TIDMXLM
RNS Number : 3131G
XLMedia PLC
29 March 2022
29 March 2022
XLMedia PLC
("XLMedia" or the "Group" or the "Company")
Results for the Year Ended 31 December 2021
XLMedia (AIM: XLM), a leading global digital performance
publisher, announces the Company's audited results for the year
ended 31 December 2021.
Financial summary
-- Revenues of $66.5 million (FY 2020: $54.8 million)
o Sports vertical generated revenues of $31.4 million (2020:
US$11.3 million)
o Personal Finance generated revenues of $8.7 million (2020:
US$8.4 million)
o European Casino assets generated revenues of US$23.2 million
(2020: US$31.7 million)
o Other legacy revenues were $3.1 million (FY 2020: $3.5
million)
-- Operating profit of $3.9 million (FY 2020: $0.1 million)
-- Adjusted EBITDA (1) of $17.9million (FY 2020: $12.2 million)
-- Adjusted profit before tax (2) of $10.5 million (FY 2020: $5.3 million)
-- Reported Profit before tax of $4 million (FY 2020: $1.1 million)
-- Cash and short-term investments of $24.6 million (31 December 2020: $13.9 million)
1 Adjusted EBITDA in all references is defined as Earnings
Before Interest, Taxes, Depreciation and Amortisation, and
excluding any share-based payments, impairment and reorganisation
costs
2 Excluding loss from impairment and reorganisation costs
Operating summary
-- Grown presence and created a significant market opportunity
within North American Sports, with coverage across the 15 states
where online sports betting is legal, as well as US states and
Canadian provinces soon to legalise
o Successfully harmonised two US sports acquisitions (Sports
Betting Dime and Saturday Inc.) with CBWG assets and team
o Commercial content team successfully working across a number
of media partners
-- European Sports and Personal Finance assets now managed from UK and US respectively
-- Managed decline within European Casino retaining profitability
-- Strengthened board and executive teams with the appointments of:
o Chief Financial Officer, Caroline Ackroyd, Chief Information
Officer, Nigel Leigh, Chief People Officer, Sonja Haas, and Julie
Markey and Cédric Boireau as Non-Executive Directors
-- Global operational reorganisation to complete in H1 22
o Annualised gross cost savings of between $5 million and $6
million
Outlook
-- Current trading for year ending 31 December 2022 in-line with management expectations
-- North American Sports vertical now a key growth, profit and
cash driver for the Group, buoyed by a strong start to 2022
Stuart Simms, Chief Executive Officer at XLMedia, commented:
"We've made great progress in North America during 2021
alongside delivering important organisational changes to both
rationalise and ring-fence legacy areas of our business. We set out
to become a significant player in North American Sports - in line
with our strategy to pursue high growth, large, regulated markets -
we're now in really good shape, with strong geographical coverage
and capability, ready to fully exploit this significant market
opportunity."
Julie Markey, Interim-Chair at XLMedia, commented:
"In 2021, the Group evolved its operational capabilities -
upskilling and realigning our global workforce to better match
strategy and generate new future growth. I'm proud of our people
for driving through a period of significant change including having
to navigate continued restrictions relating to the Covid pandemic.
The business is becoming more agile and responsive so that it can
fully exploit new opportunities."
Investor presentation webcast
A webcast of the presentation will be made available on the
Company's website at
https://www.xlmedia.com/investor-relations/webcasts/
For further information, please contact:
XLMedia plc ir@xlmedia.com
Stuart Simms, Chief Executive Officer via Vigo Consulting
Rowan Ellis, Interim Chief Financial Officer
www.xlmedia.com
Vigo Consulting Tel: 020 7390 0233
Jeremy Garcia / Kendall Hill
www.vigoconsulting.com
Cenkos Securities plc (Nomad and Joint Broker) Tel: 020 7397 8900
Giles Balleny / Max Gould
www.cenkos.com
Berenberg (Joint Broker) Tel: 020 3207 7800
Mark Whitmore / Richard Andrews / Jack Botros
www.berenberg.com
Notes:
XLMedia is a global digital performance publisher. Operating
across a variety of vertical markets including online gambling,
personal finance and sports, the Group uses proprietary tools and
methodologies to identify and target high value consumers for
platform operators.
XLMedia operates branded, content-rich websites, underpinned by
intelligent market-leading technology and data, to build stronger
and lasting relationships with consumers.
The Group seeks to create a balanced portfolio of premium
websites to cover a range of attractive geographies, both stable
and high-growth verticals, with greater exposure to regulated
markets.
Chair & Chief Executive Officer review
Introduction
The Group delivered a robust financial performance across FY21,
underpinned by a strong performance from our Sports vertical, which
has been driven by our key acquisitions and the ongoing
legalisation of sports gambling across the U.S.
We will complete the comprehensive organisational redesign and
rationalisation of the business in H1 2022, ensuring XLMedia is
rightsized and focused on addressing high growth regulated
markets.
Pleasingly, the business is now fully focused on expanding our
portfolio of premium assets, underpinned by content-rich and
consumer-centric sites, servicing high growth markets and
geographies whilst delivering enhanced operating performance and
efficiency.
Rationalisation
Our organisational redesign, which was initiated in H2 2021 ,
will be completed in H1 2022. The Group has focused on reshaping
our operating model, and this process, alongside realigning both
talent and resources globally, will yield annualised cost savings
of between $5 million and $ 6 million. The Group has been evolving
its operating model in that time, creating global and regional
hubs, which has improved our access to an economical pool of
talent. Our acquisition of BlueClaw has also accelerated this
process, bringing enhanced SEO and digital PR expertise; we have
applied this expertise to our European Sports vertical to good
effect in H2 21 and will be rolling out these best practices across
the wider Group portfolio during FY 2022.
People / Talent
During the period, the Company has re-built the executive team,
appointing Caroline Ackroyd as Chief Financial Officer in March
2022, in addition to the appointments of Chief Information Officer,
Nigel Leigh, and Chief People Officer, Sonja Haas. The Group also
strengthened the Board with the appointments of Julie Markey and
Cédric Boireau as Non-Executive Directors, bringing a wealth of
experience in international people management and value investing
respectively.
Divisional summary
Sports
The Group's Sports division delivered a strong performance
during FY 2021, driven by a number of highly strategic US sports
acquisitions. Following the successful integration of these
businesses, XLMedia has now established a considerable North
American sports platform underpinned by increasing regulatory
tailwinds, which continue to create multiple growth opportunities
for the Group.
Our North American sports platform generated significant levels
of online traffic across H2 2021, growing to a year-end audience of
17.8 million unique monthly users. Our North American teams have
successfully signed a number of key commercial and partnership
agreements, which includes AMNY, a leading news site in Manhattan
and New York City focused on local news and events, to complement
the partnerships already in place through the acquisition of CBWG.
Media partnerships are a core competency and remain a key focus to
ensure geographical coverage, alongside owned and operated
brands.
The North American Sports season, running September through
April, generated $5.7 million in 2020-2021. While the 2021-2022
season is yet to conclude, generated revenues currently standing at
$38.4 million, representing a 574% year-on-year increase.
Our pipeline continues to strengthen as more US states and
Canadian provinces regulate, including, for example, Ohio, Illinois
and Ottawa.
The Group's European Sports vertical delivered a solid 7% uplift
in revenue performance during 2021 to $10 million, whilst migrating
operations from Israel to BlueClaw in the UK.
European Casino
The Group's European Casino assets, which are in managed
decline, delivered a profitable performance across 2021, albeit
from a smaller, more efficient cost base. This vertical continues
to experience ongoing trading pressures alongside expected tail
revenue decline.
The Group's Finnish Casino assets generated revenue of $ 11.7
million (FY 2020: $ 15.0 million) , as previously highlighted, and
which continue to face strong regulatory pressures and management
anticipates a prolonged period of adjustment to this new regulatory
environment.
Personal Finance
Personal Finance delivered a flat performance in FY 2021, with
FY 2022 revenue expected to be less than FY 2021 as trading
continuing to be challenging, yet profitable. Migration of the
Personal Finance team to North America from Israel was completed in
H2 21. All key Personal Finance assets will be re-platformed during
FY 22, which will deliver improved site performance and SEO
operations, as well as enhance consumer experience and
engagement.
Regulation
XLMedia remains focused on large, high-growth regulated markets,
underpinning the Group's focus on Sports, both in the US and
Europe. Regulatory changes in the European casino vertical have led
the group to lower its exposure to the region alongside the
associated cost base.
It is XLMedia's experience that operating within a clear
regulatory framework will further drive our strategic
ambitions.
Outlook
With the Group's restructuring set to be completed in H1 2022,
XLMedia is now fully focused on growth and profit generation. The
Group's Sports vertical is now a key growth driver for the business
and has fast created a powerful operational footprint from which to
expand our services.
With the ongoing strength of our US Sports assets and
rationalisation of the broader business, XLMedia continues to trade
in-line with expectations for the year ended 31 December 2022.
Financial Review
$'000 2021 2020 Change
----------
Revenues 66, 487 54,839 21%
========================================== ========== ========== =======
Expenses:
========================================== ========== ========== =======
( 40 , 740 (3 6 , 222
Operating ) ) 12%
========================================== ========== ========== =======
Sale and marketing (14,837) (9,819) 51%
========================================== ========== ========== =======
Depreciation and amortisation (6,970) (7,720) 10%-
========================================== ========== ========== =======
Impairment loss - (955) 100%-
========================================== ========== ========== =======
Operating profit 3,940 123 3103%
========================================== ========== ========== =======
EBITDA (3) 10,910 8,798 24%
========================================== ========== ========== =======
Adjusted EBITDA (2) 17,934 12,161 47%
========================================== ========== ========== =======
Adjusted (1) profit before tax on income 10,519 5,332 97%
========================================== ========== ========== =======
Profit before taxes on income 4,015 1,106 263%
---------- ---------- -------
(1) Excluding loss from impairment and reorganisation costs
(2) Earnings Before Interest, Taxes, Depreciation, Amortisation
and excluding share-based payments, impairment, and reorganisation
costs
(3) Earnings Before Interest, Taxes, Depreciation, Amortisation,
and impairment.
XLMedia revenues in FY 2021 totalled $ 66.5 million (20 20 :
$54.8 million), an increase of 21% compared to the previous year,
underpinned by acquisitive growth within the North American Sports
vertical, which more than offsets the anticipated revenue fall in
the Casino vertical.
Operating expenses for 2021 were $ 40.7 million (2020: $ 36.2
million) , an increase of 12% compared to the previous year
reflecting costs associated with M&A activity, and
restructuring.
Sales and marketing expenses for 2021 were $ 14.8 million (2020:
$ 9.8 million), an increase of 51% which largely relates to the
North American Sports network model, and which differs from the
owned and operated model.
EBITDA for 2021 was $10.9 million or 16.4% of revenues (2020:
$8.9 million, or 16% of revenues), the latter excludes the
impairment charge of $1 million in 2020.
Adjusted EBITDA for 2021 was $17.9 million or 27% of revenues
(2020: $12.2 million, or 22.2% of revenues), an increase of 47% on
prior year due mainly to the increase in revenues.
Net financing expenses for 2021 were $0.2 million (2020: $0.1
million).
No impairment loss was recorded for 2021, (2020: $1 million,
following the demotion of the Group's websites by Google in January
2020).
In 2021 the Group recorded t ransformation costs of $6.5 million
(2020: $3.3 million) following the commencement of its
restructuring plan mid 2020, as well as costs associated with
M&A activity.
Adjusted profit before tax on income in 2021 was $10.6 million
(2020: $5.3 million), an increase of 97%.
Non-current assets as at 31 December 2021 were $123 million (31
December 2020: $66.9 million). The increase of 84% compared to the
previous year was primarily due to $56.1 million from acquiring
domains and websites in the U.S. Sports market.
Current assets as at 31 December 2021 were $39.4 million (31
December 2021: $25.2 million). The increase of 56 % compared to the
previous year was primarily due to the increase in cash and cash
equivalents mentioned below.
As at 31 December 2021, the Company had $22.4 million cash and
cash equivalents (not including short- and long-term deposits) (31
December 2020: $12.6 million). The change in cash reflects $7.2
million generated by operating activities and $34.7 million
generated by financing activities offset by $31.9 million used for
investment activity.
Total equity as at 31 December 2021 was $109.2 million or 67% of
total assets (31 December 2020: $67.3 million or 73% of total
assets). The increase of 62%, compared to the previous year, was
primarily due to the issue of $35.8 million of new ordinary shares
for the acquisition consideration of U.S. websites.
Non-current liabilities as at 31 December 2021 were $11.2
million (31 December 2020: $1.6 million). The increase of 600%,
compared to the previous year, was primarily due to deferred
consideration liabilities related to the acquisition of U.S.
domains and websites.
Current liabilities as at 31 December 2021 were $42.1 million
(31 December 2020: $23.3 million). The increase of 81%, compared to
prior year was mostly related to deferred consideration liabilities
linked with the acquisition of U.S. domains and websites
acquisitions.
2021 has been an important year for the Company - we have made
significant progress on our fundamental rationalisation programme,
repositioning ourselves well for future growth. We exited the year
with a positive trajectory and successfully completed our third
acquisition in the North American Sports market. We remain
optimistic about the Group's prospects in the years ahead.
INDEPENT AUDITORS' REPORT
To the Shareholders of XLMEDIA PLC
Report on the audit of the consolidated financial statements
Opinion
We have audited the consolidated financial statements of XLMedia
PLC and its subsidiaries (the Group), which comprise the
consolidated statement of financial position as of 31 December 2021
and 2020, and the consolidated statements of profit or loss and
other comprehensive income, consolidated statements of changes in
equity and consolidated statements of cash flows for each of the
years then ended, and notes to the consolidated financial
statements, including a summary of significant accounting
policies.
In our opinion, the accompanying consolidated financial
statements present fairly, in all material respects, the
consolidated financial position of the Group as of 31 December 2021
and 2020 and its consolidated financial performance and its
consolidated cash flows for each of the years then ended in
accordance with International Financial Reporting Standards (IFRSs)
as adopted by the European Union.
Basis for opinion
We conducted our audit in accordance with International
Standards on Auditing (ISAs). Our responsibilities under those
standards are further described in the Auditor's responsibilities
for the audit of the consolidated financial statements section of
our report. We are independent of the Group in accordance with the
International Ethics Standards Board for Accountants' International
Code of Ethics for Professional Accountants (including
International Independence Standards) (IESBA Code), and we have
fulfilled our other ethical responsibilities in accordance with the
IESBA Code. We believe that the audit evidence we have obtained is
sufficient and appropriate to provide a basis for our opinion.
Key audit matters
Key audit matters are those matters that, in our professional
judgment, were of most significance in our audit of the
consolidated financial statements of the current period. These
matters were addressed in the context of our audit of the
consolidated financial statements as a whole, and in forming our
opinion thereon, and we do not provide a separate opinion on these
matters. For each matter below, our description of how our audit
addressed the matter is provided in that context.
We have fulfilled the responsibilities described in the
Auditor's responsibilities for the audit of the consolidated
financial statements section of our report, including in relation
to these matters. Accordingly, our audit included the performance
of procedures designed to respond to our assessment of the risks of
material misstatement of the consolidated financial statements. The
results of our audit procedures, including the procedures performed
to address the matters below, provide the basis for our audit
opinion on the accompanying consolidated financial statements.
Description of key audit matter Description of auditor's
response
Revenue Revenues which amounted to USD In 2021 in order to gain
recognition 66.5 million in 2021 are significant the required level of
to the consolidated financial assurance, we performed
statements based on their quantitative substantive audit procedures
materiality. As such, there is relating to the recognition
inherent risk that revenues may and recording of revenues,
be improperly recognised, inflated including tests of reconciliations
or misstated. from underlying data
to the financial accounts.
Recognition of revenues in the IT audit specialists
accounts of the Group is a highly were deployed to assist
automated process. The Group is in understanding the
heavily reliant on the reliability design and operation
and continuity of its in-house of the relevant IT systems
IT platform to support automated and in performing various
data processing in its recognition data analyses in order
and recording of revenues. to test completeness,
accuracy and timing of
the recognition of revenues.
We also evaluated the
adequacy of the disclosures
provided in relation
to revenues in Notes
2 and 17 to the consolidated
financial statements.
------------------------------------------- ------------------------------------
Domains As of 31 December 2021, the total Our audit procedures
and Websites net carrying amount of domains included, among others,
and other and websites with indefinite useful evaluating the assumptions
intangible life and other intangible assets and methodologies used
assets was approximately USD 120.3 million. by the Group. In particular,
- impairment In accordance with IFRS as adopted we tested the Group's
test by the European Union, the Group determination of the
is required to annually test these recoverability of these
assets for impairment. As a result assets by reviewing management's
of the impairment test, no impairment forecasts of revenues
loss was recorded in 2021. and profitability. We
assessed the reliability
of these forecasts through,
among others, a review
of actual performance
against previous forecasts.
We evaluated and tested
the discount rates and
attribution of expenses,
and we considered the
reasonableness of management's
other assumptions. We
also verified the adequacy
of the disclosure of
the assumptions and other
data in Note 7 to the
consolidated financial
statements.
------------------------------------------- ------------------------------------
Taxation The Group's operations are subject We included in our team
to income tax tax specialists to analyse
in various jurisdictions. Taxation and evaluate the assumptions
is significant to our audit because used to determine tax
the assessment process is complex provisions. We evaluated
and judgmental, and the amounts and tested the underlying
involved are material to the consolidated support, such as transfer
financial statements as a whole. price studies, for the
calculation of income
taxes in the various
jurisdictions. We also
assessed the adequacy
of the Group's disclosures
in Note 15 to the consolidated
financial statements.
------------------------------------------- ------------------------------------
Other information included in the Group's 2021 Annual Report
Other information consists of the information included in the
Annual Report, other than the consolidated financial statements and
our auditor's report thereon. Management is responsible for the
other information. The Group's 2021 Annual Report is expected to be
made available to us after the date of this auditor's report.
Our opinion on the financial statements does not cover the other
information and we will not express any form of assurance
conclusion thereon.
In connection with our audit of the consolidated financial
statements, our responsibility is to read the other information
identified above when it becomes available and, in doing so,
consider whether the other information is materially inconsistent
with the consolidated financial statements or our knowledge
obtained in the audit or otherwise appears to be materially
misstated.
Responsibilities of management and the board of directors for
the consolidated financial statements
Management is responsible for the preparation and fair
presentation of the consolidated financial statements in accordance
with IFRS as adopted by the European Union, and for such internal
control as management determines is necessary to enable the
preparation of consolidated financial statements that are free from
material misstatement, whether due to fraud or error.
In preparing the consolidated financial statements, management
is responsible for assessing the Group's ability to continue as a
going concern, disclosing, as applicable, matters related to going
concern and using the going concern basis of accounting unless
management either intends to liquidate the Group or to cease
operations, or has no realistic alternative but to do so.
The board of directors is responsible for overseeing the Group's
financial reporting process.
Auditor's responsibilities for the audit of the consolidated
financial statements
Our objectives are to obtain reasonable assurance about whether
the consolidated financial statements as a whole are free from
material misstatement, whether due to fraud or error, and to issue
an auditor's report that includes our opinion. Reasonable assurance
is a high level of assurance but is not a guarantee that an audit
conducted in accordance with ISAs will always detect a material
misstatement when it exists. Misstatements can arise from fraud or
error and are considered material if, individually or in the
aggregate, they could reasonably be expected to influence the
economic decisions of users taken on the basis of these
consolidated financial statements.
As part of an audit in accordance with ISAs, we exercise
professional judgment and maintain professional skepticism
throughout the audit. We also:
Identify and assess the risks of material misstatement of the
consolidated financial statements, whether due to fraud or error,
design and perform audit procedures responsive to those risks, and
obtain audit evidence that is sufficient and appropriate to provide
a basis for our opinion. The risk of not detecting a material
misstatement resulting from fraud is higher than for one resulting
from error, as fraud may involve collusion, forgery, intentional
omissions, misrepresentations, or the override of internal
control.
Obtain an understanding of internal control relevant to the
audit in order to design audit procedures that are appropriate in
the circumstances, but not for the purpose of expressing an opinion
on the effectiveness of the Group's internal control.
Evaluate the appropriateness of accounting policies used and the
reasonableness of accounting estimates and related disclosures made
by management.
Conclude on the appropriateness of management's use of the going
concern basis of accounting and, based on the audit evidence
obtained, whether a material uncertainty exists related to events
or conditions that may cast significant doubt on the Group's
ability to continue as a going concern. If we conclude that a
material uncertainty exists, we are required to draw attention in
our auditor's report to the related disclosures in the consolidated
financial statements or, if such disclosures are inadequate, to
modify our opinion. Our conclusions are based on the audit evidence
obtained up to the date of our auditors' report. However, future
events or conditions may cause the Group to cease to continue as a
going concern.
Evaluate the overall presentation, structure and content of the
consolidated financial statements, including the disclosures, and
whether the consolidated financial statements represent the
underlying transactions and events in a manner that achieves fair
presentation.
Obtain sufficient appropriate audit evidence regarding the
financial information of the entities or business activities within
the Group to express an opinion on the consolidated financial
statements. We are responsible for the direction, supervision and
performance of the Group audit. We remain solely responsible for
our audit opinion.
We communicate with the board of directors regarding, among
other matters, the planned scope and timing of the audit and
significant audit findings, including any significant deficiencies
in internal control that we identify during our audit.
We also provide the board of directors with a statement that we
have complied with relevant ethical requirements regarding
independence, and to communicate with them all relationships and
other matters that may reasonably be thought to bear on our
independence, and where applicable, actions taken to eliminate
threats or safeguards applied.
From the matters communicated with the board of directors, we
determine those matters that were of most significance in the audit
of the consolidated financial statements of the current period and
are therefore the key audit matters. We describe these matters in
our auditor's report unless law or regulation precludes public
disclosure about the matter or when, in extremely rare
circumstances, we determine that a matter should not be
communicated in our report because the adverse consequences of
doing so would reasonably be expected to outweigh the public
interest benefits of such communication.
Report on other legal and regulatory requirements
The consolidated financial statements have been prepared in
accordance with the requirements of the Companies (Jersey) Law
1991.
The partner in charge of the audit resulting in this independent
auditor's report is Eli Barda.
Tel-Aviv, Israel KOST FORER GABBAY & KASIERER
28 March 2022 A Member of Ernst & Young Global
Consolidated statements of financial position
as at 31 December 2021
2021 2020
Notes $ 000 $ 000
Assets
Non-current assets
Intangible assets and goodwill 7 120,284 63,866
Property and equipment 6 2,401 1,072
Other assets 247 497
Long-term deposits 4 83 1,478
-------- --------
123, 015 66, 913
Current assets
Short-term deposits 4 2,158 1,228
Trade receivables 5 8,701 5,792
Other receivables 5 6 , 119 5,578
Cash and cash equivalents 22,437 12,648
-------- --------
39,415 25,246
Total assets 162,430 92,159
======== ========
Equity and liabilities
Equity
Share capital 12 *) - *) -
Share premium 12 122,071 86,022
Capital reserve 14 (258)
( 12,869 (18, 510
A ccumulated deficit ) )
-------- --------
Total equity 109, 216 67, 254
Non-current liabilities
Lease liabilities 10 1,242 366
Deferred taxes 15 1,372 1,2 43
Deferred consideration 7 7,737 -
Contingent consideration 16 808 -
-------- --------
11,159 1,609
Current liabilities
Trade payables 2,333 2,000
Deferred consideration 7,16 18,401 -
Consideration payable on intangible
assets 7 3,000 -
Other liabilities and accounts payable 8 7,820 8,76 9
Income tax provision 10,190 11, 899
Financial derivatives 11 - 304
Current maturities of lease liabilities 10 311 324
-------- --------
42 , 055 23 ,296
-------- --------
Total liabilities 53, 214 24 ,905
======== ========
Total equity and liabilities 162,430 92 , 159
======== ========
*) Less than $1,000.
The accompanying notes are an integral part of the consolidated
financial statements.
28 March 2022
-------------------- ---------------- --------------- -----------------------
Date of approval Julie Markey Stuart Simms Rowan Ellis
of the
financial statements Interim Chairman Chief Executive Interim Chief Financial
of the Board of Officer Officer
Directors
Consolidated statements of profit or loss and other
comprehensive income
for the year ended 31 December 2021
2021 2020
$ 000 $ 000
Notes
Revenue 17 66, 487 54,839
Expenses:
( 40 , 740 (3 6 , 222
Operating 14 ) )
Sale and marketing (14,837) (9,819)
Depreciation and amortisation 6,7 (6,970) (7,720)
Impairment loss 7 - (955)
---------- ----------
Operating profit 3,940 123
Finance expenses (549) (834)
Finance income 306 695
Other income 318 1,122
----------
Profit before taxes on income 4,015 1,1 0 6
Income tax benefit / (expense) 15 1, 626 ( 31 4)
----------
Profit for the year 5, 641 792
========== ==========
Other comprehensive income
Exchange loss arising on translation
of foreign operations (16) -
---------- ----------
Total comprehensive income 5, 625 792
========== ==========
Profit for the year attributable to:
Equity owners of the Company 5, 6 41 531
Non-controlling interests - 261
---------- ----------
5, 6 41 792
========== ==========
Total comprehensive income attributable
to:
Equity owners of the Company 5, 625 531
Non-controlling interests - 261
---------- ----------
5, 625 792
========== ==========
Earnings per share attributable to
equity holders of the Company:
Basic and diluted earnings per share
(in $) 12 0.023 0.004
========== ==========
See note 1c with respect to the presentation for the year ended
31 December 2020.
The accompanying notes are an integral part of the consolidated
financial statements.
Consolidated statements of changes in equity
for the year ended 31 December 2021
Capital
reserve Capital reserve
from the from
Capital translation transactions Total
reserve from of a with attributable
Share Share share-based foreign non-controlling Treasury Accumulated to owners of Non-controlling Total
capital premium transactions operation interests shares deficit the Company interests equity
$000 $000 $000 $000 $000 $000 $000 $000 $000 $000
As at 1 January
2021 *) - 86,022 2,368 - (2,626) - (18,510) 67,254 - 67,254
Profit for the
year - - - - - - 5, 641 5, 641 - 5, 641
Other
comprehensive
income - - - (16) - - - (16) - (16)
------- -------- ------------ ----------- --------------- -------- ----------- ------------ --------------- --------
Total
comprehensive
income - - - (16) - - 5, 641 5, 625 - 5, 625
Cost of
share-based
payment - - 520 - - - - 520 - 520
Share capital
issuance *) - 35,806 - - - - - 35,806 - 35,806
Exercise of
option *) - 243 ( 232 ) - - - - 11 - 11
------- -------- ------------ ----------- --------------- -------- ----------- ------------ --------------- --------
As at 31
December 2021 *) - 122,071 2,656 (16) (2,626) - (12, 869 ) 109, 216 - 109, 216
======= ======== ============ =========== =============== ======== =========== ============ =============== ========
As at 1 January
2020 *) - 112,624 2,276 - (2,445) (30,159) (19,041) 63,255 291 63,546
Profit for the
year - - - - - - 531 531 261 792
Cancellation of
treasury shares - (30,159) - - - 30,159 - - - -
Cost of
share-based
payment - - 92 - - - - 92 - 92
Share capital
issuance *) - 3,557 - - - - - 3,557 - 3,557
Acquisition of
non-controlling
interest - - - - (181) - - (181) (291) (472)
Dividend to
non-controlling
interest - - - - - - - - (261) (261)
------- -------- ------------ ----------- --------------- -------- ----------- ------------ --------------- --------
As at 31
December 2020 *) - 86,022 2,368 - (2,626) - (18,510) 67,254 - 67,254
======= ======== ============ =========== =============== ======== =========== ============ =============== ========
*) Less than $1,000.
The accompanying notes are an integral part of the consolidated
financial statements.
Consolidated statements of cash flows
for the year ended 31 December 2021
2021 2020
$ 000 $ 000
Operating activities
Profit for the year 5, 641 792
Adjustments to reconcile profit for the year
to net cash flows:
Depreciation and amortisation 6,970 7, 72 0
Impairment loss - 9 55
Finance (income) / expense, net ( 76 ) 824
Other income (437) (1,122)
Cost of share-based payment 520 92
(1, 626
Taxes on income (benefit) ) 3 14
Exchange differences on balances of cash and
cash equivalents 246 (297)
Working capital changes:
(Increase) / decrease in trade receivables (2,672) 1,963
Decrease / (increase) in other receivables 647 (340)
Increase / (decrease) in trade payables 31 3 (1,02 8 )
Decrease in other liabilities and accounts (1, 681
payable ) (1,204)
----------
7,8 45 8,669
Interest paid (76) (544)
Interest received 3 99
Income tax paid (572) (799)
Income tax received 48 996
---------
Net cash flows from operating activities 7,248 8,421
---------- ---------
Investing activities
(1,11 8
Purchase of property and equipment ) (319)
Acquisition of and additions to domains, websites ( 23 , 127
and other intangible assets ) (12,842)
Acquisition of and additions to systems, software ( 7 , 718
and licenses ) (6,642)
Loan to a third party - (500)
Adjustments of proceeds from the sale of discontinued
operation - (270)
Acquisition of subsidiary, net of cash acquired (395) -
Short-term and long-term deposits, net 507 91 1
---------- ---------
(31, 85
Net cash flows used in investing activities 1) (19,662)
---------
Financing activities
Share capital issuance 35,806 -
Proceeds from exercise of share options 11 -
Acquisition of non-controlling interest - (472)
Dividend paid to non-controlling interests - (261)
Repayment of long and short-term liability - (1,500)
Payment of principal portion of lease liabilities (1,163) (1,283)
---------- ---------
Net cash flows from/ (used in) financing activities 34, 654 (3,516)
---------- ---------
Net increase in cash and cash equivalents 10, 051 (14,757)
Net foreign exchange difference (262) 297
Cash and cash equivalents at 1 January 12,648 27,108
==========
Cash and cash equivalents at 31 December 22,437 12,648
========== =========
Significant non-cash transactions:
Deferred consideration payable on acquisition
of and additions to domains, websites and other
intangible 28,113 3,557
Right-of-use asset recognised with corresponding
lease liabilities 2,460 6,819
The accompanying notes are an integral part of the consolidated
financial statements.
1. General
a. Corporate information
XLMedia PLC ("the Company") is a global performance publisher
listed on the London Stock Exchange Alternative Investment Market
(AIM) since March 2014. The Company was incorporated in Jersey and
commenced its operations in 2012. The Company's registered office
is in 12 Castle Street St. Helier Jersey,
JE2 3RT. XLMedia PLC and its consolidated subsidiaries ("the
Group") owns and operates more than 100 premium branded websites
across various sectors, including Personal Finance, Sports and
Casino. Headquartered in the United Kingdom, with a significant
presence in the United States. The Company has a long track record
of success in digital publishing and performance marketing, working
with some of the world's largest advertisers. XLMedia PLC is
focused on regulated, high growth markets.
b. Definitions
In these financial statements
EUR - E uro
GBP - British Pound Sterling
- International Financial Reporting Standards as adopted
IFRS by the European Union
NIS - New Israeli Shekel
Related parties - As defined in IAS 24
Subsidiaries - Entities controlled (as defined in IFRS 10) by the Company
and whose accounts are consolidated with those of the
Company. For a list of the main subsidiaries, see Note
21
U.S. - United States
U.K. - United Kingdom
- U.S. dollar, all values are rounded to the nearest thousand
USD/$ ($000), except when otherwise indicated
c. Significant changes in the current reporting period
The financial position and performance of the Group was
particularly affected by the following events and transactions
during the reporting period:
- The acquisition of Sports Betting Dime in March 2021 (Note 7).
- The acquisition of Saturday Football Inc. (Note 7) and
Blueclaw Media Ltd ("Blueclaw") in September 2021 (Note 16).
- The Company elected to change the presentation of its expenses
in its consolidated statement of profit or loss from a
classification based on function to classification based on the
nature of expense. Group management believes that this presentation
provides reliable and more relevant information because due to a
change in the operating model of the Group, the new presentation
provides greater clarity and insight into the major categories of
expenses and the key cost drivers of the Company's business. This
change has been applied retrospectively to the prior year's
comparative information.
The spread of Coronavirus continues to impact the Group's
operations. The Group has a well-balanced portfolio of assets. The
Group is continually monitoring and responding to the outbreak's
potential impact.
2. Significant accounting policies
The following accounting policies have been applied consistently
in the financial statements for all periods presented unless
otherwise stated.
2. Significant accounting policies continued
a. Basis of presentation of the consolidated financial
statements
i. Compliance with IFRS
The consolidated financial statements of the Group have been
prepared in accordance with International Financial Reporting
Standards (IFRS) adopted by the European Union. And as issued by
the International Accounting Standards Board (IASB) and in
accordance with the requirements of the Companies (Jersey) Law
1991.
ii. Historical cost convention
The financial statements have been prepared on a historical cost
basis, except for the following:
- certain financial assets and liabilities (including derivative
instruments) and certain property, plant and equipment - measured
at fair value or revalued amount, and
- assets held for sale - measured at the lower of carrying
amount and fair value less costs to sell.
b. Consolidated financial statements
The consolidated financial statements comprise the financial
statements of companies that are controlled by the Company
(subsidiaries). Control is achieved when the Company is exposed, or
has rights, to variable returns from its involvement with the
investee and has the ability to affect those returns through its
power over the investee. Potential voting rights are considered
when assessing whether an entity has control. The consolidation of
the financial statements commences on the date on which control is
obtained and ends when such control ceases.
The financial statements of the Company and of the subsidiaries
are prepared as of the same dates and periods. The consolidated
financial statements are prepared using uniform accounting policies
by all companies in the Group. Significant intragroup balances and
transactions and gains or losses resulting from intragroup
transactions are eliminated in full in the consolidated financial
statements.
Non-controlling interests in subsidiaries represent the equity
in subsidiaries not attributable, directly or indirectly, to a
parent. Non-controlling interests are presented in equity
separately from the equity attributable to the equity holders of
the Company. Profit or loss and components of other comprehensive
income are attributed to the Company and to non-controlling
interests. A change in the ownership interest of a subsidiary
without a change of control is accounted for as an equity
transaction in accordance with IFRS 10.
c. Business combinations and goodwill
Business combinations are accounted for by applying the
acquisition method. The consideration transferred for the
acquisition of a subsidiary comprises the:
- fair values of the assets transferred
- liabilities incurred to the former owners of the acquired business
- equity interests issued by the Group
- fair value of any asset or liability resulting from a
contingent consideration arrangement, and
- fair value of any pre-existing equity interest in the subsidiary.
The cost of the acquisition is measured at the fair value of the
consideration transferred on the date of acquisition with the
addition of non-controlling interests in the acquiree. In each
business combination, the Company chooses whether to measure the
non-controlling interests in the acquiree based on their fair value
on the date of acquisition or at their proportionate share in the
fair value of the acquiree's net identifiable assets. Direct
acquisition costs are expensed as incurred.
2. Significant accounting policies continued
Contingent consideration is recognised at fair value on the
acquisition date and classified as a financial asset or liability
in accordance with IFRS 9. Subsequent changes in the fair value of
the contingent consideration are recognised in profit or loss. If
the contingent consideration is classified as an equity instrument,
it is measured at fair value on the acquisition date without
subsequent remeasurement.
Goodwill is initially measured at cost, which represents the
excess of the acquisition consideration and the
amount of non-controlling interests over the net identifiable
assets acquired and liabilities assumed. If the
resulting amount is negative, the acquirer recognises the
resulting gain on the acquisition date. After initial recognition,
goodwill is measured at cost less any accumulated impairment
losses.
d. Functional currency, presentation currency and foreign
currency
Functional currency and presentation currency
Items included in the financial statements of each of the
Group's entities are measured using the currency of the primary
economic environment in which the entity operates ('the functional
currency'). The consolidated financial statements are presented in
USD, which is the Group's functional and presentation currency.
Transactions and balances
Foreign currency transactions are translated into the functional
currency using the exchange rates at the dates of the transactions.
Foreign exchange gains and losses resulting from the settlement of
such transactions, and from the translation of monetary assets and
liabilities denominated in foreign currencies at year end exchange
rates, are generally recognised in profit or loss. They are
deferred in equity if they relate to qualifying cash flow hedges
and qualifying net investment hedges or are attributable to part of
the net investment in a foreign operation. Foreign exchange gains
and losses that relate to borrowings are presented in the statement
of profit or loss, within finance costs. All other foreign exchange
gains and losses are presented in the statement of profit or loss
on a net basis within other gains/(losses).
Non-monetary items that are measured at fair value in a foreign
currency are translated using the exchange rates at the date when
the fair value was determined. Translation differences on assets
and liabilities carried at fair value are reported as part of the
fair value gain or loss.
Group companies
The results and financial position of foreign operations (none
of which has the currency of a hyperinflationary economy) that have
a functional currency different from the presentation currency are
translated into the presentation currency as follows:
i. assets and liabilities for each balance sheet presented are
translated at the closing rate at the date of that balance
sheet,
ii. income and expenses for each statement of profit or loss and
statement of comprehensive income are translated at average
exchange rates (unless this is not a reasonable approximation of
the cumulative effect of the rates prevailing on the transaction
dates, in which case income and expenses are translated at the
dates of the transactions), and
iii. all resulting exchange differences are recognised in other comprehensive income.
On consolidation, exchange differences arising from the
translation of any net investment in foreign entities, and of
borrowings and other financial instruments designated as hedges of
such investments, are recognised in other comprehensive income.
When a foreign operation is sold or any borrowings forming part of
the net
2. Significant accounting policies continued
investment are repaid, the associated exchange differences are
reclassified to profit or loss, as part of the gain or loss on
sale.
Goodwill and fair value adjustments arising on the acquisition
of a foreign operation are treated as assets and liabilities of the
foreign operation and translated at the closing rate.
e. Cash equivalents
Cash is cash on hand and demand deposits. Cash equivalents are
highly liquid investments, including unrestricted short-term bank
deposits with an original maturity of three months or less that are
readily convertible to known amounts of cash and which are subject
to insignificant risk of changes in value. Investments normally
only qualify as cash equivalent if they have a short maturity of
three months or less from the date of acquisition.
f. Short-term and long-term deposits
Short-term bank deposits are deposits with an original maturity
of more than three months from the investment date and do not meet
the definition of cash equivalents. Long-term deposits are deposits
with a maturity of more than twelve months from the reporting date.
The deposits are presented according to their terms of deposit.
g. Revenue recognition
The Group generates revenues mainly from referred players who
visit the Group's premium branded websites. The main revenue
streams are: cost per acquisition ("CPA"), revenue-share fees or a
combination of both, which is referred to as a hybrid.
CPA fees are fixed-rate fees owed for each player who registers
and usually deposits a minimum balance on the operator's site, and
they are recognised when earned upon acceptance of the referral by
the operator.
Revenue-share fees represent a set percentage of net revenues
generated over the lifetime of the referred player. The Group has
no material obligations for discounts, incentives or refunds of
commissions subsequent to completion of performance
obligations.
Deferred revenues are recorded when payments are received from
customers in advance of the Company's rendering of services.
h. Taxes on income
Current or deferred taxes are recognised in profit or loss,
except to the extent that they relate to items that are recognised
in other comprehensive income or equity.
Current taxes
The current tax liability is measured using the tax rates and
tax laws that have been enacted or substantively enacted by the
reporting date, as well as adjustments required in connection with
the tax liability in respect of previous years.
Deferred taxes
Deferred taxes are computed in respect of temporary differences
between the carrying amounts in the financial statements and the
amounts attributed for tax purposes. Deferred taxes are measured at
the tax
2. Significant accounting policies continued
rate that is expected to apply when the asset is realised or the
liability is settled based on tax laws that have been enacted or
substantively enacted by the reporting date.
Deferred tax assets are reviewed at each reporting date and
reduced to the extent that it is not probable that they will be
utilised. Deductible temporary differences for which deferred tax
assets had not been recognised are reviewed at each reporting date,
and a respective deferred tax asset is recognised to the extent
that their utilisation is probable. Taxes that would apply in the
event of the disposal of investments in investees have not been
taken into account in computing deferred taxes, as long as the
disposal of the investments in investees is not probable in the
foreseeable future. Also, deferred taxes that would apply in the
event of distribution of earnings by investees as dividends have
not been taken into account in computing deferred taxes, since the
distribution of dividends does not involve an additional tax
liability or since it is the Group's policy not to initiate
distribution of dividends from a subsidiary that would trigger an
additional tax liability.
Deferred taxes are offset if there is a legally enforceable
right to offset a current tax asset against current tax liability,
and the deferred taxes relate to the same taxpayer and the same
taxation authority.
i. Leases
The Group accounts for a contract as a lease when the contract
terms convey the right to control the use of an identified asset
for a period of time in exchange for consideration.
Recognition of assets and liabilities
For leases in which the Group is the lessee, the Group
recognises on the commencement date of the lease a right-of-use
asset and a lease liability, excluding leases whose term is up to
12 months and leases for which the underlying asset is of low
value. For these excluded leases, the Group has elected to
recognise the lease payments as an expense in profit or loss on a
straight-line basis over the lease term. In measuring the lease
liability, the Group has elected to apply the practical expedient
and does not separate the lease components from the non-lease
components (such as management and maintenance services, etc.)
included in a single contract. On the commencement date, the lease
liability includes all unpaid lease payments discounted at the
interest rate implicit in the lease, if that rate can be readily
determined, or otherwise using the Group's incremental borrowing
rate. After the commencement date, the Group measures the lease
liability using the effective interest rate method. The
right-of-use asset is recognised in an amount equal to the lease
liability plus lease payments already made on or before the
commencement date and initial direct costs incurred. The
right-of-use asset is measured applying the cost model and
depreciated over the shorter of its useful life or the lease term
(see j below). The Group tests for impairment of the right-of-use
asset whenever there are indications of impairment pursuant to the
provisions of IAS 36.
Variable lease payments that depend on an index
The Group uses the index rate prevailing on the commencement
date to calculate the future lease payments. For leases in which
the Group is the lessee, the aggregate changes in future lease
payments resulting from a change in the index are discounted
(without a change in the discount rate applicable to the lease
liability) and recorded as an adjustment of the lease liability and
the right-of-use asset, only when there is a change in the cash
flows resulting from the change in the index (that is, when the
adjustment to the lease payments takes effect).
2. Significant accounting policies continued
Lease extension and termination options
A non-cancellable lease term includes both the periods covered
by an option to extend the lease when it is reasonably certain that
the extension option will be exercised and the periods covered by a
lease termination option when it is reasonably certain that the
termination option will not be exercised.
In the event of any change in the expected exercise of the lease
extension option or in the expected non-exercise of the lease
termination option, the Group remeasures the lease liability based
on the revised lease term using a revised discount rate as of the
date of the change in expectations. The total change is recognised
in the carrying amount of the right-of-use asset until it is
reduced to zero, and any further reductions are recognised in
profit or loss.
Lease modifications
If a lease modification does not reduce the scope of the lease
and does not result in a separate lease, the Group remeasures the
lease liability based on the modified lease terms using a revised
discount rate as of the modification date and records the change in
the lease liability as an adjustment to the right-of-use asset. If
a lease modification reduces the scope of the lease, the Group
recognises a gain or loss arising from the partial or full
reduction of the carrying amount of the right-of-use asset and the
lease liability. The Group subsequently remeasures the carrying
amount of the lease liability according to the revised lease terms
at the revised discount rate as of the modification date and
records the change in the lease liability as an adjustment to the
right-of-use asset.
j. Property and equipment
Property and equipment are measured at cost, including directly
attributable costs less accumulated depreciation. Depreciation is
calculated on a straight-line basis over the useful life of the
assets at annual rates as follows:
Mainly
%
Office furniture and equipment 10
Computers and peripheral equipment 33
Right of use leased assets and leasehold improvement 10 -
(over the lease term) 15
Right of use leased assets, and leasehold improvements are
depreciated on a straight-line basis over the shorter lease term
(including any extension option held by the Group and intended to
be exercised) and the asset's expected life. The useful life,
depreciation method and residual value of an asset are reviewed at
least each year-end and any changes are accounted for prospectively
as a change in accounting estimate.
Depreciation of an asset ceases at the earlier of the date that
the asset is classified as held for sale and the
date that the asset is derecognised. An asset is derecognised on
disposal or when no further economic benefits are expected from its
use.
k. Intangible assets
Separately acquired intangible assets are measured on initial
recognition at cost, including directly attributable costs.
Intangible assets acquired in a business combination are measured
at fair value at the acquisition date. Expenditures relating to
internally generated intangible assets, excluding capitalised
development costs, are recognised in profit or loss when incurred.
Intangible assets with a finite useful life are amortised over
their useful life and reviewed for impairment whenever there is an
indication that the asset may be impaired. The amortisation period
and the amortisation method for an intangible asset are reviewed at
least at each year-end.
2. Significant accounting policies continued
Intangible assets (domains and websites) with indefinite useful
lives are not systematically amortised and are tested for
impairment annually or whenever there is an indication that the
intangible asset may be impaired. The useful life of these assets
is reviewed annually to determine whether their indefinite life
assessment continues to be supportable. If the events and
circumstances do not continue to support the assessment, the change
in the useful life assessment from indefinite to finite is
accounted for prospectively as a change in accounting estimate and
on that date, the asset is tested for impairment. Commencing from
that date, the asset is amortised systematically over its useful
life.
Research expenditures are recognised in profit or loss when
incurred. An intangible asset arising from a development project or
from the development phase of an internal project is recognised if
the Group can demonstrate: the technical feasibility of completing
the intangible asset so that it will be available for use or sale;
the Company's intention to complete the intangible asset and use or
sell it; the Company's ability to use or sell the intangible asset;
how the intangible asset will generate future economic benefits;
the availability of adequate technical, financial and other
resources to complete the intangible asset; and the Company's
ability to measure reliably the expenditure attributable to the
intangible asset during its development. The asset is measured at
cost less any accumulated amortisation and any accumulated
impairment losses. Amortisation of the asset begins when
development is completed and the asset is available for use. The
asset is amortised over its useful life. Testing of impairment is
performed annually over the period of the development project.
The Group's assets include computer systems comprising hardware
and software. Software forming an integral part of the hardware to
the extent that the hardware cannot function without the programs
installed on it is classified as property and equipment. In
contrast, software that adds functionality to the hardware is
classified as an intangible asset.
Systems and software (purchased and in-house development cost)
are amortised on a straight-line basis over the useful life of
three years. Non-competition and Agencies Relationships is
amortised on a straight-line basis over the agreement term (between
2 to 3 years).
l. Impairment of non-financial assets
The Group evaluates the need to record an impairment of the
carrying amount of non-financial assets whenever events or changes
in circumstances indicate that the carrying amount is not
recoverable.
If the carrying amount of the cash-generating unit of the
non-financial assets exceeds their recoverable amount, the assets
are reduced to their recoverable amount. The recoverable amount is
the higher of fair value less costs of sale and value in use. In
measuring value in use, the expected future cash flows are
discounted using a pre-tax discount rate that reflects the risks
specific to the asset.
The recoverable amount of an asset that does not generate
independent cash flows is determined for the cash-generating unit
to which the asset belongs. Impairment losses are recognised in
profit or loss. An impairment loss of an asset, other than
goodwill, is reversed only if there have been changes in the
estimates used to determine the asset's recoverable amount since
the last impairment loss was recognised. Reversal of an impairment
loss, as above, shall not be increased above the lower of the
carrying amount that would have been determined (net of
depreciation or amortisation) had no impairment loss been
recognised for the asset in prior years and its recoverable amount.
The reversal of impairment loss of an asset presented at cost is
recognised in profit or loss.
2. Significant accounting policies continued
Goodwill is tested for impairment by assessing the recoverable
amount of the cash-generating unit (or Group of cash-generating
units) to which the goodwill has been allocated. An impairment loss
is recognised if the recoverable amount of the cash-generating unit
(or Group of cash-generating units) to which goodwill has been
allocated is less than the carrying amount of the cash-generating
unit (or Group of cash-generating units). Any impairment loss is
allocated first to goodwill. Impairment losses recognised for
goodwill cannot be reversed in subsequent periods.
Goodwill - The Company reviews goodwill and intangible assets
with indefinite useful life that are not systematically amortised
(domains and websites) for impairment annually on 31 December, or
more frequently if events or changes in circumstances indicate that
there is a need for such review.
m. Financial instruments
i. Financial assets
Financial assets are measured upon initial recognition at fair
value plus transaction costs directly attributable to the
acquisition of the financial assets, except for financial assets
measured at fair value through profit or loss in respect of which
transaction costs are recorded in profit or loss.
The Company classifies and measures debt instruments in the
financial statements based on the following criteria:
- the Company's business model for managing financial assets; and
- the contractual cash flow terms of the financial asset.
Debt instruments measured at amortised cost
The Company's business model is to hold the financial assets in
order to collect their contractual cash flows, and the contractual
terms of the financial asset give rise on specified dates to cash
flows that are solely payments of principal and interest on the
principal amount outstanding. After initial recognition, the
instruments in this category are measured according to their
terms at amortised cost using the effective interest rate method,
less any provision for impairment.
Financial assets held for trading
Financial assets held for trading (derivatives) are measured
through profit or loss unless they are designated as effective
hedging instruments.
ii. Impairment of financial assets
The Company reviews at the end of each reporting period the
provision for loss of financial debt instruments which are measured
at amortised cost. The Company has short-term trade receivables in
respect of which the Company applies a simplified approach and
measures the loss allowance in an amount equal to the lifetime
expected credit losses. An impairment loss on debt instruments
measured at amortised cost is recognised in profit or loss with a
corresponding loss allowance that is offset from the carrying
amount of the financial asset.
iii. Derecognition of financial assets
A financial asset is derecognised when the contractual rights to
the cash flows from the financial asset expire.
2. Significant accounting policies continued
iv. Financial liabilities
Financial liabilities are initially recognised at fair value
less transaction costs that are directly attributable to the issue
of the financial liability. After initial recognition, the Company
measures all financial liabilities at amortised cost using the
effective interest rate method, except for:
- financial liabilities at fair value through profit or loss such as derivatives; and
- contingent consideration recognised by the buyer in a business
combination within the scope of IFRS 3.
At initial recognition, the Company measures financial
liabilities that are not measured at amortised cost at fair value.
Transaction costs are recognised in profit or loss. After initial
recognition, changes in fair value are recognised in profit or
loss.
v. Derecognition of financial liabilities
A financial liability is derecognised only when it is
extinguished, that is when the obligation is discharged or
cancelled or expires.
n. Fair value measurement
Fair value is the price to sell an asset or pay to transfer a
liability in an orderly transaction between market participants at
the measurement date. Fair value measurement is based on the
assumption that the transaction will take place in the asset's or
the liability's principal market, or in the absence of a principal
market, in the most advantageous market.
The fair value of an asset or a liability is measured using the
assumptions that market participants would use when pricing the
asset or liability, assuming that market participants act in their
economic best interest. The Group uses valuation techniques that
are appropriate in the circumstances and for which sufficient data
are available to measure fair value, maximising the use of relevant
observable inputs and minimising the use of unobservable inputs.
All assets and liabilities measured at fair value or for which fair
value is disclosed are categorised into levels within the fair
value hierarchy based on the lowest level input that is significant
to the entire fair value measurement:
Level - quoted prices (unadjusted) in active markets for identical
1 assets or liabilities.
Level - inputs other than quoted prices included within Level 1 that
2 are observable either directly or indirectly.
Level - inputs that are not based on observable market data (valuation
3 techniques that use inputs that are not based on observable
market data).
o. Provisions
A provision in accordance with IAS 37 is recognised when the
Group has a present obligation (legal or constructive) as a result
of a past event, and it is probable that an outflow of resources
embodying economic benefits will be required to settle the
obligation and a reliable estimate can be made of the amount of the
obligation. When the Group expects part or all of the expense to be
reimbursed, for example, under an insurance contract, the
reimbursement is recognised as a separate asset but only when the
reimbursement is virtually certain. The expense is recognised in
profit or loss net of the reimbursed amount.
p. Employee benefit liabilities
Short-term employee benefits include salaries, paid sick leave,
recreation and social security contributions and are recognised as
expenses as the services are rendered. Liability in respect of a
cash bonus or a profit-sharing plan is recognised when the Group
has a legal or constructive obligation to make such payment as a
result of past service rendered by an employee, and a reliable
estimate of the amount can be made.
2. Significant accounting policies continued
Post-employment benefits are financed by contributions to
insurance companies or pension funds and classified as defined
contribution plans. The Israeli subsidiaries of the Group have
defined contribution plans pursuant to Section 14 to the Severance
Pay Law under which the subsidiary pays fixed contributions and
will have no legal or constructive obligation to pay further
contributions if the fund does not hold sufficient amounts to pay
all employee benefits relating to employee service in the current
and prior periods.
Contributions to the defined contribution plan in respect of
severance or retirement pay are recognised as an expense when
contributed concurrently with the performance of the employee's
services.
q. Share-based payment transactions
The Group's employees and officers are entitled to remuneration
in the form of equity-settled share-based payment transactions. The
cost of equity-settled transactions is measured at the fair value
of the equity instruments granted at the grant date. The fair value
is determined using an acceptable option pricing model (also see
Note 13). In estimating fair value, the vesting conditions
(consisting of service conditions and performance conditions other
than market conditions) are not taken into account. The cost of
equity-settled transactions is recognised in profit or loss
together with a corresponding increase in equity during the period
which the performance is to be satisfied ending on the date on
which the relevant employees or officers become entitled to the
award ("the vesting period"). The cumulative expense recognised for
equity-settled transactions at the end of each reporting period
until the vesting date reflects the extent to which the vesting
period has expired and the Group's best estimate of the number of
equity instruments that will ultimately vest. No expense is
recognised for awards that do not ultimately vest, except for
awards where vesting is conditional upon a market condition, which
are treated as vesting irrespective of whether the market condition
is satisfied, provided that all other vesting conditions (service
and/or performance) are satisfied.
r. Earnings per share
Earnings per share are calculated by dividing the net income
attributable to equity holders of the Company by the weighted
average number of Ordinary Shares outstanding during the period.
The Company's
share of earnings of investees is included based on the earnings
per share of the investees multiplied by the number of shares held
by the Company. If the number of Ordinary Shares outstanding
increases as a result of a capitalisation, bonus issue, or share
split, the calculation of earnings per share for all periods
presented are adjusted retrospectively. Potential Ordinary shares
are included in the computation of diluted earnings per share when
their conversion decreases earnings per share from continuing
operations. Potential Ordinary shares that are converted during the
period are included in diluted earnings per share only until the
conversion date and from that date in basic earnings per share.
3. Significant accounting judgements, estimates and
assumptions
Estimations and assumptions
The preparation of the financial statements requires management
to make estimates and assumptions that have an effect on the
application of the accounting policies and on the reported amounts
of assets, liabilities, revenues and expenses. Changes in
accounting estimates are reported in the period of the change in
estimate. The key assumptions made in the financial statements
concerning uncertainties at the end of the reporting period and the
critical estimates computed by the Group that may result in a
material adjustment to the carrying amounts of assets and
liabilities within the next financial year are discussed below.
3. Significant accounting judgements, estimates and assumptions
continued
Impairment of domains and websites
The Group reviews domains and websites for impairment at least
once a year. This requires management to make an estimate of the
projected future cash flows from the continuing use of the
cash-generating units to which the assets are allocated and also to
choose a suitable discount rate for those cash flows (see Note
7).
Income taxes
The Group is subject to income tax in various jurisdictions, and
judgment is required in determining the provision for income taxes.
During the ordinary course of business, there are transactions and
calculations for which the ultimate tax determination may be
uncertain. The Group recognises tax liabilities based on
assumptions supported by, among others, transfer price studies. The
Group believes that its accruals for tax liabilities are adequate
for all open audit years based on its assessment of many factors,
including past experience and interpretations of tax law (see Note
15).
4. Short-term and long- term deposits as at 31 December
2021 2020
$ 000 $ 000
Short-term deposits
Held in USD 500 850
Held in NIS 1,653 373
Held in EUR 5 5
----- -----
2,158 1,228
===== =====
Long-term deposits
Held in NIS - 1,478
Held in EUR 83 -
----- -----
83 1,478
===== =====
Short-term deposits carried a weighted average interest rate of
0.01% for 2021 and 2020.
Short-term deposits have fixed liens in relation to bank
guarantees for the Israel office lease and the financial
derivatives (Note 11). The long-term deposits have a fixed lien in
relation to a bank guarantee for the Cyprus office lease.
5. Trade and other receivables
Trade receivables as at 31 December
2021 2020
$ 000 $ 000
Receivables from third party customers 9,046 6,867
Allowance for expected credit losses (345) (1,075)
----- -------
8,701 5,792
===== =======
As at 31 December 2021, the Group has no material amounts that
are past due and are not impaired. Changes in the allowance for
expected credit losses are included in administrative expenses,
decreased by $730,000 (2020: $164,000 increase). See Note 11b(ii)
on the credit risk of trade receivables.
5. Trade and other receivables continued
Other receivables as at 31 December
2021 2020
$ 000 $ 000
Government authorities 3,024 2,357
Prepaid expenses 1,969 2,721
Assets held for sale (i) 391 -
Loan to a third party (ii) 234 500
Financial derivatives (Note 11) 84 -
Other receivables 417 -
----- -----
6,119 5,578
===== =====
i. Asset held for sale relates to upcoming termination of the
Israel office lease.
ii. In December 2020, the Company lent $500,000 to a third party
which is repayable in the next 12 months. Due to the short-term
nature of the loan, the carrying amount of the loan is considered
to be the same as the fair value. The loan carries an interest rate
of 5%.
6. Property and equipment
Right of
use leased
Computers, assets -
furniture, Offices
office equipment Leasehold (see note
and others improvements 10) Total
$000 $000 $000 $000
Cost
At 1 January 2020 2,816 538 9,671 13,025
Additions - - 472 472
Acquisitions during the
year 30 9 2 1 - 330
Adjustments for indexation - - (12) (12)
Decreases during the year:
Termination of leases - - (6,806) (6,806)
At 31 December 2020 3 ,125 559 3,325 7,009
Acquisitions during the
year 775 371 5,922 7,068
Adjustments for indexation - - 191 191
Decreases during the year:
Termination of leases - - (4,643) (4,643)
Other disposals (i) (3,215) (589) - (3,804)
----------------- ------------- ----------- -------
At 31 December 2021 685 341 4,795 5,821
================= ============= =========== =======
Accumulated depreciation
At 1 January 2020 2,008 259 1,327 3,594
Depreciation during the
year 723 300 1,320 2,343
At 31 December 2020 2,731 559 2,647 5,937
Depreciation during the
year 366 19 1,498 1,883
) 990
Termination of leases - - ) 990 ( (
) 3,410
Other disposals (i) ) 2,847 ( ) 563 ( - (
At 31 December 2021 250 15 3,155 3,420
================= ============= =========== =======
Net book value
At 31 December 2021 435 326 1,640 2,401
================= ============= =========== =======
At 31 December 2020 394 - 678 1,072
================= ============= =========== =======
i. In September 2021, the Company announced the migration of all
audience-centric functions, except Casino to outside Israel, moving
closer to target audiences. Following this announcement, all the
relevant fixed assets were disposed .
7. Intangible assets and goodwill
Systems,
Domains Agencies software
Goodwill and websites Relationships and licenses Total
$000 $000 $000 $000 $000
Cost or valuation
At 1 January 2020 30,052 94,366 - 33,694 158,112
Additions - 16,68 1 232 1,472 18,385
Additions - internally
developed - - - 5,170 5,170
-------- ------------- -------------- ------------- --------
At 31 December 2020 30,052 111,047 232 40,336 181,667
Additions - 51,240 - 3,400 54,640
Acquisition of a subsidiary
(Note 16) 2,063 - 484 - 2,547
Additions - internally
developed - - - 4,318 4,318
-------- ------------- -------------- ------------- --------
At 31 December 2021 32,115 162,287 716 48,054 243,172
======== ============= ============== ============= ========
Accumulated amortisation
and impairment:
At 1 January 2020 30,052 54,151 - 27,266 111, 469
Amortisation - - 8 5,369 5,377
Impairment loss - 955 - - 955
At 31 December 2020 30,052 55,1 06 8 32, 635 117,801
Amortisation - - 193 4,894 5,087
-------- ------------- -------------- ------------- --------
At 31 December 2021 30,052 55,106 201 37,529 122,888
======== ============= ============== ============= ========
Net book value
At 31 December 2021 2,063 107,181 515 10,525 120,284
======== ============= ============== ============= ========
At 31 December 2020 - 55,941 224 7,701 63,866
======== ============= ============== ============= ========
Main additions during the year
The Company acquired domains and websites, including Sports
Betting Dime and Saturday Football inc. and accounted for these as
an asset acquisition since substantially all of the fair value of
the intangible assets acquired was in a group of similar
identifiable assets. The Company recognises a liability for the
intangible assets acquired for contingent consideration only when
there is sufficient certainty that the liability will be settled.
Total domains and websites acquired were $51,240,000 (2020:
$16,681,000), including $3,000,000 related to CB Sports and Warwick
Gaming contingent payment for the year ended 31 December 2021 . The
potential future contingent consideration, for these assets is up
to an additional $8,500,000 (2020: $10,500,000) payable for the
period of 2022-2024. the acquisition cost also includes deferred
consideration of $25,091,000 which is payable in the period of
2022-2024.
Carrying amounts of intangible assets with an indefinite useful
life
In 2021, due to changes in the Company's operational model, the
Company re-evaluated its cash generating units ("CGU's " ) and how
those should be reported. The table below summarises the carrying
amounts of goodwill and domains and websites as at 31 December
2021:
Goodwill Domains and websites
----------- ----------------------
2021 2020 2021 2020
$000 $000 $000 $000
Sports U.S. - - 67,102 15,862
Sports Europe - - 12,539 12,539
Personal finance - - 13,835 13,835
Casino - - 13,705 13,705
Performance agency 2,063 - - -
----- ----
2,063 - 107,181 55,941
===== ==== =========== =========
7. Intangible assets and goodwill continued
In January 2020, 107 of the Group's sites were demoted in search
results by Google, of which 23 were premium sites. The demotion of
the sites had a material impact on the Group's future revenues. The
Company recorded an impairment loss of $955,000, which is included
in the statement of profit or loss.
The Group tests goodwill and intangible assets with indefinite
useful life for impairment annually. Intangible assets are grouped
into CGUs to determine their value in use and compared that to
their carrying value to assess if impairment exists. The key
assumptions used in calculating the value in use:
- The calculations use cash flow projections based on financial
budgets approved by management covering a four-year period.
Revenues and the profit rate assumptions are based on management
expectations and forecasts for the coming years. These forecasts
included an evaluation of those specific sites that suffered a
demotion or other factors which could adversely affect revenues and
profitability.
- Cash flows beyond the four-year period are extrapolated using
the estimated terminal growth rate of 3%. This growth rate is based
on the long-term average growth rate as customary in similar
industries.
- The discount rate reflects management's assumptions regarding
the Group's specific risk premium.
- The pre-tax discount rate that was applied for the cash flow projection was 15%.
The Group concluded that the recoverable amount is in excess of
the asset's carrying amount. Consequently, the Group concluded that
no impairment exists as of 31 December 2021. Regarding the Personal
finance vertical, an increase of 1% in the pre-tax discount rate
will create an impairment loss.
8. Other liabilities and accounts payable as at 31 December
2021 2020
$000 $000
Employees and payroll accruals 3 , 311 4, 776
Accrued expenses 2,264 3, 108
Deferred revenues 2,031 185
Government authorities 199 435
Other liabilities 15 265
------- ------
7, 820 8,769
======= ======
9. Loans from the bank
In June 2018, a subsidiary of the Company received a loan from a
bank for $6,000,000. Fixed charges have been placed on the
subsidiary's share capital and goodwill and floating charges on the
subsidiary's assets. The loan is repayable in 24 equal instalments
and carries an interest rate of USD Libor +4.4%. The loan was
repaid in full on 30 June 2020.
10. Lease liabilities as at 31 December
2021 2020
$000 $000
Lease liabilities 1,553 690
Less - current maturities 311 324
----- ----
1,242 366
===== ====
The Group recorded fixed liens on bank deposits in connection
with these agreements (see Note 4).
10. Lease liabilities as at 31 December continued
In 2020, the Company decided not to exercise an option to renew
a lease, which renewal period was originally included in the
determination of the lease liabilities and corresponding
right-of-use assets in the 2019 consolidated financial statements.
Accordingly, the Company derecognised the lease liabilities by
$7,695,000 and the related right-of-use and other assets by
$6,573,000. The impact on the profit before taxes on income was
$1,122,000 and recorded as other income.
In December 2020, the Company signed three new real estate lease
agreements. The leases commencement dates were 31 December 2020, 1
January 2021 and 15 February 2021. The impact for 2020 is an
increase in the Group's total assets and liabilities of
$500,000.
In December 2021, the Company decided to terminate two of three
signed leases from 2020. Accordingly, the Company remeasured the
U.K. lease liability based on the revised lease term using a
revised discount rate as of the date of the change in expectations.
The total change is recognised in the carrying amount of the
right-of-use asset until it is reduced to zero, and any further
reductions are recognised in profit or loss. And for the Israeli
lease, the Company derecognised the remaining balances of the lease
right-of-use asset and lease liability in December 2021. The impact
of profit and loss is a profit of $437,000.
11. Financial instruments
a. Classification of financial assets and liabilities
The financial assets and financial liabilities in the statement
of financial position are classified by groups of
financial instruments as follows as at 31 December:
2021 2020
$ 000 $ 000
Financial assets
Financial assets at fair value through profit
or loss:
Financial derivatives 84 -
Financial assets measured at amortised cost:
Cash and cash equivalents 22,437 12,648
Short-term and long-term deposits 2,241 2,706
Trade receivables 8,70 1 5,792
Other receivables 1,100 500
------ -------
Total financial assets 34,563 21,646
====== =======
Total non-current 83 1,478
Total current 34,480 20,168
Financial liabilities
Financial assets at fair value through profit
or loss:
Financial derivatives - 304
Contingent consideration 808 -
Financial liabilities measured at amortised
cost:
Trade payables 2,333 2,000
Deferred consideration 26,138 -
Consideration payable on intangible assets 3,000 -
Other liabilities and account payables 5,588 7,5 9 4
Lease liabilities 1,553 690
Total financial liabilities 39,420 10,588
====== =======
Total non-current 9,787 366
Total current 29,633 10,222
11. Financial instruments continued
b. Financial risks factors
The Group's activities expose it to various financial risks.
i. Market risk - Foreign exchange risk
A significant portion of the Group's revenues is received in
EUR. The Group also has revenues that are received in GBP. A
significant portion of the Israeli subsidiaries` expenses are paid
in NIS. Therefore, the Group is exposed to fluctuations in the
foreign exchange rates in EUR, GBP and NIS against the USD.
Financial derivatives
The Company entered into forward or options contracts with the
intention to reduce the foreign exchange risk of forecasted cash
flows. These contracts are not designated as hedges for accounting
purposes and are measured at fair value through profit or loss. For
the year ended 31 December 2021, the Group recorded foreign
exchange rate gains of $270,000 (2020: $318,000). As at 31 December
2021, the Group bought put option and sold call option for the sale
of USD in exchange for NIS in nominal amount of totaling $2,700,000
(NIS 9,000,000) for the period until the end of March 2022.
ii. Credit risk
The Group usually extends 30-60 days term to its customers. The
Group regularly monitors the credit extended to its customers and
their general financial condition but does not require collateral
as security for these receivables. The Group maintains cash and
cash equivalents, short-term and long-term investments in various
financial institutions. These financial institutions are located in
the EU, Israel and U.S.
iii. Liquidity risk
The table below summarises the maturity profile of the Group's
financial liabilities based on contractual
undiscounted payments (including interest payments):
Less 2 to
than 1 to 3 3 to > 4
one year 2 years years 4 years years Total
$000 $000 $000 $000 $000 $000
Trade payables 2, 333 - - - - 2, 333
Other liabilities and account
payables 5,588 - - - - 5,588
Consideration payable on
intangible assets 3,000 - - - - 3,000
Contingent consideration - 410 410 - - 820
Deferred consideration 18,520 4,000 4,000 - - 26, 520
Lease liabilities 352 183 169 167 809 1,680
--------- -------- ------ -------- ------ -------
4 ,
At 31 December 2021 29,793 4, 593 579 167 809 39,941
========= ======== ====== ======== ====== =======
Less 2 to
than 1 to 3 3 to > 4
one year 2 years years 4 years years Total
$000 $000 $000 $000 $000 $000
Trade payables 2,000 - - - - 2,000
Other liabilities and account
payables 7, 594 - - - - 7,594
Financial derivatives 304 - - - - 304
Lease liabilities 331 108 108 108 108 763
--------- -------- ------ -------- ------ -------
At 31 December 2020 10,229 108 108 108 108 10 ,661
========= ======== ====== ======== ====== =======
c. Fair value
The carrying amounts of the Group's financial assets and
liabilities approximate their fair value. The fair value of
financial derivatives are categorised within level 2 of the fair
value hierarchy. The fair value of the contingent consideration is
categorised within level 3 of the fair value hierarchy.
11. Financial instruments continued
d. Sensitivity tests relating to changes in market factors
2021 2020
Sensitivity test to changes in ERU to USD
exchange rate: $000 $000
Gain (loss) from the change:
Increase of 10% in the exchange rate 143 (890)
Decrease of 10% in the exchange rate ( 143 ) 890
Sensitivity test to changes in NIS to USD
exchange rate:
Gain (loss) from the change (net of the effect
of derivates):
Increase of 10% in the exchange rate 138 2 66
Decrease of 10% in the exchange rate 48 (2 66 )
Sensitivity test to changes in GBP to USD
exchange rate:
Gain (loss) from the change:
Increase of 10% in the exchange rate 488 (170)
Decrease of 10% in the exchange rate (488) 170
The sensitivity tests reflect the effects of possible changes in
exchange rates on the hedging position of the Group for the above
currencies as of the end of the year. As described in b.i. above,
these contracts are intended to reduce the Group's exposure to
fluctuations in exchange rates on future revenues and expenses.
Therefore, although it is expected the above effects will be offset
by contra effects upon the recording of the revenues and expenses,
the timing of these effects may not coincide in the same reporting
period.
Sensitivity tests and principal assumptions
The selected changes in the relevant risk variables were
determined based on management's estimate as to
reasonable possible changes in these risk variables.
The Group has performed sensitivity tests of principal market
risk factors that are liable to affect its
reported operating results or financial position. The
sensitivity tests present the effects (before tax) on
profit or loss and equity in respect of each financial
instrument for the relevant risk variable chosen for that
instrument as of each reporting date.
The test of risk factors was determined based on the materiality
of the exposure of the operating results or
the financial condition of each risk with reference to the
functional currency and assuming that all the other variables are
constant.
The Group does not have significant exposure to interest rate
risk.
11. Financial instruments continued
e. Changes in liabilities arising from financial activities
Consideration
payable
Long term on intangible Contingent Deferred Lease
loans assets consideration consideration Liabilities Total
$000 $000 $000 $000 $000 $000
At 1 January 2020 1,465 - - - 9,228 10,693
Finance lease obligation - - - - 472 472
Cash flows (1,500) - - - (1,635) (3,135)
Changes in exchange
rates - - - - (12) (12)
Termination of leases - - - - (7,960) (7,960)
Other changes 35 - - - 597 632
--------- -------------- -------------- ------------ -------
At 31 December 2020 - - - - 690 690
Business combination - - 806 - - 80 6
Website acquisition - 3,000 - 26,138 - 29,138
Finance lease obligation - - - - 5,844 5,844
Cash flows - - - - (1,163) (1,163)
Changes in interest
expense - - 2 - 75 77
Termination of leases - - - - (3,783) (3,783)
( 110
Other changes - - - - (110) )
--------- -------------- -------------- -------------- ------------ -------
At 31 December2021 - 3,000 808 26,138 1,553 31,499
========= ============== ============== ============== ============ =======
12. Equity
Composition of share capital
2021 2020
Thousands Thousands
Authorised shares
----------- -----------
Ordinary Shares with a nominal value of $0.000001
each 100,000,000 100,000,000
=========== ===========
Thousands $000
Ordinary shares issued and outstanding including
share premium *)
At 1 January 2020 216,862 112,624
Cancelled in April 2020, shares held in treasury (33,223) (30,159)
Issued in December for the consideration of the
acquisition of a website 7,955 3, 557
At 31 December 2020 191,594 86,022
Issued in March and April 2021 for the consideration
of the acquisition of a website. The transaction
costs were $1,600,000 67,500 35,806
Exercise of option and vesting of RSUs 804 243
----------- -----------
259 ,
At 31 December 2021 898 122, 071
=========== ===========
*) Net of treasury shares
As at 31 December 2021, IBI held 2,688,684 (2020: 3,315,521)
ordinary shares in trust for the Company's share-based payment
plan.
12. Equity continued
Earnings per share (EPS)
The following table reflects the income and share data used in
the basic and diluted EPS calculations:
2021 2020
$000 $000
Profit attributable to ordinary equity holders
of the Company 5,641 792
Thousands Thousands
The weighted average number of ordinary shares
for basic EPS 245,710 184,271
Effects of dilution from potential dilutive ordinary
shares *) 659 98
--------- ---------
246,369 184,369
========= =========
*) Options, RSUs and PSUs see Note 13.
13. Share-based payments
The expense recognised in the financial statements for services
received is shown in the following table as at 31 December:
2021 2020
$000 $000
Total expense arising from share-based payment
transactions 520 92
In August 2013, the Company adopted a Share Option Plan. In
December 2017 and 2020, the Company
adopted additional plans. According to the plans, the Company's
Board of Directors are entitled to grant certain employees,
officers and other service providers (together herein "employees")
of the Group remuneration in the form of equity-settled share-based
payment transactions. Pursuant to the plans, the Company's
employees may be granted options to purchase the Company's ordinary
shares. These options may be exercised, subject to the continuance
of engagement of such employees with the Company, within a period
of eight years from the grant date, at an exercise price to be
determined by the Company's Board of Directors at the grant date.
All grants to Israeli employees were made in accordance with
Section 102 of the Income Tax Ordinance, capital-gains track (with
a trustee).
Grants
In March 2021, the Company granted, to one key manager, 470,977
Restricted Stock Units ("March PSU"). The March RSU Award is
subject to a three-year performance period, with vesting subject to
the achievement of performance measured by reference to total
shareholder return over the performance period compared to the FTSE
AIM 100, followed by a two-year holding period. The total fair
value was calculated at $289,000 at the grant date (an average of
$0.61 per restricted share equal to the share price at the grant
date).
The performance conditions to be achieved such that RSUs are
capable of vesting are as follows:
Company's ranking relatively to the comparator
group % of PSUs capable of vesting
Upper quartile or better 100%
Between upper quartile and median The straight-line basis
between 100% and 25% based
on the Company's rank
Median 25%
Lower than median -
13. Share-based payment continued
In April 2021, the Company granted 1,190,476 and 769,231
Performance Stock Units ("April PSU") to the CEO and CFO,
respectively. The Company announced that the CFO had left the
Company on 22 July 2021 and accordingly his PSUs were forfeited.
The remaining award will vest on the fourth anniversary of the
grant date if and to the extent that the performance target will be
satisfied. The total fair value was calculated at $408,000 and
$264,000 at the grant date for the CEO and the CFO, respectively
(an average of $0.34 per restricted share equal to the share price
at the grant date).
The performance target relating to the performance of the
Company's share price is as follows:
Average share price % of PSUs capable of vesting
GBP 1.5 or higher 100%
Between GBP 1.35 and GBP 1.50 On a straight-line basis, between
50% and 100%
Between GBP 1.20 and GBP 1.35 On a straight-line basis, between
25% and 50%
Less than GBP 1.20 0%
The April PSU award is a contingent right to acquire shares for
no consideration. It is subject to a four-year vesting period
followed by a one-year holding period and the achievement of
performance targets measured by the increase in the Company's share
price between 1 January 2021 and 31 December 2024.
In May 2021, the Company granted 910,000 Restricted Stock Units
to key management personnel subject to three years vesting period.
The total fair value was calculated at $626,000 at the grant date
(an average of $0.69 per restricted share equal to the share price
at the grant date).
In July 2020, the Company granted 3,982,848 Restricted Stock
Units to the Company's CFO ("CFO's RSUs") and other key management
personnel. The CFO's RSUs are subject to a three-year performance
period with vesting subject to a performance target comparing the
average net return achieved by the Company relative to the net
return achieved by the constituents of the FTSE AIM 100 during the
three-year period ending in July 2023, followed by a two-year
holding period. The other key management personnel's restricted
shares are subject to three years vesting period. The total fair
value of the other key management personnel's
restricted shares was calculated at $821,000 at the grant date
(an average of $0. 29 per restricted share equal to the share price
at the grant date).
The following tables list the inputs to the models used for the
plans for the years ended 31 December 2021 and 2020,
respectively:
2021 2021 2020
March PSU April PSU CFO's RSUs
Weighted average fair values at the measurement date ($) 0.61 0.32 0.22
Dividend yield (%) - - -
Expected volatility (%) 73.94 68.6 67.49
Risk-free interest rate (GBP curve) 0.29 0.5 0.21
Expected life of share options (years) 3 4 3
Weighted average share price (GBP) 0.54 0.52 0.23
Model used Monte Carlo Monte Carlo Monte Carlo
13. Share-based payment continued
The following table illustrates the number and weighted average
exercise prices (WAEP) of, and movements in, share options during
the year (excluding RSUs and PSUs):
2021 2021 2020 2020
Number in thousands WAEP Number in thousands WAEP
Outstanding at 1 January 3,334 $ 0.37 5,526 $ 0.99
Forfeited during the year (957) $1.11 (2,192) $ 1.48
Exercised during the year (18) $0.66 - -
-------------------- --------------------
Outstanding at 31 December 2,359 $0.90 3,334 $ 0.37
==================== ====================
Exercisable at 31 December 1,383 $0.93 2,196 $ 0.97
Movement during the year of RSUs and PSUs:
2021 2020
Number in thousands Number in thousands
Outstanding at 1 January 3,066 -
Granted during the year 3,341 3,983
Forfeited during the year (2,286) (917)
Vested during the year (786) -
------------------- -------------------
Outstanding at 31 December 3,335 3,066
=================== ===================
These restricted shares unit does not have an exercise
price.
The weighted average remaining contractual life for the options
outstanding as at 31 December 2021 was
5.9 years (2020: 6.7 years).
The range of exercise prices for options outstanding (not
including the RSUs and PSUs) as at 31 December 2021 was $0.66-1.81
(2020: $0.67-1.83).
14. Operating expenses for the years ended 31 December
2021 2020
$ 000 $ 000
Staff costs 26 , 171 25,066
Technology expenses 3, 943 2,547
Professional services 2,153 3,487
Administrative expenses 1,969 1,851
Transformation costs
Consulting services 3,124 1,088
Hiring and settlements 2,342 1,393
Acquisition costs 1 , 557 790
Lease termination (437) -
Sale of property (82) -
-------- ------
40 ,7 40 36,222
======== ======
15. Taxes on income
Starting 2018, the Company was subject to Cyprus tax at the
standard corporate income tax rate of 12.5%. In July 2020, the
Company changed its tax residency to the U.K. and since then is
subject to U.K. tax at the standard corporate income tax rate of
19%.
15. Taxes on income continued
Tax law applicable to the Company's Israeli subsidiaries is the
Israeli tax law - Income Tax Ordinance (New Version) 1961. The
Israeli corporate income tax rate was 23% in 2021 and 2020.
Amendment 73 to the law for the Encouragement of Capital
Investments, 1959 also prescribes special tax tracks for
technological enterprises, which became effective in 2017, as
follows:
- Technological preferred enterprise - an enterprise for which
total consolidated revenues of its parent company and all
subsidiaries are less than NIS 10 billion. A preferred
technological enterprise, as defined in the law, which is located
in the center of Israel, will be subject to tax at a rate of 12% on
profits deriving from intellectual property.
- Any dividends distributed to "foreign companies", as defined
in the law, deriving from income from the technological enterprises
will be subject to a withholding tax at a rate of 4%.
The above amendments apply to one of the Group's Israeli
subsidiaries.
The applicable U.S. federal statutory income tax rate for the
Company's subsidiary for 2021 is 21% (2020: same). In addition,
state and city taxes are applicable in certain states and
cities.
Losses carried forward for tax purposes
As at 31 December 2021, carry-forward tax losses of the Group
are $ 6,100,000 . The tax benefit in respect of losses (excluding
$416,000) has not been recorded in the financial statements due to
the uncertainty of their utilisation.
Taxes on income included in profit or loss for the years ended
31 December:
2021 2020
$000 $000
Current taxes 563 22 5
Deferred taxes 32 72 7
Taxes benefit in respect of previous years (2,221) (638)
------- -----
(1,626) 314
======= =====
Theoretical tax
The reconciliation between the tax expense, assuming that all
the income and expenses were taxed at the statutory tax rate for
the U.K., and the taxes on income recorded in profit or loss for
the years ended 31 December are as follows:
2021 2020
$000 $000
Profit before taxes on income 4,015 1,106
Statutory tax rate 19% 19%
Tax computed at the statutory tax rate 763 210
Adjustment due to the difference between
the Company's statutory tax rate and tax
rates applicable to the subsidiaries ( 126 ) (262)
Non-deductible expenses for tax purposes 86 279
Tax benefit of net additional deduction ( 846 ) (408)
Taxes in respect of previous years (2,221) (638)
Increase in unrecognised tax losses in the
year 1, 258 845
Unrecognised temporary differences and others ( 540 ) 288
------- -----
(1,626) 314
======= =====
15. Taxes on income continued
Deferred taxes
Consolidated statements
of
Consolidated statements profit or loss
of and other comprehensive
financial position income
------------------------- --------------------------
2021 2020 2021 2020
$000 $000 $000 $000
Deferred tax liabilities
Domains and websites 2,072 77 2 1,300 16 4
Other intangible assets - 6 39 (639) 466
2,072 1,4 11
Deferred tax assets
Property and equipment 3 12 9 (4)
Lease liability - 7 7 115
Carry-forward tax losses 416 - (416) -
( 367
Other intangible assets 270 - )
Allowance for doubtful account - - - 7
Employee benefits 11 1 49 138 (2 1 )
----------- ------------ ----------- -------------
700 168
Deferred tax expenses 32 72 7
=========== =============
Deferred tax liabilities, net 1,372 1, 243
=========== ============
The deferred taxes are computed at the tax rates of 19%- 23%
based on the tax rates that are expected to apply upon realisation
(2020: 12%).
16. Business combination
In September 2021, the Company acquired 100% of the ordinary
share capital of Blueclaw for the total consideration of
$3,872,000. Blueclaw is a multi-award-winning agency based in
Leeds, providing services ranging from search engine optimisation
and pay per click management to digital Public Relationship and
content marketing with significant experience in the market
verticals in which the Company operates. The amount of profit
recorded in the acquired company's books as of September 2021, the
date of acquisition, is not material and the effect of wether the
acquisition was at the beginning of the year is not material to the
financial statements.
Assets acquired and liabilities assumed
The fair values of the identifiable assets and liabilities of
Blueclaw as at the date of acquisition were:
2021
$000
Assets
Cash and cash equivalents 1,856
Agencies Relationships (useful life: 2 years) 484
Trade and other receivables 275
Property and equipment 25
Liabilities
Trade payables and other payables (734)
Deferred tax liability (97)
Total identifiable net assets at fair value 1,809
Goodwill arising on the acquisition 2, 063
------
3,872
======
16. Business combination continued
The purchase consideration includes cash consideration paid on
completion , deferred consideration payable in September 2022 and
further contingent consideration payable.
Purchase consideration
2021
$000
Cash consideration 2,251
Deferred consideration 813
Contingent consideration 808
3,872
=====
17. Revenue and operating segments
An operating segment is a part of the Group that conducts
business activities from which it can generate revenue and incur
costs, and for which discrete financial information is available.
Identification of segments is based on internal reporting to the
chief operating decision maker ("CODM"). The CODM, who is
responsible for allocating resources and assessing performance of
the operating segments, has been identified as the Chief Executive
Officer ("CEO"). The Group does not divide its operations into
different segments, and the CODM operates and manages the Group's
entire operations as one segment, which is consistent with the
Group's internal organisation and reporting system.
Geographic information for the years ended 31 December
2021 2020
$000 $000
North America 32,489 11,514
Scandinavia 17,634 21,387
Other European countries 12,621 15,473
Oceania 834 941
Other countries 80 96
------ ------
Total revenues from identified locations 63,658 49,411
Revenues from unidentified locations 2,829 5,428
------ ------
66,487 54,839
====== ======
Revenues by vertical
2021 2020
$000 $000
Casino 23,216 31,684
Sports U.S. 15,202 1,992
Sports Europe 9,982 9,321
Third Party Network Activity 9,367 3,471
Personal Finance 8,720 8,371
66,487 54,839
====== ======
18. Balances and transactions with related parties including
directors
2021 2020
$000 $000
Balances
Current liabilities - management fees and
other short-term payables 11 499
Compensation of key management personnel
of the Group
Short-term employee benefits 2,044 1,808
Share-based payments transactions 68 41
----- -----
2,112 1,849
===== =====
19. Post-employment benefits
The post-employment employee benefits are financed by
contributions classified as defined contribution plans.
2021 2020
$000 $000
Expenses in respect of defined contribution
plans 1,966 1,867
20. Subsequent events
a. In February 2022, the Company announced that Christopher
Bell, Non-Executive Chair, has step down from the board of
directors of the Company. Julie Markey, a non-executive Director of
the Company and Chair of the remuneration committee, has been
appointed Interim Chair whilst the process of appointing a
replacement is undertaken.
b. In March 2022, the Company announced that Caroline Ackroyd
has now joined the Company as Chief Financial Officer and as a
member of the Board of Directors with immediate effect.
21. List of main subsidiaries
2021 2020
Shares conferring Shares conferring
Shares conferring rights to Shares conferring rights to
voting rights profits voting rights profits
% %
XLMedia Finance Ltd 100 100 100 100
XLMedia Publishing Ltd 100 100 100 100
Webpals Holdings Ltd 100 100 100 100
Webpals Systems S.C
Ltd 100 100 100 100
Marmar Media Ltd 100 100 100 100
Webpals, Inc. 100 100 100 100
XLMedia US 100 100 100 100
XLMedia Canada Marketing
Ltd 100 100 - -
Blueclaw Media Ltd 100 100 - -
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END
FR FFFSLVDITFIF
(END) Dow Jones Newswires
March 29, 2022 02:01 ET (06:01 GMT)
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