Final Results and Board Changes

RNS Number : 6466Q

Time Out Group plc

29 October 2021

 

29 October 2021

Time Out Group plc

("Time Out", the "Company" or the "Group")

Results for the 18 months ended 30 June 2021

 and

Board Changes

Time Out Group plc, the global media and hospitality business, today announces its audited results for the 18 months ended 30 June 2021.  Comparative information relates to the 12 months ended 31 December 2019. 

Outlook

Whilst there can be no certainty over the future imposition of trading and movement restrictions in response to Covid-19, the Board is encouraged by the current trading and prospects of the Group.  All seven of the Time Out Market sites are open and despite the lack of city tourism and social distancing restrictions, the growing level of footfall has underlined the strength of the proposition and as a result we remain optimistic about the return to pre-Covid trading levels in the months ahead.  We are particularly encouraged by the growing pipeline of potential new Time Out Market management agreements and the recurring earnings stream they offer, without the need for further capital expenditure.

The Media division is experiencing a significant recovery in advertising.  With a continued digital advertising focus and an optimised cost base, we expect operating margins to continue to grow in the current period.

Notwithstanding the requirement to refinance the existing debt facility, the equity fund raises in the period have provided the Group with lower net debt and a period end cash balance of £19.1m.

Financial Summary

· Gross revenue ⁽¹⁾   declined to £44.9m (2019⁽⁵⁾: £77.1m) and net revenue to £37.8m (2019: £63.3m) due to the forced closure of Time Out Market ("Market") sites and the sharp decline in advertising revenues generated by Time Out Media ("Media") from the travel and leisure sectors

· Gross margin ⁽²⁾   increase of 7 percentage points to 80% (2019: 73%), despite Group gross profit decline of 35% to £30.2m, reflecting Time Out Media's higher digital revenue mix

· Gro up adjusted EBITDA loss ⁽³⁾ of £25.1m (2019: £4.7m), which includes the benefit of the cost reduction initiatives implemented in the period

· Group loss for the period of £70.5m (2019: £20.9m) reflects challenging trading conditions over the 18-month period, additional depreciation as a result of Markets that opened over the comparative period and an exceptional goodwill impairment charge of £20.0m in respect of the Media business

· Cash of £19.1m at 30 June 2021 and debt of £23.5m, resulted in adjusted net debt⁽⁴⁾ of £4.4m. Reported net debt was £26.9m   including £22.5m of IFRS 16 lease liabilities

· Equity raises of £62.4m completed in the period were used to repay debt and allow flexibility in managing Covid-19 uncertainties

(1)  See note 4 for the explanation of gross and net revenue

(2)  Gross margin calculated as gross profit as a percentage of net revenue

(3)  Adjusted EBITDA is stated before interest, taxation, depreciation, amortisation, share based payments, and exceptional items.  It also includes property lease costs which, under IFRS 16, is replaced by depreciation and interest charges.  This is a non-GAAP alternative performance measure that management uses to aid understanding of the underlying business performance.  See note 4 for reconciliation to statutory measures.

(4)  Adjusted net cash/(debt) excludes lease-related liabilities under IFRS 16.  See note 7 for reconciliation to statutory measures.

(5)  All comparative information relates to the 12 month period to 31 December 2019 as opposed to the current period of 18 months to 30 June 2021

Operational Summary

·   The Group's global brand audience decreased by only 7% to a monthly average of 64.5m (2019: 69.2m) despite the closure of the Markets, limited print offerings and global travel and leisure restrictions.  The relevance and continued appeal of Time Out's editorially curated content has been reflected in the average social followers which were maintained at a monthly average of 36m

· Time Out Markets heavily disrupted due to extended government restrictions

· All Markets were largely closed during the period, but with repeated periods of re-opening and subsequent re-closure and significant restrictions.  All Markets reopened by June 2021, and have remained consistently open since with encouraging initial trading

· Time Out Market Dubai opened on 7 April 2021 with performance exceeding expectations

· Time Out Market Abu Dhabi management agreement signed in January 2021 (2023 opening)

· Withdrawal from the planned development of the Waterloo (owned & operated) Market due to the impact of the pandemic and to focus on the strong pipeline of management agreement opportunities

· Time Out Media faced significant reductions in advertising spend due to lockdowns

· Travel and hospitality industry particularly adversely affected 

· Continued focus on higher-margin digital offerings, with Creative Solutions successfully attracting global brand partnerships

· Print suspended with only a limited return in the UK, Spain and Portugal in response to advertiser demand and where economically viable

· In line with the Company's succession plan, Chris Ohlund, currently Executive Vice Chairman of Time Out, is appointed as Chief Executive Officer (CEO) of the Group with immediate effect following the decision of Julio Bruno to step down as CEO in order to pursue other business interests

Commenting on the results, Julio Bruno, CEO of Time Out Group plc, said:

"The challenges that Time Out Group and the travel and leisure industry at large have faced over the last 18 months have been well documented.  However, the adaptation and support of our audience, staff and shareholders have enabled Time Out to develop and grow its offering despite this environment.  Our pivot to "Time In", for example, during the worst months of Covid proved to be an effective move.  As a result, we are emerging from the impact of the pandemic with higher margins, new advertising clients and more Time Out Markets.

"After six rewarding years with the Group it is time to seek new challenges.  I'd like to thank my colleagues, the Board and the shareholders of Time Out for their collaboration and commitment throughout."

Peter Dubens, Chairman of Time Out said today:

"Following his appointment in 2015, Julio has overseen Time Out's transition to the public markets, the transformation of its digital offering, the growth of its audience and the launch of the global roll out of the Time Out Market concept.  We thank him for his contribution to the Group and wish him well for the future.

"As a Board we are delighted that Chris has accepted the position of CEO .  He brings to the role significant experience in digital consumer and media companies, with a track record of achieving growth, innovation and exceptional shareholder returns."

Chris Ohlund, CEO-designate added:

"I am truly honoured to lead the iconic brand of Time Out into its next phase of global growth and to seize the opportunities presented to us in both the publishing and hospitality sectors.  I look forward to joining the team to further build on the unique value proposition of our Time Out Market concept worldwide whilst firmly establishing Time Out Media as the global go-to resource to help people find the best of the city.  My confidence is rooted in my belief that our people are enabled to deliver on our integrated strategy of serving our customers, creating exceptional value to our shareholders whilst providing unique experiences to our vast audience." 

The information contained within this Announcement is deemed by the Company to constitute inside information as stipulated under Article 7 of the Market Abuse Regulation (EU) No. 596/2014 (as amended) as it forms part of the domestic law of the United Kingdom by virtue of the European Union (Withdrawal) Act 2018 (as amended).  Upon the publication of this Announcement via the Regulatory Information Service, this inside information is now considered to be in the public domain.

For further information, please contact:
Time Out Group plc	Tel: [phone]
Steven Tredget, Investor Relations Director
Liberum (Nominated Adviser and Broker)	Tel: [phone]
Andrew Godber / Clayton Bush / Edward Thomas
FTI Consulting LLP	Tel: [phone]
Edward Bridges / Stephanie Ellis / Fiona Walker

About Time Out Group plc 

Time Out Group is a global media and hospitality business that inspires connection and joy by capturing the soul of the world's greatest cities through its two divisions - Time Out Media and Time Out Market.  Time Out launched in London in 1968 with a magazine to help people discover the exciting new urban cultures that had started up all over the city.  Today, across the Group's digital and physical platforms, Time Out's professional journalists curate the best things to do, see and eat in 331 cities in 59 countries.

Time Out Market is the world's first editorially curated food and cultural market, bringing a city's best chefs, restaurateurs and unique cultural experiences together under one roof.  The first Time Out Market opened in Lisbon in 2014, followed in 2019 by Miami, New York, Boston, Chicago and Montreal, and Dubai in 2021.  A further pipeline of openings includes Porto, Abu Dhabi, Prague, London and more. 

Time Out Group, listed on AIM, is headquartered in the United Kingdom.

Chief Executive's Review

Group overview

	18 months ended 30 June 2021	12 months ended 31 December 2019
	£'000	£'000m
Market	12,233	23,229
Media	25,570	40,054
Group net revenue(1)	37,803	63,283
Gross profit	30,170	46,427
Gross margin % (2)	80%	73%
Divisional adjusted operating expenses	(53,625)	(49,244)
Divisional adjusted EBITDA (3)	(23,455)	(2,817)
Market (3)	(14,526)	(614)
Media	(8,929)	(2,203)
Corporate costs	(1,622)	(1,886)
Group adjusted EBITDA	(25,077)	(4,703)

(1)  See note 4 for the explanation of net revenue

(2)  Gross margin calculated as gross profit as a percentage of net revenue

(3)  Adjusted measures are stated before interest, taxation, depreciation, amortisation, share based payments, and exceptional items.  It also includes £7.5m of property lease costs which, under IFRS 16, is replaced by depreciation and interest charges (see note 4)

No aspect of Time Out or the world has remained untouched by the pandemic.  This particularly challenging period for the travel and leisure industry required us to make some difficult choices and to adapt how we operated.  Some of the structural changes we have made to our cost base will deliver sustained benefits.  I am immensely proud of the response of our people and partners in these tough circumstances, and of their continued support and resilience as we navigate our way through these early days of recovery. 

The period started in line with management expectations, with the Group building on the transformative progress it made in 2019.  The five newly opened Time Out Markets ('Market') in North America were enjoying growing footfall, Time Out Market Lisbon continued to grow its EBITDA despite its maturity and outperformance to date and Time Out Media ('Media') was driving higher margin digital advertising on a reduced cost base.  In March 2020, as a result of the restrictions imposed in response to the growing pandemic, all Markets were closed, Media operations were drastically curtailed, and all staff shifted to working from home.  Thereafter trading in the period proved challenging as the travel and leisure industry faltered in the face of global government restrictions which shifted in response to the rise and fall of infection rates.  Early 2021 showed tentative signs of recovery following the easing of restrictions in various countries as the world emerged from what was regarded as the peak of the pandemic.  This allowed the partial re-opening of all Markets, except Miami and the relaunch of our print editions in certain countries.  However, trading remained significantly constrained due to legal capacity limits on indoor dining, strictly limited international travel and virtually no tourism.  These factors together made the prospect of any substantive recovery in the period slow and inconsistent.

The Group's net revenue declined to £37.8m (2019: £63.3m) driven by delayed Media travel and leisure campaigns and Market closures in addition to the faltering recovery of trading later in the period.  As expected, adjusted EBITDA decreased sharply due to the fall in revenue.  In response to the impact on trading the Group took immediate action to manage the impact on cash.  All 2020 salary increases were reversed, all current period bonus schemes were cancelled, up to 30% of staff were furloughed across the Group and the senior management team took a temporary pay cut of 25%.  These initial measures were followed by a review of all teams across the Group to identify further changes to be made in the light of the reduced operations, which resulted in some staff redundancies and further use of furlough schemes.  As a consequence of this rationalisation, we re-evaluated office space requirements and have relocated a number of our offices, including those in London, New York and Sydney, to smaller, more economical premises.  We also opened discussions with all Market landlords to secure rent deferrals and/or abatements over the period of closure.  Together these actions secured immediate cash savings and reduced adjusted operating expenses to £53.6m for the 18-month financial period compared to £49.2m for the prior 12-month period.

We believe that these initiatives will allow the Group to emerge from the pandemic with a sustainable cost-efficient operating base and improved margins.

Operating KPIs

	18 months ended 30 June 2021	12 months ended 31 December 2019	Change	%
Global brand audience - monthly average(1)	64.5m	69.2m	(4.7)m	(7)%
Market TTV(2)	£28.6m	£43.7m

(1)  Global brand audience is the estimated monthly average in the period including all owned & operated cities and franchises.  It includes print circulation (O&O), unique website visitors, unique social users (as reported by Facebook and Instagram with social followers on other platforms used as a proxy for unique users), social followers (for other social media platforms), opted in members and Market visitors.

(2)  Total transaction value across all Time Out Markets including food, drink and other retail sales

In response to the challenges the pandemic imposed, Time Out innovated, rapidly pivoting to "Time IN", launching an e-magazine and created a community to share unique daily information of virtual resources available in cities - all helping our audience to explore and experience the best of their city while staying in.  An example is the continuing Love Local campaign, which celebrates local neighbourhoods and culture, food and other close-to-home services while our audience remained at home.  As a result of these measures and despite the closure of the Markets, limited print offerings and global travel and leisure restrictions the average monthly global audience only declined 7% compared to the prior year.

Notably the relevance and continued appeal of Time Out's editorially curated content led to social media followers being maintained over this period at a monthly average of 36.4m and website traffic maintained at a monthly average of 23.7m.  Our ability to retain this audience throughout the period allowed us to form partnerships with social platforms, for example the small business festivals via our Instagram channels in London, New York, Madrid and Los Angeles.  The gradual partial easing of restrictions in cities has contributed, as our audience returned to restaurants and hotels, re-engaging with our authoritative and professionally generated content.

Print circulation fell by 80% due to the decision made in late March 2020 to cease the printed edition of Time Out and only resuming in limited volumes in response to advertiser demand and only where economically viable.

The decline in Time Out Market total transaction value (TTV) is a direct result of Market closures.

Time Out Market trading overview

	18 months ended 30 June 2021	12 months ended 31 December 2019
	£'000	£'000
Owned Operations	10,112	22,180
Management Fees	2,121	1,049
Net Revenue	12,233	23,229
Gross profit	10,272	19,580
Gross Margin %	84%	84%
Operating expenses (trading)	(20,431)	(14,230)
Trading EBITDA(1)	(10,159)	5,350
Market central costs	(4,367)	(3,210)
Pre-opening costs	-	(2,754)
Adjusted EBITDA	(14,526)	(614)

(1)  Trading EBITDA represents the adjusted EBITDA from owned and operated markets post opening, and the fees relating to management agreements.  It is presented before pre-opening costs of new markets and other central costs of the Market business

The 18-month reporting period started with encouraging trading performance from the six Time Out Markets ("Market").  The prior year had seen the successful launch of five of these:  Miami and New York (May 2019), Boston (June 2019), Chicago and Montreal (November 2019) and all continued gaining further traction with locals and receiving growing plaudits in early 2020.  Time Out Market Lisbon also continued to grow footfall and average spend despite its relative maturity.  By 16 March 2020 however, in response to the global efforts to contain the spread of Covid-19, all Markets were temporarily closed as Time Out focussed on the wellbeing and safety of our employees, guests, concessionaires and their teams. 

As outlined above, in response to closures, immediate cost saving initiatives were introduced to help mitigate the lost revenue.  We engaged in productive discussions with our landlords and secured vital support through rent deferrals, abatements and amendments to other lease terms.  While this still results in an accounting rent charge within Market adjusted EBITDA, these agreements afforded some cash preservation ahead of the Markets re-opening.  The closure periods were used to adapt each Market to include table partitioning, cashier shields and sanitisation teams, which would allow chefs and consumers to enjoy its unique offerings in a safe and socially distanced environment on re-opening.  Markets partially re-opened in July and August 2020 but with on-going restrictions severely constraining Market capacity limits and the range of food offerings available.  In December 2020, further lockdown measures were introduced in response to a second wave of pandemic infections and all Markets were again forced to close.  The Group took swift action to mitigate the impact of this closure, laying off all staff except for a small skeleton team of one or two individuals in each Market.

Following the successful roll-out of vaccination programmes by many countries and the easing of certain restrictions, all Markets were re-launched by June 2021.  Initial trading has reflected the gradual pace of customers returning to city life and the capacity and travel restrictions that remain in place.  However, we are encouraged by the recovery and the visibility it provides for the gradual return to pre-COVID trading levels.  Just as importantly the Time Out Markets have returned with exceptional chef line ups and in doing so retaining their unique fine food and cultural experience.

With Markets ability to transform spaces and drive footfall, more real estate developers are turning to Time Out to attract customers to their locations, with the opening of new markets and the signing new management agreements in the period, despite restrictions.  Time Out Market Dubai opened on 7 April 2021 and has so far exceeded trading expectations.  The site featuring 17 of Dubai's top chefs and celebrated restaurateurs is the first in the Middle East and has a unique waterfront position on Burj Lake, next to The Dubai Mall and the iconic Burj Khalifa - a location that attracts millions of visitors each year.

On 3 February 2021 Time Out announced the signing of the fourth management agreement with leading real estate developer, Aldar Properties, to develop Time Out Market Abu Dhabi which is expected to open in 2023.  It will be located in one of the region's prime destinations that attracts millions of locals and visitors annually.  The Market will span over 35,000 square feet and include 15 of Abu Dhabi's best restaurateurs, 3 bars and a cultural and entertainment space.

In addition to the arrangements for Abu Dhabi, the current planned timings for new markets, subject to any further Covid-19 related delays, are unchanged:

· Porto (owned & operated) - calendar 2022

· London Spitalfields (owned & operated) - Listed Building consent application has been submitted and the Group awaits the outcome.

· Prague (management agreement) - calendar 2025

On 23 March 2021, the Group announced that it no longer intended to proceed with the development of Time Out Market Waterloo due to the impact of the Covid-19 pandemic.  The Group will instead focus on its prospective management agreement partners in a strong and growing pipeline of proposals from around the world.  Given the strength of the Time Out Markets proposition we expect to sign more sites in the year ahead, growing the Group's recurring earnings stream, without the need for further capital expenditure.

Time Out Media trading overview

	18 months ended 30 June 2021	12 months ended 31 December 2019
	£'000	£'000
Digital advertising	14,923	16,346
Print	4,516	14,742
Live events	131	1,946
Local Marketing Solutions	1,762	1,933
Advertising sales	21,332	34,967
E-commerce	3,169	3,932
Franchises	1,069	1,155
Net revenue	25,570	40,054
Gross Profit	19,898	26,847
Gross Margin %	78%	67%
Operating expenditure	(28,827)	(29,050)
Adjusted EBITDA	(8,929)	(2,203)

The pattern of performance has been repeated in the Media division.  A period that started in line with expectations driven by continued growth in digital advertising, was severely impacted by the pandemic, the subsequent lockdowns and travel restrictions.  Most major advertisers, especially in travel and leisure immediately paused material media spend and awaited greater certainty with regards freedom of movement and consumer sentiment.

In response, we implemented the cost saving measures outlined above and suspended all print publications.  Faced with a challenging operating environment during lockdown, the Group successfully pivoted its brand and content to "Time IN" allowing it to remain relevant to and engaged with our home-bound audience.  We have returned to our "Time Out" headline, however "Time IN" continues.  This represents a new way for us to share up-to-date professionally curated content relevant to our audience, whether at home or heading out.  As the cities of the world re-emerge, we look forward to re-connecting this audience to these cities, championing independent venues, local neighbourhoods and their unique culture - the Soul of The City.

Following the easing of restrictions in early 2021, we saw the first green shoots of recovery in advertising with a limited return of print editions in the UK, Portugal and Spain.  However the sustained disruption has materially impacted the gross profit compared to the prior year, despite the improved gross margin reflecting the greater focus on digital revenue.

Programmatic revenue, a key element of our digital performance, was initially hampered as supply exceeded demand and our audience transitioned to increased mobile usage with a lower average yield.  Our terms with each programmatic partner were critically assessed to ensure maximum revenue from our inventory and the ability to offer more innovative and engaging formats on mobile devices.  This optimisation of our programmatic partners has increased our demand portfolio by reducing our dependence on any one significant partner and giving us access to specific expertise on formats suitable for mobile devices, which helps better target our audience.

Our core focus of championing city life, led to innovative integrated propositions from the Creative Solutions team who, in the UK, partnered with Googlein the first full print and digital take-over.  Edited by UK actor and songwriter Ashley Walters, it celebrated Black History Month by giving all advertising pages to local black businesses, highlighting their contributions to the city and bringing their stories to the Time Out audience.  For Uber Eats, in conjunction with the Love Local editorial campaign to support London's food, drink, culture and entertainment businesses, we created a digital offering including a 25% discount on food when ordering via the Uber Eats app.  Over the period and across the world, we built upon the Love Local campaign by extending its editorial focus on local neighbourhood culture, food and other close-to-home services while our audience remained at home.

The decline in print revenue reflects the cessation of print during the initial lockdown.  Our print products will be re-introduced and continue when supported by advertiser demand, requested as part of a bespoke product and when economically viable.  This strategic change together with the broader impact of Covid-19 has resulted in an exceptional impairment charge of £20.0m being recognised in respect of Media goodwill.

We have actively focussed on the high performing e-commerce partners offering on-line courses, live-stream theatre and virtual cultural events.  These partnerships will continue to strengthen and benefit future performance.

Financial Review

	18 months ended 30 June 2021	12 months ended 31 December 2019
	£'000	£'000
Gross revenue	44,896	77,140
Concessionaire share	(7,093)	(13,857)
Net revenue	37,803	63,283
Gross profit	30,170	46,427
Operating expenses	(90,717)	(59,786)
Operating loss	(60,547)	(13,359)
Operating loss	(60,547)	(13,359)
Property lease costs	(7,509)	(3,961)
Depreciation & amortisation
- Intangible assets & property, plant and equipment	16,617	8,341
- Right-of-use assets	4,952	2,950
Share-based payments	1,480	1,048
Exceptional items	19,894	278
Loss on disposal of property, plant and equipment	36	-
Adjusted EBITDA	(25,077)	(4,703)
Finance income	35	690
Finance costs	(10,544)	(7,809)
Loss before tax	(71,056)	(20,478)

Revenue and gross profit

Group gross revenue for the period decreased by 42% to £44.9m (2019: £77.1m) reflecting the cumulative impact of a highly disruptive and uncertain period as a result of the pandemic.

Group gross profit decreased by 35% in the period compared to the 42% reduction in gross revenue, benefitting from the improvement in gross margin (as a percentage of net revenue) from 73% to 80%.  This 7-percentage point gain was primarily driven by the Media revenue mix, which was skewed to higher margin digital operations, resulting in a Media gross margin of 78% (2019: 67%).  Time Out Market gross margin was flat at 84%.

Operating expenses

Adjusted Group operating expenses only increased to £55.2m despite the longer financial period (2019: £51.3m).  Market adjusted operating expenses increased to £24.8m (2019: £20.2m), comprising trading operating expenditure increase (£6.2m), pre-opening costs decrease (£2.8m) and an increase in central costs (£1.2m).  Media adjusted operating expenses decreased to £28.8m (2019: £29.1m).  Corporate costs also decreased to £1.6m (2019: £1.9m).  These comparisons are skewed due to the 18-month period, however the overall underlying decrease in Group-wide operating expenses was part of a focussed cost savings exercise which included a review of contracts with all non-essential spending suspended and all material lease agreements reviewed with landlords to secure savings.  The period benefitted from the measures taken following the initial global lockdown in March 2020.  This included reversing all 2020 salary increases, cancelling related bonus schemes and introducing temporary salary reductions for senior staff.  This was followed by a review of all teams across the Group and to identify further changes to be made in light of the reduced operations, with resulting staff redundancies and further use of government furlough schemes.  As a consequence, we revaluated the office space requirements and have relocated a number of our offices, including London, New York and Sydney media offices, to smaller, more economic premises.  Together these actions have secured immediate and ongoing cash savings.

Adjusted EBITDA

Adjusted EBITDA is stated before interest, taxation, depreciation, amortisation, share-based payments and exceptional items.  Although IFRS 16 has been applied in the period, the £7.5m cost of property leases has been included in the operating expenses discussed above, as the Board believes it provides a fairer reflection of the operating margins of the business.  The material decrease in Group adjusted EBITDA to a £25.1m loss (2019: £4.7m loss) was driven by the reduced revenue, partially offset by the cost reductions described above.

Operating loss

The reported operating loss was £60.5m (2019: £13.4m).  This includes the IFRS 16 impact of lower property lease costs of £7.5m (2019: £4.0m), which for adjusted EBITDA was reported in operating expenditure and higher depreciation of £5.0m (2019: £2.9m) on the right-of-use assets recognised.

Net exceptional costs were £19.9m (2019: £0.3m) comprising principally of an impairment charge of £20.0m relating to the goodwill allocated to the Media business.  Staff redundancy costs (£1.2m) and property lease exit costs (£0.9m) were incurred as part of our response to Covid-19.  In addition, the two equity fundraise processes resulted in professional fee costs (£0.1m) and a write-off of deferred financing fees following the full settlement of the outstanding loan notes.  These costs were offset in part by a net gain following the de-recognition of two properties following changes in the contractual terms.

The depreciation charge of £21.6m (2019: £11.4m) increased by £10.2m, driven principally by the additional depreciation related to the four US owned and operated Markets that opened over the comparative period and the extended financial period.

Share based payments

The fair value of options at the grant date has been amortised over the time to vesting of the option.  In December 2020, the share schemes were modified to better reflect the current and anticipated performance of the Group, whereby certain historic option grants were replaced by revised grants linked to the Group's share price performance over a five-year period.  There were 27.5m options outstanding at 30 June 2021 (31 December 2019: 12.9m).

Net finance costs

Net finance costs of £10.5m (2019: £7.8m) primarily relates to interest on debt of £4.8m, amortisation of deferred financing costs (£0.4m), interest cost in respect of lease liabilities (£4.9m), and the foreign exchange loss on financial liabilities of £0.3m.

Foreign exchange

The revenue and costs of Group entities reporting in dollars have been consolidated in these summarised financial statements at an average exchange rate of $1.32 (2019: $1.27).  The operations reporting in euros have been consolidated at a rate of €1.14 (2019: €1.14).

Change of financial year end

In November 2020 we announced that the Group was changing its accounting reference date and financial year end from 31 December to 30 June with immediate effect.  The Group's activities have continued to evolve in recent years, notably with the global roll out of Time Out Markets.  The division's trading in the medium to long term (post-COVID) is likely to be a very significant contributor to the Group's revenues and profits, as well as being increasingly seasonally weighted to the second half of the calendar year.  Therefore, the Board believes that a 30 June year end will be in the best interest of the Group.  These results cover an 18-month financial period ending 30 June 2021.

Cash flow

	30 June 2021 £'000	31 December 2019 £'000
Cash and cash equivalents	19,070	13,420
Borrowings	(23,517)	(43,311)
Adjusted net debt	(4,447)	(29,891)
IFRS 16 Lease liabilities	(22,453)	(32,422)
Net debt	(26,900)	(62,313)

Cash and cash equivalents increased by £5.7m to £19.1m.  This was driven primarily by £64.1m of net cash raised following two successful equity raises in the period offset by the EBITDA loss of £25.1m (2019: £4.7m), a net working capital outflow of £2.7m (2019: £2.3m), and debt and interest repayments of £27.7m.

In order to preserve cash, except for capital expenditure related primarily to the final construction and fit out costs of Time Out Market Chicago, all non-essential Market capital expenditure was deferred with £0.2m invested in making the markets COVID-safe, offset by £0.6m of cash contributions received from landlords in respect of previously completed construction.  Media invested £2.1m (2019: £1.8m) in capitalised software development costs to support the Group's increasingly important digital platforms.

Borrowings now comprise principally the Incus facility which was £21.9m at period end.  In June 2020, the Incus facility was revised to defer capital and interest payments due in June 2020 and November 2020 to November 2021, with the next covenant testing date extended to 31 December 2021.  In September 2021, Incus formally waived further covenant tests for the remainder of the facility which is due for settlement in full in November 2022.

Cash utilisation continues to be closely monitored.  The next significant cash requirement is the settlement of the Incus facility described above.  However, the Group is satisfied that this facility can be refinanced within the existing timelines.  The Group is therefore confident that it has sufficient funding to cover its operational needs for the foreseeable future.  Further information is included below and in note 1.

Going concern

The financial statements have been prepared under the going concern basis of accounting as the Directors have a reasonable expectation that the Group and Company will continue in operational existence and be able to settle their liabilities as they fall due for the foreseeable future, being a period of not less than one year from the date of approval of the financial statements.  In making this determination, the Directors have considered the financial position of the Group, projections of its future performance and the financing facilities that are in place.

The Covid-19 pandemic has had a significant adverse impact on the Group's current trading and any projection of future performance is inherently uncertain.  The key drivers of uncertainty include the impact of the global vaccination programme on any further waves of the pandemic, the actions that may be taken by governments to respond (which could restrict our ability to operate our Markets business) and the response of our customers themselves to adverse changes in their economic circumstances (which will impact on revenues in both our Markets and Media businesses).  We have taken, and will continue to take, steps to minimise our discretionary expenditure and therefore the principal driver of our future profitability and cash flows will be the revenue we are able to generate from our two businesses.  We have also agreed with our lender, Incus Capital Finance, that the quarterly financial covenants that apply to their loan will be waived for the balance of the facility term.  Whilst the facility is due to expire in November 2022, the Directors are confident that the loan will be refinanced on acceptable terms.

The Group has modelled two financial scenarios over the next 12 months that reflect the potential continued impact of the pandemic.

The base case assumes a cautious year of recovery across both Market and Media.  Market revenue is assumed to be lower than the pre-pandemic period due to reduced capacity and international travel restrictions during the next financial year.  All Markets are only assumed to reach full capacity during the 2022/23 financial year.  Media revenue is assumed to gradually increase over the year, with revenue levels excluding print, recovering to pre-pandemic levels in the 2022/23 financial year.  The changing revenue mix is expected to yield higher margins while maintaining the reduced cost base achieved through strategic decisions taken during the period.  This scenario does not include the impact of further protracted lockdown periods. 

The downside case assumes a further 10% reduction in revenue of each business against the base case during the next financial year, with revenue returning to budgeted levels in July 2022 and no corresponding reduction in budgeted costs over this period.  In addition, this does not reduce the assumed capital expenditure over this period.  The Directors consider the modelled reduction in revenue to be unlikely given the recent performance post restrictions being lifted and the Markets reopening.  However, with the continued uncertainty of new restrictions this scenario is considered severe but plausible. 

Under both scenarios there would be adequate cash available to the Group up until November 2022 when the balance of the Incus Capital Finance facility totalling £22.1 million will need to be refinanced and given the Group has insufficient funding in place to settle their contractual obligations in full, the Group would need to seek additional funding by raising new equity or by refinancing the debt within the going concern period in order to continue in operational existence.

The Group intends to refinance the debt but as the refinancing has yet to be undertaken, the Directors have concluded that attention should be drawn to the fact that a material uncertainty exists which may cast significant doubt on the Group and Company's ability to continue as a going concern.

The global recovery from the impact of the pandemic is just beginning.  However, after consideration of the matters set out above, the Directors are satisfied that there is a reasonable expectation that the Group and Company have adequate funding to cover its operation needs for the foreseeable future and therefore consider it appropriate to prepare the financial statements under the going concern basis.

Outlook

Whilst there can be no certainty over the future imposition of trading and movement restrictions in response to Covid-19, the Board is encouraged by the current trading and prospects of the Group.  All seven of the Time Out Market sites are open and despite the lack of city tourism and social distancing restrictions, the growing level of footfall has underlined the strength of the proposition and as a result we remain optimistic about the return to pre-Covid trading levels in the months ahead.  We are particularly encouraged by the growing pipeline of potential new Time Out Market management agreements and the recurring earnings stream they offer, without the need for further capital expenditure.

The Media division is experiencing a significant recovery in advertising.  With a continued digital advertising focus and an optimised cost base, we expect operating margins to continue to grow in the current period.

Notwithstanding the requirement to refinance the existing debt facility, the equity fund raises in the period have provided the Group with lower net debt and a period end cash balance of £19.1m.

Julio Bruno

Chief Executive

Consolidated Income statement

18 months ended 30 June 2021

	Note	18 months ended 30 June 2021		12 months ended 31 December 2019
		£'000		£'000
Gross revenue	4	44,897		77,140
Cost of sales		(14,727)		(30,713)
Gross profit		30,170		46,427
Administrative expenses		(90,717)		(59,786)
Operating loss		(60,547)		(13,359)
Finance income		35		690
Finance costs		(10,544)		(7,809)
Loss before income tax	4	(71,056)		(20,478)
Income tax credit/(charge)		507		(430)
Loss for the period		(70,549)		(20,908)
Loss for the period attributable to:
Owners of the parent		(66,770)		(18,354)
Non-controlling interests		(3,779)		(2,554)
		(70,549)		(20,908)
Loss per share:
Basic and diluted loss per share (p)	6	(27.9)		(13.3)

Consolidated Statement of Other Comprehensive Income

18 months ended 30 June 2021

	18 months ended 30 June 2021		12 months ended 31 December 2019
	£'000		£'000
Loss for the period	(70,549)		(20,908)
Other comprehensive income:
Items that may be subsequently reclassified to the profit or loss:
Currency translation differences	(2,458)		(3,424)
Other comprehensive income for the period, net of tax	(2,458)		(3,424)
Total comprehensive expense for the period	(73,007)		(24,332)
Total comprehensive expense for the period attributable to:
Owners of the parent	(69,360)		(21,648)
Non-controlling interests	(3,647)		(2,684)
	(73,007)		(24,332)

Consolidated Statement of Financial Position

At 30 June 2021

	Note	30 June 2021		31 December 2019
		£'000		£'000
Assets
Non-current assets
Intangible assets - Goodwill	8	28,911		50,068
Intangible assets - Other		10,253		14,528
Property, plant and equipment		39,037		48,763
Right-of-use assets		17,031		28,309
Other receivables		3,197		5,815
		98,429		147,483
Current assets
Inventories		995		1,359
Trade and other receivables		9,932		15,801
Cash and cash equivalents	7	19,070		13,420
		29,997		30,580
Total assets		128,426		178,063
Liabilities
Current liabilities
Trade and other payables		(11,286)		(21,413)
Borrowings		(5,395)		(4,695)
Lease liabilities		(985)		(2,636)
		(17,666)		(28,744)
Non-current liabilities
Trade and other payables		(1,158)		(1,271)
Borrowings		(18,122)		(38,616)
Lease liabilities		(21,468)		(29,786)
Deferred tax liability		(1,185)		(1,749)
		(41,933)		(71,422)
Total liabilities		(59,599)		(100,166)
Net assets		68,827		77,897
Equity
Called up share capital	10	332		148
Share premium		185,563		123,290
Translation reserve		3,057		5,647
Capital redemption reserve		1,105		1,105
Retained earnings / (losses)		(121,182)		(47,420)
Total parent shareholders' equity		68,875		82,770
Non-controlling interest		(48)		(4,873)
Total equity		68,827		77,897

Consolidated Statement of Changes in Equity

30 June 2021

	Called up share capital	Share premium	Translation reserve	Capital Redemption reserve	Retained earnings/ (losses)	Total parent Shareholders' equity	Non- Controlling interest	Total equity
	£'000	£'000	£'000	£'000	£'000	£'000	£'000	£'000
At 1 January 2020	148	123,290	5,647	1,105	(47,420)	82,770	(4,873)	77,897
Changes in equity
Loss for the month period	-	-	-	-	(66,770)	(66,770)	(3,779)	(70,549)
Other comprehensive income	-	-	(2,590)	-	-	(2,590)	132	(2,458)
Total comprehensive income	-	-	(2,590)	-	(66,770)	(69,360)	(3,647)	(73,007)
Share based payments	-	-	-	-	1,480	1,480	-	1,480
Adjustment arising on change in non-controlling interest	-	-	-	-	(8,472)	(8,472)	8,472	-
Issue of new shares	184	62,273	-	-	-	62,457	-	62,457
Balance at 30 June 2021	332	185,563	3,057	1,105	(121,182)	68,875	(48)	68,827

Consolidated Statement of Changes in Equity

31 December 2019

	Called up Share capital	Share premium	Translation reserve	Capital Redemption reserve	Retained earnings/ (losses)	Total parent Shareholders' equity	Non- Controlling interest	Total equity
	£'000	£'000	£'000	£'000	£'000	£'000	£'000	£'000
Balance at 1 January 2019	135	106,937	8,941	1,105	(28,288)	88,830	(1,951)	86,879
Implementation of IFRS 16					(1,881)	(1,881)	(183)	(2,064)
Balance at 1 January 2019 (restated)	135	106,937	8,941	1,105	(30,169)	86,949	(2,134)	84,815
Changes in equity
Loss for the year	-	-	-	-	(18,354)	(18,354)	(2,554)	(20,908)
Other comprehensive income	-	-	(3,294)	-	-	(3,294)	(130)	(3,424)
Total comprehensive income	-	-	(3,294)	-	(18,354)	(21,648)	(2,684)	(24,332)
Share-based payments	-	-	-	-	1,048	1,048	-	1,048
Adjustment arising on change in non-controlling interest	-	-	-	-	55	55	(55)	-
Issue of shares	13	16,353	-	-	-	16,366	-	16,366
Balance at 31 December 2019	148	123,290	5,647	1,105	(47,420)	82,770	(4,873)	77,897

Consolidated Statement of Cash Flows

18 months ended 30 June 2021

	Note	18 months ended 30 June 2021		12 months ended 31 December 2019
		£'000		£'000
Cash flows from operating activities
Cash used in operations	9	(20,219)		(1,934)
Interest paid		(5,430)		(980)
Tax paid		(311)		(665)
Net cash used in operating activities		(25,960)		(3,579)
Cash flows from investing activities
Purchase of property, plant and equipment		(3,108)		(26,195)
Purchase of intangible assets		(2,145)		(1,895)
Interest received		35		53
Net cash used in investing activities		(5,218)		(28,037)
Cash flows from financing activities
Costs relating to share issues		(1,835)		(757)
Proceeds from share issue		64,148		17,110
Advance of borrowings		3,865		15,478
Repayment of borrowings		(22,500)		(5,897)
Repayment of lease liabilities		(6,731)		(3,898)
Acquisition of minority interests		-		(1,248)
Net cash from financing activities		36,947		20,788
Increase/(decrease) in cash and cash equivalents		5,769		(10,828)
Cash and cash equivalents at beginning of period		13,420		24,347
Effect of foreign exchange rate change		(119)		(99)
Cash and cash equivalents at end of period		19,070		13,420

Notes to the consolidated statements

1.  Basis of preparation

The financial information ("summarised financial statements") set out in this preliminary announcement represents the results of the Group and its subsidiaries for the 18 months ended 30 June 2021.  Comparative information covers the 12 months ended 31 December 2019.

While the financial information included in these summarised financial statements has been prepared in accordance with the recognition and measurement criteria of International Accounting Standards("IAS") in conformity with the requirements of the Companies Act 2006, this announcement does not itself contain sufficient information to comply with lASs and IFRSs.  The Company expects to publish full financial statements that comply with lASs and IFRSs by November 2021.

The financial information set out above does not constitute the company's statutory accounts for the 18 months ended 30 June 2021 but is derived from those accounts. The statutory accounts for this period will be finalised on the basis of the financial information presented by the directors in this preliminary announcement and will be delivered to the Registrar of Companies following the Company's Annual General Meeting.  The external auditor has reported on the accounts and their report includes reference to a material uncertainty in respect of going concern due to the refinancing of the balance of the Incus Capital Finance loan facilities of approximately £22.1m (comprising capital and accrued interest to November 2022) which is due for repayment in full in November 2022.  The preliminary results for the 18 months ended 30 June 2021 do not include the adjustments that would result if the Group was unable to continue as a going concern.

The financial information is prepared under the historical cost basis, unless stated otherwise in the accounting policies.

Alternative performance measures

The Group uses alternative performance measures to help management and analysts to assess the underlying business before one-off and non-cash items.  These includes:

· Adjusted EBITDA is calculated as profit or loss before interest, taxation, depreciation, amortisation, share based payments and exceptional items.  It also includes property lease costs which, under IFRS 16, is replaced by depreciation and interest charges.  A reconciliation to operating loss is detailed in Note 4.

· Adjusted net debt excludes the lease liabilities recognised in accordance with IFRS 16 "Leases"

· Net revenue is calculated as gross revenue less the share of concessionaire revenue, further detailed in Note 4.

Going Concern

The summarised financial statements have been prepared under the going concern basis of accounting as the Directors have a reasonable expectation that the Group and Company will continue in operational existence and be able to settle their liabilities as they fall due for the foreseeable future, being a period of not less than one year from the date of approval of these financial statements.  In making this determination, the Directors have considered the financial position of the Group, projections of its future performance and the financing facilities that are in place.

The Covid-19 pandemic has had a significant adverse impact on the Group's current trading and any projection of future performance is inherently uncertain.  The key drivers of uncertainty include the impact of the global vaccination programme on any further waves of the pandemic, the actions that may be taken by governments to respond (which could restrict our ability to operate our Markets business) and the response of our customers themselves to adverse changes in their economic circumstances (which will impact on revenues in both our Markets and Media businesses).  We have taken, and will continue to take, steps to minimise our discretionary expenditure and therefore the principal driver of our future profitability and cash flows will be the revenue we are able to generate from our two businesses.  We have also agreed with our lender, Incus Capital Finance, that the quarterly financial covenants that apply to their loan will be waived for the balance of the facility term.  Whilst the facility is due to expire in November 2022, the Directors are confident that the loan will be refinanced on acceptable terms.

The Group has modelled two financial scenarios over the next 12 months that reflect the potential continued impact of the pandemic.

The base case assumes a cautious year of recovery across both Market and Media.  Market revenue is assumed to be lower than the pre-pandemic period due to reduced capacity and international travel restrictions during the next financial year.  All Markets are only assumed to reach full capacity during the 2022/23 financial year.  Media revenue is assumed to gradually increase over the year, with revenue levels excluding print, recovering to pre-pandemic levels in the 2022/23 financial year.  The changing revenue mix is expected to yield higher margins while maintaining the reduced cost base achieved through strategic decisions taken during the period .  This scenario does not include the impact of further protracted lockdown periods. 

The downside case assumes a further 10% reduction in revenue of each business against the base case during the next financial year, with revenue returning to budgeted levels in July 2022 and no corresponding reduction in budgeted costs over this period.  In addition, this does not reduce the assumed capital expenditure over this period.  The Directors consider the modelled reduction in revenue to be unlikely given the recent performance post restrictions being lifted and the markets reopening.  However, with the continued uncertainty of new restrictions this scenario is considered severe but plausible. 

Under both scenarios there would be adequate cash available to the Group up until November 2022 when the balance of the Incus Capital Finance facility totalling £22.1 million will need to be refinanced and given the Group has insufficient funding in place to settle their contractual obligations in full, the Group would need to seek additional funding by raising new equity or by refinancing the debt within the going concern period in order to continue in operational existence.

The Group intends to refinance the debt but as the refinancing has yet to be undertaken, the Directors have concluded that attention should be drawn to the fact that a material uncertainty exists which may cast significant doubt on the Group and Company's ability to continue as a going concern.

The global recovery from the impact of the pandemic is just beginning.  However, after consideration of the matters set out above, the Directors are satisfied that there is a reasonable expectation that the Group has adequate funding to cover its operation needs for the foreseeable future and therefore consider it appropriate to prepare the financial statements under the going concern basis.

2.  Accounting policies

The same accounting policies and methods of computation are followed in these summarised financial statements as applied in the Group's latest annual audited financial statements.

3.  Exchange rates

The significant exchange rates to UK Sterling for the Group are as follows:

	18 months ended 30 June 2021			12 months ended 31 December 2019
	Closing rate	Average rate		Closing rate	Average rate
US dollar	1.38	1.32		1.32	1.27
Euro	1.16	1.14		1.18	1.14
Australian dollar	1.84	1.85		1.88	1.83
Singaporean dollar	1.86	1.80		1.77	1.74
Hong Kong dollar	10.75	10.23		10.27	9.99
Canadian dollar	1.71	1.73		1.72	1.69

4.  Segmental information

In accordance with IFRS 8, the Group's operating segments are based on the figures reviewed by the Board, which represents the chief operating decision maker.  The Group comprises two operating segments:

· Time Out Market - this includes Time Out's share of concessionaires' sales, revenues from Time Out operated bars and other revenues include retail, events and sponsorship

· Time Out Media - this includes the sale of digital and print advertising, local marketing solutions, live events tickets and sponsorship, commissions generated from e-commerce transactions, and fees from our franchise partners.

18 months ended 30 June 2021

	Time Out Market	Time Out Media	Corporate costs	Total
	£'000	£'000		£'000
Gross revenue	19,327	25,570	-	44,897
Concessionaire share	(7,094)	-	-	(7,094)
Net revenue	12,233	25,570	-	37,803
Gross profit	10,272	19,898	-	30,170
Administrative expenses	(32,821)	(55,909)	(1,987)	(90,717)
Operating loss	(22,549)	(36,011)	(1,987)	(60,547)
Operating loss	(22,549)	(36,011)	(1,987)	(60,547)
Amortisation of intangible assets	1,767	4,401	-	6,168
Depreciation of property, plant and equipment	10,038	411	-	10,449
Depreciation of right-of-use assets	3,548	1,404	-	4,952
EBITDA loss	(7,196)	(29,795)	(1,987)	(38,978)
Property lease costs	(6,108)	(1,401)	-	(7,509)
Share based payments	-	1,480	-	1,480
Exceptional items	(1,257)	20,786	365	19,894
Loss on disposal of property, plant and equipment	35	1	-	36
Adjusted EBITDA loss	(14,526)	(8,929)	(1,622)	(25,077)
Finance income				35
Finance costs				(10,544)
Loss before income tax				(71,056)
Income tax credit				507
Loss for the period				(70,549)

Gross revenue represents the total value of all food, beverage and retail sales transactions in relation to the North American owned and operated markets, the Group's share of sales transactions in relation to Time Out Market Lisbon market and any fees management agreement fees.  Net revenue is calculated as gross revenue less the concessionaires' share of revenue.

IFRS 16 'Leases' materially benefitted EBITDA in the year as property lease costs £7.5m (2019: £4.0m) are no longer included within administrative expenses and are replaced by additional depreciation costs on right-of-use assets of £5.0m (2019: £3.0m) and interest costs £4.9m (2019: £3.0m).  Adjusted EBITDA is presented including the property lease costs to aid understanding of underlying performance.

12 months ended 31 December 2019

	Time Out Market	Time Out Media	Corporate costs	Total
	£'000	£'000	£'000	£'000
Gross revenue	37,086	40,054	-	77,140
Concessionaire share	(13,857)	-	-	(13,857)
Net revenue	23,229	40,054	-	63,283
Gross profit	19,580	26,847	-	46,427
Administrative expenses	(23,859)	(34,041)	(1,886)	(59,786)
Operating loss	(4,279)	(7,194)	(1,886)	(13,359)
Operating loss	(4,279)	(7,194)	(1,886)	(13,359)
Amortisation of intangible assets	825	3,841	-	4,666
Depreciation of property, plant and equipment	3,308	367	-	3,675
Depreciation of right-of-use assets	1,792	1,158	-	2,950
EBITDA	1,646	(1,828)	(1,886)	(2,068)
Property lease costs	(2,232)	(1,729)	-	(3,961)
Share based payments	-	1,048	-	1,048
Exceptional items	(28)	306	-	278
Adjusted EBITDA loss	(614)	(2,203)	(1,886)	(4,703)
Finance income				690
Finance costs				(7,809)
Loss before income tax				(20,478)
Income tax charge				(430)
Loss for the period				(20,908)

Gross revenue is analysed geographically by origin as follows:

	18 months ended 30 June 2021			12 months ended 31 December 2019
	£'000			£'000
Europe	20,097			36,699
Americas	19,870			36,375
Rest of World	4,930			4,066
	44,897			77,140

5.  Exceptional items

Exceptional items are analysed as follows:

	18 months ended 30 June 2021		12 months ended 31 December 2019
	£'000		£'000
Redundancy costs	1,224		306
Time Out Market Waterloo exit costs	696		-
Property lease exit costs	163		-
Fundraising costs	96		-
Write off of deferred financing costs	54		-
Impairment of goodwill	20,000		-
Gain on derecognition of right-of-use assets and related lease liabilities	(2,339)		-
Revaluation of minority interest	-		(28)
	19,894		278

6.  Loss per share

Basic loss per share is calculated by dividing the loss attributable to shareholders by the weighted average number of shares during the period.

For diluted loss per share, the weighted average number of shares in issue is adjusted to assume conversion for all dilutive potential shares.  All potential ordinary shares including options and deferred shares are antidilutive as they would decrease the loss per share and are therefore not considered.  Diluted loss per share is equal to basic loss per share.

	18 months ended 30 June 2021		12 months ended 31 December 2019
	Number		Number
Weighted average number of ordinary shares for the purpose of basic and diluted loss per share	239,934,965		137,989,108
	£'000		£'000
Losses from continuing operations for the purpose of loss per share	(66,770)		(18,354)
	Pence		Pence
Basic and diluted loss per share	(27.9)		(13.3)

7.  Cash and debt

	30 June 2021		31 December 2019
Cash and cash equivalents	19,070		13,420
Borrowings	(23,517)		(43,311)
Adjusted net debt	(4,447)		(29,891)
IFRS 16 Lease liabilities	(22,453)		(32,422)
Net debt	(26,900)		(62,313)

In June 2020, the OCI loan note facility of £20.0m plus interest of £4.4m was fully settled.  At the same time, the loan facility with Incus Capital Advisors SA was revised to defer capital and interest payments due in June 2020 and November 2020 to November 2021, the covenant has been formally waived through to November 2022.

8.  Intangible assets - goodwill

Cost	30 June 2021		31 December 2019
At 1 January	50,068		51,703
Impairment	(20,000)		-
Exchange differences	(1,157)		(1,635)
At 30 June/31 December	28,911		50,068

Goodwill arises on the acquisition of subsidiaries and represents the excess of the consideration transferred over the Group's interest in net fair value of the net identifiable assets, liabilities and contingent liabilities of the acquired business.  Goodwill acquired in a business combination is allocated to each of the cash-generating units ("CGUs") that is expected to benefit from the synergies of the combination.  This represents the lowest level within the entity at which the goodwill is monitored for internal management purposes.

Goodwill impairment reviews are undertaken annually or more frequently if events or changes in circumstances indicate a potential impairment.  The carrying value of goodwill is compared to the recoverable amount, which is the higher of value in use and the fair value less costs of disposal.  Any impairment is recognised immediately as an expense and is not subsequently reversed.  The recoverable amount of each CGU has been determined based on value-in-use calculations.  These calculations use pre-tax cash flow projections based on a detailed bottom-up budget for the initial 12-month period.  A further four years are forecast using relevant growth rates and CGU-specific operation and financial assumptions.  Cash flows beyond the five-year period are extrapolated into perpetuity using an estimated long-term growth rate of 2% (2019: 2%).  The cash flows are then discounted using a weighted average cost of capital of 10% (2019: 10%).

An impairment of £20.0m (2019: £nil) arose in the Media CGU following the significant and adverse impact of Covid-19 on the activities of the CGU and a strategic decision to discontinue print operations in most territories.

If the long-term growth rate was reduced to 1% the Group would have had to recognise an impairment of £22.6m, and if the pre-tax discount rate applied to the cash flow projects for the Media CGU was 1% higher than the current estimate of 10%, the Group would have had to recognise an impairment of £24.7m.

9.  Notes to the cash flow statement

Reconciliation of loss before income tax to cash used in operations

	18 months ended 30 June 2021		12 months ended 31 December 2019
	£'000		£'000
Loss before income tax	(71,056)		(20,478)
Add back:
Net finance costs	10,509		7,119
Share based payments	1,480		1,048
Depreciation charges	15,401		6,625
Amortisation charges	6,168		4,666
Loss on disposal of property, plant and equipment	36		-
Impairment of goodwill	20,000		-
Time Out Market Waterloo exit costs	696		-
Gain on de-recognition of right-of-use asset and related lease liability	(2,339)		-
Other non-cash movements	54		48
Decrease/(increase) in inventories	325		(1,030)
Decrease/(increase) in trade and other receivables	8,302		(2,456)
(Decrease)/increase in trade and other payables	(9,795)		2,524
Cash used in operations	(20,219)		(1,934)

10.  Share capital

	Nominal value per share		18 months ended 30 June 2021		12 months ended 31 December 2019
			Number		Number
Ordinary shares			331,960,417		148,486,076
Aggregate amounts			331,960,417		148,486,076
			£'000		£'000
Ordinary shares	£0.001		332		148
Aggregate amounts			332		148

In June 2020, the Group completed a cash placing and open offer resulting in the issue of 134.7m new shares.  A further share placing took place in April 2021 resulting in the issue of a further 48.6m new shares. 

11.  Principal risks and uncertainties

The 2019 Annual Report sets out on pages 28 and 29 the principal risks and uncertainties that could impact the business.  These remain unchanged for the current financial period.

 

END

 

 

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