REG - Audioboom Group PLC - Half Year Report
19/07/2023 07:00
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RNS Number : 4371G Audioboom Group PLC 19 July 2023
19 July 2023
This announcement contains inside information as stipulated under the UK
Market Abuse Regulations ("MAR")
Audioboom Group plc
("Audioboom", the "Group" or the "Company")
Half-Year Report
Audioboom (AIM: BOOM), the leading global podcast company, announces its
unaudited half-year results for the six months ended 30 June 2023.
Financial and operational KPIs
· H1 revenue of US$31.8 million (H1 2022: US$40.9 million), predominantly
reflecting the loss of the Morbid podcast which left the network in May 2022
· Q2 revenue of US$16.4 million, up 6.5% on Q1 2023 (US$15.4 million)
· Total H1 adjusted opex((1)) of US$5.5 million, down 11% on H1 2022
(US$6.2 million), demonstrating strong cost control
· Adjusted EBITDA((2)) profit of US$0.3 million (H1 2022: US$2.0
million)
· Group cash at 30 June 2023 of US$5.3 million (31 March 2023: US$5.1
million), with a further US$1.9 million available via an undrawn overdraft. A
further US$2.7 million has been collected in July
· Average Q2 global monthly downloads of 125.9 million, up 1% on prior
quarter (Q1 2023: 125.2 million). Global monthly downloads in May 2023 reached
a record 135.2 million
· Average Q2 brand advertiser count of 8,042, up 24% (Q1 2023: 6,498).
The brand advertiser count reached a record 8,786 in June 2023
· Average Q2 global revenue per 1,000 downloads (eCPM) of US$43.55, up
6% (Q1 2023: US$41.00)
· Record total advertising impressions made available to buyers in H1
2023 of 5.1 billion, up 25% on prior year (H1 2022: 4.1 billion), including
3.4 billion via the Showcase marketplace (H1 2022: 2.1 billion)
· So as to better reflect the underlying performance of the business,
the Company reports an exceptional one-off cost in relation to an individual
contract which has been deemed to be onerous (US$8.9 million). This includes
the H1 contract net loss (US$1.8 million) and the future estimated net loss
(US$7.1 million) which has been provided for in full as at 30 June 2023
· The Board had previously indicated its intention to introduce a
progressive dividend policy with a maiden dividend in respect of the current
financial year being declared and paid in 2024. Taking into consideration the
expected performance of the current financial year, it is the Board's
intention to review the progressive dividend policy for the 2024 financial
year and onwards
· Business operations continue to improve significantly, with the
Company in a strong position to fully exploit future improvements in
advertising market conditions, and the Company expects to return to meaningful
growth in H2 2023 on a year-on-year and sequential basis
Commercial highlights
· Continued growth of Showcase, our global advertising marketplace - Q2
2023 revenue from advertising technology up 18% on Q1 2023 and H1 2023 up 35%
on H1 2022. Showcase now contributes more than 21% to Group revenue (H1 2022:
15%)
· New demand-side/monetisation partners added to Showcase, including
Bauer Nordics, Icon, Entravision, AudioHook and AudiOn
· New exclusive partnerships launched during H1 2023 in Audioboom's
creator network, with major podcasts including The Tim Dillon Show, No Sleep,
Networth and Chill, The Broski Report, Real Ones with Jon Bernthal, Trading
Secrets and Once Upon A Crime
· Renewal of key content partnerships during H1 2023, including Tiny
Meat Gang, Brooke & Connor, F1: Beyond the Grid and F1 Nation, Two Hot
Takes and Astonishing Legends
· Audioboom continues to cement its position as the leading pure-play
podcast publisher, ranking fifth in the key US market in both the Edison
Research and Triton Digital reports, as well as third in Australia, second in
New Zealand and fourth in Canada on the Triton Digital Podcast ranker
(1) Operating costs before interest, tax, depreciation, amortisation, share
based payments and non-cash foreign exchange movements
(2) Earnings before interest, tax, depreciation, amortisation, share based
payments, non-cash foreign exchange movements and material one-off items
Stuart Last, CEO of Audioboom, commented:
"Significant growth of our content network and the continued development and
evolution of our revenue product offering is key to our progress in 2023. Our
strategy and model continue to work well, with the fast expansion of our
network and the refocusing of our advertising strategy setting us up to emerge
from the economic downturn in a position of strength.
Podcasts on our network are now downloaded more than 135 million times per
month - in December 2022 this number was just 103 million. Our inventory
levels are now at 930 million monthly impressions, compared to 530 million one
year ago. The value that we are building through the growth of our network and
our revenue product offering is significant and we believe it will be
crystalised as the adverting market recovers, having a materially positive
long-term impact on the business.
I'm looking forward to updating you on the progress of our recently launched
brand-focused revenue unit in the second half of the year - its success will
be a sign of maturation for our advertising business as we expand our customer
base beyond traditional podcast advertisers to leading global brands.
While we have been disappointed with the softer advertising market since the
second half of 2022 which has caused us to reduce expectations, our model has
delivered CAGR of 65% over the previous five years and led us to outperform
the wider podcast market consistently during that time. We continue to refine
and adapt our model so that we are primed for further success, which will be
seen in the second half of 2023 as we move back into a positive growth phase."
Enquiries
Audioboom Group plc
Stuart Last, Chief Executive Officer Tel: +44(0)20 3714 4285
Brad Clarke, Chief Financial Officer
finnCap Ltd (Nominated Adviser and Broker)
Jonny Franklin-Adams/Abigail Kelly/Milesh Hindocha (Corporate Finance) Tel: +44(0)20 7220 0500
Charlotte Sutcliffe/Harriet Ward (ECM)
About Audioboom
Audioboom is a global leader in podcasting - our shows are downloaded more
than 135 million times each month by 38 million unique listeners around the
world. Audioboom is ranked as the fifth largest podcast publisher in the US by
Edison Research.
Audioboom's ad-tech and monetisation platform underpins a scalable content
business that provides commercial, distribution, marketing and production
services for a premium network of top tier podcasts. Key partners include the
official Formula 1 podcasts 'F1: Beyond the Grid' and 'F1 Nation', 'Casefile
True Crime' (US), 'True Crime Obsessed' (US), The Tim Dillon Show' (US), 'No
Such Thing As A Fish' (UK) and 'The Cycling Podcast' (UK).
Audioboom operates internationally, with global partnerships across North
America, Europe, Asia and Australia. The platform distributes content via
Apple Podcasts, YouTube, Spotify, Pandora, Amazon Music, Google Podcasts,
iHeartRadio, Facebook and Twitter as well as a partner's own websites and
mobile apps.
For more information, visit audioboom.com.
Chief Executive's Report
Strategy and Business Model
Audioboom powers podcasting - connecting creators, brands and audience to
create value across the industry. Since 2018 we have generated more than
US$180 million in revenue for our podcast creators and helped thousands of
brands deliver more than US$230 million of advertising campaigns.
Creators are the heartbeat of the platform. Our technology enables more than
8,000 podcasters to manage their content publishing process, grow their
audience, distribute to all major listening apps, and see insights into the
consumption of their content with our data and analytics dashboard.
Brands can access unique advertising options including the Premium Network,
our high-value product in which the host of the podcast delivers campaign
messages for the brand and endorses the product directly to their engaged
audience. Showcase - our highly automated marketplace - enables brands to
pinpoint their target audience at scale and with great efficiency through our
ad-tech stack, while Sonic - our platform for brands - helps advertisers
develop and execute campaigns across the podcast landscape.
Audioboom delivers strong global scale, with monthly downloads achieving a new
high of 135 million in May 2023. More than 38 million unique users consume
content from Audioboom each month, and in 2023 we will create more than 10
billion available advertising impressions.
Audioboom is the fifth largest podcast publisher in the US - the world's
largest podcast market - on Edison Research's publisher ranker. We also rank
third in Australia, second in New Zealand and fourth in Canada. Audioboom's
growth continues to outpace our competitors - since 2017 we have outperformed
the market by an average of 68% per year.
After a period of strong industry growth in 2021, advertising markets in our
key territories weakened significantly in mid-2022 due to global
macro-economic headwinds. These challenging conditions have continued into
2023. Podcasting's core customer group of 'direct response' or 'performance
marketing' brands - who have been key to building the industry over the past
10 years - have been particularly impacted by the downturn. These brands are
generally smaller, direct-to-consumer companies - they track performance of
each podcast ad they buy, directly measuring their return on investment by how
many listeners each ad can convert to customers. We have seen a 25% decrease
in budgets from this group of advertisers that are primarily utilising our
premium advertising product.
To combat this, Audioboom restructured its revenue operations in Q2 2023 and
launched an in-house team focused on growing partnerships with 'brand
awareness' advertisers. These brands are larger companies, who are more stable
in challenging economic times, and have an advertising strategy focused
towards improving consumer awareness and sentiment around their product,
rather than an immediate and directly measurable return-on-investment. The
impact of the development of this new customer base will start to be seen in
the second half of the year.
Showcase has continued to be a success story for Audioboom. During H1 2022,
Showcase contributed 21% of Group revenue (up from 15% in 2022 and 11% in
2021). In May 2023 Showcase delivered record monthly revenue of US$1.4
million. Across 2023 we are on track to make more than 7 billion impressions
available to advertisers through Showcase (up from 4 billion in 2022).
Our continued audience, download and inventory growth is driven by further
expansion of our creator network, with a focus on establishing new
partnerships with top tier podcast producers. Key partnership launches during
H1 2023 include The Tim Dillon Show, No Sleep, Networth and Chill, The Broski
Report, Real Ones with Jon Bernthal, Trading Secrets and Once Upon A Crime. We
further bolstered our creator network through long-term renewals of existing
partnerships including F1: Beyond The Grid and F1: Nation, Tiny Meat Gang,
Astonishing Legends, Two Hot Takes and RELAX!
Financial Review
Group revenue in the first half of 2023 of US$31.8 million (H1 2022: US$40.9
million) reduced year-on-year but it is important that we compare H1 2023 to
H1 2022 without revenue included from the Morbid podcast which left the
network in May 2022. H1 2022 revenue, excluding the Morbid podcast, was
US$33.4 million and the Company has performed relatively well to be within 5%
of H1 2022 in a softer advertising market. The Company has also recorded
growth quarter-on-quarter in 2023 with Q2 2023 revenue of US$16.4 million
increasing by 6.5% over Q1 2023 (US$15.4 million).
Adjusted EBITDA profit (earnings before interest, tax, depreciation,
amortisation, share based payments, non-foreign exchange movements and
material one off items) was US$0.3 million (H1 2022: US$2.0 million) with the
challenging advertising market impacting revenue and consequently adjusted
EBITDA.
As detailed further in Note 9, a provision of US$7.1 million has been created
in relation to an individual partner contract. Despite downloads for the
contract continuing to increase, the ad rates that have been commanded, and
the future ad rates that are likely to be commanded, are lower than those
modelled when the contract was signed due to advertising markets being more
challenging for longer than anticipated. In light of revenue growth being
lower than projected at the previous reporting date it is now assumed that it
is unavoidable that the contract will generate a net loss through to its
conclusion in July 2025. The contract, which was negotiated in Q1 2022 during
buoyant podcast advertising market conditions, recorded a net loss of US$1.8
million in H1 2023 and this has also been treated as an exceptional cost in
the period. This is so that the gross margin can be reported for the rest of
the business in 2023, providing a more accurate reflection of performance in
the period.
Excluding the specific contract that has been provided for, the Group gross
margin has increased to 20% (year to 31 December 2022: 19%). Audioboom has a
mix of revenue streams, contributing different gross margins. Showcase
contributed 21% of gross revenue, up from 12% in H1 2022, with a healthy
contracted gross margin of 41%. Premium revenue, where the host of the podcast
delivers campaign messages for the brand and endorses the product directly to
their engaged audience, contributed 59% of gross revenue, down from 71% in H1
2022 due to the progression of Showcase, and yielded a contracted gross margin
of 21% in H1 2023. Sonic Influencer Marketing contributed 20% of gross
revenue, up from 17% in H1 2022, with a 13% gross margin, as in 2022.
Despite macro inflationary pressures, there has been strong management of opex
costs incurred during the first half of 2023. Adjusted opex has reduced from
US$6.2 million in H1 2022 to US$5.5 million in H1 2023. This reduction has
been achieved predominantly through reductions in staff and commission costs
incurred. Total salary and commission in H1 2023 of US$3.1 million was US$1.1
million, or 26%, lower in the period versus the prior year. Audioboom remains
an extremely lean organisation - headcount has been reduced to 39 (30 June
2022: 47) and we have successfully reorganised our revenue operation in Q2
2023. Part of the headcount reductions occurred within Audioboom Studios as we
shifted our approach to production-as-a-service in line with our mission to
power podcasting for creators. As well as reducing headcount in this area, we
also removed the higher-risk development of new shows and the marketing
budgets associated with promoting new original content.
Technology costs have increased by US$0.3m, or 24%, to US$1.5 million in H1
2023 due to increased bandwidth utilised in the period and the record number
of advertising impressions made available to buyers in H1 2023, which were up
25% on H1 2022. Through successful renegotiation of third-party technology
costs, and securing more favourable rates for bandwidth and serving
advertising impressions, we were able to reduce the expected cost incurred by
US$0.1m in H1 2023.
Cash collections continue to perform well thanks to our efficient internal
processes and good relationships with our customers. We report a debtor day
figure of 72, in line with both 31 December 2022 and 30 June 2022 (68 days).
Total cash collected in H1 2023 of US$32.9 million was 104% of revenue
reported. Operating cash outflow, before working capital movements, totalled
US$1.3 million (H1 2022: US$1.3 million cash inflow) largely due to the impact
of the contract net loss as detailed in note 9 (US$1.8 million. Cash held at
30 June 2023 of US$5.3 million increased by US$0.2 million from 31 March 2023
and decreased by US$2.8 million from 31 December 2022 (US$8.1 million). A
further US$2.7 million has been collected in July. The US$1.9 million
overdraft with HSBC was renewed and remained undrawn at 30 June 2023, giving
the Company access to capital of US$7.2 million at the period end.
Outlook
As expected, key financial and operational comparisons between H1 2023 and the
corresponding period last year are distorted by a) the inclusion of the Morbid
podcast in H1 2022 reporting (Morbid is a global top 10 podcast which
contributed to that period's revenue and download success, but which left the
Audioboom platform in May 2022), and b) a very buoyant advertising market in
the first half of last year which provided strong demand and pricing from our
premium customer base but which deteriorated quickly from June 2022 onwards.
As such, while H1 2023 performance is down in comparison with H1 2022, we
expect to return to year-on-year growth for H2 2023 where market conditions
are more closely aligned with the previous year.
Historically H2 is seasonally strong for Audioboom with significant
advertising demand linked to the NFL season, European football schedules, and
the Thanksgiving-to-Christmas holiday period. This is expected again in 2023
and, along with the initial impact of our newly launched 'brand awareness'
sales unit, will lead to continued quarterly sequential growth as well as the
previously noted year-on-year growth.
While disappointed that market conditions have limited our financial
performance so far this year, our operational progress has been pleasing. We
have achieved record download and record unique user figures and, through a
focus on accelerated inventory extraction, we now create more than seven
advertising impressions from each download (vs five in 2022). The launch of
our new in-house 'brand awareness' unit has begun well - so with more
listeners, more downloads, more advertising inventory and more customers than
ever before, we are fully primed to maximise the opportunity an improved ad
market will bring.
The past 12 months have been challenging, but the strength of our platform and
content engine have minimised the impact of market conditions on the business.
We have made strategic changes - particularly in our revenue operation - that
are strengthening our business and setting us up us for success alongside an
ad market recovery. The Audioboom team continues to fight hard to deliver
maximum value for our creators, customers and shareholders.
Stuart Last
Chief Executive Officer
Audioboom Group PLC
Consolidated Statement of Comprehensive Income
Unaudited six months to 30 June 2023 Unaudited six months to 30 June 2022 Audited 12
months to 31 Dec 2022
Majority of business Onerous contract
Notes US$'000 US$'000 US$'000 US$'000 US$'000
Continuing operations
Revenue 2 29,381 2,427 31,808 40,910 74,879
Cost of sales (23,614) (4,250) (27,864) (32,650) (60,667)
Cost of sales - contract provision 9 - (7,090) (7,090) - -
Gross (loss) / profit 5,767 (8,913) (3,146) 8,260 14,212
Other income - forgiven loan liability - - - - 374
Administrative expenses - - (7,420) (7,631) (14,909)
Adjusted EBITDA - - 315 2,047 3,591
- Share based payments 8 - - (1,403) (2,290) (4,358)
- Depreciation - - (19) (24) (47)
- Depreciation - leases - - (131) (125) (250)
- Operating foreign exchange (loss) / gain - - (331) 1,021 1,141
- Contract provision and H1 contract 9 - - (8,913) - -
net loss*
- Contract settlement - - - - (400)
- Restructuring costs - - (84) - -
Operating (loss) / profit - - (10,566) 629 (323)
Finance costs - - (43) (63) (106)
(Loss) / profit before tax - - (10,609) 566 (429)
Taxation on continuing operations - - (2) - (328)
(Loss) / profit for the financial period - - (10,611) 566 (757)
Other comprehensive income
Foreign currency reserves translation difference - - 841 (1,541) (2,233)
Total comprehensive loss for the period - - (9,770) (975) (2,990)
(Loss) / profit per share
Basic and diluted EPS 4 (64.8) cents - (4.7) cents
Diluted EPS 4 - 3 cents -
Basic EPS 4 - 4 cents -
* Onerous contract H1 net loss and future contract provision treated as an
exceptional cost so as to accurately report the rest of the business
Audioboom Group PLC
Consolidated Statement of Financial Position
Unaudited as at 30 June 2023 Unaudited as at 30 June 2022 Audited as at
31 Dec 2022
Notes US$'000 US$'000 US$'000
ASSETS
Non-current assets
Property, plant and equipment 38 65 59
Right of use asset 205 452 329
Deferred tax asset 3,770 4,650 3,609
4,013 5,167 3,997
Current assets
Trade and other receivables 5 15,579 18,960 16,013
Cash and cash equivalents 5,297 5,774 8,067
Deferred tax asset 841 625 805
21,717 25,359 24,885
TOTAL ASSETS 25,730 30,526 28,882
Current liabilities
Trade and other payables 6 (9,075) (12,598) (10,614)
Partner contract provision 9 (3,386) - -
Contract settlement provision - - (400)
Lease liability 6 (220) (274) (278)
NET CURRENT ASSETS 9,036 12,487 13,593
Non-current liabilities
Lease liability 6 - (220) (80)
Partner contract provision 9 (3,703) - -
NET ASSETS 9,346 17,434 17,510
Equity
Share capital - - -
Share premium 4 63,105 62,880 62,902
Issue cost reserve (2,048) (2,048) (2,048)
Foreign exchange translation reserve (1,661) (1,811) (2,502)
Reverse acquisition reserve (3,380) (3,380) (3,380)
Retained earnings (46,670) (38,207) (37,462)
TOTAL EQUITY 9,346 17,434 17,510
Audioboom Group PLC
Consolidated Cash Flow Statement
Unaudited six months to 30 June 2023 Unaudited six months to 30 June 2022 Audited 12 months to 31 Dec 2022
US$'000 US$'000 US$'000
(Loss) / profit from operations (10,611) 566 (757)
Adjustments for:
Tax charge 2 - 328
Interest payable 43 63 106
Depreciation of fixed assets 19 24 47
Share based payments 1,403 2,290 4,358
Increase in partner contract provision 7,090 - -
Operating foreign exchange gain / (loss) 725 (1,609) (1,557)
Cash generated from operating activities before working capital movements (1,329) 1,334 2,525
Decrease / (increase) in trade and other receivables 433 (813) 2,134
(Decrease) / increase in trade and other payables (excluding leases) (1,938) 611 (1,154)
Decrease in lease liability (138) (177) (269)
Net cash generated from / (used in) operating activities (2,972) 955 3,236
Investing activities
Purchase of property, plant and equipment - - (29)
Net cash used in investing activities - - (29)
Financing activities
HSBC overdraft fees - (19) -
Proceeds from issue of ordinary share capital 202 1,869 1,891
Net cash generated from financing activities 202 1,850 1,891
Net (decrease) / increase in cash and cash equivalents (2,770) 2,805 5,098
Cash and cash equivalents at beginning of period 8,067 2,969 2,969
Cash and cash equivalents at end of period 5,297 5,774 8,067
Audioboom Group PLC
Consolidated Statement of Changes in Equity
Share premium Other reserves* Retained earnings Total equity
US$'000 US$'000 US$'000 US$'000
At 31 December 2021 61,011 (5,698) (41,063) 14,250
Profit for the period - - 566 566
Issue of shares 1,869 - - 1,869
Equity-settled share-based payments - - 2,290 2,290
Foreign exchange loss on translation - (1,541) - (1,541)
of overseas subsidiaries
At 30 June 2022 62,880 (7,239) (38,207) 17,434
Loss for the period - - (1,323) (1,323)
Issue of shares 22 - - 22
Equity-settled share-based payments - - 2,068 2,068
Foreign exchange loss on translation - (691) - (691)
of overseas subsidiaries
At 31 December 2022 62,902 (7,930) (37,462) 17,510
Loss for the period - - (10,611) (10,611)
Issue of shares 203 - - 203
Equity-settled share-based payments - - 1,403 1,403
Foreign exchange profit on translation - 841 - 841
of overseas subsidiaries
At 30 June 2023 63,105 (7,089) (46,670) 9,346
*Other reserves relate to the following reserves: Issue Cost Reserve, Foreign
Exchange Translation Reserve and the Reverse Acquisition Reserve. Full details
are disclosed in the 2022 Annual Report.
Audioboom Group plc
Notes to the financial statements
1. General information and basis of preparation
Audioboom Group plc is incorporated in Jersey under the Companies (Jersey) Law
1991. The Company's ordinary shares of no par value are traded on AIM, a
market operated by the London Stock Exchange.
These consolidated interim financial statements, which are unaudited, have
been approved by the Board of Directors on 18 July 2023. They have been
drawn up using the accounting policies and the basis of presentation expected
to be adopted in the Group's full financial statements for the year ending 31
December 2023, which are not expected to be significantly different to those
set out in note 1 to the Company's audited financial statements for the year
ending 31 December 2022.
The consolidated interim financial statements have been prepared under the
historical cost convention and in accordance with International Financial
Reporting Standards ("IFRS") and with IAS 34 "Interim financial reporting", as
adopted by the UK.
The preparation of financial statements in accordance with IFRS requires the
use of estimates and assumptions that affect the reported amounts of assets
and liabilities, and disclosure of contingent assets and liabilities as at the
date of the financial statements and the reported amounts of revenues and
expenses during the reporting period. Those estimates and assumptions are
consistent with those as reported in the Company's audited financial
statements for the year ending 31 December 2022.
Going concern
These interim financial statements have been prepared on the going concern
basis, which assumes that the Group will have sufficient funds to continue in
operational existence for at least 12 months from the date of approval of
these interim financial statements. The Group ended the period with access to
US$5.3 million of cash, and a US$1.9 million overdraft which was undrawn as at
30 June 2023. The Board's forecasts for the Group, including due consideration
of the business forecasting continuing positive EBITDA in 2023, projected
increase in revenues and cash utilisation of the Group and taking account of
reasonable possible changes in trading performance including changes outside
of expected trading performance and the impact of missed partner minimum
guarantees, indicate that the Group will have sufficient cash available to
continue in operational existence for the next 12 months from the date of
approval of these interim financial statements and beyond. Based on the
Board's forecasts, the Group considers that it will not require additional
funding for the foreseeable future for the purposes of meeting its liabilities
as and when they fall due. The Board believes that the Group is well placed to
manage its business risks, and longer-term strategic objectives, successfully.
Management has carried out sensitivity analyses of the Group's cash flow
models to assess the impact of a range of possible outcomes, including lower
than anticipated revenues, and the mitigations that the Group has available to
it, including a reduction in overhead costs, active working capital management
and the availability of the HSBC overdraft. Accordingly, the Directors are
satisfied that the Group will continue to be able to meet its ongoing
liabilities as and when they fall due in reasonably foreseeable circumstances.
Therefore, the Directors consider the going concern basis of preparation of
these interim financial statements appropriate.
2. Revenue
The Group's operations are principally located in the UK and the USA. The
Group's revenue from external customers by geographical location is detailed
below:
Unaudited six months to 30 June 2023 Unaudited six months to 30 June 2022 Audited 12 months to 31 Dec 2022
US$'000 US$'000 US$'000
United Kingdom and Rest of the World 963 1,750 3,327
USA 30,845 39,160 71,552
Total 31,808 40,910 74,879
3. Loss / profit per share
Basic earnings per share (EPS) is calculated by dividing the profit or loss
attributable to shareholders by the weighted average number of ordinary shares
in issue during the period.
IAS 33 requires presentation of diluted EPS when a company could be called
upon to issue shares that would decrease earnings per share, or increase the
loss per share. For a loss-making company with outstanding share options, net
loss per share would be decreased by the exercise of share options. Therefore,
for the periods ending 30 June 2023 and 31 December 2022, as per IAS 33:36,
the anti-dilutive potential ordinary shares are disregarded on the calculation
of diluted EPS.
Reconciliation of the loss and weighted average number of ordinary shares used
in the calculation are set out below:
30 June 2023
Loss Weighted average number of shares Per share amount
US$'000 Thousand Cents
Basic and diluted EPS
Loss attributable to equity shareholders (10,611) 16,357 (64.9)
30 June 2022
Profit Weighted average number of shares Per share amount
US$'000 Thousand Cents
Basic EPS
Profit attributable to equity shareholders 567 15,928 4
Diluted EPS
Profit attributable to equity shareholders 567 17,433 3
31 December 2022
Loss Weighted average number of shares Per share amount
US$'000 Thousand Cents
Basic and diluted EPS
Loss attributable to equity shareholders (757) 16,192 (4.7)
4. Share capital
Issued and fully paid - ordinary shares of no par value
At 30 June 2023 16,376,936
At 30 June 2022 16,286,752
At 31 December 2022 16,297,419
During the period 79,517 new ordinary shares were issued to satisfy the
exercise of existing share options under the Company's Share Option Scheme
2014 by current or former employees.
The total number of instruments over equity (including both share options and
warrants) outstanding at the period end was 1,862,451, and of these, 1,122,016
had vested at the period end.
5. Trade and other receivables
Unaudited six months to 30 June 2023 Unaudited six months to 30 June 2022 Audited 12 months to 31 Dec 2022
US$'000 US$'000 US$'000
Amounts receivable for the sale of goods and services 12,547 15,334 13,966
Allowance for doubtful debts (209) (171) (325)
Net receivables 12,338 15,163 13,641
Deferred cost of sales relating to minimum guarantee payments 382 - 93
Other receivables 241 234 237
Prepayments and accrued income 2,533 3,563 1,923
Taxes recoverable 85 - 119
Total 15,579 18,960 16,013
The average credit period taken on sales of goods and services is 72 days (30
June 2022: 68; 31 December 2022: 68). Accrued income carried forward that will
fully reverse is US$0.4 million (30 June 2022: US$1.6 million; 31 December
2022: US$0.6 million). As at 30 June 2023, US$0.4 million (2022: US$0.1
million) is included within trade and other receivables and relates to
deferred cost of sales relating to podcast partner contractual minimum
guarantee payments. These are payments which were made to podcast partners
where revenue shares earned were lower than the contractual minimum guaranteed
amount. The Company expects to recoup these payments over the life of the
contract.
6. Trade and other payables
Unaudited six months to 30 June 2023 Unaudited six months to 30 June 2022 Audited 12 months to 31 Dec 2022
US$'000 US$'000 US$'000
Current liabilities
Trade payables 7,577 8,900 5,932
Other taxes and social security 31 - 37
Accruals 1,392 2,546 4,522
Other payables 75 1,152 123
Trade and other payables due within one year 9,075 12,598 10,614
Trade payables and accruals principally comprise amounts outstanding for trade
purchases and ongoing costs. The average credit period taken for trade
purchases is 51 days (30 June 2022: 47; 31 December 2022: 54 days). The
Company currently accrues all costs based on contract terms. Payables relating
to leases total US$0.2 million which is due in under one year.
7. Related party transactions
During the period, there were no related party transactions.
8. Share based payments
During the period, 447,000 share options were issued to qualifying current
employees with an exercise price of £3.61 per share.
9. Contract provision and costs
A provision has been recognised as at 30 June 2023 in relation to an
individual partner contract. As advertising markets have performed below the
expectations previously modelled for this specific agreement, it is now
assumed that it is unavoidable that the contract will generate a loss through
to its conclusion in July 2025. The contract, which was negotiated in Q1 2022
during buoyant podcast advertising market conditions, recorded a net loss of
US$1.8 million in H1 2023 and in light of revenue growth being lower than
projected at the previous reporting date it is considered likely that it will
continue to be loss making through to its conclusion.
A provision has therefore been created for the estimated total contract loss
with the trigger point being future revenue and growth assumptions for the
show being lowered due to the advertising markets being more challenging for
longer than anticipated during Q2 2023. Consequently, despite the downloads
for the contract continuing to increase, the ad rates that have been, and are
likely to be, commanded for the contract are likely to be lower than those
previously assumed.
In estimating the potential net loss of the contract between July 2023 and
July 2025, high, medium and low growth projections have been used to estimate
the total net loss of the contract. The provision has been created as, even
under the high growth scenario, it is estimated that the contract will incur a
net loss due to insufficient time and opportunity to derive sufficient revenue
growth for the contract to generate a profit before its expiration in July
2025. A weighted average of the different growth scenarios has been used as
the performance of future advertising markets and the specific show can only
be estimated at the balance sheet date.
It has been deemed appropriate to disaggregate the revenue, net loss and
provided for projected net loss of this contract within the consolidated
statement of comprehensive income in order to detail revenue and gross margin
which reflects the performance of the underlying business. No overheads or
other costs have been included in the provision assessment.
The following are the amounts recognised in the statement of comprehensive
income:
Unaudited six months to 30 June 2023 Unaudited six months to 30 June 2022 Audited 12 months to 31 Dec 2022
US$'000 US$'000 US$'000
H1 net loss
Contract net loss incurred between January and 1,823 - -
June 2023
Contract provision
Contract provision for expected net loss between July 2023 and July 2025 7,090 - -
Total 8,913 - -
The following are the total value of the provision which has been calculated
on a weighted average basis based on a range of scenarios then discounted to
detail the net present value of the provision:
Unaudited six months to 30 June 2023 Unaudited six months to 30 June 2022 Audited 12 months to 31 Dec 2022
US$'000 US$'000 US$'000
Current contract provision 3,386 - -
Non-current contract provision 3,703 - -
Total 7,090 - -
ENDS
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