REG - XLMedia PLC - Half-year Results
29/09/2022 07:00
For best results when printing this announcement, please click on link below:
http://newsfile.refinitiv.com/getnewsfile/v1/story?guid=urn:newsml:reuters.com:20220929:nRSc0803Ba&default-theme=true
RNS Number : 0803B XLMedia PLC 29 September 2022
29 September 2022
XLMedia PLC
("XLMedia" or the "Group" or the "Company")
Results for the six months ended 30 June 2022
Significant momentum within the Group's North American sports business
XLMedia (AIM: XLM), a leading global digital media group that connects
audiences with advertisers, announces the Company's audited results for the
six months ended 30 June 2022.
Key Highlights
· North American Sports growing to 68% of revenue, all in regulated
markets.
· Signed major partnership with high quality publisher in Ohio ahead of
January 2023 online sports betting launch.
· Live in 2 new legalised States in the U.S. (New York and Louisiana)
and one Canadian Province (Ontario).
· Further rationalisation of the portfolio enabling focus on primary
sites.
· Stabilisation of the Gaming business.
· Annualised cash savings of approximately US$5-6 million expected to
be realised during 2023.
Financial Summary
· Revenues of US$44.5 million (H1 2021: US$32.2 million).
· Gross profit of US$20.9 million (H1 2021: US$18.3 million).
· Adjusted EBITDA((1)) of US$10.6 million (H1 2021: US$6.6 million).
· Reported loss before tax of US$1.7 million (H1 2021: US$0.4 million
loss).
· US$17.7 million in cash and short-term investments as of 30 June
2022.
1 Earnings Before interest, Taxes, Depreciation, Amortisation and excluding
share-based payments, impairment, and reorganisation costs
Operational Summary
· Strong performance from Sports vertical generating first half
revenues of US$34 million - 76% of Group revenues (H1 2021: US$11.7 million)
- New regulated markets opened, notably, the state of New York
launched legal online sports betting in January 2022. The Group now operates
in 16 states.
- New media partnership agreements drove revenues of US$20.5
million, (H1 2021: $1.5 million) including amNewYork.
- The Group's owned (Owned and Operated) portfolio delivered revenue
growth of US$9.6 million, up 107%, including ESNY, which was acquired in
December 2020.
- New partnerships signed with Cleveland.com in May 2022 ahead of
Ohio's January 2023 launch.
- New partnership recently signed with MASSlive.com in September
2022 in preparation for Massachusetts' 2023 launch.
- European Sports vertical delivered a performance that met
expectations in H1 2022 with revenues of US$3.8 million (H1 2021: US$5.8
million).
· Gaming revenues stabilising at US$8.4 million (H1 2021: US$12.5
million)
- Gaming revenues (Casino and Bingo), as expected, continue to trade
below historical levels while remaining a high margin vertical for the Group.
- Following a major portfolio consolidation, Gaming activities will
now focus on four leader brands, and seven brands in total.
- The division's cost base has been downsized to reflect its reduced
scale.
· Operations and infrastructure initiatives gathering momentum
- Key new leadership in the business brings deep expertise across
the media and gaming sectors
o Marcus Rich - Chair (appointed 31 March 2022);
o David King - CEO (appointed 1 July 2022);
o Caroline Ackroyd - CFO (appointed 21 March 2022);
o Karen Tyrrell - Chief People and Operations Officer (appointed 1 September
2022)
- The Group continues its focus on talent acquisition to match the
new and changing mix of the business.
- The operational reset is largely completed. Annualised full year
savings of some US$5-6 million are expected in 2023, of which approximately
US$4 million is expected to be realised during 2022. The Group will continue
to look for and invest in further cost and operational efficiencies.
- The Tech team has made significant progress in upgrading site
infrastructure and enhancing security while commencing the roll out of the new
content management system ("CMS"), which will continue into 2023.
- Work continues to integrate acquisitions, including supporting the
business with SEO specialist advice from our inhouse Blueclaw SEO team.
Outlook
· During H1 2022, the Group has delivered on its strategy to make a
shift towards sports betting in regulated markets, a revenue stream that is
predicted to show strong growth in the medium term.
· US sports betting revenues currently remain in line with management
expectations for the full year, having benefited in H1 from the additional
marketing investment made by its customers during the New York state launch.
Major new state launches typically see an increase in marketing activity,
creating a significant revenue upside for the Group, before settling into a
more normalised rhythm.
· The Gaming business performance is tracking in line with expectations
and the Group is on course to deliver cost savings of some US$4 million in the
year.
· Following the impact of Google's Your Money Your Life ("YMYL")
requirements on the Personal Finance division, the strategic decision was
taken to replatform the business and renew its content. Revenue recovery is
taking significantly longer than planned and revenue of the Personal Finance
business is now expected to be approximately US$1.5 million for the full year,
resulting in a move from profit to loss of approximately US$1-2 million which
will negatively impact the Group's full year performance.
As a result, the Group expects full year Adjusted EBITDA to be broadly in line
with the prior year, returning to growth in 2023.
David King, Chief Executive Officer of XLMedia, commented:
"Refocusing the business towards the rapidly growing US online sports betting
market, managing the reduction in Personal Finance, while stabilising the
Gaming vertical, alongside rightsizing the Group's cost base, remains a key
priority to ensuring new XLMedia is well placed for further growth.
"Having recently joined, I look forward to updating all our stakeholders on
our progress."
This announcement contains inside information for the purposes of the UK
version of Article 7 of Regulation (EU) 596/2014 ("MAR").
Analyst and Institutional investor webcast
A presentation webcast and live Q&A conference call for analysts and
institutional investors will take place at 9.00 a.m. BST on the day of
publication 29 September 2022, and a webcast of the presentation will be
available on the Company's website at:
https://www.xlmedia.com/investors/webcasts/
(https://www.xlmedia.com/investors/webcasts/)
To register for this event, please go to:
https://secure.emincote.com/client/xlmedia/2022-interim-results
(https://secure.emincote.com/client/xlmedia/2022-interim-results)
Retail investor webcast
Management will also be hosting a presentation for retail investors in
relation to the Company's results on Monday, 3 October 2022 at 2.30 p.m. BST.
The presentation will be hosted on the Investor Meet Company ("IMC") digital
platform. Investors can sign-up for free and request to meet XLMedia via:
https://www.investormeetcompany.com/xlmedia-plc/register-investor
(https://www.investormeetcompany.com/xlmedia-plc/register-investor)
Investors who already follow XLMedia on this platform will automatically be
invited.
For further information, please contact:
XLMedia plc ir@xlmedia.com
David King, Chief Executive Officer via Vigo Consulting
Caroline Ackroyd, Chief Financial Officer
www.xlmedia.com
Vigo Consulting Tel: 020 7390 0233
Jeremy Garcia / Kendall Hill
www.vigoconsulting.com
Cenkos Securities plc (Nomad and Joint Broker) Tel: 020 7397 8900
Giles Balleny / Max Gould
www.cenkos.com
Berenberg (Joint Broker) Tel: 020 3207 7800
Mark Whitmore / Richard Andrews / Jack Botros
www.berenberg.com
About XLMedia:
XLMedia (AIM: XLM) is a leading global digital media company that creates
compelling content for highly engaged audiences and connects them to relevant
advertisers.
The Group manages a portfolio of premium brands with a primary emphasis on
Sports and Gaming in regulated markets. XLMedia brands are designed to reach
passionate people with the right content at the right time.
Chief Executive Review
Introduction
We are able to report a strong six months of trading across H1 2022, which
represents the next phase in the Company's development, with revenues up 38%
to US$44.5 million (H1 2021: US$32.2 million) and adjusted EBITDA up 60% to
US$10.6 million (H1 2021: US$6.6 million) in the period.
This solid performance has been largely driven by our North American sports
business which now represents 68% of revenue at US$30.2 million, driven
entirely from regulated markets. Performance has been underpinned by the
expansion of regulation in the US including New York, now legalised, while
also securing major partnerships with high quality publishers during the
period.
Elsewhere across the business, we continue to rationalise our existing online
portfolio, enabling our team to focus on our marquee sites (for example,
Freebets.com and Caziwoo.com). As a result, the Group will successfully
deliver in year savings of approximately US$4 million.
In H1 2022, we acquired 116,000 real money players ("RMPs") which is defined
as first time depositing and post initial depositing customers.
We remain focused on implementing our existing strategic priorities including:
· Targeting regulated territories to deliver new revenue while reducing
the risk of disruption.
· Focussing on high growth Sports and Gaming verticals by building on
the Group's strong relationships with leading operators.
· Expanding the Media Partnership Business ("MPB") leveraging internal
skills and experience.
· Prioritising North America Sports market in order to capitalise on US
trajectory.
· Investing behind some 20 marquee brands to enhance quality and
engagement.
Divisional Summary
Sports
The Group delivered a strong performance from its Sports vertical, generating
revenues of US$34.0 million (H1 2022: US$11.7 million, up 191%). Our sports
business now accounts for 76% of Group revenues, of which 68% comes from the
US, highlighting the strategic importance of this high growth, regulated
market.
We are now active in 16 states, including New York, Louisiana and Kansas. A
state launch offers an immediate spike in registrations as betting enthusiasts
take advantage of legalisation. Building local partnerships enables us to
maximise the opportunity offered by new state launches, working with the
partner to connect their sports audience with advertisers. In particular, we
benefited from working with our partner amNewYork to maximise new revenue when
New York went live, coupled with the annual uplift from the Super Bowl.
Partners will typically be either high quality regional publishers with loyal
audiences, or sports focussed speciality sites with highly engaged fandoms.
This complements the Group's Owned and Operated national footprint provided by
Sports Betting Dime ("SBD"), and the Group's Owned and Operated regional
fandom sites including Saturday Down South and Elite Sports NY. Our content is
written by local sports experts who are themselves fans, writing for local
sports fans, which builds trust and return visits, which in turn allows us to
grow our audience and connect them with relevant advertisers.
The Group's Owned and Operated portfolio delivered revenue of approximately
US$9.6 million in the period.
Since the end of the period, we have extended our partnership with
Cleveland.com, and signed new agreements with Advance Local to work with
MASSLive.com ahead of both Ohio launching in January 2023 and Massachusetts at
some point in 2023.
Our European Sports vertical, which includes Freebets.com, generated H1
revenues of US$3.8 million (H1 2021: US$5.8 million). Our Freebets site is in
the process of being refreshed, having been re-platformed, and is now
rebuilding its content to ready it for growth.
Gaming
Our Gaming vertical, which includes both casino and bingo assets (currently
largely in Europe) traded in line with management's targets, generating
revenue of US$8.4 million (H1 2021: US$12.5 million).
These assets, despite trading below historic levels, remain a high margin
vertical for the Group and remain part of our strategic plans.
Following a major reduction in the number of websites operated by the Group,
Gaming activities will now have seven brands in total with a focus on four
leader brands, Caziwoo, Casino.se, Nettikasinot and Whichbingo.
This represents a significant departure from how this division was managed
previously. The focus will now be on quality, not quantity. The division's
cost base has been downsized to reflect the reduced scale and prominence of
these assets.
Nettikasinot is our Finnish language site with revenues of US$2 million in the
period and remains our largest site in the Nordic market. We will continue to
monitor potential changes to the monopoly in Finland and remain cautious
regarding incremental growth opportunities within the European portfolio.
Other Activities
Other external revenues, largely comprised of the Group's SEO agency Blueclaw,
its affiliate partnership network Reef Media and the Personal Finance business
totalled US$2.1 million (H1 2021: US$8.0 million) in the period.
Personal Finance, which is now a marginal activity, delivered revenues of US$
0.8 million (H1 2021 US$6.6 million), only 2% of Group revenues. The decline
in revenue has significantly impacted the Group's revenue and profit
performance during the period. Following the move of the business from Israel
to the US, the focus of the team has been to commence the migration of the
sites to a new platform, refresh the content to meet Google's YMYL* parameters
and prioritising two of our premium brands, Moneyunder30 and InvestorJunkie.
In line with the original acquisition plan, Blueclaw will prioritise
optimising the SEO around the Group's Owned and Operated sites. We will also
provide services to a small number of clients.
*From Google's Search Quality Evaluator Guidelines: Some topics have a high
risk of harm because content about these topics could significantly impact the
health, financial stability, or safety of people, or the welfare or well-being
of society. We call these topics "Your Money Your Life" or YMYL.
Operations and infrastructure
The period saw a significant number of staff reductions as part of the
transformation program, including changes in Personal Finance and Technology,
as well as, downsizing the Gaming infrastructure.
The transformation program referred to above, is largely completed. Part year
savings will be delivered in the year, while our estimates of annualised cash
savings remain at some US$5-6 million in FY 2023.
Following the appointment of the new CFO, Caroline Ackroyd, and the new Chair,
Marcus Rich, I joined the Group as CEO in July and on 1 September our new
Chief People and Operation Officer, Karen Tyrrell joined the leadership team.
Like Caroline, Karen also has substantial gaming sector experience.
Summary
The Group is now focused on implementing its existing strategy as we seek to
leverage our footprint in Sports and Gaming.
Our growing exposure to the US Sports arena is now in a position to capitalise
on the US sports betting market. The Group also continues to look for new
partners and opportunities to develop its Owned and Operated assets in
preparation for the legalisation of further US states in the near term.
The Board and I are committed to driving the business forward and providing
reporting and transparency. In addition, we have launched a new corporate
website providing further information and insight to investors and other
interested parties.
David King
Chief Executive Officer
29 September 2022
Financial Review
$'000 H1 2022 H1 2021 Change
Revenues 44,528 32,218 38%
Gross profit 20,878 18,260 14%
Operating expenses (20,874) (18,833) 11%
Operating profit / (loss) 4 (573) n/m
Adjusted EBITDA(1) 10,561 6,600 60%
Profit / (loss) for the period 504 (82) n/m
1 Earnings Before interest, Taxes, Depreciation, Amortisation and excluding
share-based payments, impairment, and reorganisation costs
N/m = not meaningful
Reconciliation of profit / (loss) for the period with Adjusted EBITDA
$'000 H1 2022 H1 2021 Change
Profit / (loss) for the period 504 (82) n/m
Add back:
Net finance costs / (income)(2) 1,731 (35) n/m
Other income (33) (99) -67%
Income tax benefit (2,198) (357) n/m
Depreciation and amortisation 3,600 3,587 0%
Impairment relating to Personal Finance 3,486 - n/m
Share-based payments 509 520 -2%
Acquisition integration costs & Transformation Costs 2,962 3,066 -3%
Adjusted EBITDA 10,561 6,600 60%
2 Net finance costs / (income) is comprised of finance income, finance expense
and foreign exchange gains / (losses).
XLMedia revenues in H1 2022 totalled US$44.5 million (H1 2021: $32.2 million),
an increase of 38% compared to the previous year, primarily driven by growth
in North America sports following the integration of our strategic
acquisitions.
In H1, the Company generated US$30.2 million of revenue in North America
sports which included US$20.5 million of revenue from media partnerships and
$9.6m from the Group's Owned & Operated ("O&O") websites.
European Sports revenue has declined overall from US$5.8 million to US$3.8
million, largely due to websites no longer in operation and which were cost
prohibitive to continue operating along with a declining Finnish asset. The
Group's UK focused assets have grown year on year by 7% in a market which is
mature and impacted by regulatory headwinds.
Personal Finance, Blueclaw and Reef Media revenues were less than 5% of
overall revenue.
The Group's gross profit for H1 2022 was US$20.9 million and gross margin was
47% (H1 2021: US$18.3 million, 57% gross margin). The 14% increase in gross
profit was driven by the increase in revenue discussed above. The reduction in
gross margin year over year was largely due to the change in revenue mix
towards North America sports - in particular, due to the increase in revenue
from media partnerships which have a lower gross margin as revenue is paid to
media partners for accessing their audience. Gross profit is calculated as
revenue less the costs associated with generating revenue*.
*Cost of revenue includes direct costs, marketing cost, Media Partnership
Business revenue share, and people costs. Note, these costs are also
identified and associated with operating, sales and marketing expenses as
defined in the interim condensed consolidated financial statements.
Operating expenses for H1 2022 were US$20.9 million (H1 2021: US$18.8
million). This increase was driven by the impairment relating to Personal
Finance of US$3.5 million, partially offset by cost savings relating to the
re-platforming and relocation of roles from Israel to Cyprus, UK and US.
Largely as a result of the increase in revenue year over year, Adjusted
EBITDA for H1 2021 was US$10.6 million (H1 2021: US$6.6 million), an increase
of 60% on the previous year.
Net financing costs for H1 2022 was US$0.25 million (H1 2020: US$0.04 million,
income).
In H1 2022 the Group recorded transformation costs of US$3.0 million due to
the continuation of the restructuring plan of the Group, as well as
integration activity relating to prior acquisitions (H1 2021: US$3.1 million).
As at 30 June 2022, the Company had US$17.7 million in cash and short-term
investments (31 December 2021: US$24.6 million). The change in cash reflects
US$11.0 million generated by operating activities, offset by US$5.6 million
used for investment activity and US$10.1 million used in financing activities.
Short-term investments reduced by US$0.6 million and the Company reported an
out flow for net foreign exchange differences of US$1.6 million. The Group has
made payments of US$13 million in respect of deferred consideration and
earn-out payments in relation to its North America sports acquisitions in the
period.
Current assets as at 30 June 2022 were US$27.4 million (31 December 2021:
US$39.4 million). The decrease in current assets was predominantly because of
the decrease in cash and cash-equivalents mentioned above as well as the
seasonal decrease in Trade Receivables.
Non-current assets as at 30 June 2022 were US$121.9 million (31 December 2021:
US$123.0 million). The decrease in non-current assets is primarily due to the
$3.4m impairment of Personal Finance assets.
Current liabilities as at 30 June 2022 were US$28.7 million (31 December 2021:
US$42.1 million). The decrease in current liabilities was predominantly due to
payments of deferred consideration relating to prior acquisitions and a
release of prior period income tax provisions.
Non-current liabilities as at 30 June 2022 were US$10.7 million (31 December
2020: US$11.2 million).
Total equity as at 30 June 2022 was US$109.9 million or 73% of total assets
(31 December 2021: US$109.2 million or 67% of total assets).
The first half of 2022 was a period of continued progress for the Group,
cementing our position in the fast-growing US market and with key media
partnerships secured ahead of the launch of Ohio and potentially Massachusetts
in 2023. The project to restructure the Group is progressing well with a
right-sized cost base and integration of the strategic acquisitions largely
complete.
Caroline Ackroyd
Chief Financial Officer
29 September 2022
XLMEDIA PLC
Interim Condensed Consolidated Financial Statements as at 30 June 2022
Report on Review of Interim Condensed Consolidated Financial Statements 2
Unaudited Consolidated Financial Statements:
Consolidated statements of financial position 3
Consolidated statements of profit or loss and other comprehensive 4
income
Consolidated statements of changes in equity 5
Consolidated statements of cash flows 6
Notes to the Interim Condensed Consolidated Financial Statements 8
- - - - - - - - - - -
Report on review of interim financial information
The Board of Directors
XLMedia PLC
Introduction
We have reviewed the accompanying interim condensed consolidated financial
statements of XLMedia PLC. and its subsidiaries ("the Group") as at 30 June
2022 which comprise the interim consolidated statement of financial position
as at 30 June 2022 and the related interim consolidated statements of profit
or loss and other comprehensive income, changes in equity and cash flows for
the six months then ended and explanatory notes. Management is responsible for
the preparation and presentation of this interim financial information in
accordance with IAS 34, "Interim Financial Reporting ("IAS 34") as adopted by
the European Union. Our responsibility is to express a conclusion on this
interim financial information based on our review.
Scope of review
We conducted our review in accordance with International Standard on Review
Engagements 2410, "Review of Interim Financial Information Performed by the
Independent Auditor of the Entity". A review of interim financial information
consists of making inquiries, primarily of persons responsible for financial
and accounting matters, and applying analytical and other review procedures. A
review is substantially less in scope than an audit conducted in accordance
with International Standards on Auditing and consequently does not enable us
to obtain assurance that we would become aware of all significant matters that
might be identified in an audit. Accordingly, we do not express an audit
opinion.
Conclusion
Based on our review, nothing has come to our attention that causes us to
believe that the accompanying interim condensed consolidated financial
statements are not prepared, in all material respects, in accordance with IAS
34 as adopted by the European Union.
Tel-Aviv, Israel KOST FORER GABBAY & KASIERER
, 2022 A Member of Ernst & Young Global
Consolidated statements of financial position
30 June 30 June 31 December
2022 2021 2021
$000 $000 $000
Assets Unaudited Unaudited Audited
Non-current assets
Intangible assets and goodwill 118,955 90,702 120,284
Property and equipment 2,616 6,914 2,401
Other financial assets 221 - -
Other assets - 371 247
Long-term deposits 75 1,525 83
121,867 99,512 123,015
Current assets
Short-term deposits 1,601 870 2,158
Trade receivables 5,787 5,536 8,701
Other receivables 3,863 6,101 6,119
Cash and cash equivalents 16,131 36,061 22,437
27,382 48,568 39,415
Total assets 149,249 148,080 162,430
Equity and liabilities
Equity
Share capital *) - *) - *) -
Share premium 122,071 121,828 122,071
Capital reserve 146 262 14
Accumulated deficit (12,365) (18,592) (12,869)
Total equity 109,852 103,498 109,216
Non-current liabilities
Lease liabilities 1,202 4,723 1,242
Deferred taxes 1,338 1,607 1,372
Deferred consideration 7,795 3,614 7,737
Contingent consideration 401 - 808
10,736 9,944 11,159
Current liabilities
Trade payables 2,540 2,134 2,333
Deferred consideration 8,897 9,875 18,401
Consideration payable on intangible assets 3,000 - 3,000
Other liabilities and accounts payable 6,162 9,914 7,820
Income tax provision 7,725 11,349 10,190
Current maturities of lease liabilities 337 1,366 311
28,661 34,638 42,055
Total liabilities 39,397 44,582 53,214
Total equity and liabilities 149,249 148,080 162,430
*) Less than $1,000.
The accompanying notes are an integral part of the interim condensed
consolidated financial statements.
Date of approval of the Marcus Rich David King Caroline Ackroyd
financial statements Chairman of the Board of Directors Chief Executive Officer Chief Financial Officer
Consolidated statements of profit or loss and other comprehensive income
Six months ended 30 June Six months ended 30 June Year ended 31 December
2022 2021 2021
$000 $000 $000
Unaudited Unaudited Audited
Revenue 44,528 32,218 66,487
Expenses:
Operating (21,269) (21,902) (40,740)
Sales and marketing (16,169) (7,302) (14,837)
Depreciation, amortisation and impairment (7,086) (3,587) (6,970)
Operating profit / (loss) 4 (573) 3,940
Finance expenses (1,733) (221) (549)
Finance income 2 256 306
Other income 33 99 318
Profit / (loss) before taxes on income (1,694) (439) 4,015
Income tax benefit 2,198 357 1,626
Profit / (loss) for the period 504 (82) 5,641
Other comprehensive expense
Exchange loss arising on translation of foreign operations (377) - (16)
Total comprehensive income / (expense) 127 (82) 5,625
Profit / (loss) for the period attributable to:
Equity owners of the Company 504 (82) 5,641
504 (82) 5,641
Total comprehensive income / (expense) attributable to:
Equity owners of the Company 127 (82) 5,625
127 (82) 5,625
Earnings per share attributable to equity holders of the Company:
Basic and diluted earnings per share (in $) *( - *( - 0.02
*) Lower than $0.01
See note 1c with respect to the presentation for the six months ended 30 June
2021.
The accompanying notes are an integral part of the interim condensed
consolidated financial statements.
Consolidated statements of changes in equity
Share Share premium Capital reserve from share-based transactions Capital reserve from the translation of a foreign operation Accumulated deficit Total equity attributable to owners of the Company
capital Capital reserve from transactions with non-controlling interests
$000 $000 $000 $000 $000 $000 $000
As at 1 January 2022 *) - 122,071 2,656 (16) (2,626) (12,869) 109,216
Profit for the period - - - - - 504 504
Other comprehensive expense - - - (377) - - (377)
Total comprehensive income (expense) - - - (377) - 504 127
Cost of share-based payment - - 509 - - - 509
As at 30 June 2022 (unaudited) *) - 122,071 3,165 (393) (2,626) (12,365) 109,852
As at 1 January 2021 *) - 86,022 2,368 - (2,626) (18,510) 67,254
Loss for the period - - - - - (82) (82)
Cost of share-based payment - - 520 - - - 520
Share capital issuance *) - 35,806 - - - - 35,806
As at 30 June 2021 (unaudited) *) - 121,828 2,888 - (2,626) (18,592) 103,498
As at 1 January 2021 *) - 86,022 2,368 - (2,626) (18,510) 67,254
Profit for the year - - - - - 5,641 5,641
Other comprehensive expense - - - (16) - - (16)
Total comprehensive income - - - (16) - 5,641 5,625
Cost of share-based payment - - 520 - - - 520
Share capital issuance *) - 35,806 - - - - 35,806
Exercise of option *) - 243 (232) - - - 11
As at 31 December 2021 (audited) *) - 122,071 2,656 (16) (2,626) (12,869) 109,216
*) Less than $1,000.
The accompanying notes are an integral part of the interim condensed
consolidated financial statements.
Consolidated statements of cash flows
Six months ended 30 June Six months ended 30 June Year ended 31 December
2022 2021 2021
$000 $000 $000
Unaudited Unaudited Audited
Operating activities
Profit (loss) for the period 504 (82) 5,641
Adjustments to reconcile profit for the period to net cash flows:
Depreciation, amortisation and impairment 7,086 3,587 6,970
Finance expense / (income), net 257 (497) (76)
Loss on disposal of fixed assets 227 - -
Other income - - (437)
Cost of share-based payment 509 520 520
Income tax benefit (2,198) (357) (1,626)
Exchange differences on balances of cash and cash equivalents 1,477 82 246
Working capital changes:
Decrease / (increase) in trade receivables 2,914 256 (2,672)
Decrease in other receivables 598 211 647
Increase in trade payables 207 134 313
(Decrease) / increase in other liabilities and accounts payable
(1,959) 56 (1,681)
9,622 3,910 7,845
Interest paid (257) (38) (76)
Interest received - 2 3
Income tax paid - (255) (572)
Income tax received 1,684 60 48
Net cash flows from operating activities 11,049 3,679 7,248
Investing activities
Proceeds on disposal of property and equipment 19 - -
Purchase of property and equipment (331) (809) (1,118)
Acquisition of and additions to domains, websites and other intangible assets (3,000)
(11,871) (23,127)
Acquisition of and additions to systems, software and licenses (2,892) (3,125) (7,718)
Acquisition of subsidiary, net of cash acquired - - (395)
Short-term and long-term deposits, net 565 289 507
Net cash flows used in investing activities (5,639) (15,516) (31,851)
Financing activities
Share capital issuance - 35,806 35,806
Proceeds from exercise of share options - - 11
Payment of principal portion of lease liabilities (246) (474) (1,163)
Payment of deferred consideration (9,853) - -
Net cash flows (used in) / from financing activities (10,099) 35,332 34,654
Net (decrease) / increase in cash and cash equivalents (4,689) 23,495 10,051
Net foreign exchange difference (1,617) (82) (262)
Cash and cash equivalents at 1 January 22,437 12,648 12,648
Cash and cash equivalents at 30 June / 31 December 16,131 36,061 22,437
Consolidated statements of cash flows
Six months ended 30 June Six months ended 30 June Year ended 31 December
2022 2021 2021
$000 $000 $000
Unaudited Unaudited Audited
Significant non-cash transactions:
Deferred consideration payable on acquisition of and additions to domains, 3,000 15,299
websites and other intangible
28,113
Right-of-use asset recognized with corresponding lease liabilities 347 5,991 2,460
The accompanying notes are an integral part of the condensed consolidated
financial statements.
Notes to the consolidated financial statements
1. General
a. Corporate information
XLMedia PLC ("the Company") is a leading global digital media company listed
on the London Stock Exchange Alternative Investment Market (AIM) since March
2014. The Company was incorporated in Jersey and commenced its operations in
2012. The Company's registered office is in 12 Castle Street St. Helier
Jersey, JE2 3RT. XLMedia PLC and its consolidated subsidiaries ("the Group")
owns and operates 20 premium branded marquee websites across various sectors,
including Sports, Casino and Personal Finance. Headquartered in the United
Kingdom, with a significant presence in the United States. The Company has a
long track record of success in digital media and performance marketing,
working with some of the world's largest advertisers. XLMedia PLC is focused
on regulated, high growth markets.
b. Definitions
In these financial statements
GBP - British Pound Sterling
IFRS - International Financial Reporting Standards as adopted by the European Union
Subsidiaries - Entities controlled (as defined in IFRS 10) by the Company and whose accounts
are consolidated with those of the Company. For a list of the main
subsidiaries, see Note 21 to the Company's annual financial statements as of
31 December 2021
U.S. - United States
U.K. - United Kingdom
USD/$ - U.S. dollar, all values are rounded to the nearest thousand ($000), except
when otherwise indicated
c. Significant changes
The Company elected in the 2021 annual financial statements 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
interim comparative information.
2. Significant accounting policies
a. Basis of presentation of the interim condensed consolidated financial
statements
These financial statements have been prepared in a condensed format as of 30
June 2022, and for the six months then ended ("interim consolidated financial
statements"). These financial statements should be read in conjunction with
the Company's annual financial statements as of 31 December 2021, and for the
year then ended and accompanying notes ("annual consolidated financial
statements").
The interim condensed consolidated financial statements have been prepared in
accordance with IAS 34, Interim Financial Reporting, as adopted by the
European Union.
2. Significant accounting policies (continued)
b. The initial adoption of amendments to existing financial reporting and
accounting standards:
The accounting policies adopted in the preparation of the interim condensed
consolidated financial statements are consistent with those followed in the
preparation of the Group's annual consolidated financial statements for the
year ended 31 December 2021, except for the adoption of new standards
effective as of 1 January 2022. The Group has not early adopted any standard,
interpretation or amendment that has been issued but is not yet effective.
Several amendments apply for the first time in 2022, but do not have an impact
on the interim condensed consolidated financial statements of the Group.
3. Supplementary information
a. New real estate lease agreement:
In February 2022, the Company signed one new real estate lease agreement. The
lease's commencement date is 1 June 2022. The impact for 2022 is an increase
of approximately $0.35 million in right-of-use assets and a corresponding
increase in lease liabilities.
b. Grant of Performance Stock Units:
In May 2022, the Company granted, 762,712, 1,060,484, and 644,068 Performance
Stock Units ("PSUs") to the CFO, CGO, and CIO respectively. The award will
vest on the third anniversary of the grant date if and to the extent that the
performance target will be satisfied.
The PSU award is a contingent right to acquire shares for no consideration. It
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 as compared to the FTSE AIM 100, followed by a
two-year holding period.
The following table specifies the inputs used for the fair value measurement
using the Monte Carlo simulation:
2022
May PSU
Dividend yield (%) -
Expected volatility of the share price (%) 78.91
Risk-free interest rate (%) 2.72%
Expected life of share options (years) 3
Share price (GBX) 29.5
The total fair value was calculated at $179 thousand at the grant date which
will be recognised on a straight line basis over the vesting period.
c. New appointments:
· In February 2022, the Company announced that Christopher Bell,
Non-Executive Chair, has stepped down from the board of directors of the
Company. In March 2022, the Company announced the appointment of Marcus Rich
as Non-Executive Chair with immediate effect. Marcus will also be a member of
the Audit, Remuneration, and Risk Committees.
3. Supplementary information (continued)
c. New appointments (continued):
· In March 2022, the Company announced that Caroline Ackroyd has joined
the Company as Chief Financial Officer and as a member of the Board of
Directors with immediate effect.
· In May 2022, the Company announced the appointment of David King as
Chief Executive Officer and as a member of the Board of Directors. He joined
the Group on 1 July 2022.
d. Personal Finance Cash Generating Unit ("CGU") impairment:
As a result of a decline in results due to the need to replace aging
technology, re-evaluate marketing tactics and align with best practice, the
Company recorded an impairment loss to the Personal Finance CGU for the amount
of $3,486 thousands, which is included in the statement of profit or loss. The
management and production teams are now based within the Group's US division,
and the Personal Finance vertical is focussed on completing the redesign and
re-platforming of its primary websites, with the objective of improving site
performance and enhancing the consumer experience and stabilising revenues.
Due to the change in market interest rates the Company assessed all other
CGU's for impairment. The result of this assessment indicated that no other
impairment is required as at 30 June 2022.
The pre-tax discount rate applied to the cash flow projection is 17.7% and the
terminal growth rate is 3%.
The key assumptions used in calculating the value in use:
Revenues and operational profit: the revenues and the profit rate assumptions
are based on management expectations and forecasts for the coming year and the
management's forecasted cash flows for the
following three years. These forecasts included an evaluation of factors which
could adversely affect revenues and profitability.
Discount rate: the discount rate reflects management's assumptions regarding
the Group's specific risk premium.
Terminal growth rate: the terminal growth rate applied for the period beyond
the four-year forecasted period is based on the long-term average growth rate
as customary in similar industries.
Sensitivity analyses of changes in assumptions:
With respect to the assumptions used in determining the value in use,
management believes that a significant change in key assumptions, in
particular, an increase in the Weighted Average Cost of Capital and a decrease
in EBITDA margin, would result in a further impairment of the intangible
assets.
e. Other financial assets:
On 28 February 2022 the Company converted a Loan receivable from Xineoh
Technologies Inc. with a carrying amount of $221 thousands to shares giving
the Company a 2.6% stake in ordinary shares with no special rights. The
Company elected to designate the equity investment as at Fair Value through
Other Comprehensive Income ("FVTOCI"). The Company believes there was no
material change in the fair value of the equity investment since its
recognition.
3. Supplementary information (continued)
f. Deferred and contingent consideration:
In 2021, 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.
The acquisition cost included deferred consideration with a remaining balance
as of 30 June 2022 of $15.47 million which is payable in the period of
2022-2024.
Also, in September 2021, the Company acquired 100% of the ordinary share
capital of Blueclaw, part of the amount of purchase consideration included
cash consideration paid on completion, deferred consideration payable in
September 2022 and further contingent consideration payable.
g. Sales and marketing
The increase in sales and marketing expenses was largely due to the change in
revenue mix towards North America Sports and the performance from media
partnerships which have a lower gross margin as revenue is paid to media
partners for accessing their audience.
4. 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
Six months ended 30 June Six months ended 30 June Year ended 31 December
2022 2021 2021
$000 $000 $000
Unaudited Unaudited Audited
North America 31,465 13,581 32,489
Scandinavia 6,858 8,876 17,634
Other European countries 4,384 7,800 12,621
Oceania 353 352 834
Other countries - 35 80
Total revenues from identified locations 43,060 30,644 63,658
Revenues from unidentified locations 1,468 1,574 2,829
44,528 32,218 66,487
4. Revenue and operating segments (continued)
Revenues by vertical
Six months ended 30 June Six months ended 30 June Year ended 31 December
2022 2021 2021
$000 $000 $000
Unaudited Unaudited Audited
Casino 8,403 12,490 23,216
Sports U.S. 9,620 4,642 15,202
Sports Europe 3,866 7,059 9,528
Third Party Network Activity 21,386 1,458 9,367
Blueclaw 421 - 454
Personal Finance 832 6,569 8,720
44,528 32,218 66,487
5. Subsequent events
In August 2022, the Company announced that it granted share awards over a
total of 833,333 ordinary shares in aggregate in the Company under the XLMedia
2020 Global Share Incentive Plan (the "Awards"). The Awards represent 0.31% of
the currently issued share capital of the Company. The Awards are contingent
rights to acquire shares for no consideration. The Awards are 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 as compared to the FTSE AIM 100, followed by a two-year
holding period.
This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact
rns@lseg.com (mailto:rns@lseg.com)
or visit
www.rns.com (http://www.rns.com/)
.
RNS may use your IP address to confirm compliance with the terms and conditions, to analyse how you engage with the information contained in this communication, and to share such analysis on an anonymised basis with others as part of our commercial services. For further information about how RNS and the London Stock Exchange use the personal data you provide us, please see our
Privacy Policy (https://www.lseg.com/privacy-and-cookie-policy)
. END IR PPURPBUPPPURRecent news on XLMedia
See all newsREG - XLMedia PLC - Notice of Results
AnnouncementREG - XLMedia PLC - Divestment of Europe and Canada assets completed
AnnouncementREG - XLMedia PLC - Holdings in Company
AnnouncementREG - XLMedia PLC - Divestment of Europe and Canada assets
AnnouncementREG - XLMedia PLC - Trading Update
Announcement