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

Transcription

1 25 September 2018 Time Out Group plc ( Time Out, the Company or the Group ) Unaudited Half Year Results for the six months Time Out Market momentum continues, with Time Out Digital margins improving Time Out Group plc (AIM: TMO), the global media and entertainment business, is pleased to announce its unaudited half year results for the six months. Financial highlights Group revenue - year-on-year growth of 20% to 22.4m (: 18.7m), driven by a combination of underlying* growth (+8%) and prior year acquisitions Group gross profit - strong growth of 42% (25% underlying), with material improvements in H1 gross margin to 63% (: 53%) Time Out Market division - revenue growth of 50%, with Time Out Market Lisbon continuing to deliver strong growth in EBITDA in the period Time Out Digital division - revenue growth of 15% (1% underlying), primarily driven by digital advertising growth of 56% (22% underlying); offset by underlying declines in Live (-50%), due to the strategic decision to discontinue low margin events, and Print (-5%) Adjusted EBITDA** - loss of 6.4m (: 9.4m), a 32% improvement on prior year and expected to be significantly lower in the second half Operating loss - loss of 10.2m (: 15.6m); underlying overhead savings of 5% Net cash and cash equivalents - 9.4m at 30 Loan facility - Existing 20.0m facility unutilised at 30, with term extended to 31 October 2020 Operational highlights Time Out Market division - Strong momentum continues Continued success of Time Out Market Lisbon, with a record 1.9m visitors (: 1.7m) The Group s top strategic priority remains the global roll out of the successful Time Out Market format, with five new markets on track to open in North America next year, including New York, Miami, Boston and Chicago, as well as Time Out Market s first management agreement in Montreal Time Out Digital division - Margins improving Gross margin improvements - strong operational focus in the first half helped drive a 10% (absolute) year-on-year margin improvement to 58%; key measures included the discontinuation of low margin live events, prioritisation of organic traffic and optimisation of US print frequency and distribution Overhead savings - delivery of significant efficiencies, leveraging benefits of greater scale from acquisitions and new operational practices; additional savings to be delivered in the second half Commenting on the results, Julio Bruno, CEO of Time Out Group plc, said: Time Out is celebrating its 50th year and continues to provide incredible content to our global users across digital, print and physical platforms. Our first Time Out Market in Lisbon continues to exceed our expectations, with records broken again in the first half as visitors grew 12% to 1.9m. Over the next 12 months we will open owned and operated markets in New York, Miami, Boston and Chicago and our first franchise location in partnership with Ivanhoé Cambridge in Montreal. We are in the unique position to attract the best chefs and food offerings in a city, and to drive customers to the locations through our global digital reach. 1

2 Following the successful integration of our franchises in Spain, Australia, Hong Kong and Singapore and the expansion of our content, we now own and operate the Time Out Digital business in 288 cities and have licence agreements in 27 others. Through these recent acquisitions and further improvements in our operating structure we will benefit from a much-rationalised cost base going forward. Furthermore, following a review of revenue lines, Time Out Digital has removed low margin activity, leading to significantly improved gross margins which we expect to continue into the second half. Digital advertising continues to perform well, growing sales 56% in the period. Whilst this reduces our revenue outlook for the year, it ensures we will deliver significantly lower losses in the second half and remain on track to deliver the near-term priority of EBITDA profitability. * Underlying results are presented on a constant currency basis and exclude the contribution from the acquisitions of the Australia franchisee in June and the Spain franchisee in September, and the addition of Singapore and Hong Kong ** Adjusted measures are stated before interest, taxation, depreciation, amortisation, share based payments and one-off exceptional items This announcement contains inside information for the purposes of Article 7 of Regulation (EU) no 596/2014. For further information, please contact: Time Out Group plc Tel: +44 (0) Julio Bruno, CEO Adam Silver, CFO Steven Tredget, Investor Relations Director Liberum (Nominated Adviser and Broker) Tel: +44 (0) Steve Pearce / Trystan Cullen FTI Consulting LLP Tel: +44 (0) Edward Bridges / Stephanie Ellis Notes to editors About Time Out Group plc Time Out Group is a multi-platform media and e-commerce business with a global content distribution network comprising magazines, online, mobile apps, mobile web and physical presence via Live Events and Time Out Market. Using these platforms and its well-established global brand, Time Out seeks to inspire and enable people to experience the best of a city, through curated content around food, drink, music, theatre, art, travel and entertainment across 315 cities and in 58 countries. Time Out, 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. 2

3 Chief Executive s Statement Overview Time Out Group is the leading global media and entertainment business that inspires and enables people to make the most of the city through its two highly synergistic divisions, Time Out Digital and Time Out Market. Time Out Digital is a multi-channel media and e-commerce platform with a global brand that advertisers and consumers love and trust. Time Out Market leverages this brand to bring a city s best restaurants, bars and cultural experiences together under one roof. Time Out Market currently operates in Lisbon, with new openings scheduled in 2019 for New York, Miami, Boston, Chicago and Montreal, and a further pipeline of other global locations. Operational review The following operating KPIs are used by the Group to assess its performance against its objectives. Operating KPIs ended 30 ended 30 June Change Traffic: Global unique visitors monthly average 21.7m 22.1m (2)% O&O unique visitors monthly average 17.7m 16.7m 6% E-commerce: Time Out members α 3,161k 2,190k 44% Items sold 308k 412k (25)% Transactions (including live events) 155k 202k β (23)% Premium Profiles: Active listers 1,107 1,190 (7)% Time Out Market: Total tenant turnover 15.6m 12.8m 22% Visitors 1.9m 1.7m 12% O&O is the Time Out owned and operated business. Monthly average is calculated as a rolling six-month average α Members who have opted in and engaged with Time Out in the last 12 months β metrics restated to correct data inconsistencies in live events ticket sales Audience & Traffic development During the period, the Group achieved a global monthly average audience reach of million, a 35% decline from the same period last year. Time Out, like many other online content brands, has been heavily impacted by Facebook s recent algorithm changes. Despite the impact of these changes, Time Out s global monthly unique visitor base remained broadly in line with prior year (with O&O unique visitors growing 6%), a clear reflection of the attractiveness and excellent organic search performance of Time Out s unique content. To help grow its audience through content, Time Out has increased the number of cities in which it curates the best Things to Do to 315 cities and in 58 countries. In the period, the Group also launched Paris and Madrid magazines, as well as a Hong Kong magazine in traditional Chinese, to complement the digital, mobile and social presence in those cities. Launching free magazines across relevant cities remains part of Time Out s content strategy and can create a halo effect on digital metrics, audience engagement and brand awareness, thereby offering advertising clients differentiated multi-channel solutions within brand-safe environments. Furthermore, the recent migration to a new CRM system is enabling greater personalisation and targeting of communication to users and, despite GDPR, the business grew its membership base by 44% in the period. 3

4 Business performance The Group s revenue performance is as follows ended 30 ended 30 June Change Underlying change* 000 '000 Digital advertising 6,918 4,445 56% 22% E-commerce 2,700 3,072 (12)% (15)% Affiliates & Offers 1,845 1,509 22% 18% Live events 855 1,563 (45)% (50)% Premium Profiles 1, % 11% Digital revenue 10,679 8,498 26% 7% Print 7,350 7,022 5% (5)% International (19)% (5)% Time Out Digital 18,534 16,141 15% 1% Time Out Market 3,842 2,554 50% 48% Group Revenue 22,376 18,695 20% 8% Gross Profit 14,069 9,873 42% 25% Operating expenditure (20,471) (19,238) (6)% 5% Adjusted EBITDA (6,402) (9,365) 32% 38% * Underlying results are presented on a constant currency basis and exclude the contribution from the acquisitions of the Australia franchisee in June and the Spain franchisee in September, and the addition of Singapore and Hong Kong Time Out Digital division Digital advertising Digital advertising revenue grew 56% (22% underlying) in the period, with the UK and US delivering strong growth of 42% and 13% respectively. The business continues to benefit from ongoing technology investments, with viewability increasing year-on-year from 45% to 64%, load speeds improving by 23% to 10.23ms by (June : 13.20ms), and the launch of new video capabilities. This has reaped dividends with high-profile advertising clients including Transport for London, Unilever, Cadburys and British Airways advertising across digital and print mediums. The Unilever partnership, and in particular their Magnum brand, involved a revolutionary hi-jack of the Time Out logo promoting their marketing message of Time In. Premium Profiles Revenue from Premium Profiles grew by 8% (11% underlying) even though the number of active listings decreased by 7% to 1,107 at 30 (June : 1,190). The main drivers of revenue growth were pricing increases and the sales of new advertising enhancements that have further improved the visibility of Time Out clients to the consumer base. 4

5 Print advertising Global print revenue grew 5%, driven by the print revenue of acquired franchises, with underlying revenue declining 5%. Although the UK and Portugal grew 4% and 6% respectively, difficult market conditions and short-term disruption from changes in the sales organisation drove a 33% decline in US print revenue. In light of this result, Management has taken decisive actions to improve the profitability of the US print operation including reducing the frequency of the New York magazine to fortnightly, optimising its distribution strategy and discontinuing loss-making publications in Austin and Philadelphia. E-commerce (including Affiliates & Offers and Live Events) Overall, e-commerce revenues declined 12% in the first half, with transaction volumes heavily impacted by the strategic decision to stage fewer, relatively low margin, live events and cut spend on traffic acquisition. A&O revenue still grew year-on-year by 22% with growth across all O&O countries. The US delivered revenue growth of 52%, and the UK 12%, benefiting from continued expansion of new products such as restaurant gift boxes, coupled with further new partnerships with e-commerce players such as Get Your Guide, Design My Night, La Fourchette and Skimlinks. At the same time, the Group has stopped working with certain lower margin partners. As such, while A&O transactions have declined 15% (to 143k), average revenue per transaction, has grown 44% to As outlined above, Management has also decided to focus on fewer, higher margin Live events (with greater sponsorship potential), resulting in a 45% decline in revenue but a 72% improvement in total average revenue per transaction (including tickets and sponsorship) to in the period (: 46.26). As a result of this strategy, over the same period, the number of tickets sold fell from 34k to 11k. International In addition to its O&O network, which serves 288 cities across 45 countries (as of ), the Group has a presence in a further 27 cities across 13 countries through its international licensing arrangements. Here rights are granted to third parties to publish print magazines and produce digital content under the Time Out brand, generating revenue through the payment of fees and royalties by third party licensees. International revenue decreased 19% YoY primarily due to Australia, Spain, Hong Kong and Singapore becoming O&O markets in, with underlying revenues declining 5%. Time Out Market division The Lisbon market continues to exceed expectations, delivering 50% revenue growth in the first half driven by record visitor numbers, total transaction value and improved contract terms. The Group s top strategic priority remains the global roll out of the successful Time Out Market format and, although behind schedule, strong progress has been made towards a very busy 2019, a summary of which is set out below: Miami Expected to open in Q1 2019, with construction well advanced and the chef line up complete New York Expected to open in Q The original site has been extended, with additional riverside access space secured, and strong progress is being made with the chef line up Boston Expected to open in Q Chicago Construction is currently underway, and the site is expected to open in Q Montreal Time Out Market s first management agreement, with the market due to open in Q While the business continues to pursue planning consent for the Spitalfields site in London, if successful, opening would not occur before H Furthermore, the business still awaits final UNESCO approval for the site in Porto. The Group continues to build its pipeline of additional locations in other cities around the world and is considering several attractive opportunities. The management agreement that the Company entered in May, with global real estate company Ivanhoé Cambridge, illustrates the potential for new sites which require no 5

6 capital expenditure by Time Out. The Group considers this model, whereby Time Out Market will take primary responsibility for branding, curation and day-to-day management, in return for a share of revenue and profit (subject to a minimum guaranteed management fee), to be an excellent complement to its portfolio of O&O markets and will continue to monitor other similar opportunities to leverage the Time Out brand in this way. Financial performance Revenue Group revenue grew 20% year-on-year in the first six months to 22.4m (: 18.7m), an underlying growth rate of 8%, excluding acquisitions and at constant currency. Gross margin As detailed above, a clear focus of the Group in the first half was to improve gross margins, which has helped deliver 42% growth in gross profits. This was achieved through a range of initiatives including a reduction in traffic acquisition spend, curtailing low margin live events and improvements to print operations. This focus, coupled with an ongoing shift in product mix to higher margin digital products and the Time Out Market, drove a 10% margin (absolute) improvement to 63%, compared with, and will deliver further benefits in the second half. Operating expenditure Group operating expenditure, before exceptional costs, share-based payments, depreciation and amortisation, was 20.5m (: 19.2m). Of this increase, 2.7m relates to incremental operating costs of acquired businesses. Time Out Digital underlying operating costs decreased by 9%. Time Out Market operating costs increased by 0.5m driven by the global roll-out of new markets and the growth in the Lisbon market. The Group continues its strong focus on overhead efficiencies and recent actions are expected to deliver further savings in the second half, the full benefit of which will be delivered in Adjusted EBITDA Adjusted EBITDA shown in the income statement represents the profit or loss before interest, taxation, depreciation, amortisation, share based payments and one-off exceptional items. Adjusted EBITDA loss for the period was 6.4m (: 9.4m loss), substantially reduced following the improvement in gross margin, operating expenditure savings and the continuing outperformance by Time Out Market. Time Out Market Lisbon delivered an adjusted EBITDA of 1.6m in the period (: 0.8 million). After the costs of the central team, the Time Out Market division delivered adjusted EBITDA of 0.4m compared to a loss of 0.2m in H1. Group revenue is typically biased towards the second half and this additional income, combined with an improvement in operating margin in the second half, is expected to result in a significantly lower level of losses in the second half of the year. Exceptional costs Exceptional costs in the first half of 0.4m (: 2.6m) principally relate to staff restructuring costs. Prior year costs also included staff restructuring costs of 1.7m, 0.3m of costs in respect of the acquisitions of the franchises in Australia and Spain and the revaluation ( 0.6m loss) of the put option granted by the Group to acquire the remaining minority interest in Time Out Market in Lisbon. 6

7 Operating loss The operating loss for the period was 10.2m (: 15.6m) including depreciation of 0.4m (: 0.5m) and amortisation of intangible assets of 2.2m (: 2.2m). The amortisation of intangible assets included 1.0m (: 1.1m) relating to acquired intangible assets. Other intangible asset amortisation, primarily amortisation of software both acquired and internally developed, was 1.2m (: 1.1m). Net finance costs Net finance costs, mainly comprising interest on financing of 0.8m, has doubled compared to last year following the loan secured in November. In August 2018, the Group drew 15.0m from existing credit facilities and will therefore start incurring additional interest costs in the second half. These interest amounts are payable at the end of the facility term which has been extended to 31 October Foreign exchange The revenues and costs of Group entities reporting in US dollars have been consolidated in these financial statements at an average exchange rate of $1.33 (: $1.26). The operations reporting in euros have been consolidated at a rate of 1.15 (: 1.16). Associates The Group has a 37.8% shareholding in Flypay, a mobile technology platform providing solutions for ordering and payment within the hospitality sector. The shareholding is accounted for as an associate and the Group s share of Flypay s loss for the period since acquisition is included as Share of associate s loss in the income statement. Cash flow First half Full year 2018 Adjusted EBITDA (6,402) (9,365) (14,217) Movement in working capital 1,494 (1,772) (3,725) Cash used in operations (4,908) (11,137) (17,942) Exceptional cash flows (379) (2,088) (2,877) Capital expenditure (4,600) (2,475) (4,386) Operating cash flow (9,887) (15,700) (25,205) Net interest paid (102) (81) (389) Tax received Free cash flow (9,989) (15,772) (25,591) (Repayment)/advance of new borrowings (530) (379) 7,809 Repayment of borrowings (437) (555) (1,169) Repayment of finance leases (32) (29) (59) IPO costs - (2) - Fair value movements in debt - (71) - Costs relating to share issue - - (5) Acquisition of non-controlling interest - (196) (196) Acquisitions of subsidiaries, net of cash - 37 (470) Movement in cash and cash equivalents (10,988) (16,967) (19,681) Operating cash flow The cash used in operations before exceptional costs improved, versus the same period last year, with an outflow of 4.9m (: 11.1m). The net working capital inflow of 1.5m improved significantly compared to the same period last year (: 1.8m outflow) primarily driven by higher deferred income in respect of a five-year Time Out Market Lisbon sponsorship deal signed in H Capital expenditure of 4.6m (: 7

8 2.5m) includes Time Out Market capital expenditure as well as capitalised technology staff costs of the teams working on the digital platforms. Net cash and available facilities Net cash at the period end was 2.3m (31 December : 19.3m) as follows: At 30 June At 30 June 000 At 31 December 000 Cash and cash equivalents (see note 9) 18,873 32,922 29,839 Borrowings (9,483) (2,025) (9,398) Net cash and cash equivalents 9,390 30,897 20,441 Total available cash, including the unutilised 20.0m credit facility, was 31.5m at 30. Furthermore, of the additional 7.3m restricted cash on the balance sheet at 30, Time Out Market held 3.8m in escrow which is available to be used towards construction costs. 15.0m of the 20.0m credit facility was drawn in August to progress the roll-out of Time Out Markets, the majority of which remains available. Post balance sheet events On 27 March 2018 the Company entered into a 20.0m term loan facility agreement with Oakley Capital Investments Limited ("OCI"). The facility was for a period of 19 months expiring on 31 October 2019 and had an interest rate of between 10% to 15% depending on amounts drawn. At today s date, 15.0m of the facility has been drawn. The Company has reached agreement with OCI on an amendment and conversion of the 20.0m term loan facility agreement into a Loan Note agreement, with an extended term to 31 October In return for granting security over certain Time Out trademarks and domain name, the previous interest rate mechanism will also be replaced with a flat rate of 12%. The proceeds under the Loan Notes are to be used by the Group in the same way to fund future Time Out Market developments. OCI is a substantial shareholder in the Company as defined by the AIM Rules and as such entering into the amendment and conversion of the loan agreement constitutes a related party transaction pursuant to AIM Rule 13. With the exception of Peter Dubens, who is a director of OCI, and Alex Collins, who is a partner of Oakley Capital Private Equity, the Directors of the Group consider that, having consulted with Liberum, the terms of the transaction are fair and reasonable insofar as shareholders are concerned. Outlook Time Out Market s excellent growth and positive EBITDA is expected to continue in the second half, with Management focused on the opening of five new markets in Time Out Digital s priority will remain a focus on growing its highest margin product areas and the delivery of other overhead efficiencies. At a Group level, whilst this will result in a lower level of revenue than previously expected, the continued focus on gross margin improvement and further efficiency savings, together with the historic weighting of trading towards the second half of the year, is expected to result in a significantly lower level of losses in H2. Julio Bruno Group Chief Executive 24 September

9 Condensed Consolidated Income statement Note 31 December June Revenue 4 22,376 18,695 44,364 Cost of sales 4 (8,307) (8,822) (19,709) Gross profit 14,069 9,873 24,655 Administrative expenses (24,246) (25,429) (49,293) Operating loss (10,177) (15,556) (24,638) Finance income Finance costs (833) (405) (825) Share of associate's loss (1,096) (416) (954) Loss before income tax 4 (12,090) (16,288) (26,345) Income tax credit Loss for the period (11,880) (16,026) (26,020) Loss for the period attributable to: Owners of the parent (11,492) (15,643) (25,048) Non-controlling interests (388) (383) (972) (11,880) (16,026) (26,020) Loss per share: Basic and diluted loss per share (p)

10 Condensed Consolidated Statement of Income and Other Comprehensive Income June 31 December Loss for the period (11,880) (16,026) (26,020) Other comprehensive income: Items that may be subsequently reclassified to the profit or loss: Currency translation differences 1,154 (1,320) (3,151) Other comprehensive income for the period, net of tax 1,154 (1,320) (3,151) Total comprehensive expense for the period (10,726) (17,346) (29,171) Total comprehensive expense for the period attributable to: Owners of the parent (10,408) (16,957) (28,169) Non-controlling interests (318) (389) (1,002) (10,726) (17,346) (29,171) 10

11 Condensed Consolidated Statement of Financial Position At 30 Note 31 December June Assets Non-current assets Intangible assets - Goodwill 7 50,668 50,485 50,057 Intangible assets Other 18,349 19,640 19,044 Property, plant and equipment 12,598 8,552 8,834 Investment in associate 5,102 6,737 6,199 Trade and other receivables 1, ,969 85,414 85,092 Current assets Inventories Trade and other receivables 13,881 13,330 14,602 Cash and cash equivalents 9 18,873 32,922 29,839 33,054 46,524 44,717 Total assets 121, , ,809 Liabilities Current liabilities Trade and other payables (17,966) (16,799) (17,839) Provisions (16) (86) (67) Borrowings (1,421) (833) (1,220) (19,403) (17,718) (19,126) Non-current liabilities Trade and other payables (3,511) (2,404) (2,291) Deferred tax liability (2,407) (2,610) (2,623) Borrowings (8,062) (1,192) (8,178) (13,980) (6,206) (13,092) Total liabilities (33,383) (23,924) (32,218) Net assets 87, ,014 97,591 Equity Called up share capital Share premium 106, , ,042 Translation reserve 7,129 7,852 6,045 Capital redemption reserve 1,105 1,105 1,105 Retained earnings / (losses) (25,214) (5,730) (14,496) Total parent shareholders' equity 89, ,638 98,829 Non-controlling interest (1,556) (624) (1,238) Total equity 87, ,014 97,591 11

12 Condensed Consolidated Statement of Changes in Equity At 30 (Unaudited) Capital redemption reserve Retained earnings/ (losses) Total parent Shareholders' equity Noncontrolling interest Called up share capital Share premium Translation reserve Total equity '000 '000 Balance at 1 January ,042 6,045 1,105 (14,496) 98,829 (1,238) 97,591 Changes in equity Loss for the period (11,492) (11,492) (388) (11,880) Other comprehensive income - - 1, , ,154 Total comprehensive income - - 1,084 - (11,492) (10,408) (318) (10,726) Share based payments Issue of new shares Balance at ,042 7,129 1,105 (25,214) 89,196 (1,556) 87, June (Unaudited) Called up Capital Retained Total parent Non- Share capital Share premium Translation reserve Redemption reserve earnings/ (losses) Shareholders' equity Controlling interest Total equity '000 '000 Balance at 1 January ,071 9,166 1,105 9, ,498 (236) 122,262 Changes in equity Loss for the period (15,643) (15,643) (383) (16,026) Other comprehensive income - - (1,314) - - (1,314) (6) (1,320) Total comprehensive income - - (1,314) - (15,643) (16,957) (389) (17,346) Share based payments Acquisition of minority interest Issue of shares for acquisition 2 2, ,209-2,209 Balance at 30 June ,278 7,852 1,105 (5,730) 108,638 (624) 108,014 12

13 Condensed Consolidated Statement of Changes in Equity 31 December (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 Balance at I January ,071 9,166 1,105 9, ,498 (236) 122,262 Changes in equity Loss for the year (25,048) (25,048) (972) (26,020) Other comprehensive income - - (3,121) - - (3,121) (30) (3,151) Total comprehensive income - - (3,121) - (25,048) (28,169) (1,002) (29,171) Share-based payments ,527 1,527-1,527 Issue of shares for acquisitions 2 2, ,973-2,973 Balance at 31 December ,042 6,045 1,105 (14,496) 98,829 (1,238) 97,591 13

14 Condensed Consolidated Statement of Cash Flows Note June 31 December Cash flows from operating activities Cash used in operations 8 (5,287) (13,101) (20,819) Interest paid (118) (126) (459) Tax credits received Net cash used in operating activities (5,405) (13,218) (21,275) Cash flows from investing activities Purchase of property, plant and equipment (3,334) (1,040) (1,954) Purchase of intangible assets (1,266) (1,435) (2,432) Interest received Acquisition of subsidiaries, net of cash acquired - 37 (470) Net cash used in investing activities (4,584) (2,393) (4,786) Cash flows from financing activities Costs related to share issues - (2) (5) Advance / (repayment) of new borrowings (530) (379) 7,809 Repayment of borrowings (437) (750) (1,169) Repayment of finance leases (32) (29) (59) Acquisition of minority interests - (196) (196) Net cash from financing activities (999) (1,356) 6,380 (Decrease)/Increase in cash and cash equivalents (10,988) (16,967) (19,681) Cash and cash equivalents at beginning of period 29,839 50,082 50,082 Effect of foreign exchange rate change 22 (193) (562) Cash and cash equivalents at end of period 18,873 32,922 29,839 14

15 Notes to the condensed consolidated statements 1. Basis of preparation The unaudited interim consolidated financial information for the six months has been prepared following the recognition and measurement principles of IFRS as adopted by the European Union. The interim consolidated financial information does not include all the information and disclosures required in the annual financial information and should be read in conjunction with the audited statutory financial statements for the year ended 31 December. 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 The condensed interim financial information has not been audited. The financial information for the year ended 31 December is derived from the audited financial statements for the year ended 31 December, which were unqualified and did not contain any statement under section 498(2) or 498(3) of the Companies Act Statutory accounts for Time Out Group plc for the year ended 31 December have been delivered to the Registrar of Companies. The comparative financial information for the period June does not constitute statutory accounts for that period. The statements were approved by the Board on 24 September Going Concern The Board has assessed the Group s ability to operate as a going concern based on its current financial position, latest trading forecasts and the capital expenditure requirements of the growing Time Out Market business. The Directors have subjected these forecasts to sensitivity analysis and considered the options available to mitigate any downside risks. The Group s available cash at 31 August 2018 was 19.0m, including 14.0m cash at bank and the balance of the 20.0m credit facility, the term of which has been extended to 31 October The Group also held 10.0m in escrow at 31 August 2018, available for use towards Time Out Market construction costs. Although, at the date of this report, all required funding is not contracted, the Group continues to explore all potential funding sources which includes an option over an additional debt facility of 18.0m. Given this progress, the Directors are confident that the Group will be able to raise the necessary capital to continue to execute its current strategy. For these reasons, they continue to adopt the going concern basis of accounting in preparing these financial statements. 2. Accounting policies On 1 January 2018, the Group implemented IFRS 15 "Revenue from contracts with customers" and IFRS 9 Financial Instruments. There was no prior year impact on implementation of the standard and no material impact is expected in the year. Apart from the implementation described above, 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. The Group is working towards the implementation of IFRS 16 "Leases" on 1 January Adoption of this new standard is likely to have an impact on the Group and the Directors are currently completing the assessment of this impact. 15

16 3. Exchange rates The significant exchange rates to UK Sterling for the Group are as follows: ended 30 June 31 December Closing rate Average rate Closing rate Average rate Closing rate Average rate US dollar Euro Australian dollar Singaporean dollar Hong Kong dollar Segmental information In accordance with IFRS 8, the Group's operating segments are based on the figures reviewed by the Board of Directors, which represents the chief operating decision maker. The Group is organised into two operating segments: Time Out Digital this includes the sale of digital and print advertising, local business listings ( Premium Profiles ), Live Events tickets and sponsorship, commissions generated by online bookings and transactions ( Affiliates and Offers ), and fees from third party licensees. Time Out Market predominantly turnover related rent from restaurants in the market and charges for services. (Unaudited) Time Out Digital Time Out Market Total Revenue 18,534 3,842 22,376 Cost of sales (7,808) (499) (8,307) Gross profit 10,726 3,343 14,069 Administrative expenses (24,246) Operating loss (10,177) Analysed as: Adjusted EBITDA loss (6,402) Share based payments (774) Exceptional items (379) EBITDA loss (7,555) Depreciation of property, plant and equipment (448) Amortisation of intangible assets (2,174) Operating loss (10,177) Finance income 16 Finance costs (833) Share of associate's loss (1,096) Loss before income tax (12,090) Income tax credit 210 Loss for the period (11,880) 16

17 4. Segmental information (continued) June (Unaudited) Time Out Digital Time Out Market Total Revenue 16,141 2,554 18,695 Cost of sales (8,450) (372) (8,822) Gross profit 7,691 2,182 9,873 Administrative expenses (25,429) Operating loss (15,556) Analysed as: Adjusted EBITDA loss (9,365) Share based payments (888) Exceptional items (2,605) EBITDA loss (12,858) Depreciation of property, plant and equipment (537) Amortisation of intangible assets (2,161) Operating loss (15,556) Finance income 89 Finance costs (405) Share of associate's loss (416) Loss before income tax (16,288) Income tax credit 262 Loss for the period (16,026) 31 December (Audited) Time Out Digital Time Out Market Total Revenue 38,393 5,971 44,364 Cost of sales (18,877) (832) (19,709) Gross profit 19,516 5,139 24,655 Administrative expenses (49,293) Operating loss (24,638) Analysed as: Adjusted EBITDA loss (14,217) Share based payments (1,527) Exceptional items (3,155) EBITDA loss (18,899) Depreciation of property, plant and equipment (1,124) Amortisation of intangible assets (4,420) Profit / loss on disposal of fixed assets (195) Operating loss (24,638) Finance income 72 Finance costs (825) Share of associate's loss (954) Loss before income tax (26,345) Income tax credit 325 Loss for the year (26,020) 17

18 4. Segmental information (continued) Revenue is analysed geographically by origin as follows: June 31 December Europe 15,461 11,277 26,575 Americas 5,253 6,536 14,313 Rest of World 1, ,476 22,376 18,695 44, Exceptional items Exceptional items are analysed as follows: June 31 December Restructuring costs 354 1,683 1,787 Fees relating to acquisitions in the year Advisory fees in relation to the IPO Fair value loss on deferred consideration Office relocation costs ,605 3,155 The 2018 restructuring costs include employee redundancy costs as part of moving the business to a global model and is part of the initiative started in. The acquisition fees relate to final fees in respect of prior year acquisitions. The office relocation costs relate to additional work required after the company relocated in November. The restructuring costs include employee redundancy costs incurred to as part of a plan to shift the business to a global model. The acquisition fees are costs associated with the acquisition of subsidiaries and associates in the period and include a partial release of the provision made in 2016 for an onerous lease. The fair value loss relates to a minority interest held in Time Out Market. 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, therefore diluted loss per share is equal to basic loss per share. June 31 December Number Number Number Weighted average number of ordinary shares for the purpose of basic and diluted loss per share 133,378, ,404, ,985,250 Losses from continuing operations for the purpose of loss per share 11,492 15,643 25,048 Pence Pence Pence Basic and diluted loss per share

19 7. Goodwill The Group performs its annual impairment review at the end of each financial year. Ongoing trading losses are an indicator of potential impairment and, therefore, a full review was undertaken at 30. The nature of the key inputs to the review were consistent with the review performed at 31 December and were applied to the Group s updated forecasts. The review did not require an impairment charge in the period. As part of this review, Management has also considered the way operations are monitored and how resources are allocated to achieve the Group strategy. This review concluded that the Digital and Print cash generating units ( CGU ) should be combined. Therefore, the cash generating units of the Group now comprise Time Out Digital and Time Out Market as set out below. June 31 December Time Out Digital 42,550 42,433 41,919 Time Out Market 8,118 8,052 8,138 50,668 50,485 50,057 At 30 June the carrying value of the Digital CGU was 34.0m (31 December : 33.3m) and of the Print CGU was 8.6m (31 December : 8.1m). 8. Notes to the cash flow statement Reconciliation of loss before income tax to cash used in operations June 31 December Loss before income tax (12,090) (16,288) (26,345) Add back: Net finance costs Share based payments ,527 Depreciation charges ,124 Amortisation charges 2,174 2,161 4,420 Fair value loss / (gain) on investments Loss on disposals of fixed assets Non-cash movements (256) Share of associate's loss 1, Deferred consideration paid - (30) - Decrease/(increase) in inventories (21) (40) (51) Increase in trade and other receivables 622 (796) (2,230) Decrease in trade and other payables 893 (957) (1,536) Cash used in operations (5,287) (13,101) (20,819) 19

20 9. Cash and cash balances June 31 December Cash 11,530 32,922 28,746 Monies held in restricted accounts and deposits 7,343-1,093 Cash and cash equivalents 18,873 32,922 29,839 Borrowings (9,483) (2,025) (9,398) Net cash and cash equivalents 9,390 30,897 20,441 Monies held in restricted accounts and deposits 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. 10. Share capital Nominal value per share 31 December June Number Number Number Ordinary shares 133,541, ,823, ,362,889 Aggregate amounts 133,541, ,823, ,362,889 Ordinary shares Aggregate amounts Post balance sheet events On 27 March 2018 the Company entered into a 20.0m term loan facility agreement with Oakley Capital Investments Limited ("OCI"). The facility was for a period of 19 months expiring on 31 October 2019 and had an interest rate of between 10% to 15% depending on amounts drawn. At today s date, 15.0m of the facility has been drawn. The Company has reached agreement with OCI on an amendment and conversion of the 20.0m term loan facility agreement into a Loan Note agreement, with an extended term to 31 October In return for granting security over certain Time Out trademarks and domain name, the previous interest rate mechanism will also be replaced with a flat rate of 12%. The proceeds under the Loan Notes are to be used by the Group in the same way to fund future Time Out Market developments. OCI is a substantial shareholder in the Company as defined by the AIM Rules and as such entering into the amendment and conversion of the loan agreement constitutes a related party transaction pursuant to AIM Rule 13. With the exception of Peter Dubens, who is a director of OCI, and Alex Collins, who is a partner of Oakley Capital Private Equity, the Directors of the Group consider that, having consulted with Liberum, the terms of the transaction are fair and reasonable insofar as shareholders are concerned. 20