TIDMXLM
RNS Number : 6826M
XLMedia PLC
23 September 2021
23 September 2021
XLMedia PLC
("XLMedia" or the "Group" or the "Company")
Results for the six months ended 30 June 2021
Strategic momentum continues: solid performance across all
business units,
with major organisational redesign accelerated
XLMedia (AIM: XLM), a leading global digital performance
publisher, announces the Company's audited results for the six
months ended 30 June 2021.
Financial summary
-- Revenues of $32.2 million (H1 2020: $27.7 million)
-- Gross profit of $18.3 million (H1 2020: $16.6 million)
-- Adjusted EBITDA(1) of $6.6 million (H1 2020: $5.1 million)
-- Reported loss before tax of $0.4 million (H1 2020, profit: $0.2 million)
-- Cash and short-term investments of $36.9 million (31 December 2020: $13.9 million)
-- In H1 2021 the Group recorded transformation costs of $1.0
million(2) following the continuation of the restructuring plan of
the Group (H1 2020: $1.5 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 M&A activity
Outlook
-- The Company maintains guidance of revenue for full year 2021
of between $65 million and $70 million although impact of
transformational activities (including M&A and fundraising)
likely to suppress operating profit across FY 2021 and FY 2022
o Continue to see improved productivity across business units as
we enter H2 2021, supported by US Sports and reinvigorated Casino
business
-- As Covid-19 restrictions ease, the Company is accelerating
organisational changes and will incur more costs in FY 2021 than
previously budgeted
-- Across the medium term, the Group expects to benefit from
more diverse revenue streams, with a focus on new money growth,
greater operational efficiency and a built-for-purpose platform and
data architecture, positioning XLMedia well for operational and
financial progress
Operating summary
-- Solid performance in H1 2021 across all business units: Sports, Casino, and Personal Finance
-- Successful equity raise enabling accelerated growth of US
Sports division through the acquisition of Sports Betting Dime
("SBD"), a multichannel sports betting publisher, with significant
technology and content capabilities, acquired in March 2021
-- Accelerated organisational initiatives across 2021/22 include:
o Re-organisation of audience-centric teams by industry vertical
and target locations, lowering the Group's fixed labour cost base,
and aligning resource with target audiences and growth
opportunities
o Increased use of best-in-breed external partners for
specialised and scalable expertise, creating cost efficiencies to
support audience-centric teams
o Re-building of the executive team: appointment of new CIO
Nigel Leigh, interim CFO Rowan Ellis, Alya Chaudhry as Global
Operations Director, David Weliver as Managing Editor of Personal
Finance and promotion of Ken Dorward to the Chief Growth Officer
role
o Fundamental overhaul of data architecture and tools,
delivering improved business analytics and commercial decisioning,
alongside trailing data-driven inventory management
-- Completed acquisition of Saturday Football Inc, a major
online publisher of college football news, for $24 million, in
September 2021 to further enhanced US Sports vertical
-- Announced today, the acquisition of BlueClaw for a total
consideration of up to $2.5 million to provide a UK hub for the EU
Sports business
-- Accelerating key initiatives to deliver ongoing financial and
operational benefit across the next 18 months
o Transition of audience-centric teams in Sports and Personal
Finance from Israel to the UK, North America and Cyprus, supported
by improved utilisation of external agency partners
o Phased introduction of distributed shared services model to
improve functional expertise, drive Group operational efficiencies
and create a scalable service delivery model
o Implementation of data utilisation platform (data science,
technology and operations) in Q4 2021, and completing in Dec 2022,
to support utilisation of first party data, resulting in improved
yield
Stuart Simms, Chief Executive Officer of XLMedia, commented:
"We continued to make further organisational progress in the
first six months of the year, as we expanded our portfolio of
high-quality branded sites, whilst also laying the foundations to
improve the use of our first party data. The combined positive
impact resulted in a strengthened US Sports division, increase of
regulated market and new money revenue, as well as the development
of a significantly improved data architecture and infrastructure to
serve the Group's long-term ambitions.
"The equity raise proved to be a pivotal point in my tenure,
having weathered the storm of the first 18 months, we could finally
accelerate and execute plans to realise the ambition I set out when
joining the business. Namely to build a platform (data, technology
and operations) which powers a portfolio of branded assets
operating across a number of verticals, offering an enhanced,
content-rich consumer experience and improved advertiser
performance.
"To achieve this ambition, during 2021, I have challenged the
business to accelerate the acquisition of new assets, reorganise
and re-build our capability and to develop a new data and
technology platform. I am proud of the team and our achievements,
and have confidence that the necessary changes will result in
improved focus, productivity and growth in H2 2022 and beyond."
Analyst and Institutional Investor webcast
A presentation webcast and live Q&A conference call for
analysts and investors will take place on 23 September 2021 at
9.00am UK Time, and a webcast of the presentation will be made
available thereafter on the Company's website at
https://www.xlmedia.com/investor-relations/webcasts/
To access this event please go to:
https://secure.emincote.com/client/xlmedia/2021-half-year-results
This announcement contains inside information for the purposes
of the UK version of Article 7 of Regulation (EU) 596/2014
("MAR").
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 / Fiona Hetherington / 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 / James White / Tejas Padalkar
www.berenberg.com
Notes:
XLMedia is a global digital performance publisher. Operating
across a variety of verticals including online gambling, personal
finance, sports and technology, the Group uses proprietary tools
and methodologies to identify and target high value clients for
platform operators.
XLMedia has a clear transformation strategy, which will enable
it to shape the future of the performance publishing industry. The
Company has set out its strategic agenda under two fundamental
priorities:
-- A balanced portfolio of online assets
o XLMedia seeks to create a balanced portfolio of websites to
cover a range of attractive geographies, both stable and
high-growth verticals and with greater exposure to regulated
markets. In doing so, the Company will focus particularly on
developing presence in North American sports, primarily through
targeted acquisition
-- Branded, content-rich, engaging websites
o XLMedia will consolidate its online portfolio, concentrating
on a much smaller number of publishing assets, and focusing its
resources on optimising this core set of premium sites for its
chosen markets. These content-rich, engaging websites, underpinned
by intelligent market-leading technology, will seek to build
stronger lasting relationships with consumers and enhance
monetisation opportunities
Chief Executive Officer review
The Group has delivered a much-improved financial performance in
the first half of the year, in addition to delivering major
operational progress. The easing of social restrictions relating to
the global pandemic is helping us to accelerate plans to drive
meaningful change.
In H1 2021, the Group delivered revenue of $32.2 million (16%
increase on H1 2020: $27.7 million), gross profit of $18.3 million
(10% increase on H1 2020: $16.6 million) and adjusted EBITDA of
$6.6 million (29% increase on H1 2020: $5.1 million).
Key H1 highlights include:
-- Sports and Personal Finance divisions both continued to
deliver growth in the period, with revenues stabilised in the
Casino division and the unit well-positioned for growth going
forward
o Record organic growth in European Sports
o Further positive momentum generated from US Sports, buoyed by
multiple acquisitions
-- Right-sized and re-established European Casino assets with emphasis on generating new revenue
We will continue to focus on developing a balanced portfolio of
premium assets, which are content-rich and consumer-centric, across
target markets and geographies - with opportunities to enhance
performance and efficiency through proprietary data.
Organisation Redesign and Capability
The ongoing transformation of the Group continues to gather
momentum; we have overhauled our audience-centric capability across
all verticals, which is expected to be completed by the end of the
year. The acquisition of BlueClaw, announced today, is of crucial
importance in supporting this overhaul, bringing strong operational
capability, processes and workflow.
The final phase of our change plan has already commenced and
will involve an overhaul of our shared service functions, most
notably legacy technology and systems. Throughout H1, management
have been working towards this goal and engaging with outsourcers
and technology providers to ensure the Group has the correct
platform (data, technology and operations) to accelerate our
transition to a data-driven business.
Further to the recruitment of CIO Nigel Leigh, we will continue
to evolve our data science capability, and improve data capture
(tracking) to drive increased consumer engagement, activation and
asset performance. The required technology and operations will
continue to be tested and trialled during H2 2021, with the
expected migration of all sites over to the platform during in
2022. This data-driven methodology and the utilisation of first
party data will enable XLMedia to develop its platform, which both
improves returns and profit going forward.
Management expects the final phase of the Group's transformation
to be delivered across H2 2021 and into 2022.
Key milestones achieved include:
-- Migration of all audience-centric functions, except Casino,
to outside Israel - moving closer to target audiences and improving
access to talent at lower costs
-- Improved use of external agencies to access best practice and
delivering a more agile cost base
-- Created strong organisation in North America through
acquisitions, including very capable content and technology teams
which will aid future shared services evolution
-- Completed the fundamental rationalisation of our portfolio -
from over 3,000 sites to fewer than 100
-- Upgraded site structure and content, monetising through more diverse revenue streams
-- Laid foundations for transition to data-driven business
through the implementation of a new data architecture and analytics
engine, with business intelligence system - providing improved
visibility across key performance metrics and access to data to
drive performance
-- Re-built the executive team, with new appointments:
o Interim Chief Financial Officer, Rowan Ellis
o Chief Information Officer, Nigel Leigh
o Professional transformation leader, Alya Chaudhry
o Managing Editor of Personal Finance division, David Weliver
(former owner and CEO of Money Under 30)
o Promotion to Chief Growth Officer, Ken Dorward
-- Strengthened Board with the appointment of Julie Markey as
Non-Executive Director, bringing a wealth of experience in the
organisation and management of people in international
businesses
Divisional summary
Sports
The Group's Sports division has delivered a strong performance
in the period, delivering revenues of $11.7 million in H1 2021, of
which $6.7m was new money, an increase of $5.8m (600%) over the
same period in 2020.
-- EU Sports
o Strong performance with record organic growth across H1 2021
following the resumption of professional sports and major events
like the delayed UEFA European Football Championship
o A number of key assets upgraded, in terms of content,
structure and working practices
o We are confident of continued growth in the division, boosted
by further relaxation of restrictions resulting in both more
professional and mass sports events taking place
-- US Sports
o Delivering revenues of $6.1 million in the period, the Group
now has a strong foothold in the market, which is continuing to
show a good growth trajectory, driven by increasing regulation
o CBWG, the digital media publishing business acquired in
December 2020, is now fully integrated and is exceeding management
expectations, capitalising on growth in the US Sports betting
market
o Sports Betting Dime ("SBD"), acquired in March 2021, boasts an
unrivalled audience which the Group is seeking to leverage as we
develop our offering and expand the reach of sites across regulated
states in North America. SBD also brings strong product and
technology expertise to benefit the wider Group
o Saturday Football Inc., acquired post-period end, converted an
existing agency partnership and enabled XLMedia to access to the
sizeable US College Football marketplace and delivers significant
cross marketing opportunities for the wider Group
Personal Finance
The Personal Finance division delivered strong revenues in H1
2021 of $6.6 million. As previously disclosed, the division was
heavily impacted in 2020 with a reduction in traffic to our sites.
Ongoing migration of team and resources to the US will result in
marginal operational disruption in H2 2021. However, we are
confident that in the longer term, there will be a return to
pre-pandemic revenue levels as we invest to sharpen capabilities,
drive stability and improve profitability.
-- Leadership within the Personal Finance division strengthened with key hires:
o David Weliver, founder of Money Under 30, which XLMedia
acquired in 2017, as Managing Editor to oversee delivery of
high-quality editorial content across the portfolio as well as
leadership for the business unit
o Chris Muller, recruited as Director of Audience Growth, tasked
with driving operational excellence and the application of data
analytics
o Together they will recruit a team to ensure the assets are
highly attuned to the market's specialised needs and trends, and
can grow and scale in accordance with market opportunity
-- Through the relocation of our audience-centric teams, we now
have a team of approximately 20 people focused on the Personal
Finance market, working from locations throughout the United States
and Canada. Further to this we are working to onboard agencies to
support the transition, and further accelerate our content and
digital PR strategy
-- The Personal Finance sites currently all remain on legacy
platforms, therefore, during H2 2021 and 2022, we anticipate
transitioning these sites onto the new platform, which will improve
site performance and SEO operations as well as enhancing consumer
experience and engagement.
o The application of these best practices runs in line with
Google's consumer-centric approach and its latest algorithm
changes
Casino
Our Casino division delivered revenues of $12.5 million in H1
2021. We have focused our efforts on a smaller number of profitable
sites and their ability to generate new revenues; we will seek to
grow the reach of these existing sites and more sustainable
revenues.
During 2022, the Group will evolve our casino offering to
operate brands across multiple territories as opposed to previous
strategy of single territory sites. We believe that this will
provide a more agile approach to responding to changes in
regulation. We continue to believe in the high quality of our
premium casino assets relative to peers.
The Casino business unit remains in Israel, supported by local
shared services (finance, legal, HR and technology). Since the
beginning of the year, we have maintained revenues whilst halving
the division's headcount.
Regulation
The process of achieving the relevant regulatory permissions and
operating within clear regulatory parameters is a core competency
of XLMedia, and something we will seek to leverage further going
forward.
Additionally, the experience and expertise garnered by XLMedia
and required to operate in regulated markets introduces additional
barriers to entry for potential new providers. Our approach of
developing high-quality, educational, engaging and customer-centric
websites also positions the business well from a sustainability
perspective.
Outlook
The Group has delivered steady growth across the period and
accelerated structural changes and enhanced use of data across the
business. Management continues to right-size the business, shifting
the historical operational focus from Israel, alongside backing key
strategic hires in finance, technology and business transformation.
By the end of September, headcount in Israel will be reduced
further by approximately 30 roles.
The recent acquisitions of CBWG, SBD and Saturday Football Inc.
have strengthened our offering in US Sports, and established the
Group with immediate scale, and the skills to drive growth. The
strengthening of our US Sports division also represents progress in
rebalancing the Group, focusing more heavily on regulated and
high-growth markets.
The combined positive impact of a strengthened US Sports
division, a focus on regulated markets, our investment in data
infrastructure to serve the Group long-term and restructuring of
the business, gives the Group confidence of delivering growth in
the second half, with XLMedia ideally placed for operational and
financial progress in the medium term.
The Group maintains guidance of revenue for full year 2021 of
between $65 million and $70 million. As Covid-19 restrictions ease,
the Company is accelerating organisational changes and will incur
more costs in FY 2021 than previously budgeted. Across the medium
term, the Group expects to benefit from more diverse revenue
streams, with a focus on new money growth, greater operational
efficiency and a built-for-purpose platform and data architecture,
positioning XLMedia well for operational and financial
progress.
Stuart Simms
Chief Executive Officer
22 September 2021
Financial Review
$'000 H1 2021 H1 2020 Change
Revenues 32,218 27,715 16%
========================== ======== ======== =======
Gross profit 18,260 16,609 10%
========================== ======== ======== =======
Operating expenses (*) (18,833) (16,330) 15%
========================== ======== ======== =======
Operating profit (loss) (573) 279 -305%
========================== ======== ======== =======
Adjusted EBITDA (1) 6,600 5,093 29%
========================== ======== ======== =======
Profit (loss) before tax (439) 171 -356%
-------- -------- -------
(1) Earnings Before interest, Taxes, Depreciation, Amortisation
and excluding share-based payments, impairment and reorganisation
costs
(*) Reorganization costs in previous period were reclassified as
general and administrative expenses.
XLMedia revenues in H1 2021 totalled $32.2 million (H1 2020:
$27.7 million), an increase of 16% compared to the previous year
primarily driven by US Sports, which benefitted from recent
acquisitions.
Gross profit for H1 2021 was $18.3 million and gross margin was
57% (H1 2020: $16.6 million, 60% gross margin), representing a 3%
decrease, as a result of the recent business acquisition and new
hires in low season.
Operating expenses for H1 2021 were $18.8 million (H1 2020:
$16.3 million). This increase is largely driven by redundancy
costs, coupled with new hires, and an uplift in transformation
costs associated with both M&A activity and reorganisation.
Adjusted EBITDA for H1 2021 was $6.6 million (H1 2020: $5.1
million), an increase of 29% on the previous year, driven by the
increase in revenues.
Net financing income for H1 2021 was $0.04 million (H1 2020:
$0.1 million, expense).
In H1 2021 the Group recorded transformation costs of $3.6
million following the continuation of the restructuring plan of the
Group, as well as significant M&A activity (H1 2020: $1.5
million).
As at 30 June 2021, the Company had $36.9 million in cash and
short-term investments (31 December 2020: $13.9 million). The
change in cash is a reflection of $3.7 million generated by
operating activities and $35.3 million provided by financing
activities, offset by $15.5 million used for investment
activity.
Current assets as at 30 June 2021 were $48.6 million (31
December 2020: $25.2 million). The increase in current assets was
predominantly as a result of the increase in cash and
cash-equivalents mentioned above.
Non-current assets as at 30 June 2021 were $99.5 million (31
December 2020: $66.9 million). The increase in non-current assets
is primarily as a result of the acquisition of SBD for $26.2
million.
Current liabilities as at 30 June 2021 were $34.6 million (31
December 2020: $23.3 million). The increase in current liabilities
was predominantly as a result of the first deferred consideration
payable for SBD.
Non-current liabilities as at 30 June 2021 were $9.9 million (31
December 2020: $1.6 million). The increase in non-current
liabilities is primarily attributable to the new leases liabilities
of $4.4 million relating to new office space and $3.6 million
relating to the second deferred consideration payable for the SBD
acquisition.
Total equity as at 30 June 2021 was $103.5 million or 70% of
total assets (31 December 2020: $67.3 million or 73% of total
assets). The increase in the equity was mainly as a result of the
issue of $37.4 million of new company shares, undertaken in March
2021.
The first half of 2021 was a year of continued progress for the
Company. Alongside the challenges of the ongoing headwinds from the
Covid-19 pandemic, XLMedia has continued to make progress with
restructuring the business and ensuring it is appropriately sized
as it returns to a growth trajectory. The Group has now completed
three important acquisitions in the US Sports market, our EU Sports
and Personal Finance divisions are performing well, and our Casino
market is refocused on profitable sites. With our renewed focus on
delivering engaging and captivating content for our end customer,
we remain optimistic about the Group's prospects moving into the
second half of 2021 and beyond.
Rowan Ellis
Interim Chief Financial Officer
22 September 2021
XLMEDIA PLC. AND ITS SUBSIDIARIES
INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
AS OF 30 JUNE 2021
US DOLLARS IN THOUSANDS
Report on review of interim financial information
The Board of Directors
XLMedia PLC.
Introduction
We have reviewed the accompanying consolidated interim financial
statements of XLMedia PLC. and its subsidiaries ("the Group") as at
30 June 2021 which comprise the interim consolidated statement of
financial position as at 30 June 2021 and the related interim
consolidated statements of profit or loss and other comprehensive
income, changes in equity and cash flows for the six-month period
then ended, and a summary of significant accounting policies and
other 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 consolidated
financial statements do not present fairly, in all material
respects the financial position of the Group as at 30 June 2021,
and of its financial performance and its cash flows for the
six-month period then ended in accordance with IAS 34 as adopted by
the European Union.
Tel-Aviv, Israel KOST FORER GABBAY & KASIERER
A Member of Ernst & Young
22 September 2021 Global
CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
30 June 31 December
2021 2020
--------- -----------
Unaudited Audited
--------- -----------
$ in thousands
----------------------
ASSETS
CURRENT ASSETS:
Cash and cash equivalents 36,061 12,648
Short-term deposits 870 1,228
Trade receivables 5,536 5,792
Other receivables 5,943 5,578
Financial derivatives 158 -
--------- -----------
48,568 25,246
--------- -----------
NON-CURRENT ASSETS:
Long-term deposits 1,525 1,478
Property and equipment 6,914 1,072
Domains and websites 81,292 55,941
Other intangible assets 9,410 7,925
Other assets 371 497
99,512 66,913
--------- -----------
148,080 92,159
========= ===========
The accompanying notes are an integral part of the interim
condensed consolidated financial statements.
CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
30 June 31 December
2021 2020
--------- -----------
Unaudited Audited
--------- -----------
$ in thousands
LIABILITIES AND EQUITY
CURRENT LIABILITIES:
Trade payables 2,134 2,000
Deferred consideration payable 9,875 -
Other liabilities and accounts payable 9,914 8,769
Income tax provision 11,349 11,899
Financial derivatives - 304
Current maturities of lease liabilities 1,366 324
--------- -----------
34,638 23,296
--------- -----------
NON-CURRENT LIABILITIES:
Lease liability 4,723 366
Deferred tax liabilities 1,607 1,243
Deferred consideration payable 3,614 -
--------- -----------
9,944 1,609
--------- -----------
Total liabilities 44,582 24,905
EQUITY
Share capital *) - *) -
Share premium 121,828 86,022
Capital reserve from share-based transactions 2,888 2,368
Capital reserve from non-controlling interests
transaction (2,626) (2,626)
Accumulated deficit (18,592) (18,510)
--------- -----------
Total equity 103,498 67,254
--------- -----------
148,080 92,159
========= ===========
*) Lower than $1 thousand.
The accompanying notes are an integral part of the interim
condensed consolidated financial statements.
22 September 2021
-------------------- --------------------- ----------------------- -----------------------
Date of approval Chris Bell Stuart Simms Rowan Ellis
of the
financial statements Chairman of the Board Chief Executive Officer Chief Financial Officer
of Directors
CONSOLIDATED STATEMENTS OF PROFIT OR LOSS AND OTHER
COMPREHENSIVE INCOME
Six months ended Year ended
30 June 31 December
------------------ ------------
2021 2020 2020
------- --------- ------------
Unaudited Audited
------------------ ------------
$ in thousands
(except per share data)
Revenues 32,218 27,715 54,839
Cost of revenues 13,958 11,106 20,494
------- --------- ------------
Gross profit 18,260 16,609 34,345
------- --------- ------------
Research and development expenses 1,197 1,156 2,464
Sale and marketing expenses 1,939 2,194 4,202
General and administrative expenses 15,697 (*)12,980 (*)25,810
------- --------- ------------
18,833 16,330 32,476
------- --------- ------------
Operating profit (loss) before impairment (573) 279 1,869
------- --------- ------------
Impairment loss - - 955
Operating profit (loss) (573) 279 914
------- --------- ------------
Finance expenses (221) (408) 834
Finance income 256 300 695
------- --------- ------------
Finance income (expenses), net 35 (108) (139)
------- --------- ------------
Other income, net 99 - 332
Profit (loss) before taxes on income (439) 171 1,107
Taxes on income (tax benefit) (357) 72 315
------- --------- ------------
Profit (loss) for the period (82) 99 792
======= ========= ============
Total comprehensive income (loss), net
of tax (82) 99 792
======= ========= ============
Attributable to:
Equity holders of the Company (82) (169) 531
Non-controlling interests - 268 261
------- --------- ------------
(82) 99 792
======= ========= ============
Earnings per share attributable to equity
holders of the Company:
Basic and diluted earnings (loss) per - (** - (**
share (in $) - (**
======= ========= ============
*) Reorganization costs in previous periods were reclassified as
general and administrative expenses.
**) Lower than $0.01.
The accompanying notes are an integral part of the interim
condensed consolidated financial statements.
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
Attributable to equity holders of the Company
-------------------------------------------------------------------------------------
Capital
reserve
Capital from transactions
reserve with
Share from share-based non-controlling Accumulated Total
capital Share premium transactions interests deficit equity
--------- ------------- ----------------- ----------------- ----------- -------
Unaudited
-------------------------------------------------------------------------------------
$ in thousands
-------------------------------------------------------------------------------------
Balance at 1
January 2021 *) - 86,022 2,368 (2,626) (18,510) 67,254
---------- ------------- ----------------- ----------------- ----------- -------
Loss for the
period - - - - (82) (82)
Share-based
payment - - 520 - - 520
Share capital
issuance (see
also note
4e) *) - 35,806 - - - 35,806
Balance at 30 June
2021 (unaudited) *) - 121,828 2,888 (2,626) (18,592) 103,498
========== ============= ================= ================= =========== =======
The accompanying notes are an integral part of the interim
condensed consolidated financial statements.
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
Attributable to equity holders of the Company
------------------------------------------------------------------------------
Capital
reserve
Capital from
reserve transactions
from with
Share Share share-based non-controlling Treasury Retained Non-controlling Total
capital premium transactions interests shares earnings Total interests equity
-------- -------- ------------ --------------- -------- -------- ------ --------------- ------
Unaudited
-------------------------------------------------------------------------------------------------------
$ in thousands
-------------------------------------------------------------------------------------------------------
Balance at 1
January 2020 *) - 112,624 2,276 (2,445) (30,159) (19,041) 63,255 291 63,546
--------- -------- ------------ --------------- -------- -------- ------ --------------- ------
Net income and
other
comprehensive
income - - - - - (169) (169) 268 99
Share-based
payment - - 142 - - - 142 - 142
Delisting of
treasury shares
**) - (30,159) - - 30,159 - - - -
Dividend to
non-controlling
interests - - - - - - - (268) (268)
Balance at 30
June 2020 (* - 82,465 2,418 (2,445) - (19,210) 63,228 291 63,519
========= ======== ============ =============== ======== ======== ====== =============== ======
Attributable to equity holders of the Company
--------------------------------------------------------------------------------
Capital reserve
Capital from
reserve transactions
from with Retained
Share Share share-based non-controlling Treasury earnings Non-controlling Total
capital premium transactions interests shares (losses) Total interests Equity
-------- -------- ------------ --------------- --------- --------- ------ --------------- ------
$ in thousands
---------------------------------------------------------------------------------------------------------
Balance as of 1
January
2020 *) - 112,624 2,276 (2,445) (30,159) (19,041) 63,255 291 63,546
Net profit and
other
comprehensive
income - - - - - 531 531 261 792
Delisting of
treasury shares
**) - (30,159) - - 30,159 - - - -
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
interests - - - - - - - (261) (261)
--------- -------- ------------ --------------- --------- --------- ------ --------------- ------
Balance as of 31
December
2020 *) - 86,022 2,368 (2,626) - (18,510) 67,254 - 67,254
========= ======== ============ =============== ========= ========= ====== =============== ======
*) Lower than $1 thousand.
**) In April 2020, the board resolved to cancel all shares held
in treasury.
The accompanying notes are an integral part of the interim
condensed consolidated financial statements.
CONSOLIDATED STATEMENTS OF CASH FLOWS
Six months ended Year ended
30 June 31 December
------------------ ------------
2021 2020 2020
------- --------- ------------
Unaudited Audited
------------------ ------------
$ in thousands
--------------------------------
Cash flows from operating activities:
Net income (loss) (82) 99 792
Adjustments to reconcile net income (loss)
to net cash provided by operating activities:
Adjustments to the profit or loss items:
Depreciation and amortization 3,587 3,171 7,720
Impairment loss - - 955
Finance expense (income), net (497) 109 823
Share-based payment expense 520 142 92
Other Income - - (1,122)
Taxes on income (357) 72 315
Exchange differences on balances of cash
and cash equivalents 82 (519) (297)
3,335 2,975 8,486
------- --------- ------------
Changes in asset and liability items:
Decrease in trade receivables 256 3,545 1,963
Decrease (increase) in other receivables 211 (502) (340)
Increase (decrease) in trade payables 134 (1,402) (1,028)
Increase (decrease) in other liabilities
and accounts payable 56 (441) (1,139)
Decrease in other long-term liabilities - - (65)
------- --------- ------------
657 1,200 (609)
------- --------- ------------
Cash paid during the year for:
Interest paid (38) (61) (544)
Interest received 2 82 99
Taxes paid (255) (518) (799)
Taxes received 60 248 996
------- --------- ------------
(231) (249) (248)
------- --------- ------------
Net cash provided by operating activities 3,679 4,025 8,421
======= ========= ============
The accompanying notes are an integral part of the interim
condensed consolidated financial statements.
CONSOLIDATED STATEMENTS OF CASH FLOWS
Six months ended Year ended
30 June 31 December
------------------- ------------
2021 2020 2020
--------- -------- ------------
Unaudited Audited
------------------- ------------
$ in thousands
---------------------------------
Cash flows from investing activities:
Purchase of property and equipment (809) (186) (319)
Acquisition of and additions to domains,
websites and other intangible assets (11,871) - (12,842)
Acquisition of and additions to technology (3,125) (4,394) (6,642)
Adjustments of proceeds from the sale
of discontinued operation - (270) (270)
Loan for a third party - - (500)
Short-term and long-term deposits, net 289 298 911
--------- -------- ------------
Net cash used in investing activities (15,516) (4,552) (19,662)
--------- -------- ------------
Cash flows from financing activities:
Acquisition of non-controlling interest - - (472)
Share capital issuance, net of issuance
costs 35,806 - -
Dividend paid to non-controlling interests - (184) (261)
Repayment of long term and short-term
liability - (1,500) (1,500)
Payment of lease liabilities (474) (569) (1,283)
Net cash provided by (used in) financing
activities 35,332 (2,253) (3,516)
--------- -------- ------------
Exchange differences on balances of cash
and cash equivalents (82) 519 297
--------- -------- ------------
Increase (decrease) in cash and cash equivalents 23,413 (2,261) (14,460)
Cash and cash equivalents at the beginning
of the period 12,648 27,108 27,108
--------- -------- ------------
Cash and cash equivalents at the end of
the period 36,061 24,847 12,648
========= ======== ============
Significant non-cash transactions:
Acquisition of and additions to domains,
websites, and other intangible assets
mainly for deferred consideration 14,311 310 6,816
Right-of-use asset recognized with a corresponding
lease liability 5,991 600 3,557
Acquisition of and additions to technology 988 - -
The accompanying notes are an integral part of the interim
condensed consolidated financial statements.
NOTE 1: GENERAL
a. XLMedia PLC and its subsidiaries (The Group) are online performance marketing companies.
The Group attracts users through online marketing techniques
(such as publications and advertisements), which are then directed,
by the Group, to its customers in return for a share of the revenue
generated by such user, a fee generated per user acquired, fixed
fees or a hybrid of any of these three models .
b. The spread of Coronavirus has an impact on the Group's
operations. The Group has a well-balanced portfolio of assets.
However, the global economic slowdown affected revenues related to
Personal finance and Casino Business Units. The Group is
continually monitoring and responding to the potential impact of
the outbreak. Still, as there is uncertainty regarding the duration
of the impact and future events, there is uncertainty regarding the
total effect on the Group's operations. The Group Board of
Directors and management determined that the Group will have
sufficient liquidity for operation for at least 12 months from the
date of the consolidated financial statements.
c. Definition:
$ - U.S. dollar.
NOTE 2: SIGNIFICANT ACCOUNTING POLICIES
a. Basis of preparation of the interim condensed consolidated financial statements:
These financial statements have been prepared in a condensed
format as of 30 June 2021, 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 2020, and for the year then
ended and accompanying notes ("annual consolidated financial
statements").
The interim condensed consolidated financial have been prepared
in accordance with IAS 34, Interim Financial Reporting, as adopted
by the European Union.
b. The initial adoption of amendments to existing financial
reporting and accounting standards:
Amendments to IFRS 9, IFRS 7, IFRS 16, IFRS 4 and IAS 39
regarding the IBOR reform:
In August 2020, the IASB issued amendments to IFRS 9, "Financial
Instruments", IFRS 7, "Financial Instruments: Disclosures", IAS 39,
"Financial Instruments: Recognition and Measurement", IFRS 4,
"Insurance Contracts", and IFRS 16, "Leases" ("the
Amendments").
The Amendments provide practical expedients when accounting for
the effects of the replacement of benchmark InterBank Offered Rates
(IBORs) by alternative Risk-Free Interest Rates (RFRs).
Pursuant to one of the practical expedients, an entity will
treat contractual changes or changes to cash flows that are
directly required by the IBOR reform as changes to a floating
interest rate. That is, an entity recognizes the changes in
interest rates as an adjustment of the effective interest rate
without adjusting the carrying amount of the financial instrument.
The use of this practical expedient is subject to the condition
that the transition from IBOR to RFR takes place on an economically
equivalent basis.
In addition, the Amendments permit changes required by the IBOR
reform to be made to hedge designations and hedge documentation
without the hedging relationship being discontinued, provided
certain conditions are met. The Amendments also provide temporary
relief from having to meet the "separately identifiable"
requirement, according to which a risk component must also be
separately identifiable to be eligible for hedge accounting.
The Amendments include new disclosure requirements in connection
with the expected effect of the IBOR reform on an entity's
financial statements, such as how the entity is managing the
process to transition to the IBOR reform, the risks to which it is
exposed due to the IBOR reform and quantitative information about
IBOR-referenced financial instruments that are expected to
change.
The Amendments are to be applied retrospectively for annual
periods beginning on or after 1 January 2021. Restatement of
comparative data for prior periods is not required.
The above Amendments are not expected to have a material impact
on the Company's interim financial statements.
NOTE 3: DISCLOSURE OF NEW STANDARDS IN THE PERIOD PRIOR TO THEIR ADOPTION
a. Amendment to IAS 8, "Accounting Policies, Changes to Accounting Estimates and Errors":
In February 2021, the IASB issued an amendment to IAS 8,
"Accounting Policies, Changes to Accounting Estimates and Errors"
("the Amendment"), in which it introduces a new definition of
"accounting estimates".
Accounting estimates are defined as "monetary amounts in
financial statements that are subject to measurement uncertainty".
The Amendment clarifies the distinction between changes in
accounting estimates and changes in accounting policies and the
correction of errors.
The Amendment is to be applied prospectively for annual
reporting periods beginning on or after 1 January 2023 and is
applicable to changes in accounting policies and changes in
accounting estimates that occur on or after the start of that
period. Earlier application is permitted. The Group will adopt the
Amendment after 1 January 2023.
b. Amendment to IAS 12, "Income Taxes":
In May 2021, the IASB issued an amendment to IAS 12, "Income
Taxes" ("IAS 12"), which narrows the scope of the initial
recognition exception under IAS 12.15 and IAS 12.24 ("the
Amendment").
According to the recognition guidelines of deferred tax assets
and liabilities, IAS 12 excludes recognition of deferred tax assets
and liabilities in respect of certain temporary differences arising
from the initial recognition of certain transactions. This
exception is referred to as the "initial recognition exception".
The Amendment narrows the scope of the initial recognition
exception and clarifies that it does not apply to the recognition
of deferred tax assets and liabilities arising from transactions
that give rise to equal taxable and deductible temporary
differences, even if they meet the other criteria of the initial
recognition exception.
The Amendment is to be applied for annual reporting periods
beginning on or after 1 January 2023, with earlier application
permitted. In relation to leases and decommissioning obligations,
the Amendment is to be applied commencing from the earliest
reporting period presented in the financial statements in which the
Amendment is initially applied. The cumulative effect of the
initial application of the Amendment should be recognized as an
adjustment to the opening balance of retained earnings (or another
component of equity, as appropriate) at that date.
The Company estimates that the initial application of the
Amendment is not expected to have a material impact on its
financial statements.
NOTE 4: SUPPLEMENTARY INFORMATION
a. In December 2020, the Company signed three new real estate
lease agreements. The leases' commencement dates are 31 December
2020, 1 January 2021, and 15 February 2021. The impact for 2021 is
an increase of approximately $6 million in right-of-uses assets and
a corresponding increase in lease liabilities.
b. In March 2021, the Company acquired the activity and assets
of Sports Betting Dime ("SBD") for a total consideration of $26.4
million, comprised of: $12.7 million initial cash consideration
paid, $10 million deferred consideration payable on the first
anniversary ("first payment") and $3.7 million deferred
consideration payable after 18 months ("second payment"). The
deferred consideration has been recorded as a financial liability
discounted at an annual rate of 1.7% and 1.9% for the first and
second payments accordingly. The Company accounted for this
acquisition as an asset acquisition since substantially most of the
fair value of the gross assets acquired is concentrated in domains
and websites.
c. In March 2021, the Company granted, to one key manager,
470,977 Restricted Stock Units ("RSUs"). The RSU Award is subject
to a three-year performance period, with vesting subject to the
achievement of performance measured by reference to total
shareholder return over the performance period compared to the FTSE
AIM 100, followed by a two-year holding period. The performance
conditions to be achieved such that RSUs are capable of vesting are
as follows:
XLMedia's Ranking relatively
to the Comparator Group % of RSUs capable of vesting
Upper quartile or better 100%
The straight-line basis between
Between upper quartile and 100% and 25% based on the
median Company's rank
Median 25%
Lower than median -
The following table specifies the inputs used for the fair value
measurement using the Monte Carlo simulation:
Exercise price GBP ($) -
Dividend yield (%) -
Expected volatility of the share
price (%) 73.94%
Risk-free interest (%) 0.29%
The expected life of share options
(years) 3
Share price GBP 0.54
The total fair value was calculated at $289 thousand at the
grant date and will be recognized on a straight-line basis over the
three years.
d. In April 2021, the Company granted 1,190,476 and 769,231
Performance Stock Units ("PSUs") to the CEO and CFO, respectively.
The award will vest on the fourth anniversary of the grant date if
and to the extent that the performance target will be satisfied.
The performance target relating to the performance of the Company's
share price is as follows:
Average share price % of PSUs capable of vesting
GBP1.5 or higher 100%
Between GBP1.35 and GBP1.50 On a straight-line basis, between
50% and 100%
Between GBP1.20 and GBP1.35 On a straight-line basis, between
25% and 50%
Less than GBP1.20 0%
The PSU award is a contingent right to acquire shares for no
consideration. It is subject to a four-year vesting period followed
by a one-year holding period and the achievement of performance
targets measured by the increase in the Company's share price
between 1 January 2021 and 31 December 2024.
The following table specifies the inputs used for the fair value
measurement using the Monte Carlo simulation:
Exercise price GBP ($) -
Dividend yield (%) -
Expected volatility of the share
price (%) 68.6%
Risk-free interest (%) 0.5%
The expected life of share options
(years) 4
Share price GBP 0.52
The total fair value was calculated at $ 672 thousand at the
grant date and will be recognized on a straight-line basis over the
three years .
See also g below regarding the resignation of the CFO.
e. In March and April 2021, the Company raised gross proceeds of
$37.4 million using a placing, a direct subscription with the
Company, and an Open Offer and has thus issued and allotted 67.5
million new shares. The transaction costs were approximately $1. 6
million.
f. In May 2021, the Company granted 910,000 options to
Employees. The options vest in varying amounts over a period of up
to three years from the grant date. The total fair value was
calculated at $627 thousand at the grant date and will be
recognized on a straight-line basis over the three years .
g. New appointments:
1. In June 2021, the Company announced the appointment of Julie
Markey as a new Non-Executive Director with immediate effect.
2. In June 2021, the Company appointed Nigel Leigh to a new
position, Chief Information Officer, with immediate effect.
3. In July 2021, after the reporting date, the Company announced
that Iain Balchin, the CFO, had left the Company on 22 July 2021.
The Company appointed Rowan Ellis as the new interim CFO.
NOTE 5: OPERATING SEGMENTS
a. General:
The Group has one operating segment - Publishing, which
comprises less than 100 owned informational websites in 10
languages. These websites refer potential customers to online
businesses. The 'sites' content, written by professional writers,
is designed to attract online traffic, which the Group then directs
to its customer's online businesses.
b. Geographic information:
Revenues classified by geographical areas based on internet user
location:
Six months ended Year ended
30 June 31 December
------------------
20 2 1 2020 2020
-------- -------- ------------
Unaudited Audited
------------------ ------------
$ in thousands
--------------------------------
Scandinavia 8,876 11,372 21,387
Other European countries 7,800 7,991 15,473
North America 13,581 5,434 11,514
Oceania 352 461 941
Other countries 35 55 96
------------
Total revenues from identified
locations 30,644 25,313 49,411
Revenues from unidentified
locations 1,574 2,402 5,428
------------
Total revenues 32,218 27,715 54,839
======== ======== ============
NOTE 6: SUBSEQUENT EVENTS
In September 2021, after the reporting date, the Company
announced the acquisition of Saturday Football Inc., a major online
publisher of college football news, for a total cash consideration
of $23 million, made up of: upfront consideration of $11 million in
cash plus an additional $12 million, payable over three years. In
addition, the founders will receive $1 million in long-term
incentives in the Company's shares. These share awards will become
fully vested on the fourth anniversary of the date of the grant,
subject to meeting performance conditions and other criteria and a
further two-year holding period.
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END
IR BIGDCLUDDGBD
(END) Dow Jones Newswires
September 23, 2021 02:00 ET (06:00 GMT)
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