TIDMXLM
RNS Number : 3665A
XLMedia PLC
29 September 2020
XLMedia PLC
("XLMedia" or the "Group" or the "Company")
Results for the Six Months Ended 30 June 2020
XLMedia (AIM: XLM), a leading provider of digital performance
publishing services, announces the Company's results for the six
months ended 30 June 2020.
Financial summary
-- Revenues of $27.7 million (H1 2019: $42.5million)
-- Gross profit of $16.6 million (H1 2019: $28.8 million)
-- Adjusted EBITDA (1) of $5.1 million (H1 2019: $18.6 million)
-- Adjusted profit before tax (2) of $1.7 million (H1 2019: $13.8 million)
-- Reported Profit before tax of $0.2 million (H1 2019: $13.8 million)
-- Cash balances of $28.0 million as at 30 June 2020 (31 December 2019: $30.6 million)
1 Adjusted EBITDA in all references is defined as Earnings
Before Interest, Taxes, Depreciation and Amortisation, and
excluding any share-based payments and reorganisation costs
2 Excluding reorganisation costs
Operating summary
-- Business performance impacted by Google manual ranking
penalty and Covid-19 - approximately $2 million per month impact
from late March
-- Strengthened Executive Team with the appointment of Iain
Balchin as Chief Financial Officer, Sarah Clark as Chief Operating
Officer and Ken Dorward as President, North America
-- Good progress made on restructuring the organisation to align
with refreshed strategy, resulting in annualised cost savings of
approximately $5 million from second half of 2020
-- Commenced evaluation process for possible disposal of certain Finnish assets
-- After period end:
o Corporation tax residence moved to the UK to reflect the
senior management and governance concentration
o Completed buy-out of remaining founder interests in
101greatgoals.com
Casino recovery
-- Evolving the approach, including the development of new content-rich websites
o Will submit specific rebuilt sites for reconsideration by
Google, where appropriate, by the end of the fourth quarter of
2020
-- Ongoing brand and content refresh of all main assets,
including migration to new hosted technology platform, with the
benefit of access to open source community
COVID-19 update
-- Operationally, the Company adjusted well to the remote
working requirements caused by the global Covid-19 pandemic
-- Financially, Covid-19 negatively impacted revenue in Personal Finance and Sports
-- Early signs of recovery were evident late in the period, as major sporting activity returned
Strategic clarity:
XLMedia is pursuing a more focused business model, premised
on:
-- A balanced portfolio of assets:
o An attractive range of geographies
o Stable and high growth verticals
o Increased investment in regulated markets
-- Branded, content-rich, engaging websites,
o building deeper, more valuable, relationships with partners
and consumers, underpinned by market-leading technology and
data
Outlook
-- Positive start to the second half of the year, particularly in Personal Finance and Sports
o Covid-19 second wave produces some short-term uncertainty
-- Continue to expect a material recovery in financial performance in 2021
Stuart Simms, Chief Executive Officer of XLMedia, commented:
"Our business has endured a number of unforeseen challenges
during 2020 but, as we enter the second half of the year, I believe
we are seeing signs of recovery in some key areas.
These green shoots, coupled with a detailed and diverse plan to
mitigate the impact of the Google manual ranking penalty, give me
and the Executive team confidence we can enter 2021 with
significant positive momentum and enhanced levels of control."
A webcast of our results presentation will be available on our
website today:
https://www.xlmedia.com/investor-relations/webcasts/
For further information, please contact:
XLMedia plc ir@xlmedia.com
Stuart Simms, Chief Executive Officer
Iain Balchin, Chief Financial Officer
Kieran McKinney, Investor Relations
www.xlmedia.com
Vigo Communications Tel: 020 7390 0233
Jeremy Garcia
www.vigocomms.com
Cenkos Securities plc (Nomad and Joint Tel: 020 7397 8900
Broker)
Giles Balleny / Max Gould
www.cenkos.com
Berenberg (Joint Broker) Tel: 020 3207 7800
Chris Bowman / Mark Whitmore / Simon
Cardron
www.berenberg.com
Chief Executive Officer review
First Half Performance
The first half of the year brought some significant challenges
for the business, as detailed in the Trading Update on 23 July
2020, particularly the Google manual ranking penalty in the Casino
vertical, originally identified in January, and the broad consumer
downturn caused by the global Covid-19 pandemic. Against this
backdrop, the Group delivered revenue of $27.7 million (H1 2019:
$42.5 million), gross margin of $16.6 million (H1 2019: $28.8
million) and adjusted EBITDA of $5.1 million (H1 2019: $18.6
million). Following the Google manual ranking penalty in January
and the growing impact of Covid-19 on economic activity by the end
of March, monthly revenue ran approximately $2 million behind the
expectations at the start of the year.
The Google penalty, which was identified in January, has been
well documented in a series of updates in the first six months of
the year and, while there remains a lot to be done, we made good
progress in rebuilding and upgrading the assets during the first
half. I discuss this in more detail later.
Strategic Priorities
The industry we operate in and the markets we serve are
constantly evolving. Changing consumer behaviour, evolving
regulation, the ever-shifting algorithms of the major internet
search engines and the increasing influence of social media create
both challenges and opportunities for XLMedia. Consumers of our
service increasingly demand higher quality content, which engages
them and adds real value to their journey towards the ultimate
service they seek - this is also true of Google and other internet
search engines. This requires us to be agile, and willing and able
to change and adapt, to take maximum advantage as opportunities
present themselves.
Since joining XLMedia, with the support of the leadership team,
I have focused on identifying the strengths and weaknesses of the
business, both structurally and strategically, and assessing any
changes required to best align the Company to current and future
industry trends. This process highlighted certain business model
and organisational structure challenges that needed to be addressed
to transform the performance of the business in the years
ahead.
Over the last six months, we have made good progress in
reshaping the organisation, reducing complexity, flattening the
hierarchy and beginning to bring in the complementary skills
required for the future. Looking outward, as we laid out in April,
the priorities of the business are changing, to reduce risk and
drive sustainable growth in the top and bottom line. We have set
out a clear strategic agenda under two fundamental priorities:
-- A balanced portfolio of online assets
o We seek to create a balanced portfolio of websites to cover a
range of attractive geographies, both stable and high-growth
verticals and with greater exposure to regulated markets. In doing
so, we will focus particularly on developing our presence in North
American sports, primarily through targeted acquisition.
-- Branded, content-rich, engaging websites
o XLMedia will consolidate its online portfolio, concentrating
on a much smaller number of publishing assets, and focusing its
resources on optimising this core set of premium sites for its
chosen markets. These content-rich, engaging websites, underpinned
by intelligent market-leading technology, will seek to build
stronger lasting relationships with consumers and enhance
monetisation opportunities.
Casino recovery
As disclosed in January 2020, a number of our high revenue
premium Casino websites, were penalised by Google through a manual
ranking penalty; this pushed and holds the websites far enough down
the search rankings to make driving material new business virtually
impossible.
Our thinking on the best way forward, in terms of speed,
certainty and positive financial impact, has constantly evolved,
informed by expert opinion, testing and experience. We carried out
an unsuccessful test resubmission of a small number of sites to
Google in July. We believe this test was not successful because the
assets remained on our proprietary technology platform, rather than
having been fully rebuilt on an open-source technology suite, as we
plan to do; however no significant feedback or clarity is provided
on the reasons for such an outcome. This further highlighted the
risks of pursuing only one route to recovery, especially the
possibility of consuming valuable internal resources on multiple
reconsiderations, or even the possibility of the manual penalty
never being removed in certain instances. Also, as time passes, the
domain authority on some of the original websites is eroding due to
lack of traffic, and with it the new revenue potential, gradually
reducing the advantage over entirely new websites.
We are pursuing multiple routes to re-establishing our traffic
levels in the casino vertical. Of the original premium websites, we
have identified two where a joint venture partner will lead the
efforts, sharing the upside; we expect these to be submitted for
reconsideration over the coming weeks. Towards the end of the
fourth quarter, we expect to submit a small number of the original
penalised sites for reconsideration, where we feel this is optimal.
For most others, we have already begun to develop new high-level
sites using internal and external resources. In most instances,
each of these sites will consolidate traffic from several former
premium sites, more rapidly building authority and ranking. We
expect this process to be largely complete by the end of the first
quarter of 2021. This multi-track approach minimises risk and
maximises possible upside, while focusing resources and ownership
on a more concentrated set of assets, which will also be key well
beyond the build phase. I believe the difference of this approach
in financial terms will be immaterial in the short-term, but it
will enable us to take greater and more immediate control of our
performance, greatly enhancing the longer-term potential of the
business.
Regulation
All of XLMedia's business units in some way are impacted by
regulations. Even where regulatory change negatively impacts
revenue in the short term, I believe that, on the whole, a fully
regulated market is better over the longer term for large
enterprises like XLMedia, when we factor in the reduced risk of
shocks or unforeseen change. On a more obviously positive note, the
type of regulatory change we are seeing in North American Sports,
where a previously closed market opens, represents a significant
opportunity.
Outlook
The second half of the year has started positively with much of
the global sports programme being reopened and compressed into a
couple of months, an uptick in Personal Finance activity and the
stabilisation of the Casino vertical. However, there are clear
signs of second waves of Covid-19 across the territories we operate
in, and any tightening of restrictions could impact the recovery in
our Personal Finance and Sports verticals; the very recent second
lockdown in Israel could also delay elements of the transformation
programme.
While there continue to be a number of moving parts, including
possible disposals and acquisitions, the organisational changes we
have made over the last year, and the ongoing work on developing a
suite of websites fit for the future, give me confidence we can end
the year with positive momentum, leading to a material financial
recovery in 2021.
Stuart Simms
Chief Executive Officer
29 September 2020
Financial Review
$'000 H1 2020 H1 2019 Change
Revenues 27,715 42,459 -35%
============================================== ======== ========= =======
Gross profit 16,609 28,838 -42%
============================================== ======== ========= =======
Operating expenses (14,829) (14,514) + 2%
============================================== ======== ========= =======
Operating profit before reorganisation costs 1,780 14,324 -88%
============================================== ======== ========= =======
Adjusted EBITDA(1) 5,093 18,616 -73%
============================================== ======== ========= =======
Reorganisation costs (1,501) -
============================================== ======== ========= =======
Adjusted(2) profit before tax 1,672 13,795 -88%
============================================== ======== ========= =======
Profit before tax 171 13,795
-------- --------- -------
(1) Earnings Before interest, Taxes, Depreciation and
Amortisation and excluding share-based payments and reorganisation
costs
(2) Excluding reorganisation costs
Group revenues in the first half of 2020 totalled $27.7 million
(H1 2019: $42.5 million), a decrease of 35% compared to the same
period in the prior year. This was predominantly due to the well
documented Google manual penalties imposed on a number of the
company's Casino websites, the impact of COVID 19 and the closure
of our remaining Media business.
Gross profit for the first half of 2020 was $16.6 million (H1
2019: $28.8 million), a 42% decrease, broadly in line with the
decrease in revenues. Gross margin was 60%, against 68% in the
prior period.
Operating expenses for the first half of 2020 were $14.8 million
(H1 2019: $14.5 million).
Adjusted EBITDA (2) in the first half of 2020 was $5.1 million
(H1 2019: $18.6 million), a decrease of 73% on the same period in
the prior year, due entirely to the reduction in revenues.
In the first half of 2020, the Group recorded reorganisation
costs of $1.5 million, following the commencement of a significant
restructuring of the Group to optimise the organisation for the
future. This program will be largely complete by the end of
2020.
Adjusted profit before tax in the first half of 2020 was $1.7
million (H1 2019: $13.8 million), a decrease of 88%.
As at 30 June 2020, the Company had $28.0 million in cash
balances, compared to $30.6 million as at 31 December 2019. The
change in cash is due to the $4.0 million generated by operating
activities being offset by $4.6 million used for investment
activity, and $2.3 million used for financing activities.
Current assets as at 30 June 2020 were $36.0 million, compared
to $42.3 million as at 31 December 2019. The decrease in current
assets was predominantly as a result of the decrease in cash
balances mentioned above and a decrease in trade receivables of
$3.5 million, mainly as a result of the reduction in revenues.
Non-current assets as at 30 June 2020 were $59.0 million compared
to $57.0 million as at 31 December 2019.
Current liabilities as at 30 June 2020 were $23.8 million,
compared to $27.2 million as at 31 December 2019. This decrease was
mainly as a result of a fall in trade payables of $1.4 million and
repayment of the bank loan of $1.5 million. Non-current liabilities
as at 30 June 2020 were $7.8 million, compared to $8.6 million as
of 31 December 2019. The decrease in non-current liabilities is
mainly as result of lease liability repayments.
Total equity as at 30 June 2020 was $63.5 million, or 67% of
total assets (31 December 2019: $63.5 million or 64% of total
assets).
2020 has been a challenging year for the company so far, but we
have remained resilient whilst we complete the restructuring.
During this time, cash burn has been kept to an absolute minimum
and we have removed significant future cost from the organisation.
I am confident that the business will return to positive cash
generation during the second half of the year.
Iain Balchin
Chief Financial Officer
29 September 2020
XLMEDIA PLC.
INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
AS OF 30 JUNE 2020
U.S DOLLARS IN THOUSANDS
INDEX
Page
--------
REPORT ON REVIEW OF INTERIM CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS 8
Consolidated Statements of Financial Position 9-10
Consolidated Statements of Profit or Loss and Other
Comprehensive Income 11
Consolidated Statements of Changes in Equity 12 -13
Consolidated Statements of Cash Flows 14 - 15
Notes to the Interim Condensed Consolidated Financial
Statements 16 - 20
- - - - - - - - - - - - - - - - - -
Kost Forer Gabbay Tel: +972-3-6232525
& Kasierer Fax: +972-3-5622555
144 Menachem Begin ey.com
Road, Building A,
Tel-Aviv 6492102,
Israel
Report on review
of interim condensed consolidated financial statements
The Board of Directors
XLMedia PLC.
Introduction
We have reviewed the accompanying interim condensed consolidated
statement of financial position of XLMedia PLC. and its
subsidiaries ("the Group") as of 30 June 2020 and the related
interim condensed consolidated statements of profit or loss and
other comprehensive income, changes in equity and cash flows for
the six months then ended and explanatory notes. Management is
responsible for the preparation and presentation of this interim
financial information in accordance with IAS 34, "Interim Financial
Reporting" ("IAS 34") as adopted by the European Union. Our
responsibility is to express a conclusion on this interim financial
information based on our review.
Scope of review
We conducted our review in accordance with International
Standard on Review Engagements 2410, Review of Interim Financial
Information Performed by the Independent Auditor of the Entity. A
review of interim financial information consists of making
inquiries, primarily of persons responsible for financial and
accounting matters, and applying analytical and other review
procedures. A review is substantially less in scope than an audit
conducted in accordance with International Standards on Auditing
and consequently does not enable us to obtain assurance that we
would become aware of all significant matters that might be
identified in an audit. Accordingly, we do not express an audit
opinion.
Conclusion
Based on our review, nothing has come to our attention that
causes us to believe that the accompanying interim condensed
consolidated financial statements are not prepared, in all material
respects, in accordance with IAS 34 as adopted by the European
Union.
28 September 2020 KOST FORER GABBAY & KASIERER
A Member of Ernst & Young
Tel Aviv, Israel Global
CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
June 30 31 December
2020 2019
--------- -----------
Unaudited Audited
--------- -----------
USD in thousands
----------------------
ASSETS
CURRENT ASSETS:
Cash and cash equivalents 24,847 27,108
Short-term investments 2,483 2,785
Trade receivables 4,210 7,755
Other receivables 4,458 4,522
Financial derivatives 34 222
--------- -----------
3 6 , 032 42,392
--------- -----------
NON-CURRENT ASSETS:
Long-term investments 687 682
Property and equipment 8,467 9,431
Domains and websites 40,815 40,215
Other intangible assets 8,503 6,428
Other assets 559 278
59,031 57,034
--------- -----------
95, 063 99,426
========= ===========
The accompanying notes are an integral part of the interim
condensed consolidated financial statements.
CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
30 June 31 December
2020 2019
--------- -----------
Unaudited Audited
--------- -----------
USD in thousands
----------------------
LIABILITIES AND EQUITY
CURRENT LIABILITIES:
Trade payables 1,626 3,028
Other liabilities and accounts payable 9, 045 9,62 5
Income tax payable 11,958 11,874
Financial derivatives - 79
Current maturities of long-term bank loans - 1,465
Current maturities of lease liabilities 1,138 1 ,161
--------- -----------
23,767 27,232
--------- -----------
NON-CURRENT LIABILITIES:
Lease liability 7,185 8,067
Deferred taxes 527 516
Other liabilities 65 65
--------- -----------
7,777 8,648
--------- -----------
Total liabilities 31, 544 35,880
EQUITY
Share capital *) - *) -
Share premium 82,465 112,624
Capital reserve from share-based transactions 2,418 2,276
Capital reserve from transaction with non-controlling
interests (2,445) (2,445)
Treasury shares - (30,159)
Accumulated deficit (19,210) (19,041)
--------- -----------
Equity attributable to equity holders of
the Company 63,228 63,255
Non-controlling interests 291 291
--------- -----------
Total equity 63,519 63,546
--------- -----------
95, 063 99,426
========= ===========
*) Lower than USD 1 thousand.
The accompanying notes are an integral part of the interim
condensed consolidated financial statements.
28 September 2020
-------------------- ------------------- --------------- ---------------
Date of approval Chris Bell Stuart Simms Iain Balchin
of the
financial statements Chairman of the Chief Executive Chief Financial
Board of Directors Officer Officer
CONSOLIDATED STATEMENTS OF PROFIT OR LOSS AND OTHER
COMPREHENSIVE INCOME
Six months ended Year ended
30 June 31 December
------------------
2020 2019 2019
-------- -------- ------------
Unaudited Audited
------------------ ------------
USD in thousands
(except per share data)
Revenues 27,715 42,459 79,695
Cost of revenues 11,106 13,621 26,002
-------- -------- ------------
Gross profit 16,609 28,838 53,693
-------- -------- ------------
Research and development expenses 1,156 696 1,554
Sale and marketing expenses 2,194 2,646 4,579
General and administrative expenses 11,479 11,172 21,214
-------- -------- ------------
14,829 14,514 27,347
-------- -------- ------------
Operating profit before Impairment and
Reorganisation costs 1,780 14,324 26,346
-------- -------- ------------
Impairment loss - - 81,350
Reorganisation costs 1,501 - 1, 682
-------- -------- ------------
Operating profit (loss) 279 14,324 (56,686)
-------- -------- ------------
(1, 879
Finance expenses (408) (1,212) )
Finance income 300 683 835
-------- -------- ------------
( 1,044
Finance expenses, net (108) (529) )
-------- -------- ------------
Profit (loss) before taxes on income 171 13,795 (57,730)
Taxes on income 72 1,723 3, 188
-------- -------- ------------
Income (loss) from continuing operations 99 12,072 (60,918)
Income from discontinued operations,
net - 79 2,217
-------- -------- ------------
Net income (loss) 99 12,151 (58,701)
======== ======== ============
Net income (loss) and other comprehensive
income (loss) 99 12,151 (58,701)
======== ======== ============
Attributable to:
Equity holders of the Company (169) 11,770 (59,474)
Non-controlling interests 268 381 773
-------- -------- ------------
99 12,151 (58,701)
======== ======== ============
Earnings per share attributable to equity
holders of the Company:
Basic and Diluted earnings (loss) per
share from continuing operation (in USD) - (* 0.06 (0.31)
======== ======== ============
Basic and Diluted earnings (loss) per
share from discontinued operation (in
USD) - *) - 0.01
======== ======== ============
Weighted average number of shares used
in computing basic earnings per share
(in thousands) 183,813 209,329 198,396
======== ======== ============
Weighted average number of shares used
in computing diluted earnings per share
(in thousands) 183,813 209,596 198,396
======== ======== ============
*) Lower than 0.01 USD.
The accompanying notes are an integral part of the interim
condensed consolidated financial statements.
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
Attributable to equity holders of the Company
----------------------------------------------------------------------------------
Capital
reserve
Capital from
reserve transactions Retained
from with earnings
Share Share share-based non-controlling Treasury (accumulated Non-controlling Total
capital premium transactions interests shares deficit) Total interests equity
-------- -------- ------------ --------------- -------- ------------ ------ --------------- ------
Unaudited
-----------------------------------------------------------------------------------------------------------
USD in thousands
-----------------------------------------------------------------------------------------------------------
Balance at 1
January 2020 *) - 112,624 2,276 (2,445) (30,159) (19,041) 63,255 291 63,546
--------- -------- ------------ --------------- -------- ------------ ------ --------------- ------
Net income (loss)
and other
comprehensive
income (loss) - - - - - (169) (169) 268 99
Cost of
share-based
payment - - 142 - - - 142 - 142
Delisting of
treasury shares
**) - (30,159) - - 30,159 - - - -
Dividend to
non-controlling
interests - - - - - - - (268) (268)
Balance at 30
June 2020 *) - 82,465 2,418 (2,445) - (19,210) 63,228 291 63,519
========= ======== ============ =============== ======== ============ ====== =============== ======
**) In April 2020, the Board resolved to cancel all shares held
in treasury.
Attributable to equity holders of the Company
------------------------------------------------------------------------------
Capital
reserve
Capital from
reserve transactions
from with
Share Share share-based non-controlling Treasury Retained Non-controlling Total
capital premium transactions interests shares earnings Total interests equity
-------- ------- ------------ --------------- -------- -------- ------- --------------- -------
Unaudited
--------------------------------------------------------------------------------------------------------
USD in thousands
--------------------------------------------------------------------------------------------------------
Balance at 1
January 2019 *) - 112,224 2,590 (2,445) (468) 54,623 166,524 291 166,815
--------- ------- ------------ --------------- -------- -------- ------- --------------- -------
Net income and
other
comprehensive
income - - - - - 11,770 11,770 381 12,151
Cost of
share-based
payment - - 674 - - - 674 - 674
Acquisition of treasury
shares - - - (9,653) - (9,653) - (9,653)
Dividend to
equity holders
of the
Company (0.04
USD per share) - - - - - (8,226) (8,226) - (8,226)
Exercise of
options - 128 (31) - - - 97 - 97
Dividend to
non-controlling
interests - - - - - - - (381) (381)
Balance at 30
June 2019 (* - 112,352 3,233 (2,445) (10,121) 58,167 161,186 291 161,477
========= ======= ============ =============== ======== ======== ======= =============== =======
*) Lower than USD 1 thousand.
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
Attributable to equity holders of the Company
--------------------------------------------------------------------------------------
Capital
reserve
Capital from
reserve transactions Retained
from with earnings
Share Share share-based non-controlling Treasury (accumulated Non-controlling Total
capital premium transactions interests shares deficit) Total interests Equity
-------- -------- ------------ --------------- --------- ------------- -------- --------------- --------
USD in thousands
-----------------------------------------------------------------------------------------------------------------
Balance as of 1
January 16 6 , 16 6 ,
2019 *) - 112,224 2,590 (2,445) (468) 5 4 , 623 524 291 815
Net loss and
other
comprehensive
income (loss) - - - - - (59,474) (59,474) 773 (58,701)
Acquisition of
treasury
shares - - - - (29,691) - (29,691) - (29,691)
Income from
share-based
payment - - (218) - - - (218) - (218)
Dividend to
equity holders
of the Company - - - - - (14,190) (14,190) - (14,190)
Exercise of
options *) - 400 (96) - - - 304 - 304
Dividend to
non-controlling
interests - - - - - - - (773) (773)
--------- -------- ------------ --------------- --------- ------------- -------- --------------- --------
Balance as of 31
December
2019 *) - 112,624 2,276 (2,445) (30,159) (19,041) 63,255 291 63,546
========= ======== ============ =============== ========= ============= ======== =============== ========
*) Lower than USD 1 thousand.
The accompanying notes are an integral part of the interim
condensed consolidated financial statements.
CONSOLIDATED STATEMENTS OF CASH FLOWS
Six months ended Year ended
30 June 31 December
------------------
2020 2019 2019
-------- -------- ------------
Unaudited Audited
------------------ ------------
USD in thousands
--------------------------------
Cash flows from operating activities:
Net income (loss) 99 12,151 (58,701)
Adjustments to reconcile net income (loss)
to net cash provided by operating activities:
Adjustments to the profit or loss items:
Depreciation and amortisation 3,171 3,618 7,511
Impairment loss - - 81,350
Finance expense, net 109 1,311 1 , 976
Gain from discontinued operation - - (1,811)
Cost of (income from) share-based payment 142 674 ( 218 )
Taxes on income 72 1,782 3, 228
Exchange differences on balances of cash
and cash equivalents (519) (492) (661)
-------- -------- ------------
2,975 6,893 91,375
-------- -------- ------------
Changes in asset and liability items:
Decrease in trade receivables 3,545 3,858 6,465
Decrease (increase) in other receivables (502) 620 371
Decrease in trade payables (1,402) (1,419) (2,239)
Increase (decrease) in other accounts
payable (441) 1,080 4,482
Decrease in other long-term liabilities - - (183)
-------- -------- ------------
1,200 4,139 8 ,8 9 6
-------- -------- ------------
Cash received (paid) during the year for:
Interest paid (61) (356) (752)
Interest received 82 89 101
Taxes paid (518) (1,167) (2,859)
Taxes received 248 2,058 2,061
-------- -------- ------------
(249) 624 (1,449)
-------- -------- ------------
Net cash provided by operating activities 4,025 23,807 40 , 121
======== ======== ============
The accompanying notes are an integral part of the interim
condensed consolidated financial statements.
CONSOLIDATED STATEMENTS OF CASH FLOWS
Six months ended Year ended
30 June 31 December
-------------------
2020 2019 2019
-------- --------- ------------
Unaudited Audited
------------------- ------------
USD in thousands
---------------------------------
Cash flows from investing activities:
Purchase of property and equipment (186) (111) (260)
Acquisition of and additions to domains,
websites and other intangible assets - (174) (406)
Acquisition of and additions to technology (4,394) (4,137) (8,447)
Proceeds from the sale of discontinued
operation (adjustments of proceeds)*) (270) - 1,547
Short-term and long-term investments,
net 298 139 281
-------- --------- ------------
Net cash used in investing activities (4,552) (4,283) (7,285)
-------- --------- ------------
Cash flows from financing activities:
Dividend paid to equity holders of the
Company - (8,226) (14,190)
( 9,653
Acquisition of treasury shares - ) (29,691)
Dividend paid to non-controlling interests (184) (319) (652)
Exercise of options - 117 270
( 2,750
Repayment of long and short-term liability (1,500) ) (5,500)
Repayment of lease liabilities (569) (703) (1,253)
Net cash used in financing activities (2,253) (21,534) (51,016)
-------- --------- ------------
Exchange differences on balances of cash
and cash equivalents 519 526 661
-------- --------- ------------
Decrease in cash and cash equivalents (2,261) (1,484) (17,519)
Cash and cash equivalents at the beginning
of the period 27,108 44,627 44,627
-------- --------- ------------
Cash and cash equivalents at the end of
the period 24,847 43,143 27,108
======== ========= ============
*) Net of cash balance of discontinued operation.
The accompanying notes are an integral part of the interim
condensed consolidated financial statements.
NOTE 1: GENERAL
XLMEDIA PLC and its subsidiaries (The Group) are a leading
global digital performance publisher .
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: SIGNIFICANT ACCOUNTING POLICIES
a. Basis of preparation of the interim condensed consolidated financial statements:
The interim condensed consolidated financial statements for the
six months ended 30 June 2020 have been prepared in accordance with
IAS 34, Interim Financial Reporting, as adopted by the European
Union. The interim condensed consolidated financial statements do
not include all the information and disclosures required in the
annual financial statements and should be read in conjunction with
the Group's annual consolidated financial statements as at 31
December 2019.
b. Initial adoption of amendments to existing financial reporting and accounting standards:
Amendment to IFRS 3, "Business Combinations":
In October 2018, the IASB issued an amendment to the definition
of a "business" in IFRS 3, "Business Combinations" ("the
Amendment").
The Amendment clarifies that in order to be considered a
business, an integrated set of activities and assets must include,
as a minimum, an input and a substantive process that together
significantly contribute to the ability to create outputs. The
Amendment also clarifies that a business can exist without
including all of the inputs and processes needed to create outputs.
The Amendment includes an optional concentration test according to
which it can be determined that a business has not been acquired,
without additional assessments.
The Amendment is applied prospectively to all business
combinations and asset acquisitions for which the acquisition date
is on or after 1 January 2020.
The application of the Amendment is not expected to have a
material effect on the Company.
NOTE 2: SIGNIFICANT ACCOUNTING POLICIES (Cont.)
c . Disclosure of new standard in the period prior to their adoption:
Amendment to IFRS 16, "Leases":
In view of the global coronavirus crisis, in May 2020, the IASB
issued "Covid-19-Related Rent Concessions - Amendment to IFRS 16,
Leases" ("the Amendment"). The objective of the Amendment is to
allow a lessee to apply a practical expedient according to which
covid-19 related rent concessions will not be accounted for as
lease modifications but as variable lease payments. The relief
applies to lessees only.
The Amendment applies only to covid-19 related rent concessions
and only if all of the following conditions are met:
-- The revised future lease payments are substantially the same
or less than the original lease payments immediately preceding the
change;
-- The reduction in lease payments relates to payments due on or before 30 June 2021; and
-- No other substantive changes have been made to the terms of the lease.
The Amendment is to be applied retrospectively effective for
annual periods beginning on or after 1 June 2020, with earlier
application permitted.
The Company has evaluated the effects of the Amendment and
estimates that its adoption is not expected to have a material
impact on the financial statements since no material covid-19
related rent concessions have occurred or are expected to
occur.
NOTE 3: SUPPLEMENTARY INFORMATION
The spread of Coronavirus has had an impact on the Group's
operations. The Group has a well-balanced portfolio of assets,
however in February 2020 many sport events were cancelled around
the world which had a negative effect on the Group's revenue. A
similar effect was seen in the Group's Finance and Technology units
where many financial institutions cut marketing spend to a minimum.
The Casino vertical remained resilient throughout in sites
unaffected by the ongoing Google deranking. The Group is
continually monitoring and responding to the potential impact of
the outbreak, but as there is uncertainty regarding the duration of
the impact on future events, so there is ongoing uncertainty
regarding the total future effect on the Group's operations. The
Board of Directors and management have determined that the Group
will have sufficient liquidity for its operations for at least 12
months from the date of the interim consolidated financial
statements.
NOTE 4: DISCONTINUED OPERATIONS
In February 2019, the Company's board of directors decided to
reduce certain parts of its Media activities (comprising one CGU)
which had lower profit margins. In August 2019, the Company
completed the sale of Webpals Mobile Ltd ("Mobile") which is a
substantial component of the CGU. The gain derived from the sale is
USD 1.8 million.
a. Below is data of the operating results attributed to the discontinued operation:
Six months ended Year ended
30 June 31 December
------------------
2020 2019 2019
-------- -------- ------------
Unaudited Audited
------------------ ------------
USD in thousands
--------------------------------
Revenues from sales - 8,082 9,752
Cost of sales - 6,409 7,733
-------- -------- ------------
Gross profit - 1,673 2,019
Selling, general and administrative
expenses and research and
development expenses - 1,459 1,610
Operating income - 214 409
Financial expenses (income),
net - 76 37) )
Gain from sale of discontinued
operation - - 1,811
-------- -------- ------------
Income before income taxes
from discontinued operation - 138 2,257
Taxes on income - 59 40
Income from discontinued
operation, net - 79 2,217
======== ======== ============
b. Below is data of the net cash flows provided by (used in) the discontinued operation:
Six months ended Year ended
30 June 31 December
------------------
2020 2019 2019
-------- -------- ------------
Unaudited Audited
------------------ ------------
USD in thousands
---------------------------------
Operating activities - (166) 1,109
======== ======== ============
Investing activities - - 80
======== ======== ============
NOTE 5: 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.
In 2019 the main part of the Group's Media activities was
classified a discontinued activity and sold. Other Media activities
which provided complementary activities to the Publishing
activities were integrated into the Publishing segment activities.
Subsequent to this integration the Group has one operating segment
- Publishing, which consists the operation of over 2,300 owned
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.
b. Geographic information:
Revenues classified by geographical areas based on internet user
location:
Six months ended Year ended
30 June 31 December
------------------
20 20 2019 2019
-------- -------- ------------
Unaudited Audited
------------------ ------------
USD in thousands
--------------------------------
Scandinavia 11,372 18,594 34,667
Other European countries 7,991 11,604 21,458
North America 5,434 9,302 16,162
Asia 17 146 224
Oceania 461 814 1,375
Other countries 38 298 104
------------
Total revenues from identified
locations 25,313 40,758 73,990
Revenues from unidentified locations 2,402 1,70 1 5,705
------------
Total revenues 27,715 42,459 79,695
======== ======== ============
NOTE 6: SUBSEQUENT EVENTS
In August 2020, the Company decided not to exercise an option to
renew a lease of certain office space, where the renewal period was
originally included in the determination of the lease liabilities
and corresponding right-of-use assets in the interim condensed
consolidated financial statements. Accordingly, in the second half
of 2020, the Company will derecognise the lease liabilities by
approximately $ 3.7 million and the related right-of-use and other
assets by approximately $ 3.4 million. The expected impact on the
profit before taxes on income will be a gain of approximately $ 0.3
million.
- - - - - - - - - - - - - - - - -
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END
IR DGGDCXGDDGGI
(END) Dow Jones Newswires
September 29, 2020 02:00 ET (06:00 GMT)
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