XLMedia slumps after dividend is scrapped

(Sharecast News) - XLMedia shares slumped after the online marketing group scrapped its dividend and warned that Google's demotion of more than 100 casino sites would cost up to $2.0m (£1.5m) a month.
On 20 January, XLMedia said Google had demoted a number of its casino websites and that this would impede their ability to attract new visitors and generate revenue.

In a further update, the AIM-traded company said 107 sites were affected by Google's action. More than 84 of the sites were of low commercial value but the remaining demoted sites were "premium". It said the low-value sites might have affected the rankings of the other sites but it could not be sure the problem would be resolved.

Lost income from the premium sites would reduce group revenue by between $1.0m and $2.0m a month and a lengthy period of demotion could push them down Google's rankings for a period of time if they are restored. Removing the low-value sites would reduce revenue by between $3m and $5m this year, the company said.

These actions are likely to cause a revaluation of the company's assets and incur an impairment charge, XLMedia said. The company also said that to speed up strategic initiatives and acquisition opportunities it would not pay a dividend for the 2019 financial year and that no dividend was expected to be proposed until further notice.

XLMedia shares fell 27% to 24.55p at 10:28 GMT. The shares have almost halved in value since before the 20 January statement when they were priced at 47p.

Chief Executive Stuart Simms said: "There is no question that we currently face operational headwinds, but fundamentally, I firmly believe in the underlying quality and sustainability of our business. However, I believe it is now time to accelerate a number of strategic measures that will create a short-term drag on revenue growth, but will ultimately strengthen our business by creating a much stronger and more transparent platform from which to grow."

The company also announced the appointment of a chief financial officer and chief transformation officer. Iain Balchin, a turnaround specialist, has joined as CFO with immediate effect from payments optimisation business Ixaris. He takes over from Liat Hellman, who has been interim CFO since Yehuda Dahan stepped down after a profit warning in September.

Transformation chief Sarah Clark has joined from Loot Crate where she was general manager for Europe, Middle East and Africa. Balchin's job will be below board level at first and Clark will not join the board.