Source - RNS
RNS Number : 2565K
Crossrider plc
20 September 2016
 

Crossrider plc

 

("Crossrider," the "Company" or the "Group")

 

 

Interim results for the six months ended 30 June 2016

 

Crossrider (AIM:CROS) today announces its unaudited half year results for the six months ended 30 June 2016.

 

 

Financial highlights

 

·     

Revenue of $28.7 million (H1 2015: $40.8 million), down $12.1 million of which $11.9 million is due to the expected decline in the Web Apps and License segment

·     

App Distribution segment (1) result increased to $5.9 million (H1 2015: $4.1 million)

·     

Media segment result increased to $1.7 million (H1/2015: $1.5 million)

·     

Adjusted EBITDA(2) in line with management expectations at $3.5 million (H1 2015: $5.5 million)

·     

Adjusted basic EPS(3) at 1.8 cents per share (H1 2015: 2.6 cents per share)

·     

Adjusted cash flow from operations at $4.1 million (H1 2015: $5.0 million) representing strong cash conversion of adjusted EBITDA of 119% (H1 2015: 90%)

·     

Cash balance at the end of the period of $70.2 million to execute new strategic plan

 

(1) Segment results have been calculated using revenue less costs directly attributable to that segment (See Note 3 to the interim financial statements).

(2) EBITDA, Adjusted EBITDA and Adjusted cash flow from operations are non GAAP measures. Adjusted EBITDA and Adjusted cash flow from operations are company specific measures which exclude other operating income and expenses which are considered to be one off and non-recurring in nature. (See reconciliation in the Chief Financial Officer's review below).

(3) Adjusted basic EPS excludes the after tax impact of amortisation of acquired intangibles, and other operating income and expenses which are considered to be one off and non-recurring in nature.

 

Operational highlights

 

·     

Appointment of new CEO Ido Erlichman on 31 May 2016

·     

Strategic restructuring programme commenced in June 2016, transitioning the Group to operate as a digital distribution and product hub - utilising the Company's existing technology and intellectual property

·     

The restructuring process initiated in June 2016 has, to date, resulted in $2 million of annualised savings

·     

New corporate structure implemented, with two core divisions, which will be the focus of the Group: App Distribution and Media. Third division comprising Web App and Licensing activity maintained in the short to medium term

·     

Successful launch of a synergistic third party product on the App Distribution platform, achieving a 125% increase in revenue and doubling of product's previous monthly gross profit.

·     

100% increase in driving mobile conversions from mobile app downloads and subscriptions services within the Media division

 

New reporting structure

 

Since June 2016 a major restructuring has been undertaken, resulting in changes to the Group's management reporting. The change in reporting provides a more accurate and transparent description of activities. The Group now operates three reportable segments:

 

·     

App Distribution - comprising the Group's app distribution product hub. Revenue is generated from end users purchasing products online and includes the Reimage activity, traffic acquisition capabilities, conversion expertise as well as retention and upselling activity through technology and knowhow, previously reported within the Web division

·     

Media - comprising the Group's marketing technology platforms and ad network activities, typically with revenue sharing arrangements with media partners; among others this includes Ajilion and Definiti's activities, previously reported within our Mobile division

·     

Web Apps and License - comprising revenue generated from licensing the web apps monetisation platform and associated technology, previously reported within the Web division and which, as previously announced, is in decline

 

Consequently, H1 2015 segmental results have been restated. The results of these segments are set out in the Chief Financial Officer's review. There is no change to the reported consolidated Group financial results for any prior period.

 

 

Outlook

 

The Board is pleased to report that following the June 2016 restructuring, the Group has experienced immediate and measurable benefits. In addition to the annualised cost savings of $2 million, the Group has successfully restructured the business into two primary divisions, which is expected to leverage the Company's existing distribution capabilities and technology. Crossrider's strategic focus is now on growing its digital distribution hub through the launch of new synergistic products, technologies and expanding its client base.  

 

 

Commenting on the results, Ido Erlichman, Chief Executive Officer of Crossrider, said:

 

"The first half of 2016 has been a period of transformation for Crossrider. The restructuring programme yielded immediate increases to profitability and cash flow. I am now pleased to present the new company structure and strategy which the Board believes will deliver long term value for shareholders.

 

We believe the transition to a digital distribution and product hub will be a natural and profitable progression for the Group. The transition will commercialise the Company's existing expertise in driving online traffic and the monetisation of big data. Like many online companies, Crossrider, is maturing and finding the best way to utilise its technology and online presence. The Company has already seen a third party product increase its revenue by 125% by launching on our App Distribution platform. This initial proof of concept gives us the confidence that we are well positioned to seize our market opportunities."

 

 

For further information contact:

 

Crossrider plc

Ido Erlichman, Chief Executive Officer

Moran Laufer, Acting Chief Financial Officer

 

+44 (0) 20 3772 2496

via Bell Pottinger

Shore Capital

Bidhi Bhoma

Toby Gibbs

+44 (0) 20 7408 4090



Bell Pottinger

David Rydell

James Newman

Sam Cartwright

Vrudhi Patel

+44 (0) 20 3772 2496



About Crossrider


Crossrider is an online distribution and digital product company. The Company utilises its proprietary marketing technology platforms to prospect, optimise and monetise mobile and web media. Crossrider powers all aspects of an online product to create a superb user experience. The Company offers improved retention and re-engagement rates, greatly enhancing the value of user activity. Crossrider provides its platforms to its customers for use with their products as well as developing and expanding its own product portfolio.

 

Our vision is to provide and develop best-in-class digital products for our users globally.

 

www.crossrider.com 

 

 

Chief Executive Officer's review

 

In the last quarter, Crossrider embarked on a pivotal transition programme, utilising the Company's capabilities to become an online digital distribution and product hub. We are honing Crossrider's advertising and marketing technology capabilities in order to focus on the distribution of our own products and services, expanding our reach along the value chain. Crossrider started as an advertising technology company and its strengths have always been centred on the capture and commercialisation of big data, user acquisition and optimised conversions. Our focus will now be to utilise that same strength in order to provide a distribution platform and product hub for companies focused on digital products as well as to our own consumer base.

 

Following my appointment as CEO on 31 May 2016, we instituted a three step strategic plan to drive the Company forward, based on: (i) restructuring and strengthening the core operations; (ii) organic growth; and (iii) laying the foundation for future expansion through bolt-on and strategic acquisitions to support the business model transformation.

 

We are both satisfied and excited to see that in the short period since this process began, Crossrider has made meaningful progress in refocusing the company on cash flow and profitability, streamlining operations, organically growing our existing platform, and setting the stage for taking the next steps towards growth.

 

Financial results

 

In light of the board's decision to cease the investment in the Web Apps business at the beginning of 2016, revenues and Adjusted EBITDA decreased by 29.6% and 36.4%, respectively, compared to the same period in 2015.

 

Excluding the Web Apps business, the App Distribution division and the Media division showed consistent growth.

 

The App Distribution segment results grew from $4.1 million to $5.9 million and the margins improved from 21.5% to 32.3% compared to the first half of 2015.

 

The Media division's segment results improved from $1.5 million to $1.7 million and margins improved from 21.6% to 23.2% compared to the first half of 2015.

 

Despite the restructuring cost, the share buyback and deferred consideration paid in respect of previous acquisitions, the Group had $70.2 million in cash and no debt at the end of the period. Adjusted cash flow from operations was $4.1 million in the period and this represents a cash conversion of adjusted EBITDA of 119%.

 

Laying the foundation for future growth

 

Since June, Crossrider has undergone a major restructuring. This process included introducing a new management and a new corporate structure aimed at supporting our strategic decision to expand our app distribution activities and online product base. We have also taken steps to focus the company on cash generative activities, enforce working capital discipline and provide quality service to our customers and partners.

 

 

 1 Segment result has been calculated using revenue less costs directly attributable to that segment

 

 

As part of the change in management, we appointed Moran Laufer on 19 August 2016, as Acting Chief Financial Officer after completion of a handover process with Mark Carlisle.

 

We have consolidated most of our activities into two divisions: Media and App Distribution; while retaining our Web Apps Licensing activity, this includes the Browser Extension platform, which has been outsourced through a licensing agreement since January. 

 

In the Media division we have reduced the headcount by 20% and tightened our working capital as part of a comprehensive plan to create a leaner team focused on revenue and growth from mobile products and services.

 

In the App Distribution division we are reducing our reliance on outsourcing activities in order to increase our control over the distribution of products. This will allow us not only to reduce costs but also to improve customer service and retention rates with the aim of shifting to a more recurring revenue base.

 

Through our restructuring we have realised $2 million in annualised cost savings made predominantly by reduction of headcount and realisation of operational efficiencies.

 

We have now put in place an organisational and management structure, which provides our best in class team with a solid and strong base for realising our expansion programme.

 

Organic Growth

 

To return to the path of organic growth we have focused on strengthening our distribution in the Media and App Distribution divisions.  This consists of traffic acquisition capabilities, conversion expertise as well as retention and upsell through technological tools and knowhow.

 

In the App Distribution division we are bringing our retention activities in-house. This move will help improve our customer service metrics. We now have better control over our distribution, thus improving the quality of our processes, and increasing our margins.

 

We have also bolstered our in-house media buying capabilities to achieve diversification of our media sources, thus increasing traffic volume, quality and market share.

 

We expect these changes to extend customer lifetime value, enable margin consolidation and have a direct effect on customer retention, and consequently, on profitability.

 

Our app distribution platform has been able to consistently out-perform comparable platforms and provides us with a competitive advantage in our current market as well as tremendous potential in new market areas.

 

We are now in position to grow our app product range via our distribution platform.

 

In our Media division we have expanded our foothold in the evolving media and advertising space. Leveraging our mobile capabilities, we have entered new markets and expanded our current offering into the native, social and content distribution channels.

 

These steps have resulted in stable growth in revenues compared with the first half of 2015, as well as a 100% increase in conversions in downloads and subscription services from 1.02 million to 2.05 million.

 

We are constantly honing our advertising technologies and supporting tools to reach the optimal level of our media buying services. This is all part of our company wide strategy to maintain best in class online distribution funnels for digital products.

 

Future Expansion

 

Completing the restructuring process and streamlining our activities, we now aim to move into the next stage in our strategy, accelerating future growth into the online product and distribution space. To do so, our current focus is on identifying technologies that improve our distribution funnel, products that complement our current offering or acquiring a customer base which accelerates our reach.

 

We have started to successfully test a number of products on our platform in recent months. One example is a synergistic third party product to our internet security products, which we have been promoting within our app distribution platform. Through this process we were able to achieve a 125% increase in revenue from the product as well as double the gross profit compared to the monthly average prior to launch of this product on our platform. This product is a good example of the potential for scaling up our App Distribution division.

 

Recently we established "Crossrider Innovation", a technology incubator hosting entrepreneurs with great technical skills, ideas and execution capabilities. This helps maintain Crossrider's access to great teams, as well as innovative technologies still at an early stage. We see this as an important, low cost, pillar of our strategy to identify complementary products to our current offerings as well as technologies that can strengthen our distribution platform.

 

While we do not want to downplay the challenges we face in our transformation from an Adtech company into a digital distribution and product hub, our initial progress gives the board confidence in the future direction of the business.

 

Outlook

 

The immediate steps we have taken have resulted in positive outcomes and the Group is now trading well. In the coming months we expect to see: (i) new initiatives that leverage existing assets; and (ii) acquisitions of new synergistic products, technologies or client base. We intend to continue moving forward to our goal of developing Crossrider into a leading online distribution and digital product hub.

 

Ido Erlichman

Chief Executive Officer

 

20 September 2016

 

 

 

Chief Financial Officer's review

 

Overview

 

Revenue in the first half of 2016 decreased to $28.7 million (H1 2015: $40.8 million) and Adjusted EBITDA to $3.5 million (H1 2015: $5.5 million). The decrease is attributable to a Board decision to cease investment in the browser extensions platform and outsource its monetisation to a third party. Excluding the web apps segment, revenue at $25.7 million remains broadly similar in comparison to $25.9 million in the first half of 2015. However, margins and segment results have significantly increased, at $7.6 million and 29.6% margin compared to $5.6 million and 21.6% in the first half of 2015.

 

Crossrider remains highly cash generative with cash generated from operations after adjusting for one-off non-recurring items at $4.1 million for the period (H1 2015: $5.0 million), which represents cash conversion of 119% (H1 2015: 90%). The Group balance sheet remains strong with cash balance of $70.2 million at 30 June 2016 (31 December 2015 $71.3 million) and no debt.

 

During the period, the Group went through major restructuring, resulting in changes to its management reporting system and now operates three reportable segments:

 

·     

App Distribution - comprising the Group's app distribution platform;

·     

Media - comprising the Group's Marketing technology platforms and ad network activities; and

·     

Web Apps and License - comprising revenue generated from licensing the web apps monetisation platform and associated technology

 

 

Consequently, the previous period segmental results have been restated. The results of these segments are set out below.

 

Segment Result

 

 



Revenue


Segment result



 

H1 2016


Restated

H1 2015


 

H1 2016


Restated

H1 2015



$'000


$'000


$'000


$'000

App distribution


18,211


19,055


5,877


4,103

Media


7,518


6,849


1,744


1,482

Web Apps and License


3,007


14,895


3,007


7,363

Revenue


28,736


40,799


10,628


12,948

 

 

The Segment Results have been calculated using revenue less costs directly attributable to that segment. Cost of sales comprises commissions paid to publishers and payment processing fees. Direct sales and marketing costs comprise traffic acquisition costs.

 







App distribution



H1 2016


H1 2015




$'000


$'000

Revenue



18,211


19,055

Cost of sales



(875)


(811)

Direct sales and marketing costs



(11,459)


(14,142)

Segment result



5,877


4,102

Segment margin %



32.3


21.5

 

Segment result (continued)

During the period, the App Distribution division had a significant improvement in margins reaching circa 32.3% compared to 21.5% in the comparable period, resulting in a $1.8 million increase in the segment result. This represents 43% uplift. The improvement in margin is mainly due to improvements in the app distribution processes, and specifically: a reduction in customer acquisition costs and growing customer value. Improvements in media buying efficiency resulting in better quality traffic as well as better user targeting which reduced acquisition costs. In addition, improvements in customer retention and up-sell activities increased customer value.            







Media



H1 2016


H1 2015




$'000


$'000

Revenue



7,518


6,849

Direct sales and marketing costs



(5,774)


(5,366)

Segment result



1,744


1,483

Segment margin %



23.2


21.7

 

Revenues and segment results have increased by 10% and 18% respectively compared to H1 2015. This increase is attributable to expansion in new geographic markets and verticals, mainly mobile app distribution.

Web apps and license



H1 2016


H1 2015




$'000


$'000

Revenue



3,007


14,895

Cost of sales



-


(3,550)

Direct sales and marketing costs



-


(3,982)

Segment result



3,007


7,363

Segment margin %



100


49.4

 

As a result of a Board decision at the beginning of 2016, the company has outsourced the monetisation of its web apps platform to a third party. In light of this shift in business model, the Company has ceased its media acquisition in this segment. Revenue in the period is comprised of consideration for license of the platform and its associated technology. This Segment also includes proceeds from a software licence and services agreement between Crossrider and Playtech Software pursuant to the terms of which Crossrider has granted to Playtech Software a license to use certain software modules for Playtech Software's licensees' branded casino software. The agreement's initial term will expire on 18 September 2017.

 

Adjusted EBITDA

Adjusted EBITDA for the six months to 30 June 2016 was $3.5 million (H1 2015: $5.5 million). Adjusted EBITDA is a non-GAAP company specific measure which is considered to be a key performance indicator for the Group's financial performance. It excludes other operating income, share based payment charges and expenses which are considered to be one-off and non-recurring in nature and are excluded from the following analysis:










H1 2016


H1 2015




$'000


$'000

Revenue



28,736


40,799

Cost of sales



(875)


(4,361)

Direct sales and marketing costs



(17,233)


(23,490)

Segment result



10,628


12,948







Indirect sales and marketing costs



(2,390)


(1,720)

Research and development costs



(1,005)


(1,208)

Management, general and administrative cost



(3,763)


(4,504)

Adjusted EBITDA



3,470


5,516

 

Operating loss

 

A reconciliation of Adjusted EBITDA to operating loss is provided as follows:

 










H1 2016


H1 2015




$'000


$'000

Adjusted EBITDA



3,470


5,516

Employee share-based payment charge



(111)


(2,391)

Exceptional and non-recurring costs



(645)


(690)

Depreciation and amortisation



(3,646)


(4,464)

Operating loss



(932)


(2,029)

 

Exceptional and non-recurring costs in H1 2016 comprised non-recurring staff restructuring costs of $0.3 million and $0.3 million one-time onerous contract written off in the period. The decrease in Employee share-based payment charge is due to a reversal of charges from previous periods for employees that left the company during the period.

Loss before tax

 

Loss before tax was $1.1 million (H1 2015: $2.1 million).

 

Loss after tax

 

Loss after tax was $1.2 million (H1 2015: $2.9 million). The tax charge derives mainly from Group subsidiaries residual profits. The Group continues to recognise a deferred tax asset of $0.5 m (H1 2015: $0.7m) in respect of tax losses accumulated in previous years.

 

Cash flow

 










H1 2016


H1 2015




$'000


$'000

Cash flow from operations



2,407


4,288

Exceptional and non-recurring costs



1,734


690

Adjusted cash flow from operations



4,141


4,978

% of Adjusted EBITDA



119%


90%

 

Cash flow from operations was strong at $2.4 million (H1 2015 $4.3 million). Adjusted cash flow from operations after adding back acquisition payments treated as remuneration and payments that are one off in nature, was $4.1 million and this represented an improvement in cash conversion to 119% of adjusted EBITDA from 90% in H1 2015.

 

Tax paid in the period was $0.8 million (H1 2015: $0.2 million).

 

Cash spent in the period on capital expenditure of $0.3 million (H1 2015 $1.3 million) comprises of capitalised development costs. Cash payments in respect of previous acquisitions totalled $1.4 million (H1 2015 $0.6 million).

 

The share buy-back programme, announced in November 2015, returned $1 million to shareholders in the first half of 2016 and $5.1 million in the year to 31 December 2015, returning a total of $6.1 million.

 

As a result, net cash outflow from investing and financing activities was $2.7 million (H1 2015 $1.8 million outflow).

 

Financial position

 

At 30 June 2016 the Group had cash of $70.2 million (31 December 2015: $71.3 million), net assets of $89.4 million (31 December 2015: $ 91.5million) and is debt free. At 30 June 2016 trade receivables were $6.3 million (31 December 2015: $13 million) which represented 44 days outstanding (31 December 2015: 52 days).

 

Moran Laufer

Acting Chief Financial Officer

 

20 September 2016

 

 

Consolidated statement of comprehensive income

For the six months ended 30 June 2016


 

 

Note

Six months ended 30 June 2016

(unaudited)


Six months ended 30 June 2015

(unaudited)



$'000


$'000






Revenue

3

28,736


40,799

Cost of sales


(875)


(4,361)

Gross profit


27,861


36,438






Selling and marketing costs


(19,965)


(25,583)

Research and development costs


(859)


(1,967)

Management, general and administrative costs


(4,323)


(6,453)

Depreciation and amortisation


(3,646)


(4,464)

Total operating costs

4

(28,793)


(38,467)






Operating loss

4

(932)


(2,029)






Adjusted EBITDA (*)

4

3,470


5,516






Employee share-based payment charge


(111)


(2,391)

Exceptional and non-recurring costs

4

(645)


(690)

Depreciation and amortisation


(3,646)


(4,464)

Operating loss

4

(932)


(2,029)






Share of results of equity accounted associates


12


-

Finance income


-


-

Finance costs


(135)


(117)

Loss before taxation


(1,055)


(2,146)

Tax charge


(203)


(808)

Loss for the period


(1,258)


(2,954)

Other comprehensive income:





Total comprehensive income for the period - attributable to owners of the parent


 

(1,258)


 

(2,954)






Basic and diluted earnings per share (cents)

6

(0.9)


(2.0)

 

Adjusted EBITDA is a non GAAP measure. Adjusted EBITDA is a company specific measure which excludes employee share-based payment charges and other operating income and expenses which are considered to be one off and non-recurring in nature.

All results are derived from continuing operations.

Consolidated statement of financial position

As at 30 June 2016



30 June 2016

 

(unaudited)


31 December 2015

(audited)


Note

$'000


$'000






Non-current assets





Intangible assets


16,093


19,254

Property, plant and equipment


810


1,003

Investments in equity accounted associates


823


812

Deferred tax asset


474


716



18,200


21,785

Current assets





Trade and other receivables


9,936


16,280

Cash and cash equivalents


70,175


71,336



80,111


87,616

Total assets


98,311


109,401






Equity





Share capital

5

14


14

Additional paid in capital


130,311


131,287

Retained earnings


(40,929)


(39,791)

Equity attributable to equity holders of the parent


89,396


91,510






Non-current liabilities





Deferred tax liabilities


839


986

Deferred consideration for the acquisition of subsidiary


-


184



839


1,170






Current liabilities





Trade and other payables


7,881


15,316

Deferred consideration for the acquisition of subsidiary


195


1,405



8,076


16,721

Total equity and liabilities


98,311


109,401

 

 

Consolidated statement of cash flows

For the six months ended 30 June 2016



Six months ended 30 June 2016

(unaudited)


Six months ended 30 June 2015

(Unaudited)



$'000


$'000

Cash flow from operating activities





Loss for the period after taxation


(1,258)


(2,954)

Adjustments for:





Amortisation of intangible assets


3,454


4,314

Depreciation of property, plant and equipment


192


150

Tax charge


203


808

Interest expenses


38


59

Share based payment charge


111


2,391

Unrealised foreign exchange differences


-


58

Share of results of equity accounted associates


(12)



Foreign exchange on the translation of non-current assets in foreign currencies


-


-

Operating cash flow before movement in working capital


2,728


4,826

Decrease in trade and other receivables


6,419


2,087

Decrease in trade and other payables


(5,651)


(2,625)

Decrease in other current liabilities


(1,089)


-

Cash flow from operations


2,407


4,288

Tax paid net of refunds


(770)


(180)

Cash generated from operations


1,637


4,108






Cash flow from investing activities





Purchases of property, plant and equipment


-


(167)

Net cash paid on business combination


(1,089)


(602)

Net cash paid on Investment in associates


(350)


-

Capitalisation of development costs


(292)


(1,001)

Net cash used in investing activities


(1,731)


(1,770)






Cash flow from financing activities





Net payment for purchase of own shares


(974)


-

Net cash used in financing activities


(974)


-

Net (decrease)/increase in cash and cash equivalents


(1,068)


2,338






Revaluation of cash due to changes in foreign exchange rates


(93)


(49)

Cash and cash equivalents at beginning of year


71,336


76,041

Cash and cash equivalents at end of year


70,175


78,330

 

Notes

 

1.         General information

The financial information set out in this document is for Crossrider plc (the "Company") and its subsidiary undertakings (together the "Group") in respect of the six months ended 30 June 2016.

 

Crossrider is an internet and media company using marketing technology platforms to prospect, optimize and monetize mobile and web media to its best in class products. Using proprietary technology solutions the Company powers all aspects of an online product and ensures an optimal delivery of superb user experience.

 

The Company specialises in an all-inclusive solution for finding, retaining and re-engaging users- making their activity significantly more relevant, efficient and valuable. Crossrider provides this solution to customers, partners as well as for its own product portfolio.

 

2.         Basis of preparation

These interim consolidated financial statements have been prepared using accounting policies based on International Financial Reporting Standards (IFRS and IFRIC Interpretations) issued by the International Accounting Standards Board ("IASB") as adopted for use in the EU. They do not include all disclosures that would otherwise be required in a complete set of financial statements and should be read in conjunction with the 31st December 2015 Annual Report. The financial information for the half years ended 30th June 2016 and 30th June 2015 does not constitute statutory accounts and both periods are unaudited.

 

The annual financial statements of Crossrider plc are prepared in accordance with IFRS as adopted by the European Union. The comparative financial information for the year ended 31st December 2015 included within this report does not constitute the full statutory Annual Report for that period. The statutory Annual Report and Financial Statements for 2015 have been filed with the Registrar of Companies. The independent Auditors' Report on that Annual Report and Financial Statement for the year ended 31st December 2015 was unqualified, did not draw attention to any matters by way of emphasis.

 

After making enquiries, the directors have concluded that the Group has adequate resources to continue operational existence for the foreseeable future. Accordingly, they continue to adopt the going concern basis in preparing the half-yearly consolidated unaudited financial statements.

 

Except for the restatement of segmental information in line with a change in the management reporting system as set out in note 3 the same accounting policies, presentation and methods of computation are followed in these interim consolidated financial statements as were applied in the Group's 2015 annual audited financial statements. In addition, the IASB have issued a number of IFRS and IFRIC amendments or interpretations since the last Annual Report was published. It is not expected that any of these will have a material impact on the Group. The Board of Directors approved this interim report on 20th September 2016.

 

3.         Segmental information

Segment revenues and results

During the period the Group changed its management reporting system and now operates three reportable segments:

 

·       App Distribution - comprising the Group's app distribution platform;

·       Media - comprising the Group's ad network activities and associated technology platforms; and

·       Web Apps and License - comprising revenue generated from monetising web apps and licencing the associated technology

 

Consequently, the prior year segmental results have been restated.

 

Six months ended 30 June 2016


App

Distribution


 

Media


 

Web Apps and License


 

Total



$'000


$'000


$'000


$'000










Revenue


18,211


7,518


3,007


28,736

Cost of sales


(875)


-


-


(875)

Direct sales and marketing costs


(11,459)


(5,774)


-


(17,233)

Segment result


5,877


1,744


3,007


10,628

Central operating costs








(7,158)

Adjusted EBITDA(1)








3,470










Depreciation and amortisation








(3,646)

Employee share-based payment charge








(111)

Exceptional and non-recurring costs








(645)

Operating loss








(932)

Share of results of associates








12

Finance costs








(135)

Loss before tax








(1,055)

Taxation








(203)

Loss after taxation








(1,258)

 

 

Six months ended 30 June 2015


App

Distribution


 

Media


 

Web Apps and License


 

Total



$'000


$'000


$'000


$'000










Revenue


19,055


6,849


14,895


40,799

Cost of sales


(811)


-


(3,550)


(4,361)

Direct sales and marketing costs


(14,142)


(5,366)


(3,982)


(23,490)

Segment result


4,102


1,483


7,363


12,948

Central operating costs








(7,432)

Adjusted EBITDA(1)








5,516

Depreciation and amortisation








(4,464)

Employee share-based payment charge








(2,391)

Exceptional and non-recurring costs








(690)

Operating loss








(2,029)

Finance costs








(117)

Loss before tax








(2,146)

Taxation








(808)

Loss after taxation








(2,954)

 

 

 

4.         Operating loss

 

Adjusted EBITDA

Adjusted EBITDA is calculated as follows:




Six months ended 30 June 2016


Six months ended 30

June 2015




$'000


$'000







Operating loss



(932)


(2,029)

Depreciation and amortisation



3,646


4,464

Employee share-based payment charge



111


2,391

Exceptional and non-recurring costs:






      Non-recurring staff and restructuring costs



645


82

      Expensed contingent consideration



-


608

Adjusted EBITDA



3,470


5,516

 

Operating costs

Operating costs are further analysed as follows:

 


Six months ended 30 June 2016

Adjusted

$'000

Six months ended 30 June 2016

Total

$'000


Six months ended 30 June 2015

Adjusted

$'000

Six months ended 30 June 2015

Total

$'000







Direct sales and marketing costs

17,233

17,233


23,490

23,490

Indirect sales and marketing costs

2,390

2,732


1,720

2,093

Selling and marketing costs

19,623

19,965


25,210

25,583

Research and development costs

1,005

859


1,208

1,967

Management, general and administrative cost

3,763

4,323


4,504

6,453

Depreciation and amortisation

392

3,646


303

4,464

Total operating costs

24,783

28,793


31,225

38,467

 

Adjusted operating costs exclude share based payment charges, exceptional and non-recurring costs and amortisation of acquired intangible assets.

 

5.         Shareholder's equity

 

Ordinary share capital as at 30 June 2016 amounted to $14,000 (30 June 2015: $15,000; 31 December 2015: $14,000).

 

The number of shares in issue as at 30 June 2016 was 148,496,073 (30 June 2015: 148,463,039; 31 December 2015: 148,496,073).

 

During the six months ended 30 June 2016 a total of 1,250,000 of ordinary shares of $0.0001 per value were purchased by the Company for the total cash consideration of $974,503 and are held in treasury at the reporting date (H1 2015: nil, 2015: $5,130,920)

 

6.         Earnings per share

 

Basic loss/earnings per share is calculated by dividing the loss/earnings attributable to ordinary shareholders by the weighted average number of ordinary shares outstanding during the period.

 




Six months ended 30 June 2016


Six months ended 30 June 2015




Cent


Cent







Basic and diluted



(0.9)


(2.0)

Adjusted basic



1.8


2.6

Adjusted diluted



1.8


2.5

 

Adjusted earnings per share is a non-GAAP measure and therefore the approach may differ between companies. Adjusted earnings have been calculated as follows:




Six months ended 30 June 2016


Six months ended 30 June 2015




$'000


$'000







Loss for the period



(1,258)


(2,954)







Post tax adjustments:






Employee share-based payment charge



111


2,327

Exceptional and non-recurring costs



641


675

Amortisation on acquired intangible assets



3,106


3,794

Adjusted profit for the year



2,600


3,842

 




Number


Number

Denominator - basic:






Weighted average number of equity shares for the purpose of earnings per share



141,044,650


148,463,039







Denominator - diluted






Weighted average number of equity shares for the purpose of diluted earnings per share



141,313,719


152,780,605







 

The diluted denominator has not been used where this has anti-dilutive effect. Basic and diluted loss per share are therefore the same for reporting purposes.

 

The difference between weighted average number of Ordinary shares used for basic earnings per share and the diluted earnings per share is 269,069 (H1 2015: 4,317,566) being the effect of all potentially dilutive Ordinary shares derived from the number of share options granted to employees.7.    

7.                Related party transactions

 

The Group is controlled by Unikmind Holdings Limited incorporated in British Virgin Islands, which owns 73% of the Company's shares. The controlling party is the Solidinsight Trust, established under the laws of the Isle of Man. Mr. Teddy Sagi is the sole ultimate beneficiary of the Solidinsight Trust.

 

During the period the following transactions were carried out with related parties:

 


Six months ended 30 June 2016


Six months ended 30 June 2015


$'000


$'000





Revenue from common controlled company

2,094


1,946

Other operating income earned on recharged costs



10

Technical support services to end customers provided by common controlled company

(1,077)


(416)

Payment processing services provided by common controlled company

(194)


(497)


823


1,043

 

 

8.         Cautionary statement

 

This document contains certain forward-looking statements relating to Crossrider plc ('the Group'). The Group considers any statements that are not historical facts as "forward-looking statements". They relate to events and trends that are subject to risk and uncertainty that may cause actual results and the financial performance of the Group to differ materially from those contained in any forward-looking statement. These statements are made by the directors in good faith based on information available to them and such statements should be treated with caution due to the inherent uncertainties, including both economic and business risk factors, underlying any such forward-looking information.


This information is provided by RNS
The company news service from the London Stock Exchange
 
END
 
 
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