Half-year Report

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	[phone] via Bell Pottinger
Shore Capital Bidhi Bhoma Toby Gibbs	[phone]
Bell Pottinger David Rydell James Newman Sam Cartwright Vrudhi Patel	[phone]

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 20^th 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.

 

END

 

 

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