Final Results - 29.10.21

29 October 2021

Time Out Group plc

("Time Out", the "Company" or the "Group") Results for the 18 months ended 30 June 2021 and

Board Changes

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

Outlook

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

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

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

Financial Summary

• Gross revenue(1) declined to £44.9m (2019(5): £77.1m) and net revenue to £37.8m (2019: £63.3m) due to the forced closure of Time Out Market ("Market") sites and the sharp decline in advertising revenues generated by Time Out Media ("Media") from the travel and leisure sectors
• Gross margin(2) increase of 7 percentage points to 80% (2019: 73%), despite Group gross profit decline of 35% to £30.2m, reflecting Time Out Media's higher digital revenue mix
• Group adjusted EBITDA loss(3) of £25.1m (2019: £4.7m), which includes the benefit of the cost reduction initiatives implemented in the period
• Group loss for the period of £70.5m (2019: £20.9m) reflects challenging trading conditions over the 18‐month period, additional depreciation as a result of Markets that opened over the comparative period and an exceptional goodwill impairment charge of £20.0m in respect of the Media business
• Cash of £19.1m at 30 June 2021 and debt of £23.5m, resulted in adjusted net debt(4) of £4.4m. Reported net debt was £26.9m including £22.5m of IFRS 16 lease liabilities
• Equity raises of £62.4m completed in the period were used to repay debt and allow flexibility in managing Covid‐19 uncertainties

Operational Summary

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

1. See note 4 for the explanation of gross and net revenue
2. Gross margin calculated as gross profit as a percentage of net revenue
3. Adjusted EBITDA is stated before interest, taxation, depreciation, amortisation, share based payments, and exceptional items. It also includes property lease costs which, under IFRS 16, is replaced by depreciation and interest charges. This is a non‐GAAP alternative performance measure that management uses to aid understanding of the underlying business performance. See note 4 for reconciliation to statutory measures.
4. Adjusted net cash/(debt) excludes lease‐related liabilities under IFRS 16. See note 7 for reconciliation to statutory measures.
5. All comparative information relates to the 12 month period to 31 December 2019 as opposed to the current period of 18 months to 30 June 2021

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• Time Out Markets heavily disrupted due to extended government restrictions
• • All Markets were largely closed during the period, but with repeated periods of re‐opening and subsequent re‐closure and significant restrictions. All Markets reopened by June 2021, and have remained consistently open since with encouraging initial trading
  • Time Out Market Dubai opened on 7 April 2021 with performance exceeding expectations
  • Time Out Market Abu Dhabi management agreement signed in January 2021 (2023 opening)
  • Withdrawal from the planned development of the Waterloo (owned & operated) Market due to the impact of the pandemic and to focus on the strong pipeline of management agreement opportunities
• Time Out Media faced significant reductions in advertising spend due to lockdowns
• • Travel and hospitality industry particularly adversely affected
  • Continued focus on higher‐margin digital offerings, with Creative Solutions successfully attracting global brand partnerships
  • Print suspended with only a limited return in the UK, Spain and Portugal in response to advertiser demand and where economically viable
• In line with the Company's succession plan, Chris Ohlund, currently Executive Vice Chairman of Time Out, is appointed as Chief Executive Officer (CEO) of the Group with immediate effect following the decision of Julio Bruno to step down as CEO in order to pursue other business interests

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

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

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

Peter Dubens, Chairman of Time Out said today:

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

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

Chris Ohlund, CEO‐designate added:

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

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

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

About Time Out Group plc

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

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

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

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Chief Executive's Review

Group overview

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

1. See note 4 for the explanation of net revenue
2. Gross margin calculated as gross profit as a percentage of net revenue
3. Adjusted measures are stated before interest, taxation, depreciation, amortisation, share based payments, and exceptional items. It also includes £7.5m of property lease costs which, under IFRS 16, is replaced by depreciation and interest charges (see note 4)

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

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

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

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Together these actions secured immediate cash savings and reduced adjusted operating expenses to £53.6m for the 18‐month financial period compared to £49.2m for the prior 12‐month period.

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

Operating KPIs

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

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

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

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

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

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

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