TIDMXLM

RNS Number : 5927Z

XLMedia PLC

21 September 2015

 
For immediate release  21 September 2015 
 

XLMedia PLC

("XLMedia" or "the Group" or "the Company")

Interim results for the six months ended 30 June 2015

Strong momentum continues

XLMedia (AIM: XLM), a leading provider of digital performance marketing services, is pleased to announce its interim results for the six months ended 30 June 2015.

Financial highlights

   --     Revenues increased 85% to $36.8 million (H1 2014: $19.9 million); 
   --     Gross profit increased 63% to $18.4 million (H1 2014: $11.3 million); 
   --     Adjusted EBITDA increased 103% to $12.9 million (H1 2014: $6.4 million); 
   --     Profit before tax up 187% to $13.2 million (H1 2014: $4.6 million); 
   --     Net cash from operating activities increased 111% to $12.1 million (H1 2014: $5.7 million); 
   --     Interim dividend of $5.0 million or 2.595 cent per share; and 
   --     Strong balance sheet with $43.2 million cash and short term investments. 

Operating highlights

-- Continued development of mobile capabilities through investments in technology and in house systems;

-- Extended reach of existing network through bolt on acquisition of UK focused, mobile targeted websites;

   --   First stage of EDM integration completed and accelerated into the Group; 

-- Post period end, the Group announced the completion of the acquisition of a majority stake in Marmar Media broadening the Group's offering and operational profile; and

-- Strong six months of trading reflecting the results of investments made during the past 18 months.

Ory Weihs, Chief Executive Officer of XLMedia, commented:

"We are delighted to report another record breaking six months. During the first six months of the year we continued to develop the business and invest in our main technology and mobile capabilities, which further underpin our key revenue and profit drivers.

"We made significant progress with executing our strategic plan, with acquisitions of performance marketing companies as well as bolt on publishing assets. These acquisitions complement the Group's existing business and add diversification through the addition of more clients, products, regions and marketing channels. EDM, which was acquired last year, is performing well and as such the integration of the business has been accelerated. We believe that using a unified technological infrastructure throughout the Group will enhance performance and bring additional benefits of scale to the Group.

"The Board is extremely confident of meeting expectations for the full year. Our confidence level is demonstrated by our declaration of an interim dividend of $5.0 million or 2.595 cents per share.

"We believe we have a set of strong foundations underpinning the growth potential of our business and we look to reporting on our continued progress."

Our full annual financial statements are available on our website at the following address:

http://www.xlmedia.com/company-reports/

Our updated investor presentation is also available on our website at the following address:

http://www.xlmedia.com/media/

For further information, please contact:

 
 XLMedia plc Ory Weihs www.xlmedia.com   Tel: 020 8817 5283 
 Vigo Communications Jeremy Garcia       Tel: 020 7016 9570 
  / Fiona Henson www.vigocomms.com 
 Cenkos Securities plc (Nomad            Tel: 020 7397 8900 
  and Joint Broker) Ivonne Cantu 
  / Camilla Hume www.cenkos.com 
 Liberum (Joint Broker) Neil             Tel: 020 3100 2000 
  Patel / Chris Clarke www.liberum.com 
 

Operational review

Following the Company's IPO in March 2014, we have been in the process of executing our strategy of driving growth and establishing our position as a dominant player in the area of online monetisation. Furthermore, we have continued to build on the positive momentum and footprint established in 2014 and the Group has delivered record profits in the first half of 2015. This delivery is a result of a combination of factors; inter alia, our strong organic growth, the positive impact from the acquisitions as well as the benefit of less expenses falling in to the first half than had been anticipated.

As a reflection of the growth seen in the first half of 2015, the Group has maintained its progressive dividend policy and will be issuing a dividend of 2.595 cents per share payable on 30 October 2015 to shareholders on the register at 2 October 2015. The ex-dividend date is 1 October 2015. We remain confident that demand for performance marketing services is set to continue to grow across all media platforms.

Business Summary

Over the course of the last 18 months, we have successfully executed a number of growth initiatives. Below is an overview of the progress we have achieved to date:

   --     Successful acquisitions have broadened our market reach across geographies and verticals 

o Completed a series of bolt on acquisitions of domains and websites complementing our publishing asset base and providing access to additional markets and products. All of these acquired assets have been integrated into our publishing division and platform and are benefitting from our increased scale and access to our in house technology.

o Continued efforts to evaluate potential acquisitions have resulted in the Company acquiring a group of UK focused, mobile targeted websites.

o Acquired EDM, a leading social and mobile gaming marketing company, in September 2014. Deriving the majority of its revenues from the US, EDM provides the Group with access to complementary markets as well as giving it entry in to a new vertical focused on social gaming. We completed the first phase of EDM's integration in to the Group during the period and, as reported earlier this month, due to EDM's strong performance in the first year following its acquisition we have decided to waive performance conditions for contingent consideration in order to accelerate the full integration into the Group. The Board believes this was an essential action for the Group as it is expected that social gaming will be a strong growth driver for XLMedia over the coming years.

o On 1 July 2015 the Group announced the completion of the acquisition of the majority stake in Marmar Media, a performance media company for web and mobile. Marmar Media adds additional know how and scale, as well as a wider customer base and vertical diversification.

o All of the acquired assets and companies are performing in line with or above management's expectations.

   --     Significant increase in organic revenues and client base 

o Together with the Group's stated acquisition strategy, the Group continues to deliver strong organic growth in all of its business segments with the 2014 year-end trading performance exceeding market expectations.

o The first half of 2015 delivered record revenues for the business, representing growth of 85% and 103% in revenues and adjusted EBITDA respectively. We expect to deliver further solid performance during the second half of the year.

   --     Investments in Technology 

o We have continued to make significant investments in our technology and our staff to support expansion in our media division as well as continuing to support organic growth in the publishing division.

o We use our in-house marketing technology to optimize media buying and enhance performance.

o We will continue to invest further in our technology so that we can continually improve performance and efficiency. This will ensure we maintain our strong position in the market place and that we can adapt to changes in the online and mobile search ecosystem.

Business Segments review

 
 ($'000)          Publishing    Media    Partner    Total 
                                         Network 
 
 H1 2015 
 Revenues             14,449   17,463      4,863   36,775 
 % of revenues         39.3%    47.5%      13.2%     100% 
 Direct 
  profit              11,601    6,242        558   18,401 
 Profit 
  margin               80.3%    35.7%      11.5%    50.0% 
 
 H1 2014 
 Revenues             10,659    6,716      2,502   19,877 
 % of revenues         53.6%    33.8%      12.6%     100% 
 Direct 
  profit               7,986    2,927        353   11,266 
 Profit 
  margin               74.9%    43.6%      14.1%    56.7% 
 
 
 
   --     Publishing 

Publishing revenues grew 36% to $14.4 million (H1 2014: $10.7 million). The growth was primarily organic, with some additions from new assets acquired during the second half of 2014 and 2015.

We invested significant amounts in technology infrastructure to support the centralised management of our assets and to improve conversions and performance of our assets.

Since the launch of our proprietary content management system, "Palcon", in November 2014, we have seen an improvement in the day to day operation of our network of over 2,000 specialist content websites. Palcon is a consolidated management system across all websites, enabling fast and dynamic updates and upgrades, comprehensive tracking support for website optimization as well as enhanced mobile and social features in our websites. All of the new assets we have acquired have been integrated and adjusted to our Palcon technology as well as existing websites migrated to the new technology, allowing us to benefit from the advantages of scale. We continue to develop our in-house systems to ensure we benefit from the maximum efficiencies possible.

During 2015 we invested $1.7 million in new websites and domains and we plan to continue buying and developing more assets to further drive our growth.

   --     Media 

Organic growth in the Media division came from strong and growing demand for digital advertising and resulted in revenues growing 160% to $17.5 million (H1 2014: $6.7 million). Further growth in this division was also achieved through the acquisition of EDM which contributed $6.0 million to H2 revenues in 2014.

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Our revenue model is performance based - either through revenue share, cost per acquisition, cost per installation or other models. Customers pay for performance only, avoiding the risk of applying funds to media campaigns that don't deliver return on investment ("ROI"). We use our expertise, in-house proprietary systems and trained staff and own funds to run thousands of simultaneous campaigns which yield positive ROI for us and for our customers.

EDM specializes in social and mobile advertising specifically targeted at 'user acquisition' for social gaming applications. The acquisition of EDM in September 2014 significantly added to our expertise in the social and mobile advertising, gave the Group a further presence in the US and delivered new customers and capabilities. With the strong demand in EDM's markets, demonstrated by the performance of EDM since acquisition, the Board believes social gaming will be a strong driver of the Group's growth in the coming years.

We continue to build our media base both organically and through acquisitions of EDM and Marmar Media. By increasing our media operations we aim to reach the widest possible audience by mass online communication. Although these activities can have lower margins they reach high volumes rapidly. As previously outlined, although we expect to see a decrease in the Group's media margins, in line with industry trends, we believe this decrease will be more than compensated for with the increased traffic generated through our operations. Hence we expect to continue growing Media earnings. The acquisition of a majority stake in Marmar Media, announced during the period, will bolster our offering in this space and provides us with additional scale and exposure to new markets for our media business.

   --     Partner Network 

Partner network revenues grew 94% to $4.9 million (H1 2014: $2.5 million). Our partner network remains an important part of our business, offering the opportunity to provide marketing services which are not currently serviced through our existing publishing and media networks.

Current Trading and Outlook

The Group has continued to trade strongly into the second half of the year. The business has established solid foundations for growth and continues to enhance and improve its offering, notably with the recent acquisition of Marmar Media. The Board is extremely confident of meeting expectations for the full year and has maintained its progressive dividend policy by declaring a dividend of $5 million or 2.595 cents per share payable on 30 October 2015 to shareholders on the register at 2 October 2015. The ex-dividend date is 1 October 2015.

Financial review

 
                  H1 2015   H1 2014   Change 
===============  ========  ========  ======= 
 Revenues          36,775    19,877      85% 
===============  ========  ========  ======= 
 Gross Profit      18,401    11,266      63% 
===============  ========  ========  ======= 
 Operating 
  expenses          7,409     6,233      19% 
===============  ========  ========  ======= 
 Operating 
  income           10,992     5,033     118% 
===============  ========  ========  ======= 
 Adjusted 
  EBITDA           12,933     6,377     103% 
===============  ========  ========  ======= 
 Financial 
  income            2,409       310       NA 
===============  ========  ========  ======= 
 Profit Before 
  Tax              13,170     4,610     186% 
===============  ========  ========  ======= 
 

The first half of 2015 has delivered another set of record revenues for the business. Revenues in the first six months of the year totaled $36.8 million, reflecting 85% growth compared to the same period last year. Revenues in 2015 reflect the consolidation of EDM which was acquired in September 2014, as well as strong organic growth in all business segments during the period.

Gross profit reached $18.4 million or 50% of revenues, representing 63% growth compared to last year (H1 2014: $11.3 million, 57%). In the first half of 2015 the media segment has grown to be the largest segment with 48% of revenues. As we continue implementing our strategy of further increasing and developing our media business, revenue mix will shift further towards media lowering gross margins, and as such we expect total gross margins (in terms of percentage) to decrease further across the Group.

Operating expenses during the first six months of the year were $7.4 million, an increase of 19% compared to the same period last year (H1 2014: $6.3 million). During the first six months of 2015, we saw some delays in our planned recruitments, partially due to our focus on successful integration of our acquired businesses as well as due to market conditions for recruiting technology experts. We are now recruiting more employees and therefore operating expenses will grow in the second part of 2015.

Operating expenses included $0.7 million of research and development expenses, reflecting an increase of 66% compared to the same period last year (H1 2014: $0.4 million). These expenses are in addition to the increase of 146% in investments in technology and internal systems developed during the period of $1.6 million (H1 2014: $0.7 million). The Group expects to further enhance investment in technology as we see technology as a key driver to growth and profit for the coming years.

Adjusted EBITDA(1) reached $12.9 million or 35% of revenues, reflecting an increase of 185% to the same period last year (H1 2014: $6.4 million, 32%). As the mix of revenues changes towards more media, we expect adjusted EBITDA to decrease in terms of margins but to grow in absolute numbers.

Financial income for the first six months of the year was $2.4 million, attributed to the Company's dynamic hedging activity to mitigate material exposure to foreign currencies. Since the majority of the Group's revenues are denominated in Euro, the Company entered into a series of forward contracts for the sale of Euro and purchase of US Dollars. The Euro exchange rate decreased by 8% versus the US Dollar during this period. However, the Company gained financial income from its hedging activity which partially compensated for the decrease. Out of the financial income $1.3 million was received in cash (when forward contracts matured) while the remaining $1.1 million is recorded as fair value gains for forward contracts not yet matured. The remaining forward contracts will mature over the course of the next 12 months and therefore if the Euro vs. USD exchange rate increases the Company will record financial expenses.

As a result of the high adjusted EBITDA as well as the financial gain from changes in exchange rates, profit before tax increased by 186% to $13.2 million (H1 2014: $4.6 million).

As of 30 June 2015 we had $43.2 million cash and short term investments compared to $44.1 million on December 31, 2014. The change in cash reflects an increase of $12.1 million provided by operating activity, offset by spending $9.4 million on investments in technology and acquisitions and $3 million of dividends during the first half of 2015. Investments during the period include a payment of $5.4 million on account of acquisition of Marmar media.

Current assets as of 30 June 2015 were $58.9 million (31 Dec 2014: $57.8 million), and non-current assets reached $50.0 million (31 Dec 2014: $42.0 million). The increase in non-current assets is attributed mainly to the payment on account of Marmar media shares ($5.4 million), investments in domains and websites of $1.7 million, as well as additions to our in-house technology of $0.7 million.

With total equity on 30 June 2015 reached $85 million, or 78% (2014: 76%), and cash and short term investments of $44.1 million the Group is well positioned to continue executing its strategic plan.

CONSOLIDATED STATEMENTS OF FINANCIAL POSITION

 
                              30 June   31 December 
                             ---------  ----------- 
                               2015        2014 
                             ---------  ----------- 
                             Unaudited    Audited 
                             ---------  ----------- 
                                USD in thousands 
                             ---------------------- 
 
Assets 
  Current assets: 
Cash and cash equivalents       27,366       27,351 
Short-term investments          15,807       16,714 
Trade receivables               12,445       11,548 
Other receivables                1,857        1,895 
Financial derivatives            1,430          264 
                             --------- 
 
                                58,905       57,772 
                             ---------  ----------- 
 
Non-current assets: 
Long-term investments            5,890          333 
Other receivables                  398          456 
Property and equipment             997          864 
Goodwill                        19,586       19,586 
Domains and websites            18,440       16,728 
Other intangible assets          4,692        4,014 
                             --------- 
 
                                50,003       41,981 
                             ---------  ----------- 
 
                               108,908       99,753 
                             =========  =========== 
 

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CONSOLIDATED STATEMENTS OF FINANCIAL POSITION

 
                                                      30 June   31 December 
                                                     ---------  ----------- 
                                                       2015        2014 
                                                     ---------  ----------- 
                                                     Unaudited    Audited 
                                                     ---------  ----------- 
                                                        USD in thousands 
                                                     ---------------------- 
   Liabilities and equity 
   Current liabilities: 
    Trade payables                                       9,575        9,073 
    Contingent consideration payable                     3,478        3,396 
    Other liabilities and accounts payable               7,072        7,764 
                                                     --------- 
 
                                                        20,125       20,233 
                                                     ---------  ----------- 
 
   Non-current liabilities: 
    Contingent consideration payable                     3,313        3,233 
    Deferred taxes                                         247          332 
    Other liabilities                                      117           42 
                                                     ---------  ----------- 
 
                                                         3,677        3,607 
                                                     --------- 
 
   Equity attributable to equity holders 
    of the Company: 
    Share capital                                           *)           *) 
    Share premium                                       63,898       62,271 
    Capital reserve from share-based transactions        1,295        1,784 
    Capital reserve from transactions 
     with non-controlling interests                      (506)        (506) 
    Retained earnings                                   20,129       12,072 
                                                     --------- 
 
                                                        84,816       75,621 
 
    Non-controlling interests                              290          292 
                                                     ---------  ----------- 
 
   Total equity                                         85,106       75,913 
                                                     ---------  ----------- 
 
                                                       108,908       99,753 
                                                     =========  =========== 
 

*) Lower than USD 1 thousand.

CONSOLIDATED STATEMENTS OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME

 
 
                                         Six months ended    Year ended 
                                              30 June        31 December 
                                        ------------------  ------------ 
                                          2015      2014        2014 
                                        --------  --------  ------------ 
                                            Unaudited         Audited 
                                        ------------------  ------------ 
                                                USD in thousands 
                                             (except per share data) 
 
 Revenues                                 36,775    19,877        50,720 
 Cost of revenues                         18,374     8,611        23,142 
                                        -------- 
 
 Gross profit                             18,401    11,266        27,578 
 
 Research and development expenses           708       427         1,008 
 Selling and marketing expenses            1,324     1,129         2,239 
 General and administrative expenses       5,377     4,677         9,732 
                                        -------- 
 
                                           7,409     6,233        12,979 
                                        -------- 
 
 Operating income before expenses 
  in connection with IPO                  10,992     5,033        14,599 
 
 Expenses in connection with 
  IPO                                          -       461           361 
                                        --------  --------  ------------ 
 
 Operating income after expenses 
  in connection with IPO                  10,992     4,572        14,238 
 
 Finance expenses                          (231)     (263)       (1,001) 
 Finance income                            2,409       310           231 
                                        -------- 
 
 Income before other expenses             13,170   4,619          13,468 
 Other expenses, net                           -       (9)         (229) 
                                        -------- 
 
 Profit before taxes on income            13,170     4,610        13,239 
 Taxes on income                           1,774       324         1,329 
                                        -------- 
 
 Net income and other comprehensive 
  income                                  11,396     4,286        11,910 
                                        ========  ========  ============ 
 
 Attributable to: 
 Equity holders of the Company            11,057     3,001         9,821 
 Non-controlling interests                   339     1,285         2,089 
                                        --------  --------  ------------ 
 
                                          11,396     4,286        11,910 
                                        ========  ========  ============ 
 
Net earnings per share attributable 
 to equity holders of the Company: 
 
Basic net earnings per share 
 (in USD)                                   0.06      0.02          0.06 
                                        ========  ========  ============ 
Diluted net earnings per share 
 (in USD)                                 0.06      0.02            0.05 
                                        ========  ========  ============ 
Weighted average number of shares 
 used in computing basic earnings 
 per share (in thousands)                190,942   159,103       174,398 
                                        ========  ========  ============ 
Weighted average number of shares 
 used in computing diluted earnings 
 per share (in thousands)                195,141   162,087       178,803 
                                        ========  ========  ============ 
 
 

CONSOLIDATED STATEMENTS OF CASH FLOWS

 
                                           Six months ended    Year ended 
                                                30 June        31 December 
                                          ------------------  ------------ 
                                             2015      2014       2014 
                                          ----------  ------  ------------ 
                                              Unaudited         Audited 
                                          ------------------  ------------ 
                                                  USD in thousands 
                                          -------------------------------- 
 Cash flows from operating activities: 
 
 Net income                                   11,396   4,286        11,910 
                                          ----------  ------  ------------ 
 
 Adjustments to reconcile net 
  income to net cash provided 
  by operating activities: 
 
 Adjustments to the profit or 
  loss items: 
 
 Depreciation and amortisation                 1,079     514         1,296 
 Finance expense (income), net                    49   (318)            25 
 Finance income from financial 
  derivatives                                (1,166)       -         (264) 
 Loss from sale of assets                          -       9             9 
 Cost of share-based payment                     470   1,137         1,042 
 Taxes on income                               1,774     324         1,329 
 Exchange differences on balances 
  of cash and cash equivalents                    87    (44)           482 
                                          ----------  ------  ------------ 
 
                                               2,293   1,622         3,919 
                                          ----------  ------  ------------ 
 Changes in asset and liability 
  items: 
 
 Decrease (increase) in trade 
  receivables                                  (897)   (414)           994 
 Increase in other receivables                 (170)   (508)         (608) 
 Decrease (increase) in related 
  parties                                          -     (3)           142 
 Increase (decrease) in trade 
  payables                                       502     272         (256) 
 Increase(decrease) in other 
  accounts payable                             (190)     455           782 
 Increase in other long-term 
  liabilities                                     75       -            18 
                                               (680)   (198)         1,072 
 Cash paid and received during 
  the period for: 
 
 Interest received                                25      21            46 
 Taxes paid                                    (887)    (98)         (421) 
 Taxes received                                    -     113           417 
 
                                               (862)      36            42 
                                          ----------  ------  ------------ 
 
 Net cash provided from operating 
  activities                                  12,147   5,746        16,943 
                                          ----------  ------  ------------ 
 

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CONSOLIDATED STATEMENTS OF CASH FLOWS (Cont.)

 
                                            Six months ended    Year ended 
                                                 30 June        31 December 
                                           ------------------  ------------ 
                                             2015      2014        2014 
                                           --------  --------  ------------ 
                                               Unaudited         Audited 
                                           ------------------  ------------ 
                                                   USD in thousands 
                                           -------------------------------- 
 Cash flows from investing activities: 
Purchase of property and equipment            (292)     (174)         (350) 
Acquisition of initially consolidated 
 company (a)                                      -         -       (9,950) 
 Acquisition of domains, websites 
  and other intangible assets               (4,677)   (3,484)      (11,528) 
 Proceeds and collection of receivable 
  from sale of assets                           150       178           328 
 Short- term and long-term investments, 
  net                                       (4,558)         -      (16,315) 
 
 Net cash used in investing activities      (9,377)   (3,480)      (37,815) 
                                           --------  --------  ------------ 
 
 Cash flows from financing activities: 
Issue of share capital (net 
 of issue costs)                                  -    48,917        48,917 
Dividend paid to equity holders             (3,000)   (5,247)       (8,243) 
Acquisition of non-controlling 
 interests                                        -         -       (1,490) 
Dividend paid to non-controlling 
 interests                                    (336)   (1,301)       (2,287) 
Repayment of liabilities to 
 related parties                                  -   (2,855)       (3,512) 
Proceeds from exercise of options               668        12            12 
Financing by non-controlling 
 interests                                        -        57            57 
Repayment of long-term and short-term 
 liabilities                                      -     (716)         (204) 
 
Net cash provided (used in) 
 from financing activities                  (2,668)    38,867        33,250 
                                           --------  --------  ------------ 
 
Exchange differences on balances 
 of cash and cash equivalents                  (87)        44         (482) 
                                           --------  --------  ------------ 
 
Increase in cash and cash equivalents            15    41,177        11,896 
Cash and cash equivalents at 
 the beginning of the year                   27,351    15,455        15,455 
                                           --------  --------  ------------ 
 
Cash and cash equivalents at 
 the end of the year                         27,366    56,632        27,351 
                                           ========  ========  ============ 
 
 
(a)    Acquisition of initially consolidated 
        company: 
 
       Assets and liabilities at date 
        of acquisition: 
 
  Working capital (excluding 
   cash and cash equivalents)                   --(2,057) 
  Long-term investment                          --     26 
  Property and equipment                        --     69 
  Intangible assets                             --  1,689 
  Goodwill                                      -- 17,170 
  Deferred taxes                                --  (402) 
  Contingent consideration payable              --(6,521) 
  Non-current liabilities                       --   (24) 
 
                                                --  9,950 
                                                  ======= 
 

CONSOLIDATED STATEMENTS OF CASH FLOWS (Cont.)

 
(b) Significant non-cash transactions: 
 
      Dividend payable to non-controlling 
      interests                                61  -   56 
                                              ---   ----- 
      Payables for acquisitions of 
       domains and websites                   112  -1,712 
                                              ---   ----- 
 
 

NOTES TO INTERIM CONDEST CONSOLIDATED FINANCIAL INFORMATION

   NOTE 1:         GENERAL 

The Group is an online performance marketing company. The Group attracts paying users from multiple online and mobile channels and directs them to online businesses.

The Group attracts users through online marketing techniques (such as publications and advertisements) which are then directed, by the Group, to its customers in return for a share of the revenue generated by such user, a fee generated per user acquired, fixed fees or a hybrid of any of these three models.

   NOTE 2:         OPERATING SEGMENTS 

(a) General:

The operating segments are identified on the basis of information that is reviewed by the chief operating decision maker ("CODM") to make decisions about resources to be allocated and assess its performance. Accordingly, for management purposes, the Group is organised into operating segments based on the products and services of the business units and has operating segments as follows:

 
Publishing   -  The Group owns over 2,000 informational 
                 websites in 18 languages. These 
                 websites refer potential customers 
                 to online businesses. The sites' 
                 content, written by professional 
                 writers, is designed to attract 
                 online traffic which the Group then 
                 directs to its customers online 
                 businesses. 
 
 
Media      -  The Group's Media division acquires 
               online advertising targeted at potential 
               online traffic with the objective 
               of directing it to the Group's users. 
               The Group buys advertising space 
               on search engines, websites, mobile 
               and social networks and places adverts 
               referring potential users to the 
               Group's customers' websites or to 
               its own websites. 
 
Partners   -  The Group manages marketing partners, 
 Network       whose role is to direct online traffic 
               to the Group's customers for which 
               the Group receives revenues. The 
               Group is responsible for paying 
               its partners. The Group's partner 
               programme enables affiliates to 
               have a single point of contact to 
               direct traffic to, and receive monies 
               from, rather than engaging in multilateral 
               negotiation, administration and 
               collection of revenues. 
 

Segment performance (segment profit) is evaluated based on revenues less direct operating costs. Items that were not allocated are managed on a group basis.

(b) Reporting on operating segments:

 
                                                  Partners 
                              Publishing  Media    Network   Total 
                              ----------  ------  --------  ------- 
                                         USD in thousands 
                              --------------------------------------- 
Six months ended 
 30 June 2015 (unaudited): 
Revenues                          14,449  17,463     4,863   36,775 
                              ==========  ======  ========  ======= 
 
Segment profit                    11,601   6,242       558   18,401 
                              ==========  ======  ======== 
 
Unallocated corporate 
 expenses                                                   (7,409) 
 
Finance income, 
 net                                                          2,178 
 
Profit before taxes 
 on income                                                   13,170 
                                                            ======= 
 
 
                                                 Partners 
                              Publishing  Media   Network   Total 
                              ----------  -----  --------  ------- 
                                         USD in thousands 
                              -------------------------------------- 
Six months ended 
 30 June 2014 (unaudited): 
 
Revenues                          10,659  6,716     2,502   19,877 
                              ==========  =====  ========  ======= 
 
Segment profit                     7,986  2,927       353   11,266 
                              ==========  =====  ======== 
 
Unallocated corporate 
 expenses                                                  (6,694) 
Other expenses, 
 net                                                           (9) 
Finance income, 
 net                                                            47 
 
Profit before taxes 
 on income                                                   4,610 
                                                           ======= 
 

(b) Reporting on operating segments (Cont.):

 
                                              Partners 
                          Publishing  Media    Network   Total 
                          ----------  ------  --------  -------- 
                                      USD in thousands 
                          ---------------------------------------- 
Year ended 31 December 
 2014 (audited): 
Revenues                      23,965  20,632     6,123    50,720 
                          ----------  ------  --------  -------- 
 
Segment profit                18,345   8,548       685    27,578 
                          ----------  ------  -------- 
 
Unallocated corporate 
 expenses                                               (13,340) 
Other expense, 
 net                                                       (229) 
Finance expense, 
 net                                                       (770) 
 
Profit before taxes 
 on income                                                13,239 

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