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RNS Number : 1598G XLMedia PLC 30 September 2024
This announcement contains inside information for the purposes of Article 7 of
Regulation (EU) No 596/2014. Upon the publication of this announcement, this
information is now considered to be in the public domain.
30 September 2024
XLMedia PLC
("XLMedia" or the "Group" or the "Company" or the "Business")
Results for the six months ended 30 June 2024
XLMedia (AIM: XLM), a sports digital media company, announces its unaudited
interim results for the six months ended 30 June 2024 ("H1 2024").
During H1 2024, the Group underwent a significant change with the successful
sale of its Europe and Canada assets to Gambling.com Group Limited ("GAMB")
for a total consideration of up to $42.5 million. The Company received an
initial consideration payment of $20.0 million on 2 April 2024 and the second
payment of $10.0 million is due to be received shortly on 2 October 2024. An
initial return of capital to shareholders is anticipated in Q4 2024.
The Company remains focused on driving organic revenues in the North
America market and rightsizing the Group's remaining cost base while
continuing to explore opportunities to create shareholder value.
Highlights for H1 2024 (unaudited)
· Revenue from Continuing Business(1) in H1 of $10.4 million
· Revenue from Discontinuing Business(2) in Q1 of $5.2 million
· Continuing Business Adjusted EBITDA(3) of $0.9 million
· Completed on the sale of its Europe and Canada assets to GAMB
and received initial payment of $20.0 million. Second payment of $10.0 million
to be received on 2 October 2024 and up to $12.5 million on 2 April 2025
· Paid the final payment in March 2024 of $3.5 million related to the
acquisition of CBWG
· Cash balances (including short-term deposits) of $19.4 million as
at 30 June 2024
(1) The Group classifies the remaining business which consists of the North
America business and a small residual income from the legacy network business
as continuing.
(2) The Group classifies the Europe and Canada assets sold to GAMB on 1 April
2024 as discontinued.
(3) Adjusted EBITDA defined as earnings before Interest, Taxes, Depreciation
and Amortisation, and excluding any share-based payments, impairment, final
exceptional minimum guarantee costs, Group rightsizing costs and remaining
costs associated with the discontinued business prior to their removal.
Financial Summary
For H1 2024 reporting, the Discontinued Business revenue reflects only the
first three months of trading in 2024 prior to the sale of
its Europe and Canada assets (the "Transaction"), versus H1 2023 which
includes revenue for the full six months in the period.
Revenue H1 2024
H1 2024 Revenue ($m) H1 2023 Revenue ($m)
Group Total Revenue 15.6 29.4
Discontinued Business (5.2) (12.5)
Continuing Business 10.4 16.9
North America 9.8 16.2
Other 0.6 0.7
Continuing Business Total 10.4 16.9
· The Continuing Business contributed unaudited revenue of $10.4
million in H1 2024, in line with management expectations.
· H1 2023 saw the launch of Ohio in January during the NFL season
while H1 2024 saw the launch of North Carolina in March after the NFL season
ended. This timing difference accounts for the bulk of the period-on-period
variance.
· From April through June, trading in H1 2024 tracked ahead of H1
2023.
· The Discontinued Business contributed unaudited revenue of $5.2
million.
· The Group completed the sale on 1 April 2024 of
its Europe and Canada assets to GAMB for a fixed consideration of $37.5
million ("Fixed Consideration") and a potential earnout consideration of up
to a further $5.0 million based on revenue performance.
· Following the Transaction, the Continuing Business consists of the
North America business and a small residual income ("Other") from Europe,
principally from the legacy network business that was not sold to GAMB.
· The Europe and Canada assets which have been disposed of and
associated costs will be reported against the Discontinued Business line until
the remaining costs are removed in Q4 2024.
Continuing Business Operating Summary
The Group's strategy remains focused on driving organic revenues in
the North America market while continuing to prioritise rightsizing the
Group's remaining cost base, allowing it to enter 2025 with an infrastructure
commensurate with the requirements of the North America business.
With no further state launches confirmed for the remainder of 2024, the Group
is focused on maximising revenues from the new NFL season and optimising
performance in existing legalised online sports betting and gaming states. The
Group currently operates in 21 states with legalised online sports betting and
in four states with legalised online casino wagering.
The Group continues to diversify revenue with Daily Fantasy Sports ("DFS"),
paid media, advertising and sponsorship, as well as building its Gaming
presence for longer term growth. The North America business saw c.48,000 real
money players ("RMPs") in H1 2024, an increase of 4% (c.46,000, H1 2023),
including benefitting from the successful launch of paid campaigns and the
expansion of DFS.
Sale of Europe and Canada Assets
The Board is committed to providing value to shareholders of XLMedia and
therefore has continually sought to evaluate strategic options available to
the Company.
The Board was aware that the value of its individual businesses was not being
fully reflected in its share price, and therefore it was likely that the
strategic sale of certain assets would result in delivering the most value to
shareholders. Therefore, on 21 March 2024 the Company agreed the sale of the
Europe and Canada assets to GAMB for a total consideration up to $42.5
million.
Cash
The initial consideration payment of $20.0 million was received on 2 April
2024 with the next payment of $10.0 million due in October 2024. The Board is
pleased to have been able to realise substantial value from the Transaction
and, as previously announced, the Company anticipates an initial return of
capital to shareholders from the net sale proceeds in Q4 2024, further details
of which will be announced in due course.
Cash at the end of June was $19.4 million after payment of $3.5 million in
respect of the final tranche of the CBWG acquisition and payment of deal
related costs and other transition costs of approximately $2.0 million. The
Group made its final deferred acquisition payment of $4.0 million in respect
of the acquisition of Saturday Down South in September 2024. Following this,
there are no outstanding deferred acquisition payments due.
The Group continues to incur transition and rightsizing costs including the
costs of the Discontinued Business.
Operations
The Group continues to prioritise resource management and cost reductions. As
at 30 June 2024, the Group had 78 employees (H1 2023: 167 employees)
reflecting the employees transferring with the assets as part of the
Transaction and as part of the rightsizing of the cost base.
In the months following the Google actions in May 2024 which reduced
visibility of some publishers' sports betting and gaming content, the Group
has seen activities stabilise with Media Partners and Owned and Operated
("O&O") sites continuing to gain search engine rankings traction. In the
short term, some media partner activities were temporarily halted, and have
subsequently been reactivated in advance of the NFL season. The Media
Partnership Business ("MPB") continues to be a priority for the business.
In January 2024, Caroline Ackroyd, the Group's Chief Financial Officer,
resigned from the Group to pursue other interests. Her final day with the
Company was 31 March 2024. Karen Tyrrell has taken the role of Interim Chief
Operating Officer, including responsibility for finance.
Outlook
Following the sale of the Europe and Canada assets, continuing revenues from
the North American business for the period April to August have performed
ahead of the prior year.
The usual acceleration in new customer acquisition at the start of NFL season
in September has been slower than anticipated. However, further acquisition
budgets are expected to be released by some operators.
Accordingly, the Board remain of the view that Adjusted EBITDA for the
Continuing Business, excluding revenue and costs of the Discontinued Business,
remains broadly in line with market expectations.
XLMedia's Board will continue to execute the strategy whilst also continuing
to evaluate other ways to create shareholder value and, in the meantime,
expects to return surplus cash to shareholders.
David King, Chief Executive Officer of XLMedia, commented:
"We are pleased to report the Business traded ahead of last year during April
to August and we are now focused on maximising the opportunity within the
current market conditions."
Financial Statements and Notes to the Accounts
For access to the Financial Statements and Notes to the Accounts for the six
months ended 30 June 2024, please click on the following link:
http://www.rns-pdf.londonstockexchange.com/rns/1598G_1-2024-9-29.pdf
(http://www.rns-pdf.londonstockexchange.com/rns/1598G_1-2024-9-29.pdf)
Investor Presentation Webcast
A webcast of the presentation will be made available on the Company's website
at: https://www.xlmedia.com/investors/webcasts/
(https://www.xlmedia.com/investors/webcasts/)
For further information, please contact:
XLMedia plc ir@xlmedia.com
David King, Chief Executive Officer via Vigo Consulting
www.xlmedia.com (http://www.xlmedia.com)
Vigo Consulting Tel: 020 7390 0233
Jeremy Garcia / Fiona Hetherington / Kendall Hill
www.vigoconsulting.com (http://www.vigoconsulting.com)
Cavendish Capital Markets Limited (Nomad and Broker) Tel: 020 7220 0500
Giles Balleny / Callum Davidson (Corporate Finance)
Charlie Combe (Corporate Broking)
www.cavendish.com (http://www.cavendish.com)
About XLMedia
XLMedia (AIM: XLM) is a sports 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 in regulated markets which are
designed to reach passionate people with the right content at the right time.
Forward Looking Statements
This announcement contains forward-looking statements. Forward-looking
statements are neither historical facts nor assurances of future performance.
They are based only on our current beliefs, expectations and assumptions
regarding the future of our business, future plans and strategies,
projections, anticipated events and trends, the economy and other future
conditions. Because forward-looking statements relate to the future, they are
subject to inherent uncertainties, risks and changes in circumstances that are
difficult to predict and many of which are outside of our control. Our actual
results and financial condition may differ materially from those indicated in
the forward-looking statements. Therefore, you should not rely on any of these
forward-looking statements.
Chief Executive Review
Introduction
We were pleased to be able to realise significant shareholder value from the
sale of the Europe and Canada assets to GAMB for $37.5 million with an earnout
of up to a further $5.0 million and expect an initial return of capital to
shareholders in Q4 2024.
The Group is now focused on the North America market, primarily in online
sports betting with a small online casino revenue stream. We continue to
believe the future of the Business is best served by owning our own websites
while partnering with selected high-quality partners, providing both a local
and national footprint.
The Board will, as always, continue to explore ways to generate and maximise
shareholder value.
The Market
Very different to the European market, the US market comprised of a relatively
small number of gambling operators. Since the repeal of the Professional and
Amateur Sports Protection Act by the Supreme Court in 2018, online sports
betting has been legalised in 30 states and we work with operators in 21 of
those states.
Our income is primarily delivered through cost-per-acquisition ("CPA") fees
where we introduce new, verified customers to operators and are paid an
initial one-off payment. The US market currently remains a predominantly
CPA-led market with limited opportunity to participate in revenue share or
hybrid models which, while reducing the initial up front compensation to the
Business, provide an ongoing percentage of the net revenue from the acquired
customer over the life of that customer. The limitation is attributed to both
operator desire to adopt this model in certain states and state specific
regulation prohibiting revenue share compensation leaving us unable to fully
participate in the betting activity at this time.
The betting market is currently buoyant, yet the stimulus to attract new
customers has slowed down in 2024. The launch of online sports betting in
North Carolina after the NFL season in March, like the launch of Massachusetts
in March 2023, saw much lower levels of initial customer acquisition versus
what an in NLF season state launch might attract.
Historically, the start of the new NFL season sees a surge in activity from
both operators and customers looking for new accounts and offers. This year
new patterns are emerging, and while it is too early to assess, following a
summer in which performance exceeded prior year, the new NFL season is
developing more slowly.
Looking beyond the very near term, there are still 20 states yet to launch
online sports betting, and 43 states yet to launch online gaming. This should
provide an attractive opportunity for the Group, albeit the exact timing is
currently not known.
Update on Sale of Europe and Canada Assets
On 21 March 2024, the Company announced the sale of its Europe and Canda
Assets for a total consideration of up to $42.5 million. To date, it has
received $20.0 million from this transaction with a further $10.0 million due
under the terms of the sale agreement on 2 October 2024 and a final payment of
$7.5 million together with any earnout consideration (up to a maximum of $5.0
million) due to be paid on 2 April 2025. There can be no certainty that the
Earnout Consideration will be realised, either in full or in part, and at this
point is not practical to estimate the level of earnout that may be achieved.
The Company agreed to support the migration of the Assets to GAMB over the
period of six-months following the completion of the Transaction, ending in
September 2024. The Company has incurred transition costs of some $2.7million
of which $2.0 million are classified as "costs to dispose" including the
migration of technology, reorganisation and support costs directly related to
the Europe business, and transaction costs. The Group retained cash, debtors
and liabilities as at the point of completion of the Transaction.
Strategy
We continue to believe the future of the business is best served by owning our
own websites while partnering with selected high-quality partners, providing
both a local and national footprint.
We will ensure that we are able to participate in new states as they legalise
online sports betting and will continue to develop our casino presence ready
for the legalisation of online gaming when that happens.
Revenue diversification will continue following our launch into Daily Fantasy
Sport and paid media while seeking to expand our sponsorship and advertising
opportunities.
And, absent the need to serve the sold Europe Business, we are downsizing our
corporate cost base commensurate with the North American business, while
focussing technology exclusively on the needs of our O&O assets and our
MPB.
North America Business
The Group made a solid start to H1 2024 in North America. North
Carolina launched online sports betting on 11 March 2024 after the NFL
season, delivering strong initial revenues but lower than previous in-season
launches. The Company saw good growth in customer registrations and will seek
to drive additional revenues during the new NFL season. North America revenues
in H1 2024 were below the same period in 2023, primarily due to the impact of
the launch of online sports betting in Ohio in January 2023 during the NFL
season.
Following Google actions in May 2024 which reduced visibility of some
publishers' sports betting and gaming content, the Group worked closely with
all its Media Partners, the majority of which, were not negatively affected by
the actions, to prepare for the new season. All partners were live for the
launch of the new NFL season.
North America Opportunity
The Group currently operates in 21 states with legalised online sports
betting. There are 30 states that are live, legal and 20 states yet to
legalise online sports betting, including California and Texas, the two most
populous states. The Group does not participate in nine of these states due to
limited affiliate opportunity e.g., single operator monopoly (Florida) or
in-person registration requirements (Nevada). Of those states that are not yet
live, legal for online sports betting, three are in active ballot discussions
(Missouri, Mississippi and Oklahoma) as at August 2024. In addition, the Group
currently operates in four states with legalised online casino wagering. There
are only seven states that are live, legal and 43 yet to legalise online
casino. While only a small portion of the North America revenue is attributed
to online casino, it presents an opportunity in the long-term which the Group
seeks to address over time with its recently created online casino website.
Continuing Business Organisation and Operations Update
The Group is focused on fulfilling the transition services agreement to
support GAMB and rightsizing the cost base to support the North American
business.
The total cost base [excluding Media Partner revenue share] has been reduced
by 9% period-on-period driven by:
· Headcount reduced to 78 (FY 2023: 146) driven by Europe asset
sale and rightsizing of business.
· Reductions in technology, content and other costs.
As part of the rightsizing, all US sites will move to a single CMS environment
while certain Group-wide systems are being replaced with a fit-for-purpose
single solution. The overall impact has allowed for back-office tech to be
streamlined reducing the manual labour needed to track revenue and increased
operational security. Capital expenditure was reduced to $0.9 million in the
period down from $2.7 million in H1 2023 reflecting the opportunity to
simplify the technology infrastructure.
In 2024, the Group cleared the final $7.5 million historical acquisition
liabilities with $3.5 million paid in March 2024 for the final earn out for
CBWG and $4.0 million paid in September 2024 for the final deferred
acquisition payment for Saturday Football Inc. The Group has no further
acquisition liabilities.
Summary
The Group is focused on ensuring it enters 2025 with both staffing levels and
infrastructure commensurate with the existing North American business while
ensuring continued high-quality delivery to customers and media partners, with
a view to maximising business performance in the prevailing market
conditions.
We look forward to preparing for further state launches when they are
announced.
David King
Chief Executive Officer
30 September 2024
Financial Review
Financial Summary
Following the sale of the Europe and Canada assets, the remaining business
("Continuing Business") consists of the North America business and a small
residual income ("Other") from Europe, principally from the legacy network
business that was not sold to GAMB. The Europe and Canada assets which have
been disposed of ("Discontinued Business") and associated costs will be
reported against the Discontinued Business line until the remaining costs are
removed in Q4 2024.
For H1 2024 reporting, the Discontinued Business revenue reflects only the
first three months of trading in 2024 prior to the Transaction, versus H1 2023
which includes revenue for the full six months in the period.
Total Revenue H1 2024
H1 2024 Revenue ($m) H1 2023 Revenue ($m)
Group Total Revenue 15.6 29.4
Discontinued Business(1) (5.2) (12.5)
Continuing Business(2) 10.4 16.9
North America 9.8 16.2
Other 0.6 0.7
Continuing Business Total 10.4 16.9
(1) The Group classifies the remaining business which consists of the North
America business and a small residual income from the legacy network business
as continuing.
(2) The Group classifies the Europe and Canada assets sold to Gambling.com
Group Limited on 1 April 2024 as discontinued.
The Continuing Business has delivered revenue of $10.4 million, with adjusted
EBITDA of $0.9 million. Operating losses increased to $6.1 million and the
loss for the period increased from $1.0 million to $7.7 million.
Cash balances, including short-term deposits, increased from $4.8 million to
$19.4 million after the receipt of the initial $20.0 million from the sale of
its Europe and Canada assets to GAMB.
Continuing Business
H1 2024 H1 2023 Change 2024 vs 2023
Revenue ($'m) 10.4 16.9 (38)%
Gross profit ($'m) 1.2 5.4 (78)%
Operating loss ($'m) (6.1) (1.7) (259)%
Adjusted EBITDA ($'m) 0.9 3.2 (72)%
Adjusted EBITDA margin (%) 9% 19% (10)% pts
Statutory loss for the period ($'m) (7.7) (1.0) (670)%
Basic loss per share ($) (0.032) (0.004) (700)%
Continuing Business Revenue
H1 2024 H1 2023 Change 2024 vs 2023
($m) ($m)
North America 9.8 16.2 (39)%
Other 0.6 0.7 (14)%
Total 10.4 16.9 (38)%
Revenue from Continuing Business for H1 2024 was $10.4 million (H1 2023: $16.9
million), a 38% decline compared to the previous financial period. This is
largely attributable to the state launch of online sport betting in Ohio in
January 2023 during the NFL season, and Massachusetts in March 2023 after the
NFL season, while in 2024, North Carolina launched in March 2024, after the
NFL season.
The Group continues to diversify revenue with Daily Fantasy Sports ("DFS"),
paid media, advertising and sponsorship, as well as building its Gaming
presence for longer term growth. The North America business saw c.48,000 real
money players ("RMPs") in H1 2024, an increase of 4% (c.46,000, H1 2023)
including benefiting from the successful launch of paid campaigns and the
expansion of DFS.
The Group's operations are reported on the basis of two core operating
verticals, Sports and Gaming (Casino and Bingo), and two geographies, North
America and Other.
Revenue Split by Operations
H1 2024 H1 2023 Change 2024 vs 2023
($m) ($m)
North America (Sport) 9.6 15.8 (39)%
North America (Gaming) 0.2 0.4 (50)%
North America 9.8 16.2 (39)%
Other (Gaming) 0.6 0.7 (14)%
Other 0.6 0.7 (14)%
Total 10.4 16.9 (38)%
Revenue from the North America region decreased 39% to $9.8 million (H1 2023:
$16.2 million) due primarily to the relative scale of new state launches and
accounted for 94% of Continuing Business revenues (H1 2023: 96%). Other
revenue decreased by 14% to $0.6 million (H1 2023: $0.7 million).
Revenue Split by Type
H1 2024 H1 2023 Change 2024 vs 2023
($m) ($m)
CPA 9.5 15.9 (40)%
Revenue share / hybrid and other (3) 0.9 1.0 (10)%
Total 10.4 16.9 (38)%
(3) Other defined as Fixed Deals, Sponsorship Deals, Display Advertising
The US market has continued largely as a CPA led market. As a result, CPA
revenues accounted for 91% of Continuing Business revenues reducing from 94%
in the prior period. Revenue share and other has increased to 9%.
Revenue Split by Category
H1 2024 H1 2023 Change 2024 vs 2023
($m) ($m)
North America Sport 9.6 15.8 (39)%
North America Gaming 0.2 0.4 (50)%
Other Gaming 0.6 0.7 (14)%
Gaming 0.8 1.1 (27)%
Total 10.4 16.9 (38)%
In H1 2024, in line with the Group's sport led focus, 92% of revenues were
North American Sport based.
Sport revenues decreased by 39% period-on-period to $9.6 million (H1 2023:
$15.8 million) driven primarily by the relative scale of state launches in
North America.
Gaming revenues declined by 27% to $0.8 million (H1 2023: $1.1 million). Other
revenue is largely residual Gaming revenues from Europe, with revenues of $0.6
million (H1 2023: $0.7 million).
Our US Gaming revenues are mainly driven by gaming pages provided on our
sports websites which declined period-on-period to $0.2 million (H1 2023: $0.4
million). In order to grow gaming revenues in the longer term, we have
launched a small Gaming focussed site.
Revenue split by Media Partnership Business ("MPB") and Owned and Operated
("O&O")
H1 2024 H1 2023 Change 2024 vs 2023
($m) ($m)
North America MPB 6.6 12.2 (46)%
Other partners 0.6 0.7 (14)%
Total MPB 7.2 12.9 (44)%
North America O&O(4) 3.2 4.0 (20)%
Total O&O 3.2 4.0 (20)%
Total revenue 10.4 16.9 (38)%
(4 )O&O includes paid media initiative.
Revenue from MPB decreased by 44% to $7.2 million (H1 2023: $12.9 million)
again reflecting the relative scale in state launches. Partnership revenues
represented 69% of Continuing Business revenues (H1 2023: 76%).
Revenue from O&O decreased by 20% to $3.2 million (H1 2023: $4.0 million),
also reflecting the relative scale of state launches.
Earnings
The Group recognised an operating loss from Continuing Business of $6.1
million (H1 2023: $1.7 million loss) and Adjusted EBITDA from Continuing
Business of $0.9 million (H1 2023: $3.2 million). The relative size of state
launches, period-on-period revenues, and the resulting loss of gross margin
has dropped through to Adjusted EBITDA in the period, partially offset by cost
savings.
EBITDA from Continuing Business included items which affect comparability and
so, the Group excludes these items from its Adjusted EBITDA metrics. These are
detailed below:
Reconciliation of Operating Profit for Continuing Business to Adjusted EBITDA
H1 2024 H1 2023 Change 2024 vs 2023
($m) ($m)
Operating loss from Continuing Business (6.1) (1.7) (259)%
Depreciation and Amortisation* 3.0 3.5
EBITDA from Continuing Business (3.1) 1.8 (272)%
Share-based payments 0.2 0.4
Reorganisation 1.3 1.0
costs
Exceptional minimum guarantee costs 2.5 -
Adjusted EBITDA from Continuing Business 0.9 3.2 (72)%
Adjusted EBITDA margin from Continuing Business 9% 19% (10) % pts
* Includes $1.2 million accelerated write-off
Adjustments to Earnings
The Group incurred $0.2 million of share-based payment charges (H1 2023: $0.4
million), with the reduction period-on-period due to senior management leavers
from the schemes in late 2023 and early 2024.
In addition, the Group incurred $1.3 million of reorganisation costs in H1
2024 (H1 2023: $1.0 million) relating to the continuation of the Group's
rightsizing plan and integration, and deal-related costs.
In H2 2023, the Group classified costs from the minimum guarantees in the
contract with one media partner as an adjusting item to EBITDA due to the size
and short-term nature of this agreement. The agreement ended in August 2024.
The impact of these costs on H1 2024 was $2.5 million.
Adjusting for these one-off items, adjusted EBITDA from Continuing Business
was $0.9 million (H1 2023: $3.2 million), with a margin of 9% (H1 2023: 19%).
Sales and Marketing Costs
Direct cost of revenue decreased to $7.5 million from $9.2 million. This
includes the revenue share payments to our Media Partners in the US amounting
to $4.4 million (H1 2023: $8.1 million), and a further $2.5 million for
exceptional minimum guarantee costs (H1 2023: $Nil). Excluding revenue share
payments to Media Partners, sales and marketing costs were $0.6 million (H1
2023: $1.1 million), a decrease of 45%. These costs relate largely to content
and SEO expenses.
Operating Costs
Operating costs of $6.0 million include $1.3 million of reorganisation costs
and $0.2 million of share-based payment charges (H1 2023: $5.9 million
including $1.0 million of reorganisation costs and $0.4 million of share-based
payment charges), This includes staff costs, technology expenditure and other
operating costs. Excluding these one-off items, the Group incurred operating
costs of $4.5 million (H1 2023: $4.5 million). These are analysed below:
Staff Costs
Staff costs from Continuing Business was $3.5 million (H1 2023: $3.2 million).
The period-on-period increase related to increased incentives in the US and a
change to the bonus provisions for all staff.
Other Operating Costs
Other operating costs were $1.0 million (H1 2023: $1.3 million). These include
technology expenditure, administrative expenses and professional service
costs, with the period-on-period reduction being driven by lower external
advisor fees.
Earnings per share (EPS)
H1 2024 H1 2023 Change 2024 vs 2023
Basic and diluted EPS from Continuing Business ($) (0.032) (0.004) (700)%
Adjusted basic and diluted EPS ($) (0.033) 0.018 (283)%
Basic and diluted EPS remained the same (H1 2023: same) due to the significant
number of weighted average number of shares. In H1 2024, the Group recognised
a basic and diluted loss per share from Continuing Business of $0.032 (H1
2023: loss per share of $0.004).
Including the discontinued operations, the Group recognised a loss per share
of $0.033 (H1 2023: earnings per share of $0.018).
Finance Costs
Net financial income amounted to $0.7 million (H1 2023: $0.2 million). This
includes a $0.9 million gain from the unwind on the discount of the fair value
of the assets sold in the Europe and Canada Assets sale in April 2024. In
addition. It also includes a $0.3 million foreign exchange loss due to
re-translation of monetary balances to USD, the presentational currency of the
Group (H1 2023: $0.3 million gain).
Excluding this fair value gain and the forex impact, net financial income was
$0.1 million (H1 2023: $0.1 million costs) relating to interest earned on the
short-term deposits.
The Group does not hold any external debt financing as at 30 June 2024 (H1
2023: $Nil).
Tax
The Group understands the importance of the tax contribution we make, and we
have a tax strategy which supports this commitment.
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 $0.1 million in H1 2024 for its
Continuing Business (H1 2023: $0.2 million). The Group recognised an income
tax provision of $5.6 million (H1 2023: $5.7 million). In H1 2024, the Group
paid $0.2 million to tax authorities in the jurisdictions it operates (H1
2023: $2.8 million).
Summary Balance Sheet and Cash Flow Metrics
H1 2024 H1 2023 Change 2024 vs 2023
($m) ($m)
Free cash flow (5) (1.3) (2.2) 41%
Cash from operations (6) (0.4) 0.4 (200)%
Normalised Capital expenditure (7) 0.9 2.7 (67)%
Acquisition-related payments 3.5 3.4 3%
(5) Defined as cash from operations excluding one-off tax payments or refunds,
less capital expenditure.
(6) Includes working capital and trading from discontinued operations.
(7) Defined as reported capex less acquisition-related capital expenditure.
Cash and Working Capital
On the balance sheet as at H1 2024, the Group held $3.1 million of cash at
banks. This balance included $0.6 million of cash owed to GAMB as part of the
transition services agreement from the sale of the Group's Europe and Canada
sports betting and gaming assets GAMB Limited on 1 April 2024.
At H1 2024, the Group also held $16.9 million on deposit with the Group's
banks (H1 2023: $Nil), earning interest with a short maturity date.
Including the short-term deposits, but excluding the amounts owed to GAMB,
cash balances for the Group at H1 2024 was $19.4 million (H1 2023: $7.4
million).
The Group recognised free cash outflows of $1.3 million in H1 2024 after
adjusting for one-off cash items, a reduction of 41% compared to H1 2023.
Included in the movement in working capital in H1 2024 is $1.7 million owed to
GAMB being cash collected on their behalf following the sale. Cash flow used
from operating activities was $0.4 million (H1 2023: $0.4 million generated).
Whilst the Group did not acquire any businesses in H1 2024, it continued to
invest in its assets, mainly in its domains and websites, spending $0.9
million on capital expenditure (H1 2023: $2.7 million). The reduction reflects
the completion of a number of technology projects, and the reducing demands on
technology following the sale of the European assets.
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 2024, the Group paid out $3.5 million of deferred acquisition and
earnout payments (H1 2023: $3.4 million).
Post period, the Group paid $4.0 million in September 2024 for the final
deferred acquisition payment for Saturday Football Inc. There are no further
acquisition liabilities in the business.
Historical Acquisition Payments
2023 ($m) H1 2024 ($m) H2 2024 ($m)
North American assets 4.0 - 4.0
Europe assets 4.0 - -
Deferred consideration 4.4 0.0 4.0
North American assets(8) 3.0 3.5 -
Earn-outs 3.0 3.5 0.0
Total acquisition related payments 7.4 3.5 4.0
Further outstanding payments 7.5 4.0 0.0
(8) Earn-out not recognised in balance sheet until target met.
The cash flows above included the cash flow from operations and working
capital balances for the discontinued businesses.
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 Business revenue Revenue For H1 2024 reporting, the Group classifies the remaining business which
consists of the North America business and a small residual income from the
legacy network business as continuing.
Adjusted EBITDA Operating Profit (1) Earnings before Interest, Taxes, Depreciation and Amortisation, and excluding
any share-based payments, impairment, final exceptional minimum guarantee
costs, group rightsizing costs and remaining costs associated with the
discontinued business prior to their removal.
Adjusted EBITDA from Continuing Business Operating Profit (1) As above but excluding discontinued operations
Adjusted Basic and diluted earnings per share from Continuing Business Basic and diluted earnings per share Based on profit for the period from Continuing Business.
( )
(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.
( )
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