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Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
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Kape Technologies Plc | LSE:KAPE | London | Ordinary Share | IM00BQ8NYV14 | ORD USD0.0001 |
Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
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0.00 | 0.00% | 285.00 | 279.00 | 285.00 | 0.00 | 01:00:00 |
Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
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0 | 0 | N/A | 0 |
TIDMCROS
RNS Number : 0702S
Crossrider plc
15 March 2016
Crossrider plc
("Crossrider," the "Company" or the "Group")
Final results for the year ended 31 December 2015
A progressive year with strong organic growth in mobile
Crossrider (AIM:CROS) the creator of digital advertising platforms specialising in monetising web and mobile media through the use of big data, announces its audited results for the year ended 31 December 2015.
Financial highlights
-- Revenue up $13.5 million to $84.6 million, (2014: $71.1 million) -- Adjusted EBITDA (1) down $2.2 million to $10.1 million, (2014: $13.3 million) -- Adjusted cash from operations (1) down $7.7 million to $6.9 million, (2014: $14.6 million) -- Adjusted basic EPS(2) 4.8 $ cents per share, (2014: 9.5 $ cents per share)
-- Strong balance sheet with no debt and $71 million of cash balances at the period end (equivalent to 34.8 pence per share as at 14 March 2016)
(1) 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 certain expenses which are considered to be one off and non-recurring in nature. (See reconciliation in the Chief Financial Officer's report on page 4)
(2) 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
-- 99 per cent organic revenue growth from Mobile
-- Decline in revenue from Web apps platform offset by strong performance of App distribution platform
-- Integration of technology across web and mobile and resulting mobile margin improvement -- Investment of $0.9m in programmatic video technology company Clearvelvet
Commenting on the results, Don Elgie, Executive Chairman of Crossrider, said:
"Whilst not without its challenges, primarily at the wider industry level, 2015 was a progressive year for Crossrider in which it successfully focussed resources on mobile platforms and delivered strong margins in line with expectations. The investments made during the year in mobile and video reflect Crossrider's strengths as a technology company and the Board looks forward to the future with confidence. We continue to search for accretive acquisitions and are evaluating a number of opportunities."
Outlook
Crossrider looks to 2016 with confidence and excitement. The Directors expect the current strength of the App distribution business and continued investment in new technology to offset the decline in revenue from the Web apps platform and Group EBITDA in 2016 to be in line with 2015. The balance sheet remains strong and the Board is confident in the Group's ability to execute accretive acquisitions. The Board looks forward to welcoming a new Chief Executive in due course.
- Ends -
For further information contact:
Crossrider plc +44 (0) 20 3772 2496 Don Elgie, Executive Chairman via Bell Pottinger Mark Carlisle, Chief Financial Officer Bell Pottinger David Rydell Sam Cartwright +44 (0) 20 3772 2496 Shore Capital Bidhi Bhoma Toby Gibbs +44 (0) 20 7408 4090
About Crossrider
Crossrider is a creator of digital advertising platforms specialising in monetising web and mobile media through the use of big data. The Company's web and mobile platforms power ad networks, agencies and direct publishers and enable the delivery of relevant digital advertising through the analysis of big data: making online marketing significantly more efficient and cost effective.
The Group operates web and mobile platforms which generate big data, enabling the development of a proprietary ad serving algorithm and engine that can extract value from this data to deliver relevant advertising to targeted users.
Crossrider's vision is to become the de facto standard platform for delivering relevant web and mobile adverts to billions of people, powering the next generation of digital advertising.
www.crossrider.com
Executive Chairman's review
Overview
The past year has been a year of maturity and progress for Crossrider as the Board readies the Group for its next chapter of growth. The year has been characterised by Crossrider's proven prudent financial management and operational discipline. The Board oversaw the continued refocusing of the business model by investing in the growth of mobile revenue to deliver organic growth. In addition, Crossrider continues to remain methodical in its acquisition strategy with investment in new technology. The deployment of capital remained high on the Board's agenda in 2015 as the share buy-back programme, announced in November 2015 and completed in January 2016 returned $6.1 million to shareholders ($5.1 million in the year to 31 December 2015).
In 2015 Crossrider's revenues increased by 19 per cent to $84.6 million. Adjusted EBITDA decreased by 28 per cent to $10.1 million and was in line with management's expectations reflecting the Group's strategy to invest for future growth whilst continuing to generate adjusted EBITDA and operating cash-flow. Adjusted operating cash-flow was $6.9 million representing 69 per cent of Adjusted EBITDA.
As previously communicated the Group has continued to focus more of its resources on its mobile growth strategy. As a result of a significant scaling back of the investment in our Web apps development platform following a review of this business and its prospects, the second half of the year saw an expected decline in the number of Web apps distributed and this is reflected in the key performance indicators monitored by the Group. During December 2015, Crossrider delivered ads to 130 million users, 70 million fewer than in December 2014. The number of daily available ad spaces on Crossrider's platforms increased to 7.0 billion in December 2015, most of which were in mobile, from 5.3 billion in December 2014.
Within the web and desktop division, the decline in revenue from monetising Web apps through advertising has been offset by the success of the Desktop apps distribution business and significant growth in the number of Desktop apps distributed in 2015. However, our current forecasts indicate revenue decline from the Web apps development platform will continue more rapidly in 2016 than initially anticipated. As a result, the Group has recognised an impairment charge of $9.1 million against the carrying value of the assets on the balance sheet associated with the Web apps platform.
In the second half of 2015, the Group made further progress in executing its acquisitive growth strategy by investing in early stage programmatic video technology.
I close the year as Executive Chairman following the announcement of the resignation of Chief Executive Officer Koby Menachemi who will leave at the end of March 2016. The Board would like to take this opportunity to reiterate its thanks to Koby for his tenure. The recruitment process for the Chief Executive required to lead Crossrider into its next stage of growth is well underway.
Strategy
Organic growth strategy
The Group's organic growth strategy has continued to focus on mobile, where the Board considers the greatest growth opportunity lies and where it believes Crossrider has the greatest competitive advantage. Crossrider's revenue from mobile grew organically by 99 per cent in 2015 and now represents 26 per cent of total revenue up from 12 per cent in 2014.
Crossrider's technology platforms
Crossrider's development team continues to seek opportunities to enhance the Group's organic growth from its existing technology platforms. These primarily arise from the Group's expertise in media buying analytics, insights and real time optimization in addition to campaign monitoring, planning and forecasting.
In July, Crossrider launched its new mobile affiliate network, Adooya. This will drive additional data across Crossrider's platforms as well as benefit from significant revenue synergies with its existing mobile Ad Network DefinitiMedia.
Acquisition strategy
Crossrider continues to evaluate a number of potential and significant acquisitions that meet its stated acquisition criteria:
-- Relevant and unique or disruptive technologies that can be leveraged via Crossrider's existing data and platforms across ad-tech, e-commerce and marketing technology;
-- Demonstrable track record of sustainable growth and profitability; and -- High quality teams.
In order to drive value in investment in new technology, the Group invested in September 2015 in early stage programmatic video technology with a $0.9 million investment for 16.67 per cent of Clearvelvet Trading Ltd ("Clearvelvet").
Mobile
The mobile division was acquired by the Group in May 2014. It generated revenues of $22.2 million in 2015, which represents growth of 163 per cent over 2014, including organic growth of 99 per cent. In 2015 Mobile revenues represented 26 per cent of total revenues.
Crossrider's mobile division operates its own white label Mobile media management platform (Ajillion) and its own Mobile Ad Network (DefinitiMedia).
During the period, Crossrider has focussed on enhancing the performance and expanding the reach of its "built for mobile" Ajillion platform and ad exchange which in December 2015 received over 6 billion ad requests daily, compared with 4 billion at December 2014.
Crossrider has also driven the efficient scaling of its DefinitiMedia Ad-Network through the integration of its technology across the web and mobile, increasing through automation the number of campaigns that can be run by an individual account manager.
Crossrider's new affiliate network, launched in July 2015, will build on its existing mobile offering and expand into new verticals.
Web and desktop
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Crossrider's Web and desktop division comprises its Web apps development and Desktop apps distribution platforms. These platforms use Crossrider's data analysis technology and Business Intelligence dashboards to allow publishers and advertisers to easily view and understand their traffic sources. Data analysis of KPIs, such as installation success rate, number of active users, and type of browser can be used to model potential revenue over a specific campaign period.
This has been a year of consolidation for the Web and desktop operations. In 2015 this division generated revenues of $62.4 million, a decrease of 1 per cent compared to 2014.
As a result of increased competition in the industry the number of daily new installations generated by Crossrider's proprietary Web apps development platform decreased to 0.4 million in December 2015 compared to 1.6 million daily new installations in December 2014. Crossrider expects revenue from Web apps to continue to decline significantly in 2016 as the Group continues to focus on utilising the underlying technology and intellectual property by integrating the expertise across Crossrider's other businesses, particularly mobile. The $9.1 million impairment charge against the assets associated with the Web apps platform, announced today, also reflects the Group's increased focus on mobile and the impact this is anticipated to have on the Web app business.
The Desktop apps distribution platform continued its momentum from its strong performance in 2014 driven by the strong performance of the Group's PC repair utility provider, Reimage. Reimage uses a repository of software "spare parts" by replacing faulty files with new versions. In 2015, Reimage software was installed on over 44 million devices (2014: over 16 million), repairing over 1.3 million PCs, reflecting the high quality of this product. On average, 58,000 subscriptions were sold per month in 2015 (2014: 33,000).
The strategy for the Web and desktop division is to continue to drive growth in the number of apps distributed on the Desktop app distribution platform and to increase ROI through the use of better data analysis as well as the addition of innovative and complementary new products.
People
On behalf of our management team I would like to thank all our people for their dedication and hard work during the past year. As a result of the hard work done to integrate Crossrider's technology and teams across platforms the Group will move forward on a much stronger footing.
Outlook
Crossrider looks to 2016 with confidence and excitement. The Directors expect the current strength of the App distribution business and continued investment in new technology to offset the decline in revenue from the Web apps platform and Group EBITDA in 2016 to be in line with 2015. The balance sheet remains strong and the Board is confident in the Group's ability to execute accretive acquisitions. I look forward to welcoming a new Chief Executive and will be proud to hand over the reins of a Company in a strategically strong position.
Don Elgie
Chairman
14 March 2016
(1) Group adjusted EBITDA is calculated as operating loss before depreciation, amortisation, other operating income, exceptional and non-recurring costs and employee share-based payment charges and impairment of intangible assets. The Directors believe that this provides a better understanding of the underlying trading performance of the business. A reconciliation from Group operating profit to Group adjusted EBITDA is included in the Chief Financial Officers' review below.
Chief Financial Officer's review
Revenue for the year was $84.6 million, (2014: $71.1 million). Adjusted EBITDA was $10.1 million, (2014: $13.3 million). Cash generated from operations for the year was $5.9 million, (2014: $9.3 million); after adjusting for one-off and non-recurring items adjusted cash flow from operations (as set out in the cash flow section below) was $6.9 million, (2014: $14.6 million). The Group has a strong balance sheet with cash of $71.3 million at 31 December 2015 (31 December 2014 $76.0 million) and is debt free.
Revenue
2015 2014 $'000 $'000 Web and Desktop 62,409 62,647 Mobile 22,226 8,459 ------ ------ Revenue 84,635 71,106 ====== ======
Web and desktop revenue decreased by $0.2 million (1 per cent) to $62.4 million in 2015 driven by the decline Web Apps monetised by advertising and offset by the increase in revenue derived from the number of Desktop Apps distributed.
Revenue from Mobile activities in 2015 totalled $22.2 million and was generated by the Ajillion and DefinitiMedia businesses that were acquired in May 2014. Organic revenue growth from Mobile was $11.1 million (99 per cent) in 2015.
Segment result
The Group operates two reportable segments: Web and Desktop, and Mobile. The division between the two segments is based upon the channel of delivery of product or service. Segment result has 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.
2015 2014 Web and desktop $'000 $'000 Revenue 62,409 62,647 Cost of sales (7,388) (13,178) Direct sales and marketing costs (33,796) (25,609) -------- -------- Segment result 21,225 23,860 -------- -------- Segment margin % 34% 38%
As a result of the change in the revenue mix of products sold within the Web and Desktop segment towards lower margin Desktop Apps and a decrease in the volume of advertising sold on the higher margin Web Apps development platform, traffic acquisition costs have increased resulting in a decrease in the overall Web and Desktop segment margin.
2015 2014 Mobile $'000 $'000 Revenue 22,226 8,459 Direct sales and marketing costs (16,927) (7,203) -------- ------- Segment result 5,299 1,256 -------- ------- Segment margin % 24% 15%
Mobile margins have increased as a result of the increased scale of the business and are expected to remain at their current levels.
Adjusted EBITDA
Adjusted EBITDA for the year ended 31 December 2015 was $10.1 million (2014: $13.3 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. Adjusted EBITDA is calculated as follows:
2015 2014 $'000 $'000 Operating loss (13,802) (7,497) Depreciation and amortisation 9,370 8,917 Other operating income - (294) Employee share-based payment charge 3,407 6,787 Exceptional and non-recurring costs 1,957 5,431 Impairment of intangible assets 9,132 - -------- ------- Adjusted EBITDA 10,064 13,344 ======== =======
Other operating income relates to the net income, (gross income recharged less related expenses) earned from services terminated in 2014.
Exceptional and non-recurring costs in 2015 comprise non-recurring staff costs of $0.1 million, (2014 $0.4m) and payments of contingent consideration treated as remuneration in respect of the Ajillion and DefinitiMedia acquisitions expensed through the income statement of $1.9 million (2014: $0.9 million).
Impairment of intangible assets
The revenues of the Groups' Web and desktop segment are driven by Crossrider's Desktop App distribution platform and its Web Apps development platform which are considered to be separate cash generating units ("CGU's") for the purpose of assessing the carrying values of the intangible assets of the Group. During 2015, competition within the Web Apps industry increased significantly. In addition, the Group's development and account management resources were shifted away from its Web Apps development platform to its mobile platforms to focus on achieving the Groups' strategy of growing revenue from mobile. This resulted in a significant decrease in the number of Web App installations in Q4 2015. Consequently, management now forecasts a significant reduction in advertising volumes from Web Apps in 2016. The carrying value of the intangible assets of the Web Apps development platform CGU has therefore been re-assessed resulting in an impairment charge of $9.1 million being recognised in the year (2014: $nil).
Loss before tax
Loss before tax was $14.7 million (2014: $11.7 million).
Loss after tax
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Loss after tax was $17.6 million (2014: $11.8 million). The Group continues to recognise a deferred tax asset of $0.7 million (2014: $0.5 million) in respect of tax losses accumulated in previous years. The tax charge of $2.9m includes the recognition of a $2.2 million tax charge arising as a result of the change in previously established corporation tax guidance in Israel relating to tax positions taken in respect of the 2013 and 2014 financial years. Of the $2.2 million charge $1.2 million has been agreed and settled in relation to profits generated in Israel in 2013, which have subsequently been deemed to be taxable as a result of recently revised OECD guidance and application. The remaining $1.0 million has arisen from a retrospective change to the cost plus transfer pricing methodology (which was established and ratified by Israeli case law in 2015) on share option charges incurred by subsidiaries in Israel in 2014.
Cash flow
2015 2014 $'000 $'000 Cash flows from operations 5,910 9,314 Exceptional and non-recurring costs 995 5,020 Other operating income - 253 Adjusted cash flows from operations 6,905 14,587 ----- ------ % of Adjusted EBITDA 69% 109% ===== ======
Cash flows from operations was strong at $5.9 million (2014: 9.3 million). Adjusted cash flows from operations was $6.9 million ($14.6 million) and this represented 69 per cent of adjusted EBITDA as a result of investment in working capital during the year (2014: 109 per cent).
Tax paid in the year was $1.8 million (2014: $0.9 million) which includes a one off payment of $1.6 million in respect of the finalisation of the $2.2 million exceptional tax charge set out above.
During the year the Group invested $0.2m in consolidating office locations in Israel, and capitalised development costs of $1.6m. Payments of deferred consideration in respect of the Crossrider, Ajillion and Definiti Media acquisitions totalled $0.9 million. The Group paid $0.5m in respect of its 16.67 per cent investment video technology through Clearvelvet Trading Ltd. As a result, net cash outflow from investing activities was $3.2 million (2014: $11.3 million).
The share buy-back programme, announced in November 2015, returned $5.1 million to shareholders in the year to 31 December 2015. This was completed in January 2016, returning a total of $6.1 million.
Financial position
At 31 December 2015, the Group had cash of $71.3 million and net assets of $91.8 million. The Group is debt free. At 31 December 2015 trade receivables were $13.0 million, (2014: $12.4 million) which represented 52 days outstanding, (2014: 34 days).
Key performance indicators
The Group's key performance indicators ("KPIs"), which are reviewed by management on a regular basis are set out below:
2015 2014 Financial $'000 $'000 Revenue 84,635 71,106 Adjusted EBITDA 10,064 13,344 Cash flows from operations 5,910 9,314 Adjusted cash flows from operations 6,905 14,587 Net assets 91,510 110,812 Non-financial Number Number Headcount 93 132 Average unique monthly users 130 million 200 million
Directors' responsibility statement
We confirm to the best of our knowledge:
1. The Group and Company financial statements, prepared in accordance with IFRSs as adopted by the European Union give a true and fair view of the assets, liabilities, financial position and profit of the Group and Company; and
2. The business review, which is incorporated into the Directors' Report, includes a fair review of the development and performance of the business and the position of the Group and Company, together with a description of the principal risks and uncertainties they face.
The Directors of Crossrider plc are listed in the Group's Annual Report and Accounts for the year ended 31 December 2015. A list of current directors is maintained on Crossrider's website, www.crossrider.com.
By order of the Board,
Don Elgie Mark Carlisle Executive Chairman Chief Financial Officer 14 March 2016 14 March 2016
Consolidated statement of comprehensive income
For the year ended 31 December 2015
2015 2014 Note $'000 $'000 Revenue 2 84,635 71,106 Cost of sales (7,388) (13,178) -------- -------- Gross profit 77,247 57,928 Selling and marketing costs (54,146) (35,894) Research and development costs (3,500) (6,118) Management, general and administrative costs (14,901) (14,790) Depreciation and amortisation (9,370) (8,917) Impairment of intangible assets (9,132) - -------- -------- Total operating costs (91,049) (65,719) Other operating income (*) - 294 Operating loss 3 (13,802) (7,497) Adjusted EBITDA (*) 10,064 13,344 -------- -------- Other operating income - 294 Employee share-based payment charge 6 (3,407) (6,787) Exceptional and non-recurring costs 3 (1,957) (5,431) Depreciation and amortisation (9,370) (8,917) Impairment of intangible assets 10 (9,132) - -------- -------- Operating loss 3 (13,802) (7,497) --------------------------------------- ---- -------- -------- Share of results of equity (38) - accounted associates Finance income 15 49 Finance costs (870) (4,277) -------- -------- Loss before taxation (14,695) (11,725) Exceptional tax charge 4 (2,200) - Tax charge 4 (702) (43) -------- -------- Loss for the year (17,597) (11,768) Other comprehensive income: Foreign exchange differences on translation of foreign operations 1 2 -------- -------- Total comprehensive income for the year - attributable to owners of the parent (17,596) (11,766) ======== ======== Basic earnings per share (cents) 7 (11.9) (10.5) Diluted earnings per share (cents) 7 (11.9) (10.5) -------- --------
(*)Adjusted EBITDA is a non GAAP measure. Adjusted EBITDA is a company specific measure which is calculated as operating loss before depreciation, amortisation, other operating income, exceptional and non-recurring costs, employee share-based payment charges and impairment of intangible assets which are considered to be one off and non-recurring in nature.
Consolidated statement of financial position
As at 31 December 2015
2015 2014 Note $'000 $'000 Non-current assets Intangible assets 10 19,254 35,767 Property, plant and equipment 1,003 1,178 Investments in equity accounted associates 812 - Deferred tax asset 4 716 567 21,785 37,512 -------- -------- Current assets Trade and other receivables 16,280 14,100 Cash and cash equivalents 71,336 76,041 87,616 90,141 Total assets 109,401 127,653 ======== ======== Equity Share capital 5 14 15 Additional paid in capital 131,287 136,399 Retained earnings (39,791) (25,602) Equity attributable to equity holders of the parent 91,510 110,812 -------- -------- Non-current liabilities Deferred tax liabilities 4 986 1,283 Deferred consideration for the acquisition of subsidiary 8 184 877 1,170 2,160 -------- -------- Current liabilities Trade and other payables 15,316 13,538 Deferred consideration for the acquisition of subsidiary 8 1,405 1,143 16,721 14,681 -------- -------- Total equity and liabilities 109,401 127,653
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======== ========
The financial statements were approved by the Board and authorised for issue on 14 March 2016.
Don Elgie Mark Carlisle Executive Chairman Chief Financial Officer
Consolidated statement of changes in equity
For the year ended 31 December 2015
Share Additional Retained Total capital paid in capital earnings $'000 $'000 $'000 $'000 At 1 January 2014 10 11,088 (13,121) (2,023) Loss for the year - - (11,768) (11,768) Other comprehensive income: Foreign exchange differences on translation of foreign operations - - 2 2 -------- ---------------- --------- -------- Total comprehensive income for the year - - (11,766) (11,766) Transactions with owners: Share based payments - - 6,787 6,787 Issue of equity share capital 5 125,311 (7,502) 117,814 -------- ---------------- --------- -------- At 31 December 2014 15 136,399 (25,602) 110,812 ======== ================ ========= ======== At 1 January 2015 15 136,399 (25,602) 110,812 ======== ================ ========= ======== Loss for the year (17,597) (17,597) Other comprehensive income: Foreign exchange differences on translation of foreign operations - - 1 1 -------- ---------------- --------- -------- Total comprehensive income for the year - - (17,596) (17,596) Transactions with owners: Share based payments - - 3,407 3,407 Exercise of employee options (note 16) - 18 - 18 Purchase of own shares (note 16) (1) (5,130) - (5,131) -------- ---------------- --------- -------- At 31 December 2015 14 131,287 (39,791) 91,510 ======== ================ ========= ========
Consolidated statement of cash flows
For the year ended 31 December 2015
2015 2014 Note $'000 $'000 Cash flow from operating activities Loss for the year after taxation (17,597) (11,768) Adjustments for: Amortisation of intangible assets 8,974 8,678 Impairment of intangible assets 10 9,132 - Depreciation of property, plant and equipment 396 239 Tax charge 4 2,902 43 Interest income (15) (49) Interest expenses 210 2,825 Share based payment charge 6 3,407 6,787 Share of results of associates 4 38 - Unrealised foreign exchange differences 660 1,452 Operating cash flow before movement in working capital 8,107 8,207 Increase in trade and other receivables (2,529) (8,035) (Decrease)/increase in trade and other payables (631) 8,978 Increase in other current liabilities 963 164 -------- -------- Cash flow from operations 5,910 9,314 Tax paid net of refunds (1,826) (936) -------- -------- Cash generated from operations 4,084 8,378 Cash flow from investing activities Purchases of property, plant and equipment (220) (950) Net cash paid on business combination 8 (902) (9,799) Net cash paid on Investment in associates (500) - Capitalisation of development costs (1,593) (597) -------- -------- Net cash used in investing activities (3,215) (11,346) Cash flow from financing activities Net proceeds on issue of shares - 71,419 Net payment for purchase of own shares (5,131) - Proceeds from borrowings - 6,615 -------- -------- Net cash generated from financing activities (5,131) 78,034 -------- -------- Net (decrease)/increase in cash and cash equivalents (4,262) 75,066 Revaluation of cash due to changes in foreign exchange rates (443) (1,177) Cash and cash equivalents at beginning of year 76,041 2,152 -------- -------- Cash and cash equivalents at end of year 71,336 76,041 ======== ======== 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 financial years ended 31 December 2014 and 2015.
Crossrider is a creator of digital advertising platforms specialising in monetising web and mobile media through the use of big data. The Company's web and mobile platforms power ad networks, agencies and direct publishers and enable the delivery of relevant digital advertising through the analysis of big data: making online marketing significantly more efficient and cost effective.
Basis of preparation
The directors consider that the Group has adequate resources to continue in operational existence for the foreseeable future and that it is therefore appropriate to adopt the going concern basis in preparing its financial statements.
The financial information set out in this document does not constitute the Group's statutory financial statements for the year ended 31 December 2015 or 31 December 2014. The annual report and financial statements for the year ended 31 December 2015 were approved by the Board of Directors on 14 March 2016 along with this preliminary announcement. The financial statements for the year ended 31 December 2015 have been reported on by the Independent Auditor. The Independent Auditor's report on the financial statements for 2015 was unqualified and did not draw attention to any matters by way of emphasis.
The financial information set out in these preliminary results has been prepared using International Financial Reporting Standards (IFRSs) as adopted by the EU. The accounting policies adopted in these preliminary results have been consistently applied to all the years presented and are consistent with the policies used in the preparation of the financial statements for the year ended 31 December 2014. The principal accounting policies adopted are unchanged from those used in the preparation of the statutory accounts for the period ended 31 December 2015. New standards, amendments and interpretations to existing standards, which have been adopted by the Group, have not been listed since they have no material impact on the financial statements.
2. Segmental information
Segment revenues and results
Based on the management reporting system, the Group operates two reportable segments: Web and Desktop, and Mobile. Division between the two segments is based upon the channel of delivery of product or service.
Web and Desktop Mobile Total 2015 2015 2015 $'000 $'000 $'000 Revenue 62,409 22,226 84,635 Cost of sales (7,388) - (7,388) Direct sales and marketing costs (33,796) (16,927) (50,723) --------------- -------- -------- Segment result 21,225 5,299 26,524 Central operating costs (16,460) -------- Adjusted EBITDA(1) 10,064 Depreciation and amortisation (9,370) Impairment of intangible assets (9,132) Employee share-based payment charge (3,407) Exceptional and non-recurring costs (1,957) Operating loss (13,802) Share of results of associates (38) Finance income 15 Finance costs (870) -------- Loss before tax (14,695)
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Taxation (2,902) -------- Profit after taxation (17,597) --------
The impairment of intangible assets charge of $9,132,000 relates to the Web and Desktop segment. After allocating this charge to the Web and Desktop segment, segment result is $12,093,000.
2 Segmental information (continued) Web and Desktop 2014 Mobile Total 2014 2014 $'000 $'000 $'000 Revenue 62,647 8,459 71,106 Cost of sales (13,178) - (13,178) Direct sales and marketing costs (25,609) (7,203) (32,812) --------------- -------- -------- Segment result 23,860 1,256 25,116 Central operating costs (11,772) -------- Adjusted EBITDA(1) 13,344 Depreciation and amortisation (8,917) Other operating income 294 Employee share-based payment charge (6,787) Exceptional and non-recurring costs (5,431) Operating loss (7,497) Finance income 49 Finance costs (4,277) -------- Profit before tax (11,725) Taxation (43) -------- Profit after taxation (11,768) --------
(1) Adjusted EBITDA is a company specific measure which is calculated as operating loss before depreciation, amortisation, other operating income, exceptional and non-recurring costs, employee share-based payment charges and impairment of intangible assets which are considered to be one off and non-recurring in nature as set out in note 6. The Directors believe that this provides a better understanding of the underlying trading performance of the business.
Information about major customers
In 2015 there were no customers contributing more than 10 per cent of total revenue of the Group. In 2014 there was one customer contributing more than 10 per cent of total revenue of the Group. Revenue from this customer was $9,346,000.
Geographical analysis of revenue
Revenue by origin
2015 2014 $'000 $'000 Europe 3,641 7,910 British Virgin Islands 68,300 56,686 Asia 12,694 6,510 ------ ------ 84,635 71,106 ====== ======
Geographical analysis of non-current assets
2015 2014 $'000 $'000 Europe 10,245 25,742 British Virgin Islands 87 69 Asia 9,925 11,134 ------ ------ Total intangible assets and property, plant and equipment 20,257 36,945 ====== ====== 3. Operating loss
Operating loss has been arrived at after charging:
2015 2014 $'000 $'000 Exceptional and non-recurring costs Non-recurring staff costs 95 371 Initial Public Offering costs - 758 Expensed contingent payments arising from business combinations (note 8) 1,862 4,302 ------ ------ 1,957 5,431 ------ ------ Recurring staff costs 13,322 7,983 Auditor's remuneration: Audit 97 92 Other services 20 201 Other operating income, net - 294 Amortisation of intangible assets 8,974 8,678 Depreciation 395 239 Impairment of intangible assets (note 10) 9,132 - Employee share-based payment charge (note 6) 3,407 6,787 Rent payable under operating leases 294 459 ====== ======
Operating costs
Operating costs are further analysed as follows:
2015 2015 2014 2014 Adjusted Total Adjusted Total $'000 $'000 $'000 $'000 Direct sales and marketing costs 50,722 50,722 32,812 32,812 Indirect sales and marketing costs 3,016 3,424 1,728 3,082 --------- -------- --------- -------- Selling and marketing costs 53,738 54,146 34,540 35,894 ------------------------------- --------- -------- --------- -------- Research and development costs 2,539 3,500 3,211 6,118 Management, general and administrative cost 10,906 14,901 6,833 14,790 Depreciation and amortisation 1,048 9,370 364 8,917 Impairment of intangible assets - 9,132 - - --------- -------- --------- -------- Total operating costs 68,231 91,049 44,948 65,719 ========= ======== ========= ========
Adjusted operating costs exclude share based payment charges, exceptional and non-recurring costs, amortisation of acquired intangible assets and impairment of intangible assets.
4. Taxation
The parent company is domiciled, for tax purposes, in both the Isle of Man and the UK. The final tax charge shown below arises partially from the difference in tax rates applied in the difference jurisdictions in which the subsidiaries' jurisdictions.
The tax charge in the period of $2,902,000 includes an exceptional tax charge of $2,200,000 arising as a result of the change in previously established corporation tax guidance in Israel relating to tax positions taken in respect of the 2014 and 2014 financial years. Of the $2,200,000 charge $1,200,000 has been agreed and settled in relation to profits in Israel in 2013, which have subsequently been deemed to be taxable as a result of revised OECD guidance and application. The remaining $1,000,000 has arisen from a retrospective change to the cost plus transfer pricing methodology (which was established and ratified by Israeli case law in 2015) on share option charges incurred by subsidiaries in Israel in 2014. The Group continues to recognise a deferred tax asset of $716,000 (2014: $567,000) in respect of tax losses accumulated in previous years.
The total tax charge can be reconciled to the overall tax charge as follows:
2015 2014 $'000 $'000 Loss before taxation (14,695) (11,725) -------- -------- Tax at the applicable tax rate of 20% (2014: 21%) (2,939) (2,463) Tax effect of Differences in overseas rates 2,233 1,178 Exceptional tax charge 2,200 - Expenses not deductible for tax purposes 1,408 1,259 Deferred tax not recognised on losses carried forward - 68 Tax charge for the year 2,902 43 ======== ======== Analysed as: Deferred taxation in respect of the current year (463) (388) Current tax charge 3,365 431 -------- -------- Tax charge for the year 2,902 43 ======== ======== 4 Taxation (continued)
The group has maximum corporation tax losses carried forward at each period end as set out below:
2015 2014 $'000 $'000 Corporate tax losses carried forward 19,322 14,744 ====== ======
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Details of the deferred tax asset recognised (arising in respect of losses) is set out below:
2015 2014 $'000 $'000 At the beginning of the year 567 444 Recognised in the year due to temporary differences 166 191 Foreign exchange revaluation (17) (68) ----- ----- At the end of the year 716 567 ===== =====
Details of the deferred tax liability recognised (arising from timing differences on intangible valuations on business combinations) is set out below:
2015 2014 $'000 $'000 At the beginning of the year 1,283 - Arising from business combinations - 1,480 Movement in the year due to temporary differences (297) (197) ----- ----- At the end of the year 986 1,283 ===== =====
In addition, the Group has an unrecognised deferred tax asset in respect of the following:
2015 2014 $'000 $'000 Tax losses carried forward 10,729 12,798 ------ ------ 5. Shareholder's equity 2015 2014 Number of Number of Shares Shares Issued and paid up ordinary shares of $0.0001 148,496,073 148,463,039
The issued share capital of the Company on incorporation was 10,000 ordinary share of $1.00 par value.
During the year a total of 33,034 of new ordinary shares of $0.0001 par value were issued for cash in relation to share option schemes resulting in cash consideration of $18,000.
During the year a total of 6,201,423 of ordinary shares of $0.0001 par value were purchased by the Company for a total cash consideration of $5,130,920 and are held in treasury at the reporting date (2014: nil).
The following describes the nature and purpose of each reserve within owner's equity:
Reserve Description and purpose Additional paid in Share premium (i.e. amount subscribed or capital share capital in excess of nominal value) Retained earnings Cumulative net gains and losses recognised in the consolidated statement of comprehensive income 6. Employee share based payments
Options have been granted under the Group's share option scheme to subscribe for ordinary shares of the Company. At 31 December 2015 the following options were outstanding (2014: 13,859,357):
Group Grant date Number of shares under option Subscription price per share Group 1 1 May 2014 3,899,927 $0.001 Group 2 29 May 2014 2,795,690 $0.449 Group 3 29 May 2014 3,805,419 $0.538 Group 4 17 June 2014 19,240 $0.538 Group 5 5 July 2014 70,562 $0.538 Group 7 30 September 2014 2,564,820 $1.662 Group 8 21 April 2015 1,125,500 $1.523 Group 9 18 November 2015 200,000 $0.820 ------------------------------ Total 14,481,158 ==============================
Vesting conditions
Group 1 - Vested following the Initial Public Offering.
Group 2 - 50% at the end of the first year following the grant date. 12.5% on a quarterly basis during 12 quarters period thereafter.
Groups 3-9 - 25% at the end of the first year following the grant date. 6.25% on a quarterly basis during 12 quarters period thereafter.
The total number of shares exercisable as of 31 December 2015 was 8,312,028 (2014: 3,889,927).
6. Employee share based payments (continued)
The weighted average fair value of options granted in the year using the Cox, Ross and Rubinstein's Binomial Model (the "Binomial Model") was $1.67. The inputs into the Binomial model are as follows:
2015 2014 $'000 $'000 Early exercise factor 100%-150% 150%-310% Fair value of Group's stock $0.75-$1.51 $1.157-$1.662 Expected Volatility 60% 60% Risk free interest rate 0.5-1.93% 0.1-2.66% Dividend yield - - Forfeiture rate 4-13% 4-14%
Expected volatility was determined based on the historical volatility of comparable companies.
Forfeiture rate is assumed to be 4-6% for senior management and 13% for other employees.
The risk-free interest rate was estimated based on average yields of UK Government Bonds.
The Group recognised total share based payments relating to equity-settled share based payment transactions as follows:
2015 2014 $'000 $'000 Share-based payment charge 3,407 6,787
Movements in the number of share options outstanding and their related weighted average exercise prices are as follows:
2015 2014 --------------------- --------------------- Weighted Number Weighted Number average of average of exercise options exercise options price price At the beginning of the year $0.577 13,869,357 - - Granted $1.42 1,325,500 $0.577 13,991,477 Lapsed $0.538 (680,665) $0.538 (122,120) Exercised $0.538 (33,034) - - --------- ---------- --------- ---------- At the end of the year $0.66 14,481,158 $0.577 13,869,357 ========= ========== ========= ==========
The options outstanding at 31 December 2015 had a weighted average remaining contractual life of 8.5 years (2014: 9.5 years).
7. 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 year.
2015 2014 cents cents Basic and diluted (11.9) (10.5) Adjusted basic 4.8 9.5 Adjusted diluted 4.6 9.1
Adjusted earnings per share is a non-GAAP measure and therefore the approach may differ between companies. Adjusted earnings have been calculated as follows:
2015 2014 $'000 $'000 Loss for the year (17,597) (11,768) Post tax adjustments: Other operating income - (221) Employee share-based payment charge 3,343 6,656 Exceptional and non-recurring costs 1,941 5,414 Amortisation on acquired intangible assets 8,025 7,812 Impairment of intangible assets 9,132 - Related party loan interest expense - 2,825 Exceptional tax charge 2,200 - Adjusted profit for the year 7,044 10,718 ======== ======== Number Number Denominator - basic: Weighted average number of equity shares for the purpose of earnings per share 147,779,641 112,422,910 Denominator - diluted Weighted average number of equity shares for the purpose of diluted earnings per share 152,107,062 117,889,377
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 4,327,421 being the effect of all potentially dilutive Ordinary shares derived from the number of share options granted to employees
8 Deferred consideration (a) Acquisition of Definiti Media Limited
The consideration for the acquisition of Definiti Media Ltd in May 2014 included $2,489,000 deferred consideration. Of this, $845,000 was repaid during the year ending 31 December 2014 and $746,000 was repaid during the year ending 31 December 2015. The remaining will be repaid during the year ending 31 December 2016.
In addition, $1,427,000, included as part of the acquisition arrangements, has been recognised directly in the income statement during the year ending 31 December 2015 (2014: $713,000) as set out in note 3.
(b) Acquisition of AjillionMax
The consideration for the acquisition of certain assets of AjilionMAX Limited in May 2014 included $654,000 deferred consideration. Of this $104,000 was repaid during the year ending 31 December 2014 and $156,000 was repaid during the year ending 31 December 2015. $189,000 will be repaid during the year ending 31 December 2016 and the remaining will be repaid during the year ending 31 December 2017.
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