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 David King, Chief Executive Officer Caroline Ackroyd, Chief Financial Officer www.xlmedia.com
|
ir@xlmedia.com via Vigo Consulting |
| Vigo Consulting Jeremy Garcia / Fiona Hetherington / Kendall Hill www.vigoconsulting.com
| Tel: 020 7390 0233 |
| Cavendish Securities plc (Nomad and Joint Broker) Giles Balleny / Callum Davidson www.cavendish.com
| Tel: 020 7397 8900 |
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: $43.3 million), a 33% decline compared to the previous financial period. The decline in revenues was driven by the North America Sports vertical. Both our owned sites and our Media Partners declined as a result of the scale of new state launches in H1 2022 (New York, Louisiana and Ontario) which were significantly larger in population size against state launches in H1 2023 (Ohio and Massachusetts) driving higher revenues in the prior period. In Europe, we continued to rebuild our sites, driving new customer acquisition and creating new tail revenues. Total Europe revenues delivered growth of 3%.
We continued to grow new customer volumes with Real Money Players from core websites (including Media Partners) of 80,000 in H1 2023 (H1 2022: 116,000), a decrease of 31% period-on-period also impacted by state launches.
The Group's operations are reported on the basis of two core operating verticals, Sports and Gaming (Casino and Bingo), and two geographies, North America and Europe. The Group has excluded the sub-affliliate business from prior period comparatives for all the following revenue tables.
Revenue split by type
|
| H1 2023 ($m) | H1 2022 ($m) | Change 2023 vs 2022 (%) |
| CPA | 16.4 | 28.5 | (42)% |
| Revenue share / hybrid and other 2 | 12.4 | 13.9 | (11%) |
| Total | 28.8 | 42.4 | (32)% |
2 Other defined as Fixed Deals, Sponsorship Deals, Display Advertising
The US market has continued largely as a CPA led market whereas the Europe market continues to operate with a mixture of fixed, hybrid and revenue share deals. As a result, CPA revenues accounted for 57% of core revenues declining from 67% in the prior period. Revenue share has increased to 43% of total revenue due to the overall decline in US revenues as a percentage of total revenues. As the US market continues to develop, we have started to see some hybrid and revenue share deals offered and expect this to grow as a proportion of revenues over time.
Revenue split by category 3
|
| H1 2023 ($m) | H1 2022 ($m) | Change 2023 vs 2022 (%) |
| Sport 4 | 21.4 | 34.0 | (37)% |
| Gaming | 7.4 | 8.4 | (14)% |
| Total | 28.8 | 42.4 | (32)% |
3 H1 2022 excludes revenue from the sub-affiliate network.
4 Includes the North America Sports, Media Partnerships and Europe Sports verticals.
In H1 2023, 74% of revenues came from Sport in line with the Group's focus on being sports led in the US, while also rebuilding its Europe casino assets and launching a new casino brand in the US.
Revenue split by geography
|
| H1 2023 ($m) | H1 2022 ($m) | Change 2023 vs 2022 (%) |
| 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: $0.4 million).
Revenue split by Partnership and owned and operated ("O&O")
|
| H1 2023 ($m) | H1 2022 ($m) | Change 2023 vs 2022 (%) |
| 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: $11.8 million). Tail revenues in casino declined period-on-period relating to closed websites, offset by growth in new RMPs revenues in both sports and casino.
Gross profit 5 and gross margin
|
| H1 2023 ($m) | H1 2022 ($m) | Change 2023 vs 2022 (%) |
| Gross profit from continuing operations ($'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: $8.4 million).
EBITDA from continuing operations included items which affect comparability and so, the Group excludes these items from its Adjusted EBITDA metrics. These are detailed below:
Reconciliation of operating profit for continuing operations to Adjusted EBITDA
|
| H1 2023 ($m) | H1 2022 ($m) | Change 2023 vs 2022 (%) |
| Operating profit from continuing operations | 6.0 | 4.8 | 25% |
| Depreciation and Amortisation | 3.5 | 3.6 |
|
| EBITDA from continuing operations ($'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: $5.3 million). These include all other operating costs including administrative expenses, professional service costs and redundancy costs.
Earnings per share (EPS)
|
| H1 2023 ($m) | H1 2022 ($m) | Change 2023 vs 2022 (%) |
| Basic and diluted EPS from continuing operations ($) | 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: $0.9 million).
The Group understands the importance of the tax contribution we make, and we have a tax strategy which supports this commitment. The Group is committed to paying all of its taxes in full and on time, in all the jurisdictions in which the Group operates.
Summary balance sheet and cash flow metrics
|
| H1 2023 ($m) | H1 2022 ($m) | Change 2023 vs 2022 (%) |
| Free cash flow 6 ($'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 IFRS measure | Definition |
| Continuing operations revenue | Revenue | Group revenue less discontinued operations revenue. For H1 2023, the Group classified the Personal Finance and Blueclaw verticals as discontinued. |
| Adjusted EBITDA | Operating Profit 1 | Earnings before Interest, Taxes, Depreciation and Amortisation, and excluding any share-based payments, impairment and reorganisation costs. |
| Adjusted EBITDA from continuing operations | Operating Profit 1 | As above but excluding discontinued operations |
| Adjusted Basic and diluted earnings per share from continuing operations | Basic and diluted earnings per share | Based on profit for the period from continuing operations. |
1 Operating profit is not defined under IFRS. However, it is a generally accepted profit measure.
Cash flow measures
| Metric | Closest equivalent IFRS measure | Definition |
| Free cash flow | No direct equivalent | Cash from operations excluding one-off tax payments or refunds, excluding acquisition costs, less capital expenditure. |
| Normalised capital expenditure | No direct equivalent | Reported capital expenditure excluding acquisition-related capital expenditure. |
Consolidated statement of profit or loss and other comprehensive income
| | | | |
|
|
| |||||
| | | | | Six months ended 30 June 2023 | | Six months ended 30 June 2022 |
| Year ended 31 December 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 2023 |
| 30 June 2022 | | 31 December 2022 |
| ||||||||||
| | | Notes | | $000 Unaudited |
| $000 Unaudited | | $000 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 |
| ||||||||||
| Accumulated 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 Officer | | | Chief Financial Officer |
Consolidated statement of changes in equity
| | Share capital 1 |
| Share premium |
| Capital reserve from share-based transactions |
| Capital reserve from the translation of a foreign operation |
| Other capital reserves 4 |
| Accumulated deficit |
|
| Total 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 ended 30 June 2023 |
| Six months ended 30 June 2022 | | Year ended 31 December 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 | - | Euro |
| GBP | - | British Pound Sterling |
| IFRS | - | International Financial Reporting Standards as 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 |
| USD/$
| - | U.S. dollar, all values are rounded to the nearest 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 ended 30 | | Six months ended 30 | | Year ended 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 ended 30 June 2023 |
| Six months ended 30 June 2022 |
| Year ended 31 December 2022 |
| |
| $000 Unaudited |
| $000 Unaudited | | $000 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 ended 30 June 2023 | | Six months ended 30 June 2022 |
| Year ended 31 December 2022 |
| | | $000 Unaudited | | $000 Unaudited | | $000 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 ended 30 June 2023 | | Six months ended 30 June 2022 |
| Year ended 31 December 2022 |
| | | $000 Unaudited | | $000 Unaudited | | $000 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 ended 30 June 2023 |
| Six months ended 30 June 2022 |
| Year ended 31 December 2022 |
| | | $000 Unaudited |
| $000 Unaudited |
| $000 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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