TIDMXLM
RNS Number : 6777Y
XLMedia PLC
07 March 2017
For immediate release 7 March 2017
XLMedia PLC
("XLMedia" or "the Group" or "the Company")
Final results for the year ended 31 December 2016
Another strong financial performance driven by organic growth
and diversification
XLMedia (AIM: XLM), a leading provider of digital performance
marketing services, is pleased to announce its final results for
the year ended 31 December 2016.
Financial highlights
-- Revenues increased 16% to $103.6 million (2015: $89.2 million);
-- Gross profit increased 30% to $53.3 million (2015: $41.1 million);
-- Adjusted EBITDA increased 22% to $34.6 million (2015: $28.4 million);
-- Profit before tax increased 28% to $31.0 million (2015: $24.3 million);
-- Net income increased 27% to $25.6 million (2015: $20.2 million);
-- Strong balance sheet with $35.2 million cash and short term investments;
-- Earnings per share increased 20% to $0.12 (2015: $0.10); and
-- Final dividend of $7.5 million or 3.7864 cents per share,
making a total of 7.6069 cent per share for the year.
Operating highlights
-- Strong organic growth in the publishing business, mainly in
English speaking markets and non-Scandinavian European markets;
-- Significant progress in the media segment underpinned by strong mobile penetration:
o Dau-Up received Facebook marketing partner status for
technology;
o New mobile offering enabling additional performance models
(incl. revenue share);
-- Continued diversification of the business:
o The gambling sector represented 70% of Group revenues in 2016
(2015: 74%, 2014: 83%);
o The Group's largest customer accounted for 7% of total
revenues in 2016 (2015: 9%, 2014: 15%);
o Revenues from Scandinavia were 32% of the Group's revenues
with an additional 27% from other European countries and 21% from
North America.
Post period end - further diversification through
acquisitions
-- Acquisition of mobile platform ClicksMob Inc ("ClicksMob"):
o Provides performance-based user acquisition to leading
apps;
o Strong mobile user acquisition technology; and
o An established customer base in Asia and in non-gambling
verticals such as e-commerce, travel, entertainment and
finance.
-- Acquisition of Greedyrates.ca ("Greedyrates"):
o Greedyrates is one of Canada's leading credit card comparison
websites;
o Increases the Group's North American customer base; and
o Further demonstrates XLMedia's ability to diversify its
revenue streams - this time into the financial services sector.
Ory Weihs, Chief Executive Officer of XLMedia, commented:
"We are proud to have delivered another record breaking year in
which we have made further progress in executing on our strategic
priorities and generated significant value for our shareholders.
Our strong financial performance coupled with our ability to
maintain a market leading position is supported by our commitment
to invest in proprietary products whilst integrating complementary
acquisitions.
"The Board would like to thank management and our employees for
another excellent year of results and remain committed to
delivering further progress in 2017."
Our full annual financial statements are available on our
website at the following address:
http://www.xlmedia.com/company-reports/
For our Company presentation please visit:
http://www.xlmedia.com/media/
A webcast of our results presentation will be available on our
website later today: http://www.xlmedia.com/media/
A presentation for retail and private investors will be held at
4.00pm on Wednesday 8 March 2017 at the offices of Berenberg (60
Threadneedle Street, London EC2R 8HP). Admittance is strictly
limited to those who register their attendance for the event. To
register, please contact Vigo on xlmedia@vigocomms.com.
For further information, please contact:
XLMedia plc Ory Weihs www.xlmedia.com Tel: 020 8817 5283
Vigo Communications Jeremy Garcia Tel: 020 7830 9703
/ Fiona Henson www.vigocomms.com
Cenkos Securities plc (Nomad Tel: 020 7397 8900
and Joint Broker) Ivonne Cantu
/ Camilla Hume www.cenkos.com
Berenberg (Joint Broker) Chris Tel: 020 3207 7800
Bowman / Mark Whitmore / Amritha
Murali www.berenberg.com
Business review
2016 was another strong year for the Group, with record breaking
revenues and profits, reflecting the Group's consistent execution
of its stated growth strategy.
Our strategic plan is focused on the following key growth
initiatives:
-- broaden our reach to additional geographies and verticals;
-- continue to develop our technology infrastructure to enable
growth and increase our competitive edge; and
-- make selective acquisitions that diversify and develop the Group's core operational base.
2016 was another successful year of progress in all aspects. We
have achieved diversification both geographically and vertically
through a blend of acquisitive and organic growth. Our efforts
during the year brought to close two acquisitions in early
2017:
-- Acquisition of Greedyrates, which was completed in January
2017. Greedyrates is the Group's first significant publishing asset
in the financial services vertical and significantly enhances the
customer base in North America.
-- Acquisition of ClicksMob, which was completed in February
2017. ClicksMob enhanced the Group's presence in the fast growing
market for mobile apps, and delivers an enlarged customer base,
with over 30% of revenues from Asia.
Further diversification was achieved through organic growth, and
a focus on non-gaming apps, e-commerce, and English speaking
markets.
Technology is a key component to maintaining the Group's
competitive edge and driving growth. During the past year we have
continued to invest in our technology infrastructure and achieved a
number of key milestones:
-- Dau-Up, the Company's mobile and social media performance
marketing platform, was awarded Facebook marketing partner status
for technology with Facebook recognising the benefits of the
Group's bespoke Rampix system in optimizing campaign management for
user acquisition across the Facebook platform.
-- The Group continued to improve Palcon, our proprietary
platform for centralised management of websites. During the year we
saw improved performance, particularly in mobile, of websites
migrated to the Palcon platform. Traffic and click-through rates
improved for these websites, which we expect to drive performance
and revenues in the publishing business.
-- We further enhanced our internal business intelligence
systems to support the growing scales of data produced. Our systems
ingest data from thousands of sources daily, which is then
processed and analysed to provide business information for campaign
and asset optimisation.
-- Our technology teams consisted of 80 employees at the end of
2016, up from 57 at the beginning of the year. This includes both
product and development teams and we continue to value the
acquisition of talent as a key driver in supporting our organic
growth initiatives.
The Group continues to work on broadening our offering in order
to drive organic growth, leveraging our existing channels,
customers and markets to grow revenues as well as targeting new
channels, customers and markets.
The integration of Dau-Up and Marmar Media was completed during
2016 and included the streamlining of both companies into one
location and the rationalization of their information systems. We
have also optimised our joint sales capabilities in order to better
cross-sell our services across existing and new customers. This
optimisation has resulted in increased revenues, mainly from
existing customers taking additional services from across our
enlarged platform.
We have extended Dau-Up's activities into non-gaming apps and
introduced performance based revenue share agreements for mobile
apps alongside the Cost Per Installation (CPI) model.
The Group also delivered strong organic growth in the publishing
segment, mainly in key strategic geographies, notably English
speaking and other European countries (outside Scandinavia).
As we add more services, customers and verticals we expect the
Group to continue to see benefits of scale with improved
operational infrastructure as well as further diversification of
the customer base. In 2016 the largest customer in the Group
accounted for 7% of Group revenues and we believe that figure will
continue to decline.
The Company has maintained its progressive dividend policy by
declaring a final dividend of $7.5 million or 3.7864 cents per
share payable on 7 April 2017 to shareholders on the register at 17
March 2017. The ex-dividend date is 16 March 2017. Together with
the interim dividend of 3.8205 declared in the interim results,
this amounts to a total dividend for the year of 7.6069 cent per
share.
Business Segments review
($'000) Partner
Publishing Media Network Total
2016
Revenues 46,057 47,645 9,903 103,605
% of revenues 44% 46% 10% 100%
Direct
profit 38,384 13,779 1,160 53,323
Profit
margin 83% 29% 12% 51%
2015
Revenues 30,297 45,777 13,145 89,219
% of revenues 34% 51% 15% 100%
Direct
profit 23,855 15,411 1,810 41,076
Profit
margin 79% 34% 14% 46%
Publishing
Publishing revenues grew 52% to $46.1 million (2015: $30.3
million). The growth was primarily organic, with some additions
from new assets acquired at the end of 2015.
We invested significant amounts in technology infrastructure to
support the centralised management of our assets and we have seen
improvement in conversions and performance of our assets as a
result, particularly in mobile.
In January 2017, we announced the acquisition of Greedyrates, a
leading Canadian credit card comparison website. This acquisition
is our first significant publishing asset in the financial services
vertical, and is in line with our stated strategy to expand both
geographically and in sector expertise. The consideration of $9.3
million is presented as payment on account of website acquisition
on the balance sheet as of 31 December 2016 since the payment for
the acquisition was deposited in escrow at the end of December
2016.
Media
Media revenues grew 4% to $47.6 million (2015: $45.8 million).
The growth in the media segment is attributed to strong growth in
the gambling verticals offset by a decrease in activities in the
utilities verticals, as flagged at the interim results. As we
continue to diversify our business and add more verticals we expect
overall growth to be less volatile. The recent acquisitions of
Greedyrates and ClicksMob have added more customers and verticals
to our portfolio and we expect the media division to deliver
stronger growth in 2017.
In 2016 we continued to invest in developing our mobile
proposition and enhancing our capabilities in that area. This
included the integration of media acquisitions into the Group,
creating a unified platform from which to offer broad media
solutions to customers, and investing in systems and additional
performance models.
Mobile marketing continues to drive digital advertising growth
with recent research showing digital advertising revenues in the
U.S having increased 19% to $32.7 billion in H1 2016, versus the
same period in 2015. In addition, 67% of time spent online is spent
on mobile devices with 47% of US advertising revenues in H1 2016
generated through mobile.(1) As the industry shifts to mobile we
continue to establish our position as a leader in mobile and the
acquisition of ClicksMob, a specialist in mobile user acquisition,
is a further step in achieving this.
Direct profit from media for 2016 was $13.8 million or 29% of
revenues compared to $15.4 million or 34% or revenues in 2015. As
we further grow the media operations in mobile and new verticals we
expect to see growth in lower margin products which will in turn
lower the overall margin for the division as a percentage of
revenues but increase the absolute profit for the division.
Partner Network
Partner network revenues decreased to $9.9 million (2015: $13.1
million, 2014: $6.1 million) as result of a review of our partner
base. As part of our ongoing business development and process
enhancement activities, we commenced a full review of our partners
in this network, with a view to implementing a more stringent sign
up and operations criteria. Where necessary, the Group will also
cease activity with certain partners to improve overall quality.
The consequence of this review has been a reduction in revenues
from this segment in 2016. Our partner network serves as a
complimentary channel, giving us the opportunity to provide
marketing services to clients which are not currently serviced
through our existing publishing and media divisions.
Current Trading and Outlook
We have made a strong start to 2017 with sales across all
products and verticals progressing well. The integration of the
recently acquired ClicksMob and Greedyrates businesses is on track
and once completed, these acquisitions are expected to add
significant value to the Group.
The Board therefore looks forward to another year of strong
growth and is extremely confident of the medium term trading
prospects of the Group.
Financial review
2016 2015 Change
=================== --------- ------- -------
USD in millions
=================== ------------------ =======
Revenues 103.6 89.2 +16%
=================== ========= ======= =======
Gross Profit 53.3 41.1 +30%
=================== ========= ======= =======
Operating income 30.1 23.0 +31%
=================== ========= ======= =======
Adjusted EBITDA 34.6 28.5 +22%
=================== ========= ======= =======
Financial income,
net 0.9 1.7 -48%
=================== ========= ======= =======
Profit Before
Tax 31.0 24.3 +27%
=================== ========= ======= =======
Earnings Per
Share (in usd) 0.12 0.10 +20%
=================== ========= ======= =======
With record revenues and profits, 2016 was another great year
for the Group.
Revenues for the year were $103.6 million, reflecting 16% growth
compared to the last year. The increase in revenues was mainly due
to strong organic growth in the publishing segment in the year. The
media division continues to be the largest segment generating 46%
of FY16 revenues. Strong organic growth drove publishing revenues
and profits as the second largest segment with 44% of FY16
revenues.
Gross profit reached $53.3 million or 51% of revenues,
representing 30% growth compared to last year (2015: $41.1 million,
46%). The material margin improvement in gross profit during the
year stems from the higher growth in the higher-margin publishing
segment.
As we continue to implement our strategy to further increase and
develop our media business, we expect the Group's revenue mix to
shift further towards media, reducing gross margins. Whilst this
shift will lower total gross margins (in terms of percentage)
across the Group we expect this impact to be more than offset by an
increase in higher margin activity in the Group's publishing
division.
Operating income increased to $30.1 million or 29% of revenues
(2015: $23.0 million, 26%), again due to the higher profitability
of the publishing segment, as a result of the organic growth during
2016.
Operating expenses included $2.2 million for research and
development expenses (2015: $1.4 million) in addition to
capitalized R&D of $3.1 million (2015: $2.0 million). We
continue to expand our technology infrastructure, and as at 31
December 2016 our technology and product teams consisted of 80
people compared with 57 people at the beginning of the year. We
continue to develop our in-house technology base in order to
maintain our competitive edge and drive growth further.
Adjusted EBITDA(2) reached $34.6 million or 33% of revenues,
reflecting an increase of 22% to the previous year (2015: $28.4
million, 32%).
Net financial income for the year was $0.9 million, attributable
mainly to the Company's dynamic hedging activity to mitigate
material exposure to foreign currencies. As a significant portion
of the Group's revenues are denominated in Euros, the Company
entered into a series of forward contracts for the sale of Euros
and purchase of US Dollars. Additional forward contracts were
entered into for the sale of British Pounds and for buying Israeli
Shekels for lesser amounts. The Euro exchange rate decreased by
3.4% versus the US Dollar during this period. The Company gained
financial income from its hedging activity which partially
compensated for the decrease. The majority of financial income was
recorded as fair value gains for forward contracts not yet matured
and therefore was not received in cash. The Company has entered
into additional forward contracts which will mature over the course
of the next 12 months.
As a result of the high adjusted EBITDA as well as the financial
gain from changes in exchange rates, profit before tax increased by
27% to $31.0 million (2015: $24.3 million).
As of 31 December 2016 we had $35.2 million cash and short term
investments compared to $42.6 million on 31 December 2015. The
change in cash reflects an increase of $27.0 million provided by
operating activity, offset mainly by use of $21.7 million on
investments in technology and acquisitions and $12.4 million of
dividends paid during 2016.
Current assets at 31 December 2016 were $56.7 million (31 Dec
2015: $60.9 million) and non-current assets reached $70.4 million
(31 December 2015: $57.9 million). The increase in non-current
assets is attributed mainly to the investments in domains and
websites, as well as additions to our in-house technology.
Total equity on 31 December 2016 reached $103.3 million, or 81%
(2015: 75%). This, with cash and short term investments of $35.2
million, positions the Group well to continue executing its
strategic plan.
(1) - IAB/PwC Internet Ad Revenue Report, HY 2016 - industry
survey conducted by PwC and sponsored by the Interactive
Advertising Bureau (IAB), November 2016
(2) - Earnings before interest, taxes, depreciation and
amortisation and adjusted to exclude share based payments and
expenses related to acquisition agreements
PRELIMINARY CONDENSED CONSOLIDATED STATEMENTS OF PROFIT OR
LOSS
Year ended
31
December
-------------------------
2016 2015
---------------- ------
USD in thousands
(except per
share data)
-------------------------
Revenues 103,605 89,219
Cost of revenues 50,282 48,143
----------------
Gross
profit 53,323 41,076
Research and development expenses 2,228 1,438
Selling and marketing expenses 4,142 3,038
General and administrative
expenses 16,856 13,640
----------------
23,226 18,116
----------------
Operating income 30,097 22,960
Finance expenses (403) (523)
Finance income 1,306 2,259
----------------
Income before other expenses 31,000 24,696
Other expenses, net - (403)
---------------- -------
Profit before taxes on income 31,000 24,293
Taxes on income 5,416 4,093
----------------
Net income and other comprehensive
income 25,584 20,200
================ =======
Attributable to:
Equity holders of the Company 23,937 18,719
Non-controlling interests 1,647 1,481
---------------- -------
25,584 20,200
================ =======
Earnings per share attributable
to equity holders of the Company:
Basic earnings per share (in
USD) 0.12 0.10
================ =======
Diluted earnings per share
(in USD) 0.12 0.10
================ =======
PRELIMINARY CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL
POSITION
As of 31 December
---------------------
2016 2015
--------- --------
USD in thousands
-------------------
Assets
Current assets:
Cash and cash equivalents 32,095 35,741
Short-term investments 3,091 6,866
Trade receivables 17,075 16,088
Other receivables 3,463 2,042
Financial derivatives 1,002 165
---------
56,726 60,902
--------- --------
Non-current assets:
Long-term financial assets 609 1,102
Other receivables 171 332
Property and equipment 1,229 1,190
Goodwill 26,302 26,302
Deposit for acquisition
of websites 9,300 -
Domains and websites 26,739 23,897
Other intangible assets 5,948 4,837
Deferred taxes 85 256
---------
70,383 57,916
--------- --------
127,109 118,818
========= ========
PRELIMINARY CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL
POSITION
As of 31 December
-------------------
2016 2015
--------- --------
USD in thousands
Liabilities and equity
Current liabilities:
Trade payables 9,274 11,146
Contingent consideration
payable - 5,373
Other liabilities and accounts
payable 14,196 12,151
---------
23,470 28,670
--------- --------
Non-current liabilities:
Deferred taxes 126 317
Other liabilities 228 155
--------- --------
354 472
---------
Equity
Share capital *) *)
Share premium 66,812 64,447
Capital reserve from share-based
transactions 1,208 1,390
Capital reserve from transaction
with non-controlling interests (506) (506)
Retained earnings 34,349 22,774
---------
Equity attributable to equity
holders of the Company 101,863 88,105
Non-controlling interests 1,422 1,571
--------- --------
Total equity 103,285 89,676
--------- --------
127,109 118,818
========= ========
*) Lower than USD 1 thousand.
CONSOLIDATED STATEMENTS OF CASH FLOWS
Year ended
31 December
------------------
2016 2015
-------- --------
USD in thousands
------------------
Cash flows from operating activities:
Net income 25,584 20,200
-------- --------
Adjustments to reconcile net
income to net cash provided
by operating activities:
Adjustments to the profit or
loss items:
Depreciation and amortisation 3,878 3,775
Finance expense (income), net (69) 231
Finance expense (income) from
financial derivatives (837) 99
Cost of share-based payment 646 839
Taxes on income 5,416 4,093
Exchange differences on balances
of cash and cash equivalents 589 310
-------- --------
9,623 9,347
-------- --------
Changes in asset and liability
items:
Increase in trade receivables (987) (3,580)
Increase in other receivables (930) (432)
Increase (decrease) in trade
payables (1,872) 1,155
Increase in other accounts payable 1,032 3,892
Increase in other long-term
liabilities 73 99
--------
(2,684) 1,134
-------- --------
Cash received (paid) during
the period for:
Interest paid - (2)
Interest received 139 72
Taxes paid (5,710) (2,352)
(5,571) (2,282)
-------- --------
Net cash provided by operating
activities 26,952 28,399
-------- --------
CONSOLIDATED STATEMENTS OF CASH FLOWS
Year ended 31
December
------------------
2016 2015
-------- --------
USD in thousands
------------------
Cash flows from investing activities:
Purchase of property and equipment (479) (644)
Acquisition of initially consolidated
companies - (4,459)
Payment of contingent consideration
in respect of acquired company (5,500) (3,500)
Acquisition of domains, websites
and other intangible assets (6,742) (12,326)
Deposit on account of acquisition
of Domains and websites (9,300) -
Proceeds from sale of assets 300 300
Short- term and long-term investments,
net 4,333 9,625
--------
Net cash used in investing activities (17,388) (11,004)
-------- --------
Cash flows from financing activities:
Dividend paid to equity holders
of the Company (12,362) (8,017)
Dividend paid to non-controlling
interests (1,805) (694)
Exercise of options 1,546 943
Payments of liabilities to former
shareholders of acquired subsidiary - (927)
Net cash used in financing activities (12,621) (8,695)
-------- --------
Exchange differences on balances
of cash and cash equivalents (589) (310)
-------- --------
Increase (decrease) in cash and
cash equivalents (3,646) 8,390
Cash and cash equivalents at
the beginning of the year 35,741 27,351
-------- --------
Cash and cash equivalents at
the end of the year 32,095 35,741
======== ========
Significant non-cash transactions:
Payables for acquisitions of
domains and websites 649 -
===
NOTE 1: GENERAL
(a) General description of the Group and its operations:
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 who, in turn, convert such
traffic into paying customers.
Online traffic is attracted by the Group's publications and
advertisements and are then directed, by the Group, to its
customers in return for mainly a share of the revenue generated by
such user, a fee generated per user acquired, fixed fees or a
hybrid of any of these models.
For further information regarding online marketing and the
Group's business segments see Note 2.
The Company commenced its operations in 2012. The Company's
registered office is located in 12 Castle Street, St Helier,
Jersey.
On 21 March 2014 the Company completed an Initial Public
Offering ("IPO") on the London Stock Exchange's Alternative
Investment Market (AIM).
(b) Assessment of going concern:
The Board of Directors has adopted the going concern basis of
accounting in preparing the consolidated financial statements.
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 17 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 and mobile advertising targeted
at potential online traffic with
the objective of directing it to
the Group's customers. 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
-----------------------------------------
Year ended 31 December
2016:
Revenues 46,057 47,645 9,903 103,605
---------- ------ -------- ---------
Segment profit 38,384 13,779 1,160 53,323
---------- ------ -------- ---------
Unallocated corporate
expenses (23,226)
Finance income,
net 903
---------
Profit before taxes
on income 31,000
=========
Year ended 31 December
2015:
Revenues 30,297 45,777 13,145 89,219
---------- ------ -------- ---------
Segment profit 23,855 15,411 1,810 41,076
---------- ------ -------- ---------
Unallocated corporate
expenses (18,116)
Other expense,
net (403)
Finance income,
net 1,736
Profit before taxes
on income 24,293
=========
(c) Geographic information:
Revenues classified by geographical areas based on internet user
location:
Year ended 31
December
------------------
2016 2015
--------- -------
USD in thousands
------------------
Scandinavia 33,054 29,414
Other European countries 28,295 16,732
North America 21,724 19,588
Oceania 4,951 2,788
Other countries 2,215 2,610
--------- -------
Total revenues from
identified locations 90,239 71,132
Revenues from unidentified
locations 13,366 18,087
--------- -------
Total revenues 103,605 89,219
========= =======
This information is provided by RNS
The company news service from the London Stock Exchange
END
FR LFFSIVRIRIID
(END) Dow Jones Newswires
March 07, 2017 02:01 ET (07:01 GMT)
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