Full Year Results

RNS Number : 6742I

Time Out Group plc

06 December 2022

 

6 December 2022

Time Out Group plc

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

Audited Full Year Results for the twelve months ended 30 June 2022

Positioned for further profitable growth and back on pre-pandemic trajectory

Time Out Group plc (AIM: TMO), the global media and hospitality business, today announces its audited full year results for the twelve months ended 30 June 2022. Comparative information relates to the 18 months ended 30 June 2021.

Commenting on the results, Chris Ohlund, CEO of Time Out Group plc, said:

"We are pleased to have reached a turning point for the Group in delivering positive Group Adjusted EBITDA, despite the impact of the pandemic during the financial year. This marks a return to our pre-pandemic trajectory and demonstrates that we are now in an even stronger position for future growth. I want to thank everyone at Time Out Group for their hard work and dedication to achieve this milestone - even more so as we have achieved it despite significant disruption.

"We have invested in our strategy with ambitious measures in place to drive profitable growth and have made significant progress across both of our business divisions. Time Out Media's content that focuses on the best of the city has helped millions go out once again, attracting a growing digital audience and key brand partners advertising with us. Our seven existing Time Out Markets have seen footfall and sales return, with record days exceeding pre-pandemic levels. In addition, we have a strong pipeline of seven locations set to open between 2023 and 2027, six of which are Management Agreements which have associated contracted minimum levels of revenues secured for several years. Interest from landlords in our Markets proposition has never been stronger as they seek to drive footfall to increase the value of their property. We are in advanced negotiations with real estate developers around the globe who wish to make Time Out Market the anchor of their properties as they consider our concept to be the world's leading food and cultural market."

Financial highlights

· Gross revenue increased by 62% to £72.9m (2021⁽¹⁾ 18m: £44.9m) and net revenue⁽²⁾ by 47% to £55.4m (2021 18m: £37.8m)

· Gross profit increased 48% to £44.6m (2021 18m: £30.2m)

· Group Adjusted EBITDA ⁽³⁾ improved significantly to positive territory of £1.2m (2021 18m: £17.6m loss)

· Group operating loss reduced significantly to £14.1m (2021 18m: £60.5m loss)

· Cash of £4.8m at 30 June 2022 (2021: £19.1m) and borrowings of £21.9m (2021: £23.5m), resulted in Adjusted net debt⁽⁴⁾ of £17.1m. Reported net debt was £44.5m (2021: £26.9m) including £27.4m (2021: £22.5m) of IFRS 16 lease liabilities

· Refinancing completed post year-end with new four-year term loan facility of €35.0m signed on 24 November 2022. €5.8m of the facility remains undrawn and the agreement allows an extension to €47.5m by mutual consent

Operational highlights

· Time Out Market: significant revenue growth and progress with new Management Agreements

o All seven Markets are open with a restored curation of the best of the city, return of footfall and strong trading with net revenue increasing to £28.9m (2021 18m: £12.2m)

o Osaka and post year-end, Cape Town, Vancouver and Riyadh Management Agreements signed, taking the number of open and contracted sites to 14

o A significant pipeline of further Management Agreements in advanced negotiations as a result of increased engagement with real estate developers

· Time Out Media: digital-first strategy driving improved economics

o Completion of transition from a traditional print to a digital-first multi-platform strategy, enabling the Media division to increasingly tap into the higher-margin, growing digital advertising space

o 20% growth in digital revenue with particular success from Creative Solutions campaigns for major global brands

o Combined digi-physical Media and Market campaigns attracting new clients and increased, high-revenue advertiser spend

Outlook 

The post pandemic recovery has continued in the new financial year, with revenue growth in both Time Out Group divisions meeting management expectations in Q1. Given the near-term weaker economic outlook, rising inflation and geo-political uncertainty, the Board recognises the head winds the Group may face in FY2023. However, it is cautiously optimistic given the increasing engagement of global brands seeking our multi-channel advertising solutions and the recent record trading days within the Time Out Market portfolio.

In contrast to most media and hospitality operators, Time Out Group is building a valuable long term recurring earnings stream. Already in place are eight Time Out Market management agreements, either open (two) or signed (six) with a term of at least 10 years, which will generate a contracted minimum aggregate contribution to EBITDA of c.£13m per annum when all are operational. Driven by the appeal of the concept and the increased resource committed to new site development, the signing of new Market management agreements in cities around the world is expected to accelerate in 2023 and beyond. With a strengthened balance sheet, the Company is in a position to continue to execute its ambitious plans and deliver further profitable growth.

(1)  All comparative information relates to the 18-month period to 30 June 2021.

(2)  Net revenue is calculated as gross revenue less the concessionaires' share of revenue. See note 4 to the condensed consolidated statements.

(3)  Adjusted EBITDA is operating loss stated before interest, taxation, depreciation, amortisation, share-based payments, exceptional items and profit/(loss) on the disposal of fixed assets. This is a non-GAAP alternative performance measure ("APM") that management uses to aid understanding of the underlying business performance. See note 4 for reconciliation to statutory numbers.

(4)  Adjusted net cash/(debt) excludes lease-related liabilities under IFRS 16. This is an APM. See note 7 to the consolidated financial statements for a reconciliation to statutory numbers.

For further information, please contact:
Time Out Group plc	Tel: [phone]
Chris Ohlund, CEO
Patrick Foley, CFO
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

Notes to editors

About Time Out Group

Time Out Group is a global media and hospitality business that curates and creates the best of the world's greatest cities through its two divisions - Time Out Media and Time Out Market. Time Out launched in London in 1968 with a magazine to help people discover the exciting new urban cultures that had started up all over the city. Today, across the Group's digital and physical platforms, Time Out's professional journalists curate the best things to do, see and eat in 333 cities in 59 countries.

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

	12 months ended 30 June 2022	18 months ended 30 June 2021
	£m	£'000
Market	28,924	12,233
Media	26,479	25,570
Group net revenue(1)	55,403	37,803
Gross profit	44,583	30,170
Gross margin % (2)	80%	80%
Divisional Adjusted operating expenses(3)	(40,654)	(46,116)
Divisional Adjusted EBITDA(3)	3,929	(15,946)
Market	2,225	(8,418)
Media	1,704	(7,528)
Corporate costs	(2,710)	(1,622)
Group Adjusted EBITDA(3)	1,219	(17,568)

(1)  Net revenue is calculated as gross revenue less the concessionaires' share of revenue. See note 4.

(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, exceptional items and profit/(loss) on the disposal of fixed assets. These are APMs that management uses to aid understanding of the underlying business performance. See note 4 for reconciliation to statutory numbers.

The financial year has seen the Group return to its pre-pandemic trajectory, starting with the gradual reopening of hospitality in most parts of the world and a transition back to near normality in our trading environments. All our Markets reopened with increasing footfall and revenue, and our Media business experienced a marked recovery in digital advertising. The shadow of Covid-19 in H1 stalled this momentum with further disruption as the rapid spread of the Omicron variant in the winter months resulted in new restrictions and another dent in consumer activity; however, the key spring and summer months saw a period of encouraging progress and recovery.

The Group's net revenue increased by 47% to £55.4m (2021 18m: £37.8m), albeit from a comparative period that was severely impacted by Covid-19. Gross margin was maintained at 80% as we temporarily resumed an element of our UK print products, which ceased in June 2022. Operating expenses continue to be monitored to ensure optimal Market profitability. These combined to produce an improvement in the Divisional Adjusted EBITDA of £3.9m (2021 18m: £15.9m Adjusted EBITDA loss). Corporate costs increased to £2.7m against a comparative (2021 18m: £1.6m) that benefitted from temporary Covid-19 related cost savings. This resulted - for the first time since becoming a listed company in 2016 - in a positive Group Adjusted EBITDA of £1.2m (2021 18m: £17.6m Group Adjusted EBITDA loss).

At the beginning of September 2022 Patrick Foley commenced his role as Chief Financial Officer, replacing Neil Wood who had been acting as Interim CFO. Patrick brings over 20 years' financial and commercial experience and broad sector background in Media, Technology and Software Development. He joins from Sahara Presentation Systems Ltd / Boxlight Corporation where he was CFO; previously, he has held various senior roles including that of CFO, COO and Interim CEO at Arts Alliance Media Ltd; prior to that he was VP Finance for Universal Pictures International. Patrick qualified as a Chartered Management Accountant and holds an MSc degree in Strategic Business Management from Manchester Metropolitan University.

Time Out Market trading overview

	12 months ended 30 June 2022	18 months ended 30 June 2021
	£'000	£'000
Owned operations	24,734	10,112
Management fees	4,190	2,121
Net revenue	28,924	12,233
Gross profit	24,081	10,272
Gross margin %	83%	84%
Adjusted operating expenditure (trading)(2)	(17,320)	(14,323)
Trading EBITDA(1)	6,761	(4,051)
Market central costs	(4,524)	(4,367)
Pre-opening costs	(12)	-
Adjusted EBITDA(2)	2,225	(8,418)

(1)  Trading EBITDA represents the Adjusted EBITDA from owned and operated markets post opening, Management Agreement fees, 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.

(2)  Adjusted measures are stated before interest, taxation, depreciation, amortisation, share-based payments, exceptional items and profit/(loss) on the disposal of fixed assets. These are APMs that management uses to aid understanding of the underlying business performance. See note 4 for reconciliation to statutory numbers.

Time Out Market net revenue increased materially to £28.9m (2021 18m: £12.2m) and generated Adjusted EBITDA of £2.2m (2021 18m: £8.4m Adjusted EBITDA loss) as the hospitality sector emerged from the severe restrictions experienced for the majority of the comparative period, despite some restrictions still in place in the first few months of the financial year. The easing of international travel restrictions has seen tourists return to the cities in which we operate, and people going out once again, as well as returning to offices, have all helped drive this revenue growth and a return to steady trading. Operating expenses continue to be monitored to ensure optimal Market profitability. Market central costs have increased as we further strengthened the Time Out Market team facilitating both growth in our existing Markets and to drive our global expansion.

Sandy Hayek - previously Time Out Market Dubai General Manager - was promoted in May to Time Out Market Co-CEO Operations with a focus on day-to-day management across our existing locations. Working alongside Sandy is Time Out Market Co-CEO Development Jay Coldren, who focuses on continued global expansion. He brings a strong background in development and expansion as well as more than 30 years of hospitality experience spanning restaurants, boutique hotels and gourmet retail. Until 30 September 2022, this role was held by Didier Souillat who left the business to explore new opportunities.

Time Out Market is a food and cultural market that brings the best of the city under one roof - it offers a curated mix of a city's best chefs and as we have reopened our Markets, we have restored exceptional chef line-ups. In the second half of the period alone, around 30 new concessions signed across all Markets including James Beard award-winning Chef Michelle Bernstein who brought Little Liberty to Time Out Market Miami; Luella's Southern Kitchen by Chef Darnell Reed (a James Beard semi-finalist) at Time Out Market Chicago; and Time Out Market Lisbon welcomed Chef Vincent Farges - one of the city's top chefs with a Michelin star in his own local restaurant.

Time Out Market not only offers culinary but also cultural experiences, which is a key differentiator and helps drive high-value footfall as well as media attention. In the period, numerous activations took place from local live bands and DJs to comedy nights. Other cultural highlights included a giant mural, paying tribute to late designer Virgil Abloh, at Time Out Market Chicago; an NFT digital art exhibit at Time Out Market Miami to coincide with Miami Art Week; and Time Out Market Dubai's first Wine Market.

Alongside seven existing Markets, as part of the global expansion plans there is a significant pipeline of new locations signed as well as several in advanced negotiations. This is a result of ongoing interest from landlords and real estate developers who value Time Out Market as a concept that can transform spaces and drive consumer footfall. Our engagement with landlords has continued, albeit with the conclusion of new Management Agreements being delayed due to pandemic-related restrictions earlier in the financial year. The opening of the Markets in Montreal in 2019 and of Dubai in 2021 commenced the Group's first Management Agreements which offers further expansion opportunities. Under a Management Agreement, the real estate partner funds all capital and operational expenditure with the Group receiving a pre-development fee and share of revenue and profit. This has grown as an important part of the portfolio mix as Time Out Market continues to its global expansion. Furthermore, we have evolved our systematic approach to sourcing new opportunities, designed to accelerate the rate of new signings. As a result, we expect to sign more Management Agreements in the year ahead and beyond as they represent a key focus area and growth engine, increasing the Group's recurring earnings stream, without the need for further capital expenditure .

Between May and November 2022, four Management Agreements were signed: In May 2022, we announced that we have entered into an agreement with real estate developer Hankyu Hanshin Properties Corporation to open Time Out Market Osaka in 2025. An agreement with V&A Waterfront Holdings Ltd was signed in October 2022 to bring Time Out Market to Cape Town towards the end of 2023. In November 2022 agreements were signed with QuadReal Property Group and Westbank to open Time Out Market Vancouver at the end of 2024 and with Diriyah Gate Development Authority (DGDA) to open the new Time Out Market Riyadh at Diriyah Gate which is forecast to open in 2027. Furthermore, we have agreed Head of Terms for three locations with the initial feasibility costs being met by the prospective Management Agreement partner.

The current opening pipeline for new Markets, in addition to seven existing locations, includes:

· Porto (Owned & Operated) - calendar 2023

· Cape Town (Management Agreement) - calendar 2023

· Vancouver (Management Agreement) - calendar 2024

· Abu Dhabi (Management Agreement) - calendar 2025

· Prague (Management Agreement) - calendar 2025

· Osaka (Management Agreement) - calendar 2025

· Riyadh (Management Agreement) - calendar 2027

Time Out Media trading overview

	12 months ended 30 June 2022	18 months ended 30 June 2021
	£'000	£'000
Digital advertising	17,928	14,923
Print	3,378	4,516
Live events	1,098	131
Local Marketing Solutions	1,161	1,762
Advertising sales	23,565	21,332
Affiliates	1,414	1,882
Offers	826	1,287
Franchises	674	1,069
Net revenue	26,479	25,570
Gross profit	20,502	19,898
Gross margin %	77%	78%
Adjusted operating expenditure(1)	(18,798)	(27,426)
Adjusted EBITDA(1)	1,704	(7,528)

(1)  Adjusted measures are stated before interest, taxation, depreciation, amortisation, share-based payments, exceptional items and profit/(loss) on the disposal of fixed assets. These are APMs that management use to aid understanding of the underlying business performance. See note 4 for reconciliation to statutory numbers.

Time Out Media trading was encouraging in the year with net revenue up 4% to £26. 5m (2021 18m: £25.6m) generating Adjusted EBITDA of £1.7m (2021 18m: £7.5m Group Adjusted EBITDA loss) . Digital revenue continued to grow and recovered to pre-pandemic levels, supplemented by selective print products in the UK, Spain, and Portugal, which slightly diluted gross margin for the year due to the higher cost of delivering print solutions.

June 2022 saw the last regular Time Out London print magazine as part of a shift towards a digital-first multi-platform strategy. As a result, the majority of the 333 cities in which we cover content are now fully digital, with only monthly print issues in Barcelona and quarterly in Madrid and Lisbon (and in a few cities within our franchise network). While this approach has incurred additional costs this year, we are already seeing the benefit of a focused digital offering, with a sales team driving and attracting higher margin digital advertising as well as more bespoke creative campaigns .

On the back of strong relationships with direct and agency partners, the Creative Solutions team delivered big-ticket campaigns in the period, across multiple territories and multiple platforms. This included working with the likes of Diageo, Samsung, Google, Transport for London, Visit California and Mastercard to name a few. Many of these campaigns had a 360-degree approach spanning all of Time Out's digital channels plus Live Events, which rebounded in the period. To leverage the synergies between Time Out Media and Time Out Market, we increasingly host Live Events for clients in our Markets which is a unique proposition, attracting new clients and increased advertiser spend. One example is the Oscars Watch Party at Time Out Market New York as part of a campaign for Visit California and LA Tourism.

Our "best of the city" content is now being distributed across an increasing range of digital channels spanning websites, mobile, email, social media and video. A key element of our strategy is a focus on short-form video for mobile consumption, and therefore filmed in portrait mode; this is an area we have invested in as it is increasingly the preferred medium in which our audience engages with the world around them. As such, we have made a leap forward in developing Time Out's video storytelling with the launch of several short-form video series; these include series called Behind the Scenes, 48 Hours In…, Secrets of Your City and Hype Dish. The videos are published onsite, via Instagram Reels and TikTok. The latter is the fastest growing channel for Time Out London and within one year has seen follower numbers go from zero to almost 100,000 in June 2022 when we delivered the first commercial TikTok video for FreeNow.

We are doing much to grow our global brand audience⁽¹⁾, which went up 19% to 72m (2021 18m: 60m). In a period of disruption of the leisure industry this is testament to the continued relevance and authority of our brand and content, attracting a valuable, active audience. In a world with too much information, this audience values that we curate the best of the city for them and that we deliver our content to them across the digital channels where they are now. Partnerships with leading media and content brands such as Apple News drive additional traffic to our content and we have also continued to see significant viewing numbers for editorial campaigns such as World's Coolest Neighbourhoods and Best Cities rankings - these are annual stories which have built authority and interest, driving traffic as well as hundreds of pieces of press coverage and thereby global earned media.

(1) Global brand audience is the estimated monthly average in the period including all Owned & Operated cities and franchises. It includes print circulation and unique website visitors (Owned and operated), 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. The metric for the 18-month period ended 30 June 2021 of 60.3m (previously 64.5m) has been restated to exclude data in respect of franchisee countries where the information is no longer reliably obtainable and to reflect a change in the measurement of opted-in members.

Financial Review

	12 months ended 30 June 2022	18 months ended 30 June 2021
	£'000	£'000
Gross revenue	72,933	44,896
Concessionaire share	(17,530)	(7,093)
Net revenue	55,403	37,803
Gross profit	44,583	30,170
	80%	80%
Administrative expenses	(58,724)	(90,717)
Operating loss	(14,141)	(60,547)
Operating loss	(14,141)	(60,547)
Depreciation & amortisation
- Intangible assets	2,540	6,168
- Property, plant and equipment	6,575	10,449
- Right-of-use assets	2,065	4,952
Share-based payments	1,817	1,480
Exceptional items	2,316	19,894
Loss on disposal of property, plant and equipment	47	36
Adjusted EBITDA(1)	1,219	(17,568)
Finance income	8	35
Finance costs	(5,329)	(10,544)
Loss before tax	(19,462)	(71,056)

(1)  Adjusted EBITDA is operating loss stated before interest, taxation, depreciation, amortisation, share-based payments, exceptional items and profit/(loss) on the disposal of fixed assets. This is an APM that management use to aid understanding of the underlying business performance. See note 4 for reconciliation to statutory numbers.

Revenue and gross profit

Group gross revenue for the period increased by 62% to £72.9m (2021 18m: £45.0m) as the business recovered from the effect of the Covid-19 pandemic. The year began strongly as restrictions eased, international travel resumed and our audience once again began enjoying their cities. However in early December, the Omicron variant resulted in renewed restrictions which had a severe impact on our seasonally higher performing December period. This trickled into the second half of the year with trading returning over the rest of the year. Despite this, Group gross profit as a percentage of net revenue is consistent at 80%.

Market performance drove the increase in revenue with our markets open more consistently over the year, supplemented by the revenue generated from signing Heads of Terms in respect of future Management Agreement Markets. Media revenue progressed to a recovery to pre-pandemic levels of business as digital revenue returned with increased consumer confidence, driving an increase across other revenue streams, in particular Live Events which delivered £1.1m revenue in the year from a very low base in the prior period (2021 18m: £0.1m). In the year we have invested in the teams to focus on our Affiliates and Offers business as our audiences increasingly look for engaging but economical ways to go out.

Operating expenses

Adjusted Group operating expenses decreased by £4.3m to £43.4m (2021 18m: £47.7m).

Market Adjusted operating expenses increased by £3.1m to £21.9m (2021 18m: £18.7m), comprising Trading operating expenditure increase of £3.0m and an increase in Market central costs of £0.2m. Media Adjusted operating expenses decreased by £8.6m to £18.8m (2021 18m: £27.4m). Corporate costs increased to £2.7m against a comparative (2021 18m: £1.6m) that benefitted from temporary Covid-19 related cost savings.

Overall administrative expenses for the year also includes £0.8m (2021 18m: nil) related to redefining and beginning the implementation of our digital-first strategy.

Adjusted EBITDA

Group Adjusted EBITDA, which is stated before interest, taxation, depreciation, amortisation, share-based payments exceptional items and loss on disposal of fixed assets, improved to £1.2m (2021 18m: £17.6m Group Adjusted EBITDA loss). The material improvement was driven by the significant growth in revenue as the business begins to recover from the impact of the pandemic.

Operating loss

The reported operating loss was £14.1m (2021 18m: £60.5m loss).

The net exceptional costs of £2.3m (2021 18m: £19.9m) includes costs related to a discontinued corporate transaction (£0.8m), staff redundancy costs of staff who left the Group following the discontinuation of Print in the UK (£2.0m), the contractual exit costs of the former Chief Executive (£0.7m) and a gain on the modification of the Lisbon property lease of £0.5m. The majority of the prior period exceptional costs of £19.9m comprised of the impairment of Media-related goodwill (£20.0m), staff redundancy costs (£1.1m), Time Out Market Waterloo exit costs (£0.7m) and fundraising costs (£1.0m), offset by the gains on the modification of property leases (£2.4m).

The depreciation charge of £8.6m (2021 18m: £14.0m) decreased by £5.4m, driven principally by reduced Media office space in the UK and US.

The amortisation of intangible assets of £2.5m (2021 18m: £6.2m) decreased by £3.7m principally due to certain acquired intangible assets now being fully amortised.

Net finance costs

Net finance costs of £5.3m (2021 18m: £10.5m) primarily relates to interest on debt of £2.4m (2021 18m: £4.8m), amortisation of deferred financing costs of £0.2m (2021 18m: £0.4m) and interest cost in respect of lease liabilities of £2.6m (2021 18m: £4.9m).

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 $1.34 (2021: $1.32). The operations reporting in euros have been consolidated at a rate of €1.18 (2021: €1.14).

Cash and debt

		30 June 2022 £'000	30 June 2021 £'000
Cash and cash equivalents		4,849	19,070
Borrowings		(21,978)	(23,517)
Adjusted net debt		(17,129)	(4,447)
IFRS 16 Lease liabilities		(27,420)	(22,453)
Net cash debt		(44,549)	(26,900)

Cash and cash equivalents decreased by £14.2m since 30 June 2021 to £4.8m (2021: £19.1m). This was driven primarily by the Group Adjusted EBITDA of £1.2m (2021 18m: £17.6m Group Adjusted EBITDA loss), exceptional costs cash outflow of £2.8m (2021 18m: £2.2m), net working capital outflow of £2.6m (2021 18m: £24.1m), capital expenditure of £1.8m (2021 18m: £5.3m), net repayment of capital and interest on borrowings of £3.7m (2021 18m: £18.6m) and the repayment of lease liabilities of £4.0m (2021 18m: £6.7m).

Essential Market capital expenditure of £0.2m was undertaken to ensure the markets remain Covid-safe and £0.6m invested in the initial stages of the development of Time Out Market Porto. Media invested £0.7m (2021 18m: £0.6m) in capitalised software development costs to support the Group's increasingly important digital platforms and £0.4m in the reopening of all offices.

At 30 June 2022 borrowings comprise principally the fully drawn Incus Capital Finance facility of £20.9m (2021: £19.0m). The facility was fully repaid on 30 November 2022.

On 24 August, the Group agreed an unsecured loan facility of up to £8.0 million with Oakley Capital Investments Limited ("OCI"). The drawn balance on this facility as 30 November 2022 of £5.2m has been converted to a loan note ("OCI Loan Note") and extended to 31 December 2023. Interest will be charged at a 90 day average SONIA rate plus 10% per annum, with an arrangement fee of 2% and an exit premium.

On 24 November 2022, the Group agreed a new €35.0m secured four-year term loan facility with Crestline Europe LLP ("Crestline facility") which will be used to refinance the Incus Capital Facility. The facility has a term of four years, with the right to settle in full after two years. Interest may be capitalised or paid in cash, at the election of the Company, during the first year at a rate of 9.5% plus 3-month EURIBOR and from the second year onwards interest will be paid in cash at a rate of 8.5% plus 3-month EURIBOR. There will separately be an exit premium payable upon full repayment of the facility, calculated by reference to the principal amount drawn. The facility is subject to quarterly financial covenants based on minimum liquidity levels (quarterly testing commencing on 31 December 2022) and target leverage ratio (quarterly testing commencing on 30 June 2023).

The Company has also executed an equity warrant instrument and agreed to issue 11,400,423 equity warrants on 30 November 2022 and a further 2,264,468 at full drawdown of the Loan Note Facility (in total representing approximately 3.6% of its fully diluted share capital) to the Crestline subscribers. The five-year equity warrants, which have customary anti-dilution protections, have an exercise price of 39 pence per ordinary share.

Going concern

The financial statements have been prepared under the going concern basis of accounting as the Directors have a reasonable expectation that the Group and Company will continue in operational existence and be able to settle their liabilities as they fall due for the foreseeable future, being a period of not less than one year from the date of approval of the financial statements ("forecast period"). 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.

In making this assessment the Directors have considered two scenarios over the forecast period:

The base case assumes a slow but steady period of growth across both Market and Media. Market revenue is assumed to improve driven by Time Out Market Lisbon returning to pre-pandemic trading levels and other O&O markets progressing towards steady-state trading levels by the end of the forecast period. Our strong Management Agreement pipeline is also forecast to deliver incremental revenue in the forecast period. Media revenue is assumed to return to pre-pandemic levels driven by a focus in high-margin digital-first offerings complemented by the return of Live Events, Affiliate and Offers revenue. This scenario does assume an appropriate element of cost inflation but does not include the impact of extended global economic uncertainty or further pandemic-related restrictions. The downside case sensitises the base case to assume that the Market Owned & Operated revenue and Media revenue underperforms the base case by 10% while maintaining the base case gross margin, with no corresponding reduction in budgeted operating costs over the forecast period. Consistent with the base it also assumes an appropriate element of cost inflation but does not include the impact of extended global economic uncertainty or further pandemic-related restrictions.

The Directors consider the downside case reduction in revenue for each division to be unlikely given recent performance, however with the uncertainty created by inflationary and recessionary factors this scenario is considered severe but plausible.

As set out earlier, the Group has successfully refinanced the Incus Capital loan facility which was fully settled on 30 November. €5.8m of the new €35.0m Crestline facility remains undrawn and the agreement allows for the facility to be extended to €47.5m by mutual consent.

The Board is satisfied that under both scenarios the Group will be able to operate within the level of its current debt and financial covenants and will have sufficient liquidity to meet its financial obligations as they fall due for a period of at least 12 months from the date of signing these financial statements. For this reason, the Group and Company continue to adopt the going concern basis in preparing its financial statements.

Outlook

The post pandemic recovery has continued in the new financial year, with revenue growth in both Time Out Group divisions meeting management expectations in Q1. Given the near-term weaker economic outlook, rising inflation and geo-political uncertainty, the Board recognises the head winds the Group may face in FY2023. However, it is cautiously optimistic given the increasing engagement of global brands seeking our multi-channel advertising solutions and the recent record trading days within the Time Out Market portfolio.

In contrast to most media and hospitality operators, Time Out Group is building a valuable long term recurring earnings stream. Already in place are eight Time Out Market management agreements, either open (two) or signed (six) with a term of at least 10 years, which will generate a contracted minimum aggregate contribution to EBITDA of c.£13m per annum when all are operational. Driven by the appeal of the concept and the increased resource committed to new site development, the signing of new Market management agreements in cities around the world is expected to accelerate in 2023 and beyond.

With a strengthened balance sheet, the Company is in a position to continue to execute its ambitious plans and deliver further profitable growth.

Chris Ohlund

Group Chief Executive

6 December 2022

Consolidated Income statement

12 months ended 30 June 2022

	Note	12 months ended 30 June 2022		18 months ended 30 June 2021
		£'000		£'000
Gross revenue	1, 4	72,933		44,897
Cost of sales	4	(28,350)		(14,727)
Gross profit		44,583		30,170
Administrative expenses		(58,724)		(90,717)
Operating loss		(14,141)		(60,547)
Finance income		8		35
Finance costs		(5,329)		(10,544)
Loss before income tax	4	(19,462)		(71,056)
Income tax (charge)/credit		(97)		507
Loss for the period		(19,559)		(70,549)
Loss for the period attributable to:
Owners of the parent		(19,553)		(66,770)
Non-controlling interests		(6)		(3,779))
		(19,559)		(70,549)
Loss per share:
Basic and diluted loss per share (p)	6	(5.9)		(27.9)

Consolidated Statement of Other Comprehensive Income

12 months ended 30 June 2022

	12 months ended 30 June 2021		18 months ended 30 June 2021
	£'000		£'000
Loss for the period	(19,559)		(70,549)
Other comprehensive income:
Items that may be subsequently reclassified to the profit or loss:
Currency translation differences	4,803		(2,458)
Other comprehensive income/(expense) for the period, net of tax	4,803		(2,458)
Total comprehensive expense for the period	(14,756)		(73,007)
Total comprehensive expense for the period attributable to:
Owners of the parent	(14,748)		(69,360)
Non-controlling interests	(8)		(3,647)
	(14,756)		(73,007)

Condensed Consolidated Statement of Financial Position

At 30 June 2022

	Note	30 June 2022		30 June 2021
		£'000		£'000
Assets
Non-current assets
Intangible assets - Goodwill		29,893		28,911
Intangible assets - Other		8,219		10,253
Property, plant and equipment		37,851		39,037
Right-of-use assets		20,490		17,031
Other receivables		3,554		3,197
		100,007		98,429
Current assets
Inventories		986		995
Trade and other receivables		14,906		9,932
Cash and cash equivalents	7	4,849		19,070
		20,741		29,997
Total assets		120,748		128,426
Liabilities
Current liabilities
Trade and other payables		(14,872)		(11,286)
Borrowings	7	(21,131)		(5,395)
Lease liabilities	7	(5,056)		(985)
		(41,059)		(17,666)
Non-current liabilities
Trade and other payables		-		(1,158)
Deferred tax liability		(1,158)		(1,185)
Borrowings	7	(847)		(18,122)
Lease liabilities	7	(22,364)		(21,468)
		(24,369)		(41,933)
Total liabilities		(65,428)		(59,599)
Net assets		55,320		68,827
Equity
Called up share capital	9	336		332
Share premium		185,563		185,563
Translation reserve		7,862		3,057
Capital redemption reserve		1,105		1,105
Retained earnings / (losses)		(139,522)		(121,182)
Total parent shareholders' equity		55,344		68,875
Non-controlling interest		(24)		(48)
Total equity		55,320		68,827

Condensed Consolidated Statement of Changes in Equity

At 30 June 2022

	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 2020	148	123,290	5,647	1,105	(47,420)	82,770	(4,873)	77,897
Changes in equity
Loss for the period	-	-	-	-	(66,770)	(66,770)	(3,779)	(70,549)
Other comprehensive income	-	-	(2,590)	-	-	(2,590)	132	(2,458)
Total comprehensive income	-	-	(2,590)	-	(66,770)	(69,360)	(3,647)	(73,007)
Share-based payments	-	-	-	-	1,480	1,480	-	1,480
Adjustment arising on change of non-controlling interest	-	-	-	-	(8,472)	(8,472)	8,472	-
Issue of shares	184	62,273	-	-	-	62,457	-	62,457
Balance at 30 June 2021	332	185,563	3,057	1,105	(121,182)	68,875	(48)	68,827
Changes in equity
Loss for the period	-	-	-	-	(19,553)	(19,553)	(6)	(19,559)
Other comprehensive income	-	-	4,805	-	-	4,805	(2)	4,803
Total comprehensive income	-	-	4,805	-	(19,553)	(14,748)	(8)	(14,756)
Share-based payments	-	-	-	-	1,817	1,817	-	1,817
Adjustment arising on change of non-controlling interest					(604)	(604)	32	(572)
Issue of new shares	4	-	-	-	-	4	-	4
Balance at 30 June 2022	336	185,563	7,862	1,105	(139,522)	55,344	(24)	55,320

Condensed Consolidated Statement of Cash Flows

12 months ended 30 June 2022

	Note	12 months ended 30 June 2022		18 months ended 30 June 2021
		£'000		£'000
Cash flows from operating activities
Cash used in operations	8	(4,544)		(20,219)
Interest paid		(2,497)		(5,430)
Tax paid		-		(311)
Net cash used in operating activities		(7,041)		(25,960)
Cash flows from investing activities
Purchase of property, plant and equipment		(1,173)		(3,108)
Purchase of intangible assets		(740)		(2,145)
Interest received		2		35
Net cash used in investing activities		(1,911)		(5,218)
Cash flows from financing activities
Repayment of borrowings		(1,505)		(22,500)
Proceeds from borrowings		254		3,865
Repayment of lease liabilities		(4,035)		(6,731)
Acquisition of minority interest		(203)		-
Costs relating to share issues		-		(1,835)
Proceeds from share issue		-		64,148
Net cash from financing activities		(5,489)		36,947
Increase/(decrease) in cash and cash equivalents		(14,441)		5,769
Cash and cash equivalents at beginning of period		19,070		13,420
Effect of foreign exchange rate change		220		(119)
Cash and cash equivalents at end of period		4,849		19,070

Notes to the condensed consolidated statements

1.  Preliminary Information

The consolidated financial statements of Time Out Group PLC for the year ended 30 June 2022 were authorised by the Board on 6 December 2022. Comparative information covers the 18 months ended 30 June 2021.

While the financial information included in these summarised financial statements has been prepared in accordance with the recognition and measurement criteria of UK-adopted International Accounting Standards ("IAS") and with the requirements of the Companies Act 2006 as applicable to companies reporting under those standards, this announcement does not itself contain sufficient information to comply with lASs and IFRSs. The Company expects to publish full financial statements that comply with lASs and IFRSs in December 2022.

The financial information set out above does not constitute the Company's statutory accounts for the year ended 30 June 2022 but is derived from those accounts. The statutory accounts for this period will be finalised on the basis of the financial information presented by the directors in this preliminary announcement and will be delivered to the Registrar of Companies following the Company's Annual General Meeting. The external auditor has reported on the accounts and their report did not contain any statements under Section 498 of the Companies Act 2006.

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

Alternative performance measures

The Group uses alternative performance measures ("APM") 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, exceptional items and profit/(loss) on the disposal of fixed assets.

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

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

Going Concern

The financial statements have been prepared under the going concern basis of accounting as the Directors have a reasonable expectation that the Group and Company will continue in operational existence and be able to settle their liabilities as they fall due for the foreseeable future, being a period of not less than one year from the date of approval of the financial statements ("forecast period"). 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.

In making this assessment the Directors have considered two scenarios over the forecast period:

The base case assumes a slow but steady period of growth across both Market and Media. Market revenue is assumed to improve driven by Time Out Market Lisbon returning to pre-pandemic trading levels and other O&O markets progressing towards steady-state trading levels by the end of the forecast period. Our strong Management Agreement pipeline is also forecast to deliver incremental revenue in the forecast period. Media revenue is assumed to return to pre-pandemic levels driven by a focus in high-margin digital-first offerings complemented by the return of Live Events, Affiliate and Offers revenue. This scenario does assume an appropriate element of cost inflation but does not include the impact of extended global economic uncertainty or further pandemic-related restrictions. The downside case sensitises the base case to assume that the Market Owned & Operated revenue and Media revenue underperforms the base case by 10% while maintaining the base case gross margin, with no corresponding reduction in budgeted operating costs over the forecast period. Consistent with the base it also assumes an appropriate element of cost inflation but does not include the impact of extended global economic uncertainty or further pandemic-related restrictions.

The Directors consider the downside case reduction in revenue for each division to be unlikely given recent performance, however with the uncertainty created by inflationary and recessionary factors this scenario is considered severe but plausible.

As set out earlier, the Group has successfully refinanced the Incus Capital loan facility which was fully settled on 30 November. €5.0m of the new €35.0m Crestline facility remains undrawn and the agreement allows for the facility to be extended to €47.5m by mutual consent.

The Board is satisfied that under both scenarios the Group will be able to operate within the level of its current debt and financial covenants and will have sufficient liquidity to meet its financial obligations as they fall due for a period of at least 12 months from the date of signing these financial statements. For this reason, the Group and Company continue to adopt the going concern basis in preparing its financial statements.

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:

	12 months ended 30 June 2022			18 months ended 30 June 2021
	Closing rate	Average rate		Closing rate	Average rate
US dollar	1.21	1.34		1.38	1.32
Euro	1.16	1.18		1.16	1.14
Australian dollar	1.76	1.84		1.84	1.85
Singaporean dollar	1.69	1.82		1.86	1.80
Hong Kong dollar	9.52	10.45		10.75	10.23
Canadian dollar	1.56	1.69		1.71	1.73

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.

12 months ended 30 June 2022

	Time Out Market	Time Out Media	Corporate costs	Total
	£'000	£'000	£'000	£'000
Gross revenue	46,454	26,479	-	72,933
Concessionaire share	(17,530)	-	-	(17,530)
Net revenue	28,924	26,479	-	55,403
Gross profit	24,081	20,502	-	44,583
Administrative expenses	(29,921)	(22,728)	(6,075)	(58,724)
Operating loss	(5,840)	(2,226)	(6,075)	(14,141)
Operating loss	(5,840)	(2,226)	(6,075)	(14,141)
Amortisation of intangible assets	14	2,526	-	2,540
Depreciation of property, plant and equipment	6,425	150	-	6,575
Depreciation of right-of-use assets	2,017	48	-	2,065
Loss on disposal of fixed assets	-	47	-	47
EBITDA (loss)/ gain	2,616	545	(6,075)	(2,914)
Share-based payments	-	-	1,817	1,817
Exceptional items	(391)	1,159	1,548	2,316
Adjusted EBITDA (loss)/ gain	2,225	1,704	(2,710)	1,219
Finance income				8
Finance costs				(5,329)
Loss before income tax				(19,462)
Income tax credit				(97)
Loss for the period				(19,559)

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.

18 months ended 30 June 2021

	Time Out Market	Time Out Media	Corporate costs	Total
	£'000	£'000	£'000	£'000
Gross revenue	19,327	25,570	-	44,897
Concessionaire share	(7,094)	-	-	(7,094)
Net revenue	12,233	25,570	-	37,803
Gross profit	10,272	19,898	-	30,170
Administrative expenses	(32,821)	(55,909)	(1,987)	(90,717)
Operating loss	(22,549)	(36,011)	(1,987)	(60,547)
Operating loss	(22,549)	(36,011)	(1,987)	(60,547)
Amortisation of intangible assets	1,767	4,401	-	6,168
Depreciation of property, plant and equipment	10,038	411	-	10,449
Depreciation of right-of-use assets	3,548	1,404	-	4,952
EBITDA loss	(7,196)	(29,795)	(1,987)	(38,978)
Share-based payments	-	1,480	-	1,480
Exceptional items	(1,257)	20,786	365	19,894
Loss on disposal of fixed assets	35	1	-	36
Adjusted EBITDA loss	(8,418)	(7,528)	(1,622)	(17,568)
Finance income				35
Finance costs				(10,544)
Loss before income tax				(71,056)
Income tax charge				507
Loss for the period				(70,549)

Gross revenue is analysed geographically by origin as follows:

	12 months ended 30 June 2022		18 months ended 30 June 2021
	£'000		£'000
Europe	25,826		20,097
Americas	41,703		19,870
Rest of World	5,404		4,930
	72,933		44,897

5.  Exceptional items

Exceptional items are analysed as follows:

	12 months ended 30 June 2022		18 months ended 30 June 2021
	£'000		£'000
Restructuring costs	1,958		1,224
Gain on recognition / derecognition of right-of-use asset and related lease liability	(475)		(2,339)
Discontinued corporate transaction costs	833		-
Time Out Market Waterloo exit costs	-		696
Property lease exit costs	-		163
Fundraising costs	-		96
Write-off of deferred financing costs	-		54
Impairment of goodwill	-		20,000
	2,316		19,894

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.

	12 months ended 30 June 2022		18 months ended 30 June 2021
	Number		Number
Weighted average number of ordinary shares for the purpose of basic and diluted loss per share	334,198,517		239,394,965
	£'000		£'000
Losses from continuing operations for the purpose of loss per share	(19,553)		(66,770)
	Pence		Pence
Basic and diluted loss per share	(5.9)		(27.9)

7.  Cash and debt

	30 June 2022		30 June 2021
	£'000		£'000
Cash and cash equivalents	4,849		19,070
Borrowings	(21,978)		(23,517)
Adjusted net debt	(17,129)		(4,447)
IFRS 16 Lease liabilities	(27,420)		(22,453)
Net debt	(44,549)		(26,900)

Borrowings comprise principally the Incus Capital Finance loan facility, which was fully repaid on 30 November 2022. Post financial year-end this was refinanced by a new €35.0m secured four-year term loan facility with Crestline Europe LLP. See note 10 for full details.

8.  Notes to the cash flow statement

Reconciliation of loss before income tax to cash used in operations

	12 months ended 31 December 2021		18 months ended 30 June 2021
	£'000		£'000
Loss before income tax	(19,462)		(71,056)
Add back:
Net finance costs	5,321		10,509
Share-based payments	1,817		1,480
Depreciation charges	8,640		15,401
Amortisation charges	2,540		6,168
Loss on disposal of property, plant and equipment	47		36
Impairment of goodwill	-		20,000
Time Out Market Waterloo exit costs	-		696
Gain on recognition / derecognition of right-of-use asset and related lease liability	(475)		(2,339)
Other non-cash movements	(67)		54
Increase in inventories	18		325
Decrease/(increase) in trade and other receivables	(3,961)		8,302
(Decrease)/increase in trade and other payables	1,038		(9,795)
Cash used in operations	(4,544)		(20,219)

9.  Share capital

	Nominal value per share		30 June 2021		30 June 2021
			Number		Number
Ordinary shares			335,870,417		331,960,417
Aggregate amounts			335,870,417		331,960,417
			£'000		£'000
Ordinary shares	£0.001		336		332
Aggregate amounts			336		332

10.  Post balance sheet events

On 24 August, the Group agreed an unsecured loan facility of up to £8.0 million with Oakley Capital Investments Limited ("OCI"). The drawn balance on this facility as 30 November 2022 was £5.2m and has been converted to a loan note "OCI Loan Note") and extended to 31 December 2023. Interest will be charged at a 90 day average SONIA rate  plus 10% per annum, with an arrangement fee of 2% and an exit premium.

On 24 November 2022, the Group agreed a new €35.0m secured four-year term loan facility with Crestline Europe LLP ("Crestline facility") which will be used to refinance the Incus Capital Facility. The facility has a term of four years, with the right to settle in full after two years. Interest may be capitalised or paid in cash, at the election of the Company, during the first year at a rate of 9.5% plus 3-month EURIBOR and from the second year onwards interest will be paid in cash at a rate of 8.5% plus 3-month EURIBOR. There will separately be an exit premium payable upon full repayment of the facility, calculated by reference to the principal amount drawn. The facility is subject to quarterly financial covenants based on minimum liquidity levels (quarterly testing commencing on 31 December 2022) and target leverage ratio (quarterly testing commencing on 30 June 2023).

The Company has also executed an equity warrant instrument and agreed to issue 11,400,423 equity warrants on or around 30 November 2022 and a further 2,264,468 at full drawdown of the Loan Note Facility (in total representing approximately 3.6% of its fully diluted share capital) to the Crestline subscribers. The five-year equity warrants, which have customary anti-dilution protections, have an exercise price of 39 pence per ordinary share.

11.  Principal risks and uncertainties

The 2021 Annual Report sets out on pages 60 and 61 the principal risks and uncertainties that could impact the business.

 

END

 

 

FR FELLBLLLBFBD