Results for the half year ended 30 June 2023
Good progress across our strategic pillars, on track to meet full year expectations
LBG Media plc, the UK-based multi-brand, multi-channel digital youth publisher, is pleased to report its results for the half year ended 30 June 2023 (“HY23” or “the period”). During the period, the Group delivered a strong performance, growing its global audience and content views, and is on track to meet full year market expectations.
|Total Group Revenue||27.2||24.8||10%|
|Adjusted EBITDA margin1||11%||7%||+4% pts|
|Loss before tax||(1.2)||(1.9)||39%|
|Cash and cash equivalents||32.7||28.6||15%|
- Total Group Revenue of £27.2m (HY22: £24.8m) up 10% and in line with the typical seasonal split between H1 and H2, and which we have experienced historically.
- Direct revenues increased by 9% to £11.4m (HY22: £10.6m) driven by the Group’s growing reputation for successful campaigns with global brands. Visibility of booking levels for the second half of the year has also improved compared to this time last year.
- Indirect revenue increased by 13% to £15.3m (HY22: £13.6m). Year-on-year content views increased by 87%, on the back of strong growth of 38% in the prior year, enabling the Group to greater capitalise on the market shift to short-form content that occurred in the second half of last year.
- Adjusted EBITDA1 of £3.0m (HY22: £1.6m), up 84%, reflective of the stronger revenue performance of the Group and disciplined cost management. Loss before tax was £1.2m (HY22: loss of £1.9m) representing a 39% improvement in comparison to the prior year.
- Cash and cash equivalents at the period-end amounted to £32.7m (FY22: £29.3m, HY22: £28.6m), reflecting a net increase in cash of £3.4m, after £0.5m of consideration paid in March for the acquisition of Lessons Learned in Life (‘LLIL’).
- Global audience grew by 95m people (including the LLIL acquisition with 19.6m followers as at 30 June 2023) to over 410m (HY22: 315m), with 67.1bn content views in the period, up 87% on the prior period.
- In March 2023, the Group completed the acquisition of LLIL - an under-monetised US Facebook page that is on track to achieve payback within its first year.
- Continued to support socially responsible campaigns with a cross-business, post-earthquake Turkey / Syria appeal fund, working with the ‘If U Care, Share’ charity and our recent partnership with the London Mayor’s office supporting the ‘Have A Word’ campaign.
- Achieved direct revenue brief conversion of 29%; a significant uplift from 18% conversion in HY22.
CEO, Solly Solomou commented:
“We have made good financial and operational progress throughout the first half of 2023. The significant increase in content views demonstrates our effective ongoing engagement with the hard to reach 18 to 34 year-old demographic which remains a highly attractive proposition for our partner brands and platforms and will continue to drive the business forward.
“Our growth continued to outperform the wider digital advertising market as we operate within the fastest growing segments, giving us confidence as we look forward. In addition, our strategic progress in the half was encouraging. We continued to execute on our plans to broaden geographically, with good early progress in our recently established US operations, to acquire businesses, plugging in under-monetised brands onto our platform, and to broaden our capabilities, with our agile business model ensuring we can reach the widest possible audience.
“We have started H2 with positive momentum and I am excited by the opportunities that lie ahead.”
The Board believes that the Group’s highly differentiated offering and strategic programme will continue to fuel our growth. Normal seasonality in advertising revenue combined with the relatively even split of costs means that profitability is significantly weighted towards the second half of the year, as has been the case in prior years. Notwithstanding the general challenges in the overall market, our momentum on audience and content growth, as well as client brief conversion rate, has continued into H2 and will help us capitalise on that seasonality. We can confirm the outlook for the full year remains in line with market expectations2.
1 Adjusted EBITDA – earnings before interest, tax, depreciation, and amortisation adjusted for share based payments (including employers NIC as appropriate) and adjusting items. Adjusted EBITDA margin is Adjusted EBITDA divided by Group Revenue represented as a percentage.
2 External market consensus for the year ending 31 December 2023 is currently: Revenue of £69.3m and Adjusted EBITDA of £19.3m.
LBG Media plc will be hosting an analyst presentation on 20 September 2023 following the release of these results for the half year ended 30 June 2023. Attendance is by invitation only. Slides accompanying the analyst presentation, along with a recording, will be available on the LBG Media plc website following the event.
In the period ended 30 June 2023, LBG Media delivered a strong performance, with revenue growth of 10% to £27.2m (HY22: £24.8m), while Adjusted EBITDA increased by 84% to £3.0m (HY22: £1.6m). The Group remains cash generative with a healthy cash position of £32.7m (FY22: £29.3m, HY22: £28.6m).
LBG Media remains focused on delivering relevant and exciting content to the predominantly youth audience, with the volume of views continuing to grow in the first half of the year, by 87% versus HY22, driving growth in market share. The growth in views came as the Group used its insights and first-mover advantage to capitalise on the market shift to short-form content that occurred in the second half of last year.
LBG Media operates within some of the fastest growing segments of the digital media market, including social video and mobile. With the global digital advertising revenue forecast to grow at 7.6% this year1, LBG Media is once again outgrowing the digital market.
Revenue is generated through our two core revenue channels, Direct and Indirect. Despite being distinct channels, our capabilities and opportunities to monetise our audience relationship can be used across both.
Direct revenue is generated from the provision of content marketing services to brand owners, marketing agencies and other entities such as government bodies, and has increased by 9% in HY23 to £11.4m (HY22: £10.6m). This was driven by strong momentum with our branded clients such as Vodafone, McDonalds, Google and Disney. Direct revenue also includes some revenue from direct display advertising, where brand owners’ pay for advertising space on our websites for an agreed fee.
Indirect revenue is received via third party social media platforms (e.g. Facebook, Snapchat, YouTube) or via programmatic partners, which hold the relationship with the brand owner, or agency. In HY23 indirect revenue increased by 13% to £15.3m (HY22: £13.6m), driven by the market shift to short-form video seen in the second half of 2022. Facebook, YouTube and Snapchat are already monetised platforms, while TikTok and Instagram are at earlier stages of monetisation.
Audience, followers & engagement
LBG Media’s expert content creators produce engaging and relevant content for our audience. The content is then distributed through various platforms and websites and in-depth analysis is then performed on interactions and audience engagement in real time. The learnings from this then drive the refinement of content to make it even more engaging for the audience, in a cycle of continuous improvement.
In the first half of 2023, our global audience grew to 410m, which is a 33% growth rate year-on-year. In the UK alone, the Group reaches almost two thirds of 18 to 34-year-olds. Our content was viewed over 67.1bn times, up 87% compared to HY22 and this was well diversified across our brand portfolio.
LBG Media’s 14 core brands serve both niche and mainstream audiences. Each of the brands are based around specific interest points such as sports, gaming, music, technology, and travel. The portfolio has been enhanced over recent years, with the well targeted acquisitions of Go Animals in 2022 (since rebranded as Furry Tails) and LLIL in 2023.
In line with the Group’s growth strategy, in March 2023, LBG Media acquired the social media accounts, social media content, domain names, website, intellectual property licenses, third party rights and records of LLIL for a consideration of £0.5m. This was an under-monetised asset that is on track to achieve payback within its first year.
Our presence in the US continues to expand following the launch of our US operations last year. We are proud to have a multi-platform global audience, and international represents 17% of Group revenue.
We saw another significant increase in followers on TikTok, up 66% year-on-year, where we are the largest media publisher.
LBG Media has a proven track record of delivering strong growth, both organically and via acquisitions. Our strategy for growth can be summarized by the three core pillars below:
- Geographies: LBG Media currently has a physical presence in five territories – the UK, Ireland, Australia, New Zealand, and United States. We aim to grow these communities by continuing to create and publish relevant digital content, further building brand awareness levels and increasing follower numbers. The majority of LBG Media’s Direct revenue is currently generated in the UK, however, active audiences in other geographies provide a foundation for future growth across both the Indirect and Direct revenue streams and help to de-risk revenue through diversification.
- Acquisitions: It can be significantly more time and cost efficient to access markets through selective acquisitions compared to building a new brand from scratch if an established digital media brand with a physical presence, existing audiences and understanding of the local market is already present. We continue to actively consider and assess acquisition opportunities that have diversification potential, both geographically and in terms of genre of content, as we look to increase our audience.
- Capabilities: Our agile model allows us to actively replicate content across any new platforms, ensuring it reaches the widest possible audience and we intend to continue to expand our capabilities to produce innovative content, as well as using data and new technologies, including AI, to further enhance our service offering. Increasing audience monetisation is key to driving LBG Media’s growth. Currently only Facebook, Snapchat and YouTube facilitate such monetisation of users through adverts, but we believe that in time these capabilities will be introduced across all social media platforms as they mature, providing significant upside opportunities for us.
Events & Awards
LBG Media have proactively reached out to current and potential direct revenue clients by hosting events within the first six months of the year. Once again, our headline event was at Heckfield Place, which gave brands and agencies the chance to learn more about our commercial capabilities. Over the two-day event, we had a series of tailored presentations shining a light on Gen Z behaviours, the new era of social broadcast, the creator economy and more. Sessions were then interspersed with external speakers such as ex-international footballer Jill Scott and comedian Mo Gilligan. The event had exceptional feedback with guests saying they now had a much deeper understanding of our commercial capabilities.
During the first half of the year, we were proud to have been shortlisted for 20 awards recognising the quality of work we produce within the industry. Our Tango Berry Peachy campaign won in the Campaign Media Awards for 'Best Social Strategy' and also in the Digiday Content Marketing Awards in the 'Best Product Launch' category. Our Budweiser campaign for the 2022 World Cup also took the winning spot at the Campaign Media Awards in the 'Branded Content' category.
As a leading social youth publisher, LBG Media has a powerful global platform to pursue socially responsible agendas and we have run several social awareness campaigns recently to help raise interest of key social issues.
Within the first half of the year, we have actively supported those impacted by the earthquake in Turkey and Syria by activating a cross-business fundraising emergency appeal generating more than £50k in just over a week. We also worked with the ‘If U Care, Share’ charity to encourage our audience to talk about how they are feeling.
More recently, we kickstarted a partnership with the London Mayor’s office to combat sexism amongst peer groups supporting the ‘Have A Word’ campaign. We used LADnation to conduct research into our engaged youth audience’s views and experience of sexual harassment, before creating original content which we amplified across our platforms.
|Net operating expenses||(28.5)||(26.6)||(7%)|
|Adjusted EBITDA1 %||11%||7%||+4% pts|
|Share based payments||(2.2)||(2.4)||10%|
|Net finance costs||(0.0)||(0.1)||95%|
|Share of joint ventures||0.1||(0.0)||283%|
|Loss before taxation||(1.2)||(1.9)||39%|
|Corporation tax credit/(expense)||(0.6)||0.1||(535%)|
|Loss for the period||(1.7)||(1.8)||4%|
|Cash and cash equivalents||32.7||28.6||15%|
1 Earnings before interest, tax, depreciation, and amortisation adjusted for share based payments (including employers NIC as appropriate) and adjusting items. Adjusted EBITDA % is Adjusted EBITDA divided by Group Revenue represented as a percentage.
Key performance indicators (“KPIs”)
The board monitors progress of the Group by reference to the following KPIs:
|Adjusted EBITDA as a % of revenue||11%||7%||+4% pts|
|Loss before tax||(1.2)||(1.9)||0.7||39%|
|Global audience (m)*||410||315||95||33%|
|Content views (bn)**||67.1||35.8||31.3||87%|
|Average number of employees (no.)||427||473||(46)||(10%)|
* Global audience includes social followers, in addition to average monthly website users for the six months to June.
** Content views is total views of content across all social platforms and websites.
The definition of what constitutes a view can vary across the social platforms.
|Total Group Revenue||27.2||24.8||10%|
Total Group Revenue of £27.2m (HY22: £24.8m), representing growth of 10% and in line with the seasonality we anticipate between H1 and H2.
Direct revenues increased by 9% to £11.4m (HY22: £10.6m) driven by the Group’s growing reputation for successful campaigns with global brands including Vodafone, Google and Disney. Visibility of booking levels for the second half of the year has also improved compared to this time last year.
Indirect revenue increased by 13% to £15.3m (HY22: £13.6m). Year on year content views increased by 87%, enabling the Group to greater capitalise on the market shift to short-form content that occurred in the second half of last year.
Net operating expenses
Net operating expenses increased by 7% to £28.5m (HY22: £26.6m).
Production and media costs increased by £0.1m to £5.0m (HY22: £4.9m), with the increase driven by more branded content (Direct) in the period.
Establishment costs, the majority of which is technology costs, increased by £0.6m to £3.1m (HY22: £2.5m), up 22% mainly due to increased software subscriptions to support our content production and continued investment to support future growth in Direct revenue.
Staff costs reduced by £0.3m to £15.8m (HY22: £16.1m). This reduction is mainly a result of the restructuring exercise undertaken in the second half of 2022, offset by inflationary pay rises and our continued investment in our international businesses.
Travel and expenses decreased by £0.3m to £0.7m (HY22: £1.0m). The prior half year included the costs of celebrating our 10-year anniversary.
Depreciation of £0.9m (HY22: £0.7m) was up 35%, mainly driven by a new property lease in Australia.
Net operating expenses (continued)
Amortisation of £0.5m (HY22: £0.4m) up 39%, the increase mainly being due the acquisition of LLIL in March 2023 in addition to the full six-month period of amortisation of Go Animals (Furry Tails) social media pages which were acquired in May 2022.
Share based payment costs were £2.2m (HY22: £2.4m). The share based payments charge includes £0.2m (HY22: £0.4m) of employers NIC on certain share options.
Adjusting items were £0.7m (HY22: £nil). Adjusting items includes costs associated with team reorganisation, a one-off cost-of-living payment and acquisition related fees. More information on these items can be found in note 4.
Adjusted EBITDA was £3.0m (HY22: £1.6m) representing an 84% increase in comparison to the prior half year and in line with the revenue seasonality we anticipate between H1 and H2. Adjusted EBITDA margin increased to 11% (HY22: 7%).
Normal seasonality in advertising revenue combined with the relatively even split of costs means that profitability is significantly weighted towards the second half of the year.
Adjusted EBITDA is used for internal performance analysis to assess the execution of our strategies. Management believe that this adjusted measure is an appropriate metric to understand the underlying performance of the Group. More information on Alternative Performance Measures (APMs) can be found on page 18.
Net finance costs
Net finance costs of £0.0m (HY22: £0.1m) were incurred during the year.
Share of JV
Share in joint ventures was £0.1m profit (HY22: £0.0m loss) representing our percentage share in the results of Pubity Group Ltd.
Loss before tax
Loss before tax was £1.2m (HY22: £1.9m) representing a 39% improvement in comparison to the prior year.
The tax charge for the period was £0.6m (HY22: £0.1m credit).
Goodwill and other intangible assets increased by £0.3m to £15.7m (FY22: £15.4m) reflecting additions of the bolt-on acquisition of LLIL for £0.5m and software additions of £0.3m, offset by amortisation of £0.5m.
Property plant and equipment (PPE) decreased by £0.5m to £3.2m (FY22: £3.7m). Within the period we acquired a new property lease accounting for £0.4m, offset by depreciation of £0.9m.
Other receivables reduced to £0.1m (FY22: £0.6m). Other receivables reflect long term lease deposits in relation to our offices. During HY23, we received a significant repayment of £0.5m for the London lease deposit.
Trade and other receivables reduced by £0.9m to £19.5m (FY22: £20.4m) mainly due to effective cash collection within the period including a reduction in accrued income of £3.9m.
Trade and other payables increased by £1.8m to £6.1m (FY22: £4.3m) mainly driven by timing differences of our working capital movements.
Cash flow and cash position
Cash and cash equivalents at the period end amounted to £32.7m (FY22: £29.3m, HY22: £28.6m).
The increase in cash of £3.4m in comparison to the year-end includes net cash generated from operating activates of £5.3m, and outflows relating to investing and financing activities of £1.8m. More information on the cash flow can be found on page 11.
|Solly Solomou||Richard Jarvis|
|Chief Executive Officer||Chief Financial Officer|
UNAUDITED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
| ||Note||Period ended |
30 June 2023
|Period ended |
30 June 2022
|Net operating expenses||(28,499)||(26,577)|
|Share based payment charge||(2,178)||(2,408)|
|Group operating loss||(1,252)||(1,814)|
|Net finance costs||(3)||(57)|
|Share of post-tax (loss)/profit of equity accounted joint venture||84||(46)|
|Loss before taxation||(1,171)||(1,917)|
|Loss for the period attributable to equity holders of the company||(1,724)||(1,790)|
|Currency translation differences (net of tax)||(78)||-|
|Loss and total comprehensive income for the financial year attributable to equity holders of the company||(1,802)||(1,790)|
|Basic (loss)/earnings per share (pence)||7||(0.8)||(0.9)|
|Diluted (loss)/earnings per share (pence)||7||(0.8)||(0.9)|
1Adjusted EBITDA, which is defined as profit before net finance costs, tax, depreciation, amortisation, share based payment charge and adjusting items is a non-GAAP metric used by management and is not an IFRS disclosure.
All results derive from continuing operations.
UNAUDITED CONSOLIDATED STATEMENT OF FINANCIAL POSITION
|Note||As at 30 |
|As at 30 |
|As at 31|
|Goodwill and other intangible assets||6||15,707||15,374||15,436|
|Property, plant and equipment||3,203||4,038||3,670|
|Investments in equity-accounted joint ventures||443||314||359|
|Deferred tax asset||651||-||260|
|Total non-current assets||20,128||20,300||20,317|
|Trade and other receivables||19,500||14,733||20,370|
|Current tax asset||-||434||378|
|Cash and cash equivalents||32,708||28,554||29,268|
|Total current assets||52,208||43,721||50,016|
|Called up share capital||207||206||206|
|Share premium reserve||28,993||28,993||28,993|
|Accumulated exchange differences||(49)||-||29|
|Deferred tax liability||445||618||394|
|Total non-current liabilities||2,375||3,306||2,894|
|Trade and other payables||6,077||6,835||4,295|
|Current tax liabilities||946||-||636|
|Total current liabilities||8,357||8,199||6,213|
|Total equity and liabilities||72,336||64,021||70,333|
UNAUDITED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
|As at 1 January 2022||206||28,993||-||23,082||52,281|
|Loss for the financial period||-||-||-||(1,790)||(1,790)|
|Total comprehensive income for the period||-||-||-||(1,790)||(1,790)|
|Share based payments||-||-||-||2,025||2,025|
|Deferred tax on share options||-||-||-||-||-|
|Total transactions with owners, recognised directly in equity||-||-||-||2,025||2,025|
|As at 30 June 2022 (unaudited)||206||28,993||-||23,317||52,516|
|Profit for the financial period||-||-||-||7,137||7,137|
|Currency translation differences (net of tax)||-||-||29||-||29|
|Total comprehensive income for the period||-||-||29||7,137||7,166|
|Share based payments||-||-||-||1,527||1,527|
|Deferred tax on share options||-||-||-||17||17|
|Total transactions with owners, recognised directly in equity||206||28,993||-||1,544||30,743|
|As at 31 December 2022 and 1 January 2023 (audited)||206||28,993||29||31,998||61,226|
|Loss for the financial period||-||-||-||(1,724)||(1,724)|
|Currency translation differences (net of tax)||-||-||(78)||-||(78)|
|Total comprehensive loss for the period||-||-||(78)||(1,724)||(1,802)|
|Share based payments||-||-||-||2,178||2,178|
|Deferred tax on share options||-||-||-||1||1|
|Total transactions with owners, recognised directly in equity||1||-||-||2,179||2,180|
|As at 30 June 2023 (unaudited)||207||28,993||(49)||32,453||61,604|
UNAUDITED CONSOLIDATED STATEMENT OF CASH FLOWS
|6 months to 30|
|6 months to 30|
|Year ended 31|
|Cash flows from operating activities|
|Cash generated/(used) from operations||5,486||(2,900)||1,295|
|Net cash generated/(used) from operating activities||5,294||(3,703)||(1,398)|
|Cash flows from investing activities|
|Purchase of intangible assets||(798)||(1,147)||(1,675)|
|Purchase of property, plant and equipment||(191)||(315)||(544)|
|Net cash generated/(used) in investing activities||(989)||(1,462)||(2,219)|
|Cash flows from financing activities|
|Lease deposits paid||-||-||(105)|
|Net cash generated/(used) in financing activities||(800)||(644)||(1,453)|
|Net increase/(decrease) in cash and cash equivalents||3,505||(5,809)||(5,070)|
|Cash and cash equivalents at the beginning of the period||29,268||34,338||34,338|
|Effect of exchange rate changes on cash and cash equivalents||(65)||25||-|
|Cash and cash equivalents at the end of the period||32,708||28,554||29,268|
|6 months to 30|
|6 months to 30|
|Year ended 31|
|Cash generated/(used) from operations||£’000|
|(Loss)/profit for the financial period/year||(1,724)||(1,790)||5,347|
|Net interest expense||3||57||143|
|Share of post tax (profits)/losses/ of equity accounted joint venture||(84)||46||-|
|Amortisation of intangible assets||507||366||804|
|(Loss)/profit on disposal||-||(40)||21|
|Share based payments||2,178||2,025||3,552|
|Decrease/(increase) in trade and other receivables||1,394||60||(5,210)|
|(Decrease)/increase in trade and other payables||1,786||(4,174)||(6,971)|
|Cash generated/(used) from operations||5,486||(2,900)||1,295|
Notes to the Financial Statements are available in the printable PDF version