REG - XLMedia PLC - Results for the six months ended 30 June 2023
28/09/2023 07:00
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RNS Number : 9082N XLMedia PLC 28 September 2023
The information contained within this announcement is deemed to constitute
inside information as stipulated under the retained EU law version of the
Market Abuse Regulation (EU) No. 596/2014 (the "UK MAR") which is part
of UK law by virtue of the European Union (Withdrawal) Act 2018. The
information is disclosed in accordance with the Company's obligations under
Article 17 of the UK MAR. Upon the publication of this announcement, this
inside information is now considered to be in the public domain.
28 September 2023
XLMedia PLC
("XLMedia" or the "Group" or the "Company")
Results for the six months ended 30 June 2023
· Further progress on delivery of strategy
· Streamlined organisational structure and cost base
· Delivered growth in core Europe Gaming and Sports brands
XLMedia (AIM: XLM), a leading global digital media company, announces the
unaudited results for the six months ended 30 June 2023.
Continuing business revenues for the Group grew 18% across the two years from
H1 2021 to H1 2023.
To 30 June 2022, the Group's continuing business revenue grew 77%
period-on-period including the benefit of the launch of online sports betting
in New York - the fourth largest US state by population. The period to 30
June 2023 included the successful launch of online sports betting
in Ohio (the seventh most populous state) but as previously announced this,
together with a reduced level of customer acquisition marketing activity by
some operators, did not match the same period in the prior year, resulting in
a reduction in Group continuing operations revenues of 33% versus H1 2022.
Key Highlights H1 2023
· The Group's Freebets brand grew revenue 37% led by Freebets.com.
· The Group's Europe Gaming premium brands Whichbingo and Nettikasinot
both returned to growth, up 38% and 5% respectively.
· Sustainable cost savings of $4.0 million delivered in the period
including 14% reduction in headcount.
· Online sports betting was launched in Ohio in January and
Massachusetts in March.
· Revenue share deals in the US were agreed with bet365, Betway and
Pointsbet enabling the Group to participate in betting profits generated by
customers introduced by XLMedia to these operators.
· The successful partnership with Schneps Media for amNY was extended
for a further three years.
· Disposal of the Group's Personal Finance asset portfolio realised a
total cash consideration of $2.05 million.
Financial Summary
· Group total revenues of $29.4 million (H1 2022: $44.5 million)
· Group adjusted EBITDA((1)) of $6.5 million (H1 2022: $10.6
million)
· Continuing business((2)) revenues were $27.9 million (H1 2022: $41.9
million)
· Continuing business adjusted EBITDA was $6.9 million (H1 2022: $11.9
million)
· Reported profit for the period of $4.7 million (H1 2022: $0.5
million)
· $7.4 million in cash and short-term deposits as of 30 June 2023
1 Earnings Before interest, Taxes, Depreciation, Amortisation and excluding
share-based payments, impairment, and reorganisation costs
2 Continuing business is defined as continuing operations excluding
activities or assets that do not form part of the Group's future operations,
for example Casino.se sold in July 2023.
Sports vertical generated first half revenues of $21.4 million - 74% of
continuing operations revenues (H1 2022: $34.0 million, H1 2021: $11.7
million)
· Following growth of 412% in US Sports revenue from H1 2021 to H1
2022, H1 2023 was down period-on-period to $16.2 million (H1 2022: $30.2
million, H1 2022: $7.3 million).
· New regulated markets opened in Ohio in January and Massachusetts in
March, increasing the number of live sports betting states the Group operates
in to 19.
· The Media Partnership Business (MPB) revenues totalled $12.2 million
(H1 2022: $20.5 million, H1 2021: $1.5 million).
· The Group's partners Cleveland.com in Ohio and MASSlive.com in
Massachusetts were instrumental in driving revenues at state launch. However,
as a result of the late state launch in Massachusetts after the end of the NFL
season, revenues were significantly lower than expected.
· Owned and Operated ("O&O") revenues in the US were impacted by
the change in the levels of operator acquisition marketing spend during the
period. While the Group significantly benefited from the New York launch in H1
2022 (including its O&O ESNY brand), the New York market saw very limited
customer acquisition activity by operators in H1 2023.
· The Europe Sports business returned to growth in H1 2023, with
revenues of $4.5 million, excluding residual sub-affiliate network revenues
(H1 2022: $3.8 million).
Gaming revenues stabilised at $7.4 million (H1 2022: $8.4 million, H1 2021:
$12.5 million)
· European operations generated $7.0 million (H1 2022: $8.0 million)
with a reduction in tail revenues accounting for the majority of the decline.
· New Real Money Players ("RMPs") acquired during the period grew 9%
compared to H1 2022 creating future tail revenues that will be realised in
2024 and beyond.
· Whichbingo H1 revenue grew by 38% and RMPs by 28% compared to H1
2022.
· Nettikasinot H1 revenue grew by 5% and RMPs by 16% compared to H1
2022.
· The Group did not own or operate a dedicated North America gaming
site in the period. Gaming revenues earned from gaming pages on O&O
sports betting sites in legalised online gaming states in the US generated
revenues in H1 2023 of $0.4 million (H1 2022: $0.4 million).
Disposals
The Group announced the sale of the loss-making Personal Finance business in
H1 2023 for a total cash consideration of $2.05 million. Revenues for the
Personal Finance business in the period prior to sale were $0.6 million (H1
2022: $0.8 million) at a $0.4 million loss.
Cash
After earnout payments of $3.4 million in respect of prior period acquisitions
and payments of $2.8 million in corporate tax in Israel for the period 2016 to
2020, cash stood at $7.4 million at 30 June 2023.
Post period end
· Post period end, on 12 July 2023, we announced the disposal of
three of the Group's Europe Gaming domains and associated
websites, Casino.se, Casino.gr and Casino.pt, for a total upfront cash
consideration of $4.0 million, representing a 4.7 times multiple on revenue.
· Online sports betting in Kentucky launches today and the Group has
prepared accordingly.
· XLMedia is focused on capitalising on its substantial southeast
footprint, with North Carolina expected to launch in Q1 2024, as well as
additional launches in Maine and Vermont in 2024.
· New Media Partnerships signed with Atlanta Journal-Constitution and
WRAL.com, the latter in preparation for the launch of online sports betting in
North Carolina in 2024.
Outlook
· The Group is now focussed on Sport and Gaming, principally in
regulated markets, in North America and Europe, having exited declining,
non-core activities.
· Europe Sports revenues are expected to grow year on year, following
growth in H1 2023, and strong revenue trends running into H2.
· The new NFL season remains a critical element in delivering
management's expectations. In particular the launch of Kentucky and the return
to market of one of our largest operator clients following its own betting
rebranding.
· The strong growth trends in our premium Europe gaming brands,
Whichbingo and Nettikasinot, are also core to delivering management's full
year expectations.
· Actions to reduce the Group's cost base during the period will
provide further benefit in H2.
As a result, the Group expects full year adjusted EBITDA to be broadly in line
with management expectations.
As noted previously, the Group's performance will continue to benefit from
period revenue spikes resulting from new online sports betting state launches
in the US, however the timing, number and scale of launches will vary
significantly.
David King, Chief Executive Officer of XLMedia, commented:
"Having pivoted the Group into a North American, sport-led business in 2020
and 2021, XLMedia is well placed to participate in the long-term growth of
online sports betting. However, as previously noted, the Group's overall
growth will not be linear while the affiliate revenues in North America remain
principally a one-off introductory fee and the timing and scale of new state
launches impact period-to-period comparisons. We are working to develop more
revenue share relationships with operators in the US, while also successfully
building our recurring revenues in Europe, providing a solid base for future
growth."
Investor webcasts
A results webcast will be made available
at https://www.xlmedia.com/investors/webcasts/
(https://www.xlmedia.com/investors/webcasts/) on Thursday, 28 September 2023
from 10.00 a.m. (BST).
An additional presentation will be held on Tuesday, 3 October 2023 at 1.00
p.m. (BST) and hosted on the Investor Meet Company platform.
Questions can be submitted pre-event via your Investor Meet Company dashboard
up until 9.00 a.m. the day before the meeting or at any time during the live
presentation. Investors who already follow XLMedia on this platform will
automatically be invited.
Participants can sign-up for free and add to meet XLMedia via: Investor
webcast (https://www.investormeetcompany.com/xlmedia-plc/register-investor)
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 / Fiona Hetherington / Kendall Hill
www.vigoconsulting.com
Cavendish Securities plc (Nomad and Joint Broker) Tel: 020 7397 8900
Giles Balleny / Callum Davidson
www.cavendish.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
The first half of 2023 has seen us make further strides in building a new
XLMedia, implementing our strategy to rebuild our European business while
expanding our footprint in North America, delivering revenue growth for the
continuing business of 18% from H1 2021 through to H1 2023.
In Europe, by focussing on our premium brands we have delivered growth
following a number of periods of significant decline.
In the US, our largest market, as the regulated markets develop we have seen
spend by some operators move towards building a more steady profit profile
rather than maximising short-term market share. Following the growth of 412%
in our US Sports revenue in H1 2022, the change in operator behaviour together
with the more modest scale of state launches in 2023 has resulted in a
reduction in revenues against H1 2022.
Our focus in the US remains one of developing revenue share arrangements with
operators. Over time this will enable the business to participate in betting
profits, increasing recurring revenues and reducing volatility in revenues
caused by state launches.
The rationalisation and simplification program continued into H1 2023 with the
closure or sale of non-core assets and the further reduction in headcount by
14% rationalised technology services and tools as well as substantially
reducing the number of licenses across key platforms.
In the period, total continuing operations revenues were $28.8 million, while
adjusted EBITDA was $6.9 million.
Divisional Summary
Sports - North America
The opening of the Ohio online sports betting market provided a good start to
the year. The subsequent launch of online sports betting in Massachusetts
after the end of the NFL season resulted in disappointing revenue results and
this, combined with changes to the pattern of operator acquisition spending -
particularly around the Superbowl - led to a decline in revenues when compared
to the 412% growth in North America Sports revenues from H1 2021 to 2022.
The Group now operates in 19 states and we are well prepared for today's
launch of online sports betting in Kentucky.
Across all the states where we operate, either through O&O sites or
through Media Partner sites, we continue to offer high-quality national and
local sports coverage and sports betting content with an emphasis on building
engagement and trust with users. Our exclusive sports betting content for
Media Partners offers relevant information for fans and participants in those
states where betting is permitted. Audience engagement is an essential element
of our strategy to participate in betting profits through revenue share in the
future.
In H1 2023 we have focussed on growing traffic in Sports Betting Dime in
particular, our national sports betting affiliate site with the objective of
building high intent audiences, supporting both new customer acquisition, up
13% against the comparable period in 2022, but also revenue share when that
becomes available, with total unique visitors up 120% period-on-period.
In H1 2023, we also saw our revenue diversification program expanded into
Daily Fantasy Sports, which is legal in most US states. After initially
launching with one operator, we have expanded to two, and will soon expand to
a third. Current revenues are principally being driven by our Saturday Down
South brand with its extensive reach across southern states.
In August 2023, we announced a new media partnership with WRAL.com based in
North Carolina, which has legalised online sports betting and is expected to
launch in Q1 2024. We will provide highly engaging sports betting content
while also managing commercial deals with regulated sportsbook operators and
executing proven monetisation strategies.
In September, we announced new media partnership with Atlanta
Journal-Constitution (AJC), a high-quality news and sport brand, based in
Georgia but with an exceptional and well-established national reputation and
extensive digital footprint. This exclusive agreement will enable AJC to
capture new revenue streams whilst providing their readership with a new
content offering. The partnership also allows the Group to immediately reach
AJC's national readership in currently legal live sports betting markets, and
also provides the Group with access to AJC's readership in Georgia should
the state legalise sports betting in the medium term.
And while we are always looking to find new high quality partners in new
states, we have extended our successful amNY partnership with Schneps Media
for a further three years.
Sports - Europe
Following a challenging in period in our Europe Sports business in previous
years, Freebets.com (our premium Europe and UK sports betting marketing brand)
led the division back to growth, with revenues up 50% against H1 2022,
benefiting in part from the redirection of Freebets.co.uk as part of the
rationalisation programme. First time depositors were up 36%. Europe Sports
revenues are mostly hybrid deals with revenues made up of a small upfront
customer acquisition payment followed by ongoing participation in betting
profits from those customers. Revenue share from new hybrid deal customers
will continue into H2 2023 and beyond, and form part of our recurring
revenues.
Growth in recurring revenues is a key strand in the strategy to grow overall
revenues and reduce seasonality and volatility.
The Europe Sports business delivered revenues of $4.5 million excluding
residual sub-affiliate network revenues. (H1 2022: $3.8 million). In the
period we successfully expanded our horse racing offering, with particular
success around major events including the Cheltenham Festival, the Grand
National and Royal Ascot - all finding new customers - while the English
Premier league season continues to drive acquisition.
Gaming - Europe
The Group's Europe Gaming vertical as a whole generated revenue of $7.0
million (H1 2022: $8.0 million). The trading performance of the three EU
gaming assets sold in July 2023 is included and represents c.$0.3 million in
the results.
Following its restructuring in 2022, the Group's Europe Gaming vertical
(casino and bingo) is trading marginally ahead of management expectations.
RMPs grew 9% year-on-year in the period as the rebuilding of the gaming
business continued while creating future tail revenues. In the short-term, the
decline in historical tail revenues continues to impact period-on-period
growth, however the business expects to return to overall growth.
· WhichBingo, the second largest gaming brand in the portfolio,
grew revenue in H1 2023 by 38% period-on-period and grew RMPs by 28%
period-on-period. H1 2023 was the strongest performing half year ever.
· Nettikasinot, the largest gaming brand in the portfolio, grew
revenue in H1 2023 by 5% against H1 2022 and grew RMPs 16% during the same
period.
Together, WhichBingo and Nettikasinot now contribute approaching half the
Gaming revenues in the period.
Disposals
In late 2022 the Group announced the intention to sell the loss-making
Personal Finance business, and completed the sale of these assets in H1 2023
for a total gross cash consideration of $2.05 million. Revenues for the
Personal Finance business in the period prior to sale were $0.6 million (H1
2022: $0.8 million) at a $0.4 million loss.
Personal Finance business was written down to zero in 2022. As a result of the
sale, the asset was written back to the amount equivalent to the disposal
proceeds creating no profit or loss on the disposal before transaction related
costs.
Post period end, on 12 July 2023, we announced the disposal of three of the
Group's Europe Gaming domains and associated websites, Casino.se, Casino.gr
and Casino.pt, for a total upfront cash consideration of $4.0 million,
representing a 4.7 times multiple on full year revenues. The Group will
continue to operate its Gaming business in the Swedish and other Europe
markets and then launched Kasino.se, a new site focused on the Swedish market.
Operations and People
H1 2023 saw XLMedia complete the removal of a layer of management across all
divisions resulting in more direct engagement between managers and operational
staff, and the leadership team.
As part of the transformation program, we have exited non-core activities
sub-affiliate network and the Blueclaw agency and completed the sale of the
loss-making Personal Finance business.
The management of Europe Sport and Gaming were brought together under the
leadership of Karen Tyrrell, Chief People and Operations Officer.
The Group continued to focus on its program to streamline technology and
replace legacy technology. We have launched our Dynamic Offer Engine, a
proprietary ad serving technology, enabling us to automate and optimise
conversion rates from new sports betting promotions and offers while trialing
using new AI tools to enhance content creation.
Total cost savings achieved in H1 2023 were $4.0 million, including the 14%
reduction in headcount.
Cash
In 2020 and 2021, the Group pivoted to a US Sport led business, making three
substantial acquisitions, CBWG, Sports Betting Dime ("SBD") and Saturday Down
South ("SDS"). While the SBD acquisition was financed through an equity raise,
the CBWG and SDS acquisitions have earnout and deferred payments payable in
2023 and 2024. Cash payments of $3.4million were made in H1 with a further
$4.0 million payable in H2, and an additional $7.5 million due in 2024.
Cash generated by the business must first be utilised on acquisition payments,
restructuring costs and the bespoke technology replacement program (capex).
Expenditure on capex has reduced in the period by $0.5 million, while
restructuring costs reduced period-on-period by $2.0 million.
Currently there is no external debt financing in the business however we are
currently evaluating implementing a revolving credit facility for working
capital purposes.
Board Changes
Earlier in the year, Richard Rosenberg and Jonas Mårtensson indicated their
intention to step down as Directors of the Group. Mr. Mårtensson stepped down
from the Board at the end of June while Mr. Rosenberg will step down at the
end of this month having ensured a smooth transition of his responsibilities.
In addition, in line with the Group's focus on cost reduction, and as reported
in our Annual Report, the Board agreed to implement a reduction of 15% in the
level of fees paid to the remaining Non-Executive Directors (including the
Chair) with effect from 1 April 2023.
Summary
The spike in revenue in H1 2022 and the resulting comparable period decline
masks the growth in revenues from H1 2021 to H1 2023.
The Group is focussed on building recurring revenues and diversifying its
revenue streams. This will take time.
State launches will continue to create profitable spikes in revenue,
particularly when the larger states (e.g. California, Texas) legalise online
sports betting at some point in the future.
The return to growth of our premium European brands will now provide a solid
platform for the business, while the exit from non-core activities removes
distraction, enabling resources to be focussed on further growth in core
verticals of sport and gaming.
David King
Chief Executive Officer
28 September 2023
Chief Financial Officer Review
Financial Highlights
The business has delivered continuing operations revenue of $28.8 million,
with adjusted EBITDA from continuing operations down 42% to $6.9 million.
Operating profit improved by 25% to $6.0 million and profit for the period
increased from $0.5 million to $4.7 million.
Cash balances reduced from $10.8 million to $7.4 million after generated cash
from continuing operations of the Group, capital expenditure, acquisition
payments, historical tax payments and receipts for assets disposed of during
the period.
Continuing operations (1)
H1 2023 H1 2022 Change 2023 vs 2022
Revenue ($'m) 28.8 43.3 (33)%
Gross profit ($'m) 14.9 22.2 (33)%
Operating profit ($'m) 6.0 4.8 25%
Adjusted EBITDA ($'m) 6.9 11.9 (42)%
Adjusted EBITDA margin (%) 24% 27% (3)% pts
Statutory profit for the period ($'m) 4.7 0.5 840%
Basic earnings per share ($) 0.023 0.020 15%
( )
(1) Defined as total Group financial performance less discontinued operations.
For H1 2023, the Group classified the Personal Finance and Blueclaw verticals
as discontinued.
Continuing Operations Revenue
Revenue from continuing operations for H1 2023 was $28.8 million (H1 2022:
$43.3 million), a 33% decline compared to the previous financial period. The
decline in revenues was driven by the North America Sports vertical. Both our
owned sites and our Media Partners declined as a result of the scale of new
state launches in H1 2022 (New York, Louisiana and Ontario) which were
significantly larger in population size against state launches in H1 2023
(Ohio and Massachusetts) driving higher revenues in the prior period. In
Europe, we continued to rebuild our sites, driving new customer acquisition
and creating new tail revenues. Total Europe revenues delivered growth of 3%.
We continued to grow new customer volumes with Real Money Players from core
websites (including Media Partners) of 80,000 in H1 2023 (H1 2022: 116,000), a
decrease of 31% period-on-period also impacted by state launches.
The Group's operations are reported on the basis of two core operating
verticals, Sports and Gaming (Casino and Bingo), and two geographies, North
America and Europe. The Group has excluded the sub-affliliate business from
prior period comparatives for all the following revenue tables.
Revenue split by type
H1 2023 H1 2022 Change 2023 vs 2022 (%)
($m) ($m)
CPA 16.4 28.5 (42)%
Revenue share / hybrid and other (2) 12.4 13.9 (11%)
Total 28.8 42.4 (32)%
(2) Other defined as Fixed Deals, Sponsorship Deals, Display Advertising
The US market has continued largely as a CPA led market whereas the Europe
market continues to operate with a mixture of fixed, hybrid and revenue share
deals. As a result, CPA revenues accounted for 57% of core revenues declining
from 67% in the prior period. Revenue share has increased to 43% of total
revenue due to the overall decline in US revenues as a percentage of total
revenues. As the US market continues to develop, we have started to see some
hybrid and revenue share deals offered and expect this to grow as a proportion
of revenues over time.
Revenue split by category (3)
H1 2023 H1 2022 Change 2023 vs 2022 (%)
($m) ($m)
Sport (4) 21.4 34.0 (37)%
Gaming 7.4 8.4 (14)%
Total 28.8 42.4 (32)%
(3) H1 2022 excludes revenue from the sub-affiliate network.
(4) Includes the North America Sports, Media Partnerships and Europe Sports
verticals.
( )
In H1 2023, 74% of revenues came from Sport in line with the Group's focus on
being sports led in the US, while also rebuilding its Europe casino assets and
launching a new casino brand in the US.
Revenue split by geography
H1 2023 H1 2022 Change 2023 vs 2022 (%)
($m) ($m)
North America (Sport) 16.2 30.2 (46)%
Europe (Sport) 5.2 3.8 37%
Sport 21.4 34.0 (37)%
North America (Gaming) 0.4 0.4 0%
Europe (Gaming) 7.0 8.0 (13)%
Gaming 7.4 8.4 (12)%
Sport revenues decreased by 37% period-on-period to $21.4 million (H1 2022:
$34.0 million) as a result of North America Sports revenues reducing with
smaller state launches period-on-period.
Europe Sports revenues improved to $5.2 million in H1 2023 (H1 2022: $3.8
million). In Europe, our primary site Freebets.com grew by 37%
period-on-period. Europe Sports includes the continuing sub-affiliate network
which has been significantly rationalized during the period.
Gaming revenues declined by 12% to $7.4 million (H1 2022: $8.4 million) as
tail revenues declined in Europe gaming markets against the prior period. Our
marquee brands Nettikasinot and WhichBingo grew by 5% and 38% respectively in
H1 2023, period-on-period. Europe remains the main Gaming region for the
Group, with revenues of $7.0 million (H1 2022: $8.0 million), accounting for
more than 90% of Gaming revenue in both H1 2023 and H1 2022.
Our US Gaming revenues are driven by gaming pages provided on our Sports
websites, in particular Crossing Broad. US Gaming revenues were flat
period-on-period at $0.4 million (H1 2022: $0.4 million).
Revenue split by Partnership and owned and operated ("O&O")
H1 2023 H1 2022 Change 2023 vs 2022 (%)
($m) ($m)
North America Partnership 12.2 20.5 (40)%
Total Partnership 12.2 20.5 (40)%
North America O&O 4.4 10.1 (56)%
Europe O&O 12.2 11.8 3%
Total O&O 16.6 21.9 (27)%
Total revenue 28.8 42.4 (32)%
Revenue from the North America region decreased by 45% to $16.6 million (H1
2022: $30.6 million) and accounted for 58% of the Group continuing revenues
(H1 2022: 72%). Media Partnership revenue was down 40% to $12.2 million (H1
2022: $20.5 million). During 2022, we signed partnership agreements with new
partners Cleveland.com and Masslive.com to support the state launches in Ohio
and Massachusetts.
Revenue from the Europe region improved by 3% to $12.2 million (H1 2022: $11.8
million). Tail revenues in casino declined period-on-period relating to closed
websites, offset by growth in new RMPs revenues in both sports and casino.
Gross profit (5) and gross margin
H1 2023 H1 2022 Change 2023 vs 2022 (%)
($m) ($m)
Gross profit from continuing operations ($'m) 14.9 22.2 (33)%
Gross profit margin (%) 48% 51% (3) % pts
( )
(4) Gross profit is calculated as revenue less the costs associated with
generating revenue. Cost of revenue includes direct costs, marketing costs,
Media Partnership revenue share costs, and staff costs. Note, these costs are
part of operating, and sales and marketing expenses as defined in the
consolidated financial statements.
The Group's gross profit from continuing operations for H1 2023 was down 33%
to $14.9 million, with a gross margin of 48% (H1 2022: $22.2 million, 51%
gross margin). The 3% reduction in gross margin period-on-period was largely
due to a decline in North America gross margin which reduced from 48% to 31%,
offset by improvements in Europe Sports and Europe Gaming to 70% and 76%
respectively. Revenue shares payments to Media Partners, which form part of
the reported sales and marketing expenses, were $8.1 million in H1 2023 (H1
2022: $12.4 million).
Earnings
The Group recognised an operating profit from continuing operations of $6.0
million (H1 2022: $4.8 million) and EBITDA from continuing operations of $9.5
million (H1 2022: $8.4 million).
EBITDA from continuing operations included items which affect comparability
and so, the Group excludes these items from its Adjusted EBITDA metrics. These
are detailed below:
Reconciliation of operating profit for continuing operations to Adjusted
EBITDA
H1 2023 H1 2022 Change 2023 vs 2022 (%)
($m) ($m)
Operating profit from continuing operations 6.0 4.8 25%
Depreciation and Amortisation 3.5 3.6
EBITDA from continuing operations ($'m) 9.5 8.4 13%
Share-based payments 0.4 0.5
Impairment reversal (4.0) -
Reorganisation costs 1.0 3.0
Adjusted EBITDA from continuing operations ($'m) 6.9 11.9 (42)%
Adjusted EBITDA margin from continuing operations 24% 27% (3) % pts
Adjustments to earnings
The Group incurred $0.4 million of share-based payment charges (H1 2022: $0.5
million).
Due to the agreement for the sale of the Europe Gaming assets, the Group
reversed $4.0 million of previous impairment charges to reflect the
recoverable amount for those assets.
In addition, the Group incurred $1.0 million of reorganisation costs in H1
2023 (H1 2022: $3.0 million) relating to the continuation of the Group's
restructuring plan and integration and other costs activity relating to prior
period acquisitions.
Adjusting for these one-off items:
· Adjusted EBITDA from continuing operations was $6.9 million (H1 2022:
$11.9 million), with a margin of 24% (H1 2022: 27%).
· Group adjusted EBITDA including Personal Finance and Blueclaw was
$6.5 million (H1 2022: $10.6 million).
The Group completed the sale of Personal Finance assets and the restructuring
of non-core activities in H1 2023 removing marginal and loss-making activity,
while allowing resources to be focused on the core business.
Sales and marketing costs
Direct costs associated with our revenue streams decreased to $10.6 million
from $15.5million. This includes the revenue shares payments to our Media
Partners in the US amounting to $8.1 million (H1 2022: $12.4 million).
Excluding revenue shares payments to Media Partners, sales and marketing costs
were $2.5 million (H1 2022: $3.1 million), a decrease of 19%. These costs
relate largely to content and SEO expenses.
Operating costs
Operating costs of $12.7 million include $1.0 million of reorganisation costs
and $0.4 million of share-based payment charges (H1 2022: $19.4 million
including $3.0 million of reorganisation costs and $0.5 million of share-based
payment charges), include staff costs, technology investment and other
operating costs.
Staff costs
Staff costs from continuing operations was $8.0 million (H1 2022: $11.3
million). The period-on-period reduction related to moving activities from
Israel, and recruiting new staff predominantly in the UK, Europe and the US.
In addition, the restructuring program removed a management layer and closed
non-core activities during 2022 and early 2023. This has also been reflected
in the reduction in total Group employee numbers (including Personal Finance)
to 167 from 193.
Technology investment
The Group has continued to invest in its technology in H1 2023, incurring $1.6
million of operating costs in this area (H1 2022: $2.8 million). The Group
upgraded its site infrastructure in 2022 and continues to replace legacy
technology for data platforms and finance billing systems.
Other operating costs
Other operating costs were $3.1 million (H1 2022: $5.3 million). These include
all other operating costs including administrative expenses, professional
service costs and redundancy costs.
Earnings per share (EPS)
H1 2023 H1 2022 Change 2023 vs 2022 (%)
($m) ($m)
Basic and diluted EPS from continuing operations ($) 0.023 0.020 15%
Adjusted basic and diluted EPS ($) 0.018 0.002 800%
Basic and diluted EPS remained the same (H1 2022: same) due to the significant
number of weighted average number of shares. In H1 2023, the Group recognised
a basic and diluted EPS from continuing operations of $0.023 (H1 2022:
$0.020).
Including the discontinued operations of Personal Finance (before it was sold)
and Blueclaw, the Group recognised an earnings per share of $0.018 (H1 2022:
$0.002).
Finance costs
Net financial income amounted to $0.2 million credit (H1 2022: $1.7 million
cost). This includes a $0.3 million foreign exchange gain due to
re-translation of monetary balances to USD, the presentational currency of the
Group (H1 2022: $1.5 million loss). Excluding this forex impact, net financial
costs were $0.1 million (H1 2022: $0.2 million) relating to bank charges and
lease finance costs.
The Group does not hold any external debt financing as at 30 June 2023 (H1
2022: $Nil), but is currently exploring opportunities to introduce a revolving
credit facility for working capital purposes.
Tax
The Group has a tax-presence in the regions where the Group is incorporated,
which are Jersey (where the parent company is incorporated), UK, US, Cyprus,
Canada and Israel. The Group structure consists of a UK branch with a shared
service centre in Cyprus, both of which support the intellectual property
based in Israel and Cyprus and the growing operations in the US.
The Group recognised a tax charge of $0.6 million in H1 2023 for its
continuing operations (H1 2022: $2.2 million credit). A deferred tax credit of
$3.2 million was released for the impairment of the Personal Finance assets in
discontinued operations.
The Group recognised an income tax provision of $4.7 million (H1 2022: $7.7
million). The reduction in the income tax liability is due mainly to
settlements of historical agreements with local tax authorities. In H1 2023,
the Group paid $2.8 million to tax authorities in respect of the tax years
2016 to 2020 in the jurisdictions it operates (H1 2022: $0.9 million).
The Group understands the importance of the tax contribution we make, and we
have a tax strategy which supports this commitment. The Group is committed to
paying all of its taxes in full and on time, in all the jurisdictions in which
the Group operates.
Summary balance sheet and cash flow metrics
H1 2023 H1 2022 Change 2023 vs 2022 (%)
($m) ($m)
Free cash flow (6) ($'m) 0.5 6.1 (92)%
Cash from operations (7) ($'m) 3.2 9.6 (67)%
Normalised Capital expenditure (8) ($'m) 2.7 3.2 (9)%
Acquisition-related payments ($'m) 3.4 9.9 (66)%
(6) Defined as cash from operations excluding one-off tax payments or refunds,
less capital expenditure.
(7) Includes working capital and trading from discontinued operations.
(8) Defined as reported capex less acquisition-related capital expenditure.
Cash and working capital
Cash balances (including short-term deposits) at 30 June 2023 was $7.4 million
(FY 2022: $10.8 million). After adjustment for forex movements, overall cash
balances decreased due to acquisition-related payments and tax payments
detailed below.
The Group recognised free cash inflows of $0.5 million in H1 2023 after
adjusting for one-off cash items compared to an inflow of $6.1 million in H1
2022. The main driver of the reduction in free cash outflows related to a
decline in underlying trading and working capital outflows driven by lower
trade creditor balances. Cash flow from operating activities was $3.2 million
(H1 2022: $9.6 million).
Whilst the Group did not acquire any businesses in H1 2023, it continued to
invest in its assets, mainly in its domains and websites, spending $2.7
million on capital expenditure (H1 2022: $3.2 million).
The Group's acquisition program between Q4 2020 and 2021 resulted in it
committing to future acquisition and earn out payments as part of the
acquisition consideration, to be substantially funded from the Group's free
cashflow.
During H1 2023, the Group paid out $3.4 million of deferred acquisition and
earnout payments (H1 2022: $9.9 million), including settling all existing
obligations with the previous owners of Blueclaw Media Ltd. This final
settlement was paid in January 2023 and the Group has no further obligations
in this matter.
In H2 2023, the Group expects to make a further $4.0 million of deferred
consideration payments and in 2024, the Group expects a further $7.5 million
dependent on whether earn-out targets are met.
The cash flows above included the cash flow from operations and working
capital balances for the Personal Finance and Blueclaw businesses.
Caroline Ackroyd
Chief Financial Officer
28 September 2023
Glossary of financial terms
Although the Group is not subject to the Guidelines on Alternative Performance
Measures issued by the European Securities and Markets Authority, we have
provided additional information on the metrics used by the Group. The
Directors use the metrics listed below as they are critical to understanding
the financial performance and financial health of the Group. As they are not
defined by IFRS, they may not be directly comparable with other companies who
use similar measures.
Profit measures
Metric Closest equivalent IFRS measure Definition
Continuing operations revenue Revenue Group revenue less discontinued operations revenue.
For H1 2023, the Group classified the Personal Finance and Blueclaw verticals
as discontinued.
Adjusted EBITDA Operating Profit (1) Earnings before Interest, Taxes, Depreciation and Amortisation, and excluding
any share-based payments, impairment and reorganisation costs.
Adjusted EBITDA from continuing operations Operating Profit (1) As above but excluding discontinued operations
Adjusted Basic and diluted earnings per share from continuing operations Basic and diluted earnings per share Based on profit for the period from continuing operations.
( )
(1) Operating profit is not defined under IFRS. However, it is a generally
accepted profit measure.
Cash flow measures
Metric Closest equivalent IFRS measure Definition
Free cash flow No direct equivalent Cash from operations excluding one-off tax payments or refunds, excluding
acquisition costs, less capital expenditure.
Normalised capital expenditure No direct equivalent Reported capital expenditure excluding acquisition-related capital
expenditure.
( )
Consolidated statement of profit or loss and other comprehensive income
Six months ended 30 June 2023 Six months ended 30 June 2022 Year ended 31 December 2022
$000 $000 $000
Unaudited Unaudited Audited
Continuing operations Notes
Revenue 1 3a 28,792 43,275 70,935
Expenses:
Operating (12,659) (19,353) (34,629)
Sales and marketing (10,625) (15,505) (22,824)
Depreciation and amortisation (3,499) (3,600) (7,313)
Impairment reversal 3d 4,000 - -
Operating profit 6,009 4,817 6,169
Finance expenses (152) (1,733) (1,751)
Finance income 309 2 5
Other income 682 33 566
Profit before taxes on income 6,848 3,119 4,989
Tax (charge) / credit (605) 2,198 (1,604)
Profit for the period from continuing operations 6,243 5,317 3,385
Discontinued operations
Loss for the period from discontinued operations (net of tax) (1,516) (4,813) (12,824)
3b
Net profit / (loss) for the period attributable to the owners of the Company 4,727 504 (9,439)
Other comprehensive expenses that may be reclassified to profit or loss in
subsequent periods:
Impairment of equity investment 3e (242) - -
Exchange differences on translation of foreign operations 130 (377) (372)
Other comprehensive expenses (112) (377) (372)
Total comprehensive income / (loss) for the period attributable to the owners 4,615 127 (9,811)
of the Company
Earnings / (loss) per share attributable to the owners of the Company (in $):
Basic and diluted earnings per share from continuing operations 0.023 0.020 0.013
Basic and diluted earnings / (loss) per share 0.018 0.002 (0.036)
1 Total Group revenue including discontinued operations is $29,423,000 (30
June 2022: $44,528,000; 31 December 2022: $73,738,000). See Note 3a for
further details.
The accompanying notes are an integral part of the consolidated financial
statements.
Consolidated statement of financial position
30 June 30 June 31 December 2022
2023 2022
Notes $000 $000 $000
Unaudited Unaudited Audited
Assets
Non-current assets
Intangible assets and goodwill 3d 112,999 118,955 108,581
Property and equipment 2,024 2,616 2,277
Other financial assets 3e - 221 242
Long-term deposits 76 75 75
115,099 121,867 111,175
Current assets
Short-term deposits 103 1,601 342
Trade receivables 3,611 5,787 5,699
Other receivables 6,803 3,863 3,454
Cash and cash equivalents 7,331 16,131 10,411
17,848 27,382 19,906
Total assets 132,947 149,249 131,081
Equity and liabilities
Equity
Share capital 1 - - -
Share premium 122,071 122,071 122,071
Capital reserve 828 146 500
Accumulated deficit (17,581) (12,365) (22,308)
Total equity 105,318 109,852 100,263
Non-current liabilities
Lease liabilities 1,008 1,202 1,177
Deferred taxes 2,919 1,338 36
Deferred consideration 3,919 7,795 3,884
Contingent consideration - 401 -
7,846 10,736 5,097
Current liabilities
Trade payables 1,452 2,540 3,655
Deferred consideration 3,992 8,897 3,969
Consideration payable on intangible assets - 3,000 3,000
Other liabilities and accounts payables 9,337 6,162 10,241
Income tax provision 4,658 7,725 4,505
Current maturities of lease liabilities 344 337 351
19,783 28,661 25,721
Total liabilities 27,629 39,397 30,818
Total equity and liabilities 132,947 149,249 131,081
1 Less than $1,000.
The accompanying notes are an integral part of the consolidated financial
statements. The financial statements were approved by the Board of Directors
on 27 September 2023 and were signed on its behalf by:
David King Caroline Ackroyd
Chief Executive Officer Chief Financial Officer
Consolidated statement of changes in equity
Share Share premium Capital reserve from share-based transactions Capital reserve from the translation of a foreign operation Other capital reserves (4) Accumulated deficit Total
capital (1) equity
$000 $000 $000 $000 $000 $000 $000
As at 1 January 2023 - 122,071 3,514 (388) (2,626) (22,308) 100,263
Profit for the period - - - - - 4,727 4,727
Other comprehensive income / (expense) - - - 130 (242) - (112)
Total comprehensive income - - - 130 (242) 4,727 4,615
Cost of share-based payments - - 440 - - - 440
As at 30 June 2023 (2) - 122,071 3,954 (258) (2,868) (17,581) 105,318
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 - - - (377) - 504 127
Cost of share-based payments - - 509 - - - 509
As at 30 June 2022 (2) - 122,071 3,165 (393) (2,626) (12,365) 109,852
As at 1 January 2022 - 122,071 2,656 (16) (2,626) (12,869) 109,216
Loss for the year - - - - - (9,439) (9,439)
Other comprehensive expense - - - (372) - - (372)
Total comprehensive loss - - - (372) - (9,439) (9,811)
Cost of share-based payments - - 858 - - - 858
As at 31 December 2022 (3) - 122,071 3,514 (388) (2,626) (22,308) 100,263
1 Less than $1,000.
2 Unaudited.
3 Audited.
4 Other capital reserves relate to transactions with non-controlling interests
and financial assets at fair value through other comprehensive income.
The accompanying notes are an integral part of the consolidated financial
statements.
Consolidated statement of cash flows
Six months ended 30 June 2023 Six months ended 30 June 2022 Year ended 31 December 2022
$000 $000 $000
Notes Unaudited Unaudited Audited
Cash flows from operating activities
Cash generated from operations 3g 3,202 9,622 14,647
Interest paid - (257) (310)
Interest received 5 - 5
Income tax paid (2,767) - (876)
Income tax received - 1,684 2,287
Net cash inflow from operating activities 440 11,049 15,753
Cash flows from investing activities
Proceeds on disposal of property and equipment - 19 83
Proceeds from sale of discontinued operation 3c 2,050 - -
Purchase of property and equipment (15) (331) (62)
Purchase of and additions to systems, software and licences (2,656) (2,892) (6,701)
Acquisition of and additions to domains, websites and other intangible assets - (3,000) (3,000)
Short-term and long-term deposits (net) 238 565 1,824
Net cash outflow from investing activities (383) (5,639) (7,856)
Cash flows from financing activities
Payment of principal portion of lease liabilities (142) (246) (401)
Payment of deferred consideration (371) (6,853) (15,371)
Payment of consideration on intangible assets (3,000) (3,000) (3,000)
Net cash outflow from financing activities (3,513) (10,099) (18,772)
Net decrease in cash and cash equivalents (3,456) (4,689) (10,875)
Net foreign exchange difference 376 (1,617) (1,151)
Cash and cash equivalents at 1 January 10,411 22,437 22,437
Cash and cash equivalents at 30 June / 31 December 7,331 16,131 10,411
The accompanying notes are an integral part of the consolidated financial
statements.
Notes to the consolidated financial statements
1. General
a. General information
XLMedia PLC ("the Group") is a global digital media company listed on the
London Stock Exchange Alternative Investment Market ("AIM"). The Group was
incorporated in Jersey and its registered office is IFC 5, St. Helier, JE1
1ST, Jersey (registration number 114467).
The financial information presented in this report for the six months ended 30
June 2023 ("interim condensed consolidated financial statements") do not
comprise statutory accounts as defined by the Companies (Jersey) Law 1991 and
does not include all of the information and disclosures required for full
financial statements.
The comparative financial information contained in the interim condensed
consolidated financial statements in respect of the year ended 31 December
2022 has been extracted from the Group's annual financial statements ("annual
consolidated financial statements"). The report of the auditors on those
annual consolidated financial statements was unqualified. Copies of those
annual consolidated financial statements are available at the Company's
registered office is IFC 5, St. Helier, JE1 1ST, Jersey and can also be
downloaded or viewed via the Group's website.
These interim condensed consolidated financial statements are unaudited and
has not been reviewed by the Group's independent auditors, Kost Forer Gabbay
& Kasierer. This information was approved by the Board of Directors on 27
September 2023 and can be viewed via the Group's website www.xlmedia.com
b. Definitions
In these financial statements, the following terms will be used:
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 by IAS 24 'Related Party Disclosures'
Subsidiaries - Entities controlled (as defined in IFRS 10 'Consolidated Financial
Statements') by the Group and whose financial statements are consolidated into
the Group. For a list of the main subsidiaries, see Note 23 in the Group's
annual financial statements as of 31 December 2022
US - United States
UK - United Kingdom
USD/$ - U.S. dollar, all values are rounded to the nearest thousand ($000), except
when otherwise indicated
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 2023, and for the six months then ended. The interim condensed
consolidated financial statements have been prepared in accordance with IAS 34
'Interim Financial Reporting', as adopted by the European Union, and the AIM
Rules for Companies.
These interim consolidated financial statements should be read in conjunction
with the Group's annual consolidated financial statements for the year ended
31 December 2022, which were prepared in accordance with International
Financial Reporting Standards ("IFRS") adopted by the European Union, and
issued by the International Accounting Standards Board ("IASB"), in accordance
with the requirements of the Companies (Jersey) Law 1991.
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 2022.
Whilst several amendments apply for the first time in the six months ended 30
June 2023, they do not have an impact on the interim condensed consolidated
financial statements of the Group. The Group has not early adopted any
standard, interpretation or amendment that has been issued but is not yet
effective.
3. Supplementary information
a. 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 (including continuing and discontinued operations)
Six months ended 30 Six months ended 30 Year ended
31 December
June 2023 June 2022 2022
$000 $000 $000
Unaudited Unaudited Audited
North America 17,216 31,465 49,226
Europe 10,063 11,242 20,725
Rest of World 768 353 652
Total revenues from identified locations 28,047 43,060 70,603
Revenues from unidentified locations 1,376 1,468 3,135
29,423 44,528 73,738
3. Supplementary information continued
a. Revenue and operating segments continued
The table below shows the verticals which are defined as continuing operations
and discontinued operations are per IFRS 5 'Non-current Assets Held for Sale
and Discontinued Operations':
Revenues by vertical
Six months ended 30 June 2023 Six months ended 30 June 2022 Year ended 31 December 2022
$000 $000 $000
Unaudited Unaudited Audited
North America Sports 4,082 9,620 18,065
Media Partnerships 12,154 21,386 28,398
Gaming 7,359 8,403 15,602
Europe Sports 5,197 3,866 8,870
Revenue from continuing operations 28,792 43,275 70,935
Blueclaw - 421 870
Personal Finance 631 832 1,933
Revenue from discontinued operations 631 1,253 2,803
29,423 44,528 73,738
( )
b. Discontinued operations
For the six months ended 30 June 2023, the Group classified the Personal
Finance and the Blueclaw businesses as discontinued operations based on
strategic decisions. Revenue and expenses, and gains and losses relating to
the discontinuation of these activities are shown as a single line item on the
face of the statement of profit or loss as "Loss for the period from
discontinued operations (net of tax)", with the comparative figures being
restated as required by IFRS 5 'Non-current Assets Held for Sale and
Discontinued Operations'.
Profit or loss
The financial results of discontinued operations were as follows:
Six months ended 30 June 2023 Six months ended 30 June 2022 Year ended 31 December 2022
$000 $000 $000
Unaudited Unaudited Audited
Revenue 631 1,253 2,803
Expenses:
Operating (781) (1,916) (3,755)
Sales and marketing (234) (664) (1,219)
Impairment reversal / (charge) (see Note 3d) 2,050 (3,486) (13,835)
Profit / (loss) before taxes on income 1,666 (4,813) (16,006)
Tax (charge) / credit (3,182) - 3,182
Loss from discontinued operations (1,516) (4,813) (12,824)
3. Supplementary information continued
b. Discontinued operations continued
Prior to the sale of the Personal Finance business, the Group assessed the
recoverable amount of the assets and in accordance with IAS 36 'Impairment of
Assets', reversed previous impairment charges by $2,050,000, reflecting the
consideration received in the sale (see Note 3c).
Taxation from discontinued operations in the six months ended 30 June 2023
reflects the subsequent reversal of the deferred tax credit for the impairment
charge incurred in the year ended 31 December 2022 upon sale of the Personal
Finance business.
Cash flows
Six months ended 30 June 2023 Six months ended 30 June 2022 Year ended 31 December 2022
$000 $000 $000
Unaudited Unaudited Audited
Loss for the period (1,516) (4,813) (12,824)
Impairment (reversal) / charge (2,050) 3,486 13,835
Tax charge / (credit) 3,182 - (3,182)
Cash outflow from discontinued operations (384) (1,327) (2,171)
Cash flows from discontinued operations also include working capital balances
to support the Personal
Finance and Blueclaw businesses. These are immaterial for disclosure in both
the six months ended 30 June 2022 and in the year ended 31 December 2022.
c. Disposal of Personal Finance discontinued operation
On 15 December 2022, the Group announced the restructuring of the Personal
Finance business with a view to selling the Personal Finance assets. As
disclosed in Note 3b above, Personal Finance was disclosed as a discontinued
operation in the annual consolidated financial statements for the year ended
31 December 2022.
On 30 May 2023 and 6 June 2023, the Group disposed of the assets of the
Personal Finance business for total proceeds of $2,050,000. The disposal is
detailed below:
Six months ended 30
June 2023
$000
Unaudited
Consideration received 2,050
Costs of disposal (225)
Carrying value of net assets sold (2,050)
Loss on disposal after tax (225)
The disposal of the Personal Finance business incurred no tax payable. The
cash generated from the disposal of the Personal Finance business will be
utilised in the day-to-day operations of the wider business of the Group.
3. Supplementary information continued
d. Cash Generating Unit ("CGU") impairments
The Group tests goodwill and intangible assets with indefinite useful life for
impairment annually or when whenever events or changes in circumstances
indicate that the carrying amount is not recoverable. The Directors do not
believe there has been a trigger for an impairment review of the carrying
value of goodwill and intangible assets with indefinite useful lives during
the six months ended 30 June 2023. As such, the Group concluded that the
recoverable amount for each CGU is in excess of the carrying value recognised
in the statement of financial position.
The Group has also assessed its intangible assets with indefinite useful life
for any changes in the estimates used to determine the asset's recoverable
amount. For the assets in the Personal Finance disposal (see Note 3c) and the
three European Gaming domains and associated websites disposed of shortly
after the end of the reporting period end (see Note 3h), the Group deemed the
recoverable amount to be the consideration agreed with the third party buyers.
As such, $4,000,000 has been recognised as an impairment reversal within
continuing operations in the six months ended 30 June 2023 for the three
European Gaming domains and associated websites. For the Personal Finance
assets, as these relate to a discontinued operation, the impairment reversal
of $2,050,000 has been recognised within discontinued operations in the line
"Loss for the period from discontinued operations (net of tax)" in the six
months ended 30 June 2023.
e. Impairment of Other financial assets
On 28 February 2022, the Group converted a loan receivable from Xineoh
Technologies Inc. to shares giving the Group a 2.6% stake in ordinary shares
with no special rights. The Group elected to designate the equity investment
as at fair value through Other Comprehensive Income.
For the six months ended 30 June 2023, the Group has reviewed the financial
performance of Xineoh Technologies Inc. and have concluded that the carrying
value of $242,000 was fully impaired. This impairment charge has been
recognised in Other Comprehensive Income as "Impairment of equity investment".
f. Grant of Performance Stock Units
On 11 May 2023, the Group granted 6,850,000 of Performance Stock Units
("PSUs") under the XLMedia 2020 Global Share Incentive Plan (the "awards") to
the Executive Committee members, including the Executive Directors of the
Group. The awards represent 2.61% of the currently issued share capital of the
Group.
The awards will vest on the third anniversary of the grant date if and to the
extent that the performance target will be satisfied. The PSU award is a
contingent right to acquire shares for no consideration. It is subject to a
three-year performance period, with vesting subject to the achievement of
performance measured by reference to total shareholder return over the
performance period as compared to the FTSE AIM 100, followed by a two-year
holding period.
The following table specifies the inputs used for the fair value measurement
using the Monte Carlo simulation:
3. Supplementary information continued
f. Grant of Performance Stock Units continued
2023
May PSU
Weighted average fair values at the measurement date ($) 0.08
Shares granted 6,850,000
Expected volatility of the share price (%) 72.14
Risk-free interest rate (%) 3.56
Expected life of share options (years) 3
Weighted average share price (GBP) 0.1175
The total fair value was calculated at $650,000 at the grant date which will
be recognised on a straight line basis over the vesting period.
g. Cash generated from operations
Six months ended 30 June 2023 Six months ended 30 June 2022 Year ended 31 December 2022
$000 $000 $000
Unaudited Unaudited Audited
Profit / (loss) for the period 4,727 504 (9,439)
Adjustments to reconcile profit / (loss) for the period:
Depreciation and amortisation 3,499 3,600 7,313
Impairment reversal for continuing operations (4,000) - -
Impairment (reversal) / charge for discontinued operations (2,050) 3,486 13,835
Net finance expense 152 257 450
Loss on disposal of property and equipment - 227 157
Loss on disposal of intangible assets 225 - -
Other income (907) - -
Cost of share-based payments 440 509 858
Tax charge / (credit) from continuing operations 605 (2,198) 1,604
Tax charge / (credit) from discontinued operations 3,182 - (3,182)
Exchange differences on balances of cash and cash equivalents (309) 1,477 1,297
Working capital changes:
Decrease in trade receivables (1) 2,088 2,914 3,002
(Increase) / decrease in other receivables (1) (3,349) 598 2,665
(Decrease) / increase in trade payables (1) (2,203) 207 1,322
Increase / (decrease) in other liabilities and accounts payable (1) 1,102 (1,959) (5,235)
Cash generated from operations 3,202 9,622 14,647
Total working capital outflow (the sum of items marked 1 in the table above)
was $2,362,000
(30 June 2022: $1,760,000 inflow; 31 December 2022: $1,754,000 inflow).
3. Supplementary information continued
h. Subsequent events
Following IAS 10 'Events after the Balance Sheet Date', the Group continues to
disclose events that it considers material where the non-disclosure of which
could influence the economic decisions of users of the financial statements.
On 12 July 2023, the Group sold three European Gaming domains and associated
websites, casino.se, casino.gr, and casino.pt, for a total upfront cash
consideration of $4,000,000.
The Directors considered this transaction to be an adjusting post balance
sheet event for the six months ended 30 June 2023. Whilst the cash
consideration was not received in the reporting period, the consideration
agreed has been recognised as "Other receivables" and the recoverable amount
of the intangible assets relating to the transaction have been revalued to the
consideration agreed as this reflects the recoverable amount (see Note 3d for
more details).
The profit or loss on disposal of the assets will be recognised fully in the
consolidated financial statements for the year ended 31 December 2023.
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. END IR BIGDCLDDDGXRRecent news on XLMedia
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