REG - XLMedia PLC - Final Results
29/03/2022 07:00
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RNS Number : 3131G XLMedia PLC 29 March 2022
29 March 2022
XLMedia PLC
("XLMedia" or the "Group" or the "Company")
Results for the Year Ended 31 December 2021
XLMedia (AIM: XLM), a leading global digital performance publisher, announces
the Company's audited results for the year ended 31 December 2021.
Financial summary
· Revenues of $66.5 million (FY 2020: $54.8 million)
o Sports vertical generated revenues of $31.4 million (2020: US$11.3
million)
o Personal Finance generated revenues of $8.7 million (2020: US$8.4 million)
o European Casino assets generated revenues of US$23.2 million (2020:
US$31.7 million)
o Other legacy revenues were $3.1 million (FY 2020: $3.5 million)
· Operating profit of $3.9 million (FY 2020: $0.1 million)
· Adjusted EBITDA(1) of $17.9million (FY 2020: $12.2 million)
· Adjusted profit before tax(2) of $10.5 million (FY 2020: $5.3
million)
· Reported Profit before tax of $4 million (FY 2020: $1.1 million)
· Cash and short-term investments of $24.6 million (31 December 2020:
$13.9 million)
1 Adjusted EBITDA in all references is defined as Earnings Before Interest,
Taxes, Depreciation and Amortisation, and excluding any share-based payments,
impairment and reorganisation costs
2 Excluding loss from impairment and reorganisation costs
Operating summary
· Grown presence and created a significant market opportunity within
North American Sports, with coverage across the 15 states where online sports
betting is legal, as well as US states and Canadian provinces soon to legalise
o Successfully harmonised two US sports acquisitions (Sports Betting Dime
and Saturday Inc.) with CBWG assets and team
o Commercial content team successfully working across a number of media
partners
· European Sports and Personal Finance assets now managed from UK and
US respectively
· Managed decline within European Casino retaining profitability
· Strengthened board and executive teams with the appointments of:
o Chief Financial Officer, Caroline Ackroyd, Chief Information Officer,
Nigel Leigh, Chief People Officer, Sonja Haas, and Julie Markey and Cédric
Boireau as Non-Executive Directors
· Global operational reorganisation to complete in H1 22
o Annualised gross cost savings of between $5 million and $6 million
Outlook
· Current trading for year ending 31 December 2022 in-line with
management expectations
· North American Sports vertical now a key growth, profit and cash
driver for the Group, buoyed by a strong start to 2022
Stuart Simms, Chief Executive Officer at XLMedia, commented:
"We've made great progress in North America during 2021 alongside delivering
important organisational changes to both rationalise and ring-fence legacy
areas of our business. We set out to become a significant player in North
American Sports - in line with our strategy to pursue high growth, large,
regulated markets - we're now in really good shape, with strong geographical
coverage and capability, ready to fully exploit this significant market
opportunity."
Julie Markey, Interim-Chair at XLMedia, commented:
"In 2021, the Group evolved its operational capabilities - upskilling and
realigning our global workforce to better match strategy and generate new
future growth. I'm proud of our people for driving through a period of
significant change including having to navigate continued restrictions
relating to the Covid pandemic. The business is becoming more agile and
responsive so that it can fully exploit new opportunities."
Investor presentation webcast
A webcast of the presentation will be made available on the Company's website
at https://www.xlmedia.com/investor-relations/webcasts/
(https://www.xlmedia.com/investor-relations/webcasts/)
For further information, please contact:
XLMedia plc ir@xlmedia.com (mailto:ir@xlmedia.com)
Stuart Simms, Chief Executive Officer via Vigo Consulting
Rowan Ellis, Interim Chief Financial Officer
www.xlmedia.com (http://www.xlmedia.com/)
Vigo Consulting Tel: 020 7390 0233
Jeremy Garcia / Kendall Hill
www.vigoconsulting.com (http://www.vigoconsulting.com)
Cenkos Securities plc (Nomad and Joint Broker) Tel: 020 7397 8900
Giles Balleny / Max Gould
www.cenkos.com (http://www.cenkos.com/)
Berenberg (Joint Broker) Tel: 020 3207 7800
Mark Whitmore / Richard Andrews / Jack Botros www.berenberg.com
(http://www.berenberg.com)
Notes:
XLMedia is a global digital performance publisher. Operating across a variety
of vertical markets including online gambling, personal finance and sports,
the Group uses proprietary tools and methodologies to identify and target high
value consumers for platform operators.
XLMedia operates branded, content-rich websites, underpinned by intelligent
market-leading technology and data, to build stronger and lasting
relationships with consumers.
The Group seeks to create a balanced portfolio of premium websites to cover a
range of attractive geographies, both stable and high-growth verticals, with
greater exposure to regulated markets.
Chair & Chief Executive Officer review
Introduction
The Group delivered a robust financial performance across FY21, underpinned by
a strong performance from our Sports vertical, which has been driven by our
key acquisitions and the ongoing legalisation of sports gambling across the
U.S.
We will complete the comprehensive organisational redesign and rationalisation
of the business in H1 2022, ensuring XLMedia is rightsized and focused on
addressing high growth regulated markets.
Pleasingly, the business is now fully focused on expanding our portfolio of
premium assets, underpinned by content-rich and consumer-centric sites,
servicing high growth markets and geographies whilst delivering enhanced
operating performance and efficiency.
Rationalisation
Our organisational redesign, which was initiated in H2 2021, will be completed
in H1 2022. The Group has focused on reshaping our operating model, and this
process, alongside realigning both talent and resources globally, will yield
annualised cost savings of between $5 million and $6 million. The Group has
been evolving its operating model in that time, creating global and regional
hubs, which has improved our access to an economical pool of talent. Our
acquisition of BlueClaw has also accelerated this process, bringing enhanced
SEO and digital PR expertise; we have applied this expertise to our European
Sports vertical to good effect in H2 21 and will be rolling out these best
practices across the wider Group portfolio during FY 2022.
People / Talent
During the period, the Company has re-built the executive team, appointing
Caroline Ackroyd as Chief Financial Officer in March 2022, in addition to the
appointments of Chief Information Officer, Nigel Leigh, and Chief People
Officer, Sonja Haas. The Group also strengthened the Board with the
appointments of Julie Markey and Cédric Boireau as Non-Executive Directors,
bringing a wealth of experience in international people management and value
investing respectively.
Divisional summary
Sports
The Group's Sports division delivered a strong performance during FY 2021,
driven by a number of highly strategic US sports acquisitions. Following the
successful integration of these businesses, XLMedia has now established a
considerable North American sports platform underpinned by increasing
regulatory tailwinds, which continue to create multiple growth opportunities
for the Group.
Our North American sports platform generated significant levels of online
traffic across H2 2021, growing to a year-end audience of 17.8 million unique
monthly users. Our North American teams have successfully signed a number of
key commercial and partnership agreements, which includes AMNY, a leading news
site in Manhattan and New York City focused on local news and events, to
complement the partnerships already in place through the acquisition of CBWG.
Media partnerships are a core competency and remain a key focus to ensure
geographical coverage, alongside owned and operated brands.
The North American Sports season, running September through April, generated
$5.7 million in 2020-2021. While the 2021-2022 season is yet to conclude,
generated revenues currently standing at $38.4 million, representing a 574%
year-on-year increase.
Our pipeline continues to strengthen as more US states and Canadian provinces
regulate, including, for example, Ohio, Illinois and Ottawa.
The Group's European Sports vertical delivered a solid 7% uplift in revenue
performance during 2021 to $10 million, whilst migrating operations from
Israel to BlueClaw in the UK.
European Casino
The Group's European Casino assets, which are in managed decline, delivered a
profitable performance across 2021, albeit from a smaller, more efficient cost
base. This vertical continues to experience ongoing trading pressures
alongside expected tail revenue decline.
The Group's Finnish Casino assets generated revenue of $11.7 million (FY 2020:
$15.0 million), as previously highlighted, and which continue to face strong
regulatory pressures and management anticipates a prolonged period of
adjustment to this new regulatory environment.
Personal Finance
Personal Finance delivered a flat performance in FY 2021, with FY 2022 revenue
expected to be less than FY 2021 as trading continuing to be challenging, yet
profitable. Migration of the Personal Finance team to North America from
Israel was completed in H2 21. All key Personal Finance assets will be
re-platformed during FY 22, which will deliver improved site performance and
SEO operations, as well as enhance consumer experience and engagement.
Regulation
XLMedia remains focused on large, high-growth regulated markets, underpinning
the Group's focus on Sports, both in the US and Europe. Regulatory changes in
the European casino vertical have led the group to lower its exposure to the
region alongside the associated cost base.
It is XLMedia's experience that operating within a clear regulatory framework
will further drive our strategic ambitions.
Outlook
With the Group's restructuring set to be completed in H1 2022, XLMedia is now
fully focused on growth and profit generation. The Group's Sports vertical is
now a key growth driver for the business and has fast created a powerful
operational footprint from which to expand our services.
With the ongoing strength of our US Sports assets and rationalisation of the
broader business, XLMedia continues to trade in-line with expectations for the
year ended 31 December 2022.
Financial Review
$'000 2021 2020 Change
Revenues 66,487 54,839 21%
Expenses:
Operating (40,740) (36,222) 12%
Sale and marketing (14,837) (9,819) 51%
Depreciation and amortisation (6,970) (7,720) 10%-
Impairment loss - (955) 100%-
Operating profit 3,940 123 3103%
EBITDA(3) 10,910 8,798 24%
Adjusted EBITDA(2) 17,934 12,161 47%
Adjusted(1) profit before tax on income 10,519 5,332 97%
Profit before taxes on income 4,015 1,106 263%
( )
(1) Excluding loss from impairment and reorganisation costs
(2) Earnings Before Interest, Taxes, Depreciation, Amortisation and excluding
share-based payments, impairment, and reorganisation costs
(3) Earnings Before Interest, Taxes, Depreciation, Amortisation, and
impairment.
XLMedia revenues in FY 2021 totalled $66.5 million (2020: $54.8 million),
an increase of 21% compared to the previous year, underpinned by acquisitive
growth within the North American Sports vertical, which more than offsets the
anticipated revenue fall in the Casino vertical.
Operating expenses for 2021 were $40.7 million (2020: $36.2 million), an
increase of 12% compared to the previous year reflecting costs associated with
M&A activity, and restructuring.
Sales and marketing expenses for 2021 were $14.8 million (2020: $9.8
million), an increase of 51% which largely relates to the North American
Sports network model, and which differs from the owned and operated model.
EBITDA for 2021 was $10.9 million or 16.4% of revenues (2020: $8.9
million, or 16% of revenues), the latter excludes the impairment charge of $1
million in 2020.
Adjusted EBITDA for 2021 was $17.9 million or 27% of revenues (2020: $12.2
million, or 22.2% of revenues), an increase of 47% on prior year due mainly to
the increase in revenues.
Net financing expenses for 2021 were $0.2 million (2020: $0.1 million).
No impairment loss was recorded for 2021, (2020: $1 million, following the
demotion of the Group's websites by Google in January 2020).
In 2021 the Group recorded transformation costs of $6.5 million (2020: $3.3
million) following the commencement of its restructuring plan mid 2020, as
well as costs associated with M&A activity.
Adjusted profit before tax on income in 2021 was $10.6 million (2020: $5.3
million), an increase of 97%.
Non-current assets as at 31 December 2021 were $123 million (31 December
2020: $66.9 million). The increase of 84% compared to the previous year was
primarily due to $56.1 million from acquiring domains and websites in the U.S.
Sports market.
Current assets as at 31 December 2021 were $39.4 million (31 December
2021: $25.2 million). The increase of 56% compared to the previous year was
primarily due to the increase in cash and cash equivalents mentioned below.
As at 31 December 2021, the Company had $22.4 million cash and cash
equivalents (not including short- and long-term deposits) (31 December
2020: $12.6 million). The change in cash reflects $7.2 million generated by
operating activities and $34.7 million generated by financing activities
offset by $31.9 million used for investment activity.
Total equity as at 31 December 2021 was $109.2 million or 67% of total
assets (31 December 2020: $67.3 million or 73% of total assets). The
increase of 62%, compared to the previous year, was primarily due to the issue
of $35.8 million of new ordinary shares for the acquisition consideration of
U.S. websites.
Non-current liabilities as at 31 December 2021 were $11.2 million (31
December 2020: $1.6 million). The increase of 600%, compared to the previous
year, was primarily due to deferred consideration liabilities related to the
acquisition of U.S. domains and websites.
Current liabilities as at 31 December 2021 were $42.1 million (31 December
2020: $23.3 million). The increase of 81%, compared to prior year was mostly
related to deferred consideration liabilities linked with the acquisition of
U.S. domains and websites acquisitions.
2021 has been an important year for the Company - we have made significant
progress on our fundamental rationalisation programme, repositioning ourselves
well for future growth. We exited the year with a positive trajectory and
successfully completed our third acquisition in the North American Sports
market. We remain optimistic about the Group's prospects in the years ahead.
INDEPENDENT AUDITORS' REPORT
To the Shareholders of XLMEDIA PLC
Report on the audit of the consolidated financial statements
Opinion
We have audited the consolidated financial statements of XLMedia PLC and its
subsidiaries (the Group), which comprise the consolidated statement of
financial position as of 31 December 2021 and 2020, and the consolidated
statements of profit or loss and other comprehensive income, consolidated
statements of changes in equity and consolidated statements of cash flows for
each of the years then ended, and notes to the consolidated financial
statements, including a summary of significant accounting policies.
In our opinion, the accompanying consolidated financial statements present
fairly, in all material respects, the consolidated financial position of the
Group as of 31 December 2021 and 2020 and its consolidated financial
performance and its consolidated cash flows for each of the years then ended
in accordance with International Financial Reporting Standards (IFRSs) as
adopted by the European Union.
Basis for opinion
We conducted our audit in accordance with International Standards on Auditing
(ISAs). Our responsibilities under those standards are further described in
the Auditor's responsibilities for the audit of the consolidated financial
statements section of our report. We are independent of the Group in
accordance with the International Ethics Standards Board for Accountants'
International Code of Ethics for Professional Accountants (including
International Independence Standards) (IESBA Code), and we have fulfilled our
other ethical responsibilities in accordance with the IESBA Code. We believe
that the audit evidence we have obtained is sufficient and appropriate to
provide a basis for our opinion.
Key audit matters
Key audit matters are those matters that, in our professional judgment, were
of most significance in our audit of the consolidated financial statements of
the current period. These matters were addressed in the context of our audit
of the consolidated financial statements as a whole, and in forming our
opinion thereon, and we do not provide a separate opinion on these matters.
For each matter below, our description of how our audit addressed the matter
is provided in that context.
We have fulfilled the responsibilities described in the Auditor's
responsibilities for the audit of the consolidated financial statements
section of our report, including in relation to these matters. Accordingly,
our audit included the performance of procedures designed to respond to our
assessment of the risks of material misstatement of the consolidated financial
statements. The results of our audit procedures, including the procedures
performed to address the matters below, provide the basis for our audit
opinion on the accompanying consolidated financial statements.
Description of key audit matter Description of auditor's response
Revenue recognition Revenues which amounted to USD 66.5 million in 2021 are significant to the In 2021 in order to gain the required level of assurance, we performed
consolidated financial statements based on their quantitative materiality. As substantive audit procedures relating to the recognition and recording of
such, there is inherent risk that revenues may be improperly recognised, revenues, including tests of reconciliations from underlying data to the
inflated or misstated. financial accounts. IT audit specialists were deployed to assist in
understanding the design and operation of the relevant IT systems and in
performing various data analyses in order to test completeness, accuracy and
timing of the recognition of revenues.
Recognition of revenues in the accounts of the Group is a highly automated
process. The Group is heavily reliant on the reliability and continuity of its We also evaluated the adequacy of the disclosures provided in relation to
in-house IT platform to support automated data processing in its recognition revenues in Notes 2 and 17 to the consolidated financial statements.
and recording of revenues.
Domains and Websites and other intangible assets - impairment test As of 31 December 2021, the total net carrying amount of domains and websites Our audit procedures included, among others, evaluating the assumptions and
with indefinite useful life and other intangible assets was approximately USD methodologies used by the Group. In particular, we tested the Group's
120.3 million. In accordance with IFRS as adopted by the European Union, the determination of the recoverability of these assets by reviewing management's
Group is required to annually test these assets for impairment. As a result of forecasts of revenues and profitability. We assessed the reliability of these
the impairment test, no impairment loss was recorded in 2021. forecasts through, among others, a review of actual performance against
previous forecasts. We evaluated and tested the discount rates and attribution
of expenses, and we considered the reasonableness of management's other
assumptions. We also verified the adequacy of the disclosure of the
assumptions and other data in Note 7 to the consolidated financial statements.
Taxation The Group's operations are subject to income tax We included in our team tax specialists to analyse and evaluate the
assumptions used to determine tax provisions. We evaluated and tested the
in various jurisdictions. Taxation is significant to our audit because the underlying support, such as transfer price studies, for the calculation of
assessment process is complex and judgmental, and the amounts involved are income taxes in the various jurisdictions. We also assessed the adequacy of
material to the consolidated financial statements as a whole. the Group's disclosures in Note 15 to the consolidated financial statements.
Other information included in the Group's 2021 Annual Report
Other information consists of the information included in the Annual Report,
other than the consolidated financial statements and our auditor's report
thereon. Management is responsible for the other information. The Group's 2021
Annual Report is expected to be made available to us after the date of this
auditor's report.
Our opinion on the financial statements does not cover the other information
and we will not express any form of assurance conclusion thereon.
In connection with our audit of the consolidated financial statements, our
responsibility is to read the other information identified above when it
becomes available and, in doing so, consider whether the other information is
materially inconsistent with the consolidated financial statements or our
knowledge obtained in the audit or otherwise appears to be materially
misstated.
Responsibilities of management and the board of directors for the consolidated
financial statements
Management is responsible for the preparation and fair presentation of the
consolidated financial statements in accordance with IFRS as adopted by the
European Union, and for such internal control as management determines is
necessary to enable the preparation of consolidated financial statements that
are free from material misstatement, whether due to fraud or error.
In preparing the consolidated financial statements, management is responsible
for assessing the Group's ability to continue as a going concern, disclosing,
as applicable, matters related to going concern and using the going concern
basis of accounting unless management either intends to liquidate the Group or
to cease operations, or has no realistic alternative but to do so.
The board of directors is responsible for overseeing the Group's financial
reporting process.
Auditor's responsibilities for the audit of the consolidated financial
statements
Our objectives are to obtain reasonable assurance about whether the
consolidated financial statements as a whole are free from material
misstatement, whether due to fraud or error, and to issue an auditor's report
that includes our opinion. Reasonable assurance is a high level of assurance
but is not a guarantee that an audit conducted in accordance with ISAs will
always detect a material misstatement when it exists. Misstatements can arise
from fraud or error and are considered material if, individually or in the
aggregate, they could reasonably be expected to influence the economic
decisions of users taken on the basis of these consolidated financial
statements.
As part of an audit in accordance with ISAs, we exercise professional judgment
and maintain professional skepticism throughout the audit. We also:
► Identify and assess the risks of material misstatement of the
consolidated financial statements, whether due to fraud or error, design and
perform audit procedures responsive to those risks, and obtain audit evidence
that is sufficient and appropriate to provide a basis for our opinion. The
risk of not detecting a material misstatement resulting from fraud is higher
than for one resulting from error, as fraud may involve collusion, forgery,
intentional omissions, misrepresentations, or the override of internal
control.
► Obtain an understanding of internal control relevant to the audit in
order to design audit procedures that are appropriate in the circumstances,
but not for the purpose of expressing an opinion on the effectiveness of the
Group's internal control.
► Evaluate the appropriateness of accounting policies used and the
reasonableness of accounting estimates and related disclosures made by
management.
► Conclude on the appropriateness of management's use of the going concern
basis of accounting and, based on the audit evidence obtained, whether a
material uncertainty exists related to events or conditions that may cast
significant doubt on the Group's ability to continue as a going concern. If we
conclude that a material uncertainty exists, we are required to draw attention
in our auditor's report to the related disclosures in the consolidated
financial statements or, if such disclosures are inadequate, to modify our
opinion. Our conclusions are based on the audit evidence obtained up to the
date of our auditors' report. However, future events or conditions may cause
the Group to cease to continue as a going concern.
► Evaluate the overall presentation, structure and content of the
consolidated financial statements, including the disclosures, and whether the
consolidated financial statements represent the underlying transactions and
events in a manner that achieves fair presentation.
► Obtain sufficient appropriate audit evidence regarding the financial
information of the entities or business activities within the Group to express
an opinion on the consolidated financial statements. We are responsible for
the direction, supervision and performance of the Group audit. We remain
solely responsible for our audit opinion.
We communicate with the board of directors regarding, among other matters, the
planned scope and timing of the audit and significant audit findings,
including any significant deficiencies in internal control that we identify
during our audit.
We also provide the board of directors with a statement that we have complied
with relevant ethical requirements regarding independence, and to communicate
with them all relationships and other matters that may reasonably be thought
to bear on our independence, and where applicable, actions taken to eliminate
threats or safeguards applied.
From the matters communicated with the board of directors, we determine those
matters that were of most significance in the audit of the consolidated
financial statements of the current period and are therefore the key audit
matters. We describe these matters in our auditor's report unless law or
regulation precludes public disclosure about the matter or when, in extremely
rare circumstances, we determine that a matter should not be communicated in
our report because the adverse consequences of doing so would reasonably be
expected to outweigh the public interest benefits of such communication.
Report on other legal and regulatory requirements
The consolidated financial statements have been prepared in accordance with
the requirements of the Companies (Jersey) Law 1991.
The partner in charge of the audit resulting in this independent auditor's
report is Eli Barda.
Tel-Aviv, Israel KOST FORER GABBAY & KASIERER
28 March 2022 A Member of Ernst & Young Global
Consolidated statements of financial position
as at 31 December 2021
2021 2020
Notes $000 $000
Assets
Non-current assets
Intangible assets and goodwill 7 120,284 63,866
Property and equipment 6 2,401 1,072
Other assets 247 497
Long-term deposits 4 83 1,478
123,015 66,913
Current assets
Short-term deposits 4 2,158 1,228
Trade receivables 5 8,701 5,792
Other receivables 5 6,119 5,578
Cash and cash equivalents 22,437 12,648
39,415 25,246
Total assets 162,430 92,159
Equity and liabilities
Equity
Share capital 12 *) - *) -
Share premium 12 122,071 86,022
Capital reserve 14 (258)
Accumulated deficit (12,869) (18,510)
Total equity 109,216 67,254
Non-current liabilities
Lease liabilities 10 1,242 366
Deferred taxes 15 1,372 1,243
Deferred consideration 7 7,737 -
Contingent consideration 16 808 -
11,159 1,609
Current liabilities
Trade payables 2,333 2,000
Deferred consideration 7,16 18,401 -
Consideration payable on intangible assets 7 3,000 -
Other liabilities and accounts payable 8 7,820 8,769
Income tax provision 10,190 11,899
Financial derivatives 11 - 304
Current maturities of lease liabilities 10 311 324
42,055 23,296
Total liabilities 53,214 24,905
Total equity and liabilities 162,430 92,159
*) Less than $1,000.
The accompanying notes are an integral part of the consolidated financial
statements.
28 March 2022
Date of approval of the Julie Markey Stuart Simms Rowan Ellis
financial statements Interim Chairman of the Board of Directors Chief Executive Officer Interim Chief Financial Officer
Consolidated statements of profit or loss and other comprehensive income
for the year ended 31 December 2021
2021 2020
$000 $000
Notes
Revenue 17 66,487 54,839
Expenses:
Operating 14 (40,740) (36,222)
Sale and marketing (14,837) (9,819)
Depreciation and amortisation 6,7 (6,970) (7,720)
Impairment loss 7 - (955)
Operating profit 3,940 123
Finance expenses (549) (834)
Finance income 306 695
Other income 318 1,122
Profit before taxes on income 4,015 1,106
Income tax benefit / (expense) 15 1,626 (314)
Profit for the year 5,641 792
Other comprehensive income
Exchange loss arising on translation of foreign operations (16) -
Total comprehensive income 5,625 792
Profit for the year attributable to:
Equity owners of the Company 5,641 531
Non-controlling interests - 261
5,641 792
Total comprehensive income attributable to:
Equity owners of the Company 5,625 531
Non-controlling interests - 261
5,625 792
Earnings per share attributable to equity holders of the Company:
Basic and diluted earnings per share (in $) 12 0.023 0.004
See note 1c with respect to the presentation for the year ended 31 December
2020.
The accompanying notes are an integral part of the consolidated financial
statements.
Consolidated statements of changes in equity
for the year ended 31 December 2021
Share Share premium Capital reserve from share-based transactions Capital reserve from the translation of a foreign operation Capital reserve from transactions with non-controlling interests Treasury shares Accumulated deficit Total attributable to owners of the Company Non-controlling interests Total
capital equity
$000 $000 $000 $000 $000 $000 $000 $000 $000 $000
As at 1 January 2021 *) - 86,022 2,368 - (2,626) - (18,510) 67,254 - 67,254
Profit for the year - - - - - - 5,641 5,641 - 5,641
Other comprehensive income - - - (16) - - - (16) - (16)
Total comprehensive income - - - (16) - - 5,641 5,625 - 5,625
Cost of share-based payment - - 520 - - - - 520 - 520
Share capital issuance *) - 35,806 - - - - - 35,806 - 35,806
Exercise of option *) - 243 (232) - - - - 11 - 11
As at 31 December 2021 *) - 122,071 2,656 (16) (2,626) - (12,869) 109,216 - 109,216
As at 1 January 2020 *) - 112,624 2,276 - (2,445) (30,159) (19,041) 63,255 291 63,546
Profit for the year - - - - - - 531 531 261 792
Cancellation of treasury shares - (30,159) - - - 30,159 - - - -
Cost of share-based payment - - 92 - - - - 92 - 92
Share capital issuance *) - 3,557 - - - - - 3,557 - 3,557
Acquisition of non-controlling interest - - - - (181) - - (181) (291) (472)
Dividend to non-controlling interest - - - - - - - - (261) (261)
As at 31 December 2020 *) - 86,022 2,368 - (2,626) - (18,510) 67,254 - 67,254
*) Less than $1,000.
The accompanying notes are an integral part of the consolidated financial
statements.
Consolidated statements of cash flows
for the year ended 31 December 2021
2021 2020
$000 $000
Operating activities
Profit for the year 5,641 792
Adjustments to reconcile profit for the year to net cash flows:
Depreciation and amortisation 6,970 7,720
Impairment loss - 955
Finance (income) / expense, net (76) 824
Other income (437) (1,122)
Cost of share-based payment 520 92
Taxes on income (benefit) (1,626) 314
Exchange differences on balances of cash and cash equivalents 246 (297)
Working capital changes:
(Increase) / decrease in trade receivables (2,672) 1,963
Decrease / (increase) in other receivables 647 (340)
Increase / (decrease) in trade payables 313 (1,028)
Decrease in other liabilities and accounts payable (1,681) (1,204)
7,845 8,669
Interest paid (76) (544)
Interest received 3 99
Income tax paid (572) (799)
Income tax received 48 996
Net cash flows from operating activities 7,248 8,421
Investing activities
Purchase of property and equipment (1,118) (319)
Acquisition of and additions to domains, websites and other intangible assets (23,127) (12,842)
Acquisition of and additions to systems, software and licenses (7,718) (6,642)
Loan to a third party - (500)
Adjustments of proceeds from the sale of discontinued operation - (270)
Acquisition of subsidiary, net of cash acquired (395) -
Short-term and long-term deposits, net 507 911
Net cash flows used in investing activities (31,851) (19,662)
Financing activities
Share capital issuance 35,806 -
Proceeds from exercise of share options 11 -
Acquisition of non-controlling interest - (472)
Dividend paid to non-controlling interests - (261)
Repayment of long and short-term liability - (1,500)
Payment of principal portion of lease liabilities (1,163) (1,283)
Net cash flows from/ (used in) financing activities 34,654 (3,516)
Net increase in cash and cash equivalents 10,051 (14,757)
Net foreign exchange difference (262) 297
Cash and cash equivalents at 1 January 12,648 27,108
Cash and cash equivalents at 31 December 22,437 12,648
Significant non-cash transactions:
Deferred consideration payable on acquisition of and additions to domains,
websites and other intangible
28,113 3,557
Right-of-use asset recognised with corresponding lease liabilities 2,460 6,819
The accompanying notes are an integral part of the consolidated financial
statements.
1. General
a. Corporate information
XLMedia PLC ("the Company") is a global performance publisher listed on the
London Stock Exchange Alternative Investment Market (AIM) since March 2014.
The Company was incorporated in Jersey and commenced its operations in 2012.
The Company's registered office is in 12 Castle Street St. Helier Jersey,
JE2 3RT. XLMedia PLC and its consolidated subsidiaries ("the Group") owns and
operates more than 100 premium branded websites across various sectors,
including Personal Finance, Sports and Casino. Headquartered in the United
Kingdom, with a significant presence in the United States. The Company has a
long track record of success in digital publishing and performance marketing,
working with some of the world's largest advertisers. XLMedia PLC is focused
on regulated, high growth markets.
b. Definitions
In these financial statements
EUR - Euro
GBP - British Pound Sterling
IFRS - International Financial Reporting Standards as adopted by the European Union
NIS - New Israeli Shekel
Related parties - As defined in IAS 24
Subsidiaries - Entities controlled (as defined in IFRS 10) by the Company and whose accounts
are consolidated with those of the Company. For a list of the main
subsidiaries, see Note 21
U.S. - United States
U.K. - United Kingdom
USD/$ - U.S. dollar, all values are rounded to the nearest thousand ($000), except
when otherwise indicated
c. Significant changes in the current reporting period
The financial position and performance of the Group was particularly affected
by the following events and transactions during the reporting period:
- The acquisition of Sports Betting Dime in March 2021 (Note 7).
- The acquisition of Saturday Football Inc. (Note 7) and Blueclaw
Media Ltd ("Blueclaw") in September 2021 (Note 16).
- The Company elected to change the presentation of its expenses in
its consolidated statement of profit or loss from a classification based on
function to classification based on the nature of expense. Group management
believes that this presentation provides reliable and more relevant
information because due to a change in the operating model of the Group, the
new presentation provides greater clarity and insight into the major
categories of expenses and the key cost drivers of the Company's business.
This change has been applied retrospectively to the prior year's comparative
information.
The spread of Coronavirus continues to impact the Group's operations. The
Group has a well-balanced portfolio of assets. The Group is continually
monitoring and responding to the outbreak's potential impact.
2. Significant accounting policies
The following accounting policies have been applied consistently in the
financial statements for all periods presented unless otherwise stated.
2. Significant accounting policies continued
a. Basis of presentation of the consolidated financial statements
i. Compliance with IFRS
The consolidated financial statements of the Group have been prepared in
accordance with International Financial Reporting Standards (IFRS) adopted by
the European Union. And as issued by the International Accounting Standards
Board (IASB) and in accordance with the requirements of the Companies (Jersey)
Law 1991.
ii. Historical cost convention
The financial statements have been prepared on a historical cost basis, except
for the following:
- certain financial assets and liabilities (including derivative
instruments) and certain property, plant and equipment - measured at fair
value or revalued amount, and
- assets held for sale - measured at the lower of carrying amount and
fair value less costs to sell.
b. Consolidated financial statements
The consolidated financial statements comprise the financial statements of
companies that are controlled by the Company (subsidiaries). Control is
achieved when the Company is exposed, or has rights, to variable returns from
its involvement with the investee and has the ability to affect those returns
through its power over the investee. Potential voting rights are considered
when assessing whether an entity has control. The consolidation of the
financial statements commences on the date on which control is obtained and
ends when such control ceases.
The financial statements of the Company and of the subsidiaries are prepared
as of the same dates and periods. The consolidated financial statements are
prepared using uniform accounting policies by all companies in the Group.
Significant intragroup balances and transactions and gains or losses resulting
from intragroup transactions are eliminated in full in the consolidated
financial statements.
Non-controlling interests in subsidiaries represent the equity in subsidiaries
not attributable, directly or indirectly, to a parent. Non-controlling
interests are presented in equity separately from the equity attributable to
the equity holders of the Company. Profit or loss and components of other
comprehensive income are attributed to the Company and to non-controlling
interests. A change in the ownership interest of a subsidiary without a change
of control is accounted for as an equity transaction in accordance with IFRS
10.
c. Business combinations and goodwill
Business combinations are accounted for by applying the acquisition method.
The consideration transferred for the acquisition of a subsidiary comprises
the:
- fair values of the assets transferred
- liabilities incurred to the former owners of the acquired business
- equity interests issued by the Group
- fair value of any asset or liability resulting from a contingent
consideration arrangement, and
- fair value of any pre-existing equity interest in the subsidiary.
The cost of the acquisition is measured at the fair value of the consideration
transferred on the date of acquisition with the addition of non-controlling
interests in the acquiree. In each business combination, the Company chooses
whether to measure the non-controlling interests in the acquiree based on
their fair value on the date of acquisition or at their proportionate share in
the fair value of the acquiree's net identifiable assets. Direct acquisition
costs are expensed as incurred.
2. Significant accounting policies continued
Contingent consideration is recognised at fair value on the acquisition date
and classified as a financial asset or liability in accordance with IFRS 9.
Subsequent changes in the fair value of the contingent consideration are
recognised in profit or loss. If the contingent consideration is classified as
an equity instrument, it is measured at fair value on the acquisition date
without subsequent remeasurement.
Goodwill is initially measured at cost, which represents the excess of the
acquisition consideration and the
amount of non-controlling interests over the net identifiable assets acquired
and liabilities assumed. If the
resulting amount is negative, the acquirer recognises the resulting gain on
the acquisition date. After initial recognition, goodwill is measured at cost
less any accumulated impairment losses.
d. Functional currency, presentation currency and foreign currency
Functional currency and presentation currency
Items included in the financial statements of each of the Group's entities are
measured using the currency of the primary economic environment in which the
entity operates ('the functional currency'). The consolidated financial
statements are presented in USD, which is the Group's functional and
presentation currency.
Transactions and balances
Foreign currency transactions are translated into the functional currency
using the exchange rates at the dates of the transactions. Foreign exchange
gains and losses resulting from the settlement of such transactions, and from
the translation of monetary assets and liabilities denominated in foreign
currencies at year end exchange rates, are generally recognised in profit or
loss. They are deferred in equity if they relate to qualifying cash flow
hedges and qualifying net investment hedges or are attributable to part of the
net investment in a foreign operation. Foreign exchange gains and losses that
relate to borrowings are presented in the statement of profit or loss, within
finance costs. All other foreign exchange gains and losses are presented in
the statement of profit or loss on a net basis within other gains/(losses).
Non-monetary items that are measured at fair value in a foreign currency are
translated using the exchange rates at the date when the fair value was
determined. Translation differences on assets and liabilities carried at fair
value are reported as part of the fair value gain or loss.
Group companies
The results and financial position of foreign operations (none of which has
the currency of a hyperinflationary economy) that have a functional currency
different from the presentation currency are translated into the presentation
currency as follows:
i. assets and liabilities for each balance sheet presented are
translated at the closing rate at the date of that balance sheet,
ii. income and expenses for each statement of profit or loss and
statement of comprehensive income are translated at average exchange rates
(unless this is not a reasonable approximation of the cumulative effect of the
rates prevailing on the transaction dates, in which case income and expenses
are translated at the dates of the transactions), and
iii. all resulting exchange differences are recognised in other
comprehensive income.
On consolidation, exchange differences arising from the translation of any net
investment in foreign entities, and of borrowings and other financial
instruments designated as hedges of such investments, are recognised in other
comprehensive income. When a foreign operation is sold or any borrowings
forming part of the net
2. Significant accounting policies continued
investment are repaid, the associated exchange differences are reclassified to
profit or loss, as part of the gain or loss on sale.
Goodwill and fair value adjustments arising on the acquisition of a foreign
operation are treated as assets and liabilities of the foreign operation and
translated at the closing rate.
e. Cash equivalents
Cash is cash on hand and demand deposits. Cash equivalents are highly liquid
investments, including unrestricted short-term bank deposits with an original
maturity of three months or less that are readily convertible to known amounts
of cash and which are subject to insignificant risk of changes in value.
Investments normally only qualify as cash equivalent if they have a short
maturity of three months or less from the date of acquisition.
f. Short-term and long-term deposits
Short-term bank deposits are deposits with an original maturity of more than
three months from the investment date and do not meet the definition of cash
equivalents. Long-term deposits are deposits with a maturity of more than
twelve months from the reporting date. The deposits are presented according to
their terms of deposit.
g. Revenue recognition
The Group generates revenues mainly from referred players who visit the
Group's premium branded websites. The main revenue streams are: cost per
acquisition ("CPA"), revenue-share fees or a combination of both, which is
referred to as a hybrid.
CPA fees are fixed-rate fees owed for each player who registers and usually
deposits a minimum balance on the operator's site, and they are recognised
when earned upon acceptance of the referral by the operator.
Revenue-share fees represent a set percentage of net revenues generated over
the lifetime of the referred player. The Group has no material obligations for
discounts, incentives or refunds of commissions subsequent to completion of
performance obligations.
Deferred revenues are recorded when payments are received from customers in
advance of the Company's rendering of services.
h. Taxes on income
Current or deferred taxes are recognised in profit or loss, except to the
extent that they relate to items that are recognised in other comprehensive
income or equity.
Current taxes
The current tax liability is measured using the tax rates and tax laws that
have been enacted or substantively enacted by the reporting date, as well as
adjustments required in connection with the tax liability in respect of
previous years.
Deferred taxes
Deferred taxes are computed in respect of temporary differences between the
carrying amounts in the financial statements and the amounts attributed for
tax purposes. Deferred taxes are measured at the tax
2. Significant accounting policies continued
rate that is expected to apply when the asset is realised or the liability is
settled based on tax laws that have been enacted or substantively enacted by
the reporting date.
Deferred tax assets are reviewed at each reporting date and reduced to the
extent that it is not probable that they will be utilised. Deductible
temporary differences for which deferred tax assets had not been recognised
are reviewed at each reporting date, and a respective deferred tax asset is
recognised to the extent that their utilisation is probable. Taxes that would
apply in the event of the disposal of investments in investees have not been
taken into account in computing deferred taxes, as long as the disposal of the
investments in investees is not probable in the foreseeable future. Also,
deferred taxes that would apply in the event of distribution of earnings by
investees as dividends have not been taken into account in computing deferred
taxes, since the distribution of dividends does not involve an additional tax
liability or since it is the Group's policy not to initiate distribution of
dividends from a subsidiary that would trigger an additional tax liability.
Deferred taxes are offset if there is a legally enforceable right to offset a
current tax asset against current tax liability, and the deferred taxes relate
to the same taxpayer and the same taxation authority.
i. Leases
The Group accounts for a contract as a lease when the contract terms convey
the right to control the use of an identified asset for a period of time in
exchange for consideration.
Recognition of assets and liabilities
For leases in which the Group is the lessee, the Group recognises on the
commencement date of the lease a right-of-use asset and a lease liability,
excluding leases whose term is up to 12 months and leases for which the
underlying asset is of low value. For these excluded leases, the Group has
elected to recognise the lease payments as an expense in profit or loss on a
straight-line basis over the lease term. In measuring the lease liability, the
Group has elected to apply the practical expedient and does not separate the
lease components from the non-lease components (such as management and
maintenance services, etc.) included in a single contract. On the commencement
date, the lease liability includes all unpaid lease payments discounted at the
interest rate implicit in the lease, if that rate can be readily determined,
or otherwise using the Group's incremental borrowing rate. After the
commencement date, the Group measures the lease liability using the effective
interest rate method. The right-of-use asset is recognised in an amount equal
to the lease liability plus lease payments already made on or before the
commencement date and initial direct costs incurred. The right-of-use asset is
measured applying the cost model and depreciated over the shorter of its
useful life or the lease term (see j below). The Group tests for impairment of
the right-of-use asset whenever there are indications of impairment pursuant
to the provisions of IAS 36.
Variable lease payments that depend on an index
The Group uses the index rate prevailing on the commencement date to calculate
the future lease payments. For leases in which the Group is the lessee, the
aggregate changes in future lease payments resulting from a change in the
index are discounted (without a change in the discount rate applicable to the
lease liability) and recorded as an adjustment of the lease liability and the
right-of-use asset, only when there is a change in the cash flows resulting
from the change in the index (that is, when the adjustment to the lease
payments takes effect).
2. Significant accounting policies continued
Lease extension and termination options
A non-cancellable lease term includes both the periods covered by an option to
extend the lease when it is reasonably certain that the extension option will
be exercised and the periods covered by a lease termination option when it is
reasonably certain that the termination option will not be exercised.
In the event of any change in the expected exercise of the lease extension
option or in the expected non-exercise of the lease termination option, the
Group remeasures the lease liability based on the revised lease term using a
revised discount rate as of the date of the change in expectations. The total
change is recognised in the carrying amount of the right-of-use asset until it
is reduced to zero, and any further reductions are recognised in profit or
loss.
Lease modifications
If a lease modification does not reduce the scope of the lease and does not
result in a separate lease, the Group remeasures the lease liability based on
the modified lease terms using a revised discount rate as of the modification
date and records the change in the lease liability as an adjustment to the
right-of-use asset. If a lease modification reduces the scope of the lease,
the Group recognises a gain or loss arising from the partial or full reduction
of the carrying amount of the right-of-use asset and the lease liability. The
Group subsequently remeasures the carrying amount of the lease liability
according to the revised lease terms at the revised discount rate as of the
modification date and records the change in the lease liability as an
adjustment to the right-of-use asset.
j. Property and equipment
Property and equipment are measured at cost, including directly attributable
costs less accumulated depreciation. Depreciation is calculated on a
straight-line basis over the useful life of the assets at annual rates as
follows:
Mainly %
Office furniture and equipment 10
Computers and peripheral equipment 33
Right of use leased assets and leasehold improvement (over the lease term) 10 - 15
Right of use leased assets, and leasehold improvements are depreciated on a
straight-line basis over the shorter lease term (including any extension
option held by the Group and intended to be exercised) and the asset's
expected life. The useful life, depreciation method and residual value of an
asset are reviewed at least each year-end and any changes are accounted for
prospectively as a change in accounting estimate.
Depreciation of an asset ceases at the earlier of the date that the asset is
classified as held for sale and the
date that the asset is derecognised. An asset is derecognised on disposal or
when no further economic benefits are expected from its use.
k. Intangible assets
Separately acquired intangible assets are measured on initial recognition at
cost, including directly attributable costs. Intangible assets acquired in a
business combination are measured at fair value at the acquisition date.
Expenditures relating to internally generated intangible assets, excluding
capitalised development costs, are recognised in profit or loss when incurred.
Intangible assets with a finite useful life are amortised over their useful
life and reviewed for impairment whenever there is an indication that the
asset may be impaired. The amortisation period and the amortisation method for
an intangible asset are reviewed at least at each year-end.
2. Significant accounting policies continued
Intangible assets (domains and websites) with indefinite useful lives are not
systematically amortised and are tested for impairment annually or whenever
there is an indication that the intangible asset may be impaired. The useful
life of these assets is reviewed annually to determine whether their
indefinite life assessment continues to be supportable. If the events and
circumstances do not continue to support the assessment, the change in the
useful life assessment from indefinite to finite is accounted for
prospectively as a change in accounting estimate and on that date, the asset
is tested for impairment. Commencing from that date, the asset is amortised
systematically over its useful life.
Research expenditures are recognised in profit or loss when incurred. An
intangible asset arising from a development project or from the development
phase of an internal project is recognised if the Group can demonstrate: the
technical feasibility of completing the intangible asset so that it will be
available for use or sale; the Company's intention to complete the intangible
asset and use or sell it; the Company's ability to use or sell the intangible
asset; how the intangible asset will generate future economic benefits; the
availability of adequate technical, financial and other resources to complete
the intangible asset; and the Company's ability to measure reliably the
expenditure attributable to the intangible asset during its development. The
asset is measured at cost less any accumulated amortisation and any
accumulated impairment losses. Amortisation of the asset begins when
development is completed and the asset is available for use. The asset is
amortised over its useful life. Testing of impairment is performed annually
over the period of the development project.
The Group's assets include computer systems comprising hardware and software.
Software forming an integral part of the hardware to the extent that the
hardware cannot function without the programs installed on it is classified as
property and equipment. In contrast, software that adds functionality to the
hardware is classified as an intangible asset.
Systems and software (purchased and in-house development cost) are amortised
on a straight-line basis over the useful life of three years. Non-competition
and Agencies Relationships is amortised on a straight-line basis over the
agreement term (between 2 to 3 years).
l. Impairment of non-financial assets
The Group evaluates the need to record an impairment of the carrying amount of
non-financial assets whenever events or changes in circumstances indicate that
the carrying amount is not recoverable.
If the carrying amount of the cash-generating unit of the non-financial assets
exceeds their recoverable amount, the assets are reduced to their recoverable
amount. The recoverable amount is the higher of fair value less costs of sale
and value in use. In measuring value in use, the expected future cash flows
are discounted using a pre-tax discount rate that reflects the risks specific
to the asset.
The recoverable amount of an asset that does not generate independent cash
flows is determined for the cash-generating unit to which the asset belongs.
Impairment losses are recognised in profit or loss. An impairment loss of an
asset, other than goodwill, is reversed only if there have been changes in the
estimates used to determine the asset's recoverable amount since the last
impairment loss was recognised. Reversal of an impairment loss, as above,
shall not be increased above the lower of the carrying amount that would have
been determined (net of depreciation or amortisation) had no impairment loss
been recognised for the asset in prior years and its recoverable amount. The
reversal of impairment loss of an asset presented at cost is recognised in
profit or loss.
2. Significant accounting policies continued
Goodwill is tested for impairment by assessing the recoverable amount of the
cash-generating unit (or Group of cash-generating units) to which the goodwill
has been allocated. An impairment loss is recognised if the recoverable amount
of the cash-generating unit (or Group of cash-generating units) to which
goodwill has been allocated is less than the carrying amount of the
cash-generating unit (or Group of cash-generating units). Any impairment loss
is allocated first to goodwill. Impairment losses recognised for goodwill
cannot be reversed in subsequent periods.
Goodwill - The Company reviews goodwill and intangible assets with indefinite
useful life that are not systematically amortised (domains and websites) for
impairment annually on 31 December, or more frequently if events or changes in
circumstances indicate that there is a need for such review.
m. Financial instruments
i. Financial assets
Financial assets are measured upon initial recognition at fair value plus
transaction costs directly attributable to the acquisition of the financial
assets, except for financial assets measured at fair value through profit or
loss in respect of which transaction costs are recorded in profit or loss.
The Company classifies and measures debt instruments in the financial
statements based on the following criteria:
- the Company's business model for managing financial assets; and
- the contractual cash flow terms of the financial asset.
Debt instruments measured at amortised cost
The Company's business model is to hold the financial assets in order to
collect their contractual cash flows, and the contractual terms of the
financial asset give rise on specified dates to cash flows that are solely
payments of principal and interest on the principal amount outstanding. After
initial recognition, the
instruments in this category are measured according to their terms at
amortised cost using the effective interest rate method, less any provision
for impairment.
Financial assets held for trading
Financial assets held for trading (derivatives) are measured through profit or
loss unless they are designated as effective hedging instruments.
ii. Impairment of financial assets
The Company reviews at the end of each reporting period the provision for loss
of financial debt instruments which are measured at amortised cost. The
Company has short-term trade receivables in respect of which the Company
applies a simplified approach and measures the loss allowance in an amount
equal to the lifetime expected credit losses. An impairment loss on debt
instruments measured at amortised cost is recognised in profit or loss with a
corresponding loss allowance that is offset from the carrying amount of the
financial asset.
iii. Derecognition of financial assets
A financial asset is derecognised when the contractual rights to the cash
flows from the financial asset expire.
2. Significant accounting policies continued
iv. Financial liabilities
Financial liabilities are initially recognised at fair value less transaction
costs that are directly attributable to the issue of the financial liability.
After initial recognition, the Company measures all financial liabilities at
amortised cost using the effective interest rate method, except for:
- financial liabilities at fair value through profit or loss such as
derivatives; and
- contingent consideration recognised by the buyer in a business
combination within the scope of IFRS 3.
At initial recognition, the Company measures financial liabilities that are
not measured at amortised cost at fair value. Transaction costs are recognised
in profit or loss. After initial recognition, changes in fair value are
recognised in profit or loss.
v. Derecognition of financial liabilities
A financial liability is derecognised only when it is extinguished, that is
when the obligation is discharged or cancelled or expires.
n. Fair value measurement
Fair value is the price to sell an asset or pay to transfer a liability in an
orderly transaction between market participants at the measurement date. Fair
value measurement is based on the assumption that the transaction will take
place in the asset's or the liability's principal market, or in the absence of
a principal market, in the most advantageous market.
The fair value of an asset or a liability is measured using the assumptions
that market participants would use when pricing the asset or liability,
assuming that market participants act in their economic best interest. The
Group uses valuation techniques that are appropriate in the circumstances and
for which sufficient data are available to measure fair value, maximising the
use of relevant observable inputs and minimising the use of unobservable
inputs. All assets and liabilities measured at fair value or for which fair
value is disclosed are categorised into levels within the fair value hierarchy
based on the lowest level input that is significant to the entire fair value
measurement:
Level 1 - quoted prices (unadjusted) in active markets for identical assets or
liabilities.
Level 2 - inputs other than quoted prices included within Level 1 that are observable
either directly or indirectly.
Level 3 - inputs that are not based on observable market data (valuation techniques that
use inputs that are not based on observable market data).
o. Provisions
A provision in accordance with IAS 37 is recognised when the Group has a
present obligation (legal or constructive) as a result of a past event, and it
is probable that an outflow of resources embodying economic benefits will be
required to settle the obligation and a reliable estimate can be made of the
amount of the obligation. When the Group expects part or all of the expense to
be reimbursed, for example, under an insurance contract, the reimbursement is
recognised as a separate asset but only when the reimbursement is virtually
certain. The expense is recognised in profit or loss net of the reimbursed
amount.
p. Employee benefit liabilities
Short-term employee benefits include salaries, paid sick leave, recreation and
social security contributions and are recognised as expenses as the services
are rendered. Liability in respect of a cash bonus or a profit-sharing plan is
recognised when the Group has a legal or constructive obligation to make such
payment as a result of past service rendered by an employee, and a reliable
estimate of the amount can be made.
2. Significant accounting policies continued
Post-employment benefits are financed by contributions to insurance companies
or pension funds and classified as defined contribution plans. The Israeli
subsidiaries of the Group have defined contribution plans pursuant to Section
14 to the Severance Pay Law under which the subsidiary pays fixed
contributions and will have no legal or constructive obligation to pay further
contributions if the fund does not hold sufficient amounts to pay all employee
benefits relating to employee service in the current and prior periods.
Contributions to the defined contribution plan in respect of severance or
retirement pay are recognised as an expense when contributed concurrently with
the performance of the employee's services.
q. Share-based payment transactions
The Group's employees and officers are entitled to remuneration in the form of
equity-settled share-based payment transactions. The cost of equity-settled
transactions is measured at the fair value of the equity instruments granted
at the grant date. The fair value is determined using an acceptable option
pricing model (also see Note 13). In estimating fair value, the vesting
conditions (consisting of service conditions and performance conditions other
than market conditions) are not taken into account. The cost of equity-settled
transactions is recognised in profit or loss together with a corresponding
increase in equity during the period which the performance is to be satisfied
ending on the date on which the relevant employees or officers become entitled
to the award ("the vesting period"). The cumulative expense recognised for
equity-settled transactions at the end of each reporting period until the
vesting date reflects the extent to which the vesting period has expired and
the Group's best estimate of the number of equity instruments that will
ultimately vest. No expense is recognised for awards that do not ultimately
vest, except for awards where vesting is conditional upon a market condition,
which are treated as vesting irrespective of whether the market condition is
satisfied, provided that all other vesting conditions (service and/or
performance) are satisfied.
r. Earnings per share
Earnings per share are calculated by dividing the net income attributable to
equity holders of the Company by the weighted average number of Ordinary
Shares outstanding during the period. The Company's
share of earnings of investees is included based on the earnings per share of
the investees multiplied by the number of shares held by the Company. If the
number of Ordinary Shares outstanding increases as a result of a
capitalisation, bonus issue, or share split, the calculation of earnings per
share for all periods presented are adjusted retrospectively. Potential
Ordinary shares are included in the computation of diluted earnings per share
when their conversion decreases earnings per share from continuing operations.
Potential Ordinary shares that are converted during the period are included in
diluted earnings per share only until the conversion date and from that date
in basic earnings per share.
3. Significant accounting judgements, estimates and assumptions
Estimations and assumptions
The preparation of the financial statements requires management to make
estimates and assumptions that have an effect on the application of the
accounting policies and on the reported amounts of assets, liabilities,
revenues and expenses. Changes in accounting estimates are reported in the
period of the change in estimate. The key assumptions made in the financial
statements concerning uncertainties at the end of the reporting period and the
critical estimates computed by the Group that may result in a material
adjustment to the carrying amounts of assets and liabilities within the next
financial year are discussed below.
3. Significant accounting judgements, estimates and assumptions continued
Impairment of domains and websites
The Group reviews domains and websites for impairment at least once a year.
This requires management to make an estimate of the projected future cash
flows from the continuing use of the cash-generating units to which the assets
are allocated and also to choose a suitable discount rate for those cash flows
(see Note 7).
Income taxes
The Group is subject to income tax in various jurisdictions, and judgment is
required in determining the provision for income taxes. During the ordinary
course of business, there are transactions and calculations for which the
ultimate tax determination may be uncertain. The Group recognises tax
liabilities based on assumptions supported by, among others, transfer price
studies. The Group believes that its accruals for tax liabilities are adequate
for all open audit years based on its assessment of many factors, including
past experience and interpretations of tax law (see Note 15).
4. Short-term and long-term deposits as at 31 December
2021 2020
$000 $000
Short-term deposits
Held in USD 500 850
Held in NIS 1,653 373
Held in EUR 5 5
2,158 1,228
Long-term deposits
Held in NIS - 1,478
Held in EUR 83 -
83 1,478
Short-term deposits carried a weighted average interest rate of 0.01% for 2021
and 2020.
Short-term deposits have fixed liens in relation to bank guarantees for the
Israel office lease and the financial derivatives (Note 11). The long-term
deposits have a fixed lien in relation to a bank guarantee for the Cyprus
office lease.
5. Trade and other receivables
Trade receivables as at 31 December
2021 2020
$000 $000
Receivables from third party customers 9,046 6,867
Allowance for expected credit losses (345) (1,075)
8,701 5,792
As at 31 December 2021, the Group has no material amounts that are past due
and are not impaired. Changes in the allowance for expected credit losses are
included in administrative expenses, decreased by $730,000 (2020: $164,000
increase). See Note 11b(ii) on the credit risk of trade receivables.
5. Trade and other receivables continued
Other receivables as at 31 December
2021 2020
$000 $000
Government authorities 3,024 2,357
Prepaid expenses 1,969 2,721
Assets held for sale(i) 391 -
Loan to a third party(ii) 234 500
Financial derivatives (Note 11) 84 -
Other receivables 417 -
6,119 5,578
i. Asset held for sale relates to upcoming termination of the Israel office
lease.
ii. In December 2020, the Company lent $500,000 to a third party which is
repayable in the next 12 months. Due to the short-term nature of the loan, the
carrying amount of the loan is considered to be the same as the fair value.
The loan carries an interest rate of 5%.
6. Property and equipment
Computers, furniture, office equipment and others Leasehold improvements Right of use leased assets - Total
Offices
(see note 10)
$000 $000 $000 $000
Cost
At 1 January 2020 2,816 538 9,671 13,025
Additions - - 472 472
Acquisitions during the year 309 21 - 330
Adjustments for indexation - - (12) (12)
Decreases during the year:
Termination of leases - - (6,806) (6,806)
At 31 December 2020 3,125 559 3,325 7,009
Acquisitions during the year 775 371 5,922 7,068
Adjustments for indexation - - 191 191
Decreases during the year:
Termination of leases - - (4,643) (4,643)
Other disposals(i) (3,215) (589) - (3,804)
At 31 December 2021 685 341 4,795 5,821
Accumulated depreciation
At 1 January 2020 2,008 259 1,327 3,594
Depreciation during the year 723 300 1,320 2,343
At 31 December 2020 2,731 559 2,647 5,937
Depreciation during the year 366 19 1,498 1,883
Termination of leases - - )990( )990(
Other disposals(i) )2,847( )563( - )3,410(
At 31 December 2021 250 15 3,155 3,420
Net book value 435 326 1,640 2,401
At 31 December 2021
At 31 December 2020 394 - 678 1,072
i. In September 2021, the Company announced the migration of all
audience-centric functions, except Casino to outside Israel, moving closer to
target audiences. Following this announcement, all the relevant fixed assets
were disposed.
7. Intangible assets and goodwill
Goodwill Domains and websites Agencies Relationships Systems, software and licenses Total
$000 $000 $000 $000 $000
Cost or valuation
At 1 January 2020 30,052 94,366 - 33,694 158,112
Additions - 16,681 232 1,472 18,385
Additions - internally developed - - - ( ) 5,170 5,170
At 31 December 2020 30,052 111,047 232 40,336 181,667
Additions - 51,240 - 3,400 54,640
Acquisition of a subsidiary (Note 16) 2,063 - 484 - 2,547
Additions - internally developed - - - 4,318 4,318
At 31 December 2021 32,115 162,287 716 48,054 243,172
Accumulated amortisation and impairment:
At 1 January 2020 30,052 54,151 - 27,266 111,469
Amortisation - - 8 5,369 5,377
Impairment loss - 955 - - 955
At 31 December 2020 30,052 55,106 8 32,635 117,801
Amortisation - - 193 4,894 5,087
At 31 December 2021 30,052 55,106 201 37,529 122,888
Net book value
At 31 December 2021 2,063 107,181 515 10,525 120,284
At 31 December 2020 - 55,941 224 7,701 63,866
Main additions during the year
The Company acquired domains and websites, including Sports Betting Dime and
Saturday Football inc. and accounted for these as an asset acquisition since
substantially all of the fair value of the intangible assets acquired was in a
group of similar identifiable assets. The Company recognises a liability for
the intangible assets acquired for contingent consideration only when there is
sufficient certainty that the liability will be settled. Total domains and
websites acquired were $51,240,000 (2020: $16,681,000), including $3,000,000
related to CB Sports and Warwick Gaming contingent payment for the year ended
31 December 2021. The potential future contingent consideration, for these
assets is up to an additional $8,500,000 (2020: $10,500,000) payable for the
period of 2022-2024. the acquisition cost also includes deferred consideration
of $25,091,000 which is payable in the period of 2022-2024.
Carrying amounts of intangible assets with an indefinite useful life
In 2021, due to changes in the Company's operational model, the Company
re-evaluated its cash generating units ("CGU's") and how those should be
reported. The table below summarises the carrying amounts of goodwill and
domains and websites as at 31 December 2021:
Goodwill Domains and websites
2021 2020 2021 2020
$000 $000 $000 $000
Sports U.S. - - 67,102 15,862
Sports Europe - - 12,539 12,539
Personal finance - - 13,835 13,835
Casino - - 13,705 13,705
Performance agency 2,063 - - -
2,063 - 107,181 55,941
7. Intangible assets and goodwill continued
In January 2020, 107 of the Group's sites were demoted in search results by
Google, of which 23 were premium sites. The demotion of the sites had a
material impact on the Group's future revenues. The Company recorded an
impairment loss of $955,000, which is included in the statement of profit or
loss.
The Group tests goodwill and intangible assets with indefinite useful life for
impairment annually. Intangible assets are grouped into CGUs to determine
their value in use and compared that to their carrying value to assess if
impairment exists. The key assumptions used in calculating the value in use:
- The calculations use cash flow projections based on financial
budgets approved by management covering a four-year period. Revenues and the
profit rate assumptions are based on management expectations and forecasts for
the coming years. These forecasts included an evaluation of those specific
sites that suffered a demotion or other factors which could adversely affect
revenues and profitability.
- Cash flows beyond the four-year period are extrapolated using the
estimated terminal growth rate of 3%. This growth rate is based on the
long-term average growth rate as customary in similar industries.
- The discount rate reflects management's assumptions regarding the
Group's specific risk premium.
- The pre-tax discount rate that was applied for the cash flow
projection was 15%.
The Group concluded that the recoverable amount is in excess of the asset's
carrying amount. Consequently, the Group concluded that no impairment exists
as of 31 December 2021. Regarding the Personal finance vertical, an increase
of 1% in the pre-tax discount rate will create an impairment loss.
8. Other liabilities and accounts payable as at 31 December
2021 2020
$000 $000
Employees and payroll accruals 3,311 4,776
Accrued expenses 2,264 3,108
Deferred revenues 2,031 185
Government authorities 199 435
Other liabilities 15 265
7,820 8,769
9. Loans from the bank
In June 2018, a subsidiary of the Company received a loan from a bank for
$6,000,000. Fixed charges have been placed on the subsidiary's share capital
and goodwill and floating charges on the subsidiary's assets. The loan is
repayable in 24 equal instalments and carries an interest rate of USD Libor
+4.4%. The loan was repaid in full on 30 June 2020.
10. Lease liabilities as at 31 December
2021 2020
$000 $000
Lease liabilities 1,553 690
Less - current maturities 311 324
1,242 366
The Group recorded fixed liens on bank deposits in connection with these
agreements (see Note 4).
10. Lease liabilities as at 31 December continued
In 2020, the Company decided not to exercise an option to renew a lease, which
renewal period was originally included in the determination of the lease
liabilities and corresponding right-of-use assets in the 2019 consolidated
financial statements. Accordingly, the Company derecognised the lease
liabilities by
$7,695,000 and the related right-of-use and other assets by $6,573,000. The
impact on the profit before taxes on income was $1,122,000 and recorded as
other income.
In December 2020, the Company signed three new real estate lease agreements.
The leases commencement dates were 31 December 2020, 1 January 2021 and 15
February 2021. The impact for 2020 is an increase in the Group's total assets
and liabilities of $500,000.
In December 2021, the Company decided to terminate two of three signed leases
from 2020. Accordingly, the Company remeasured the U.K. lease liability based
on the revised lease term using a revised discount rate as of the date of the
change in expectations. The total change is recognised in the carrying amount
of the right-of-use asset until it is reduced to zero, and any further
reductions are recognised in profit or loss. And for the Israeli lease, the
Company derecognised the remaining balances of the lease right-of-use asset
and lease liability in December 2021. The impact of profit and loss is a
profit of $437,000.
11. Financial instruments
a. Classification of financial assets and liabilities
The financial assets and financial liabilities in the statement of financial
position are classified by groups of
financial instruments as follows as at 31 December:
2021 2020
$000 $000
Financial assets
Financial assets at fair value through profit or loss:
Financial derivatives 84 -
Financial assets measured at amortised cost:
Cash and cash equivalents 22,437 12,648
Short-term and long-term deposits 2,241 2,706
Trade receivables 8,701 5,792
Other receivables 1,100 500
Total financial assets 34,563 21,646
Total non-current 83 1,478
Total current 34,480 20,168
Financial liabilities
Financial assets at fair value through profit or loss:
Financial derivatives - 304
Contingent consideration 808 -
Financial liabilities measured at amortised cost:
Trade payables 2,333 2,000
Deferred consideration 26,138 -
Consideration payable on intangible assets 3,000 -
Other liabilities and account payables 5,588 7,594
Lease liabilities 1,553 690
Total financial liabilities 39,420 10,588
Total non-current 9,787 366
Total current 29,633 10,222
11. Financial instruments continued
b. Financial risks factors
The Group's activities expose it to various financial risks.
i. Market risk - Foreign exchange risk
A significant portion of the Group's revenues is received in EUR. The Group
also has revenues that are received in GBP. A significant portion of the
Israeli subsidiaries` expenses are paid in NIS. Therefore, the Group is
exposed to fluctuations in the foreign exchange rates in EUR, GBP and NIS
against the USD.
Financial derivatives
The Company entered into forward or options contracts with the intention to
reduce the foreign exchange risk of forecasted cash flows. These contracts are
not designated as hedges for accounting purposes and are measured at fair
value through profit or loss. For the year ended 31 December 2021, the Group
recorded foreign exchange rate gains of $270,000 (2020: $318,000). As at 31
December 2021, the Group bought put option and sold call option for the sale
of USD in exchange for NIS in nominal amount of totaling $2,700,000 (NIS
9,000,000) for the period until the end of March 2022.
ii. Credit risk
The Group usually extends 30-60 days term to its customers. The Group
regularly monitors the credit extended to its customers and their general
financial condition but does not require collateral as security for these
receivables. The Group maintains cash and cash equivalents, short-term and
long-term investments in various financial institutions. These financial
institutions are located in the EU, Israel and U.S.
iii. Liquidity risk
The table below summarises the maturity profile of the Group's financial
liabilities based on contractual
undiscounted payments (including interest payments):
Less than one year 1 to 2 years 2 to 3 3 to 4 years > 4 Total
years years
$000 $000 $000 $000 $000 $000
Trade payables 2,333 - - - - 2,333
Other liabilities and account payables 5,588 - - - - 5,588
Consideration payable on intangible assets 3,000 - - - - 3,000
Contingent consideration - 410 410 - - 820
Deferred consideration 18,520 4,000 4,000 - - 26,520
Lease liabilities 352 183 169 167 809 1,680
At 31 December 2021 29,793 4,593 4,579 167 809 39,941
Less than one year 1 to 2 years 2 to 3 3 to 4 years > 4 Total
years years
$000 $000 $000 $000 $000 $000
Trade payables 2,000 - - - - 2,000
Other liabilities and account payables 7,594 - - - - 7,594
Financial derivatives 304 - - - - 304
Lease liabilities 331 108 108 108 108 763
At 31 December 2020 10,229 108 108 108 108 10,661
c. Fair value
The carrying amounts of the Group's financial assets and liabilities
approximate their fair value. The fair value of financial derivatives are
categorised within level 2 of the fair value hierarchy. The fair value of the
contingent consideration is categorised within level 3 of the fair value
hierarchy.
11. Financial instruments continued
d. Sensitivity tests relating to changes in market factors
2021 2020
Sensitivity test to changes in ERU to USD exchange rate: $000 $000
Gain (loss) from the change:
Increase of 10% in the exchange rate 143 (890)
Decrease of 10% in the exchange rate (143) 890
Sensitivity test to changes in NIS to USD exchange rate:
Gain (loss) from the change (net of the effect of derivates):
Increase of 10% in the exchange rate 138 266
Decrease of 10% in the exchange rate 48 (266)
Sensitivity test to changes in GBP to USD exchange rate:
Gain (loss) from the change:
Increase of 10% in the exchange rate 488 (170)
Decrease of 10% in the exchange rate (488) 170
The sensitivity tests reflect the effects of possible changes in exchange
rates on the hedging position of the Group for the above currencies as of the
end of the year. As described in b.i. above, these contracts are intended to
reduce the Group's exposure to fluctuations in exchange rates on future
revenues and expenses. Therefore, although it is expected the above effects
will be offset by contra effects upon the recording of the revenues and
expenses, the timing of these effects may not coincide in the same reporting
period.
Sensitivity tests and principal assumptions
The selected changes in the relevant risk variables were determined based on
management's estimate as to
reasonable possible changes in these risk variables.
The Group has performed sensitivity tests of principal market risk factors
that are liable to affect its
reported operating results or financial position. The sensitivity tests
present the effects (before tax) on
profit or loss and equity in respect of each financial instrument for the
relevant risk variable chosen for that
instrument as of each reporting date.
The test of risk factors was determined based on the materiality of the
exposure of the operating results or
the financial condition of each risk with reference to the functional currency
and assuming that all the other variables are constant.
The Group does not have significant exposure to interest rate risk.
11. Financial instruments continued
e. Changes in liabilities arising from financial activities
Long term loans Consideration payable on intangible assets Contingent consideration Deferred consideration Lease Liabilities Total
$000 $000 $000 $000 $000 $000
At 1 January 2020 1,465 - - - 9,228 10,693
Finance lease obligation - - - - 472 472
Cash flows (1,500) - - - (1,635) (3,135)
Changes in exchange rates - - - - (12) (12)
Termination of leases - - - - (7,960) (7,960)
Other changes 35 - - - 597 632
At 31 December 2020 - - - - 690 690
Business combination - - 806 - - 806
Website acquisition - 3,000 - 26,138 - 29,138
Finance lease obligation - - - - 5,844 5,844
Cash flows - - - - (1,163) (1,163)
Changes in interest expense - - 2 - 75 77
Termination of leases - - - - (3,783) (3,783)
Other changes - - - - (110) (110)
At 31 December2021 - 3,000 808 26,138 1,553 31,499
12. Equity
Composition of share capital
2021 2020
Thousands Thousands
Authorised shares
Ordinary Shares with a nominal value of $0.000001 each 100,000,000 100,000,000
Thousands $000
Ordinary shares issued and outstanding including share premium *)
At 1 January 2020 216,862 112,624
Cancelled in April 2020, shares held in treasury (33,223) (30,159)
Issued in December for the consideration of the acquisition of a website 7,955 3,557
At 31 December 2020 191,594 86,022
Issued in March and April 2021 for the consideration of the acquisition of a 67,500 35,806
website. The transaction costs were $1,600,000
Exercise of option and vesting of RSUs 804 243
At 31 December 2021 259,898 122,071
*) Net of treasury shares
As at 31 December 2021, IBI held 2,688,684 (2020: 3,315,521) ordinary shares
in trust for the Company's share-based payment plan.
12. Equity continued
Earnings per share (EPS)
The following table reflects the income and share data used in the basic and
diluted EPS calculations:
2021 2020
$000 $000
Profit attributable to ordinary equity holders of the Company 5,641 792
Thousands Thousands
The weighted average number of ordinary shares for basic EPS 245,710 184,271
Effects of dilution from potential dilutive ordinary shares *) 659 98
246,369 184,369
*) Options, RSUs and PSUs see Note 13.
13. Share-based payments
The expense recognised in the financial statements for services received is
shown in the following table as at 31 December:
2021 2020
$000 $000
Total expense arising from share-based payment transactions 520 92
In August 2013, the Company adopted a Share Option Plan. In December 2017 and
2020, the Company
adopted additional plans. According to the plans, the Company's Board of
Directors are entitled to grant certain employees, officers and other service
providers (together herein "employees") of the Group remuneration in the form
of equity-settled share-based payment transactions. Pursuant to the plans, the
Company's employees may be granted options to purchase the Company's ordinary
shares. These options may be exercised, subject to the continuance of
engagement of such employees with the Company, within a period of eight years
from the grant date, at an exercise price to be determined by the Company's
Board of Directors at the grant date. All grants to Israeli employees were
made in accordance with Section 102 of the Income Tax Ordinance, capital-gains
track (with a trustee).
Grants
In March 2021, the Company granted, to one key manager, 470,977 Restricted
Stock Units ("March PSU"). The March RSU Award is subject to a three-year
performance period, with vesting subject to the achievement of performance
measured by reference to total shareholder return over the performance period
compared to the FTSE AIM 100, followed by a two-year holding period. The total
fair value was calculated at $289,000 at the grant date (an average of $0.61
per restricted share equal to the share price at the grant date).
The performance conditions to be achieved such that RSUs are capable of
vesting are as follows:
Company's ranking relatively to the comparator group % of PSUs capable of vesting
Upper quartile or better 100%
Between upper quartile and median The straight-line basis between 100% and 25% based on the Company's rank
Median 25%
Lower than median -
13. Share-based payment continued
In April 2021, the Company granted 1,190,476 and 769,231 Performance Stock
Units ("April PSU") to the CEO and CFO, respectively. The Company announced
that the CFO had left the Company on 22 July 2021 and accordingly his PSUs
were forfeited. The remaining award will vest on the fourth anniversary of the
grant date if and to the extent that the performance target will be satisfied.
The total fair value was calculated at $408,000 and $264,000 at the grant date
for the CEO and the CFO, respectively (an average of $0.34 per restricted
share equal to the share price at the grant date).
The performance target relating to the performance of the Company's share
price is as follows:
Average share price % of PSUs capable of vesting
GBP 1.5 or higher 100%
Between GBP 1.35 and GBP 1.50 On a straight-line basis, between 50% and 100%
Between GBP 1.20 and GBP 1.35 On a straight-line basis, between 25% and 50%
Less than GBP 1.20 0%
The April PSU award is a contingent right to acquire shares for no
consideration. It is subject to a four-year vesting period followed by a
one-year holding period and the achievement of performance targets measured
by the increase in the Company's share price between 1 January 2021 and 31
December 2024.
In May 2021, the Company granted 910,000 Restricted Stock Units to key
management personnel subject to three years vesting period. The total fair
value was calculated at $626,000 at the grant date (an average of $0.69 per
restricted share equal to the share price at the grant date).
In July 2020, the Company granted 3,982,848 Restricted Stock Units to the
Company's CFO ("CFO's RSUs") and other key management personnel. The CFO's
RSUs are subject to a three-year performance period with vesting subject to a
performance target comparing the average net return achieved by the Company
relative to the net return achieved by the constituents of the FTSE AIM 100
during the three-year period ending in July 2023, followed by a two-year
holding period. The other key management personnel's restricted shares are
subject to three years vesting period. The total fair value of the other key
management personnel's
restricted shares was calculated at $821,000 at the grant date (an average of
$0.29 per restricted share equal to the share price at the grant date).
The following tables list the inputs to the models used for the plans for the
years ended 31 December 2021 and 2020, respectively:
2021 2021 2020
March PSU April PSU CFO's RSUs
Weighted average fair values at the measurement date ($) 0.61 0.32 0.22
Dividend yield (%) - - -
Expected volatility (%) 73.94 68.6 67.49
Risk-free interest rate (GBP curve) 0.29 0.5 0.21
Expected life of share options (years) 3 4 3
Weighted average share price (GBP) 0.54 0.52 0.23
Model used Monte Carlo Monte Carlo Monte Carlo
13. Share-based payment continued
The following table illustrates the number and weighted average exercise
prices (WAEP) of, and movements in, share options during the year (excluding
RSUs and PSUs):
2021 2021 2020 2020
Number in thousands WAEP Number in thousands WAEP
Outstanding at 1 January 3,334 $0.37 5,526 $0.99
Forfeited during the year (957) $1.11 (2,192) $1.48
Exercised during the year (18) $0.66 - -
Outstanding at 31 December 2,359 $0.90 3,334 $0.37
Exercisable at 31 December 1,383 $0.93 2,196 $0.97
Movement during the year of RSUs and PSUs:
2021 2020
Number in thousands Number in thousands
Outstanding at 1 January 3,066 -
Granted during the year 3,341 3,983
Forfeited during the year (2,286) (917)
Vested during the year (786) -
Outstanding at 31 December 3,335 3,066
These restricted shares unit does not have an exercise price.
The weighted average remaining contractual life for the options outstanding as
at 31 December 2021 was
5.9 years (2020: 6.7 years).
The range of exercise prices for options outstanding (not including the RSUs
and PSUs) as at 31 December 2021 was $0.66-1.81 (2020: $0.67-1.83).
14. Operating expenses for the years ended 31 December
2021 2020
$000 $000
Staff costs 26,171 25,066
Technology expenses 3,943 2,547
Professional services 2,153 3,487
Administrative expenses 1,969 1,851
Transformation costs
Consulting services 3,124 1,088
Hiring and settlements 2,342 1,393
Acquisition costs 1,557 790
Lease termination (437) -
Sale of property (82) -
40,740 36,222
15. Taxes on income
Starting 2018, the Company was subject to Cyprus tax at the standard corporate
income tax rate of 12.5%. In July 2020, the Company changed its tax residency
to the U.K. and since then is subject to U.K. tax at the standard corporate
income tax rate of 19%.
15. Taxes on income continued
Tax law applicable to the Company's Israeli subsidiaries is the Israeli tax
law - Income Tax Ordinance (New Version) 1961. The Israeli corporate income
tax rate was 23% in 2021 and 2020. Amendment 73 to the law for the
Encouragement of Capital Investments, 1959 also prescribes special tax tracks
for technological enterprises, which became effective in 2017, as follows:
- Technological preferred enterprise - an enterprise for which
total consolidated revenues of its parent company and all subsidiaries are
less than NIS 10 billion. A preferred technological enterprise, as defined in
the law, which is located in the center of Israel, will be subject to tax at a
rate of 12% on profits deriving from intellectual property.
- Any dividends distributed to "foreign companies", as defined
in the law, deriving from income from the technological enterprises will be
subject to a withholding tax at a rate of 4%.
The above amendments apply to one of the Group's Israeli subsidiaries.
The applicable U.S. federal statutory income tax rate for the Company's
subsidiary for 2021 is 21% (2020: same). In addition, state and city taxes are
applicable in certain states and cities.
Losses carried forward for tax purposes
As at 31 December 2021, carry-forward tax losses of the Group are $6,100,000.
The tax benefit in respect of losses (excluding $416,000) has not been
recorded in the financial statements due to the uncertainty of their
utilisation.
Taxes on income included in profit or loss for the years ended 31 December:
2021 2020
$000 $000
Current taxes 563 225
Deferred taxes 32 727
Taxes benefit in respect of previous years (2,221) (638)
(1,626) 314
Theoretical tax
The reconciliation between the tax expense, assuming that all the income and
expenses were taxed at the statutory tax rate for the U.K., and the taxes on
income recorded in profit or loss for the years ended 31 December are as
follows:
2021 2020
$000 $000
Profit before taxes on income 4,015 1,106
Statutory tax rate 19% 19%
Tax computed at the statutory tax rate 763 210
Adjustment due to the difference between the Company's statutory tax rate and (126) (262)
tax rates applicable to the subsidiaries
Non-deductible expenses for tax purposes 86 279
Tax benefit of net additional deduction (846) (408)
Taxes in respect of previous years (2,221) (638)
Increase in unrecognised tax losses in the year 1,258 845
Unrecognised temporary differences and others (540) 288
(1,626) 314
15. Taxes on income continued
Deferred taxes
Consolidated statements of Consolidated statements of
financial position profit or loss and other comprehensive income
2021 2020 2021 2020
$000 $000 $000 $000
Deferred tax liabilities
Domains and websites 2,072 772 1,300 164
Other intangible assets - 639 (639) 466
2,072 1,411
Deferred tax assets
Property and equipment 3 12 9 (4)
Lease liability - 7 7 115
Carry-forward tax losses 416 - (416) -
Other intangible assets 270 - (367)
Allowance for doubtful account - - - 7
Employee benefits 11 149 138 (21)
700 168
Deferred tax expenses 32 727
Deferred tax liabilities, net 1,372 1,243
The deferred taxes are computed at the tax rates of 19%-23% based on the tax
rates that are expected to apply upon realisation (2020: 12%).
16. Business combination
In September 2021, the Company acquired 100% of the ordinary share capital of
Blueclaw for the total consideration of $3,872,000. Blueclaw is a
multi-award-winning agency based in Leeds, providing services ranging from
search engine optimisation and pay per click management to digital Public
Relationship and content marketing with significant experience in the market
verticals in which the Company operates. The amount of profit recorded in the
acquired company's books as of September 2021, the date of acquisition, is not
material and the effect of wether the acquisition was at the beginning of the
year is not material to the financial statements.
Assets acquired and liabilities assumed
The fair values of the identifiable assets and liabilities of Blueclaw as at
the date of acquisition were:
2021
$000
Assets
Cash and cash equivalents 1,856
Agencies Relationships (useful life: 2 years) 484
Trade and other receivables 275
Property and equipment 25
Liabilities
Trade payables and other payables (734)
Deferred tax liability (97)
Total identifiable net assets at fair value 1,809
Goodwill arising on the acquisition 2,063
3,872
16. Business combination continued
The purchase consideration includes cash consideration paid on
completion, deferred consideration payable in September 2022 and
further contingent consideration payable.
Purchase consideration
2021
$000
Cash consideration 2,251
Deferred consideration 813
Contingent consideration 808
3,872
17. Revenue and operating segments
An operating segment is a part of the Group that conducts business activities
from which it can generate revenue and incur costs, and for which discrete
financial information is available. Identification of segments is based on
internal reporting to the chief operating decision maker ("CODM"). The CODM,
who is responsible for allocating resources and assessing performance of the
operating segments, has been identified as the Chief Executive Officer
("CEO"). The Group does not divide its operations into different segments, and
the CODM operates and manages the Group's entire operations as one segment,
which is consistent with the Group's internal organisation and reporting
system.
Geographic information for the years ended 31 December
2021 2020
$000 $000
North America 32,489 11,514
Scandinavia 17,634 21,387
Other European countries 12,621 15,473
Oceania 834 941
Other countries 80 96
Total revenues from identified locations 63,658 49,411
Revenues from unidentified locations 2,829 5,428
66,487 54,839
Revenues by vertical
2021 2020
$000 $000
Casino 23,216 31,684
Sports U.S. 15,202 1,992
Sports Europe 9,982 9,321
Third Party Network Activity 9,367 3,471
Personal Finance 8,720 8,371
66,487 54,839
18. Balances and transactions with related parties including directors
2021 2020
$000 $000
Balances
Current liabilities - management fees and other short-term payables 11 499
Compensation of key management personnel of the Group
Short-term employee benefits 2,044 1,808
Share-based payments transactions 68 41
2,112 1,849
19. Post-employment benefits
The post-employment employee benefits are financed by contributions classified
as defined contribution plans.
2021 2020
$000 $000
Expenses in respect of defined contribution plans 1,966 1,867
20. Subsequent events
a. In February 2022, the Company announced that Christopher Bell,
Non-Executive Chair, has step down from the board of directors of the Company.
Julie Markey, a non-executive Director of the Company and Chair of the
remuneration committee, has been appointed Interim Chair whilst the process of
appointing a replacement is undertaken.
b. In March 2022, the Company announced that Caroline Ackroyd has now joined
the Company as Chief Financial Officer and as a member of the Board of
Directors with immediate effect.
21. List of main subsidiaries
2021 2020
Shares conferring voting rights Shares conferring rights to profits Shares conferring voting rights Shares conferring rights to profits
% %
XLMedia Finance Ltd 100 100 100 100
XLMedia Publishing Ltd 100 100 100 100
Webpals Holdings Ltd 100 100 100 100
Webpals Systems S.C Ltd 100 100 100 100
Marmar Media Ltd 100 100 100 100
Webpals, Inc. 100 100 100 100
XLMedia US 100 100 100 100
XLMedia Canada Marketing Ltd 100 100 - -
Blueclaw Media Ltd 100 100 - -
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