TIDMXLM
RNS Number : 2037N
XLMedia PLC
23 September 2019
23 September 2019
XLMedia PLC
("XLMedia" or the "Group" or the "Company")
Interim results for the six months ended 30 June 2019 and full
year update
XLMedia (AIM: XLM), a leading provider of digital performance
marketing services, announces its unaudited interim results for the
six months ended 30 June 2019.
Financial highlights(1)
-- Revenues of $42.5 million (H1 2018: $47.2 million)
-- Gross profit of $28.8 million (H1 2018: $31.7 million)
-- Adjusted EBITDA(2) of $18.6 million (H1 2018: $21.6 million)
-- Profit before tax of $13.8 million (H1 2018: $17.6 million)
-- Stable earnings per share of $0.06 in volatile market conditions
-- Interim dividend of $5.8 million or 3.1584 cents per share
(H1 2018: 3.0040 cents per share) - maintaining the Group's
progressive dividend policy
-- Strong balance sheet with $43.1 million of cash and
short-term investments at 30 June 2019(3)
Operating highlights
-- Continued diversification of assets underpinned by record
performance from the Group's personal finance division, now
representing 14% of Group revenue (H1 2018: 7%)
-- US gambling market continues to develop positively
o The Company's subsidiary, XLMedia US Limited, was accepted
last week as an authorized Gaming Service Provider by the
Pennsylvania Gaming Control Board for online advertising of online
sports betting and casino brands in the state of Pennsylvania
o Currently implementing ongoing organic investment programme
while developing the Group's presence and existing assets for this
market
-- Execution of strategy to focus on higher margin publishing
activities and discontinue some of the media activities. In August
the Company announced the sale of the Group's mobile apps marketing
subsidiary;
-- Industry wide regulatory headwinds continue to be felt in
2019. Key Swedish, German, UK and Swiss markets creating near term
challenges for the Group, specifically;
o Newly regulated
-- New gambling regulation in Sweden impacting both volumes and
customer sign ups - the Group believes the market will stabilise in
the mid-term, but revenues from this market may not return to
previous volumes in the midterm. So far the decrease is 23% as the
market adjusts to the new regulatory framework
-- New regulatory regime of the Swiss online casino market
resulting in many operators exiting the market, including most of
the Group's existing clients in the region
o Ongoing regulation - Evolving UK regulatory landscape
continues to put pressure on revenues
o To be regulated - German regulatory uncertainty within the
online casino market - decreased our revenues by 36% in this
market
-- Announced the appointment of Stuart Simms as Chief Executive
Officer on 29 July 2019, effective 2 October 2019, with Ory Weihs
remaining on the Board as a Non-executive Director of the
Company
Trading update
-- Despite underlying trading in the first half year
stabilising, regulatory headwinds highlighted above continue to
create trading uncertainty for the Group which has led to
weaker-than-expected performance in July and August
-- The combination of this performance and a slowdown in the
Group's acquisition activity this year, alongside reviewing all
strategic investments, means the Board is today revising market
guidance for the year ended 31 December 2019
-- The Board now expects the Group to deliver revenues of circa
US $80 million and adjusted EBITDA to be circa US $34 million, for
the year ending 31 December 2019
Ory Weihs, Chief Executive Officer of XLMedia, commented:
"This year has proven to be challenging for both XLMedia and the
industry as a whole, as the gaming industry changes and regulates.
However, this does result in the Group having greater visibility,
more sustainable revenues and stable earnings. Whilst we expect
this disruption to continue in the midterm, we remain committed to
our stated strategy, focusing on publishing. We continue to
diversify our asset base, specifically developing our US gambling
strategy and the personal finance sector, in which we continue to
make good progress with this sector now accounting for 14% of the
Group's revenues.
"As my last address as CEO of XLMedia, I would like to wish
Stuart every success and firmly believe that with the support of
the Board and management team he will lead the business back to
sustainable growth."
A webcast of our results presentation will be available on our
website later this week at the following link:
https://www.xlmedia.com/investor-relations/webcasts/
The information contained within this announcement (the
"Announcement") is deemed by the Company to constitute inside
information as stipulated under the Market Abuse Regulation (EU)
No. 596/2014. Upon the publication of this Announcement via a
Regulatory Information Service, this inside information is now
considered to be in the public domain.
For further information, please contact:
XLMedia plc Ory Weihs www.xlmedia.com Via Vigo Communications
Vigo Communications Jeremy Garcia / Fiona Tel: 020 7390 0233
Henson / Simon Woods www.vigocomms.com
Cenkos Securities plc (Nomad and Joint Tel: 020 7397 8900
Broker) Giles Balleny / Max Gould www.cenkos.com
Berenberg (Joint Broker) Chris Bowman Tel: 020 3207 7800
/ Mark Whitmore / Simon Cardron www.berenberg.com
Strategy
The Group has started the year with stabilised rankings to our
major assets, however, regulatory headwinds have slowed progress
and delayed expected recovery of performance in some of our
markets, mainly as gambling operators cease their activities in
certain markets or are limiting the deposits they can accept from
players.
Although regulation has had a negative impact on performance, we
do believe that in the medium and longer term it provides
sustainable opportunities for XLMedia, as we leverage our strong
asset base, vast experience, know how and advanced unique
technology which positions XLMedia as a top publishing group in the
gaming sector.
Going forward we will continue our focus on publishing, and
focus on diversifying our investments in the following:
-- Pursuit of growth opportunities in North America to both
build and develop a comprehensive portfolio of online assets for
the US gambling market
-- Continue developing the Group's core technology to retain competitive advantage
-- Ongoing expansion of the Group's publishing portfolio in
other regulated European gambling markets
-- Seeking to acquire earnings accretive publishing assets,
leveraging benefits of scale and technology
All new sites being developed will help bolster the Group's
asset base, expanding and enhancing its existing geographical
footprint.
The Group started the year with the strategic decision to focus
on publishing and discontinue some of its media activities. As a
result, in August 2019 the Group announced the sale of Webpals
Mobile Ltd ("Mobile"), the Group's subsidiary which was focused on
the promotion of apps which are not in the Group's core verticals
of gambling and personal finance.
Under the terms of the agreement, Mobile repaid $1.9 million of
inter-company balances to the Group on completion of the
transaction. There will be a final settlement to be made based on
the assets and liabilities of Mobile as at completion following the
preparation of final accounts. In 2018, Mobile delivered nil
contribution at EBITDA level. The net proceeds from the sale will
be used by the Group in the furtherance of its strategy of
developing its publishing assets.
Regulation
As previously disclosed, the Group has seen a number of
regulatory headwinds, namely new gambling legislation in Sweden
currently impacting all market participants and uncertainty within
the online German casino sector with brands pausing activity. The
Swiss market has also slowed significantly following the adoption
of a new regulatory regime which has significantly limited the
number of online licenses. The UK regulatory landscape continues to
evolve with ongoing downward pressure on revenues remaining.
Despite this, strong online ranking across key sites, including
freebets.com, remains.
Ongoing regulation
United Kingdom
Increased compliance demands on operators, including more
stringent age verification and Know-Your-Customer rules, continue
to slow down our conversion rate for new depositing customers
across a number of our gambling clients. As of April 2019, the UK
online casino tax has increased from 15% to 21%. Despite our
rankings remaining high, the Group has experienced an impact on
ARPU (average revenue per user).
Europe - other countries
The Group continues to seek opportunities to expand its presence
in other European countries which have already undergone
regulation, affording the Group greater visibility of market
conditions and quality of earnings.
To be regulated
Germany
The German online casino market remains in a state of flux with
regulatory uncertainty around online casino activity. Some clients
continue to operate as usual while others have paused all activity
in the market.
Newly regulated
United States
The US market continues to present a mid to long term
opportunity as the number of States in various stages of regulating
sports betting continues to grow, with very few, including New
Jersey and Pennsylvania, which are already live. The Company's
subsidiary, XLMedia US Limited, was last week accepted as an
Authorized Registered Gaming Service provider by the Pennsylvania
Gaming Control Board for online advertising of online sports
betting and casino brands in the state of Pennsylvania. The Company
remains committed to investing US $7 million over the next three
years.
Sweden
At the start of 2019, a new regulatory regime became effective
in Sweden, requiring casino operators in Sweden to apply for a
license from the Swedish Gambling Authority ("SGA"). This change
was followed by the introduction of tough monitoring and
sanctioning by the SGA of licensed operators, affecting conversion
rates and overall performance, causing uncertainty in the
market.
These changes will undoubtedly take time to bed down, and the
short term impact has been lower than expected player values
overall, and some operators struggling.
Switzerland
A new gambling regulatory regime came into effect in Switzerland
in January 2019. Under the new regime, licenses for online gambling
are only granted to a limited number of operators, mainly
consisting of existing land-based casino operators. As a result,
most of our customers have exited the market, negatively affecting
the Group's performance in the market.
General Regulation
The Group continues to monitor regulations worldwide, responding
to changing regulatory environments and new compliance needs in the
gambling advertising sector. The Group aims to continue to build
its asset portfolio across regulated markets globally in both the
gambling and personal finance sectors, by investing in developing
assets organically and acquiring selected targets.
Financial review
H1 2019 H1 2018 Change
($'000s) ($'000s)
---------- ---------- -------
Revenues 42,459 47,183 -10%
========== ========== =======
Gross Profit 28,838 31,688 -9%
========== ========== =======
Operating expenses 14,514 13,649 +6%
========== ========== =======
Operating income 14,324 18,039 -21%
========== ========== =======
Adjusted EBITDA 18,616 21,601 -14%
========== ========== =======
Profit Before Tax 13,795 17,584 -22%
========== ========== =======
The financial performance reflects continued operations
excluding discontinued media activities following strategic
decision to focus on higher margin publishing activities and
discontinue some of the media activities.
In the six months ended 30 June 2019, the Company delivered
revenues of $42.5 million (H1 2018: $47.2 million) and adjusted
EBITDA of $18.6 million (H1 2018: $21.6 million).
The first half of 2019 was impacted by the regulatory trends and
other operational issues which resulted in revenues of $42.5
million, a decrease of 10% compared to the same period last year.
The decrease is from the Group's core gaming activity affected by
regulatory headwinds, for example new regulation in Sweden which
impacted more than expected and the revenues in this territory
decreased 23%. The Group's revenues from its personal finance
assets in H1 2019 increased to $6.0 million or 14% of the Group's
revenues (H1 2018: $3.1 million, 7%).
Gross profit was $28.8 million or 68% of revenues, representing
a 1% increase compared to the same period last year (H1 2018: $31.7
million, 67%). High gross margins reflect the Group's strategic
decision to focus on its publishing activities.
Operating expenses during the first six months of the year were
$14.5 million, an increase of 6% compared to the same period last
year (H1 2018: $13.6 million). The increase is mainly from
increased general and administration costs relating to changes in
management and increased amortization of capitalized R&D
costs.
Operating expenses include the first implementation of IFRS 16 -
a new accounting principle which requires a lessee to recognise
assets and liabilities for leases with a term of more than 12
months. As a result, the Group recorded increased amortization
expenses of $0.7 million, increased financing expenses of $0.9
million and reduced rent expenses of $0.7 million.
Operating expenses included $0.7 million of research and
development expenses, similar to the same period last year. These
expenses are in addition to investments in technology and internal
systems developed during the period of $4.1 million (H1 2018: $4.3
million). Total R&D spend together with capitalised costs was
$4.8 million compared to $5.8 million in H1 2018. We see technology
as a key driver to increasing revenues and profit for the coming
years, and the majority of the spend is invested for future
business development.
Adjusted EBITDA(4) reached $18.6 million or 44% of revenues,
reflecting a decrease of 14% relative to the same period last year
(H1 2018: $21.6 million, 46%).
As a result of the reduced revenues and gross profit as compared
to the same period last year, profit before tax decreased by 22% to
$13.8 million (H1 2018: $17.6 million). Net income for the period
was $12.2 million, reflecting a decrease of 14% (H1 2018: $14.1
million). Net income included Income from discontinued
operations(5) of $0.08 million and non-controlling interest of $0.4
million.
As at 30 June 2019 we had $43.1 million of cash and short-term
investments compared to $43.7 million as at 31 December 2018. The
cash amount included $3.0 million within Mobile classified as
assets held for sale in the balance sheet, and which was later
settled prior to the disposal of Mobile.
Current assets as at 30 June 2019 were $55.5 million (31 Dec
2018: $60.0 million). Assets held for sale(6) were $6.2 million (31
Dec 2018: $9.3 million) and non-current assets were $138.0 million
(31 Dec 2018: $127.2 million). The increase in non-current assets
of $10.0 million is attributed to the implementation of IFRS 16 as
at 1 January 2019 as mentioned above.
Total equity as at 30 June 2019 was $161.5 million, or 81% of
total assets (31 Dec 2018: 85%). During H1 the Company executed its
buyback programmes and bought shares in a total amount of $9.7
million. Also, during H1 we repaid $1.4 million of bank loans and
recognized a lease liability of $1.7 million (IFRS 16 - see
explanation above). The strong balance sheet combined with cash and
short-term investments of $43.1 million ensures the Group is well
positioned to continue to execute its strategic plan.
Dividend, Share Buyback & Tender Offer
On 18 December 2018, the Company instigated a share buyback
programme with repurchased shares being held in treasury. To date,
the Company has purchased 13.5 million shares for an aggregate sum
of $10.8 million.
In addition, the Company further capitalised on its strong cash
position, and highly cash generative business model by completing a
GBP15.7 million Tender Offer in August 2019, acquiring 19.7 million
Ordinary Shares at 80 pence per share. The repurchased shares are
held in treasury and the number of Shares in issue carrying voting
rights reduced accordingly.
The Board is declaring an interim dividend of $5.8 million or
3.1584 cents per share, to be paid in Pound Sterling 2.5328 pence
per share 1 November 2019 to shareholders on the register at 4
October 2019. The ex-dividend date is 3 October 2019.
Board changes
On 29 July 2019, the Company announced the appointment of Stuart
Simms as Chief Executive Officer with effect from 2 October 2019.
Ory Weihs will continue in his role as Chief Executive Officer
until Stuart's arrival and thereafter will remain a supporter of
the business through his role on the Board as a Non-executive
Director of the Company. Stuart has been working closely with Ory
to ensure an orderly hand-over of responsibilities whilst
conducting a full review of the business.
Stuart has significant experience in technology companies, and
specifically the performance marketing sector, and joins having
previously held several Board and senior executive positions,
including as Chief Executive Officer of Rakuten Marketing
("Rakuten"), one of the world's largest performance marketing
companies with revenues in excess of $1 billion. During his tenure
at Rakuten, Stuart oversaw a substantial transformation and
re-structuring of the business, resulting in a return to growth.
Stuart implemented a clear strategy to utilise inhouse technology
and integrate acquisitions, accelerating both revenue and profit
growth.
Outlook
As highlighted earlier in the announcement, both H1 and the full
year results will be impacted by regulatory developments across
Sweden, Germany, Switzerland and the UK. This, alongside no
acquisition activity, which was expected to deliver additional
EBITDA in the full year results, has impacted expected performance
for the year.
Accordingly, the Board now expects the Group to deliver revenues
of circa US $80 million and adjusted EBITDA to be circa US $34
million, for the year ending 31 December 2019.
INTERIM CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL
POSITION
30 June 31 December
--------- -----------
2019 2018
--------- -----------
Unaudited Audited
--------- -----------
USD in thousands
----------------------
Assets
Current assets:
Cash and cash equivalents 40,273 44,627
Short-term investments 2,805 2,996
Trade receivables 9,410 16,112
Other receivables 2,992 5,502
55,480 69,237
Assets held for sale (Note 4) 6,187 -
--------- -----------
Total current assets 61,667 69,237
--------- -----------
Non-current assets:
Long-term investments 668 633
Property and equipment 10,891 1,296
Goodwill 23,652 23,652
Domains and websites 92,226 92,053
Other intangible assets 10,574 9,146
Deferred taxes - 99
Other assets 372 435
138,383 127,314
--------- -----------
200,050 196,551
========= ===========
The accompanying notes are an integral part of the interim
condensed consolidated financial statements.
INTERIM CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL
POSITION
30 June 31 December
--------- -----------
2019 2018
--------- -----------
Unaudited Audited
--------- -----------
USD in thousands
----------------------
Liabilities and equity
Current liabilities:
Current maturity of long-term bank loans 4,216 5,585
Lease liability 1,729 -
Trade payables 2,660 6,416
Other liabilities and accounts payable 7,346 7,058
Income tax payable 10,090 9,049
26,041 28,108
--------- -----------
Liabilities attributed to assets held for sale:
(Note 4) 3,431 -
--------- -----------
Total current liabilities 29,472 28,108
Non-current liabilities:
Lease liability 8,762 -
Long- term bank loans - 1,380
Deferred taxes 193 -
Other liabilities 146 248
--------- -----------
9,101 1,628
--------- -----------
Total liabilities 38,573 29,736
--------- -----------
Equity:
Share capital *) *)
Share premium 112,352 112,224
Capital reserve from share-based transactions 3,233 2,590
Capital reserve from transactions with non-controlling
interests (2,445) (2,445)
Treasury shares (10,121) (468)
Retained earnings 58,167 54,623
--------- -----------
Equity attributable to equity holders of the Company 161,186 166,524
Non-controlling interests 291 291
--------- -----------
Total equity 161,477 166,815
--------- -----------
200,050 196,551
========= ===========
*) Lower than USD 1 thousand.
The accompanying notes are an integral part of the interim
condensed consolidated financial statements.
22 September,
2019
-------------------- ------------------- --------------- ---------------
Date of approval Chris Bell Ory Weihs Yehuda Dahan
of the
financial statements Chairman of the Chief Executive Chief Financial
Board of Directors Officer Officer
INTERIM CONDENSED CONSOLIDATED STATEMENTS OF PROFIT OR LOSS AND
OTHER COMPREHENSIVE INCOME
Six months ended Year ended
30 June 31 December
------------------ ------------
2019 2018 2018
--------- ------- ------------
Unaudited Audited
------------------ ------------
USD in thousands
(except per share data)
Revenues 42,459 47,183 93,502
Cost of revenues 13,621 15,495 30,133
--------- ------- ------------
Gross profit 28,838 31,688 63,369
Research and development expenses 696 733 1,043
Selling and marketing expenses 2,646 2,563 5,044
General and administrative expenses 11,172 10,353 20,597
--------- ------- ------------
14,514 13,649 26,684
--------- ------- ------------
Operating profit 14,324 18,039 36,685
--------- ------- ------------
Finance expenses (1,212) (556) (837)
Finance income 683 101 300
--------- ------- ------------
Finance expenses, net (529) (455) (537)
--------- ------- ------------
Profit before taxes on income 13,795 17,584 36,148
Taxes on income 1,723 2,616 4,089
--------- ------- ------------
Income from continuing operations 12,072 14,968 32,059
Income (loss) from discontinued operations,
net (Note 4) 79 (916) (11,284)
Net income 12,151 14,052 20,775
========= ======= ============
Net income and other comprehensive income 12,151 14,052 20,775
========= ======= ============
Attributable to:
Equity holders of the Company 11,770 13,553 19,818
Non-controlling interests 381 499 957
--------- ------- ------------
12,151 14,052 20,775
========= ======= ============
Earnings per share attributable to equity
holders of the Company:
Basic and Diluted earnings per share
from continuing operation (in USD) 0.06 0.06 0.14
========= ======= ============
Basic and Diluted loss per share from
discontinuing operation (in USD) (*) (*) (0.05)
========= ======= ============
Weighted average number of shares used
in computing basic earnings per share
(in thousands) 209,329 214,466 215,441
========= ======= ============
Weighted average number of shares used
in computing diluted earnings per share
(in thousands) 209,596 217,854 217,330
========= ======= ============
(*) less than 0.01 USD.
The accompanying notes are an integral part of the interim
condensed consolidated financial statements.
INTERIM CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
Six months ended Year ended
30 June 31 December
------------------ ------------
2019 2018 2018
-------- -------- ------------
Unaudited Audited
------------------ ------------
USD in thousands
--------------------------------
Cash flows from operating activities:
Net income 12,151 14,052 20,775
-------- -------- ------------
Adjustments to reconcile net income to
net cash provided by operating activities:
Adjustments to the profit or loss items:
Depreciation, amortisation and impairment 3,618 2,788 6,503
Finance (income) expense, net 1,311 (1,584) (1,577)
Gain from sale of property - - (10)
Loss from write down to fair value less
selling costs of the discontinued operation - - 9,938
Cost of share-based payment 674 774 1,667
Taxes on income 1,782 2,738 4,387
Exchange differences on balances of cash
and cash equivalents (492) 329 954
-------- -------- ------------
6,893 5,045 21,862
-------- -------- ------------
Changes in asset and liability items:
Decrease in trade receivables 3,858 1,174 2,838
Decrease (increase) in other receivables 620 (2,789) (509)
Increase (decrease) in trade payables (1,419) 113 (3,397)
Increase (decrease) in other accounts
payable 1,080 (2,459) (4,571)
Increase in other long-term liabilities - 24 47
------------
4,139 (3,937) (5,592)
------------
Cash paid and received during the period
for:
Interest paid (356) (215) (469)
Interest received 89 99 196
Taxes paid (1,167) (2,195) (5,544)
Taxes received 2,058 556 557
------------
624 (1,755) (5,260)
-------- -------- ------------
Net cash provided by operating activities 23,807 13,405 31,785
-------- -------- ------------
The accompanying notes are an integral part of the interim
condensed consolidated financial statements.
INTERIM CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Cont.)
Six months ended Year ended
30 June 31 December
------------------ ------------
2019 2018 2018
-------- -------- ------------
Unaudited Audited
------------------ ------------
USD in thousands
--------------------------------
Cash flows from investing activities:
Purchase of property and equipment (111) (421) (553)
Proceeds from sale of assets and property - 150 270
Acquisition of and additions to domains,
websites, technologies and other intangible
assets (4,311) (43,756) (55,516)
Short- term and long-term investments,
net 139 (4,964) 1,735
------------
Net cash used in investing activities (4,283) (48,991) (54,064)
-------- -------- ------------
Cash flows from financing activities:
Share capital issuance, net of issuance
costs - 42,618 42,618
Dividend paid to equity holders of the
Company (8,226) (8,000) (14,362)
Repayment of lease liabilities (703) - -
Acquisition of treasury shares (9,653) - (468)
Dividend paid to non-controlling interests (319) (499) (1,285)
Exercise of options 117 641 976
Repayment of long and short-term liability (2,750) (1,250) (4,000)
Receipt of long-term loan from bank - 5,965 5,965
------------
Net cash provided from (used in) financing
activities (21,534) 39,475 29,444
-------- -------- ------------
Exchange differences on balances of cash
and cash equivalents 526 (329) (954)
-------- -------- ------------
Increase (decrease) in cash and cash equivalents (1,484) 3,560 6,211
Cash and cash equivalents at the beginning
of the period 44,627 38,416 38,416
-------- -------- ------------
Cash and cash equivalents at the end of
the period 43,143 41,976 44,627
======== ======== ============
The accompanying notes are an integral part of the interim
condensed consolidated financial statements.
NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS
NOTE 1: GENERAL
XLMEDIA PLC and its subsidiaries (The Group) are online
performance marketing companies.
The Group attracts users through online marketing techniques
(such as publications and advertisements) which are then directed,
by the Group, to its customers in return for a share of the revenue
generated by such user, a fee generated per user acquired, fixed
fees or a hybrid of any of these three models.
NOTE 2: SUPPLEMENTARY INFORMATION
The Board of the Company has approved a buyback programme (the
"Programme") to buy back up to USD 10 million of the Company's
Ordinary shares (the "Shares").
The Programme ran from 18 December 2018 to the conclusion of the
2019 annual general meeting of the Company. At the 2019 annual
general meeting another buyback programme was approved to buy back
up to additional USD 10 million of the Company's Shares.
The Programmewas funded from the Company's existing cash
balances and did not affect the Company's stated dividend policy of
paying out at least 50 per cent of retained earnings.
During 2018 the Company acquired 492,302 Shares at a cost of USD
468 thousand.
In the reporting period the Company acquired 12,211,138 Shares
in total amount of USD 9,653 thousand. Subsequent to the reporting
period the Company acquired 845,303 Shares in total amount of USD
716 thousands.
On 16 July, 2019 the Company ceased the buyback programme and
published a tender offer, which was accepted on 16 August 2019 and
following the Company purchased 19,675,000 Shares at 80 pence per
share and at a cost of USD 20,034 thousand including transaction
expenses.
NOTE 3:- DISCONTINUED OPERATIONS
a. In February, 2019, the Company's Board of directors decided
to reduce certain parts of its Media activities (comprising one
CGU) which have lower profit margins. Subsequent to the reporting
period, in August 2019, the Company completed the sale of Webpals
Mobile Ltd ("Mobile") which is a substantial component of the CGU.
Under the terms of the agreement Mobile repaid USD 1.9 million of
inter-company balances to the Group on completion. The repayment
amount is subject to further adjustments. The gain deriving from
the sale will be in the range of USD 1-1.6 million.
Prior to the classification of the CGU as a disposal group, the
recoverable amount of the sold assets was calculated as fair value
less expected selling costs, and based on that the Group recorded
in 2018, a write down loss in the amount of USD 9,938 thousand.
NOTE 3: DISCONTINUED OPERATIONS (Cont.)
b. Below are the main groups of assets and liabilities classified as held for sale:
June 30,
----------------
2019
----------------
Unaudited
----------------
USD in thousands
----------------
Assets:
Cash and cash equivalents 2,870
Short-term investments 144
Accounts receivable 2,844
Other accounts receivable 252
Property, plant and equipment 77
Assets held for sale 6,187
================
Liabilities:
Accounts payable 2,337
Other liabilities and account payables 1,094
Liabilities attributed to assets held
for sale 3,431
----------------
Net assets held for sale 2,756
================
c. Below is data of the operating results attributed to the discontinued operation:
Six months ended Year ended
30 June 31 December
------------------ ------------
2019 2018 2018
-------- -------- ------------
Unaudited Audited
------------------ ------------
USD in thousands
--------------------------------
Revenues from sales 8,082 11,905 24,364
Cost of sales 6,409 10,072 19,789
-------- -------- ------------
Gross profit 1,673 1,833 4,575
Selling, general and administrative
expenses and research and development
expenses 1,459 2,594 5,573
Loss from write down to fair
value less selling costs of
the discontinued operation - - 9,938
-------- -------- ------------
Operating income (loss) 214 (761) (10,936)
Financial expenses, net (76) (33) (50)
-------- -------- ------------
Income (Loss) before income
taxes from discontinued operation 138 (794) (10,986)
Taxes on income 59 122 298
Income (loss) from discontinued
operation, net 79 (916) (11,284)
======== ======== ============
NOTE 3: DISCONTINUED OPERATIONS (Cont.)
d. Below is data of the net cash flows provided by (used in) the discontinued operation:
Six months ended Year ended
30 June 31 December
------------------ ------------
2019 2018 2018
------- --------- ------------
Unaudited Audited
------------------ ------------
USD in thousands
---------------------------------
Operating activities (166) 407 (9)
======= ========= ============
Investing activities - (1,001) (1,407)
======= ========= ============
NOTE 4: OPERATING SEGMENTS
The operating segments are identified on the basis of
information that is reviewed by the chief operating decision maker
("CODM") to make decisions about resources to be allocated and
assess its performance.
As of 30 June, 2019 the main part of the Group's Media
activities were classified as discontinued activity and other Media
activities were integrated to the Publishing segment activities.
The Group now has one operating segment - Publishing, which
consists the operation of over 2,300 owned informational websites
in 18 languages. These websites refer potential customers to online
businesses. The sites' content, written by professional writers, is
designed to attract online traffic which the Group then directs to
its customers online businesses.
NOTE 5: OTHER INFORMATION
Revenues classified by geographical areas based on internet user
location:
Six months ended Year ended
30 June 31 December
------------------ ------------
2019 2018 2018
-------- -------- ------------
Unaudited Audited
------------------ ------------
USD in thousands
--------------------------------
Scandinavia 18,594 20,654 42,362
Other European countries 11,604 13,983 26,804
North America 9,302 7,772 14,510
Asia 146 - 56
Oceania 814 791 1,668
Other countries 298 1,208 2,191
------------
Total revenues from identified
locations 40,758 44,408 87,591
Revenues from unidentified locations 1,701 2,775 5,911
------------
Total revenues 42,459 47,183 93,502
======== ======== ============
- - - - - - - - - - - - - - - -
(1) Financial performance reflects continued operations
excluding discontinued media activities following strategic
decision to focus on publishing activities
(2) Earnings before interest, taxes, depreciation and
amortization adjusted to exclude share based payments
(3) Excluding cash and short term investments attributed to the
media activity that are classified under held for sale assets
(4) Earnings before interest, taxes, depreciation and
amortization adjusted to exclude share based payments
(5) Discontinued operations resulting from the decision to
reduce media activities and the disposal of Mobile subsidiary
(6) The discontinued media activities
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
IR FLLLLKKFZBBF
(END) Dow Jones Newswires
September 23, 2019 02:01 ET (06:01 GMT)
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