TIDMTMO
RNS Number : 6818A
Time Out Group plc
28 March 2017
28 March 2017
Time Out Group plc
("Time Out", the "Company" or the "Group")
Audited Full Year Results for the twelve months ended 31
December 2016
Growth ahead of expectations
Time Out Group plc (AIM: TMO), the global media and
entertainment business with food and cultural markets, is pleased
to announce its maiden audited results for the year ended 31
December 2016.
The results demonstrate strong progress for the Group, with
revenue accelerating in the second half of the year, in line with
the Trading Update issued in January 2017.
Financial Highlights
Proforma results, including a full year of Time Out Market in
2016 and prior year
-- Digital revenue growth of 39% including e-commerce up 45%,
Premium Profiles up 51% and digital advertising up 36% year-on-year
(YoY)
-- Group revenue increased by 23% (17% in constant currency) to
GBP37.1m (2015: GBP30.2m) with revenue growth in the second half of
29% compared to 16% in the first half of 2016
-- Adjusted EBITDA* loss improved by GBP2.5m to GBP10.6m (2015: GBP13.1m)
-- Time Out Market in Lisbon reported strong YoY revenue growth
of 115% and record 3.1 million visitors
Reported results, including only post-acquisition trading of
Time Out Market
-- Group revenue increased by 25% to GBP35.7m (2015: GBP28.5m)
-- Adjusted EBITDA* loss improved by GBP2.2m to GBP10.2m (2015:
GBP12.4m); the operating loss for the year was GBP17.9m (2015:
GBP18.5m)
-- Closing net cash position of GBP47.5m
Operational Highlights
-- Successful AIM listing in June 2016 raising net proceeds of
GBP59 million after repayment of debt, positioning Time Out for the
next stage of its growth and development
-- In 2016, Time Out achieved a global monthly audience reach of
156 million across all platforms, growing 45% YoY
-- Time Out Market has signed conditional leases, subject to
planning permission, in London and Miami and is scoping new
locations
-- To further grow its e-commerce business, the Group entered
new affiliate agreements with Viator and Broadway.com
-- Investment in resources especially across product,
engineering and e-commerce. This transformation of skills will
continue in 2017
* profit or loss before interest, taxation, depreciation,
amortisation, share based payments, share of associate's loss and
one-off exceptional items
Commenting on the results, Julio Bruno, CEO of Time Out Group
plc, said:
"2016 has been a year of significant events for Time Out Group.
We listed on the stock market in June to take this iconic brand to
the next stage of its development, accelerating its growth and
consolidating the lines of business.
At Time Out, we like to say that we are in the 'happiness
business'. We inspire and enable people to discover, book and share
what the world's cities have to offer. As the trusted companion of
both locals and visitors, we influence hundreds of millions of
travel and entertainment spend around the globe. But just as
importantly, our curated, high-quality content creates a valuable
brand-appropriate environment for our online advertising and
e-commerce partners.
We have beaten revenue expectations but we are just at the
beginning of our quest to transact with our large, global
audience."
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)207
813 3000
Julio Bruno, CEO
Richard Boult, CFO
Steven Tredget, Investor Relations
Director
Liberum Capital Limited (Nominated Tel: +44 (0)203
Adviser and Broker) 100 2222
Steve Pearce / Jill Li
FTI Consulting LLP Tel: +44 (0)203
727 1000
Edward Bridges / Stephanie Ellis
/ Emma Appleton / Frances Elworthy
Notes to editors
About Time Out Group plc
Time Out Group is the leading global media and entertainment
business with a content distribution network comprising digital,
mobile, apps, social media and print and a 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 make the most of a city, through curated content around
food, drink, music, theatre, art, style, travel and entertainment.
Time Out, listed on AIM and headquartered in the United Kingdom, is
present in 108 cities and 39 countries and has a global monthly
audience reach of 156 million.
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 Statement
Overview
Time Out Group comprises two divisions; Time Out Digital and
Time Out Market. Time Out Digital, including the digital, print and
international segments, is a multi-platform media, entertainment
and e-commerce business with a global content distribution network
comprising magazines, online, social channels, mobile apps, mobile
web, international licensing agreements and Live Events. Time Out
Market leverages the Time Out brand to bring together under one
roof a city's best restaurants, bars, shops and cultural
experiences based on editorial curation. Time Out Market is
currently present in Lisbon, attracting 3.1 million visitors in
2016, and conditional leases have been agreed for new markets in
Miami and London.
As set out in its Admission Document, the strategy of the Group
is to:
-- Monetise its audience via e-commerce
-- Monetise businesses via digital and other advertising expertise
-- Monetise local businesses via local advertising/Premium Profiles
-- Roll out Time Out Market worldwide
-- Support its international licensing network
Operational review
The following operating KPIs are used by the Group to assess its
performance against these objectives.
Operating KPIs
Year ended Year ended
31 December 31 December
2016 2015
------------- -------------
Audience and Traffic:
Global audience reach -
monthly average 155.9m 107.6m
O&O Audience - monthly average 94.2m 56.9m
O&O Monthly unique visitors
- monthly average 16.4m 15.6m
E-commerce:
Transacting members (rolling
12 months) 169k 163k
Transactions 303k 250k
Premium Profiles:
Active listers 770 493
Time Out Market*:
Total tenant turnover EUR23.5m EUR16.5m
*Proforma results including full twelve months trading for Time
Out Market. Total tenant turnover is revenue earned by restaurants
in the Time Out Market. Time Out's revenue includes a percentage
fee earned on this turnover.
O&O is the Time Out 'owned and operated' business operations
in 65 cities across 14 countries; global audience reach includes
both 'owned and operated' as well as international licensing
arrangements in a further 43 cities across 25 countries. 'Monthly
Average' calculated as a rolling 12 month average.
Audience development
Time Out is one of the leading brands to inform and inspire
users through the provision of curated content about food, drink,
music, theatre, art, style, travel and entertainment. The Group's
established brand and high brand awareness are key drivers of Time
Out's significant audience reach (including its international
licensing arrangements).
During the year, the audience of the Group's owned and operated
(O&O) sites grew by 34%. Average website traffic for the period
increased by 7% YoY and followers on social media grew by 46% YoY.
In the last month of 2016, Time Out achieved a global monthly
audience reach of 337 million, growing 167% YoY. Across O&O
city websites, particularly strong growth was seen in the US,
driven by increased focus on content in the 'Things To Do' section,
with a mix of evergreen content and blog content that continues to
be distributed via social media. Videos, in particular on Time
Out's Facebook channels, have been increasingly popular with some
examples generating over ten million views. The proportion of
visits through mobile and tablet devices now exceeds 59%.
In 2016, Time Out expanded its presence globally through new
channels. Time Out Portugal went digital with the launch of the
Time Out Lisbon website. Both Time Out Los Angeles and Time Out
Miami launched quarterly free print magazines (October and November
respectively) to complement the Company's digital, mobile and
social presence as it grows its national footprint and audience in
North America. Launching free magazines across key cities is part
of Time Out's unique approach to print distribution which has
previously proven successful in London, New York and Chicago and
creates a halo effect on digital metrics, audience engagement and
brand awareness. It also provides increasing value to advertisers
who can connect through new creative opportunities across the
brand's global print, digital, mobile and event platform to reach
Time Out's audience.
Business performance
The performance of the Group, including proforma trading of Time
Out Market for the full years of 2016 and 2015, is as follows:
Year ended Year ended
31 December 31 December % %
2016* 2015* change change
constant
GBP'000 GBP'000 currency
------------- ------------- -------- ----------
Digital advertising 10,210 7,522 36% 28%
Premium Profiles 1,444 957 51% 50%
E-commerce 4,662 3,226 45% 41%
Digital revenue 16,316 11,705 39% 33%
Print 15,238 15,004 2% -3%
International 1,880 1,793 5% 5%
------------- ----------
Time Out Digital 33,434 28,502 17% 12%
Time Out Market* 3,696 1,720 115% 90%
--------
Group Revenue 37,130 30,222 23% 17%
------------- ------------- -------- ----------
Gross profit 22,326 17,187 30% 24%
------------- ------------- -------- ----------
Operating Expenditure (32,914) (30,278) 9% 3%
------------- ------------- -------- ----------
Adjusted EBITDA (10,588) (13,091) 19% 25%
============= ============= ======== ==========
*Proforma results are adjusted to include a full year of trading
from Time Out Market. Of 2016 revenue, GBP1,392k relates to
pre-acquisition trading and the entire revenue of 2015.
Advertising
Time Out has established long-term, direct relationships with
brands and local businesses and uses a number of solution based
advertising platforms, programmatic platforms and other creative
channels, including native advertising and experiential
advertising, to generate advertising revenue. In 2016, highly
visible and engaging branded moments have been created for and with
high profile partners including British Airways, Guinness,
Budweiser, Bombay Sapphire and Nestlé's Nescafe Azera which
received a commendation in the 'Best Content Marketing Campaign'
category at the Drum Content Awards 2016.
Digital advertising revenues grew 36% YoY with continued strong
growth in the second half in the US where the benefit of being able
to provide an enhanced nationwide advertising presence has helped
to further develop direct relationships with major agencies. The UK
trading environment has been more challenging, with programmatic
trading continuing to increase.
Overall, print advertising increased 2%. Within this figure, a
decline in revenue in the UK was offset by a stronger performance
in other geographies including the US, as well as revenue from the
Portuguese franchise, which was acquired in November 2015, and the
benefit, on translation, of significantly weaker Sterling in the
second half. UK print advertising trends improved in the 4(th)
quarter of the year.
In both London and New York, major advertising partners are
increasingly seeking cross-platform solutions that allow them
targeted audience reach in the brand-appropriate environment that
Time Out's curated, professional content provides. The Group has
seen strong growth in revenues from this multi-media advertising
solution strategy. These creative campaigns utilise both print and
digital advertising together with bespoke contents hubs on the
website and may also include sponsored Live Events organised by
Time Out. Revenues for these creative solutions have grown 52% in
2016.
In order to further raise Time Out's profile amongst beverage
brands and industry influencers as well as increasing sponsorship
revenue, the Company launched its first Global Bar Awards to
celebrate the world's best bars and spotlight those that are
driving this industry forward; winners were revealed at an Awards
event across five of the world's most influential cities (London,
New York, Paris, Los Angeles, Chicago). The programme allowed
sponsoring partner Austin Tourism & Convention Bureau to reach
Time Out's highly engaged audience who loves to go out: Time Out
research shows that for example 61% of the US Time Out audience is
more likely to have gone to a bar or club compared to the average
user (according to ComScore data, June to August 2016) and over
three quarters of the London Time Out audience visit bars and pubs
each month.
Local businesses: Premium Profiles
We offer local businesses in London, Paris and New York the
opportunity to increase their exposure to Time Out's audience by
purchasing additional advertising features (Premium Profiles) on
the Group's platform for a monthly subscription fee.
Revenues from Premium Profiles grew by 51% and the number of
active listers increased by 56%. The team in London is now well
established and the New York team is now fully operational. There
were 770 active listers worldwide as of December 2016. The Group
continues to expand the listing categories from restaurants to
attractions, hotels and shops.
In 2016, Time Out launched its Love City Awards - created in
London in 2014 - for the first time simultaneously across seven
cities: London, New York, Los Angeles, Chicago, Lisbon, Paris and
Tokyo. The Awards programme is part of Time Out's commitment to
champion local, independent businesses. It provided a city's
restaurants, bars, cafes, shops and cultural venues with a platform
to raise their profile, reach new customers and experience the
benefits of Time Out's powerful digital, social and print channels.
The 2016 campaign allowed Time Out to connect with businesses in
cities across the globe which helped drive thousands of new as well
as claimed listings. Time Out's audience used the opportunity to
support their most loved businesses: a record of 100,000 businesses
were nominated across all cities.
E-commerce and digital product development
Developing e-commerce and monetising the audience is an
important element of Time Out's growth strategy. 2016 has seen
significant developments of the Group's e-commerce platform and
offering, to transform this iconic brand into a digital,
transactional business.
Time Out's e-commerce platform (currently available in London,
Paris, New York, Chicago and Los Angeles) integrates third party
booking engines by affiliate partners such as Viator and
Broadway.com. This allows users to complete a booking or
transaction across a broad range of categories including theatre,
music, and event tickets, restaurant table reservations, discounted
offers, attractions and increasingly hotels which provide the Group
with higher average booking values and margins. For this key
vertical, an innovative front end has been developed with a new
user interface, bringing together curated content, recommendations,
reviews and maps. The company is seeing very positive signs as it
is developing travel and leisure e-commerce for a very active
audience with a high purchasing intent, both locally and
internationally, aided by good quality scores on major search
engine ranking algorithms.
E-commerce revenue grew 45% YoY. This was also driven by
particularly good performance from the Live Events arranged and
sold by the Group; an area which continues to expand across cities
in both the US and London where the Group arranged around 250 Live
Events in 2016. These events brought together 80,000 people,
popular brands and iconic locations to create unique commercial
experiences.
In affiliate sales, there was overall year on year growth of 25%
with the continued development of the e-commerce offer in London
and New York. Attractions ticket provider Viator was successfully
launched in the US and UK and Time Out New York partnered with
Broadway.com to offer tickets for all Broadway shows in the city,
however in the second half this was offset by a weaker performance
from the new theatre ticketing offer in London leading to a
reduction in the number of transacting members. Changes have been
made to address this issue post the year end.
Revenue from offers has remained flat year on year. Plans are in
place to focus product development on improving the visibility and
distribution of offers and the effectiveness of customer
relationship management.
As outlined at the time of the IPO, investment has been made to
expand the Group's team of technical employees, enhance the
effectiveness of e-commerce and drive expansion into new verticals.
During the year, the product and technology teams have been
reformed with new staff hired while particular skills in mapping
and the travel vertical have been brought into the business through
the acquisition of HallStreet.com, an award-winning geo-mapping
start-up, in March 2016. HallStreet.com innovated in the travel and
leisure space with an interactive events and travel planner based
on maps. Integrating the technology into Time Out's platform is
making it easier for users to book the best experiences or hotels
in the city as it provides a bird's eye view of the city alongside
inspirational content and 'near-me' booking capabilities.
The e-commerce offer was further enhanced in October 2016 with
the acquisition of YPlan, a "mobile first" events discovery and
booking platform, for GBP2.4m consideration payable in shares, of
which GBP0.8m is payable on the first anniversary of the
acquisition. The acquisition brought additional resource to the
product and technology teams and the team has already developed
applications and technology to expand the existing Time Out offer.
The Group is now starting to test the development of its e-commerce
offering with increased investment in cost of sale PPC to generate
traffic across its offers. Further, more substantial PPC marketing
spend will be made over the next few months as the offering is
developed, tested and optimised.
With the majority of traffic now coming via mobile and tablet
devices, Time Out has further enhanced its app throughout the year
in order to make it simple and fun for users to uncover a city. The
app brings together the very best of Time Out: high-quality curated
content of restaurants, bars and things to do in the city, viewed
on a list or a map so the most relevant spots nearby can easily be
found in London, Paris, New York, Chicago, LA or other great cities
around the globe. In October, the app has been featured in the 'Hot
This Week' list in the Apple Store and the Time Out team is working
on more updates focusing on editorial inspiration, geo-mapping,
further improved usability and enhanced mobile booking capabilities
for thousands of theatres, restaurants and attractions across
cities worldwide.
International
In addition to its owned and operated business operations in 65
cities across 14 countries, the Group has a presence in a further
43 cities across 25 countries through its international licensing
arrangements whereby 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.
For the full year, revenue from licensees which are billed
principally in dollars, grew 5% aided in part by the depreciation
of Sterling.
A number of licensing partners were key to the largest global
research project Time Out has undertaken to date. 2016 saw the
launch of Time Out's first global City Index, a worldwide survey of
20,000 people across 18 cities, involving Time Out's owned and
operated cities such as London, Lisbon and New York as well as
licensing partners including Tokyo, Melbourne and Mexico City. The
purpose of the project was to position Time Out as a global
authority on city living and track trends. The survey generated
strong engagement with the global Time Out audience and its results
were turned into content across digital and print Time Out channels
as well as over 100 pieces of global press coverage.
Time Out Market
Time Out Market is a physical, curated marketplace which brings
together a city's best restaurants, food, shops and culture under
one roof. At the time of the IPO, the Group acquired the Time Out
Market business comprising the market in Lisbon and a central team
who are developing the format for expansion into further cities
worldwide.
The performance of the market in Lisbon has been very
encouraging, with a record 3.1 million visitors and top ratings on
review sites. Total tenant turnover has increased by 42%
contributing, together with changes in the charging basis to
tenants, to a 115% (90% in local currency) increase in Time Out
revenues YoY. This strong revenue growth has delivered an EBITDA of
GBP1.1m (2015: GBP0.1m) before central costs. The restaurant,
concert venue and other operations are now active on the first
floor of the location and the Time Out Bar is in operation on the
main market floor. 2016 also saw three of the chefs with a presence
in the Lisbon market receiving Michelin stars in their own local
restaurants and 150 cooking workshops were offered in the Chef's
Academy, proving the high-quality food experience Time Out Market
offers.
In line with the stated growth strategy, the Group is expanding
this format internationally to other cities. Leases, which are
subject to planning approval, have been signed for new locations in
London and Miami. It is anticipated that the markets will open in
the first half of 2018. The Group continues to see a high level of
interest from landlords in many other cities.
Outlook
The Group continues to execute its growth strategy with further
progress and change anticipated throughout 2017. Trading is in line
with market expectations.
Financial performance
As part of the AIM admission process, the Group acquired Time
Out Market Limited, the holding company of the Time Out Market in
Lisbon and a 41.5% stake in Flypay, a provider of mobile technology
based ordering and payment solutions to restaurants and venues,
accordingly the reported results of the Group include a full year
of trading of the Time Out Digital business but only the trading
since 14 June 2016 of Time Out Market and Flypay.
The proforma results included in this report, include a full
year of results from Time Out Market operations in both 2016 and
2015.
Revenue
Reported Group revenue for the year has increased by 25% from
GBP28.5m to GBP35.7m primarily through organic growth aided by a
favourable tailwind from foreign exchange. Time Out Market Limited
was acquired by the Group on 14 June 2016 and therefore it has only
been included in the accounts after that date. Taking into account
a full year of Time Out Market in 2015 and 2016, Group revenue grew
by 23%.
Gross margin
The overall gross margin (revenue less cost of sales) of the
Group rose by four percentage points YoY to 59% (2015: 55%). This
was aided by an improvement in the revenue mix, with a greater
proportionate contribution of the Group's higher margin digital
revenue versus a smaller contribution from the lower margin print
revenue streams. The gross margin with Time Out Market included on
a pro-forma basis was 60% (2015: 57%)
Operating expenditure
Proforma Group operating expenditure (including a full year of
Time Out Market), and before exceptional costs, share based
payments, depreciation and amortisation, was GBP32.9m (2015:
GBP30.3m). Excluding the effect of currency translation, total
costs grew by GBP0.9m with the costs of Time Out Market increasing
by GBP1.1m at constant currency as the team in Lisbon grew to
manage the higher activity and the central team was expanded to
develop the concept worldwide.
For the rest of the Group and before the effect of foreign
exchange translation, costs were flat. Savings in the UK and USA
operations of in excess of circa GBP4.0m were offset by investment
in the new digital activities, higher Group management costs as a
result of the requirements of a listed company and the costs of new
businesses acquired including the Portugal franchisee,
HallStreet.com and YPlan.
Close attention continues to be paid to costs to ensure that
both cost of sales and operating expenditure and skills of teams
are aligned with the potential revenue and activities of the
company.
Adjusted EBITDA
Adjusted EBITDA represents the profit or loss before interest,
taxation, depreciation, amortisation, share based payments, share
of associate's loss and one-off exceptional items.
Reported Adjusted EBITDA loss for the year was GBP10.2m (2015:
GBP12.4m loss), an improvement of GBP2.2m due to profitable organic
revenue growth and acquisitions.
The Group's adjusted EBITDA loss on a proforma basis which
includes a full year of Time Out Market was GBP10.6m (2015:
GBP13.1m loss). The impact of currency translation on results due
to the weaker pound was an increase in adjusted EBITDA losses of
GBP1.0m.
For the year to 31 December 2016 included on a proforma basis,
Time Out Market Lisbon had an adjusted EBITDA of GBP1.1m (2015:
GBP0.1m). After the costs of the central team, the Time Out Market
division had an adjusted EBITDA loss of GBP0.5m (2015:
GBP0.7m).
Exceptional costs
One off exceptional costs include GBP1.0m of IPO advisory costs
not directly related to the raising of equity finance (2015:
GBPnil), GBP0.9m of employee termination costs (2015: GBP2.6m),
GBP0.5m of legal fees related to acquisitions (2015: GBP0.1m),
GBP0.4m for an onerous lease provision (2015: GBPnil).
Share based payments
The Group has issued a mixture of options to existing staff and
staff joining with YPlan. The value of these options at issuance
has been amortised over the time to vesting of the option. As at 31
December, 9.8m options were outstanding.
Operating loss
The operating loss for the year was GBP17.9m (2015: GBP18.5m)
including depreciation of GBP0.7m (2015: GBP0.4m) and amortisation
of intangible assets of GBP3.1m (2015: GBP2.7m).
The amortisation of intangible assets included GBP1.0m (2015:
GBP0.4m) relating to acquired intangible assets. Other intangible
asset amortisation, primarily amortisation of software both
acquired and internally developed, was GBP2.2m (2015: GBP2.3m).
Net finance costs
Net finance costs, mainly comprising interest accrued on
shareholder debt, decreased by GBP1.4m to GBP1.1m (2015: GBP2.5m)
as a result of the majority of debt in the UK and US being repaid
following the IPO as well as a foreign exchange gain on foreign
currency cash acquired.
Foreign exchange
The revenues and costs of Group entities reporting in dollars
have been consolidated in these financial statements at an average
exchange rate of $1.36 (2015: $1.53). The operations reporting in
euros have been consolidated at a rate of EUR1.22 (2015: EUR1.39).
For the year, the net adjusted EBITDA loss of the dollar reporting
entities was approximately $5.3m (2015: $8.9m) and entities
reporting in euros had an adjusted EBITDA profit of EUR0.7m (2015:
EUR0.6m loss) including a full year of Time Out Market. The year on
year impact of the change in exchange rates would have been to
increase the proforma full year 2015 revenue, gross profit,
operating expenditure and Adjusted EBITDA loss by GBP1.6m, GBP0.8m,
GBP1.7m and GBP1.0m respectively.
Associates
As part of the admission process, the Group acquired an
additional 41.5% shareholding in Flypay Limited for GBP7.0m,
bringing the total investment to 41.6%. Flypay is a mobile
technology platform providing solutions for ordering and payment
within the hospitality sector.
On 28 September 2016, Just Eat invested GBP3.0m in cash into
Flypay in exchange for 8.0% of its share capital, valuing Flypay at
GBP43.5m on a post-money basis. As a result, Time Out's investment
in the business was diluted from 41.5% to 37.8%. The investment is
accounted for as an associate and the Group's share of Flypay's
loss for the period since acquisition of GBP0.6m is included as
'Share of associate's loss' on the income statement.
An exceptional gain of GBP0.7m (2015: GBPnil) was recorded in
respect of the investment in Flypay by Just Eat. The gain reflects
the increase in value of the Group's share of the net assets of
Flypay after the cash injection net of the reduction in the
pre-investment net assets due to the dilution of Time Out's
shareholding. The investment in Flypay is recorded at GBP7.2m at 31
December 2016.
Initial Public Offering
On 14 June, the Company was admitted to trading on AIM and
raised, net of fees and repayment of debt, GBP59m from the placing
of 60 million shares with institutional investors. The listing was
undertaken to provide capital for the Group's next stage of
development including the roll out of the Time Out Market format,
to further enhance the Group's profile and brand recognition with
consumers and businesses and to assist the recruitment, retention
and incentivisation of senior management and employees at all
levels of the Group.
Cash flow
2016 2015
GBP'000 GBP'000
Adjusted EBITDA (10,231) (12,418)
Movement in working capital (2,484) 1,524
Cash used in operations (12,715) (10,894)
Exceptional cash flows (3,242) (2,269)
Capital expenditure (3,497) (2,406)
Operating cash flow (19,454) (15,569)
Net interest paid (1,521) (2,536)
Tax received 8 437
Free cash flow (20,967) (17,668)
Proceeds of pre-IPO preference
share issue 4,000 19,271
IPO fundraising 90,000 -
IPO costs (5,281) -
Line of credit movements 766 (247)
Acquisitions (2,335) (1,161)
Acquisition of minority
interest (1,408) -
Foreign exchange (110) (601)
Movement in net debt 64,665 (406)
------------------------------- -------- --------
Operating cash flow
The cash used in operations before exceptional costs was
GBP12.7m (2015: GBP10.9m) including the net working capital outflow
of GBP2.5m (2015: inflow of GBP1.5m). Within the outflow of working
capital is GBP0.5m of lease deposits paid in respect of new Time
Out Markets and an outflow of GBP0.5m of non-trading payments made
post acquisition in respect of YPlan from cash acquired with the
business. The significant growth of the Group's operations absorbed
the remainder.
Capital expenditure of GBP3.5m (2015: GBP2.4m) includes GBP1.8m
(2015: GBP1.8m) of capitalised software development costs relating
to the teams working on the website and digital platforms as well
as the cost of leasehold improvements. Of the leasehold
improvements, GBP1.1m was in respect of the development of Time Out
Market. The cash outflow is less due to timing of payments in Time
Out Market.
IPO proceeds
The IPO raised gross proceeds of GBP90m and GBP6.3m of related
costs were paid in the period. GBP1.0m of costs are included within
exceptionals and the remainder were charged to share premium. Of
the remaining proceeds, GBP24.9m was used to pay down existing
shareholder borrowings.
Acquisitions
The Group undertook three acquisitions in the period, acquiring
the trade and assets of HallStreet.com, Barcelona SL in March 2016
and an additional 76.6% of the ordinary share capital of Time Out
Market Limited as part of the admission process in June 2016. In
October 2016, the Group also acquired 100% of the share capital of
Leanworks Limited ("YPlan"), a UK-based e-commerce company.
Cash consideration for HallStreet.com was GBP0.3m with no cash
acquired with the business. Time Out Market was acquired for shares
and had cash at acquisition of GBP0.8m as well as third party debt
of GBP3.4m at the time of acquisition. YPlan was acquired for
shares and had cash at acquisition of GBP0.7m. Total cash from
acquisitions was GBP1.2m and debt assumed on acquisition was
GBP3.4m.
On 6 July 2016, Time Out Market acquired a further 20.2%
shareholding in MC-Mercados da Capital, LDA, the operator of the
Lisbon Time Out Market, for cash taking the Group's direct
shareholding to 95.3% and the indirect shareholding to 81%. Cash
consideration of GBP1.4m was paid.
Net cash and borrowings
Net cash at the period end was GBP47.5m (2015: net debt of
GBP17.2m) as follows:
At 31 At 31
December December
2016 2015
GBP'000 GBP'000
Cash and cash equivalents 50,082 4,282
Borrowings (2,598) (21,463)
---------- ----------
Net cash/(debt) 47,484 (17,181)
Julio Bruno
Group Chief Executive Officer
28 March 2017
Consolidated Income statement
Year ended 31 December 2016
Year
Year ended ended
31 December 31 December
Note 2016 2015
------------- -------------
GBP'000 GBP'000
Revenue 5 35,736 28,502
Cost of sales 5 (14,707) (12,960)
------------- -------------
Gross profit 21,029 15,542
Administrative expenses (38,882) (33,994)
------------- -------------
Operating loss (17,853) (18,452)
Analysed as
Adjusted EBITDA loss (10,231) (12,418)
Share based payments (1,064) -
Exceptional items 6 (2,728) (2,969)
------------- -------------
EBITDA loss (14,023) (15,387)
Depreciation of property,
plant and equipment (710) (385)
Amortisation of intangible
assets (3,120) (2,680)
------------- -------------
Operating loss (17,853) (18,452)
---------------------------------- ----- ------------- -------------
Finance income 389 4
Finance costs (1,531) (2,520)
Share of associate's loss 152 -
------------- -------------
Loss before income tax (18,843) (20,968)
Income tax credit 203 700
------------- -------------
Loss for the year (18,640) (20,268)
============= =============
Loss for the year attributable
to:
Owners of the parent (18,462) (20,268)
Non-controlling interests (178) -
(18,640) (20,268)
------------- -------------
Loss per share:
Basic and diluted loss per
share (pence) 7 18.9 40.6
All amounts relate to continuing
operations.
Consolidated Statement of Other Comprehensive Income
Year ended 31 December 2016
Year ended Year ended
31 December 31 December
2016 2015
------------- -------------
GBP'000 GBP'000
Loss for the year (18,640) (20,268)
Other comprehensive income:
Items that may be subsequently
reclassified to the profit or loss:
Currency translation differences 7,087 961
Other comprehensive income for
the year, net of tax 7,087 961
Total comprehensive expense for
the year (11,553) (19,307)
============= =============
Total comprehensive expense for
the year attributable to:
Owners of the parent (11,369) (19,307)
Non-controlling interests (185) -
(11,553) (19,307)
------------- -------------
Consolidated Statement of Financial Position
At 31 December 2016
31 December 31 December
Note 2016 2015
------------ ------------
GBP'000 GBP'000
Assets
Fixed Assets and Investments
Intangible assets - Goodwill 9 49,230 35,525
Intangible assets - Other 10 20,367 12,720
Property, plant and equipment 7,982 867
Investment in associate 7,153 -
Other investments - 8
Trade and other receivables
- non current 11 550 550
85,282 49,670
------------ ------------
Current assets
Inventories 241 184
Trade and other receivables 11 11,987 8,064
Cash and cash equivalents 50,082 4,282
62,310 12,530
------------ ------------
Total assets 147,592 62,200
------------ ------------
Liabilities
Current liabilities
Trade and other payables 12 (17,643) (12,987)
Provisions (186) -
Borrowings 13 (1,083) -
(18,912) (12,987)
------------ ------------
Non-current liabilities
Trade and other payables 12 (1,905) (131)
Provisions (149) -
Deferred tax liability (2,849) (1,474)
Borrowings 13 (1,515) (21,463)
(6,418) (23,068)
------------ ------------
Total liabilities (25,330) (36,055)
------------ ------------
Net assets 122,262 26,145
============ ============
Equity
Called up share capital 131 957
Share premium 103,071 77,427
Translation reserve 9,166 2,072
Capital redemption reserve 1,105 -
Retained earnings/ (Accumulated
losses) 9,025 (54,311)
Total parent shareholders'
equity 122,498 26,145
------------ ------------
Non-controlling interest (236) -
Total equity 122,262 26,145
============ ============
Consolidated Statement of Changes in Equity
Year ended 31 December 2016
Called Retained Total
up Capital earnings/ parent Non-
Share Share Translation Redemption (Accumulated Shareholders' Controlling Total
Note capital premium reserve reserve losses) equity interest equity
-------- --------- ------------ ----------- ------------- -------------- ------------ ---------
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Balance at 1
January
2015 763 58,349 1,111 - (34,043) 26,180 26,180
Changes in
equity
Loss for the
year - - - - (20,268) (20,268) - (20,268)
Other
comprehensive
income - - 961 - - 961 - 961
Total
comprehensive
income 763 58,349 2,072 - (54,311) 6,873 - 6,873
Issue of share
capital 194 19,078 - - - 19,272 - 19,272
Balance at 31
December
2015 957 77,427 2,072 - (54,311) 26,145 - 26,145
Changes in
equity
Loss for the
year - - - - (18,462) (18,462) (178) (18,640)
Other
comprehensive
income - - 7,094 - - 7,094 (7) 7,087
Total
comprehensive
income - - 7,094 - (18,462) (11,368) (185) (11,553)
Share-based
payments - - - - 1,064 1,064 - 1,064
Pre-IPO issue of
preference
shares 40 3,960 - - - 4,000 - 4,000
Ordinary bonus
shares
issued 95 (95) - - - - - -
Share capital
reduction - (80,887) - - 80,887 - - -
Preference bonus
shares
issued 72 (72) - - - - - -
Share capital
reorganisation (1,105) - - 1,105 - - - -
Issue of shares
for
acquisitions 12 18,097 - - - 18,109 - 18,109
Non-controlling
interest
acquired
("NCI") 8 - - - - - - (232) (232)
Goodwill
attributable
to NCI 8 - - - - - - 28 28
Acquisition of
minority
interest 8 - - - - (153) (153) 153 -
IPO issue of
share
capital 60 89,940 - - - 90,000 - 90,000
Costs associated
with
IPO - (5,299) - - - (5,299) - (5,299)
Balance at 31
December
2016 131 103,071 9,166 1,105 9,025 122,498 (236) 122,262
======== ========= ============ =========== ============= ============== ============ =========
Consolidated Statement of Cash Flows
Year
Year ended ended
31 December 31 December
Note 2016 2015
------------- -------------
GBP'000 GBP'000
Cash flows from operating activities
Cash used in operations 14 (15,965) (13,163)
Interest paid (316) (230)
Tax credits received 8 437
Net cash used in operating
activities (16,273) (12,956)
Cash flows from investing activities
Purchase of property, plant
and equipment (1,641) (605)
Purchase of intangible assets (1,856) (1,802)
Interest received 4 4
Pre-acquisition funding to
Time Out Market (150) -
Acquisition of subsidiaries,
net of cash acquired 8 1,222 (1,154)
Net cash used in investing
activities (2,421) (3,557)
Cash flows from financing activities
Proceeds of preference share
issue 4,000 19,271
Proceeds from IPO 90,000 -
IPO transaction costs through
share premium (5,281) -
Advance of new borrowings 2,766 -
Repayment of borrowings (25,999) (247)
Repayment of finance leases (26) -
Acquisition of minority interest (1,408) -
Acquisition of non-controlling
interests - (7)
Net cash from financing activities 64,052 19,017
Increase in cash and cash equivalents 45,358 2,504
Cash and cash equivalents at
beginning of year 4,282 1,752
Effect of foreign exchange
rate change 442 26
Cash and cash equivalents at
end of year 50,082 4,282
============= =============
Notes to the Accounts
Year ended 31 December 2016
1. Basis of Preparation
The financial information in this preliminary announcement has
been extracted from the Group audited financial statements for the
year ended 31 December 2016 and does not constitute statutory
accounts within the meaning of section 434 of the Companies Act
2006. The Group financial statements and this preliminary
announcement were approved by the Board of Directors on 27 March
2017.
The auditors have reported on the Group's financial statements
for the years ended 31 December 2016 and 31 December 2015 under
s495 of the Companies Act 2006. The Auditors' reports are
unqualified and do not contain a statement under section 498(2) or
(3) of the Companies Act 2006. The Group's statutory financial
statements for the year ended 31 December 2015 have been filed with
the Registrar of Companies and those for the year ended 31 December
2016 will be filed following the Company's Annual General
Meeting.
The Group's financial statements have been prepared in
accordance with International Financial Reporting Standards
('IFRSs') and IFRS Interpretations Committee ('IFRS IC') as adopted
and endorsed by the European Union and have been prepared under the
historical cost convention.
The same accounting policies, presentation and computation
methods are followed in this preliminary announcement as in the
preparation of the Group financial statements. The accounting
policies have been applied consistently by the Group.
2. Going concern
The Group's business activities, together with the factors
likely to affect its future development, performance and position
are set out in the Chief Executive Officer's Review along with the
financial position of the Group, its cash flows, liquidity position
and borrowing facilities. In addition, notes to the Group financial
statements include details of the Group's treasury activities,
funding arrangements and objectives, policies and procedures for
managing various risks including liquidity, capital management and
credit risks.
The Directors have considered the Group's forecasts, including
taking account of reasonably possible changes in trading
performance, and the Group's available banking facilities. Based on
this review and after making enquiries, the Directors have a
reasonable expectation that the Group has adequate resources to
continue in operational existence for the foreseeable future. For
this reason, the Directors continue to adopt a going concern basis
in preparing these financial statements and this preliminary
announcement.
3. Accounting policies
The principal accounting policies applied in the preparation of
these consolidated financial statements are set out below. These
policies have been consistently applied to all the years presented,
unless otherwise stated.
Revenue recognition
Revenue, which is stated net of sales tax, represents the
amounts derived from the sale of goods and services which fall
within the Group's ordinary activities.
-- Advertising revenue is recognised at the time the advertisement is published.
-- Subscription and Premium Profiles revenue is recognised
evenly over the length of each subscription.
-- Circulation revenue is recognised at the time of sale.
Provision is made for returns of distributor returns.
-- Ticket revenues for events are recognised in the month of the
event. Tickets for Time Out offers are recognised at the point of
sale.
-- Licence/royalty revenue is recognised over the contract
period in accordance with the substance of the underlying
agreement.
-- Market related revenue is predominantly turnover related rent
from restaurants in the markets and is recognised as the turnover
is earned by the sub-letting restaurants. These are treated as
operating leases and are recognised in the income statement on a
straight-line basis over the period of the lease.
Subsidiaries
Subsidiaries are all entities (including structured entities)
over which the Group has control. The Group controls an entity when
the Group is exposed to, or has rights to, variable returns from
its involvement with the entity and has the ability to affect those
returns through its power over the entity. Subsidiaries are fully
consolidated from the date on which control is transferred to the
Group. They are deconsolidated from the date that control
ceases.
In the Group financial statements the acquisition method is
adopted. Under this method, the results of subsidiary undertakings
acquired or disposed of in the period are consolidated for the
periods from or to the date on which control is passed. The
consideration transferred for the acquisition of a subsidiary is
the fair values of the assets transferred, the liabilities incurred
to the former owners of the acquiree and the equity interests
issued by the Group. The consideration transferred includes the
fair value of any asset or liability resulting from a contingent
consideration arrangement. Identifiable assets acquired and
liabilities and contingent liabilities assumed in a business
combination are measured initially at their fair values at the
acquisition date. The Group recognises any non-controlling interest
in the acquiree on an acquisition-by-acquisition basis, either at
fair value or at the non-controlling interest's proportionate share
of the recognised amounts of acquiree's identifiable net
assets.
Acquisition-related costs are expensed as incurred.
If the business combination is achieved in stages, the
acquisition date carrying value of the acquirer's previously held
equity interest in the acquiree is remeasured to fair value at the
acquisition date; any gains or losses arising from such
remeasurement are recognised in profit or loss.
Any contingent consideration to be transferred by the Group is
recognised at fair value at the acquisition date. Subsequent
changes to the fair value of the contingent consideration that is
deemed to be an asset or liability is recognised in accordance with
IAS 39, either in profit or loss or as a change to other
comprehensive income. Contingent consideration that is classified
as equity is not remeasured, and its subsequent settlement is
accounted for within equity.
Inter-company transactions, balances and unrealised gains on
transactions between Group companies are eliminated. Unrealised
losses are also eliminated. When necessary, amounts reported by
subsidiaries have been adjusted to conform to the Group's
accounting policies.
Non-controlling interests
Transactions with non-controlling interests that do not result
in a loss of control are accounted for as equity transactions -
that is, as transactions with the owners in their capacity as
owners. The difference between the fair value of any consideration
paid and the relevant share acquired of the carrying value of net
assets of the subsidiary is recorded in equity. Gains or losses on
disposals to non-controlling interests are also recorded in
equity.
Non-controlling interests in the net assets of consolidated
subsidiaries are identified separately from the Group's equity and
consist of the amount of those interests at the date of the
original business combination plus their share of changes in equity
since that date.
Associates
An associate is an undertaking over which the Group exercises
significant influence, usually from 20%-50% of the equity voting
rights, in respect of the financial and operating policy. The Group
accounts for its interests in associates using the equity method.
Under the equity method, the investment in the associate is
initially measured at cost. The carrying amount of the investment
is adjusted to recognise changes in the Group's share of net assets
of associates since the acquisition date.
If the ownership interest in an associate is reduced but
significant influence is retained, only a proportionate share of
the amounts previously recognised in other comprehensive income is
reclassified to profit or loss where appropriate.
The income statement reflects the Group's share of the results
of operations of the entity. The statement of comprehensive income
includes the Group's share of any other comprehensive income
recognised by the associate. Dividend income is recognised when the
right to receive the payment is established.
The Group determines at each reporting date whether there is any
objective evidence that the investment in the associate is
impaired. If this is the case, the Group calculates the amount of
impairment as the difference between the recoverable amount of the
associate and its carrying value and recognises the amount adjacent
to 'share of profit/(loss) of associates' in the income
statement.
Dilution gains and losses arising in investments in associates
are recognised in the income statement.
Segmental reporting
Operating segments are reported in a manner consistent with the
internal reporting provided to the chief operating decision-maker.
The chief operating decision-maker, who is responsible for
allocating resources and assessing performance of the operating
segments, has been identified as the steering committee that makes
strategic decisions.
Service concession arrangements
The concession granted by the Municipality of Lisbon to occupy
and operate an area within the Mercado da Ribeira in Lisbon is
accounted for as a service concession arrangement under IFRIC 12
'Service Concession Arrangements'. The present value of all
payments to the Municipality are capitalised and recognised as a
separate intangible asset and a corresponding obligation is
recognised. The intangible asset is amortised on a straight-line
basis over the life of the concession arrangement.
4. Exchange rates
The significant exchange rates to UK Sterling for the Group are
as follows:
2016 2015
------------------ ------------------
Closing Average Closing Average
rate rate rate rate
-------- -------- -------- --------
US dollar 1.23 1.36 1.48 1.53
Euro 1.17 1.22 1.36 1.39
-------- -------- -------- --------
5. 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 is organised into four
operating segments, having added a segment to report the acquired
Markets business:
-- Print - sale of print advertising and publications;
-- Digital - sale of digital advertising (including premium
profiles) and e-commerce commissions generated by online bookings
and transactions;
-- International - fees and royalties from third party licensees
for the rights to publish print magazines and produce website
content under the Time Out brand;
-- Markets - predominantly turnover related rent from
restaurants in the market and charges for services.
No information is provided at the segment level concerning
interest income, interest expense, depreciation or amortisation,
income taxes, profit/loss from associates or other material
non-cash items. The Board of Directors do not review any measures
of assets, liabilities or cash flows at a segment level.
Year ended 31 December
2016
Print Digital International Markets Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Revenue 15,238 16,316 1,880 2,302 35,736
Cost of sales (9,966) (4,488) (30) (223) (14,707)
Gross profit 5,272 11,828 1,850 2,079 21,029
======== ======== ============== ======== =========
Administrative expenses (38,882)
Operating loss (17,853)
Finance income 389
Finance costs (1,531)
Gain on investment and
share of associate's
loss 152
Loss before income tax (18,843)
Income tax credit 203
Loss for the year (18,640)
=========
Year ended 31 December
2015
Print Digital International Markets Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Revenue 15,004 11,705 1,793 - 28,502
Cost of sales (10,121) (2,789) (50) - (12,960)
Gross profit 4,883 8,916 1,743 - 15,542
========= ======== ============== ======== =========
Administrative expenses (33,994)
Operating loss (18,452)
Finance income 4
Finance costs (2,520)
---------
Loss before income tax (20,968)
Income tax credit 700
---------
Loss for the year (20,268)
=========
Revenue is analysed geographically by origin as follows:
2016 2015
-------- --------
GBP'000 GBP'000
Europe 20,289 17,504
Americas 13,567 9,205
Rest of World 1,880 1,793
35,736 28,502
======== ========
The Group earns its revenues by selling both goods and services.
These can be analysed as follows:
2016 2015
-------- --------
GBP'000 GBP'000
Print advertising and circulation 15,238 15,004
Digital advertising 10,210 7,554
Premium profiles 1,444 957
E-commerce 4,662 3,194
International 1,880 1,793
Markets 2,302 -
35,736 28,502
======== ========
There are no revenues from any single customer that exceed 10%
of the Group's revenues.
6. Exceptional items
Costs are analysed as follows:
2016 2015
-------- --------
GBP'000 GBP'000
Restructuring costs 1,261 2,586
New York free magazine launch costs - 267
Fees relating to acquisitions in
the year 514 116
Advisory fees in relation to the
IPO 953 -
2,728 2,969
======== ========
The 2016 restructuring costs include employee termination costs
of GBP847k incurred to compensate members of senior management for
loss of office and to reflect the Group organisation structure
required as a listed entity. Restructuring costs also include a
provision for an onerous lease of GBP371k relating to the office
space previously occupied by the YPlan staff as well as associated
legal and agent fees of GBP43k.
The acquisition fees are all costs associated with the
acquisition of subsidiaries and associates during the year.
Advisory fees in relation to the IPO include costs not directly
related to the raising of finance, including a portion of advisory
costs incurred, management bonuses related to the IPO and marketing
costs.
The 2015 restructuring costs include employee termination costs
following a Group restructuring of operations to better align its
skills and resources to an international digital growth strategy,
along with costs associated with the withdrawal from the printed
travel guides market. The New York free magazine launch costs are
all marketing and launch costs associated with the switch in early
2015 to the free magazine model in New York. The legal fees are all
legal costs associated with the acquisition of subsidiaries.
7. 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 year.
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.
2016 2015
----------- -----------
Number Number
Weighted average number of ordinary
shares for the purpose of basic and
diluted loss per share 97,768,759 49,906,844
GBP'000 GBP'000
Loss from continuing operations for
the purpose of loss per share 18,462 20,268
Pence Pence
Basic and diluted loss per share 18.9 40.6
The weighted average number of shares at 31 December 2015 has
been restated to reflect the share reorganisation that took place
ahead of the IPO in June 2016.
A deferred issue of ordinary shares with a fixed value of up to
GBP782k relating to the acquisition of YPlan is payable in October
2017 subject to no warranty claims being made under the sale and
purchase agreement. Shares issued as deferred consideration will be
calculated with reference to prevailing share price.
8. Business combinations
a) 2016 acquisition of Hall Street Barcelona SL
On 1 March 2016, the Group acquired the trade and assets of Hall
Street Barcelona, SL, a Spanish-based e-commerce business
specialising in geo-mapping technology, for cash consideration of
GBP294k and 211 ordinary shares of GBP1 each.
As a result of this acquisition, the Group will be able to
integrate the geo-mapping technology into its existing platform,
enabling it to increase functionality in the travel and leisure
markets.
The provisional fair value of the assets and liabilities
acquired was GBP4k of property, plant and equipment and GBP4k of
other payables, resulting in goodwill recognised equal to the
consideration paid of GBP294k. The goodwill represents the value of
the acquired assembled workforce and is not deductible for tax
purposes.
b) Acquisition of Time Out Market Limited
On 14 June 2016, the Group acquired the entire issued preference
share capital and an additional 76.6% of the total ordinary share
capital of Time Out Market Limited. The Group had previously
acquired 8.5% of the ordinary share capital of the acquiree and
hence now owns 85% of the voting equity interests. The Group issued
6,353,281 ordinary shares as consideration, with a total fair value
of GBP9,530k.
Time Out Market Limited owned 75.1% of MC-Mercados da Capital,
LDA, the operator of the Lisbon Time Out Market. As a result of the
acquisition, the Group intends to expand the Time Out Market
concept internationally while capitalising on synergies between the
existing Time Out segments and the market concept which has already
proved to be successful in Lisbon. Post-acquisition, Time Out
Market has entered into agreements for locations in London, Miami
and Porto, pending planning permissions.
The following table summarises the consideration paid for the
acquisition of Time Out Market Limited, the fair value of assets
acquired, liabilities assumed and the non-controlling interest at
the acquisition date. The goodwill arising from the acquisition is
attributable to the team and plans to expand the concept
internationally.
GBP'000
--------
Property, plant and equipment 5,113
Intangible assets - other 1,250
Intangible assets - customer relationships 3,275
Deferred tax liability (819)
Trade and other receivables 584
Cash and cash equivalents 836
Trade and other payables (3,222)
Financial liability for option over non-controlling
interest (1,548)
Borrowings (3,408)
Non-controlling interest in subsidiary 203
Net assets acquired 2,265
Non-controlling interest in Time Out Market
Limited 29
Fair value of existing equity investment -
Goodwill 7,237
Consideration paid 9,530
========
Acquired intangible assets comprise of a concession granted by
the Municipality of Lisbon to occupy and fully operate an area
within the Mercado da Ribeira in Lisbon as well as existing
customer relationships net of the associated deferred tax
liability.
The non-controlling interest, representing shares held by third
parties in respect of the Lisbon business and a management
shareholding in Time Out Market, is measured using the
proportionate share method. On 6 July 2016, Time Out Market Limited
acquired a further 20.2% shareholding in MC-Mercados da Capital,
LDA, the operator of the Lisbon Time Out Market, in cash, taking
their direct shareholding to 95.3% and the Group's indirect
shareholding to 81%. Cash consideration of GBP1.4m was paid.
The fair value of the previously held equity interest in the
acquiree is equal to the original cost of GBP2; as a result there
is no gain or loss recognised on the acquisition of the additional
ordinary share capital.
Revenue of GBP2,302k and operating loss of GBP517k (excluding
the impact of amortisation on the acquired customer relationships
intangible asset of GBP263k) since the acquisition date have been
included in the consolidated income statement. If the business
combination had occurred at the beginning of the year the revenue
contribution to the Group would have been GBP3,694k and the
operating loss contribution to the Group would have been GBP1,518k
(excluding the impact of amortisation on the acquired customer
relationships intangible asset of GBP263k).
c) 2016 acquisition of YPlan
On 20 October 2016, the Group acquired 100% of the issued
ordinary share capital of Leanworks Limited ("YPlan"), a
London-based "mobile-first" events discovery and booking platform,
in consideration for the issue of 1,166,644 Ordinary Shares valued
at GBP1,625k based off of a share price of GBP1.393 (being the
average middle market price for the 30 days prior to completion).
It also acquired 100% of the issued ordinary share capital of YPlan
Inc., a dormant US subsidiary.
As a result of this acquisition, the Group intended to continue
the investment in the technology and product to grow e-commerce and
expand its team of engineers. The acquisition is in line with this
strategy as it will provide the Group with an advanced e-commerce
platform which will accelerate and scale its existing e-commerce
business. The technology will further enable the Group to manage
transactions between consumers and businesses in-house, improving
the user experience. The acquisition also brings a talented product
development and technology team, with the specific know-how to
drive bookings and optimise the conversion rate of Time Out's
audience.
The amounts recognised in the financial statements have been
determined provisionally. A further issuance of ordinary shares
with a fixed value of up to GBP782k relating to the acquisition is
payable in October 2017 subject to no warranty claims being made
under the sale and purchase agreement. Shares issued as deferred
consideration will be calculated with reference to prevailing share
price. The provisional fair values of the assets and liabilities
acquired are as follows:
GBP'000
--------
Property, plant and equipment 47
Intangible asset - e-commerce platform 2,227
Trade and other receivables 614
Cash and cash equivalents 681
Trade and other payables (1,409)
Deferred tax liability (401)
Net assets acquired 1,759
Goodwill 648
Consideration paid 1,625
Deferred consideration 782
Total consideration 2,407
========
The intangible asset shown is the internally generated platform.
Goodwill is considered to be represented by the assembled
workforce.
There were GBP625k of costs relating to this acquisition which
have been recognised as non-recurring costs. The costs relate to
GBP371k for an onerous lease provision for the acquired company's
vacant office and GBP253k of advisory fees.
Revenue of GBP90k and operating loss of GBP644k since the
acquisition date have been included in the consolidated income
statement. If the business combination had occurred at the
beginning of the year the revenue contribution to the Group would
have been GBP689k for the year and the operating loss contribution
for the year would have been GBP4,453k.
d) 2015 acquisition of Capital de Escrita LDA (prior year)
On 12 November 2015, the Group acquired the trade and assets of
a former licensee, Capital de Escrita, LDA in Portugal for cash
consideration of GBP1,154k. The acquisition was in order to align
synergies with the rest of the Group as well as with the
corresponding investment that Oakley Capital made earlier in the
same year in the Lisbon-based market. The company at the time of
acquisition produced magazines and guide books.
The review of the fair value of the assets and liabilities
acquired in this business combination has resulted in the
recognition of an intangible asset for the reacquired trademark
rights in Portugal and a related deferred tax liability.
The final fair values of assets and liabilities acquired in the
acquisition are as follows:
GBP'000
--------
Intangible assets - re-acquired trademark
rights 201
Trade and other receivables 4
Trade and other payables (77)
Deferred tax liability (36)
Net assets acquired 92
Goodwill 1,062
Consideration paid 1,154
========
The goodwill arising from the acquisition is represented by the
assembled workforce.
9. Goodwill
2016 2015
-------- --------
Cost GBP'000 GBP'000
At 1 January 35,525 33,091
Acquisitions 8,180 1,227
Finalisation of PY acquisition
fair values (164) -
Exchange differences 5,689 1,207
49,230 35,525
======== ========
The carrying value of the goodwill is analysed
by business segment as follows:
2016 2015 2014
-------- --------
GBP'000 GBP'000 GBP'000
Digital 33,231 28,340 27,133
Print 8,180 7,185 5,958
Market 7,819 - -
49,230 35,525 33,091
======== ======== ========
There were no impairment losses relating to goodwill at the end
of the year (2015: GBPnil).
Goodwill arises on the acquisition of subsidiaries and
represents the excess of the consideration transferred over the
Group's interest in net fair value of the net identifiable assets,
liabilities and contingent liabilities of the acquired. Goodwill
acquired in a business combination is allocated to each of the cash
generating units (CGUs) that is expected to benefit from the
synergies of the combination. The Group's CGUs consist of: Digital,
Print and Market. This represents the lowest level within the
entity at which the goodwill is monitored for internal management
purposes. There is no goodwill in respect to the Group's
international segment.
Goodwill impairment reviews are undertaken annually or more
frequently if events or changes in circumstances indicate a
potential impairment. The carrying value of goodwill is compared to
the recoverable amount, which is the higher of value in use and the
fair value less costs of disposal. Any impairment is recognised
immediately as an expense and is not subsequently reversed.
An exercise was undertaken to establish whether there was any
impairment of goodwill at the statement of financial position date
of 31 December 2016, determined at the fair value of the CGUs less
costs of disposal using a market approach and assumptions
reflecting a market participant view. The valuation applies
multiples of 3.2x to 2017 forecast Digital revenues, 6.4x for
forecast 2017 Market revenues and 1.0x to 2017 forecast Print
revenues, which are based upon sensitised benchmarks for comparable
businesses. The 2017 revenues were taken from the latest forecasts
approved by the Board. For the Digital CGU the key assumptions were
the growth in advertising revenues, the number of transacting
members and the average revenue per user. For the Market CGU the
key assumptions were relating to new markets worldwide and the
continuing growth of the Lisbon market. For the Print CGU the key
assumption was the ability of the Group to maintain print
advertising revenues during the transition to digital. Since the
forecast future revenues are based on significant unobservable
inputs, the fair value less costs of disposal of the goodwill is
classified as a level 3 fair value.
A full sensitivity analysis has not been disclosed as management
believes that any reasonable change in assumptions would not cause
the carrying value of the Digital or Market CGUs to exceed their
recoverable amounts. For the Print CGU, which has the lowest amount
of headroom, if either revenues decline by 20% in the next 12
months or the multiple used decreased to .75x, it would most likely
lead to an impairment of the goodwill of that segment.
10. Intangible assets - other
Group
Trademarks Service Other
and Development concession Customer intangible
copyright costs arrangements relationships assets Total
----------- ------------ -------------- --------------- ------------ --------
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Cost
At 1 January
2015 4,378 6,158 - - 5,371 15,907
Additions 51 1,751 - - - 1,802
Disposals - (820) - - - (820)
Exchange differences 168 - - - 266 434
At 31 December
2015 4,597 7,089 - - 5,637 17,323
Acquisitions 28 10 1,212 3,275 2,227 6,752
Finalisation
of PY acquisition
fair values 201 - - - - 201
Additions 27 1,829 - - - 1,856
Disposals (6) (1,626) - - - (1,632)
Exchange differences 760 - 97 263 1,126 2,246
At 31 December
2016 5,607 7,302 1,309 3,538 8,991 26,746
Amortisation
At 1 January
2015 66 2,549 - - 113 2,728
Charge for the
year 315 1,978 - - 388 2,681
Eliminated on
disposal - (817) - - - (817)
Exchange differences 4 - - - 7 11
At 31 December
2015 385 3,710 - - 508 4,603
Charge for the
year 456 1,705 22 384 553 3,120
Eliminated on
disposal - (1,624) - - - (1,624)
Exchange differences 107 - 1 - 171 279
At 31 December
2016 948 3,791 23 384 1,233 6,378
Net book value
At 31 December
2016 4,659 3,511 1,286 3,154 7,757 20,367
=========== ============ ============== =============== ============ ========
At 31 December
2015 4,212 3,378 - - 5,130 12,720
=========== ============ ============== =============== ============ ========
At 1 January
2015 4,311 3,609 - - 5,258 13,178
=========== ============ ============== =============== ============ ========
All development costs are internally generated intangible assets
and are amortised over a range of two to four years depending on
the useful life determined by management. The trademark and
copyright intangible assets are not internally generated and are
amortised over 15 years from the month of acquisition. The service
concession relates to the concession granted by the Municipality of
Lisbon to occupy and operate in an area within the Mercado da
Ribeira in Lisbon. It is amortised over the life of the concession
(until the expiry of the current lease in 2031). Customer
relationships relates to tenants operating in the Time Out Market
and is amortised over five years, ending in 2021.
Other intangible assets related to advertising relationships and
internally generated software which is amortised over 15 years
(until 2029) and four years (until 2020) respectively. The
amortisation charge for all intangible assets is recognised in
administrative expenses and the charge for the year was GBP3,120k
(2015: GBP2,681k).
11. Trade and other receivables
2016 2015
-------- --------
Current: GBP'000 GBP'000
Trade debtors 7,032 4,918
Other debtors 2,517 1,290
Prepayment and accrued income 2,438 1,856
11,987 8,064
======== ========
2016 2015
-------- --------
Non-current: GBP'000 GBP'000
Other debtors 550 550
550 550
======== ========
The fair values of all financial assets of the Group equate to
their carrying value.
As at 31 December 2016, Group trade receivables of GBP1,587k
(2015: GBP1,220k) were past due but not impaired. The past due
receivables relate to a number of independent customers for whom
there is no recent history of default. The ageing of these trade
receivables is over three months (2015: over three months).
As at 31 December 2016, Group trade receivables of GBP416k
(2015: GBP157k) were impaired. The amount of the provision was
GBP416k as at 31 December 2016 (2015: GBP157k). The individually
impaired receivables mainly relate to international trade
receivables. The ageing analysis of these trade receivables is over
three months (2015: over three months).
Movements on the Group provision for the impairment of trade
receivables are as follows:
2016 2015
-------- --------
GBP'000 GBP'000
At 1 January 157 148
Acquisitions 146 -
Provision for receivable impairment 260 180
Receivables written off during the
year as uncollectable (162) (168)
Unused amounts reversed - (7)
Exchange differences 15 4
At 31 December 416 157
======== ========
The creation and release of any provision for impaired
receivables have been included in 'administrative expenses' in the
income statement. Amounts charged to the allowance account are
generally written off when there is no expectation of recovering
additional cash.
The non-current balance relates to an office lease deposit that
will mature in 2019.
12. Trade and other payables
2016 2015
-------- --------
GBP'000 GBP'000
Current:
Trade creditors 4,919 2,766
Social security taxes 575 562
Other creditors 1,764 1,369
Deferred consideration 809 -
Line of credit 3,424 2,445
Accruals and deferred income 6,028 5,434
Value Added Tax 124 411
17,643 12,987
======== ========
Non-current:
Deferred consideration 307 86
Other creditors 1,598 45
1,905 131
======== ========
Line of credit amounts included above represent the Group's
accounts receivable financing agreements with two financial
institutions. There is an agreement with RBS Invoice Finance
Limited which is automatically renewed each year if certain
conditions are met. Under the agreement, accounts receivable are
assigned, with recourse, to this financial institution. In return,
the Group receives an advance of 80% of eligible assigned accounts
receivable. The interest rate in effect for the year ended 31
December 2016 was 2.85% above the Bank of England base rate (2015:
2.85% above). At 31 December 2016, accounts receivable assigned to
RBS Invoice Finance Limited were GBP2,483k (2015: GBP3,001k).
There is a similar agreement with Access Capital, Inc. for the
US, and the same principles apply with an 85% advance of eligible
assigned accounts receivable. The rate of interest under this
agreement equates to approximately 10% (2015: approximately 10%).
At 31 December 2016, accounts receivable assigned to Access
Capital, Inc. were GBP2,222k (2015: GBP1,273k). Both facilities are
secured by way of charges over certain of the Group's assets.
Included within other creditors is an amount of GBP121k (2015:
GBP67k) relating to finance leases undertaken for IT equipment.
There were GBP26k (2015: GBPnil) of costs associated with these
leases included in depreciation and GBP2k (2015: GBPnil) included
in finance costs. Deferred consideration comprises amounts payable
in ordinary shares of Time Out in respect to the YPlan acquisition,
of which further details can be found in note 11. Other creditors
also includes liabilities for our e-commerce business as well as
pension liabilities.
The non-current other creditors relates to a lease concession
for the Lisbon market and deferred consideration to minority
interests in the Lisbon market.
13. Borrowings
2016 2015
-------- --------
GBP'000 GBP'000
Current:
Financing of Time Out Market 1,083 -
1,083 -
======== ========
Non-current:
Loan stock - 3,565
Loan notes - 4,032
Senior debt - 4,755
Mezzanine debt - 9,111
Financing of Time Out Market 1,515 -
1,515 21,463
======== ========
Borrowings repayable as follows:
2016 2015
-------- --------
GBP'000 GBP'000
Between nil and one year 1,083 -
Between one and two years 491 12,352
Between two and five years 512 9,111
Over five years 512 -
2,598 21,463
======== ========
Financing of Time Out Market
The financing acquired with Time Out Market comprised of loans
from major suppliers under exclusivity contracts (GBP1,432k),
financing provided by a local Urban Development Fund as part of the
Joint European Support for Sustainable Investment in City Areas
(JESSICA) initiative (GBP1,342k), a Shareholder loan (GBP376k) and
a small bank loan (GBP276k). Repayments during the year were
GBP1,118k and as part of these payments, the Shareholder loan
acquired was paid off. The ending balances were GBP1,365k
(JESSICA), GBP128k (bank loans) and GBP1,105k (supplier loans). The
JESSICA loan is charged at a rate of the six-month EURIBOR rate
plus 1.75% and is repayable in installments to 2024. The supplier
loans are non-interest bearing, held at fair value, and are paid in
monthly instalments with the last instalment due in November 2018.
The bank loan was charged at a rate of six-month EURIBOR plus 3.25%
and was repaid early in January 2017.
Loan stock
In prior years, loan stock with a par value of GBP2,000k was
issued by the Group to TO (Bermuda) Limited, one of the Group's
controlling parties. Interest was charged at 12% per annum. At 30
June 2015, the repayment date was 30 November 2015; this was
extended to 31 December 2017 by the end of 2015. Accrued interest
is included above.
On 14 June 2016, the outstanding loan and interest of GBP3,763k
was settled partially in cash from the IPO proceeds, and partially
through an offset against the receivable due from TO (Bermuda)
Limited for the issue of 741,343 new ordinary shares.
Loan notes
In prior years, loan notes with a par value of GBP2,000k were
issued by the Group to Oakley Capital Investments Limited, one of
the Group's controlling parties. Interest was charged at 10% per
annum. At 30 June 2015, the repayment date was 30 November 2015;
this was extended to 31 December 2017 by the end of 2015. Accrued
interest is included above.
On 14 June 2016, the outstanding loan and interest of GBP4,211k
was settled through an offset against the receivable due from
Oakley Capital Investments Limited for the issue of 2,807,653
shares.
Senior debt
In prior years, senior loans with a par value of US$4,810k were
issued by the Group to Oakley Capital Investments Limited, CP_TONY
LLC and C&H Holdings LLC, all related parties. Interest was
charged at 8.5% per annum. At 30 June 2015, the repayment date was
30 November 2015, this was extended to 31 December 2017 by the end
of 2015. Accrued interest is included above.
On 14 June 2016, the outstanding loan and interest of GBP5,012k
was settled partially in cash from the IPO proceeds, and partially
through an offset against the receivable due from the
counterparties for the issue of 2,361,543 new ordinary shares.
Mezzanine debt
In prior years, mezzanine loans with a par value of US$7,074k
were issued by the Group to Oakley Capital Investments Limited,
CP_TONY LLC and C&H Holdings LLC, all related parties. Interest
was charged at 15% per annum. The repayment date was 28 May 2018.
Accrued interest is included above.
On 14 June 2016, the outstanding loan and interest of GBP9,850k
was settled through an offset against the receivable due from the
counterparties for the issue of 6,566,368 new ordinary shares.
Short-term loan
On 13 May 2016, Oakley Capital Investments Limited provided a
short-term loan of GBP2,000k to provide financing for the IPO
process.
On 14 June 2016, the outstanding loan and interest of GBP2,053k
was settled partially in cash from the proceeds of the IPO, and
partially through an offset against the receivable due from Oakley
Capital Investments Limited for the issue of 189,760 new ordinary
shares.
The fair values of all financial liabilities of the Group equate
to their carrying value.
14. Notes to the cash flow statement
Group reconciliation of loss before income tax to cash used in
operations
2016 2015
--------- ---------
GBP'000 GBP'000
Loss before income tax (18,843) (20,969)
Add back:
Net finance costs 1,142 2,517
Share based payments 1,064 -
Depreciation charges 710 385
Amortisation charges 3,120 2,680
Fair value gain on investments (730) -
Loss on disposals of fixed assets 16 -
Non-cash movements 77 (454)
Share of associate's loss 577 -
Decrease/(increase) in inventories (29) 148
Increase in trade and other receivables (1,982) (411)
(Decrease)/increase in trade and other
payables (1,087) 2,941
Cash used in operations (15,965) (13,163)
========= =========
15. Related party transactions
The Group is controlled by Oakley Capital Investment Limited
("OCIL") and Oakley Capital Private Equity, who together owned
58.55% of the Company's shares as at the year ended 31 December
2016.
The following transactions were carried out with related
parties:
Acquisition of Time Out Market Limited
On 14 June 2016, the Group acquired the entire issued preference
share capital and an additional 76.6% of the ordinary share capital
of Time Out Market Limited from OCIL, a controlling related party.
The Group issued 6,353,281 ordinary shares as consideration, with a
total fair value of GBP9,530k. More information can be found in
note 8.
Other relating to Time Out Market Limited
Time Out Digital Limited had a debtor balance with Time Out
Market Limited at the year-end of GBP5,251k of which GBP3,147k
related to funding. In addition to the funding, Time Out Digital
Limited provided GBP1,750k in July 2016 in order to buy out a
minority interest in the Lisbon market and pay off a shareholder
loan in that company. The rest of the balance relates to transfer
pricing charges and trading between companies.
Acquisition of associate interest in Flypay Limited
On 14 June 2016, the Group acquired a further 41.5% of the
ordinary share capital of Flypay Limited, from OCIL, a controlling
related party. The Group issued 4,660,000 ordinary shares as
consideration, with a total fair value of GBP6,990k. In October
2016, the Group's share was diluted to 37.8% due to further
investment from other investors. The dilution resulted in a fair
value gain of GBP730k which is recognised in the income
statement.
Other
During the year, Time Out America paid $80k to Oakley Capital
for 2012 Directors' Fees. The cost of the fees were included in
prior year results. The Group also engages with Oakley Advisory, a
subsidiary of OCIL, on a consultancy basis and pays it a minimum
fee of GBP60k per annum.
As part of the IPO, Time Out Group plc (the "Company") issued
6,353,281 ordinary shares to OCIL in consideration of the
acquisition of Time Out Market Limited and issued 4,660,000
ordinary shares to OCIL in consideration of the acquisition of an
additional 41.5% of the issued share capital of Flypay Limited. The
Company issued 60,000,000 ordinary shares to investors.
Financing transactions with related parties are detailed in note
13.
This information is provided by RNS
The company news service from the London Stock Exchange
END
FR UBRURBUAOUUR
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March 28, 2017 02:01 ET (06:01 GMT)
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