Half-year Report

RNS Number : 8837T

Time Out Group plc

30 March 2021

 

THIS ANNOUNCEMENT IS RESTRICTED AND IS NOT FOR RELEASE, PUBLICATION, DISTRIBUTION OR FORWARDING, IN WHOLE OR IN PART, DIRECTLY OR INDIRECTLY, IN OR INTO THE UNITED STATES, AUSTRALIA, CANADA, THE REPUBLIC OF SOUTH AFRICA, JAPAN OR ANY OTHER JURISDICTION IN WHICH SUCH PUBLICATION, RELEASE OR DISTRIBUTION WOULD BE UNLAWFUL

FURTHER, THIS ANNOUNCEMENT IS FOR INFORMATION PURPOSES ONLY AND IS NOT AN OFFER OF SECURITIES IN ANY JURISDICTION

30 March 2021

Time Out Group plc

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

Unaudited results for the six months ended 31 December 2020

Time Out Group plc, the global media and hospitality business, today announces its unaudited results for the six months ended 31 December 2020. The results reflect the continued disruption as a consequence of the enforced closure of leisure venues and travel restrictions in response to the COVID-19 pandemic.

In November 2020 we announced that the Group changed its accounting reference date and financial year end from 31 December to 30 June with immediate effect. These results therefore cover a second interim period from 1 July 2020 to 31 December 2020 as a part of the 18-month financial year ending 30 June 2021.

Financial Summary

· Gross revenue ⁽¹⁾   decline of 74% to £13.3m (2019⁽⁵⁾: £50.2m) and net revenue decline of 69% to £12.0m (2019: £38.6m) due to the forced closure of Markets and the sharp decline in advertising revenues generated by Media from the travel and leisure sectors

· Gross margin ⁽²⁾   increase of 7 percentage points to 82% (2019: 75%), despite Group gross profit decline of 66% to £9.8m, reflecting Time Out Media's higher digital revenue mix

· Adjusted operating expense decrease of £10.8m to £18.2m (2019: £29.0m) from continued focus on cost optimisation and  market closures

· Gro up adjusted EBITDA loss ⁽³⁾ of £8.5m (2019: £0.2m), includes the benefit of the cost reduction initiatives implemented in the period

· Group operating loss of £14.9m (2019: £4.7m)

· Cash of £10.4m at 31 December 2020 and debt of £23.0m, resulted in adjusted net debt⁽⁴⁾ of £12.6m. Reported net debt was £44.0m   including £31.4m of IFRS 16 lease liabilities

· Equity raise of approximately £15.0m (before expenses) announced today and expected to complete in April 2021

· Outlook: The pandemic and related government mandated restrictions will continue to have a significant impact for the foreseeable future. However, as these restrictions begin to ease, our optimised cost base and strengthened balance sheet following the expected completion of the equity raise in April, will allow the Group to emerge from this period of disruption in a stronger position

Operational Summary

· The Group's global brand audience decreased by 7% to a monthly average of 64m (2019: 69m) due to closure of the markets and limited print offerings. Despite this, we have maintained our 37m monthly average social followers reflecting the continued appeal of Time Out's editorially curated content

· Time Out Markets heavily disrupted due to extended government restrictions

· All markets were largely closed, with periods of partial re-openings and significant restrictions. With the exception of Miami, which re-opened on 18 March, markets remain closed

· Post period progress: 

‐ Abu Dhabi management agreement signed in January 2021 (2023 opening). Dubai market expected to open on 7 April 2021

‐ 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 continuing to shine in partnering with global brands

· Limited return of print in the UK, Spain and Portugal in response to advertiser demand and where economically viable

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

"2020 proved to be a very challenging year for all, and as our audience needed to adapt to the new realities so did we at Time Out Group. We reorientated our content to Time IN, inspiring people at home; we developed new business opportunities, attracted new advertising clients, renegotiated rents in our Time Out Markets, and cut costs to reflect our trading environment.

With worldwide vaccine programmes comes hope of our social lives returning to some normality, and whilst much has changed, some things haven't: Time Out remains the soul of great cities worldwide and will be on hand once again to guide people through the best of city life when doors reopen. Sadly, as a result of the pandemic, some hospitality businesses will not return. However, thanks to our supportive investors and the equity fundraise announced today which we expect to complete in April, our Time Out Markets will flourish again as chefs and customers alike eagerly await a return to our unique fine food and cultural experience. With the accelerated change of the retail environment, commercial landlords and real estate developers face the increasing challenge of attracting customers to their locations, thus they are looking to our Markets to transform their spaces and drive footfall. Time Out is part of the solution and, as we have seen with the recent agreement for a new Time Out Market in Abu Dhabi, we are confident of signing more such agreements in the year ahead."

Information contained within this announcement in relation to the Company's proposed equity fundraise is deemed by the Company to constitute inside information as stipulated under the Market Abuse Regulation (EU) No. 596/2014 as amended by The Market Abuse (Amendment) (EU Exit) Regulations 2019. 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]
Julio Bruno, CEO
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

(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.

(4)  Adjusted net cash/(debt) excludes lease-related liabilities under IFRS 16

(5)  All comparative information relates to the six-month period to 31 December 2019

Notes to editors

About Time Out Group plc 

Time Out Group is a global media and leisure business that helps people explore and experience the best of the city 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, the Group's digital and physical presence comprises websites, mobile, magazines, live events and Time Out Market. Across these platforms Time Out distributes its curated content - written by professional journalists - around the best food, drink, culture, entertainment and travel across 327 cities in 58 countries. Time Out Market is a food and cultural market which brings the best of the city under one roof: its best chefs, drinks and cultural experiences - based on editorial curation. The first Time Out Market opened in Lisbon in 2014 and Miami, New York, Boston, Montreal and Chicago followed in 2019 with a further pipeline in other global locations. Time Out Group, listed on AIM, is headquartered in the United Kingdom.

IMPORTANT NOTICES

This announcement is for information only and does not itself constitute or form part of an offer to sell or issue or the solicitation of an offer to buy or subscribe for securities referred to herein in any jurisdiction. This communication is not an offer for securities in the United States. The securities referred to herein have not been and will not be registered under the US Securities Act 1933, as amended (the "Securities Act") or under the securities laws of any state or other jurisdiction of the United States, and may not be offered or sold directly or indirectly in or into the United States except pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the Securities Act and in compliance with the securities laws of any state or any other jurisdiction of the United States.

This document contains "forward-looking statements", which include all statements other than statements of historical facts, including, without limitation, any statements preceded by, followed by or that include the words "targets", "believes", "expects", "aims", "intends", "will", "may", "anticipates", "would", "could" or similar expressions or the negative thereof. Such forward-looking statements involve known and unknown risks, uncertainties and other important factors beyond the Group's control that could cause the actual results, performance or achievements of the Group to be materially different from future results, performance or achievements expressed or implied by such forward-looking, including, among others, the achievement of anticipated levels of profitability, growth, the impact of competitive pricing, volatility in stock markets or in the price of the Group's shares, financial risk management and the impact of general business and global economic conditions. Such forward-looking statements are based on numerous assumptions regarding the Group's present and future business strategies and the environment in which the Group will operate in the future. By their nature, forward-looking statements involve risks and uncertainties because they relate to events and depend on circumstances that may or may not occur in the future. These forward-looking statements speak only as at the date as of which they are made, and each of Time Out Group Plc and the Group expressly disclaims any obligation or undertaking to disseminate any updates or revisions to any forward-looking statements contained herein to reflect any change in Time Out Group Plc's or the Group's expectations with regard thereto or any change in events, conditions or circumstances on which any such statements are based. Neither the Group, nor any of its agents, employees or advisors intends or has any duty or obligation to supplement, amend, update or revise any of the forward-looking statements contained in this document.  

Chief Executive's Review

Group overview

Financial summary

	Unaudited	Unaudited
	6 months to 31 December 2020	6 months to 31 December 2019	Change
	£m	£m	%
Market	3,007	16,636	(82)%
Media	8,957	21,959	(59)%
Group net revenue(1)	11,964	38,594	(69)%
Gross profit	9,773	28,910	(66)%
Gross margin % (2)	82%	75%	7%
Divisional adjusted operating expenses	(17,666)	(28,040)	37%
Divisional adjusted EBITDA (4)	(7,893)	870	(1,007)%
Market (3)	(6,210)	195	(3,285)%
Media	(1,683)	675	(349)%
Corporate costs	(559)	(1,029)	46%
Group adjusted EBITDA	(8,452)	(159)	(5,216)%

(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 £2.2m of property lease costs which, under IFRS 16, is replaced by depreciation and interest charges (see note 4)

The period started with some 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 was very 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 slow and inconsistent. The UK and other countries re-entered lockdown in November 2020 following summer restrictions being relaxed.

The Group's net revenue declined by 69% to £12.0m (2019: £38.6m) driven primarily by the faltering recovery of trading in the period. Following on from the cost saving measures implemented at the time of the initial lockdown,  in the reporting period we also completed a review of all teams across the Group and identified further changes to be made in light of the reduced operations, with resulting staff redundancies and further use of furlough schemes. These measures reduced staff costs by 47% across the Group. As a consequence of this rationalisation, we have revaluated office space requirements and will be relocating a number of our offices, including those in London, New York and Sydney, to smaller, more economic premises. We also continue our open discussions with the Market landlords to secure further rent deferrals and abatements. Together these actions secured immediate cash savings and reduced adjusted operating expenses by £10.8m to £18.2m (2019: £29.0m), with the full impact to be realised over the coming months.

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

Operating KPIs

	6 months to 31 December 2020	6 months to 31 December 2019	Change	%
Global brand audience - monthly average(1)	64.1m	69.2m	(5.1)m	(7)%
Market TTV(2)	£5.7m	£43.7m	£(38.0)m	(87)%

(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

Maintaining and growing our global brand audience is a key objective of the Group, which presented a significant challenge during the pandemic. We innovated, rapidly pivoting to Time IN to help our audience explore and experience the best of their city, while staying in. A great 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, despite the impact of the pandemic the average monthly global audience only declined 7% compared to the prior period.

Notably, over this period social media followers were maintained at a monthly average of 37m. Our ability to maintain 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 partial easing of restrictions in Hong Kong and Singapore also contributed, as our audience returned to restaurants and hotels, re-engaging with our curated 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. However, despite the trading challenges in the period, our website traffic decreased only marginally with a monthly average of 23.1m (2019: 24.7m). The decline in Time Out Market TTV is a direct result of market closures.

Time Out Market trading overview

	Unaudited	Unaudited
	6 months to 31 December 2020	6 months to 31 December 2019	Change
	£'000	£'000	%
Owned Operations	2,320	15,914	(85)%
Management Fees	687	722	(5)%
Net Revenue	3,007	16,636	(82)%
Gross profit	2,530	13,897	(82)%
Gross Margin %	84%	84%	-%
Operating expenses (trading)	(7,069)	(10,867)	35%
Trading EBITDA(1)	(4,539)	3,030	(250)%
Pre-opening costs	8	(1,284)	101%
Market central costs	(1,679)	(1,551)	(8)%
Adjusted EBITDA	(6,210)	195	(3,285)%

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

The period beginning 1 July 2020 started positively with the lifting of government restrictions allowing all markets, except for Miami, to partially re-open during July and August 2020. All markets were adapted to include table partitioning, cashier shields and sanitisation teams, allowing chefs and consumers to return to enjoy its unique offerings in a safe and socially distanced environment. However, due to the on-going measures, trading was severely constrained affecting both the market capacity limits and the range of food offerings available. By December 2020, as the world grappled with a second wave of pandemic infections and further lockdown measures, all our markets were again forced to close following government efforts to restrict the spread of COVID-19. Following lessons learned from the first lockdown, we 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. We continue open dialogue with our landlords and are appreciative of their on-going support through rent deferrals and abatements. While this still results in an accounting rent charge within Market adjusted EBITDA, the agreements will afford some cashflow benefits when the markets re-open and revert to a normal level of operation.

Following the successful roll-out of vaccination programmes by many countries and the prospect of easing of restrictions, we continue to monitor local government guidance to determine the appropriate time to re-launch the markets in a safe and sustainable manner. This will help to avoid the highly disruptive cycles of closing and re-opening and the knock-on impact on our chefs, customers and staff. We were pleased to have  re-opened Time Out Market Miami on 18 March 2021.

It is worth noting that during the comparative six months the Group concluded a transformative year with the successful launch of five new markets:  Miami and New York (May 2019), Boston (June 2019), Chicago and Montreal (November 2019). We remain optimistic of the strong prospects for the Markets when they fully re-open.

Despite the on-going restrictions in the year, the Group continues to make progress in opening new markets and signing new management agreements. Time Out Market Dubai is set to open on 7 April 2021, the first in the Middle East, located in Souk Al Bahar, an Arabic-style retail, entertainment and dining destination right in the heart of Downtown Dubai. The Market has a unique waterfront position on Burj Lake, next to The Dubai Mall and the iconic Burj Khalifa - and is a location that attracts millions of visitors each year. It features 17 of Dubai's top chefs and celebrated restaurateurs, three bars and dedicated spaces for cultural experiences.

On 3 February 2021,  we 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, showcasing the region's food and culture, 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 Dubai and Abu Dhabi set out above, subject to any further COVID-19 related delays, the current planned timings for additional new markets are:

· 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, we announced that we no longer intended to proceed with the development of Time Out Market Waterloo due to the impact of the COVID-19 pandemic and to focus more on our prospective management agreement partners in a strong and growing pipeline of proposals from around the world.

Time Out Market provides a premium environment, supported by strong consumer led marketing and a cost-effective structure for restauranteurs. At a time when commercial landlords and real estate developers face the increasing challenge of attracting customers, the Markets transform spaces that become the anchor in prime locations to drive consumer footfall. As a result, 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

	Unaudited	Unaudited
	6 months to 31 December 2020	6 months to 31 December 2019	Change
	£'000	£'000	%
Digital advertising	5,492	9,093	(40)%
Print	1,453	7,784	(81)%
Live events	-	1,357	(100)%
Local Marketing Solutions	609	979	(38)%
Advertising sales	7,554	19,213	(61)%
E-commerce	1,101	2,099	(48)%
Franchises	302	647	(53)%
Net revenue	8,957	21,959	(59)%
Gross Profit	7,243	15,013	(52)%
Gross Margin %	81%	68%	12%
Operating expenditure	(8,926)	(14,338)	38%
Adjusted EBITDA	(1,683)	675	(349)%

The pattern of performance has been repeated in the Media division. The period began with 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 six months, despite the improved gross margin reflecting the greater focus on digital revenue. The second lockdown in the UK and continued restrictions globally have again delayed media spend as advertisers assess the impact of vaccination rollouts and the return of consumer confidence. As outlined above, we continued with the cost saving measures implemented earlier in the year and also identified significant additional initiatives in the period.

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.

Our digital capabilities, particularly in delivering programmatic revenue is increasingly important. The consistent 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 values of championing a city led to innovative ideas brought to life by our integrated 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. Across the world, we built upon the Love Local campaign launched earlier in the year 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 will continue when supported by advertiser demand, requested as part of a bespoke product and when economically viable.

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

Group gross revenue for the period decreased by 74% to £13.3m (2019: £50.2m) reflecting the continued impact of COVID-19.

Group gross profit decreased by 66% in the period compared to the 74% reduction in gross revenue, benefitting from the improvement in gross margin (as a percentage of net revenue) from 75% to 82%. 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 81% (2019: 68%). Time Out Market gross margin was flat at 84%.

Operating expenses

Adjusted Group operating expenses decreased by £10.8m to £18.2m (2019: £29.0m). Market adjusted operating expenses decreased by £5.0m to £8.7m (2019: £13.7m), comprising trading operating expenditure decrease (£3.8m), pre-opening costs decrease (£1.3m) offset by a small increase in central costs due to adverse foreign exchange differences. Media adjusted operating expenses decreased by 38% to £8.9m (2019:£14.3m). Corporate costs also decreased by 46% to £0.6m (2019: £1.0m). This overall 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. In addition to these measures, in the reporting period we also completed a review of all teams across the Group and identified 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 in the coming months we will relocate a number of our offices, including London, New York and Sydney media offices, to smaller, more economic premises. We also continue our open discussions with the Market landlords to secure further rent deferrals and abatements. Together these actions have secured immediate and on-going 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 £2.2m 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 £8.5m loss (2019: £0.2m loss) was driven by the reduced revenue, partially offset by the cost reductions described above.

Operating loss

The reported operating loss was £14.9m (2019: £4.7m). This includes the IFRS 16 impact of lower property lease costs of £2.2m (2019: £2.8m), which was previously reported in operating expenditure and higher depreciation of £2.0m (2019: £1.6m) on the right-of-use assets recognised.

The net exceptional costs of £1.1m (2019: £0.2m) relate to staff redundancy costs.

The depreciation charge of £5.0m (2019: £4.3m) increased by £0.7m, driven principally by the additional depreciation related to markets that opened over the comparative period (£0.7m).

The amortisation of intangible assets of £2.1m (2019: £2.5m) includes £1.1m (2019: £1.4m) relating to acquired intangible assets and £1.0m (2019: £1.1m) relating to other intangible assets, primarily acquired and internally developed software.

Net finance costs

Net finance costs of £1.8m (2019: £3.7m) primarily relates to interest on debt of £1.3m, amortisation of deferred financing costs (£0.1m) and interest cost in respect of lease liabilities (£1.8m), offset by the foreign exchange gain on financial liabilities of £1.4m. Net interest costs are substantially lower due to the settlement of the Oakley Capital Investments Limited loan note in June 2020.

Foreign exchange

The revenue and costs of Group entities reporting in dollars have been consolidated in these financial statements at an average exchange rate of $1.30 (2019: $1.25). The operations reporting in euros have been consolidated at a rate of €1.11 (2019: €1.13).

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 a second interim period from 1 July 2020 to 31 December 2020 as a part of the 18-month financial year ending 30 June 2021.

Cash flow

	Unaudited	Unaudited	Audited
	31 December 2020 £'000	30 June 2020 £'000	31 December 2019 £'000
Cash and cash equivalents	10,394	22,524	13,420
Borrowings	(22,976)	(21,987)	(43,311)
Adjusted net cash/(debt)	(12,582)	537	(29,891)
IFRS 16 Lease liabilities	(31,443)	(33,195)	(32,422)
Net cash/ (debt)	(44,025)	(32,658)	(62,313)

Cash and cash equivalents decreased by £12.1m since 30 June 2020 to £10.4m. This was driven by the EBITDA loss of £7.9m (2019: £2.0m) and a net working capital outflow of £2.7m (2019: £2.3m), a reflection of the difficult and disrupted trading period.

In order to preserve cash, 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 £0.6m (2019: £1.0m) in capitalised software development costs to support the Group's increasingly important digital platforms.

Borrowings now comprises principally the Incus facility which was £22.1m 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.

Cash utilisation continues to be closely monitored. On 30 March 2021, the Group announced a proposed equity fundraise by way of Firm Placing, a Retail Offer, a Conditional Placing and a Placing and Open Offer to raise gross proceeds (before expenses) of approximately £15.0 million, approximately £3.7 million of which is conditional on shareholder approval at a general meeting and expected to complete in April 2021. Following the anticipated completion of this fundraise, the Group is confident that it has sufficient funding to cover its operational needs for the foreseeable future. Further information is included in note 1 to these condensed financial statements.

Outlook

We entered 2021 with all Time Out Markets temporarily closed until at least the spring and advertising revenue stunted by the ongoing shutdown of the leisure and hospitality industry and curtailed travel. Whilst it is clear that the current circumstances continue to have a significant negative impact on the Group's trading, we do not have clarity over the duration and severity of the necessary response to COVID-19 and as such it is not possible to provide a clear outlook for the rest of the current financial year and beyond.

The Board is encouraged by the impact of vaccine programmes around the world, allowing the gradual re-opening of the world's economies and leading to the launch of a new market in Dubai, the re-opening of Miami and further re-openings to follow in the near future. With the continuing support of our investors shown through the proposed equity fundraise announced today, the Board believes that Time Out is set to emerge post pandemic with a greater digital focus, higher operating margins due to an optimised cost base, more Markets open and a large global audience that has remained engaged with Time Out and its content.

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, and the Board is confident that once restrictions are eased the progress seen in existing Markets prior to the pandemic, will continue.

Julio Bruno

Chief Executive

Condensed Consolidated Income statement

Six months ended 31 December 2020

		Unaudited		Unaudited		Audited
	Note	Six months ended 31 December 2020		Six months ended 31 December 2019		Year ended 31 December 2019
		£'000		£'000		£'000
Gross revenue	1, 4	13,282		50,243		77,140
Cost of sales	4	(3,509)		(21,333)		(30,713)
Gross profit		9,773		28,910		46,427
Administrative expenses		(24,694)		(33,634)		(59,786)
Operating loss		(14,921)		(4,724)		(13,359)
Finance income		1,387		662		690
Finance costs		(3,165)		(4,411)		(7,809)
Loss before income tax	4	(16,699)		(8,473)		(20,478)
Income tax (charge)/credit		157		(176)		(430)
Loss for the period		(16,542)		(8,649)		(20,908)
Loss for the period attributable to:
Owners of the parent		(14,407)		(6,937)		(18,354)
Non-controlling interests		(2,135)		(1,712)		(2,554)
		(16,542)		(8,649)		(20,908)
Loss per share:
Basic and diluted loss per share (p)	6	5.1		5.0		13.3

Condensed Consolidated Statement of Other Comprehensive Income

Six months ended 31 December 2020

	Unaudited		Unaudited		Audited
	Six months ended 31 December 2020		Six months ended 31 December 2019		Year ended 31 December 2019
	£'000		£'000		£'000
Loss for the period	(16,542)		(8,649)		(20,908)
Other comprehensive income:
Items that may be subsequently reclassified to the profit or loss:
Currency translation differences	(9,082)		(3,661)		(3,424)
Other comprehensive expense for the period, net of tax	(9,082)		(3,661)		(3,424)
Total comprehensive expense for the period	(25,624)		(12,310)		(24,332)
Total comprehensive expense for the period attributable to:
Owners of the parent	(22,998)		(10,616)		(21,648)
Non-controlling interests	(2,626)		(1,694)		(2,684)
	(25,624)		(12,310)		(24,332)

Condensed Consolidated Statement of Financial Position

At 31 December 2020

		Unaudited		Audited
	Note	31 December 2020		31 December 2019
		£'000		£'000
Assets
Non-current assets
Intangible assets - Goodwill		50,040		50,068
Intangible assets - Other		11,694		14,528
Property, plant and equipment		43,459		48,763
Right-of-use assets		23,836		28,309
Other receivables		10,259		5,815
		139,288		147,483
Current assets
Inventories		1,050		1,359
Trade and other receivables		4,202		15,801
Cash and cash equivalents	7	10,394		13,420
		15,646		30,580
Total assets		154,934		178,063
Liabilities
Current liabilities
Trade and other payables		(13,459)		(21,413)
Borrowings		(4,349)		(4,695)
Lease liabilities		(1,076)		(2,636)
		(18,884)		(28,744)
Non-current liabilities
Trade and other payables		(194)		(1,271)
Borrowings		(18,627)		(38,616)
Lease liabilities		(30,367)		(29,786)
Deferred tax liability		(1,358)		(1,749)
		(50,546)		(71,422)
Total liabilities		(69,430)		(100,166)
Net assets		85,504		77,897
Equity
Called up share capital	9	283		148
Share premium		169,089		123,290
Translation reserve		1,124		5,647
Capital redemption reserve		1,105		1,105
Retained earnings / (losses)		(76,526)		(47,420)
Total parent shareholders' equity		95,075		82,770
Non-controlling interest		(9,571)		(4,873)
Total equity		85,504		77,897

Condensed Consolidated Statement of Changes in Equity

At 31 December 2020 (Unaudited)

	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 period	-	-	-	-	(15,786)	(15,786)	(2,081)	(17,867)
Other comprehensive income	-	-	4,068	-	-	4,068	9	4,077
Total comprehensive income	-	-	4,068	-	(15,786)	(11,718)	(2,072)	(13,790)
Share based payments	-	-	-	-	522	522	-	522
Issue of new shares	135	45,799	-	-	-	45,934	-	45,934
Balance at 30 June 2020	283	169,089	9,715	1,105	(62,684)	117,508	(6,945)	110,563
Loss for the period	-	-	-	-	(14,407)	(14,407)	(2,135)	(16,542)
Other comprehensive income	-	-	(8,591)	-	-	(8,591)	(491)	(9,082)
Total comprehensive income	-	-	(8,591)	-	(14,407)	(22,998)	(2,626)	(25,624)
Share based payments	-	-	-	-	565	565	-	565
Issue of new shares	-	-	-	-	-	-	-	-
Balance at 31 December 2020	283	169,089	1,124	1,105	(76,526)	95,075	(9,571)	85,504

Condensed 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 period	-	-	-	-	(11,417)	(11,417)	(842)	(12,259)
Other comprehensive income	-	-	385	-	-	385	(148)	237
Total comprehensive income	-	-	385	-	(11,417)	(11,032)	(990)	(12,022)
Share-based payments	-	-	-	-	532	532	-	532
Adjustment arising on change in non-controlling interest	-	-	-	-	55	55	(55)	-
Issue of shares	-	-	-	-	-	-	-	-
Balance at 30 June 2019	135	106,937	9,326	1,105	(40,999)	76,504	(3,179)	73,325
Changes in equity
Loss for the period	-	-	-	-	(6,937)	(6,937)	(1,712)	(8,649)
Other comprehensive income	-	-	(3,679)	-	-	(3,679)	18	(3,661)
Total comprehensive income	-	-	(3,679)	-	(6,937)	(10,616)	(1,694)	(12,310)
Share based payments	-	-	-	-	516	516	-	516
Issue of new 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

Condensed Consolidated Statement of Cash Flows

Six months ended 31 December 2020

		Unaudited		Unaudited		Audited
	Note	Six months ended 31 December 2020		Six months ended 31 December 2019		Year ended 31 December 2019
		£'000		£'000		£'000
Cash flows from operating activities
Cash used in operations	8	(9,898)		368		(1,934)
Interest paid		-		(938)		(980)
Tax paid		-		(115)		(665)
Net cash used in operating activities		(9,898)		(685)		(3,579)
Cash flows from investing activities
Purchase of property, plant and equipment		599		(5,876)		(26,195)
Purchase of intangible assets		(627)		(1,010)		(1,895)
Interest received		15		25		53
Net cash used in investing activities		(13)		(6,861)		(28,037)
Cash flows from financing activities
Costs relating to share issues		-		(757)		(757)
Proceeds from share issue		-		17,110		17,110
Advance of borrowings		-		2,827		15,478
Repayment of borrowings		-		(5,897)		(5,897)
Repayment of lease liabilities		(2,146)		(1,989)		(3,898)
Acquisition of minority interests		-		-		(1,248)
Net cash from financing activities		(2,146)		11,294		20,788
Increase/(decrease) in cash and cash equivalents		(12,057)		3,748		(10,828)
Cash and cash equivalents at beginning of period		22,524		9,726		24,347
Effect of foreign exchange rate change		(73)		(54)		(99)
Cash and cash equivalents at end of period		10,394		13,420		13,420

Notes to the condensed consolidated statements

1.  Basis of preparation

The unaudited condensed interim consolidated financial information for the six months ended 31 December 2020 has been prepared following the recognition and measurement principles of IFRS as adopted by the United Kingdom. The condensed interim consolidated financial statements do not include all the information and disclosures required in the annual financial statements and should be read in conjunction with the audited statutory financial statements for the year ended 31 December 2019.

The condensed interim financial information contained in this interim statement does not constitute financial statements as defined by section 434(3) of the Companies Act 2006. The condensed interim financial information is unaudited and has not been reviewed by the Group's auditor. The financial information for the year ended 31 December 2019 is derived from the audited financial statements for the year ended 31 December 2019, which were unqualified and did not contain any statement under section 498(2) or 498(3) of the Companies Act 2006. Statutory accounts for Time Out Group plc for the year ended 31 December 2019 have been delivered to the Registrar of Companies. The comparative financial information for the period ended 31 December 2019 does not constitute statutory financial statements for that period.

These statements were approved by the Board on 29 March 2021.

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. These results therefor cover a second interim period from 1 July 2020 to 31 December 2020 as a part of the 18-month financial year ending 30 June 2021.

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 include:

· 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

These condensed interim 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 no payments of interest or capital will be required on that facility before November 2021 and that the quarterly financial covenants that apply to that loan will not be measured before the 31 December 2021.

The global recovery from the impact of the pandemic is just beginning. However, the Directors are confident that as a result of the measures taken to optimise the cost base and following the anticipated completion of the equity fundraise in April 2021, the Group will have sufficient funding to cover its operational 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 condensed set of 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:

	Six months ended 31 December 2020			Six months ended 31 December 2019			Year ended 31 December 2019
	Closing rate	Average rate		Closing rate	Average rate		Closing rate	Average rate
US dollar	1.36	1.30		1.32	1.25		1.32	1.27
Euro	1.11	1.11		1.18	1.13		1.18	1.14
Australian dollar	1.77	1.81		1.88	1.83		1.88	1.83
Singaporean dollar	1.80	1.77		1.77	1.72		1.77	1.74
Hong Kong dollar	10.53	10.06		10.27	9.81		10.27	9.99
Canadian dollar	1.74	1.73		1.72	1.65		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.

Six months ended 31 December 2020

(Unaudited)

	Time Out Market	Time Out Media	Corporate costs	Total
	£'000	£'000	£'000	£'000
Gross revenue	4,325	8,957	-	13,282
Concessionaire share	(1,318)	-	-	(1,318)
Net revenue	3,007	8,957	-	11,964
Gross profit	2,530	7,243	-	9,773
Administrative expenses	(12,089)	(11,832)	(773)	(24,694)
Operating loss	(9,559)	(4,589)	(773)	(14,921)
Operating loss	(9,559)	(4,589)	(773)	(14,921)
Amortisation of intangible assets	404	1,680	-	2,084
Depreciation of property, plant and equipment	2,804	129	-	2,933
Depreciation of right-of-use assets	1,468	576	-	2,044
EBITDA loss	(4,883)	(2,204)	(773)	(7,860)
Property lease costs	(1,363)	(872)	-	(2,235)
Share based payments	-	565	-	565
Exceptional items	36	828	214	1,078
Loss on disposal of property, plant and equipment	-	-	-	-
Adjusted EBITDA loss	(6,210)	(1,683)	(559)	(8,452)
Finance income				1,387
Finance costs				(3,165)
Loss before income tax				(16,699)
Income tax credit				157
Loss for the period				(16,542)

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

IFRS 16 'Leases' materially benefitted EBITDA in the period as property lease costs of £2.2m (2019: £2.9m) are no longer included within administrative expenses and are replaced by additional depreciation costs on right-of-use assets of £2.0m (2019: £1.6m) and interest costs £1.8m (2019: £1.9). Adjusted EBITDA is presented including the property lease costs to aid understanding of underlying performance.

Six months ended 31 December 2019

(Unaudited)

	Time Out Market	Time Out Media	Corporate costs	Total
	£'000	£'000	£'000	£'000
Gross revenue	28,284	21,959	-	50,243
Concessionaire share	(11,648)	-	-	(11,648)
Net revenue	16,636	21,959	-	38,595
Gross profit	13,897	15,013	-	28,910
Administrative expenses	(15,800)	(16,805)	(1,029)	(33,634)
Operating loss	(1,903)	(1,792)	(1,029)	(4,724)
Operating loss	(1,903)	(1,792)	(1,029)	(4,724)
Amortisation of intangible assets	463	2,012	-	2,475
Depreciation of property, plant and equipment	2,548	117	-	2,665
Depreciation of right-of-use assets	1,021	587	-	1,608
EBITDA	2,129	924	(1,029)	2,024
Property lease costs	(1,934)	(916)	-	(2,850)
Share based payments	-	516	-	516
Exceptional items	-	151	-	151
Adjusted EBITDA loss	195	675	(1,029)	(159)
Finance income				662
Finance costs				(4,411)
Loss before income tax				(8,473)
Income tax charge				(176)
Loss for the period				(8,649)

Year ended 31 December 2019

(Audited)

	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:

	Unaudited		Unaudited		Audited
	Six months ended 31 December 2020		Six months ended31 December 2019		Year ended 31 December 2019
	£'000		£'000		£'000
Europe	7,005		20,786		36,699
Americas	4,890		27,053		36,375
Rest of World	1,387		2,404		4,066
	13,282		50,243		77,140

5.  Exceptional items

Exceptional items are analysed as follows:

	Unaudited		Unaudited		Audited
	Six months ended 31 December 2020		Six months ended 31 December 2019		Year ended 31 December 2019
	£'000		£'000		£'000
Redundancy costs	1,078		151		306
Fair value gain on option over non-controlling interest	-		-		(28)
	1,078		151		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.

	Unaudited		Unaudited		Audited
	Six months ended 31 December 2020		Six months ended 31 December 2019		Year ended 31 December 2019
	Number		Number		Number
Weighted average number of ordinary shares for the purpose of basic and diluted loss per share	283,201,804		138,104,452		137,989,108
	£'000		£'000		£'000
Losses from continuing operations for the purpose of loss per share	14,407		6,937		18,354
	Pence		Pence		Pence
Basic and diluted loss per share	5.1		5.0		13.3

7.  Cash and debt

	Unaudited		Audited
	31 December 2020		31 December 2019
Cash and cash equivalents	10,394		13,420
Borrowings	(22,976)		(43,311)
Adjusted net debt	(12,582)		(29,891)
IFRS 16 Lease liabilities	(31,443)		(32,422)
Net debt	(44,025)		(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, with the next covenant testing date extended to 31 December 2021. The loan is repayable in full in November 2022.

8.  Notes to the cash flow statement

Reconciliation of loss before income tax to cash used in operations

	Unaudited		Unaudited		Audited
	Six months ended 31 December 2020		Six months ended 31 December 2019		Year ended 31 December 2019
	£'000		£'000		£'000
Loss before income tax	(16,699)		(8,473)		(20,478)
Add back:
Net finance costs	1,778		3,749		7,119
Share based payments	565		516		1,048
Depreciation charges	4,977		4,272		6,625
Amortisation charges	2,084		2,475		4,666
Fair value (gain)/loss on option over non-controlling interest	-		28		-
Loss on disposals of fixed assets	-		-		-
Non-cash movements	(43)		29		48
Increase in inventories	311		(436)		(1,030)
Decrease/(increase) in trade and other receivables	1,340		(1,025)		(2,456)
(Decrease)/increase in trade and other payables	(4,211)		(767)		2,524
Cash used in operations	(9,898)		368		(1,934)

9.  Share capital

			Unaudited		Audited
	Nominal value per share		31 December 2020		31 December 2019
			Number		Number
Ordinary shares			283,201,804		148,486,076
Aggregate amounts			283,201,804		148,486,076
			£'000		£'000
Ordinary shares	£0.001		283		148
Aggregate amounts			283		148

In June 2020, the Group completed a cash placing and open offer resulting in the issue of 134.7m new shares.

10.  Post balance sheet event

On 3 February 2021,  the Group announced that it had entered into a management agreement with Aldar Properties for a new Time Out Market in Abu Dhabi expected to open in 2023.

On 23 March 2021, the Group announced that it no longer intends to proceed with the development of Time Out Market Waterloo due to the impact of the COVID-19 pandemic.

On 30 March 2021, the Group announced a proposed equity fundraise to raise gross proceeds of approximately £15.0m which is expected to complete in April 2021.

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. There are no changes to these risks and uncertainties.

 

END

 

 

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