TIDMXLM
RNS Number : 0803B
XLMedia PLC
29 September 2022
29 September 2022
XLMedia PLC
("XLMedia" or the "Group" or the "Company")
Results for the six months ended 30 June 2022
Significant momentum within the Group's North American sports
business
XLMedia (AIM: XLM), a leading global digital media group that
connects audiences with advertisers, announces the Company's
audited results for the six months ended 30 June 2022.
Key Highlights
-- North American Sports growing to 68% of revenue, all in regulated markets.
-- Signed major partnership with high quality publisher in Ohio
ahead of January 2023 online sports betting launch.
-- Live in 2 new legalised States in the U.S. (New York and
Louisiana) and one Canadian Province (Ontario).
-- Further rationalisation of the portfolio enabling focus on primary sites.
-- Stabilisation of the Gaming business.
-- Annualised cash savings of approximately US$5-6 million expected to be realised during 2023.
Financial Summary
-- Revenues of US$44.5 million (H1 2021: US$32.2 million).
-- Gross profit of US$20.9 million (H1 2021: US$18.3 million).
-- Adjusted EBITDA(1) of US$10.6 million (H1 2021: US$6.6 million).
-- Reported loss before tax of US$1.7 million (H1 2021: US$0.4 million loss).
-- US$17.7 million in cash and short-term investments as of 30 June 2022.
1 Earnings Before interest, Taxes, Depreciation, Amortisation
and excluding share-based payments, impairment, and reorganisation
costs
Operational Summary
-- Strong performance from Sports vertical generating first half
revenues of US$34 million - 76% of Group revenues (H1 2021: US$11.7
million)
- New regulated markets opened, notably, the state of New York
launched legal online sports betting in January 2022. The Group now
operates in 16 states.
- New media partnership agreements drove revenues of US$20.5
million, (H1 2021: $1.5 million) including amNewYork.
- The Group's owned (Owned and Operated) portfolio delivered
revenue growth of US$9.6 million, up 107%, including ESNY, which
was acquired in December 2020.
- New partnerships signed with Cleveland.com in May 2022 ahead of Ohio's January 2023 launch.
- New partnership recently signed with MASSlive.com in September
2022 in preparation for Massachusetts' 2023 launch.
- European Sports vertical delivered a performance that met
expectations in H1 2022 with revenues of US$3.8 million (H1 2021:
US$5.8 million).
-- Gaming revenues stabilising at US$8.4 million (H1 2021: US$12.5 million)
- Gaming revenues (Casino and Bingo), as expected, continue to
trade below historical levels while remaining a high margin
vertical for the Group.
- Following a major portfolio consolidation, Gaming activities
will now focus on four leader brands, and seven brands in
total.
- The division's cost base has been downsized to reflect its reduced scale.
-- Operations and infrastructure initiatives gathering momentum
- Key new leadership in the business brings deep expertise across the media and gaming sectors
o Marcus Rich - Chair (appointed 31 March 2022);
o David King - CEO (appointed 1 July 2022);
o Caroline Ackroyd - CFO (appointed 21 March 2022);
o Karen Tyrrell - Chief People and Operations Officer (appointed
1 September 2022)
- The Group continues its focus on talent acquisition to match
the new and changing mix of the business.
- The operational reset is largely completed. Annualised full
year savings of some US$5-6 million are expected in 2023, of which
approximately US$4 million is expected to be realised during 2022.
The Group will continue to look for and invest in further cost and
operational efficiencies.
- The Tech team has made significant progress in upgrading site
infrastructure and enhancing security while commencing the roll out
of the new content management system ("CMS"), which will continue
into 2023.
- Work continues to integrate acquisitions, including supporting
the business with SEO specialist advice from our inhouse Blueclaw
SEO team.
Outlook
-- During H1 2022, the Group has delivered on its strategy to
make a shift towards sports betting in regulated markets, a revenue
stream that is predicted to show strong growth in the medium
term.
-- US sports betting revenues currently remain in line with
management expectations for the full year, having benefited in H1
from the additional marketing investment made by its customers
during the New York state launch. Major new state launches
typically see an increase in marketing activity, creating a
significant revenue upside for the Group, before settling into a
more normalised rhythm.
-- The Gaming business performance is tracking in line with
expectations and the Group is on course to deliver cost savings of
some US$4 million in the year.
-- Following the impact of Google's Your Money Your Life
("YMYL") requirements on the Personal Finance division, the
strategic decision was taken to replatform the business and renew
its content. Revenue recovery is taking significantly longer than
planned and revenue of the Personal Finance business is now
expected to be approximately US$1.5 million for the full year,
resulting in a move from profit to loss of approximately US$1-2
million which will negatively impact the Group's full year
performance.
As a result, the Group expects full year Adjusted EBITDA to be
broadly in line with the prior year, returning to growth in
2023.
David King, Chief Executive Officer of XLMedia, commented:
"Refocusing the business towards the rapidly growing US online
sports betting market, managing the reduction in Personal Finance,
while stabilising the Gaming vertical, alongside rightsizing the
Group's cost base, remains a key priority to ensuring new XLMedia
is well placed for further growth.
"Having recently joined, I look forward to updating all our
stakeholders on our progress."
This announcement contains inside information for the purposes
of the UK version of Article 7 of Regulation (EU) 596/2014
("MAR").
Analyst and Institutional investor webcast
A presentation webcast and live Q&A conference call for
analysts and institutional investors will take place at 9.00 a.m.
BST on the day of publication 29 September 2022, and a webcast of
the presentation will be available on the Company's website at:
https://www.xlmedia.com/investors/webcasts/
To register for this event, please go to:
https://secure.emincote.com/client/xlmedia/2022-interim-results
Retail investor webcast
Management will also be hosting a presentation for retail
investors in relation to the Company's results on Monday, 3 October
2022 at 2.30 p.m. BST.
The presentation will be hosted on the Investor Meet Company
("IMC") digital platform. Investors can sign-up for free and
request to meet XLMedia via:
https://www.investormeetcompany.com/xlmedia-plc/register-investor
Investors who already follow XLMedia on this platform will
automatically be invited.
For further information, please contact:
XLMedia plc ir@xlmedia.com
David King, Chief Executive Officer via Vigo Consulting
Caroline Ackroyd, 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 Tel: 020 7397 8900
Broker)
Giles Balleny / Max Gould
www.cenkos.com
Berenberg (Joint Broker) Tel: 020 3207 7800
Mark Whitmore / Richard Andrews / Jack
Botros
www.berenberg.com
About XLMedia:
XLMedia (AIM: XLM) is a leading global digital media company
that creates compelling content for highly engaged audiences and
connects them to relevant advertisers.
The Group manages a portfolio of premium brands with a primary
emphasis on Sports and Gaming in regulated markets. XLMedia brands
are designed to reach passionate people with the right content at
the right time.
Chief Executive Review
Introduction
We are able to report a strong six months of trading across H1
2022, which represents the next phase in the Company's development,
with revenues up 38% to US$44.5 million (H1 2021: US$32.2 million)
and adjusted EBITDA up 60% to US$10.6 million (H1 2021: US$6.6
million) in the period.
This solid performance has been largely driven by our North
American sports business which now represents 68% of revenue at
US$30.2 million, driven entirely from regulated markets.
Performance has been underpinned by the expansion of regulation in
the US including New York, now legalised, while also securing major
partnerships with high quality publishers during the period.
Elsewhere across the business, we continue to rationalise our
existing online portfolio, enabling our team to focus on our
marquee sites (for example, Freebets.com and Caziwoo.com). As a
result, the Group will successfully deliver in year savings of
approximately US$4 million.
In H1 2022, we acquired 116,000 real money players ("RMPs")
which is defined as first time depositing and post initial
depositing customers.
We remain focused on implementing our existing strategic
priorities including:
-- Targeting regulated territories to deliver new revenue while reducing the risk of disruption.
-- Focussing on high growth Sports and Gaming verticals by
building on the Group's strong relationships with leading
operators.
-- Expanding the Media Partnership Business ("MPB") leveraging internal skills and experience.
-- Prioritising North America Sports market in order to capitalise on US trajectory.
-- Investing behind some 20 marquee brands to enhance quality and engagement.
Divisional Summary
Sports
The Group delivered a strong performance from its Sports
vertical, generating revenues of US$34.0 million (H1 2022: US$11.7
million, up 191%). Our sports business now accounts for 76% of
Group revenues, of which 68% comes from the US, highlighting the
strategic importance of this high growth, regulated market.
We are now active in 16 states, including New York, Louisiana
and Kansas. A state launch offers an immediate spike in
registrations as betting enthusiasts take advantage of
legalisation. Building local partnerships enables us to maximise
the opportunity offered by new state launches, working with the
partner to connect their sports audience with advertisers. In
particular, we benefited from working with our partner amNewYork to
maximise new revenue when New York went live, coupled with the
annual uplift from the Super Bowl.
Partners will typically be either high quality regional
publishers with loyal audiences, or sports focussed speciality
sites with highly engaged fandoms. This complements the Group's
Owned and Operated national footprint provided by Sports Betting
Dime ("SBD"), and the Group's Owned and Operated regional fandom
sites including Saturday Down South and Elite Sports NY. Our
content is written by local sports experts who are themselves fans,
writing for local sports fans, which builds trust and return
visits, which in turn allows us to grow our audience and connect
them with relevant advertisers.
The Group's Owned and Operated portfolio delivered revenue of
approximately US$9.6 million in the period.
Since the end of the period, we have extended our partnership
with Cleveland.com, and signed new agreements with Advance Local to
work with MASSLive.com ahead of both Ohio launching in January 2023
and Massachusetts at some point in 2023.
Our European Sports vertical, which includes Freebets.com,
generated H1 revenues of US$3.8 million (H1 2021: US$5.8 million).
Our Freebets site is in the process of being refreshed, having been
re-platformed, and is now rebuilding its content to ready it for
growth.
Gaming
Our Gaming vertical, which includes both casino and bingo assets
(currently largely in Europe) traded in line with management's
targets, generating revenue of US$8.4 million (H1 2021: US$12.5
million).
These assets, despite trading below historic levels, remain a
high margin vertical for the Group and remain part of our strategic
plans.
Following a major reduction in the number of websites operated
by the Group, Gaming activities will now have seven brands in total
with a focus on four leader brands, Caziwoo, Casino.se,
Nettikasinot and Whichbingo.
This represents a significant departure from how this division
was managed previously. The focus will now be on quality, not
quantity. The division's cost base has been downsized to reflect
the reduced scale and prominence of these assets.
Nettikasinot is our Finnish language site with revenues of US$2
million in the period and remains our largest site in the Nordic
market. We will continue to monitor potential changes to the
monopoly in Finland and remain cautious regarding incremental
growth opportunities within the European portfolio.
Other Activities
Other external revenues, largely comprised of the Group's SEO
agency Blueclaw, its affiliate partnership network Reef Media and
the Personal Finance business totalled US$2.1 million (H1 2021:
US$8.0 million) in the period.
Personal Finance, which is now a marginal activity, delivered
revenues of US$ 0.8 million (H1 2021 US$6.6 million), only 2% of
Group revenues. The decline in revenue has significantly impacted
the Group's revenue and profit performance during the period.
Following the move of the business from Israel to the US, the focus
of the team has been to commence the migration of the sites to a
new platform, refresh the content to meet Google's YMYL* parameters
and prioritising two of our premium brands, Moneyunder30 and
InvestorJunkie.
In line with the original acquisition plan, Blueclaw will
prioritise optimising the SEO around the Group's Owned and Operated
sites. We will also provide services to a small number of
clients.
*From Google's Search Quality Evaluator Guidelines: Some topics
have a high risk of harm because content about these topics could
significantly impact the health, financial stability, or safety of
people, or the welfare or well-being of society. We call these
topics "Your Money Your Life" or YMYL.
Operations and infrastructure
The period saw a significant number of staff reductions as part
of the transformation program, including changes in Personal
Finance and Technology, as well as, downsizing the Gaming
infrastructure.
The transformation program referred to above, is largely
completed. Part year savings will be delivered in the year, while
our estimates of annualised cash savings remain at some US$5-6
million in FY 2023.
Following the appointment of the new CFO, Caroline Ackroyd, and
the new Chair, Marcus Rich, I joined the Group as CEO in July and
on 1 September our new Chief People and Operation Officer, Karen
Tyrrell joined the leadership team. Like Caroline, Karen also has
substantial gaming sector experience.
Summary
The Group is now focused on implementing its existing strategy
as we seek to leverage our footprint in Sports and Gaming.
Our growing exposure to the US Sports arena is now in a position
to capitalise on the US sports betting market. The Group also
continues to look for new partners and opportunities to develop its
Owned and Operated assets in preparation for the legalisation of
further US states in the near term.
The Board and I are committed to driving the business forward
and providing reporting and transparency. In addition, we have
launched a new corporate website providing further information and
insight to investors and other interested parties.
David King
Chief Executive Officer
29 September 2022
Financial Review
$'000 H1 2022 H1 2021 Change
Revenues 44,528 32,218 38%
--------- --------- -------
Gross profit 20,878 18,260 14%
--------- --------- -------
Operating expenses (20,874) (18,833) 11%
--------- --------- -------
Operating profit
/ (loss) 4 (573) n/m
--------- --------- -------
Adjusted EBITDA(1) 10,561 6,600 60%
--------- --------- -------
Profit / (loss)
for the period 504 (82) n/m
--------- --------- -------
1 Earnings Before interest, Taxes, Depreciation, Amortisation
and excluding share-based payments, impairment, and reorganisation
costs
N/m = not meaningful
Reconciliation of profit / (loss) for the period with Adjusted
EBITDA
$'000 H1 2022 H1 2021 Change
Profit / (loss) for the period 504 (82) n/m
----------------------- -------------------------- --------
Add back:
----------------------- -------------------------- --------
Net finance costs / (income)(2) 1,731 (35) n/m
----------------------- -------------------------- --------
Other income (33) (99) -67%
----------------------- -------------------------- --------
Income tax benefit (2,198) (357) n/m
----------------------- -------------------------- --------
Depreciation and amortisation 3,600 3,587 0%
----------------------- -------------------------- --------
Impairment relating to Personal Finance 3,486 - n/m
----------------------- -------------------------- --------
Share-based payments 509 520 -2%
----------------------- -------------------------- --------
Acquisition integration costs & Transformation
Costs 2,962 3,066 -3%
----------------------- -------------------------- --------
Adjusted EBITDA 10,561 6,600 60%
----------------------- -------------------------- --------
2 Net finance costs / (income) is comprised of finance income,
finance expense and foreign exchange gains / (losses).
XLMedia revenues in H1 2022 totalled US$44.5 million (H1 2021:
$32.2 million), an increase of 38% compared to the previous year,
primarily driven by growth in North America sports following the
integration of our strategic acquisitions.
In H1, the Company generated US $30.2 million of revenue in
North America sports which included US$20.5 million of revenue from
media partnerships and $9.6m from the Group's Owned & Operated
("O&O") websites.
European Sports revenue has declined overall from US$5.8 million
to US$3.8 million, largely due to websites no longer in operation
and which were cost prohibitive to continue operating along with a
declining Finnish asset. The Group's UK focused assets have grown
year on year by 7% in a market which is mature and impacted by
regulatory headwinds.
Personal Finance, Blueclaw and Reef Media revenues were less
than 5% of overall revenue.
The Group's gross profit for H1 2022 was US$20.9 million and
gross margin was 47% (H1 2021: US$18.3 million, 57% gross margin).
The 14% increase in gross profit was driven by the increase in
revenue discussed above. The reduction in gross margin year over
year was largely due to the change in revenue mix towards North
America sports - in particular, due to the increase in revenue from
media partnerships which have a lower gross margin as revenue is
paid to media partners for accessing their audience. Gross profit
is calculated as revenue less the costs associated with generating
revenue*.
*Cost of revenue includes direct costs, marketing cost, Media
Partnership Business revenue share, and people costs. Note, these
costs are also identified and associated with operating, sales and
marketing expenses as defined in the interim condensed consolidated
financial statements.
Operating expenses for H1 2022 were US$20.9 million (H1 2021:
US$18.8 million). This increase was driven by the impairment
relating to Personal Finance of US$3.5 million, partially offset by
cost savings relating to the re-platforming and relocation of roles
from Israel to Cyprus, UK and US.
Largely as a result of the increase in revenue year over year,
Adjusted EBITDA for H1 2021 was US$10.6 million (H1 2021: US$6.6
million), an increase of 60% on the previous year.
Net financing costs for H1 2022 was US$0.25 million (H1 2020:
US$0.04 million, income).
In H1 2022 the Group recorded transformation costs of US$3.0
million due to the continuation of the restructuring plan of the
Group, as well as integration activity relating to prior
acquisitions (H1 2021: US$3.1 million).
As at 30 June 2022, the Company had US$17.7 million in cash and
short-term investments (31 December 2021: US$24.6 million). The
change in cash reflects US$11.0 million generated by operating
activities, offset by US$5.6 million used for investment activity
and US$10.1 million used in financing activities. Short-term
investments reduced by US$0.6 million and the Company reported an
out flow for net foreign exchange differences of US$1.6 million.
The Group has made payments of US$13 million in respect of deferred
consideration and earn-out payments in relation to its North
America sports acquisitions in the period.
Current assets as at 30 June 2022 were US$27.4 million (31
December 2021: US$39.4 million). The decrease in current assets was
predominantly because of the decrease in cash and cash-equivalents
mentioned above as well as the seasonal decrease in Trade
Receivables.
Non-current assets as at 30 June 2022 were US$121.9 million (31
December 2021: US$123.0 million). The decrease in non-current
assets is primarily due to the $3.4m impairment of Personal Finance
assets.
Current liabilities as at 30 June 2022 were US$28.7 million (31
December 2021: US$42.1 million). The decrease in current
liabilities was predominantly due to payments of deferred
consideration relating to prior acquisitions and a release of prior
period income tax provisions.
Non-current liabilities as at 30 June 2022 were US$10.7 million
(31 December 2020: US$11.2 million).
Total equity as at 30 June 2022 was US$109.9 million or 73% of
total assets (31 December 2021: US$109.2 million or 67% of total
assets).
The first half of 2022 was a period of continued progress for
the Group, cementing our position in the fast-growing US market and
with key media partnerships secured ahead of the launch of Ohio and
potentially Massachusetts in 2023. The project to restructure the
Group is progressing well with a right-sized cost base and
integration of the strategic acquisitions largely complete.
Caroline Ackroyd
Chief Financial Officer
29 September 2022
XLMEDIA PLC
Interim Condensed Consolidated Financial Statements as at 30
June 2022
Report on Review of Interim Condensed Consolidated Financial
Statements 2
Unaudited Consolidated Financial Statements:
Consolidated statements of financial position 3
Consolidated statements of profit or loss and other
comprehensive income 4
Consolidated statements of changes in equity 5
Consolidated statements of cash flows 6
Notes to the Interim Condensed Consolidated Financial
Statements 8
- - - - - - - - - - -
Report on review of interim financial information
The Board of Directors
XLMedia PLC
Introduction
We have reviewed the accompanying interim condensed consolidated
financial statements of XLMedia PLC. and its subsidiaries ("the
Group") as at 30 June 2022 which comprise the interim consolidated
statement of financial position as at 30 June 2022 and the related
interim consolidated statements of profit or loss and other
comprehensive income, changes in equity and cash flows for the six
months then ended and explanatory notes. Management is responsible
for the preparation and presentation of this interim financial
information in accordance with IAS 34, "Interim Financial Reporting
("IAS 34") as adopted by the European Union. Our responsibility is
to express a conclusion on this interim financial information based
on our review.
Scope of review
We conducted our review in accordance with International
Standard on Review Engagements 2410, "Review of Interim Financial
Information Performed by the Independent Auditor of the Entity". A
review of interim financial information consists of making
inquiries, primarily of persons responsible for financial and
accounting matters, and applying analytical and other review
procedures. A review is substantially less in scope than an audit
conducted in accordance with International Standards on Auditing
and consequently does not enable us to obtain assurance that we
would become aware of all significant matters that might be
identified in an audit. Accordingly, we do not express an audit
opinion.
Conclusion
Based on our review, nothing has come to our attention that
causes us to believe that the accompanying interim condensed
consolidated financial statements are not prepared, in all material
respects, in accordance with IAS 34 as adopted by the European
Union.
Tel-Aviv, Israel KOST FORER GABBAY & KASIERER
A Member of Ernst & Young
, 2022 Global
Consolidated statements of financial position
30 June 30 June 31 December
2022 2021 2021
$ 000 $ 000 $000
Assets Unaudited Unaudited Audited
Non-current assets
Intangible assets and goodwill 118,955 90,702 120,284
Property and equipment 2,616 6,914 2,401
Other financial assets 221 - -
Other assets - 371 247
Long-term deposits 75 1,525 83
--------- --------- -----------
121,867 99,512 123,015
Current assets
Short-term deposits 1,601 870 2,158
Trade receivables 5,787 5,536 8,701
Other receivables 3,863 6,101 6,119
Cash and cash equivalents 16,131 36,061 22,437
--------- --------- -----------
27,382 48,568 39,415
---------
Total assets 149,249 148,080 162,430
========= ========= ===========
Equity and liabilities
Equity
Share capital *) - *) - *) -
Share premium 122,071 121,828 122,071
Capital reserve 146 262 14
Accumulated deficit (12,365) (18,592) (12,869)
--------- --------- -----------
Total equity 109,852 103,498 109,216
Non-current liabilities
Lease liabilities 1,202 4,723 1,242
Deferred taxes 1,338 1,607 1,372
Deferred consideration 7,795 3,614 7,737
Contingent consideration 401 - 808
--------- --------- -----------
10,736 9,944 11,159
Current liabilities
Trade payables 2,540 2,134 2,333
Deferred consideration 8,897 9,875 18,401
Consideration payable on intangible
assets 3,000 - 3,000
Other liabilities and accounts
payable 6,162 9,914 7,820
Income tax provision 7,725 11,349 10,190
Current maturities of lease
liabilities 337 1,366 311
--------- --------- -----------
28,661 34,638 42,055
--------- --------- -----------
Total liabilities 39,397 44,582 53,214
========= ========= ===========
Total equity and liabilities 149,249 148,080 162,430
========= ========= ===========
*) Less than $1,000.
The accompanying notes are an integral part of the interim
condensed consolidated financial statements.
Date of approval Marcus Rich David King Caroline Ackroyd
of the
financial statements Chairman of the Chief Executive Chief Financial
Board of Directors Officer Officer
Consolidated statements of profit or loss and other
comprehensive income
Six months Six months Year ended
ended 30 ended 30 31 December
June June
2022 2021 2021
$000 $ 000 $000
Unaudited Unaudited Audited
Revenue 44,528 32,218 66,487
Expenses:
Operating (21,269) (21,902) (40,740)
Sales and marketing (16,169) (7,302) (14,837)
Depreciation, amortisation
and impairment (7,086) (3,587) (6,970)
----------
Operating profit / (loss) 4 (573) 3,940
Finance expenses (1,733) (221) (549)
Finance income 2 256 306
Other income 33 99 318
------------
Profit / (loss) before taxes
on income (1,694) (439) 4,015
Income tax benefit 2,198 357 1,626
------------
Profit / (loss) for the period 504 (82) 5,641
========== ========== ============
Other comprehensive expense
Exchange loss arising on translation
of foreign operations (377) - (16)
---------- ---------- ------------
Total comprehensive income
/ (expense) 127 (82) 5,625
========== ========== ============
Profit / (loss) for the period
attributable to:
Equity owners of the Company 504 (82) 5,641
504 (82) 5,641
========== ========== ============
Total comprehensive income
/ (expense) attributable to:
Equity owners of the Company 127 (82) 5,625
127 (82) 5,625
========== ========== ============
Earnings per share attributable
to equity holders of the Company:
Basic and diluted earnings
per share (in $) *( - *( - 0.02
========== ========== ============
*) Lower than $0.01
See note 1c with respect to the presentation for the six months
ended 30 June 2021.
The accompanying notes are an integral part of the interim
condensed consolidated financial statements.
Consolidated statements of changes in equity
Share Share Capital Capital Accumulated Total equity
capital premium reserve from reserve Capital reserve deficit attributable
share-based from the from to owners of
transactions translation transactions the Company
of a with
foreign non-controlling
operation interests
$000 $000 $000 $000 $000 $000 $000
As at 1
January 2022 *) - 122,071 2,656 (16) (2,626) (12,869) 109,216
Profit for the
period - - - - - 504 504
Other
comprehensive
expense - - - (377) - - (377)
-------- -------- ------------ ----------- ---------------- ----------- ------------
Total
comprehensive
income
(expense) - - - (377) - 504 127
Cost of
share-based
payment - - 509 - - - 509
As at 30 June
2022
(unaudited) *) - 122,071 3,165 (393) (2,626) (12,365) 109,852
======== ======== ============ =========== ================ =========== ============
As at 1
January 2021 *) - 86,022 2,368 - (2,626) (18,510) 67,254
Loss for the
period - - - - - (82) (82)
Cost of
share-based
payment - - 520 - - - 520
Share capital
issuance *) - 35,806 - - - - 35,806
-------- -------- ------------ ----------- ---------------- ----------- ------------
As at 30 June
2021
(unaudited) *) - 121,828 2,888 - (2,626) (18,592) 103,498
======== ======== ============ =========== ================ =========== ============
As at 1
January 2021 *) - 86,022 2,368 - (2,626) (18,510) 67,254
Profit for the
year - - - - - 5, 641 5, 641
Other
comprehensive
expense - - - (16) - - (16)
-------- -------- ------------ ----------- ---------------- ----------- ------------
Total
comprehensive
income - - - (16) - 5, 641 5, 625
Cost of
share-based
payment - - 520 - - - 520
Share capital
issuance *) - 35,806 - - - - 35,806
Exercise of
option *) - 243 ( 232 ) - - - 11
-------- -------- ------------ ----------- ---------------- ----------- ------------
As at 31
December 2021
(audited) *) - 122,071 2,656 (16) (2,626) (12, 869 ) 109, 216
======== ======== ============ =========== ================ =========== ============
*) Less than $1,000.
The accompanying notes are an integral part of the interim
condensed consolidated financial statements.
Consolidated statements of cash flows
Six months Six months
ended 30 ended 30 Year ended
June June 31 December
2022 2021 2021
$000 $ 000 $ 000
Unaudited Unaudited Audited
Operating activities
Profit (loss) for the period 504 (82) 5,641
Adjustments to reconcile profit for the
period to net cash flows:
Depreciation, amortisation and impairment 7,086 3,587 6,970
Finance expense / (income), net 257 (497) (76)
Loss on disposal of fixed assets 227 - -
Other income - - (437)
Cost of share-based payment 509 520 520
Income tax benefit (2,198) (357) (1,626)
Exchange differences on balances of
cash and cash equivalents 1,477 82 246
Working capital changes:
Decrease / (increase) in trade receivables 2,914 256 (2,672)
Decrease in other receivables 598 211 647
Increase in trade payables 207 134 313
(Decrease) / increase in other liabilities
and accounts payable (1,959) 56 (1,681)
---------- ----------
9,622 3,910 7,845
Interest paid (257) (38) (76)
Interest received - 2 3
Income tax paid - (255) (572)
Income tax received 1,684 60 48
---------- ------------
Net cash flows from operating activities 11,049 3,679 7,248
---------- ---------- ------------
Investing activities
Proceeds on disposal of property and
equipment 19 - -
Purchase of property and equipment (331) (809) (1,118)
Acquisition of and additions to domains,
websites and other intangible assets (3,000) (11,871) (23,127)
Acquisition of and additions to systems,
software and licenses (2,892) (3,125) (7,718)
Acquisition of subsidiary, net of cash
acquired - - (395)
Short-term and long-term deposits, net 565 289 507
---------- ---------- ------------
Net cash flows used in investing activities (5,639) (15,516) (31,851)
---------- ------------
Financing activities
Share capital issuance - 35,806 35,806
Proceeds from exercise of share options - - 11
Payment of principal portion of lease
liabilities (246) (474) (1,163)
Payment of deferred consideration (9,853) - -
---------- ---------- ------------
Net cash flows (used in) / from financing
activities (10,099) 35,332 34,654
---------- ---------- ------------
Net (decrease) / increase in cash and
cash equivalents (4,689) 23,495 10,051
Net foreign exchange difference (1,617) (82) (262)
Cash and cash equivalents at 1 January 22,437 12,648 12,648
---------- ----------
Cash and cash equivalents at 30 June
/ 31 December 16,131 36,061 22,437
========== ========== ============
Consolidated statements of cash flows
Six months Six months
ended 30 ended 30 Year ended
June June 31 December
2022 2021 2021
$000 $ 000 $ 000
Unaudited Unaudited Audited
Significant non-cash transactions:
Deferred consideration payable on acquisition
of and additions to domains, websites
and other intangible 3,000 15,299 28,113
Right-of-use asset recognized with corresponding
lease liabilities 347 5,991 2,460
The accompanying notes are an integral part of the condensed
consolidated financial statements.
Notes to the consolidated financial statements
1. General
a. Corporate information
XLMedia PLC ("the Company") is a leading global digital media
company 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 20 premium branded marquee websites across
various sectors, including Sports, Casino and Personal Finance.
Headquartered in the United Kingdom, with a significant presence in
the United States. The Company has a long track record of success
in digital media 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
GBP - British Pound Sterling
- International Financial Reporting Standards as adopted
IFRS by the European Union
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 to the Company's annual financial statements as of
31 December 2021
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
The Company elected in the 2021 annual financial statements 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 interim comparative
information.
2. Significant accounting policies
a. Basis of presentation of the interim condensed consolidated
financial statements
These financial statements have been prepared in a condensed
format as of 30 June 2022, and for the six months then ended
("interim consolidated financial statements"). These financial
statements should be read in conjunction with the Company's annual
financial statements as of 31 December 2021, and for the year then
ended and accompanying notes ("annual consolidated financial
statements").
The interim condensed consolidated financial statements have
been prepared in accordance with IAS 34, Interim Financial
Reporting, as adopted by the European Union.
2. Significant accounting policies (continued)
b. The initial adoption of amendments to existing financial
reporting and accounting standards:
The accounting policies adopted in the preparation of the
interim condensed consolidated financial statements are consistent
with those followed in the preparation of the Group's annual
consolidated financial statements for the year ended 31 December
2021, except for the adoption of new standards effective as of 1
January 2022. The Group has not early adopted any standard,
interpretation or amendment that has been issued but is not yet
effective.
Several amendments apply for the first time in 2022, but do not
have an impact on the interim condensed consolidated financial
statements of the Group.
3. Supplementary information
a. New real estate lease agreement:
In February 2022, the Company signed one new real estate lease
agreement. The lease's commencement date is 1 June 2022. The impact
for 2022 is an increase of approximately $0.35 million in
right-of-use assets and a corresponding increase in lease
liabilities.
b. Grant of Performance Stock Units:
In May 2022, the Company granted, 762,712, 1,060,484, and
644,068 Performance Stock Units ("PSUs") to the CFO, CGO, and CIO
respectively. The award will vest on the third anniversary of the
grant date if and to the extent that the performance target will be
satisfied.
The PSU award is a contingent right to acquire shares for no
consideration. It 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
as compared to the FTSE AIM 100, followed by a two-year holding
period.
The following table specifies the inputs used for the fair value
measurement using the Monte Carlo simulation:
2022
May PSU
Dividend yield (%) -
Expected volatility of the share price (%) 78.91
Risk-free interest rate (%) 2.72%
Expected life of share options (years) 3
Share price (GBX) 29.5
The total fair value was calculated at $179 thousand at the
grant date which will be recognised on a straight line basis over
the vesting period.
c. New appointments:
-- In February 2022, the Company announced that Christopher
Bell, Non-Executive Chair, has stepped down from the board of
directors of the Company. In March 2022, the Company announced the
appointment of Marcus Rich as Non-Executive Chair with immediate
effect. Marcus will also be a member of the Audit, Remuneration,
and Risk Committees.
3. Supplementary information (continued)
c. New appointments (continued):
-- In March 2022, the Company announced that Caroline Ackroyd
has joined the Company as Chief Financial Officer and as a member
of the Board of Directors with immediate effect.
-- In May 2022, the Company announced the appointment of David
King as Chief Executive Officer and as a member of the Board of
Directors. He joined the Group on 1 July 2022.
d. Personal Finance Cash Generating Unit ("CGU") impairment:
As a result of a decline in results due to the need to replace
aging technology, re-evaluate marketing tactics and align with best
practice, the Company recorded an impairment loss to the Personal
Finance CGU for the amount of $3,486 thousands, which is included
in the statement of profit or loss. The management and production
teams are now based within the Group's US division, and the
Personal Finance vertical is focussed on completing the redesign
and re-platforming of its primary websites, with the objective of
improving site performance and enhancing the consumer experience
and stabilising revenues.
Due to the change in market interest rates the Company assessed
all other CGU's for impairment. The result of this assessment
indicated that no other impairment is required as at 30 June
2022.
The pre-tax discount rate applied to the cash flow projection is
17.7% and the terminal growth rate is 3%.
The key assumptions used in calculating the value in use:
Revenues and operational profit: the revenues and the profit
rate assumptions are based on management expectations and forecasts
for the coming year and the management's forecasted cash flows for
the
following three years. These forecasts included an evaluation of
factors which could adversely affect revenues and
profitability.
Discount rate: the discount rate reflects management's
assumptions regarding the Group's specific risk premium.
Terminal growth rate : the terminal growth rate applied for the
period beyond the four-year forecasted period is based on the
long-term average growth rate as customary in similar
industries.
Sensitivity analyses of changes in assumptions:
With respect to the assumptions used in determining the value in
use, management believes that a significant change in key
assumptions, in particular, an increase in the Weighted Average
Cost of Capital and a decrease in EBITDA margin, would result in a
further impairment of the intangible assets.
e. Other financial assets:
On 28 February 2022 the Company converted a Loan receivable from
Xineoh Technologies Inc. with a carrying amount of $221 thousands
to shares giving the Company a 2.6% stake in ordinary shares with
no special rights. The Company elected to designate the equity
investment as at Fair Value through Other Comprehensive Income
("FVTOCI"). The Company believes there was no material change in
the fair value of the equity investment since its recognition.
3. Supplementary information (continued)
f. Deferred and contingent consideration:
In 2021, 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.
The acquisition cost included deferred consideration with a
remaining balance as of 30 June 2022 of $15.47 million which is
payable in the period of 2022-2024.
Also, in September 2021, the Company acquired 100% of the
ordinary share capital of Blueclaw, part of the amount of purchase
consideration included cash consideration paid on completion,
deferred consideration payable in September 2022 and further
contingent consideration payable.
g. Sales and marketing
The increase in sales and marketing expenses was largely due to
the change in revenue mix towards North America Sports and the
performance from media partnerships which have a lower gross margin
as revenue is paid to media partners for accessing their
audience.
4. 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
Six months Six months
ended 30 ended 30 Year ended
June June 31 December
2022 2021 2021
$000 $000 $000
Unaudited Unaudited Audited
North America 31,465 13,581 32,489
Scandinavia 6,858 8,876 17,634
Other European countries 4,384 7,800 12,621
Oceania 353 352 834
Other countries - 35 80
---------- ---------- ------------
Total revenues from identified
locations 43,060 30,644 63,658
Revenues from unidentified
locations 1,468 1,574 2,829
---------- ---------- ------------
44,528 32,218 66,487
========== ========== ============
4. Revenue and operating segments (continued)
Revenues by vertical
Six months Six months
ended 30 ended 30 Year ended
June June 31 December
2022 2021 2021
$000 $000 $000
Unaudited Unaudited Audited
Casino 8,403 12,490 23,216
Sports U.S. 9,620 4,642 15,202
Sports Europe 3,866 7,059 9,528
Third Party Network Activity 21,386 1,458 9,367
Blueclaw 421 - 454
Personal Finance 832 6,569 8,720
----------
44,528 32,218 66,487
========== ========== =============
5. Subsequent events
In August 2022, the Company announced that it granted share
awards over a total of 833,333 ordinary shares in aggregate in the
Company under the XLMedia 2020 Global Share Incentive Plan (the
"Awards"). The Awards represent 0.31% of the currently issued share
capital of the Company. The Awards are contingent rights to acquire
shares for no consideration. The Awards are 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 as compared to the FTSE AIM 100, followed by
a two-year holding period.
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END
IR PPURPBUPPPUR
(END) Dow Jones Newswires
September 29, 2022 02:00 ET (06:00 GMT)
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