TIDMXLM
RNS Number : 9082N
XLMedia PLC
28 September 2023
The information contained within this announcement is deemed to
constitute inside information as stipulated under the retained EU
law version of the Market Abuse Regulation (EU) No. 596/2014 (the
"UK MAR") which is part of UK law by virtue of the European Union
(Withdrawal) Act 2018. The information is disclosed in accordance
with the Company's obligations under Article 17 of the UK MAR. Upon
the publication of this announcement, this inside information is
now considered to be in the public domain .
28 September 2023
XLMedia PLC
("XLMedia" or the "Group" or the "Company")
Results for the six months ended 30 June 2023
-- Further progress on delivery of strategy
-- Streamlined organisational structure and cost base
-- Delivered growth in core Europe Gaming and Sports brands
XLMedia (AIM: XLM), a leading global digital media company,
announces the unaudited results for the six months ended 30 June
2023.
Continuing business revenues for the Group grew 18% across the
two years from H1 2021 to H1 2023.
To 30 June 2022, the Group's continuing business revenue grew
77% period-on-period including the benefit of the launch of online
sports betting in New York - the fourth largest US state by
population. The period to 30 June 2023 included the successful
launch of online sports betting in Ohio (the seventh most populous
state) but as previously announced this, together with a reduced
level of customer acquisition marketing activity by some operators,
did not match the same period in the prior year, resulting in a
reduction in Group continuing operations revenues of 33% versus H1
2022.
Key Highlights H1 2023
-- The Group's Freebets brand grew revenue 37% led by Freebets.com.
-- The Group's Europe Gaming premium brands Whichbingo and
Nettikasinot both returned to growth, up 38% and 5%
respectively.
-- Sustainable cost savings of $4.0 million delivered in the
period including 14% reduction in headcount.
-- Online sports betting was launched in Ohio in January and Massachusetts in March.
-- Revenue share deals in the US were agreed with bet365, Betway
and Pointsbet enabling the Group to participate in betting profits
generated by customers introduced by XLMedia to these
operators.
-- The successful partnership with Schneps Media for amNY was
extended for a further three years.
-- Disposal of the Group's Personal Finance asset portfolio
realised a total cash consideration of $2.05 million.
Financial Summary
-- Group total revenues of $29.4 million (H1 2022: $44.5 million)
-- Group adjusted EBITDA(1) of $6.5 million (H1 2022: $10.6 million)
-- Continuing business(2) revenues were $27.9 million (H1 2022: $41.9 million)
-- Continuing business adjusted EBITDA was $6.9 million (H1 2022: $11.9 million)
-- Reported profit for the period of $4.7 million (H1 2022: $0.5 million)
-- $7.4 million in cash and short-term deposits as of 30 June 2023
1 Earnings Before interest, Taxes, Depreciation, Amortisation
and excluding share-based payments, impairment, and reorganisation
costs
2 Continuing business is defined as continuing operations
excluding activities or assets that do not form part of the Group's
future operations, for example Casino.se sold in July 2023.
Sports vertical generated first half revenues of $21.4 million -
74% of continuing operations revenues (H1 2022: $34.0 million, H1
2021: $11.7 million)
-- Following growth of 412% in US Sports revenue from H1 2021 to
H1 2022, H1 2023 was down period-on-period to $16.2 million (H1
2022: $ 30.2 million, H1 2022: $ 7.3 million).
-- New regulated markets opened in Ohio in January and
Massachusetts in March, increasing the number of live sports
betting states the Group operates in to 19.
-- The Media Partnership Business (MPB) revenues totalled $12.2
million (H1 2022: $20.5 million, H1 2021: $1.5 million).
-- The Group's partners Cleveland.com in Ohio and MASSlive.com
in Massachusetts were instrumental in driving revenues at state
launch. However, as a result of the late state launch in
Massachusetts after the end of the NFL season, revenues were
significantly lower than expected.
-- Owned and Operated ("O&O") revenues in the US were
impacted by the change in the levels of operator acquisition
marketing spend during the period. While the Group significantly
benefited from the New York launch in H1 2022 (including its
O&O ESNY brand), the New York market saw very limited customer
acquisition activity by operators in H1 2023.
-- The Europe Sports business returned to growth in H1 2023,
with revenues of $4.5 million, excluding residual sub-affiliate
network revenues (H1 2022: $3.8 million).
Gaming revenues stabilised at $7.4 million (H1 2022: $8.4
million, H1 2021: $12.5 million)
-- European operations generated $7.0 million (H1 2022: $8.0
million) with a reduction in tail revenues accounting for the
majority of the decline.
-- New Real Money Players ("RMPs") acquired during the period
grew 9% compared to H1 2022 creating future tail revenues that will
be realised in 2024 and beyond.
-- Whichbingo H1 revenue grew by 38% and RMPs by 28% compared to H1 2022.
-- Nettikasinot H1 revenue grew by 5% and RMPs by 16% compared to H1 2022.
-- The Group did not own or operate a dedicated North America
gaming site in the period. Gaming revenues earned from gaming pages
on O&O sports betting sites in legalised online gaming states
in the US generated revenues in H1 2023 of $0.4 million (H1 2022:
$0.4 million).
Disposals
The Group announced the sale of the loss-making Personal Finance
business in H1 2023 for a total cash consideration of $2.05
million. Revenues for the Personal Finance business in the period
prior to sale were $0.6 million (H1 2022: $0.8 million) at a $0.4
million loss.
Cash
After earnout payments of $3.4 million in respect of prior
period acquisitions and payments of $2.8 million in corporate tax
in Israel for the period 2016 to 2020, cash stood at $7.4 million
at 30 June 2023.
Post period end
-- Post period end, on 12 July 2023, we announced the disposal
of three of the Group's Europe Gaming domains and associated
websites, Casino.se, Casino.gr and Casino.pt, for a total upfront
cash consideration of $4.0 million, representing a 4.7 times
multiple on revenue.
-- Online sports betting in Kentucky launches today and the Group has prepared accordingly.
-- XLMedia is focused on capitalising on its substantial
southeast footprint, with North Carolina expected to launch in Q1
2024 , as well as additional launches in Maine and Vermont in
2024.
-- New Media Partnerships signed with Atlanta
Journal-Constitution and WRAL.com, the latter in preparation for
the launch of online sports betting in North Carolina in 2024.
Outlook
-- The Group is now focussed on Sport and Gaming, principally in
regulated markets, in North America and Europe, having exited
declining, non-core activities.
-- Europe Sports revenues are expected to grow year on year,
following growth in H1 2023, and strong revenue trends running into
H2.
-- The new NFL season remains a critical element in delivering
management's expectations. In particular the launch of Kentucky and
the return to market of one of our largest operator clients
following its own betting rebranding.
-- The strong growth trends in our premium Europe gaming brands,
Whichbingo and Nettikasinot, are also core to delivering
management's full year expectations.
-- Actions to reduce the Group's cost base during the period will provide further benefit in H2.
As a result, the Group expects full year adjusted EBITDA to be
broadly in line with management expectations.
As noted previously, the Group's performance will continue to
benefit from period revenue spikes resulting from new online sports
betting state launches in the US, however the timing, number and
scale of launches will vary significantly.
David King, Chief Executive Officer of XLMedia, commented:
"Having pivoted the Group into a North American, sport-led
business in 2020 and 2021, XLMedia is well placed to participate in
the long-term growth of online sports betting. However, as
previously noted, the Group's overall growth will not be linear
while the affiliate revenues in North America remain principally a
one-off introductory fee and the timing and scale of new state
launches impact period-to-period comparisons. We are working to
develop more revenue share relationships with operators in the US,
while also successfully building our recurring revenues in Europe,
providing a solid base for future growth."
Investor webcasts
A results webcast will be made available at
https://www.xlmedia.com/investors/webcasts/ on Thursday, 28
September 2023 from 10.00 a.m. (BST).
An additional presentation will be held on Tuesday, 3 October
2023 at 1.00 p.m. (BST) and hosted on the Investor Meet Company
platform.
Questions can be submitted pre-event via your Investor Meet
Company dashboard up until 9.00 a.m. the day before the meeting or
at any time during the live presentation. Investors who already
follow XLMedia on this platform will automatically be invited.
Participants can sign-up for free and add to meet XLMedia via : Investor webcast
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 / Fiona Hetherington /
Kendall Hill
www.vigoconsulting.com
Cavendish Securities plc (Nomad and Tel: 020 7397 8900
Joint Broker)
Giles Balleny / Callum Davidson
www.cavendish.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
The first half of 2023 has seen us make further strides in
building a new XLMedia, implementing our strategy to rebuild our
European business while expanding our footprint in North America,
delivering revenue growth for the continuing business of 18% from
H1 2021 through to H1 2023.
In Europe, by focussing on our premium brands we have delivered
growth following a number of periods of significant decline.
In the US, our largest market, as the regulated markets develop
we have seen spend by some operators move towards building a more
steady profit profile rather than maximising short-term market
share. Following the growth of 412% in our US Sports revenue in H1
2022, the change in operator behaviour together with the more
modest scale of state launches in 2023 has resulted in a reduction
in revenues against H1 2022.
Our focus in the US remains one of developing revenue share
arrangements with operators. Over time this will enable the
business to participate in betting profits, increasing recurring
revenues and reducing volatility in revenues caused by state
launches.
The rationalisation and simplification program continued into H1
2023 with the closure or sale of non-core assets and the further
reduction in headcount by 14 % rationalised technology services and
tools as well as substantially reducing the number of licenses
across key platforms.
In the period, total continuing operations revenues were $28.8
million, while adjusted EBITDA was $6.9 million.
Divisional Summary
Sports - North America
The opening of the Ohio online sports betting market provided a
good start to the year. The subsequent launch of online sports
betting in Massachusetts after the end of the NFL season resulted
in disappointing revenue results and this, combined with changes to
the pattern of operator acquisition spending - particularly around
the Superbowl - led to a decline in revenues when compared to the
412% growth in North America Sports revenues from H1 2021 to
2022.
The Group now operates in 19 states and we are well prepared for
today's launch of online sports betting in Kentucky.
Across all the states where we operate, either through O&O
sites or through Media Partner sites, we continue to offer
high-quality national and local sports coverage and sports betting
content with an emphasis on building engagement and trust with
users. Our exclusive sports betting content for Media Partners
offers relevant information for fans and participants in those
states where betting is permitted. Audience engagement is an
essential element of our strategy to participate in betting profits
through revenue share in the future.
In H1 2023 we have focussed on growing traffic in Sports Betting
Dime in particular, our national sports betting affiliate site with
the objective of building high intent audiences, supporting both
new customer acquisition, up 13% against the comparable period in
2022, but also revenue share when that becomes available, with
total unique visitors up 120% period-on-period.
In H1 2023, we also saw our revenue diversification program
expanded into Daily Fantasy Sports, which is legal in most US
states. After initially launching with one operator, we have
expanded to two, and will soon expand to a third. Current revenues
are principally being driven by our Saturday Down South brand with
its extensive reach across southern states.
In August 2023, we announced a new media partnership with
WRAL.com based in North Carolina, which has legalised online sports
betting and is expected to launch in Q1 2024. We will provide
highly engaging sports betting content while also managing
commercial deals with regulated sportsbook operators and executing
proven monetisation strategies.
In September, we announced new media partnership with Atlanta
Journal-Constitution (AJC), a high-quality news and sport brand,
based in Georgia but with an exceptional and well-established
national reputation and extensive digital footprint. This exclusive
agreement will enable AJC to capture new revenue streams whilst
providing their readership with a new content offering. The
partnership also allows the Group to immediately reach AJC's
national readership in currently legal live sports betting markets,
and also provides the Group with access to AJC's readership in
Georgia should the state legalise sports betting in the medium
term.
And while we are always looking to find new high quality
partners in new states, we have extended our successful amNY
partnership with Schneps Media for a further three years.
Sports - Europe
Following a challenging in period in our Europe Sports business
in previous years, Freebets.com (our premium Europe and UK sports
betting marketing brand) led the division back to growth, with
revenues up 50% against H1 2022, benefiting in part from the
redirection of Freebets.co.uk as part of the rationalisation
programme. First time depositors were up 36%. Europe Sports
revenues are mostly hybrid deals with revenues made up of a small
upfront customer acquisition payment followed by ongoing
participation in betting profits from those customers. Revenue
share from new hybrid deal customers will continue into H2 2023 and
beyond, and form part of our recurring revenues.
Growth in recurring revenues is a key strand in the strategy to
grow overall revenues and reduce seasonality and volatility.
The Europe Sports business delivered revenues of $4.5 million
excluding residual sub-affiliate network revenues. (H1 2022: $3.8
million). In the period we successfully expanded our horse racing
offering, with particular success around major events including the
Cheltenham Festival, the Grand National and Royal Ascot - all
finding new customers - while the English Premier league season
continues to drive acquisition.
Gaming - Europe
The Group's Europe Gaming vertical as a whole generated revenue
of $7.0 million (H1 2022: $8.0 million). The trading performance of
the three EU gaming assets sold in July 2023 is included and
represents c.$0.3 million in the results.
Following its restructuring in 2022, the Group's Europe Gaming
vertical (casino and bingo) is trading marginally ahead of
management expectations. RMPs grew 9% year-on-year in the period as
the rebuilding of the gaming business continued while creating
future tail revenues. In the short-term, the decline in historical
tail revenues continues to impact period-on-period growth, however
the business expects to return to overall growth.
-- WhichBingo , the second largest gaming brand in the
portfolio, grew revenue in H1 2023 by 38% period-on-period and grew
RMPs by 28% period-on-period. H1 2023 was the strongest performing
half year ever.
-- Nettikasinot , the largest gaming brand in the portfolio,
grew revenue in H1 2023 by 5% against H1
2022 and grew RMPs 16% during the same period.
Together, WhichBingo and Nettikasinot now contribute approaching
half the Gaming revenues in the period.
Disposals
In late 2022 the Group announced the intention to sell the
loss-making Personal Finance business, and completed the sale of
these assets in H1 2023 for a total gross cash consideration of
$2.05 million. Revenues for the Personal Finance business in the
period prior to sale were $0.6 million (H1 2022: $0.8 million) at a
$0.4 million loss.
Personal Finance business was written down to zero in 2022. As a
result of the sale, the asset was written back to the amount
equivalent to the disposal proceeds creating no profit or loss on
the disposal before transaction related costs.
Post period end, on 12 July 2023, we announced the disposal of
three of the Group's Europe Gaming domains and associated websites,
Casino.se, Casino.gr and Casino.pt, for a total upfront cash
consideration of $4.0 million, representing a 4.7 times multiple on
full year revenues. The Group will continue to operate its Gaming
business in the Swedish and other Europe markets and then launched
Kasino.se, a new site focused on the Swedish market.
Operations and People
H1 2023 saw XLMedia complete the removal of a layer of
management across all divisions resulting in more direct engagement
between managers and operational staff, and the leadership
team.
As part of the transformation program, we have exited non-core
activities sub-affiliate network and the Blueclaw agency and
completed the sale of the loss-making Personal Finance
business.
The management of Europe Sport and Gaming were brought together
under the leadership of Karen Tyrrell, Chief People and Operations
Officer.
The Group continued to focus on its program to streamline
technology and replace legacy technology. We have launched our
Dynamic Offer Engine, a proprietary ad serving technology, enabling
us to automate and optimise conversion rates from new sports
betting promotions and offers while trialing using new AI tools to
enhance content creation.
Total cost savings achieved in H1 2023 were $4.0 million,
including the 14% reduction in headcount.
Cash
In 2020 and 2021, the Group pivoted to a US Sport led business,
making three substantial acquisitions, CBWG, Sports Betting Dime
("SBD") and Saturday Down South ("SDS"). While the SBD acquisition
was financed through an equity raise, the CBWG and SDS acquisitions
have earnout and deferred payments payable in 2023 and 2024. Cash
payments of $3.4million were made in H1 with a further $4.0 million
payable in H2, and an additional $7.5 million due in 2024.
Cash generated by the business must first be utilised on
acquisition payments, restructuring costs and the bespoke
technology replacement program (capex). Expenditure on capex has
reduced in the period by $0.5 million, while restructuring costs
reduced period-on-period by $2.0 million.
Currently there is no external debt financing in the business
however we are currently evaluating implementing a revolving credit
facility for working capital purposes.
Board Changes
Earlier in the year, Richard Rosenberg and Jonas Mårtensson
indicated their intention to step down as Directors of the Group.
Mr. Mårtensson stepped down from the Board at the end of June while
Mr. Rosenberg will step down at the end of this month having
ensured a smooth transition of his responsibilities.
In addition, in line with the Group's focus on cost reduction,
and as reported in our Annual Report, the Board agreed to implement
a reduction of 15% in the level of fees paid to the remaining
Non-Executive Directors (including the Chair) with effect from 1
April 2023.
Summary
The spike in revenue in H1 2022 and the resulting comparable
period decline masks the growth in revenues from H1 2021 to H1
2023.
The Group is focussed on building recurring revenues and
diversifying its revenue streams. This will take time.
State launches will continue to create profitable spikes in
revenue, particularly when the larger states (e.g. California,
Texas) legalise online sports betting at some point in the
future.
The return to growth of our premium European brands will now
provide a solid platform for the business, while the exit from
non-core activities removes distraction, enabling resources to be
focussed on further growth in core verticals of sport and
gaming.
David King
Chief Executive Officer
28 September 2023
Chief Financial Officer Review
Financial Highlights
The business has delivered continuing operations revenue of
$28.8 million, with adjusted EBITDA from continuing operations down
42% to $6.9 million. Operating profit improved by 25% to $6.0
million and profit for the period increased from $0.5 million to
$4.7 million.
Cash balances reduced from $10.8 million to $7.4 million after
generated cash from continuing operations of the Group, capital
expenditure, acquisition payments, historical tax payments and
receipts for assets disposed of during the period.
Continuing operations (1)
H1 2023 H1 2022 Change 2023
vs 2022
========================================= =========== =========== ===============
Revenue ($'m) 28.8 43.3 (33)%
----------------------------------------- ----------- ----------- ---------------
Gross profit ($'m) 14.9 22.2 (33)%
----------------------------------------- ----------- ----------- ---------------
Operating profit ($'m) 6.0 4.8 25%
----------------------------------------- ----------- ----------- ---------------
Adjusted EBITDA ($'m) 6.9 11.9 (42)%
----------------------------------------- ----------- ----------- ---------------
Adjusted EBITDA margin (%) 24% 27% (3)% pts
----------------------------------------- ----------- ----------- ---------------
Statutory profit for the period ($'m) 4.7 0.5 840%
----------------------------------------- ----------- ----------- ---------------
Basic earnings per share ($) 0.023 0.020 15%
========================================= =========== =========== ===============
(1) Defined as total Group financial performance less
discontinued operations. For H1 2023, the Group classified the
Personal Finance and Blueclaw verticals as discontinued.
Continuing Operations Revenue
Revenue from continuing operations for H1 2023 was $28.8 million
(H1 2022: $43.3 million), a 33% decline compared to the previous
financial period. The decline in revenues was driven by the North
America Sports vertical. Both our owned sites and our Media
Partners declined as a result of the scale of new state launches in
H1 2022 (New York, Louisiana and Ontario) which were significantly
larger in population size against state launches in H1 2023 (Ohio
and Massachusetts) driving higher revenues in the prior period. In
Europe, we continued to rebuild our sites, driving new customer
acquisition and creating new tail revenues. Total Europe revenues
delivered growth of 3%.
We continued to grow new customer volumes with Real Money
Players from core websites (including Media Partners) of 80,000 in
H1 2023 (H1 2022: 116,000), a decrease of 31% period-on-period also
impacted by state launches.
The Group's operations are reported on the basis of two core
operating verticals, Sports and Gaming (Casino and Bingo), and two
geographies, North America and Europe. The Group has excluded the
sub-affliliate business from prior period comparatives for all the
following revenue tables.
Revenue split by type
H1 2023 H1 2022 Change 2023
vs 2022 (%)
($m) ($m)
================================= ============ ============ ================
CPA 16.4 28.5 (42)%
--------------------------------- ------------ ------------ ----------------
Revenue share / hybrid and
other (2) 12.4 13.9 (11%)
--------------------------------- ------------ ------------ ----------------
Total 28.8 42.4 (32)%
================================= ============ ============ ================
(2) Other defined as Fixed Deals, Sponsorship Deals, Display
Advertising
The US market has continued largely as a CPA led market whereas
the Europe market continues to operate with a mixture of fixed,
hybrid and revenue share deals. As a result, CPA revenues accounted
for 57% of core revenues declining from 67% in the prior period.
Revenue share has increased to 43% of total revenue due to the
overall decline in US revenues as a percentage of total revenues.
As the US market continues to develop, we have started to see some
hybrid and revenue share deals offered and expect this to grow as a
proportion of revenues over time.
Revenue split by category (3)
H1 2023 H1 2022 Change 2023
vs 2022 (%)
($m) ($m)
================ ============ ============ ================
Sport (4) 21.4 34.0 (37)%
---------------- ------------ ------------ ----------------
Gaming 7.4 8.4 (14)%
---------------- ------------ ------------ ----------------
Total 28.8 42.4 (32)%
================ ============ ============ ================
(3) H1 2022 excludes revenue from the sub-affiliate network.
(4) Includes the North America Sports, Media Partnerships and
Europe Sports verticals.
In H1 2023, 74% of revenues came from Sport in line with the
Group's focus on being sports led in the US, while also rebuilding
its Europe casino assets and launching a new casino brand in the
US.
Revenue split by geography
H1 2023 H1 2022 Change 2023
vs 2022 (%)
($m) ($m)
============================= ============ ============ ================
North America (Sport) 16.2 30.2 (46)%
----------------------------- ------------ ------------ ----------------
Europe (Sport) 5.2 3.8 37%
----------------------------- ------------ ------------ ----------------
Sport 21.4 34.0 (37)%
----------------------------- ------------ ------------ ----------------
North America (Gaming) 0.4 0.4 0%
----------------------------- ------------ ------------ ----------------
Europe (Gaming) 7.0 8.0 (13)%
----------------------------- ------------ ------------ ----------------
Gaming 7.4 8.4 (12)%
============================= ============ ============ ================
Sport revenues decreased by 37% period-on-period to $21.4
million (H1 2022: $34.0 million) as a result of North America
Sports revenues reducing with smaller state launches
period-on-period.
Europe Sports revenues improved to $5.2 million in H1 2023 (H1
2022: $3.8 million). In Europe, our primary site Freebets.com grew
by 37% period-on-period. Europe Sports includes the continuing
sub-affiliate network which has been significantly rationalized
during the period.
Gaming revenues declined by 12% to $7.4 million (H1 2022: $8.4
million) as tail revenues declined in Europe gaming markets against
the prior period. Our marquee brands Nettikasinot and WhichBingo
grew by 5% and 38% respectively in H1 2023, period-on-period.
Europe remains the main Gaming region for the Group, with revenues
of $7.0 million (H1 2022: $8.0 million), accounting for more than
90% of Gaming revenue in both H1 2023 and H1 2022.
Our US Gaming revenues are driven by gaming pages provided on
our Sports websites, in particular Crossing Broad. US Gaming
revenues were flat period-on-period at $0.4 million (H1 2022: $0.4
million).
Revenue split by Partnership and owned and operated
("O&O")
H1 2023 H1 2022 Change 2023
vs 2022 (%)
($m) ($m)
================================ ============ ============ ================
North America Partnership 12.2 20.5 (40)%
-------------------------------- ------------ ------------ ----------------
Total Partnership 12.2 20.5 (40)%
-------------------------------- ----------------
North America O&O 4.4 10.1 (56)%
-------------------------------- ----------------
Europe O&O 12.2 11.8 3%
-------------------------------- ------------ ------------ ----------------
Total O&O 16.6 21.9 (27)%
------------ ------------ ----------------
Total revenue 28.8 42.4 (32)%
================================ ============ ============ ================
Revenue from the North America region decreased by 45% to $16.6
million (H1 2022: $30.6 million) and accounted for 58% of the Group
continuing revenues (H1 2022: 72%). Media Partnership revenue was
down 40% to $12.2 million (H1 2022: $20.5 million). During 2022, we
signed partnership agreements with new partners Cleveland.com and
Masslive.com to support the state launches in Ohio and
Massachusetts.
Revenue from the Europe region improved by 3% to $12.2 million
(H1 2022: $11.8 million). Tail revenues in casino declined
period-on-period relating to closed websites, offset by growth in
new RMPs revenues in both sports and casino.
Gross profit (5) and gross margin
H1 2023 H1 2022 Change 2023
vs 2022 (%)
($m) ($m)
================================= ============ ============ ================
Gross profit from continuing
operations ($'m) 14.9 22.2 (33)%
--------------------------------- ------------ ------------ ----------------
Gross profit margin (%) 48% 51% (3) % pts
================================= ============ ============ ================
(4) Gross profit is calculated as revenue less the costs
associated with generating revenue. Cost of revenue includes direct
costs, marketing costs, Media Partnership revenue share costs, and
staff costs. Note, these costs are part of operating, and sales and
marketing expenses as defined in the consolidated financial
statements.
The Group's gross profit from continuing operations for H1 2023
was down 33% to $14.9 million, with a gross margin of 48% (H1 2022:
$22.2 million, 51% gross margin). The 3% reduction in gross margin
period-on-period was largely due to a decline in North America
gross margin which reduced from 48% to 31%, offset by improvements
in Europe Sports and Europe Gaming to 70% and 76% respectively.
Revenue shares payments to Media Partners, which form part of the
reported sales and marketing expenses, were $8.1 million in H1 2023
(H1 2022: $12.4 million).
Earnings
The Group recognised an operating profit from continuing
operations of $6.0 million (H1 2022: $4.8 million) and EBITDA from
continuing operations of $9.5 million (H1 2022: $8.4 million).
EBITDA from continuing operations included items which affect
comparability and so, the Group excludes these items from its
Adjusted EBITDA metrics. These are detailed below:
Reconciliation of operating profit for continuing operations to
Adjusted EBITDA
H1 2023 H1 2022 Change 2023
vs 2022 (%)
($m) ($m)
========================================== ============ ============ ================
Operating profit from continuing
operations 6.0 4.8 25%
------------------------------------------ ------------ ------------ ----------------
Depreciation and Amortisation 3.5 3.6
------------------------------------------ ------------ ------------ ----------------
EBITDA from continuing operations
($'m) 9.5 8.4 13%
------------------------------------------ ------------ ------------ ----------------
Share-based payments 0.4 0.5
------------------------------------------ ------------ ------------ ----------------
Impairment reversal (4.0) -
------------------------------------------ ------------ ------------ ----------------
Reorganisation costs 1.0 3.0
------------------------------------------ ------------ ------------ ----------------
Adjusted EBITDA from continuing
operations ($'m) 6.9 11.9 (42)%
------------------------------------------ ------------ ------------ ----------------
Adjusted EBITDA margin from continuing
operations 24% 27% (3) % pts
------------------------------------------ ------------ ------------ ----------------
Adjustments to earnings
The Group incurred $0.4 million of share-based payment charges
(H1 2022: $0.5 million).
Due to the agreement for the sale of the Europe Gaming assets,
the Group reversed $4.0 million of previous impairment charges to
reflect the recoverable amount for those assets.
In addition, the Group incurred $1.0 million of reorganisation
costs in H1 2023 (H1 2022: $3.0 million) relating to the
continuation of the Group's restructuring plan and integration and
other costs activity relating to prior period acquisitions.
Adjusting for these one-off items:
-- Adjusted EBITDA from continuing operations was $6.9 million
(H1 2022: $11.9 million), with a margin of 24% (H1 2022: 27%).
-- Group adjusted EBITDA including Personal Finance and Blueclaw
was $6.5 million (H1 2022: $10.6 million).
The Group completed the sale of Personal Finance assets and the
restructuring of non-core activities in H1 2023 removing marginal
and loss-making activity, while allowing resources to be focused on
the core business.
Sales and marketing costs
Direct costs associated with our revenue streams decreased to
$10.6 million from $15.5million. This includes the revenue shares
payments to our Media Partners in the US amounting to $8.1 million
(H1 2022: $12.4 million). Excluding revenue shares payments to
Media Partners, sales and marketing costs were $2.5 million (H1
2022: $3.1 million), a decrease of 19%. These costs relate largely
to content and SEO expenses.
Operating costs
Operating costs of $12.7 million include $1.0 million of
reorganisation costs and $0.4 million of share-based payment
charges (H1 2022: $19.4 million including $3.0 million of
reorganisation costs and $0.5 million of share-based payment
charges), include staff costs, technology investment and other
operating costs.
Staff costs
Staff costs from continuing operations was $8.0 million (H1
2022: $11.3 million). The period-on-period reduction related to
moving activities from Israel, and recruiting new staff
predominantly in the UK, Europe and the US. In addition, the
restructuring program removed a management layer and closed
non-core activities during 2022 and early 2023. This has also been
reflected in the reduction in total Group employee numbers
(including Personal Finance) to 167 from 193.
Technology investment
The Group has continued to invest in its technology in H1 2023,
incurring $1.6 million of operating costs in this area (H1 2022:
$2.8 million). The Group upgraded its site infrastructure in 2022
and continues to replace legacy technology for data platforms and
finance billing systems.
Other operating costs
Other operating costs were $3.1 million (H1 2022: $5.3 million).
These include all other operating costs including administrative
expenses, professional service costs and redundancy costs.
Earnings per share (EPS)
H1 2023 H1 2022 Change 2023
vs 2022 (%)
($m) ($m)
========================================= ============ ============ ================
Basic and diluted EPS from continuing
operations ($) 0.023 0.020 15%
----------------------------------------- ------------ ------------ ----------------
Adjusted basic and diluted EPS
($) 0.018 0.002 800%
========================================= ============ ============ ================
Basic and diluted EPS remained the same (H1 2022: same) due to
the significant number of weighted average number of shares. In H1
2023, the Group recognised a basic and diluted EPS from continuing
operations of $0.023 (H1 2022: $0.020).
Including the discontinued operations of Personal Finance
(before it was sold) and Blueclaw, the Group recognised an earnings
per share of $0.018 (H1 2022: $0.002).
Finance costs
Net financial income amounted to $0.2 million credit (H1 2022:
$1.7 million cost). This includes a $0.3 million foreign exchange
gain due to re-translation of monetary balances to USD, the
presentational currency of the Group (H1 2022: $1.5 million loss).
Excluding this forex impact, net financial costs were $0.1 million
(H1 2022: $0.2 million) relating to bank charges and lease finance
costs.
The Group does not hold any external debt financing as at 30
June 2023 (H1 2022: $Nil), but is currently exploring opportunities
to introduce a revolving credit facility for working capital
purposes.
Tax
The Group has a tax-presence in the regions where the Group is
incorporated, which are Jersey (where the parent company is
incorporated), UK, US, Cyprus, Canada and Israel. The Group
structure consists of a UK branch with a shared service centre in
Cyprus, both of which support the intellectual property based in
Israel and Cyprus and the growing operations in the US.
The Group recognised a tax charge of $0.6 million in H1 2023 for
its continuing operations (H1 2022: $2.2 million credit). A
deferred tax credit of $3.2 million was released for the impairment
of the Personal Finance assets in discontinued operations.
The Group recognised an income tax provision of $4.7 million (H1
2022: $7.7 million). The reduction in the income tax liability is
due mainly to settlements of historical agreements with local tax
authorities. In H1 2023, the Group paid $2.8 million to tax
authorities in respect of the tax years 2016 to 2020 in the
jurisdictions it operates (H1 2022: $0.9 million).
The Group understands the importance of the tax contribution we
make, and we have a tax strategy which supports this commitment.
The Group is committed to paying all of its taxes in full and on
time, in all the jurisdictions in which the Group operates.
Summary balance sheet and cash flow metrics
H1 2023 H1 2022 Change 2023
vs 2022 (%)
($m) ($m)
================================== ============ ============ ================
Free cash flow (6) ($'m) 0.5 6.1 (92)%
---------------------------------- ------------ ------------ ----------------
Cash from operations (7) ($'m) 3.2 9.6 (67)%
---------------------------------- ------------ ------------ ----------------
Normalised Capital expenditure
(8) ($'m) 2.7 3.2 (9)%
---------------------------------- ------------ ------------ ----------------
Acquisition-related payments
($'m) 3.4 9.9 (66)%
================================== ============ ============ ================
(6) Defined as cash from operations excluding one-off tax
payments or refunds, less capital expenditure.
(7) Includes working capital and trading from discontinued
operations.
(8) Defined as reported capex less acquisition-related capital
expenditure.
Cash and working capital
Cash balances (including short-term deposits) at 30 June 2023
was $7.4 million (FY 2022: $10.8 million). After adjustment for
forex movements, overall cash balances decreased due to
acquisition-related payments and tax payments detailed below.
The Group recognised free cash inflows of $0.5 million in H1
2023 after adjusting for one-off cash items compared to an inflow
of $6.1 million in H1 2022. The main driver of the reduction in
free cash outflows related to a decline in underlying trading and
working capital outflows driven by lower trade creditor balances.
Cash flow from operating activities was $3.2 million (H1 2022: $9.6
million).
Whilst the Group did not acquire any businesses in H1 2023, it
continued to invest in its assets, mainly in its domains and
websites, spending $2.7 million on capital expenditure (H1 2022:
$3.2 million).
The Group's acquisition program between Q4 2020 and 2021
resulted in it committing to future acquisition and earn out
payments as part of the acquisition consideration, to be
substantially funded from the Group's free cashflow.
During H1 2023, the Group paid out $3.4 million of deferred
acquisition and earnout payments (H1 2022: $9.9 million), including
settling all existing obligations with the previous owners of
Blueclaw Media Ltd. This final settlement was paid in January 2023
and the Group has no further obligations in this matter.
In H2 2023, the Group expects to make a further $4.0 million of
deferred consideration payments and in 2024, the Group expects a
further $7.5 million dependent on whether earn-out targets are
met.
The cash flows above included the cash flow from operations and
working capital balances for the Personal Finance and Blueclaw
businesses.
Caroline Ackroyd
Chief Financial Officer
28 September 2023
Glossary of financial terms
Although the Group is not subject to the Guidelines on
Alternative Performance Measures issued by the European Securities
and Markets Authority, we have provided additional information on
the metrics used by the Group. The Directors use the metrics listed
below as they are critical to understanding the financial
performance and financial health of the Group. As they are not
defined by IFRS, they may not be directly comparable with other
companies who use similar measures.
Profit measures
Metric Closest equivalent Definition
IFRS measure
========================= ====================== ================================================
Continuing operations Revenue Group revenue less discontinued operations
revenue revenue.
For H1 2023, the Group classified the
Personal Finance and Blueclaw verticals
as discontinued.
------------------------- ---------------------- ------------------------------------------------
Adjusted EBITDA Operating Profit Earnings before Interest, Taxes, Depreciation
(1) and Amortisation, and excluding any
share-based payments, impairment and
reorganisation costs.
------------------------- ---------------------- ------------------------------------------------
Adjusted EBITDA from Operating Profit As above but excluding discontinued
continuing operations (1) operations
------------------------- ---------------------- ------------------------------------------------
Adjusted Basic and Basic and diluted Based on profit for the period from
diluted earnings per earnings per continuing operations.
share from continuing share
operations
========================= ====================== ================================================
(1) Operating profit is not defined under IFRS. However, it is a
generally accepted profit measure.
Cash flow measures
Metric Closest equivalent Definition
IFRS measure
===================== ======================= ================================================
Free cash flow No direct equivalent Cash from operations excluding one-off
tax payments or refunds, excluding
acquisition costs, less capital expenditure.
--------------------- ----------------------- ------------------------------------------------
Normalised capital No direct equivalent Reported capital expenditure excluding
expenditure acquisition-related capital expenditure.
===================== ======================= ================================================
Consolidated statement of profit or loss and other comprehensive
income
Six months Six months Year ended
ended 30 ended 30 31 December
June 2023 June 2022 2022
$ 000 $000 $ 000
Unaudited Unaudited Audited
Continuing operations Notes
Revenue 1 3a 28,792 43,275 70,935
Expenses:
Operating (12,659) (19,353) (34,629)
Sales and marketing (10,625) (15,505) (22,824)
Depreciation and amortisation (3,499) (3,600) (7,313)
Impairment reversal 3d 4,000 - -
----------
Operating profit 6,009 4,817 6,169
Finance expenses (152) (1,733) (1,751)
Finance income 309 2 5
Other income 682 33 566
Profit before taxes on income 6,848 3,119 4,989
Tax (charge) / credit (605) 2,198 (1,604)
---------- ---------- ------------
Profit for the period from continuing
operations 6,243 5,317 3,385
Discontinued operations
Loss for the period from discontinued
operations (net of tax) 3b (1,516) (4,813) (12,824)
---------- ---------- ------------
Net profit / (loss) for the period
attributable to the owners of the
Company 4,727 504 (9,439)
Other comprehensive expenses that
may be reclassified to profit or
loss in subsequent periods:
Impairment of equity investment 3e (242) - -
Exchange differences on translation
of foreign operations 130 (377) (372)
---------- ---------- ------------
Other comprehensive expenses (112) (377) (372)
Total comprehensive income / (loss)
for the period attributable to
the owners of the Company 4,615 127 (9,811)
========== ========== ============
Earnings / (loss) per share attributable
to the owners of the Company (in
$):
Basic and diluted earnings per
share from continuing operations 0.023 0.020 0.013
Basic and diluted earnings / (loss)
per share 0.018 0.002 (0.036)
1 Total Group revenue including discontinued operations is
$29,423,000 (30 June 2022: $44,528,000; 31 December 2022:
$73,738,000). See Note 3a for further details.
The accompanying notes are an integral part of the consolidated
financial statements.
Consolidated statement of financial position
30 June 30 June 31 December
2023 2022 2022
$ 000 $ 000 $ 000
Notes Unaudited Unaudited Audited
Assets
Non-current assets
Intangible assets and goodwill 3d 112,999 118,955 108,581
Property and equipment 2,024 2,616 2,277
Other financial assets 3e - 221 242
Long-term deposits 76 75 75
---------- ---------- -----------
115,099 121,867 111,175
Current assets
Short-term deposits 103 1,601 342
Trade receivables 3,611 5,787 5,699
Other receivables 6,803 3,863 3,454
Cash and cash equivalents 7,331 16,131 10,411
----------
17,848 27,382 19,906
----------
Total assets 132,947 149,249 131,081
========== =========== ===========
Equity and liabilities
Equity
Share capital 1 - - -
Share premium 122,071 122,071 122,071
Capital reserve 828 146 500
A ccumulated deficit (17,581) (12,365) (22,308)
---------- ----------- -----------
Total equity 105,318 109,852 100,263
Non-current liabilities
Lease liabilities 1,008 1,202 1,177
Deferred taxes 2,919 1,338 36
Deferred consideration 3,919 7,795 3,884
Contingent consideration - 401 -
---------- ---------- -----------
7,846 10,736 5,097
Current liabilities
Trade payables 1,452 2,540 3,655
Deferred consideration 3,992 8,897 3,969
Consideration payable on intangible
assets - 3,000 3,000
Other liabilities and accounts payables 9,337 6,162 10,241
Income tax provision 4,658 7,725 4,505
Current maturities of lease liabilities 344 337 351
---------- ---------- -----------
19,783 28,661 25,721
---------- ---------- -----------
Total liabilities 27,629 39,397 30,818
---------- ---------- -----------
Total equity and liabilities 132,947 149,249 131,081
========== ========== ===========
1 Less than $1,000.
The accompanying notes are an integral part of the consolidated
financial statements. The financial statements were approved by the
Board of Directors on 27 September 2023 and were signed on its
behalf by:
David King Caroline Ackroyd
Chief Executive Chief Financial
Officer Officer
Consolidated statement of changes in equity
Capital
reserve
from the
Capital translation Other
reserve from of a capital
Share Share share-based foreign reserves Accumulated Total
capital (1) premium transactions operation (4) deficit equity
$000 $000 $000 $000 $000 $000 $000
As at 1
January 2023 - 122,071 3,514 (388) (2,626) (22,308) 100,263
Profit for the
period - - - - - 4,727 4,727
Other
comprehensive
income /
(expense) - - - 130 (242) - (112)
------------ ----------- ------------ ----------- ----------- ----------- --------
Total
comprehensive
income - - - 130 (242) 4,727 4,615
Cost of
share-based
payments - - 440 - - - 440
As at 30 June
2023 (2) - 122,071 3,954 (258) (2,868) (17,581) 105,318
============ =========== ============ =========== =========== =========== ========
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 - - - (377) - 504 127
Cost of
share-based
payments - - 509 - - - 509
------------ ----------- ------------ ----------- ----------- ----------- --------
As at 30 June
2022 (2) - 122,071 3,165 (393) (2,626) (12,365) 109,852
------------ ----------- ------------ ----------- ----------- ----------- --------
As at 1
January 2022 - 122,071 2,656 (16) (2,626) (12, 869 ) 109, 216
Loss for the
year - - - - - (9,439) (9,439)
Other
comprehensive
expense - - - (372) - - (372)
------------ ----------- ------------ ----------- ----------- ----------- --------
Total
comprehensive
loss - - - (372) - (9,439) (9,811)
Cost of
share-based
payments - - 858 - - - 858
------------ ----------- ------------ ----------- ----------- ----------- --------
As at 31
December 2022
(3) - 122,071 3,514 (388) (2,626) (22,308) 100,263
============ =========== ============ =========== =========== =========== ========
1 Less than $1,000.
2 Unaudited.
3 Audited.
4 Other capital reserves relate to transactions with
non-controlling interests and financial assets at fair value
through other comprehensive income.
The accompanying notes are an integral part of the consolidated
financial statements.
Consolidated statement of cash flows
Six months Six months Year ended
ended 30 ended 30 31 December
June 2023 June 2022 2022
$ 000 $ 000 $ 000
Notes Unaudited Unaudited Audited
Cash flows from operating activities
Cash generated from operations 3g 3,202 9,622 14,647
Interest paid - (257) (310)
Interest received 5 - 5
Income tax paid (2,767) - (876)
Income tax received - 1,684 2,287
----------- ------------
Net cash inflow from operating activities 440 11,049 15,753
----------- ----------- ------------
Cash flows from investing activities
Proceeds on disposal of property
and equipment - 19 83
Proceeds from sale of discontinued
operation 3c 2,050 - -
Purchase of property and equipment (15) (331) (62)
Purchase of and additions to systems,
software and licences (2,656) (2,892) (6,701)
Acquisition of and additions to domains,
websites and other intangible assets - (3,000) (3,000)
Short-term and long-term deposits
(net) 238 565 1,824
----------- ----------- ------------
Net cash outflow from investing
activities (383) (5,639) (7,856)
----------- ------------
Cash flows from financing activities
Payment of principal portion of lease
liabilities (142) (246) (401)
Payment of deferred consideration (371) (6,853) (15,371)
Payment of consideration on intangible
assets (3,000) (3,000) (3,000)
----------- ----------- ------------
Net cash outflow from financing
activities (3,513) (10,099) (18,772)
----------- ----------- ------------
Net decrease in cash and cash equivalents (3,456) (4,689) (10,875)
Net foreign exchange difference 376 (1,617) (1,151)
Cash and cash equivalents at 1 January 10,411 22,437 22,437
----------- -----------
Cash and cash equivalents at 30
June / 31 December 7,331 16,131 10,411
=========== =========== ============
The accompanying notes are an integral part of the consolidated
financial statements.
Notes to the consolidated financial statements
1. General
a. General information
XLMedia PLC ("the Group") is a global digital media company
listed on the London Stock Exchange Alternative Investment Market
("AIM"). The Group was incorporated in Jersey and its registered
office is IFC 5, St. Helier, JE1 1ST, Jersey (registration number
114467).
The financial information presented in this report for the six
months ended 30 June 2023 ("interim condensed consolidated
financial statements") do not comprise statutory accounts as
defined by the Companies (Jersey) Law 1991 and does not include all
of the information and disclosures required for full financial
statements.
The comparative financial information contained in the interim
condensed consolidated financial statements in respect of the year
ended 31 December 2022 has been extracted from the Group's annual
financial statements ("annual consolidated financial statements").
The report of the auditors on those annual consolidated financial
statements was unqualified. Copies of those annual consolidated
financial statements are available at the Company's registered
office is IFC 5, St. Helier, JE1 1ST, Jersey and can also be
downloaded or viewed via the Group's website.
These interim condensed consolidated financial statements are
unaudited and has not been reviewed by the Group's independent
auditors, Kost Forer Gabbay & Kasierer. This information was
approved by the Board of Directors on 27 September 2023 and can be
viewed via the Group's website www.xlmedia.com
b. Definitions
In these financial statements, the following terms will be
used:
EUR - E uro
GBP - British Pound Sterling
- International Financial Reporting Standards as
IFRS adopted by the European Union
NIS - New Israeli Shekel
Related parties - As defined by IAS 24 'Related Party Disclosures'
Subsidiaries - Entities controlled (as defined in IFRS 10 'Consolidated
Financial Statements') by the Group and whose financial
statements are consolidated into the Group. For
a list of the main subsidiaries, see Note 23 in
the Group's annual financial statements as of 31
December 2022
US - United States
UK - United Kingdom
- U.S. dollar, all values are rounded to the nearest
USD/$ thousand ($000), except when otherwise indicated
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 2023, and for the six months then ended. The
interim condensed consolidated financial statements have been
prepared in accordance with IAS 34 'Interim Financial Reporting',
as adopted by the European Union, and the AIM Rules for
Companies.
These interim consolidated financial statements should be read
in conjunction with the Group's annual consolidated financial
statements for the year ended 31 December 2022, which were prepared
in accordance with International Financial Reporting Standards
("IFRS") adopted by the European Union, and issued by the
International Accounting Standards Board ("IASB"), in accordance
with the requirements of the Companies (Jersey) Law 1991.
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
2022.
Whilst several amendments apply for the first time in the six
months ended 30 June 2023, they do not have an impact on the
interim condensed consolidated financial statements of the Group.
The Group has not early adopted any standard, interpretation or
amendment that has been issued but is not yet effective.
3. Supplementary information
a. 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 (including continuing and discontinued
operations)
Six months Six months Year ended
ended 30 ended 30 31 December
June 2023 June 2022 2022
$000 $000 $000
Unaudited Unaudited Audited
North America 17,216 31,465 49,226
Europe 10,063 11,242 20,725
Rest of World 768 353 652
---------- ---------- ------------
Total revenues from identified
locations 28,047 43,060 70,603
Revenues from unidentified
locations 1,376 1,468 3,135
---------- ---------- ------------
29,423 44,528 73,738
========== ========== ============
3. Supplementary information continued
a. Revenue and operating segments continued
The table below shows the verticals which are defined as
continuing operations and discontinued operations are per IFRS 5
'Non-current Assets Held for Sale and Discontinued Operations':
Revenues by vertical
Six months Six months Year ended
ended 30 ended 30 31 December
June 2023 June 2022 2022
$000 $000 $000
Unaudited Unaudited Audited
North America Sports 4,082 9,620 18,065
Media Partnerships 12,154 21,386 28,398
Gaming 7,359 8,403 15,602
Europe Sports 5,197 3,866 8,870
---------- ---------- ------------
Revenue from continuing operations 28,792 43,275 70,935
---------- ---------- ------------
Blueclaw - 421 870
Personal Finance 631 832 1,933
---------- ---------- ------------
Revenue from discontinued operations 631 1,253 2,803
----------
29,423 44,528 73,738
========== ========== ============
b. Discontinued operations
For the six months ended 30 June 2023, the Group classified the
Personal Finance and the Blueclaw businesses as discontinued
operations based on strategic decisions. Revenue and expenses, and
gains and losses relating to the discontinuation of these
activities are shown as a single line item on the face of the
statement of profit or loss as "Loss for the period from
discontinued operations (net of tax)", with the comparative figures
being restated as required by IFRS 5 'Non-current Assets Held for
Sale and Discontinued Operations'.
Profit or loss
The financial results of discontinued operations were as
follows:
Six months Six months Year ended
ended 30 ended 30 31 December
June 2023 June 2022 2022
$000 $000 $000
Unaudited Unaudited Audited
Revenue 631 1,253 2,803
Expenses:
Operating (781) (1,916) (3,755)
Sales and marketing (234) (664) (1,219)
Impairment reversal / (charge)
(see Note 3d) 2,050 (3,486) (13,835)
Profit / (loss) before taxes
on income 1,666 (4,813) (16,006)
Tax (charge) / credit (3,182) - 3,182
----------------
Loss from discontinued operations (1,516) (4,813) (12,824)
================ ========== ============
3. Supplementary information continued
b. Discontinued operations continued
Prior to the sale of the Personal Finance business, the Group
assessed the recoverable amount of the assets and in accordance
with IAS 36 'Impairment of Assets', reversed previous impairment
charges by $2,050,000, reflecting the consideration received in the
sale (see Note 3c).
Taxation from discontinued operations in the six months ended 30
June 2023 reflects the subsequent reversal of the deferred tax
credit for the impairment charge incurred in the year ended 31
December 2022 upon sale of the Personal Finance business.
Cash flows
Six months Six months Year ended
ended 30 ended 30 31 December
June 2023 June 2022 2022
$000 $000 $000
Unaudited Unaudited Audited
Loss for the period (1,516) (4,813) (12,824)
Impairment (reversal) / charge (2,050) 3,486 13,835
Tax charge / (credit) 3,182 - (3,182)
Cash outflow from discontinued
operations (384) (1,327) (2,171)
========== ========== ============
Cash flows from discontinued operations also include working
capital balances to support the Personal
Finance and Blueclaw businesses. These are immaterial for
disclosure in both the six months ended 30 June 2022 and in the
year ended 31 December 2022.
c. Disposal of Personal Finance discontinued operation
On 15 December 2022, the Group announced the restructuring of
the Personal Finance business with a view to selling the Personal
Finance assets. As disclosed in Note 3b above, Personal Finance was
disclosed as a discontinued operation in the annual consolidated
financial statements for the year ended 31 December 2022.
On 30 May 2023 and 6 June 2023, the Group disposed of the assets
of the Personal Finance business for total proceeds of $2,050,000.
The disposal is detailed below:
Six months
ended 30
June 2023
$ 000
Unaudited
Consideration received 2,050
Costs of disposal (225)
Carrying value of net assets sold (2,050)
Loss on disposal after tax (225)
==========
The disposal of the Personal Finance business incurred no tax
payable. The cash generated from the disposal of the Personal
Finance business will be utilised in the day-to-day operations of
the wider business of the Group.
3. Supplementary information continued
d. Cash Generating Unit ("CGU") impairments
The Group tests goodwill and intangible assets with indefinite
useful life for impairment annually or when whenever events or
changes in circumstances indicate that the carrying amount is not
recoverable. The Directors do not believe there has been a trigger
for an impairment review of the carrying value of goodwill and
intangible assets with indefinite useful lives during the six
months ended 30 June 2023. As such, the Group concluded that the
recoverable amount for each CGU is in excess of the carrying value
recognised in the statement of financial position.
The Group has also assessed its intangible assets with
indefinite useful life for any changes in the estimates used to
determine the asset's recoverable amount. For the assets in the
Personal Finance disposal (see Note 3c) and the three European
Gaming domains and associated websites disposed of shortly after
the end of the reporting period end (see Note 3h), the Group deemed
the recoverable amount to be the consideration agreed with the
third party buyers.
As such, $4,000,000 has been recognised as an impairment
reversal within continuing operations in the six months ended 30
June 2023 for the three European Gaming domains and associated
websites. For the Personal Finance assets, as these relate to a
discontinued operation, the impairment reversal of $2,050,000 has
been recognised within discontinued operations in the line "Loss
for the period from discontinued operations (net of tax)" in the
six months ended 30 June 2023.
e. Impairment of Other financial assets
On 28 February 2022, the Group converted a loan receivable from
Xineoh Technologies Inc. to shares giving the Group a 2.6% stake in
ordinary shares with no special rights. The Group elected to
designate the equity investment as at fair value through Other
Comprehensive Income.
For the six months ended 30 June 2023, the Group has reviewed
the financial performance of Xineoh Technologies Inc. and have
concluded that the carrying value of $242,000 was fully impaired.
This impairment charge has been recognised in Other Comprehensive
Income as "Impairment of equity investment".
f. Grant of Performance Stock Units
On 11 May 2023, the Group granted 6,850,000 of Performance Stock
Units ("PSUs") under the XLMedia 2020 Global Share Incentive Plan
(the "awards") to the Executive Committee members, including the
Executive Directors of the Group. The awards represent 2.61% of the
currently issued share capital of the Group.
The awards will vest on the third anniversary of the grant date
if and to the extent that the performance target will be satisfied.
The PSU award is a contingent right to acquire shares for no
consideration. It is subject to a three-year performance period,
with vesting subject to the achievement of performance measured by
reference to total shareholder return over the performance period
as compared to the FTSE AIM 100, followed by a two-year holding
period.
The following table specifies the inputs used for the fair value
measurement using the Monte Carlo simulation:
3. Supplementary information continued
f. Grant of Performance Stock Units continued
2023
May PSU
Weighted average fair values at the measurement date ($) 0.08
Shares granted 6,850,000
Expected volatility of the share price (%) 72.14
Risk-free interest rate (%) 3.56
Expected life of share options (years) 3
Weighted average share price (GBP) 0.1175
The total fair value was calculated at $650,000 at the grant
date which will be recognised on a straight line basis over the
vesting period.
g. Cash generated from operations
Six months
Six months ended Year ended
ended 30 30 June 31 December
June 2023 2022 2022
$000 $000 $000
Unaudited Unaudited Audited
Profit / (loss) for the period 4,727 504 (9,439)
Adjustments to reconcile profit /
(loss) for the period:
Depreciation and amortisation 3,499 3,600 7,313
Impairment reversal for continuing
operations (4,000) - -
Impairment (reversal) / charge for
discontinued operations (2,050) 3,486 13,835
Net finance expense 152 257 450
Loss on disposal of property and
equipment - 227 157
Loss on disposal of intangible assets 225 - -
Other income (907) - -
Cost of share-based payments 440 509 858
Tax charge / (credit) from continuing
operations 605 (2,198) 1,604
Tax charge / (credit) from discontinued
operations 3,182 - (3,182)
Exchange differences on balances
of cash and cash equivalents (309) 1,477 1,297
Working capital changes:
Decrease in trade receivables (1) 2,088 2,914 3,002
(Increase) / decrease in other receivables
(1) (3,349) 598 2,665
(Decrease) / increase in trade payables
(1) (2,203) 207 1,322
Increase / (decrease) in other liabilities
and accounts payable (1) 1,102 (1,959) (5,235)
----------
Cash generated from operations 3,202 9,622 14,647
========== ========== ============
Total working capital outflow (the sum of items marked 1 in the
table above) was $2,362,000
(30 June 2022: $1,760,000 inflow; 31 December 2022: $1,754,000
inflow).
3. Supplementary information continued
h. Subsequent events
Following IAS 10 'Events after the Balance Sheet Date', the
Group continues to disclose events that it considers material where
the non-disclosure of which could influence the economic decisions
of users of the financial statements.
On 12 July 2023, the Group sold three European Gaming domains
and associated websites, casino.se, casino.gr, and casino.pt, for a
total upfront cash consideration of $4,000,000.
The Directors considered this transaction to be an adjusting
post balance sheet event for the six months ended 30 June 2023.
Whilst the cash consideration was not received in the reporting
period, the consideration agreed has been recognised as "Other
receivables" and the recoverable amount of the intangible assets
relating to the transaction have been revalued to the consideration
agreed as this reflects the recoverable amount (see Note 3d for
more details).
The profit or loss on disposal of the assets will be recognised
fully in the consolidated financial statements for the year ended
31 December 2023.
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END
IR BIGDCLDDDGXR
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September 28, 2023 02:00 ET (06:00 GMT)
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