Half-year Report

RNS Number : 5035A

Time Out Group plc

30 September 2020

 

30 September 2020

Time Out Group plc

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

Unaudited results for the six months ended 30 June 2020

Time Out Group plc, the global media and leisure business, today announces its unaudited results for the six months ended 30 June 2020. The results reflect a period of significant disruption as a consequence of the enforced closure of leisure venues and travel restrictions in response to the COVID-19 pandemic.

Financial Highlights

· Prior to the escalation of the COVID-19 pandemic the Group was performing in line with our expectations; digital advertising and the recently expanded Time Out Market estate continued the trading momentum established in 2019

· Gross revenue ⁽¹⁾ decline of 24% to £20.3m (2019: £26.9m) and net revenue decline of 36% to £15.8m (2019: £24.7m) due to the temporary closure of the Time Out Markets and the sharp decline in advertising revenues generated from the travel and leisure sectors

· Gross margin ⁽²⁾ increase of 7 percentage points to 78% (2019: 71%), despite Group gross profit decline of 19% to £12.4m, reflecting Time Out Media's higher digital revenue mix

· Group adjusted EBITDA loss ⁽³⁾ of £8.8m (2019: £4.5m), includes the partial benefit of the cost reduction initiatives implemented in the period

· Group operating loss increase to £13.6m (2019: £8.6m)

· Funding: Successful equity placing raised gross proceeds of £47.1m to strengthen the Company's balance sheet in the wake of the impact of COVID-19 and redeem £24m of loan notes

· Cash of £22.5m at 30 June 2020 and debt of £22.0m, resulted in adjusted net cash⁽⁴⁾ of £0.5m. Reported net debt was £32.7m including £33.2m of IFRS 16 lease liabilities

· Outlook: The duration and scale of the continued impact of COVID-19 and the measures required to curb it are unknown. However, the Group has taken funding, cost and operating initiatives to ensure it emerges stronger from this period of disruption

Operational Highlights

· The Group's global brand audience increased by 29% to a monthly average of 73.3m (2019: 57.0m), reflecting the authority and continued relevance of Time Out's content, which seeks to champion virtual culture, food and drink, and community during periods of lockdown 

· Time Out Market locations were closed by 16 March 2020 in response to COVID-19 outbreaks and the subsequent local government guidelines and remained closed for the remainder of the period

· Accelerated development and launch of the Time Out Market app has enabled contactless transactions with order & pay at table, home delivery and collection

· Lisbon, New York, Chicago, Boston and Montreal have now safely re-opened post period end, with Miami expected to re-open in Q4 2020

· Time Out Media faced significant delays to advertising spend

· Creative Solutions initiated recovery as global consumer brands launched digital campaigns

· First post-lockdown magazine published in August, with more following as advertising allows return to print in the UK and Spain

(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, share of associate's loss 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

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

"2020 will be remembered as the year the world stood still and we stopped going out. I am proud that a company so focused on being out and about in the world's greatest cities was able to adapt and innovate so quickly, remaining relevant with both consumers and advertisers. Our early pivot to Time-In allowed us to create new content that engaged our global audience from home and develop new business opportunities from e-commerce to digital advertising."

"Our Time Out Markets closed in mid-March but our teams continued to innovate resulting in the launch of our Time Out Market app, which facilitates contactless transactions, order & pay at table, takeaway and delivery. We redesigned our Markets to create enjoyable, COVID-safe environments, where we still offer the best food and cultural experiences in the city that both our Chefs and consumers are keen to return to."

"The combination of a successful fundraising, a cost-reduction programme and further strategic initiatives will support Time Out as it emerges from this  period of COVID-led disruption with a stronger global brand, a larger audience, and a higher operating margin. Landlords and developers around the world are approaching us, more than ever, to explore the roll-out of more Time Out Markets, a testament to the enduring value of our brand."

This announcement is released by Time Out Group plc and contains inside information for the purposes of Article 7 of the Market Abuse Regulation (EU) 596/2014 (MAR), and is disclosed in accordance with the Company's obligations under Article 17 of MAR. For the purposes of MAR and Article 2 of Commission Implementing Regulation (EU) 2016/1055, this announcement is being made on behalf of the Company by Julio Bruno, Chief Executive.

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]
Clayton Bush / Andrew Godber / Edward Thomas
FTI Consulting LLP	Tel: [phone]
Edward Bridges / Stephanie Ellis / Fiona Walker

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, 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 328 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.

FORWARD-LOOKING STATEMENTS  

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
	H1 2020	H1 2019	Change
	£m	£m	%
Market	6,694	6,593	2%
Media	9,127	18,095	(50)%
Group net revenue(1)	15,821	24,688	(36)%
Gross margin % (2)	78%	71%	7%
Market (3)	(4,052)	(811)	(400)%
Media	(4,210)	(2,875)	(46)%
Divisional adjusted EBITDA (4)	(8,262)	(3,686)	(124)%
Corporate costs	(507)	(857)	41%
Group adjusted EBITDA	(8,769)	(4,543)	(93)%

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

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

(3)  Time Out Market Miami and New York opened in May 2019 and Boston opening in June 2019.  Therefore net revenue is not directly comparable to H1 2019

(4)  Adjusted EBITDA is stated before interest, taxation, depreciation, amortisation, share based payments, share of associate's loss and exceptional items. It also includes £3.5m of property lease costs which, under IFRS 16, is replaced by depreciation and interest charges (see note 4)

The period started in line with our expectations, with the Group building on the transformative prior year, which most notably produced positive Group adjusted EBITDA in H2 2019.  The five newly opened Time Out Markets ('Market') in North America were enjoying growing footfall and the performance of Time Out Media ('Media') continued to improve. However, the period ended with all Market operations closed and Media operations substantially curtailed as a result of the world-wide lockdowns in response to COVID-19 pandemic.

The Group's net revenue decline of 36% to £15.8m (2019: £24.7m) was primarily driven by Media, as travel and leisure advertising campaigns were postponed, resulting in the temporary suspension of all print editions.  Market revenue year-on-year is not comparable as new markets first opened in May 2019.  The prior period principally comprises the operation of Time Out Market Lisbon. 

As expected, adjusted EBITDA decreased sharply due to the fall in revenue. In response to the impact on trading the Group took action to manage the impact on cash. All 2020 salary increases were reversed, all 2020 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%. Within the Market division immediate cash savings were identified through a focused review of contracts with all non-essential spending suspended and all material lease agreements reviewed with the landlords to secure rent deferrals.  The Group successfully completed an equity placing raising gross proceeds of £47.1m to strengthen the balance sheet and all capital expenditure related to the Time Out Market roll-out has been delayed until 2021.

Operating KPIs

	H1 2020	H1 2019	Change	%
Global brand audience - monthly average(1)	73.3m	57.0m	16.3m	29%
Market TTV(2)	£16.4m	£21.8m	£(5.4)m	(25)%

(1)  Global brand audience is the estimated monthly average in the period including all owned & operated cities and franchises. It has been redefined to include print circulation, 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.  The pandemic presented a significant challenge to our ability to reach and strengthen engagement with our audience. In response to residential containment we pivoted the brand to Time In, launched an e-magazine and created a community to share unique daily information of virtual resources available in cities. This helped to grow our global audience by 29% to 73.3m year-on-year despite the suspension of print publications and market closures.

Our social media followers increased by 59% to a monthly average of 42.9m (2019: 27.0m). Return visitors to our sites increased and share count increased five-fold demonstrating an effective global cross posting strategy.  This was in part driven by collaborations with social platforms, for example Inside Voices on Instagram invited New York and London locals to share talent videos, while the Love Local campaign particularly resonated with our audience who were spending more time in local neighbourhoods.

Our website traffic increased by 10% to a monthly average of 25.2m (2019: 22.9m), which in turn will drive programmatic and display advertising as marketing budgets return. 

Circulation decreased by 57% as all print editions ceased in late March.  The first post-lockdown magazine was published in August, encouragingly attracting repeat advertising clients. The decline in Time Out Market visitors and TTV is a direct result of market closures.

Time Out Market trading overview

	Unaudited	Unaudited
	H1 2020	H1 2019	Change
	£'000	£'000	%
Owned Operations	6,188	6,266	(1)%
Management Fees	506	327	55%
Net Revenue	6,694	6,593	2%
Gross profit	5,525	5,683	(3)%
Gross Margin %	83%	86%	(3)%
Operating expenses (trading)	(8,722)	(3,365)	(159)%
Trading EBITDA(1)	(3,197)	2,318	(238)%
Pre-opening costs	(8)	(1,470)	99%
Market central costs	(847)	(1,659)	49%
Adjusted EBITDA	(4,052)	(811)	(400)%

(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 started with performance in line with our expectations. Lisbon continued to grow footfall and average spend despite its relative maturity and the five newly opened Markets were gaining further traction with locals and receiving growing plaudits. By 16 March however, in response to the global efforts to contain the spread of COVID-19, all markets were temporarily closed as we 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 revenue lost. We engaged in productive discussions with our landlords and are appreciative of their on-going support through partial deferrals of rent.  While this still results in an accounting rent charge within Market adjusted EBITDA, the agreements afford some cash preservation as the markets re-open and revert to a normal level of operation.

COVID-19 has proven to be a catalyst for the acceleration of initiatives already in the pipeline, most notably the development and launch of the Market app that facilities contactless transactions, order and payment at tables, collection and home delivery via third party fulfilment.

Chefs and consumers alike have been keen to return to the Time Out Markets since reopening, demonstrating that the scale and layout of well-ventilated venues is well suited to allow social distancing in an enjoyable environment. The markets have been adapted to include distanced seating plans, table partitioning, cashier shields and sanitisation teams. As a result of these measures and government restrictions being lifted, Lisbon and Montreal Markets reopened in July followed by New York, Boston and Chicago in August. We currently expect the Miami market to reopen in Q4.

There are five previously announced and contracted sites, where progress is being made towards opening. Although they may be subject to further COVID-19 related delays, the current scheduled timings are:

· London Waterloo (owned & operated) - currently expected to open in H1 2022

· Porto (owned & operated) - currently expected to open in Q4 2021

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

· Dubai (management agreement) - construction has now re-started following a COVID related pause and is currently expected to open in Q1 2022

· Prague (management agreement) - expected opening date in 2023

Time Out's unique curated markets show-casing the best of each city, hold particular appeal for retail real estate owners, as they seek solutions to generating high and consistent footfall.  As a result, we are actively reviewing a growing pipeline of proposals from landlords around the world. Following the success of Montreal, management agreements are an increased strategic focus, especially given that these projects require no capital outlay and provide long-term visibility over guaranteed revenue and EBITDA.

Time Out Media trading overview

	Unaudited	Unaudited
	H1 2020	H1 2019	Change
	£'000	£'000	%
Digital advertising	4,250	7,253	(41)%
Print	2,429	6,958	(65)%
Live events	61	589	(90)%
Local Marketing Solutions	798	954	(16)%
Advertising sales	7,538	15,754	(52)%
E-commerce	1,245	1,833	(32)%
Franchising	344	508	(32)%
Net revenue	9,127	18,095	(50)%
Gross Profit	6,829	11,834	(42)%
Gross Margin %	75%	65%	10%
Operating expenditure	(11,039)	(14,709)	25%
Adjusted EBITDA	(4,210)	(2,875)	(46)%

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

In response to COVID-19 we implemented the cost saving measures outlined above and suspended all print publications.  The brand and its content pivoted to "Time In" allowing the Company to remain relevant to and engaged with our home-bound audience. Becoming a pure-play digital publisher improved the revenue mix and drove a ten-percentage point increase in gross margin. 

Programmatic revenue, which remains a key element of our digital performance, was hampered in the period 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. 

The appeal of our integrated Creative Solutions offering helped deliver key campaigns during this challenging period.  This included PayPal where we created a digital microsite to help users explore elements of lock-down that could be retained, with users pledging to 'Keep the change' via social media.  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.

The first post lock down magazine was published on 11 August, paying homage to our founder Tony Elliott, with more following as advertising aided the return of print editions in the UK and Spain.  Encouragingly we are beginning to attract larger campaigns again with blue-chip consumer brands, albeit the recovery of global advertising spend post-lockdown has been slow and inconsistent. 

Financial Review

Group gross revenue for the period decreased by 24% to £20.3m (2019: £26.9m).  While the period started in line with our expectations, overall revenue has been impacted due to COVID-19.

Group gross profit decreased by only 19% in the period, benefitting from the improvement in gross margin (as a percentage of net revenue) from 71% to 78%.  This seven percentage-point gain was primarily driven by Media revenue mix, which was skewed to higher margin digital operations, with gross margin of 75% (2019: 65%).  Time Out Market gross margin declined from 86% to 83%.

Operating expenses

Adjusted operating expenses decreased by 5% to £21.1m (2019: 22.1m).  Market adjusted operating expenses increased by £3.1m with the increase in trading operating expenditure (£5.4m) being offset by a decrease in pre-opening costs and central costs (£2.3m).  This is driven by having five markets open in Q1 2020 compared to only Time Out Market Lisbon in the prior period.  This increase was partially offset by Media, which reduced its operating costs by 25% to £11.0m.  Corporate costs also decreased 41% to 0.5m (2019: £0.9m).  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.  In addition, all 2020 salary increases were reversed, all 2020 bonus schemes were cancelled, and the senior management team took a 25% temporary cut.  The Group also took advantage of government support schemes including the UK Coronavirus Job Retention Scheme with up to 30% of staff furloughed across the Group.

Adjusted EBITDA

Adjusted EBITDA is stated before interest, taxation, depreciation, amortisation, share-based payments, share of associate's losses and exceptional items. Although IFRS 16 has been applied in the period, the £3.6m 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 93% decrease in Group adjusted EBITDA to a £8.8m loss (2018: £4.5 loss) was driven by the reduced revenue and costs described above.

Corporate costs also decreased by £0.3m due to staff cost reductions.

Operating loss

The reported operating loss was £13.6m (2019: £8.6m), a 60% increase year-on-year, and includes an additional net benefit of £1.7m (2019: £0.2m net charge) - comprising the saving of £3.5m (2019: £1.1m) of property lease costs (previously reported in operating expenditure), offset by £1.8m (2019: £1.3m) of incremental depreciation on the right-of-use asset created in relation to these property leases. 

The net exceptional costs of £0.2m primarily relate to professional fees incurred in the settlement of the Oakley Capital Investments Limited ('OCI') loan notes in June 2020 and the write-off of the related deferred financing costs.

The depreciation charge of £5.4m (2019: 2.3m) increased by £3.1m, driven principally by the additional depreciation of new market openings (£2.6m) and the depreciation charge of £1.8m (2019: £1.3m) recognised on right-of-use assets.

The amortisation of intangible assets of £2.2m (2019: £2.2m) includes £1.1m (2019: £1.1m) relating to acquired intangible assets and £1.1m (2019: £1.1m) relating to other intangible assets, primarily acquired and internally developed software.

Net finance costs

Net finance costs of £4.4m (2019: 3.4m) primarily relates to interest on debt of £2.4m (2019: £2.1m), coupled with the foreign exchange loss on financial liabilities of £0.2m (2019: £0.1m loss), and the amortisation of deferred financing costs of £0.1m (2019: £0.1m).  In addition, the interest costs in respect of lease liabilities was £1.9m (2019: 1.2m).

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 $1.27 (2019: $1.30). The operations reporting in euros have been consolidated at a rate of €1.15 (2019: €1.14). 

Cash flow

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

Cash and cash equivalents increased by £9.1m (2019: £14.6m decrease).  The most significant movements relate to net inflows from the equity raise in June 2020 of £45.9m and the subsequent settlement in full of the OCI loan notes of £24.4m (including interest of £4.4m).  Capital expenditure related primarily to the final construction and fit out costs of the Chicago market and essential re-fit costs in advance of anticipated market re-openings, a material decrease from £20.3m in the prior period. Media invested a further £0.9m in capitalised software development costs relating to the teams working on the Group's digital platforms.

Cash used in operations of £3.8m (2019: £2.3m) was driven by the EBITDA loss and a net working capital inflow of £1.6m (2019: £1.3m).  Working capital benefitted from one-off cash inflows related to government COVID-19 support loans of £1.0m in the period.  

Borrowings now comprises principally the Incus facility which was £20.6m 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, particularly in light of the potential for further restrictions being imposed in response to COVID-19 infection rates. The consequence of repeated periods of containment is the restriction of the Group's ability to operate and may result in the need to secure additional medium-term funding.  Further information is included in note 1 to these condensed financial statements.

Outlook

We are operating in an environment of rapidly changing circumstances, with the full impact of COVID-19 being dependent on the duration and severity of the virus and the response by governments and consumers alike. As such, it is not possible to provide a precise outlook for the rest of the current financial year.

However the Board believes that, following the successful refinancing, a cost reduction programme and further strategic initiatives, the Group will emerge, following the immediate impact of COVID-19, with a stronger brand, a larger audience and a higher operating margin and will be well positioned to continue the successful Time Out Markets roll-out which transformed the Group in 2019. In the meantime, the pipeline of new Time Out Market management agreements continues to grow as landlords worldwide search for much needed proven concepts and footfall generators and that increase the appeal of their real estate.

Julio Bruno

Chief Executive Officer

Condensed Consolidated Income statement

Six months ended 30 June 2020

		Unaudited		Unaudited		Audited
	Note	Six months ended 30 June 2020		Six months ended 30 June 2019		Year ended 31 December 2019
		£'000		£'000		£'000
Gross revenue	1, 4	20,324		26,897		77,140
Cost of sales	4	(7,960)		(9,380)		(30,713)
Gross profit		12,354		17,517		46,427
Administrative expenses		(25,992)		(26,152)		(59,786)
Operating loss		(13,638)		(8,635)		(13,359)
Finance income		14		28		690
Finance costs		(4,406)		(3,398)		(7,809)
Share of associate's loss		-		-		-
Loss before income tax	4	(18,030)		(12,005)		(20,478)
Income tax (charge)/credit		163		(254)		(430)
Loss for the period		(17,867)		(12,259)		(20,908)
Loss for the period attributable to:
Owners of the parent		(15,786)		(11,417)		(18,354)
Non-controlling interests		(2,081)		(842)		(2,554)
		(17,867)		(12,259)		(20,908)
Loss per share:
Basic and diluted loss per share (p)	6	9.8		8.5		13.3

Condensed Consolidated Statement of Other Comprehensive Income

Six months ended 30 June 2020

	Unaudited		Unaudited		Audited
	Six months ended 30 June 2020		Six months ended 30 June 2019		Year ended 31 December 2019
	£'000		£'000		£'000
Loss for the period	(17,867)		(12,259)		(20,908)
Other comprehensive income:
Items that may be subsequently reclassified to the profit or loss:
Currency translation differences	4,077		237		(3,424)
Other comprehensive income for the period, net of tax	4,077		237		(3,424)
Total comprehensive expense for the period	(13,790)		(12,022)		(24,332)
Total comprehensive expense for the period attributable to:
Owners of the parent	(11,718)		(11,032)		(21,648)
Non-controlling interests	(2,072)		(990)		(2,684)
	(13,790)		(12,022)		(24,332)

Condensed Consolidated Statement of Financial Position

At 30 June 2020

		Unaudited		Unaudited		Audited
	Note	Six months ended 30 June 2020		Six months ended 30 June 2019		Year ended 31 December 2019
		£'000		£'000		£'000
Assets
Non-current assets
Intangible assets - Goodwill		52,840		51,774		50,068
Intangible assets - Other		13,799		17,001		14,528
Property, plant and equipment		51,385		44,523		48,763
Right-of-use assets		27,963		22,424		28,309
Other receivables		5,163		5,357		5,815
		151,150		141,079		147,483
Current assets
Inventories		1,463		968		1,359
Trade and other receivables		9,637		16,428		15,801
Cash and cash equivalents	7	22,524		9,726		13,420
		33,624		27,122		30,580
Total assets		184,774		168,201		178,063
Liabilities
Current liabilities
Trade and other payables		(17,247)		(20,172)		(21,413)
Borrowings		(463)		(2,656)		(4,695)
Lease liabilities		(3,012)		(2,143)		(2,636)
		(20,722)		(24,971)		(28,744)
Non-current liabilities
Trade and other payables		(222)		(2,369)		(1,271)
Borrowings		(21,524)		(41,508)		(38,616)
Lease liabilities		(30,183)		(24,083)		(29,786)
Deferred tax liability		(1,560)		(1,945)		(1,749)
		(53,489)		(69,905)		(71,422)
Total liabilities		(74,211)		(94,876)		(100,166)
Net assets		110,563		73,325		77,897
Equity
Called up share capital	9	283		135		148
Share premium		169,089		106,937		123,290
Translation reserve		9,715		9,326		5,647
Capital redemption reserve		1,105		1,105		1,105
Retained earnings / (losses)		(62,684)		(40,999)		(47,420)
Total parent shareholders' equity		117,508		76,504		82,770
Non-controlling interest		(6,945)		(3,179)		(4,873)
Total equity		110,563		73,325		77,897

Condensed Consolidated Statement of Changes in Equity

At 30 June 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

30 June 2019 (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
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)
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)	-
Balance at 30 June 2019	135	106,937	9,326	1,105	(40,999)	76,504	(3,179)	73,325

Condensed Consolidated Statement of Changes in Equity

31 December 2019 (Audited)

	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

Condensed Consolidated Statement of Cash Flows

Six months ended 30 June 2020

		Unaudited		Unaudited		Audited
	Note	Six months ended 30 June 2020		Six months ended 30 June 2019		Year ended 31 December 2019
		£'000		£'000		£'000
Cash flows from operating activities
Cash used in operations	8	(3,823)		(2,302)		(1,934)
Interest paid		(5,595)		(42)		(980)
Tax paid		-		(550)		(665)
Net cash used in operating activities		(9,418)		(2,894)		(3,579)
Cash flows from investing activities
Purchase of property, plant and equipment		(3,716)		(20,319)		(26,195)
Purchase of intangible assets		(870)		(885)		(1,895)
Interest received		14		28		53
Net cash used in investing activities		(4,572)		(21,176)		(28,037)
Cash flows from financing activities
Proceeds from share issue		47,148		-		17,110
Costs relating to share issues		(1,216)		-		(757)
Advance of borrowings		2,770		12,651		15,478
Repayment of borrowings		(22,500)		-		(5,897)
Repayment of lease liabilities		(3,218)		(1,909)		(3,898)
Acquisition of minority interests		-		(1,248)		(1,248)
Net cash from financing activities		22,984		9,494		20,788
Increase/(decrease) in cash and cash equivalents		8,994		(14,576)		(10,828)
Cash and cash equivalents at beginning of period		13,420		24,347		24,347
Effect of foreign exchange rate change		110		(45)		(99)
Cash and cash equivalents at end of period		22,524		9,726		13,420

Notes to the condensed consolidated statements

1.  Basis of preparation

The unaudited condensed interim consolidated financial information for the six months ended 30 June 2020 has been prepared following the recognition and measurement principles of IFRS as adopted by the European Union. 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 30 June 2019 does not constitute statutory financial statements for that period.

These statements were approved by the Board on 29 September 2020.

Reserves adjustment

An amount of £0.2m was posted through the Statement of Changes in Equity to adjust for a change in estimate arising on the adoption of IFRS 16 in the prior year.

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, share of associates loss 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 are the actions that may be taken by governments to respond to the pandemic (which could restrict our ability to operate our Markets business), the response of our customers to the pandemic itself and 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 our £19 .6m term loan before November 2021 and that the quarterly financial covenants that apply to that loan will not be measured  before the 31 December 2021 measurement date.

Should the impact of the pandemic be more severe or prolonged than we currently forecast, the Group will need to seek additional funding.  Although the Board considers that there are strong grounds for believing that such funding could be secured, there can be no guarantee that would be the case.  This gives rise to a material uncertainty that may cast doubt on the Group's ability to continue as a going concern.

Notwithstanding the material uncertainty described above, the Directors 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 30 June 2020			Six months ended 30 June 2019			Year ended 31 December 2019
	Closing rate	Average rate		Closing rate	Average rate		Closing rate	Average rate
US dollar	1.23	1.27		1.27	1.30		1.32	1.27
Euro	1.10	1.15		1.12	1.14		1.18	1.14
Australian dollar	1.79	1.93		1.81	1.83		1.88	1.83
Singaporean dollar	1.72	1.77		1.72	1.76		1.77	1.74
Hong Kong dollar	9.55	9.89		9.90	10.17		10.27	9.99
Canadian dollar	1.68	1.73		1.66	1.74		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 30 June 2020

(Unaudited)

	Time Out Market	Time Out Media	Corporate costs	Total
	£'000	£'000		£'000
Gross revenue	11,197	9,127	-	20,324
Concessionaire share	(4,503)	-	-	(4,503)
Net revenue	6,694	9,127	-	15,821
Gross profit	5,525	6,829	-	12,354
Administrative expenses	(11,545)	(13,789)	(658)	(25,992)
Operating loss	(6,020)	(6,960)	(658)	(13,638)
Operating loss	(6,020)	(6,960)	(658)	(13,638)
Amortisation of intangible assets	-	2,252	-	2,252
Depreciation of property, plant and equipment	3,409	160	-	3,569
Depreciation of right-of-use assets	1,239	580	-	1,819
EBITDA loss	(1,372)	(3,968)	(658)	(5,998)
Property lease costs	(2,716)	(785)	-	(3,501)
Share based payments	-	522	-	522
Exceptional items	-	21	151	172
Loss on disposal of property, plant and equipment	36	-	-	36
Adjusted EBITDA loss	(4,052)	(4,210)	(507)	(8,769)
Finance income				14
Finance costs				(4,406)
Loss before income tax				(18,030)
Income tax credit				163
Loss for the period				(17,867)

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 fees management agreement fees.  Net revenue is calculated as gross revenue less the concessionnaires' share of revenue.

IFRS 16 'Leases' materially benefitted EBITDA in the year as property lease costs £3.5m (2019: 1.1m) are no longer included within administrative expenses and are replaced by additional depreciation costs on right-of-use assets of £1.8m (2019: £1.2m) and interest costs £1.8m (2019: £1.2m).  Adjusted EBITDA is presented including the property lease costs to aid understanding of underlying performance.

Six months ended 30 June 2019

(Unaudited)

	Time Out Market	Time Out Media	Corporate costs	Total
	£'000	£'000		£'000
Gross revenue	8,802	18,095	-	26,897
Concessionaire share	(2,209)	-	-	(2,209)
Net revenue	6,593	18,095	-	24,688
Gross profit	5,683	11,834	-	17,517
Administrative expenses	(7,697)	(17,598)	(857)	(26,152)
Operating loss	(2,014)	(5,764)	(857)	(8,635)
Operating loss	(2,014)	(5,764)	(857)	(8,635)
Amortisation of intangible assets	-	2,191	-	2,191
Depreciation of property, plant and equipment	760	250	-	1,010
Depreciation of right-of-use assets	769	574	-	1,343
EBITDA loss	(485)	(2,749)	(857)	(4,091)
Property lease costs	(298)	(813)	-	(1,111)
Share based payments	-	532	-	532
Exceptional items	(28)	155	-	127
Adjusted EBITDA loss	(811)	(2,875)	(857)	(4,543)
Finance income				28
Finance costs				(3,398)
Loss before income tax				(12,005)
Income tax charge				(254)
Loss for the period				(12,259)

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 of revenue	(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 30 June 2020		Six months ended 30 June 2019		Year ended 31 December 2019
	£'000		£'000		£'000
Europe	7,529		15,913		36,699
Americas	11,569		9,322		36,375
Rest of World	1,226		1,662		4,066
	20,324		26,897		77,140

5.  Exceptional items

Exceptional items are analysed as follows:

	Unaudited		Unaudited		Audited
	Six months ended 30 June 2020		Six months ended 30 June 2019		Year ended 31 December 2019
	£'000		£'000		£'000
Restructuring costs	22		155		306
Loan facility settlement fees	150		-		-
Fair value gain on option over non-controlling interest	-		(28)		(28)
	172		127		278

The restructuring costs in each period relate to redundancy costs.  Loan facility settlement fees relate to professional fees incurred in the settlement of the Oakley Capital Investments Limited ('OCI') loan notes in June 2020 and the write-off of the related deferred financing costs.

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 30 June 2020		Six months ended 30 June 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	161,889,528		133,000,470		137,989,108
	£'000		£'000		£'000
Losses from continuing operations for the purpose of loss per share	15,786		11,417		18,354
	Pence		Pence		Pence
Basic and diluted loss per share	9.8		8.5		13.3

7.  Cash and debt

	Unaudited		Unaudited		Audited
	Six months ended 30 June 2020		Six months ended 30 June 2019		Year ended 31 December 2019
Cash and cash equivalents	22,524		9,473		13,420
Restricted cash - Escrow	-		253		-
Total cash	22,524		9,726		13,420
Borrowings	(21,987)		(44,164)		(43,311)
Adjusted net cash/(debt)	537		(34,438)		(29,891)
IFRS 16 Lease liabilities	(33,195)		(26,226)		(32,422)
Net debt	(32,658)		(60,664)		(62,313)

Monies held in restricted accounts represent cash held by the Group in accounts with conditions that restrict the use of these monies by the Group and, as such, does not meet the definition of cash and cash equivalents.  Escrow accounts relate to cash balances used to fund expected Time Out Market construction costs.

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.

8.  Notes to the cash flow statement

Reconciliation of loss before income tax to cash used in operations

	Unaudited		Unaudited		Audited
	Six months ended 30 June 2020		Six months ended 30 June 2019		Year ended 31 December 2019
	£'000		£'000		£'000
Loss before income tax	(18,030)		(12,005)		(20,478)
Add back:
Net finance costs	4,392		3,370		7,119
Share based payments	522		532		1,048
Depreciation charges	5,388		2,353		6,625
Amortisation charges	2,252		2,191		4,666
Fair value (gain)/loss on option over non-controlling interest	-		(28)		-
Loss on disposals of fixed assets	36		-		-
Non-cash movements	61		19		48
Increase in inventories	(24)		(594)		(1,030)
Decrease/(increase) in trade and other receivables	5,644		(1,431)		(2,456)
(Decrease)/increase in trade and other payables	(4,064)		3,291		2,524
Cash used in operations	(3,823)		(2,302)		(1,934)

9.  Share capital

		Unaudited		Unaudited		Audited
	Nominal value per share	Six months ended 30 June 2020		Six months ended 30 June 2019		Year ended 31 December 2019
		Number		Number		Number
Ordinary shares		283,201,804		135,000,470		148,486,076
Aggregate amounts		283,201,804		135,000,470		148,486,076
		£'000		£'000		£'000
Ordinary shares	£0.001	283		135		148
Aggregate amounts		283		135		148

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

10.  Principal risks and uncertainties

The 2019 Annual Report sets out on pages 28 and 29 the principle risks and uncertainties that could impact the business.  There are no changes to these risks and uncertainties.

 

END

 

 

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