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| Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
|---|---|---|---|---|---|
| Rhythmone | LSE:RTHM | London | Ordinary Share | GB00BYW0RC64 | ORD 10P |
| Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
|---|---|---|---|---|---|---|---|---|---|---|
| 0.00 | 0.00% | 169.50 | 168.00 | 171.00 | 0.00 | 01:00:00 |
| Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
|---|---|---|---|---|---|
| 0 | 0 | N/A | 0 |
Dow Jones received a payment from EQS/DGAP to publish this press release.
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RhythmOne PLC (RTHM)
RHYTHMONE PLC ANNOUNCES UNAUDITED FIRST HALF FINANCIAL YEAR 2019 RESULTS
13-Dec-2018 / 07:00 GMT/BST
Dissemination of a Regulatory Announcement, transmitted by EQS Group.
The issuer is solely responsible for the content of this announcement.
RHYTHMONE PLC ANNOUNCES UNAUDITED
FIRST HALF FINANCIAL YEAR 2019 RESULTS
Adjusted EBITDA1 $20.5 Million Improved from $3.1 Million
Board Approved Share Buyback Program
Unified RhythmOne Programmatic Platform Continues to Lead Company Growth
London, England and San Francisco, CA - 13 December 2018 - RhythmOne plc (LSE AIM: RTHM, "Company" or
"Group"), today reports unaudited results for the six months ended 30 September 2018 ("H12019" or "the
Period") as well as announces the approval of a share buyback program and promotion of key executives. The
Company's H12019 conference call will be webcast live at https://investor.rhythmone.com [1] on 13 December
2018 at 9:30AM GMT; 4:30AM EST; 1:30AM PST.
Financial Highlights (Unaudited)
Six Six
months months
to to
30-Sep 30-Sep
2018 2017
(unaud (unaudi Change
ited) ted)
$000 $000 % or $
Revenue 175,47 114,528 53%
5
Gross margin % 45.2% 38.1% 7.1
pts.
Loss before income tax (1,620 (8,286) 6,666
)
Loss for the (2,197 (8,238)
Period )
6,041
Adjusted EBITDA1 20,484 3,057 17,427
Loss per share Cents Cents Cents
Basic and (2.82) (16.63) 15.98
diluted
? Maintained focus on strategic revenue growth, including the acquisition of YuMe that added $58.2M to
revenue;
? Gross margin percentage increased to 45.2% from 38.1% driven by a shift in product mix towards higher
value inventory;
? Achieved a significant reduction in the Loss for the Period and the Loss per share while achieving a
significant increase in profitability on an Adjusted EBITDA1 basis;
? H12019 performance in line with management expectations across key metrics, as follows:
- Total revenues of $175.5M (H12018: $114.5M), up 53% year-over-year
- Adjusted EBITDA1 of $20.5M, an improvement of $17.4M (H12018: $3.1M)
? Invested approximately $3.4M in capital expenditures including capitalized product development to
strengthen infrastructure and improve growth driving product lines.
Operational Highlights
? The RhythmOne Programmatic Platform was consistently ranked in the top tier in quality as measured by
Pixalate's Global Seller Trust Index (June 2018);
? RhythmOne reached 378.4M global uniques as measured by Quantcast (October 2018 / 30-day range) evidencing
strong audience reach;
? The Company saw a significant rise in connected TV ad request volume of approximately 640%
year-over-year, primarily driven by new supply partnerships;
? The Company also saw a strong year-over-year increase in pricing of approximately 54%, driven by the
integration of the YuMe and RadiumOne businesses, enabling enhanced monetization of high-value, high-impact
and data and filtering enhancements across all formats.
? Underlying these highlights, the Company has:
? Completed the unification of the RhythmOne Programmatic Platform and offerings resulting in the
majority of the Company's revenue transacted on the platform;
? Forged or expanded direct client relationships with major US brands such as Procter & Gamble, Amazon,
Starbucks, United Airlines, Pfizer, Merck, Mastercard, and Bank of America;
? Continued strong, long-standing relationships in the Automotive (e.g., General Motors, Honda, Toyota,
Fiat, Subaru, and BMW) and telecommunication (e.g., Sprint, Verizon, and AT&T) sectors;
? Established or strengthened direct relationships with agency holding companies such as IPG, Dentsu,
GroupM, Havas, and Omnicom;
? Signed 162 new supply partners including Accuweather, Buzzfeed, Bell Media, Scripps, Forbes, Nexstar,
Lee Enterprises, Meredith Corp, Purch, and TRONC; and
? Completed integration of the YuMe business including the supply and data management platform (DMP) into
the RhythmOne Programmatic Platform.
Commenting on the results, Mark Bonney, CEO of RhythmOne, said:
"We are pleased to have achieved our objectives for H12019. During the Period, we focused significant effort
on advancing key strategic and financial objectives including the unification of the RhythmOne Programmatic
Platform where today we can say that the majority of our revenue is transacted on the platform. We also
completed the integration of sales and operating teams across the business, made significant improvements in
internal management systems capabilities, and realized significant savings by capitalizing on the synergies
of several acquired businesses all of which, along with the contribution from our acquisition of YuMe just
prior to the start of the fiscal year, allowed us to achieve $20.5 million of profitability on an Adjusted
EBITDA1 basis, a nearly 7X improvement from H12018.
We are proud to have built and scaled the RhythmOne Programmatic Platform that continues to rank in the top
tier in quality (Pixalate's Global Seller Trust Index) and reaches more than 378 million global uniques
(Quantcast), reinforcing RhythmOne's position as an established ad tech leader with significant scale,
cutting edge technology and differentiated, high quality supply. The RhythmOne Programmatic Platform is a
unified programmatic platform that can serve as the infrastructure to integrate strategic acquisitions on
both the demand and supply sides of the value chain, as the industry continues to consolidate. As we move
into the second half of FY2019, we will continue to focus on accelerating growth and driving profitability
through the integration of enhanced capabilities gained through our previous acquisitions. In addition to
revenue scale, the entire management team is intensely focused on driving further efficiency in the business
with the objective of progressive profitability on an Adjusted EBITDA1 basis."
Share Buyback
The Board has approved, subject to required consents and regulatory requirements the implementation of a
share buyback program of up to $10 million. The Company will release full details on the program as soon as
they are finalized.
Key Executive Promotions
As the Company completes the integration of its recent acquisitions and moves into a new stage of
concentrating on scale and profitable growth, the Company is excited to announce the following promotions:
- Jorg Nowak, Chief Revenue Officer (CRO)
- Karim Rayes, Chief Product Officer (CPO)
- Amy Rothstein, Chief Operating Officer (COO)
Commenting on the announcement, Amy Rothstein, COO of RhythmOne, said:
"As we move into our seasonally strongest period for cash generation, we look forward to maximizing
shareholder value through various methods including the Share Buyback Program and other strategic
opportunities. With the unified RhythmOne Programmatic Platform, we are well positioned to take advantage of
growth opportunities both organically and inorganically."
Note:
1) This press release contains references to Adjusted EBITDA. See discussion of this non-GAAP financial
measure below.
Press Contacts for RhythmOne
Analyst and Investor Contact
Mark Bonney
RhythmOne plc
Nomad for RhythmOne Broker for RhythmOne
Grant Thornton UK LLP (Nominated
Adviser)
+44 (0)20 7383 5100
Whitman Howard
(Broker)
+44 (0)20 7659 1234
Philip Secrett
Nick Lovering
Jen Clarke
Hugh Rich
Ben Roberts
Financial Overview
RhythmOne's financial objective for H12019 was revenue scale and improvement in profitability with an
operational focus on fortifying the Company's unified programmatic platform across demand and supply side
business (the "RhythmOne Programmatic Platform" which includes the platform that was formerly marketed as
"RhythmMax") and achieving significant integration of sales, engineering and other operational teams in
connection with acquisitions made by the Company. Performance in H12019 was in line with management
expectations. The Company continues to trade in line with consensus forecast revenue and adjusted EBITDA is
in line with consensus forecast EBITDA.
During the Period, revenue totaled $175.5M compared with $114.5M reported for the half year ended September
2017 (H12018). The Company saw strong revenue growth from its RhythmOne Programmatic Platform and benefited
from the acquisition of RadiumOne completed in June 2017 and YuMe, completed in February 2018. The Company is
realizing the benefits from its investments in technology, strategic packaging of inventory and
agency-focused sales efforts. The RhythmOne Programmatic Platform is the underlying driver of Company growth.
In fact, the full integration of the RhythmOne Programmatic Platform means a substantial portion of our
revenue is transacted on platform.
Cost of revenues of $96.1M in H12019 increased from $70.9M in H12018 and decreased to 54.8% of revenues
compared to 61.9% of revenues in H12018 driven by a shift in product mix towards higher value inventory.
Operating expense for H12019 was $80.3M compared with $54.9M in H12018, a 46% increase driven by the
additional operating expense from the acquisitions of YuMe and RadiumOne and exceptional costs driven by
restructuring related charges partially offset by savings generated through integration efforts during the
Period. The Company incurred a Loss for the Period of ($2.2M) in H12019, a $6.0M improvement from H12018.
Adjusted EBITDA1 for H12019 was $20.5M compared with $3.1M in H12018.
The Company had a Loss for the Period of ($2.2M) in the Period as compared to ($8.2M) in the comparable
period in Fiscal 2018. The Company improved Adjusted EBITDA1 in H12019 by $17.4M as compared to H12018. Both
the improvement in Loss for the Period and Adjusted EBITDA1 were fueled by the growth of the historical
RhythmOne business, the profitability of YuMe and the significant synergies realized from our integration
efforts.
RhythmOne's cash and cash equivalents as at 30 September 2018 totaled $22.0M compared to $37.3M at 31 March
2018. The decrease of $15.3M during the Period was primarily driven by $25.9M of cash used for movements in
trade receivables, payables, and accrued liabilities, which includes restructuring and exceptional costs of
$3.6M. Additionally, $5.7M was used for investments in platform development, capital investments and payments
on equipment leases. These uses of cash were offset by $16.5M of operating cash flows before movements in
working capital.
The principal risks and uncertainties affecting the Group have not changed since those disclosed in the
annual report for the year ended 31 March 2018.
Adjusted EBITDA1
This financial measure does not have any standardized meaning prescribed by IFRS and is therefore referred to
as a non-GAAP measure. Adjusted EBITDA is defined as loss for the period, adjusted to exclude finance income
and expense, taxation, depreciation and amortization, share based payments, exceptional items, which include
acquisition related costs, restructuring and severance costs, settlement of litigation, fair value
adjustments and unrealized foreign exchange gain and loss. Provided below is a reconciliation of Adjusted
EBITDA to Loss for the Period, the most directly comparable IFRS financial measure.
RhythmOne's management believes that Adjusted EBITDA provides useful information to investors in
understanding and evaluating the operating results of RhythmOne in the same manner as management and the
RhythmOne board of directors because it excludes the impact of exceptional items in profit from operations,
which have less bearing on the routine operating activities of RhythmOne, thereby enhancing users'
understanding of the underlying business performance. RhythmOne's management also believes that Adjusted
EBITDA provides information that enables investors to better compare RhythmOne's business performance across
periods.
This non-IFRS measure is not necessarily comparable to similarly titled measures of other companies, and
Adjusted EBITDA should not be viewed as a substitute for, or superior to, loss for the period prepared in
accordance with IFRS as a measure of RhythmOne' s profitability or liquidity. Some of the limitations of
Adjusted EBITDA are:
? Although depreciation and amortization are non-cash charges, the assets being depreciated and amortized
may have to be replaced in the future, and Adjusted EBITDA does not reflect cash capital expenditure
requirements for such replacements or for new capital expenditure requirements;
? Adjusted EBITDA does not reflect changes in, or cash requirements for, RhythmOne's working capital needs;
? Adjusted EBITDA does not consider the potentially dilutive impact of equity-based compensation;
? Adjusted EBITDA does not reflect tax payments that may represent a reduction in cash available to
RhythmOne; and
? Other companies, including companies in RhythmOne's industry, may calculate Adjusted EBITDA differently,
which reduces its usefulness as a comparative measure.
Users of this financial information should consider the types of events and transactions for which
adjustments have been made.
The following table is a reconciliation of Adjusted EBITDA to Loss for the Period:
ADJUSTED EBITDA SIX MONTHS TO SIX MONTHS TO
30 SEPTEMBER 30 SEPTEMBER
2018 2017
(unaudited) (unaudited)
$000's $000's
Loss for the Period (2,197) (8,238)
Adjustments:
Finance income (4) (232)
Finance expense 741 141
Income tax expense 577 (48)
/ (benefit)
Depreciation and 15,620 7,738
amortization
Share based 650 641
payments
Exceptional items 3,609 3,695
Unrealized foreign 1,488 (640)
exchange loss /
(gain)
Total adjustments 22,681 11,295
Adjusted EBITDA 20,484 3,057
Operational KPIs
Comparative operating metrics are outlined below:
Percentage of revenue by format:
H12018 H22018 H12019
Revenue
Desktop 67% 55% 37%
Mobile 33% 34% 36%
ATV 0% 11% 27%
The Company saw a significant rise in Revenue of 53% year-over-year in part driven by growth on Mobile and
Advanced Television, with approximately 36% of revenue coming from Mobile and 27% coming from Advanced
Television. The Company also saw a strong year-over-year increase in pricing of approximately 54%, driven by
the integration of the YuMe and RadiumOne businesses, enabling enhanced monetization of high-value,
high-impact and data and filtering enhancements across all formats.
Market Background
The Company's product investments during the Period were consistent with key industry growth vectors.
Programmatic trading is now well established as the primary buying mechanism for digital advertising.
eMarketer projects that 82.5% of total digital display ad spend in the US will be executed through
programmatic channels in 2018, as will 81.0% of total digital video ad spend (eMarketer Forecasts, October
2018). The programmatic growth trend points to a significant shift in how online advertising is being bought
and sold. No longer are advertisers buying ads on specific websites as a proxy for audience segments; rather,
they are buying actual audiences, across connected devices and ad formats, based on measurable data and in
real time. Furthermore, eMarketer projects US digital video ad spend will grow from $27.82B in 2018 to
$33.56B in 2019, with connected TV as a main driver, growing from $8.2B in 2018 to $13.3B in 2019. This trend
is explained by the shift of linear television advertising budgets to digital due to decreasing Linear TV
subscribers. Linear TV media ad spend is expected to decrease from 31% to 24% of total marketing budget over
the next 5 years.
Growth Drivers
The online advertising industry is highly competitive and fragmented. As parts of the ecosystem combine and
the value chain is streamlined, RhythmOne expects the industry to be characterized by fewer, dominant, better
integrated players that are able to deliver material value to both demand and supply sides of the value
chain. In order to drive sustainable competitive advantage, the Company has focused on developing our
RhythmOne Programmatic Platform which is a full-stack, end-to-end unified programmatic platform with a number
of key differentiators:
? Scale. Significant audience reach across devices and formats
? Efficiency. End-to-end stack that disintermediates the chain and creates margin efficiency
? Performance. Unique audiences and inventory packages that guarantee performance KPIs
? Quality. Proprietary brand safety technology, RhythmGuard
? Data-Powered. Analytics tools that allow advertisers to activate and amplify their first-party data
To support this, the Company has identified key areas of investment to drive ongoing growth within this new
landscape:
1) Unified RhythmOne Programmatic Platform;
2) Unique, Data-driven Audience Segments; and
3) Emerging platforms such as connected and addressable TV ("Advanced TV") and influencer marketing.
1) Unified RhythmOne Programmatic Platform
In H12019, RhythmOne continued to grow and enhance its unified, multi-channel, multi-format programmatic
platform. Since its inception as "RhythmMax," the RhythmOne Programmatic Platform has consistently maintained
one of the largest supply footprints in the industry and, following the acquisitions of RadiumOne and YuMe,
now reaches 378.4M global uniques as measured by Quantcast (October 2018 / 30-day range) - affording access
to quality, cross-device, multi-format advertising inventory at scale and driving audience reach. Moreover,
the platform continued to achieve benchmark financial performance. Through the RhythmOne Programmatic
Platform, the Company has unified the entire supply side of the value chain, streamlining interactions
between advertisers and consumers, and enhancing the efficiency and effectiveness of online advertising
campaigns. With a complete, end-to-end technology stack, significant scale and quality inventory, RhythmOne
is positioned to be a viable independent alternative to "walled garden" platforms.
During the Period, RhythmOne integrated its platform with 162 new supply partners including Accuweather,
Buzzfeed, Bell Media, Scripps, Forbes, Nexstar, Lee Enterprises, Meredith Corp, Purch, and TRONC,
strengthening its base of high-value supply. It also formed new partnerships with key supply and demand
platforms such as Amazon UAM and Tremor video DSP. Simultaneously, the Company established and renewed direct relationships with Agency Holding Companies such as IPG, Dentsu, GroupM, Havas, and Omnicom, and attracted new and repeat advertisers in the US, including Procter & Gamble, Amazon, Starbucks, United Airlines, Pfizer, Merck, Mastercard, Bank of America, General Motors, Honda, Toyota, Fiat, Subaru, BMW, Sprint, Verizon, and AT&T. During H12019 the Company undertook an evaluation of every geographic area that the Company was operating in following its recent acquisitions. After reviewing, it was determined that certain of those geographies could not attain sustainable profitability without substantial investment and the Company made the decision to invest in geographies and business areas that would provide better growth opportunities and return on investment. Internationally, the Company now maintains offices in France, Singapore, Mexico, and Chile after closing offices in Italy, Spain, UK, and Australia. During H12019, the Company continuously enhanced its proprietary brand safety filtering technology, RhythmGuard, which eliminates suspicious and underperforming traffic before it reaches the marketplace - improving ROI for advertisers and maximizing yield for quality publisher partners. In response to this acute industry issue, RhythmOne took steps to package its supply based upon certain KPIs that align with advertisers' campaign objectives. Specifically, the Company has developed private marketplace offerings that enhances advertiser performance focused on KPIs such as viewability and verified inventory to drive premium demand. These offerings allow advertisers to access curated inventory that meets the strictest quality and/or viewability standards, letting brands and agencies focus instead on campaign optimization and achieving the best possible return on investment. Complementing its RhythmGuard brand safety initiative, RhythmOne also partnered with leading viewability and verification vendors, including White Ops, Integral Ad Science, DoubleVerify, Moat and Pixalate, whom the Company believes will be instrumental in helping to establish common standards for the industry. As a result, RhythmOne continued to be ranked in the top tier in quality according to Pixalate's Global Seller Trust Index (June 2018). RhythmOne remains committed to providing the highest levels of quality assurance to its advertising partners. 2) Unique, Data-driven Audience Segments In addition to platform investments in the RhythmOne Programmatic Platform, the Company sought to distinguish its supply footprint by offering unique, owned, controlled and first-look audiences, as well as data-driven audience segments. The acquisitions of RadiumOne and YuMe further supported the audience initiative. Through these acquisitions, the Company gained access to a leading data-driven marketing platform, unique consumer insights, audience segmentation and targeting technology, and premium supply & demand relationships. Specifically, RadiumOne's offerings included a performance-focused data management platform (DMP), and a demand side platform (DSP). YuMe's advertising offerings included a robust first-party data management and targeting platform, unique audience segments and other programmatic capabilities with a focus on the fast-growing segments of mobile, video and connected TV, which together with the RadiumOne offerings, the YuMe offering helped to fortify and extend RhythmOne's end-to-end technology stack. Coupled with a suite of proprietary analytics tools, RhythmOne's technology stack gathers audience insights from a brand's paid, earned, owned and shared media channels, which can then be activated within advertising campaigns. The RhythmOne Programmatic Platform offers first-party data segments to brands and agencies as both a managed service and through self-serve platforms. 3) Emerging Platforms Influencer Business. We believe the influencer marketing segment is one of the fastest growing segments of the digital advertising industry. The RhythmInfluence team has positioned itself as a market leader based on the eight-year tenure of this group and its high campaign success rates. The RhythmInfluence business has seen a 182% growth year-over-year which is fueled in large part due to longstanding relationships with Fortune 500 retail clients. The successful integration into the national sales team acquired from the YuMe and RadiumOne transactions has further contributed to the success of the Influencer team continuing the efforts to leverage cross selling opportunities of our various product lines. Advanced TV. As consumers continue their migration from Linear TV to Connected TV, we are well positioned to capture an influx of advertiser branding dollars. We combine the executional experience, world class customer service, market education, campaign insights and brand safety needed to stay ahead of new entrants to both defend and grow our revenue. To this point the Company saw a significant rise in connected TV ad request volume of approximately 640% year-over-year in H12019, primarily driven by new supply partnerships. Technology & Products RhythmOne continued to invest in products, platforms, and research and development, with a focus on enhancing and expanding the Company's unified programmatic marketplace. One of the major initiatives in H12019 was to consolidate YuMe's data management platform (DMP) and demand side platform (DSP) into the RhythmOne Programmatic Platform. This consolidation is well underway and is scheduled to be completed by the end of calendar year 2018. This effort enables the Company to offer its partners one of the largest unified marketplace in the industry while reducing its operational and maintenance costs. Other marketplace improvements include: ? Advanced inventory availability forecasting, enabling the Company to accurately predict price and volume availabilities for all audience and device types. ? Improvements to the Company's advanced TV technology, including advanced targeting functionalities such as cross-device and more granular device targeting ? Automated performance predictions through machine learning for key KPIs such as viewability, invalid traffic (IVT), video completion rate (VCR), and click-through rate (CTR), which enables the Company to provide better performance for advertisers while increasing publisher yield. Integration and Acquisitions For the past several years, the Company has sought to capitalize on consolidation opportunities within the industry as part of its growth strategy. In June 2017 the Company completed the acquisition of certain assets and liabilities of RadiumOne, Inc. Through RadiumOne, RhythmOne gained access to a leading data-driven marketing platform, unique customer insights, audience segmentation and targeting technology, and premium advertiser relationships. With this acquisition, RhythmOne became one of a handful of global competitors with a comprehensive, end-to-end technology offering within the digital advertising ecosystem. Integration efforts were effective with the majority of RadiumOne supply migrated into RhythmOne's Programmatic Platform, and the integration of RadiumOne's data management platform and analytics tools completed as well. In February 2018 RhythmOne acquired YuMe, Inc. Through YuMe, RhythmOne gained access to premium video supply, including emerging, high-value connected CTV inventory, unique customer insights, cross-screen targeting technology and established demand relationships. The acquisition of YuMe aligned with the Company's mission to create a unified marketplace that is efficient and effective for advertisers. YuMe's demand-side strengths and innovation in video advertising complement the programmatic platform that RhythmOne has built over the last five years. YuMe is now fully integrated into RhythmOne from an operational perspective. Board and Executive Changes During the Period, RhythmOne announced certain changes to its Board of Directors. Mark Bonney joined the Company as CEO and as an Executive Director in June 2018 replacing Ted Hastings. Additionally, Mark Zorko joined the Company as CFO in September 2018 replacing Edward Reginelli. Departures from the board included Rah Chellaraj, Ujjal Kohli, Mark Opzoomer and Edward Reginelli who each retired or resigned from the Company's Board of Directors. The Board continually engages in an evaluation of its composition. Outlook The Company anticipates continued year-over-year revenue growth throughout the balance of FY2019, led by its programmatic capabilities and prior acquisitions. The Company continues to trade in line with consensus forecast revenue and adjusted EBITDA is in line with consensus forecast EBITDA. As seen during the Period, the unified RhythmOne Programmatic Platform has become the primary engine for growth, facilitating growth in advanced TV and the delivery of targeted, quality audiences, across devices and formats, at scale - globally. As the Company enters its strongest cash generating period, the Board intends to implement the Share Buyback Program and continue to consider strategic opportunities. The industry is fast consolidating, driving toward an ecosystem characterized by fewer, dominant, better integrated players that are able to deliver sustainable value to both demand and supply sides of the value chain. In addition to organic growth, as the integration of previously acquired businesses is nearing completion, the Company intends to evaluate strategic M&A opportunities across the premium supply and data science segments of the ecosystem, as a means to fortify its programmatic base, enhance its inventory packaging capabilities, and augment its financial performance and long-term competitiveness. Through the RhythmOne Programmatic Platform, RhythmOne has the infrastructure in place to seamlessly integrate the operations of potential acquisitions, with the objective of continuing to
provide a large-scale, differentiated alternative to the walled garden platforms.
Forward-Looking Statements
This press release contains certain forward-looking statements with respect to future events and our future
financial performance. All statements other than statements of historical fact are statements that could be
forward-looking statements, including, but not limited to our Outlook, statements about the RadiumOne and
YuMe acquisitions, the anticipated benefits and synergies associated with acquisitions, future opportunities,
future expectations, beliefs, plans, objectives, financial conditions, assumptions, or future events or
performance and quotations from management.
These forward-looking statements are subject to a number of risks and uncertainties, assumptions and other
factors that could cause actual results and timing of events to differ materially from future results that
are expressed or implied in our forward-looking statements. Among the key factors that could cause or
contribute to such differences include the growth and prospects of the digital advertising industry,
forecasts regarding internet usage and advertising spend, projected levels of growth in RhythmOne's markets,
RhythmOne's expectations about the factors that drive business, RhythmOne's investments in international and
emerging markets and sectors, anticipated trends and challenges in RhythmOne's industry, including but not
limited to the increasing quantity, variety and fragmentation of digital video content, platforms,
distribution channels and technologies, the expansion of the digital media advertising market in general and
the digital video advertising market in particular, RhythmOne's operating results, including revenue, cost of
revenue, expenses and liquidity, RhythmOne's strategy and competition, market trends, including overall
opportunities for digital media advertising and shifting advertising budgets, the ongoing improvement and
refinement of RhythmOne's data-science capabilities, developments in the regulatory framework applicable to
RhythmOne's business, RhythmOne's intellectual property and proprietary technologies and the ability to
integrate the YuMe operations effectively and in a manner that achieves the anticipated synergies. These and
other risk factors are discussed in "Risk Factors" in RhythmOne's Annual Report on Form 20-F for the fiscal
year ended March 31, 2018,which is on file with the United States Securities and Exchange Commission and can
be found at www.sec.gov.
All forward-looking statements attributable to RhythmOne, or persons acting on their behalf, are expressly
qualified in their entirety by the cautionary statements set out herein and speak only as of the date they
are made. Subject to compliance with applicable laws and regulations, RhythmOne disclaims any intention or
obligation to update or revise any forward-looking statements and undertakes no obligation to release
publicly the results of any future revisions to the forward-looking statements to reflect events or
circumstances after the date hereof or to reflect the occurrence of unanticipated events.
RHYTHMONE PLC
CONDENSED CONSOLIDATED INCOME STATEMENT (UNAUDITED)
Results for the six months to 30 September 2018
SIX MONTHS TO 30 SEPTEMBER SIX MONTHS TO 30 SEPTEMBER
2018 2017
Before Before
Exceptional Exceptional Exceptional Exceptional
Items Items Total Items Items Total
NOTE $000's $000's $000's $000's $000's $000's
Revenue 175,475 - 175,47 114,528 - 114,528
5
Cost of (96,102) - (96,10 (70,939) - (70,939
revenue 2) )
Operating 8 (76,647) (3,609) (80,25 (48,271) (6,639) (54,910
expenses 6) )
Income 2,726 (3,609) (883) (4,682) (6,639) (11,321
(loss) )
before
finance
income
(expense),
other
income and
tax
Finance 4 - 4 232 - 232
income
Finance 3 (741) - (741) (141) - (141)
expense
Other 8 - - - - 2,944 2,944
income
Income 1,989 (3,609) (1,620 (4,591) (3,695) (8,286)
(loss) )
before
income tax
Income tax 4 (1,692) 1,115 (577) 48 - 48
(expense)
benefit
Income 297 (2,494) (2,197 (4,543) (3,695) (8,238)
(loss) for )
the period
NOTE CENTS CENTS
LOSS PER SHARE
ATTRIBUTABLE TO RHYTHMONE
PLC
BASIC 5 (2.82) (16.63)
DILUTED 5 (2.82) (16.63)
RHYTHMONE PLC
CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME (LOSS) (UNAUDITED)
For six months ended 30 September 2018
SIX MONTHS TO SIX MONTHS TO
30 SEPTEMBER 2018 30 SEPTEMBER 2017
$000's $000's
Loss for the period (2,197) (8,238)
Items which might be
potentially reclassified
to profit or loss
Exchange difference on 825 (1,092)
translation of foreign
operations
Gain on marketable - 8
securities (net of tax)
TOTAL COMPREHENSIVE LOSS (1,372) (9,322)
FOR THE PERIOD
RHYTHMONE PLC
CONDENSED CONSOLIDATED BALANCE SHEET (UNAUDITED)
As at 30 September 2018
AS AT AS AT
30 SEPTEMBER 2018 31 MARCH 2018
NOTE $000's $000's
ASSETS
NON-CURRENT ASSETS
Goodwill 10 123,952 123,841
Intangible assets 11 76,964 86,360
Property, plant and 9,425 12,309
equipment
Other receivables 2,067 2,927
Deferred tax asset 4 29,776 29,290
242,184 254,727
CURRENT ASSETS
Trade receivables 97,772 84,793
Other receivables and 6 7,726 42,615
restricted cash
Cash and cash 22,045 37,331
equivalents
127,543 164,739
TOTAL ASSETS 369,727 419,466
LIABILITIES
NON-CURRENT LIABILITIES
Deferred tax liability 4 (4,297) (4,412)
Other payables (3,762) (4,095)
Borrowings (9,486) (9,461)
Provisions (530) (628)
(18,075) (18,596)
CURRENT LIABILITIES
Trade and other (71,154) (84,627)
payables
Term loan 6 - (35,000)
Provisions (295) (558)
(71,449) (120,185)
TOTAL LIABILITIES (89,524) (138,781)
NET ASSETS 280,203 280,685
SHAREHOLDERS' EQUITY
Share capital 7 12,799 12,641
Share premium account 106,011 103,856
Shares to be issued 7 20 2,093
Share-based 2 32,386 31,736
compensation reserve
Currency translation 31,550 30,725
reserve
Merger reserve 49,277 49,277
Retained earnings 48,160 50,357
TOTAL EQUITY 280,203 280,685
RHYTHMONE PLC
CONDENSED CONSOLIDATED CASH FLOW STATEMENT (UNAUDITED)
For the six months to 30 September 2018
SIX MONTHS TO SIX MONTHS TO
30 SEPTEMBER 2018 30 SEPTEMBER 2017
$000's $000's
CASH FLOWS FROM
OPERATING ACTIVITIES
Loss for the period (2,197) (8,238)
Adjustments for:
Depreciation and 15,620 7,738
amortization
Share based payments 650 641
Change in provisions (361) (327)
Loss on disposal of - 184
computer equipment
Remeasurement of - (2,944)
deferred consideration
Income tax expense / 577 (48)
(benefit)
Finance expense 741 141
Finance income (4) (232)
Unrealised foreign 1,488 (640)
exchange (gain)/loss
Operating cash flows 16,514 (3,725)
before movements in
working capital
Changes in operating
assets and liabilities:
Increase in trade and (12,563) (6,252)
other receivables
Decrease in trade and (13,313) (4,644)
other payables
Net cash used in (9,362) (14,621)
operating activities
Income taxes paid (268) -
Net cash used in (9,630) (14,621)
operating activities
CASH FLOWS FROM
INVESTING ACTIVITIES
Interest received 4 232
Purchase of property, (504) (313)
plant and equipment
Capitalization of (2,937) (1,785)
internal development
charges and software
Acquisitions, net of - (4,489)
cash acquired
Sales of marketable - 55,874
securities
Net cash (used in) / (3,437) 49,519
generated from investing
activities
CASH FLOWS FROM
FINANCING ACTIVITIES
Repayments on finance (1,540) (730)
lease
Interest payments (741) (141)
Release of collateral 35,000 -
related to term loan
Repayment of term loan (35,000) -
Repayment of credit - (14,431)
facility
Proceeds from issuance 158 184
of shares
Net cash used in (2,123) (15,118)
financing activities
Net (decrease) / (15,190) 19,780
increase in cash and
cash equivalents
Beginning cash and cash 37,331 19,338
equivalents
Effect of foreign (96) 207
exchange on cash and
cash equivalents
Cash and cash 22,045 39,325
equivalents at end of
period
RHYTHMONE PLC
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY (UNAUDITED)
For the six months to 30 September 2018
RETAINED
ORDINARY SHARE SHARES SHARE BASED CURRENCY EARNINGS /
SHARE PREMIUM TO BE COMPENSATION TRANSLATION MERGER OTHER (ACCUMULATED TOTAL
CAPITAL ACCOUNT ISSUED RESERVE RESERVE RESERVE RESERVES DEFICIT) EQUITY
$000's $000's $000's $000's $000's $000's $000's $000's $000's
BALANCE AS AT 8,667 168,159 24 28,605 (8,591) 107,820 (8) (121,441) 183,23
1 APRIL 2017 5
Net loss for - - - - - - - (8,238) (8,238
the period )
Other - - - - (1,092) - 8 - (1,084
comprehensive )
income
Total - - - - (1,092) - 8 (8,238) (9,322
comprehensive )
loss for the
period
Issue of 7 177 - - - - - - 184
shares, net of
costs
RadiumOne - - 9,126 - - - - - 9,126
acquisition
Capitalization - 58,001 - - 542 (58,543 - - -
of merger )
reserve
Capital - (226,16 - - 40,487 - - 185,673 -
reduction 0)
Credit to - - - 641 - - - - 641
equity for
share-based
payments
BALANCE AS AT 8,674 177 9,150 29,246 31,346 49,277 - 55,994 183,86
30 SEPTEMBER 4
2017
BALANCE AS AT 12,641 103,856 2,093 31,736 30,725 49,277 - 50,357 280,68
1 APRIL 2018 5
Net loss for - - - - - - - (2,197) (2,197
the period )
Other - - - - 825 - - - 825
comprehensive
income
Total - - - - 825 - - (2,197) (1,372
comprehensive )
income for the
period
Issue of 158 2,155 - - - - - - 2,313
shares, net of
costs
Issue of - - (2,073 - - - - - (2,073
shares, net of ) )
costs related
to
acquisitions
Credit to - - - 650 - - - - 650
equity for
share-based
payments
BALANCE AS AT 12,799 106,011 20 32,386 31,550 49,277 - 48,160 280,20
30 SEPTEMBER 3
2018
RHYTHMONE PLC
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
(UNAUDITED)
1) General information, basis of preparation and accounting policies
RhythmOne plc ("the Company") is incorporated in England and Wales under the Companies Act 2006. The address
of the registered office is 65 Gresham Street, 6th Floor, London, EC2V 7NQ, United Kingdom. The Company is a
public limited company, which is listed on the London Stock Exchange (AIM).
These condensed consolidated interim financial statements were approved for issue on 13 December 2018.
The Company and its subsidiaries provide internet advertising services primarily to its customers in the U.S.
These condensed consolidated interim financial statements do not comprise statutory accounts within the
meaning of section 434 of the Companies Act 2006. Statutory accounts for the year ended 31 March 2018 were
approved by the board of directors on 14 June 2018 and delivered to the Registrar of Companies. The report of
the auditors on those accounts was unqualified, did not contain an emphasis of matter paragraph and did not
contain any statement under section 498 of the Companies Act 2006. Statutory financial statements for the
year ended 31 March 2018 are available on the Company's website www.investor.rhythmone.com [2].
These condensed interim financial statements for the six months ended 30 September 2018 have been prepared in
accordance with the AIM rules and with IAS 34, 'Interim financial reporting', as adopted by the European
Union. The condensed consolidated interim financial statements should be read in conjunction with the annual
financial statements for the year ended 31 March 2018, which have been prepared in accordance with IFRS as
adopted by the European Union. The Group is defined as RhythmOne plc and its subsidiaries. These condensed
interim financial statements have been reviewed, not audited.
These condensed consolidated interim financial statements have been prepared on a going concern basis. The
directors have considered the financial resources of the Group and the risks associated with doing business
in the current economic climate and believe the Group is well placed to manage these risks successfully. The
directors have reviewed management's business plan setting out key business assumptions and considered it to
be reasonable and are satisfied that the Group has adequate resources to continue in operational existence
for the foreseeable future being a period of no less than 12 months from the date of signing of this interim
report. Accordingly, they continue to adopt the going concern basis in preparing this interim announcement.
The preparation of interim financial statements requires management to make judgements, estimates and
assumptions that affect the application of accounting policies and the reported amounts of assets and
liabilities, income and expense. Actual results may differ from these estimates. In preparing these condensed
interim financial statements, the significant judgements made by management in applying the group's
accounting policies and the key sources of estimation uncertainty were the same as those that applied to the
consolidated financial statements for the year ended 31 March 2018.
The Group's activities expose it to a variety of financial risks. These are discussed in detail in the
Group's annual financial statements as at 31 March 2018. There have been no changes in the risk management
department or in any risk management policies since the year end.
The directors consider that the principal risks and uncertainties which may have a material impact on the
Group's performance in the second half of its 2019 financial year remain the same as those outlined in the
Group's Annual report for the year ended 31 March 2018.
As discussed in detail in the Group's Annual report for the financial year ended 31 March 2018, separate
financial information is not reviewed by the chief operating decision-maker for the various products to
assess their performance or for the purpose of resource allocation decisions and therefore no separate
operating or reportable segments have been identified in accordance with IFRS 8 "Operating Segments".
New accounting standards
With effect from 1 April 2018 the Group has adopted the following new accounting standards:
(a) IFRS 15 'Revenue from Contracts with Customers'
IFRS 15 sets out the requirements for recognising revenue from contracts with customers. The standard
requires entities to apportion revenue earned from contracts to individual promises, or performance
obligations, on a stand-alone selling price basis, based on a five-step model.
The Group completed a transition exercise and based on the work undertaken, no material impacts have been
identified.
(b) IFRS 9 'Financial Instruments'
IFRS 9 provides a new expected losses impairment model for financial assets, including trade receivables, and
includes amendments to classification and measurement of financial instruments.
The Group completed a transition exercise and based on the work undertaken, no material impacts have been
identified.
Standards and interpretations not yet applied
At the date of approval of this Half Year Report, the following Standards and Interpretations that are
potentially relevant to the Group, and which have not been applied in these financial statements, were in
issue but not yet effective (and in some cases had not yet been adopted by the EU):
? IFRS 16 'Leases' - effective for accounting periods beginning on or after 1 January 2019.
? Amendments to IAS 19: Plan Amendment, Curtailment of Settlement - effective for accounting periods
beginning on or after 1 January 2019.
? Annual Improvements 2015-2017 Cycle - effective for accounting periods beginning on or after 1 January
2019.
? IFRIC Interpretation 23: Uncertainty over Income Tax Treatments - effective for accounting periods
beginning on or after 1 January 2019.
? Amendments to IAS 28: Long-term Interests in Associates and Joint Ventures - effective for accounting
periods beginning on or after 1 January 2019.
The Directors anticipate that the adoption of these Standards and Interpretations in future periods will have
no material impact on the financial statements of the Group with the exception of IFRS 16 'Leases' where our
review of the impact is ongoing as described below.
IFRS 16 'Leases'
For the Group, transition to IFRS 16 will take effect from 1 April 2019. The half year results for the six
months ending 30 September 2019 will be IFRS 16 compliant with the first Annual Report published in
accordance with IFRS 16 being for the year ending 31 March 2020.
IFRS 16 provides a single model for lessees which recognises a right of use asset and lease liability for all
leases which are longer than one year, or which are not classified as low value. The distinction between
finance and operating leases for lessees is removed.
The Group is currently assessing the impact of the new standard. The most significant impact currently
identified will be that the Group's land and buildings leases will be brought on to the balance sheet.
Further assessment of other leases is currently ongoing.
New accounting standards and interpretations applied for the first time
The following Standards with an effective date of 1 January 2018 have been adopted without any significant
impact on the amounts reported in these financial statements:
? Amendments to IFRS 2: Classification and Measurement of Share-based Payment Transactions.
? Annual Improvements 2014-2017 Cycle.
? IFRIC Interpretation 22 Foreign Currency Transactions and Advance Consideration.
2) Share-based payments
Included within operating expenses are the following amounts in respect of share-based payments:
SIX MONTHS TO SIX MONTHS TO
30 SEPTEMBER 2018 30 SEPTEMBER 2017
(unaudited) (unaudited)
$000's $000's
Operating expenses 650 641
650 641
3) Finance expense
Included in finance expense on the Group's condensed consolidated income statement for the six month period
ended 30 September 2018 was $0.7 million of interest expense. Included in finance expense for the six month
period ended 30 September 2017 was $0.3 million of interest expense primarily related to capital lease
obligations.
4) Taxation and deferred tax
Income tax expense is recognised based on management's estimate of the weighted average annual income tax
rate expected for the full financial year.
Tax expense for the six-month period ended 30 September 2018 was $0.6 million compared to a tax benefit of
$48 thousand for the six-month period ended 30 September 2017. Tax expense for the six-month period ended 30
September 2018 represents the best estimate of the average annual effective income tax rate expected for the
full year plus the effect of discrete items recognized in the period.
The Group has recognized net deferred tax assets of $29.8 million as of 30 September 2018, of which $37.7
million relates to available credits and trading losses which are due to expire within the next 15 to 20
years. All recognised trading losses relate to the Group's U.S. operations, as the Directors do not believe
it is more likely than not that the UK and other overseas businesses will be profitable in the foreseeable
future.
In relation to the available U.S. trading losses, the Group considers all available evidence to determine
whether it is more likely than not that some portion or all of the available deferred tax asset should be
recognised. The ultimate utilization of the deferred tax assets is dependent upon the generation of future
taxable income. Management considers projected taxable income in assessing the expected utilization of
deferred tax assets. In making such judgements, significant weight is given to evidence that can be
objectively verified, such as improved profitability and visible market trends. As at 31 March 2018 and 30
September 2018 the recognition of the deferred tax assets is deemed to be supported by the future taxable
profits of the Group. The key assumption in the Directors' deferred tax asset model is the Group's projected
revenue growth rate. Management has determined that following the acquisitions of YuMe, Inc. ("YuMe") and
RadiumOne, Inc. ("RadiumOne") all U.S. trading loses should be recognised at 31 March 2018 and 30 September
2018 as all are expected to be utilized within the next four years.
The movements in deferred tax assets and liabilities (including offsetting balances within the same
jurisdiction as permitted under IAS 12) during the period is shown below. Deferred tax assets and liabilities
are only offset where there is a legally enforceable right of offset and there is an intention to settle the
balances net.
ASSETS ASSETS LIABILITIES LIABILITIES NET NET
30 31 MARCH 30 31 MARCH 30 31 MARCH
SEPTEMBER 2018 SEPTEMBER 2018 SEPTEMBER 2018
2018 2018 2018
(unaudited) (audited) (unaudited) (audited) (unaudited) (audited)
$000's $000's $000's $000's $000's $000's
Property (2,216) (2,987) 16,600 18,186 14,384 15,199
, plant
and
equipmen
t and
intangib
le
assets
Tax (37,655) (37,655) - - (37,655) (37,655)
credit
and loss
carry
forward
Share (573) (53) - - (573) (53)
based
payments
Other (1,635) (2,369) - - (1,635) (2,369)
deductib
le
temporar
y
differen
ces
Net (42,079) (43,064) 16,600 18,186 (25,479) (24,878)
deferred
tax
(assets)
/
liabilit
ies
Offset 12,303 13,774 (12,303) (13,774) - -
tax
Net (29,776) (29,290) 4,297 4,412 (25,479) (24,878)
deferred
tax
(assets)
/
liabilit
ies
5) Earnings per share
SIX MONTHS TO SIX MONTHS TO
30 SEPTEMBER 2018 30 SEPTEMBER 2017
(unaudited) (unaudited)
$000's $000's
LOSS FOR THE PERIOD
Loss for the period used (2,197) (8,238)
in calculation of basic
and diluted earnings per
share
CENTS CENTS
EARNINGS PER SHARE
Basic and diluted (2.82) (16.63)
SHARES SHARES
NUMBER NUMBER
(unaudited) (unaudited)
NUMBER OF SHARES
Weighted average number 78,031,609 49,542,062
of shares for the
purpose of basic
earnings per share
6) Other receivables and restricted cash and Term loan
Other receivables and restricted cash on the condensed consolidated balance sheet as at 30 September 2018 was
$7.7 million compared to $42.6 million as at 31 March 2018. The decrease in other receivables and restricted
cash of $34.9 million during the six-month period ended 30 September 2018 was primarily a result of the
expiration and settlement of the Group's $35.0 million Term loan on 2 June 2018. The Group had originally
provided collateral in the amount of $35 million in restricted cash for the Term loan, which was released and
used to settle the Term loan. As at 31 March 2018 there was a $35.0 million balance of restricted cash
associated with the Term loan compared with nil as at 30 September 2018.
7) Share capital and Share premium account
The increase of the share capital and share premium accounts on the condensed consolidated balance sheet as
at 30 September 2018 relates to the issuance of 591,443 shares on the release of employee restricted stock
units, the issuance of 14,000 shares on the exercise of employee stock options and the issuance of 495,309
shares related to the release of a deferred consideration payment associated with the acquisition of
RadiumOne on 26 June 2017.
8) Exceptional costs
One-time acquisition and exceptional costs and other costs related to acquisitions are separately identified
as exceptional costs. The types of costs included within acquisition costs are those which are directly
attributable to an acquisition, such as legal and accounting expenses, integration costs, severance and
retention remuneration. The types of costs which are considered exceptional include restructuring charges and
onerous lease provisions.
SIX MONTHS TO SIX MONTHS TO
30 SEPTEMBER 2018 30 SEPTEMBER 2017
(unaudited) (unaudited)
$000's $000's
Acquisition related costs:
Severance and retention - 1,218
Professional fees 1,741 1,233
Total acquisition related 1,741 2,451
costs
Exceptional costs:
Restructuring charges 1,868 4,188
Total exceptional costs 1,868 4,188
Fair value adjustment - (2,944)
Total fair value - (2,944)
adjustment
Total acquisition and 3,609 3,695
exceptional costs
Acquisition related costs including severance, retention and professional fees primarily relate to the
acquisitions of YuMe and RadiumOne.
At the 30 September 2017 period end, the deferred consideration relating to the RadiumOne acquisition has
been recognized within Trade and other payables. This item met the definition of a financial liability and
was consequently re-measured as at 30 September 2017. The resulting gain of $2.9 million was recognized as an
exceptional item within other income in the condensed consolidated income statement for the six months to 30
September 2017. In June 2018, this deferred consideration was paid out by issuing 495,309 ordinary shares.
9) Financial risk management and financial instruments
The group's activities expose it to a variety of financial risks: market risk, credit risk and liquidity
risk.
The condensed interim financial statements do not include all financial risk management information and
disclosures required in the annual financial statements. They should be read in conjunction with the group's
annual financial statements as at 31 March 2018.
There have been no changes in the risk management department or in any risk management policies since the
year end.
The fair value of the following financial assets and liabilities approximate their carrying amount:
? Trade receivables
? Other receivables
? Cash and cash equivalents
? Trade and other payables
10) Goodwill
Goodwill increased $0.1 million to $124.0 million during the six-month period ended 30 September 2018 as a
result of adjustments to the fair value of the assets and liabilities acquired in the acquisition of YuMe in
February 2018.
The Group tests goodwill for impairment annually or more often if there are indications that it may be
impaired. At the 30 September 2018 period end, management did not identify any impairments.
11) Intangible assets
RELATIONSHIPS
WITH CAPITALIZED TRADENAMES,
CUSTOMERS & PURCHASED DEVELOPMENT TRADEMARKS SOFTWARE
PUBLISHERS TECHNOLOGY COSTS & PATENTS LICENSES OTHER TOTAL
(unaudited) (unaudited) (unaudited) (unaudited) (unaudited) (unaudited) (unaudited)
$000's $000's $000's $000's $000's $000's $000's
COST
At 31 March 71,009 40,440 27,403 15,457 5,901 1,518 161,728
2018
Additions - - 2,937 - - - 2,937
Adjustment - - (16) - - - (16)
At 30 71,009 40,440 30,324 15,457 5,901 1,518 164,649
September
2018
ACCUMULATED AMORTIZATION
At 31 March (26,161) (17,417) (18,068) (7,799) (5,862) (61) (75,368)
2018
Amortization (5,590) (4,034) (1,888) (766) (39) - (12,317)
At 30 (31,751) (21,451) (19,956) (8,565) (5,901) (61) (87,685)
September
2018
NET BOOK
VALUE
At 31 March 44,848 23,023 9,335 7,658 39 1,457 86,360
2018
At 30 39,258 18,989 10,368 6,892 - 1,457 76,964
September
2018
12) Alternative performance measures
Adjusted EBITDA
This financial measure does not have any standardized meaning prescribed by IFRS and is therefore referred to
as a non-GAAP measure. Adjusted EBITDA is defined as loss for the period, adjusted to exclude finance income
and expense, taxation, depreciation and amortization, share based payments, exceptional items, which include
acquisition-related costs, restructuring and severance costs, settlement of litigation, fair value
adjustments and unrealized foreign exchange gain and loss. Provided below is a reconciliation of Adjusted
EBITDA to Loss for the Period.
RhythmOne's management believes that Adjusted EBITDA provides useful information to investors in
understanding and evaluating the operating results of RhythmOne in the same manner as management and the
RhythmOne board of directors because it excludes the impact of exceptional items in profit from operations,
which have less bearing on the routine operating activities of RhythmOne, thereby enhancing users'
understanding of the underlying business performance. RhythmOne's management also believes that Adjusted
EBITDA provides information that enables investors to better compare RhythmOne's business performance across
periods.
This non-IFRS measure is not necessarily comparable to similarly titled measures of other companies, and
Adjusted EBITDA should not be viewed as a substitute for, or superior to, loss for the period prepared in
accordance with IFRS as a measure of RhythmOne' s profitability or liquidity. Some of the limitations of
Adjusted EBITDA are:
? Although depreciation and amortization are non-cash charges, the assets being depreciated and amortized
may have to be replaced in the future, and Adjusted EBITDA does not reflect cash capital expenditure
requirements for such replacements or for new capital expenditure requirements;
? Adjusted EBITDA does not reflect changes in, or cash requirements for, RhythmOne' s working capital
needs;
? Adjusted EBITDA does not consider the potentially dilutive impact of equity-based compensation;
? Adjusted EBITDA does not reflect tax payments that may represent a reduction in cash available to
RhythmOne; and
? Other companies, including companies in RhythmOne's industry, may calculate Adjusted EBITDA differently,
which reduces its usefulness as a comparative measure.
Users of this financial information should consider the types of events and transactions for which
adjustments have been made.
The following table is a reconciliation of Adjusted EBITDA to Loss for the Period:
ADJUSTED EBITDA SIX MONTHS TO SIX MONTHS TO
30 SEPTEMBER 2018 30 SEPTEMBER 2017
(unaudited) (unaudited)
$000's $000's
Loss for the Period (2,197) (8,238)
Adjustments:
Finance income (4) (232)
Finance expense 741 141
Income tax expense / 577 (48)
(benefit)
Depreciation and 15,620 7,738
amortization
Share based payments 650 641
Exceptional items 3,609 3,695
Unrealized foreign 1,488 (640)
exchange loss / (gain)
Total adjustments 22,681 11,295
Adjusted EBITDA 20,484 3,057
Independent review report to RhythmOne plc
Report on the condensed consolidated interim financial statements
Our conclusion
We have reviewed RhythmOne plc's condensed consolidated interim financial statements (the "interim financial
statements") in the First Half Financial Year 2019 Results of RhythmOne plc for the 6 month period ended 30
September 2018. Based on our review, nothing has come to our attention that causes us to believe that the
interim financial statements are not prepared, in all material respects, in accordance with International
Accounting Standard 34, 'Interim Financial Reporting', as adopted by the European Union and the AIM Rules for
Companies.
What we have reviewed
The interim financial statements comprise:
the condensed consolidated balance sheet as at 30 September 2018;
the condensed consolidated income statement and consolidated statement of comprehensive income (loss) for the
period then ended;
the condensed consolidated cash flow statement for the period then ended;
the condensed consolidated statement of changes in equity for the period then ended; and
the explanatory notes to the interim financial statements.
The interim financial statements included in the First Half Financial Year 2019 Results have been prepared in
accordance with International Accounting Standard 34, 'Interim Financial Reporting', as adopted by the
European Union and the AIM Rules for Companies.
As disclosed in note 1 to the interim financial statements, the financial reporting framework that has been applied in the preparation of the full annual financial statements of the Group is applicable law and International Financial Reporting Standards (IFRSs) as adopted by the European Union. Responsibilities for the interim financial statements and the review Our responsibilities and those of the directors The First Half Financial Year 2019 Results, including the interim financial statements, is the responsibility of, and has been approved by, the directors. The directors are responsible for preparing the First Half Financial Year 2019 Results in accordance with the AIM Rules for Companies which require that the financial information must be presented and prepared in a form consistent with that which will be adopted in the company's annual financial statements. Our responsibility is to express a conclusion on the interim financial statements in the First Half Financial Year 2019 Results based on our review. This report, including the conclusion, has been prepared for and only for the company for the purpose of complying with the AIM Rules for Companies and for no other purpose. We do not, in giving this conclusion, accept or assume responsibility for any other purpose or to any other person to whom this report is shown or into whose hands it may come save where expressly agreed by our prior consent in writing. What a review of interim financial statements involves We conducted our review in accordance with International Standard on Review Engagements (UK and Ireland) 2410, 'Review of Interim Financial Information Performed by the Independent Auditor of the Entity' issued by the Auditing Practices Board for use in the United Kingdom. A review of interim financial information consists of making enquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing (UK) and, consequently, does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion. We have read the other information contained in the First Half Financial Year 2019 Results and considered whether it contains any apparent misstatements or material inconsistencies with the information in the interim financial statements. PricewaterhouseCoopers LLP Chartered Accountants Uxbridge 13 December 2018 ISIN: GB00BYW0RC64 Category Code: IR TIDM: RTHM LEI Code: 213800MZEQLXEIOJ9N61 Sequence No.: 6872 EQS News ID: 757557 End of Announcement EQS News Service 1: https://link.cockpit.eqs.com/cgi-bin/fncls.ssp?fn=redirect&url=dc8724ca56c2a2c5316734fa7ad0cf72&application_id=757557&site_id=vwd_london&application_name=news 2: https://link.cockpit.eqs.com/cgi-bin/fncls.ssp?fn=redirect&url=22127c2ccc3cc8f37c7bae9a35e49f3c&application_id=757557&site_id=vwd_london&application_name=news
(END) Dow Jones Newswires
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