Directing internet users to gaming and gambling websites continues to be a very lucrative business for XLMedia (XLM). Technology investments enabled the digital marketing group to widen its customer base and gain further competitive edge in 2016, resulting in an impressive 22 per cent rise in adjusted cash profit to $34.6m (£28.4m).
Publishing played a key role in that success. Revenue in XLMedia's core segment soared 52 per cent to $46.1m after investments in technology, particularly within Palcon - a centralised content management system for its 2,300 informational websites - which led to better conversions and stronger mobile results.
But sales in the smaller legacy partner network slid by a quarter, reflecting the group's decision to work only with quality businesses. Media revenue increased just 4 per cent to $47.6m after a weak performance in utilities ate into the strong growth registered by gambling. Management expects recent acquisitions to revitalise media trading, but also warned that rising mobile-related sales will weigh on divisional margins. An increase in higher-margin publishing activity should compensate.
Broker Cenkos forecasts adjusted pre-tax profit of $32.4m in 2017, giving EPS of 12.6¢, up from $31.6m and 12.4¢ last year.
| XLMEDIA (XLM) | ||||
|---|---|---|---|---|
| ORD PRICE: | 106p | MARKET VALUE: | £212m | |
| TOUCH: | 105-107p | 12-MONTH HIGH: | 117p | LOW: 61p |
| DIVIDEND YIELD: | 5.9% | PE RATIO: | 11 | |
| NET ASSET VALUE: | 51¢* | NET CASH: | $35.2m† | |
| Year to Dec 31 | Turnover ($m) | Pre-tax profit ($m) | Earnings per share (¢) | Dividend per share (¢) |
|---|---|---|---|---|
| 2012 | 26.1 | 13.5 | na | na |
| 2013 | 34.5 | 11.7 | 9.0 | 2.77 |
| 2014 | 50.7 | 13.2 | 6.0 | 3.16 |
| 2015 | 89.2 | 24.3 | 10.0 | 5.09 |
| 2016 | 104 | 31.0 | 12.0 | 7.61 |
| % change | +16 | +28 | +20 | +49 |
Ex-div: 16 Mar Payment: 7 Apr *Includes intangible assets of $59m, or 29¢ a share †Includes short-term investments of $3.1m £1=$1.22 | ||||
