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Taptica Int. Ltd (TRMR)

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Tuesday 19 March, 2019

Taptica Int. Ltd

Full Year Audited 2018 Results

RNS Number : 2276T
Taptica International Ltd
19 March 2019
 

 

 

The information communicated in this announcement contains inside information for the purposes of Article 7 of the Market Abuse Regulation (EU) No. 596/2014.

 

19 March 2019

 

 

Taptica International Ltd

("Taptica," the "Company" or the "Group")

 

Full Year Audited 2018 Results

 

Taptica International Ltd (AIM: TAP), a global leader in advertising technologies for performance-based mobile marketing and brand advertising, announces its full year results for the year ended 31 December 2018.

 

Financial Highlights

·   Earnings in line with management expectations and significantly ahead of guidance at the start of 2018

·   Revenues up 31% to $276.9 million (2017: $210.9 million)

Business remains highly cash generative with a strong balance sheet

Sustained diversification of revenue streams with a focus on margin improvement

·   Gross profit increased 38% to $111.4 million (2017: $80.6 million)

Increase in gross margin to 40.25% (2017: 38.2%) resulting from increased efficiencies enabling campaign optimisation

·   Adjusted EBITDA* increased 29% to $44.1 million (2017: $34.2 million)

·   Reported EPS of 32.81 cents (2017: 22.49 cents) and Adjusted DPS of 52.36 cents (2017: 40.44 cents)

·   Net cash inflow from operating activities of $37.5 million (2017: $30.8 million)

·   Net Cash as at 31 December 2018 of $54.4 million** (31 December 2017: net debt of $4.0 million)

 

*Adjusted EBITDA is defined as earnings before interest, taxes, depreciation and amortisation, non-recurring income/expenses  and share-based payment expenses.

** Net cash is defined as cash and cash equivalents less short and long-term interest-bearing debt including capital and finance leases

 

Operational Highlights

·   Expanded global presence with extension of customer base

·   Operating efficiencies achieved, in particular within Tremor Video DSP, resulting in improved margins and overall profitability

·   Performance-based marketing (47% of total revenue):

Increased traction with existing household-name clients

Added blue-chip customers including Bytedance, Yandex and Shein

China, India and UK territories performed particularly well

·   Brand advertising (53% of total revenue):

Significant improvements in Tremor Video DSP operating and media buying efficiencies post-acquisition

Added new data partnerships and optimized existing ones

Client wins include TJMaxx, Hertz and Chobani

 

Post-period End

·   In February 2019, Taptica announced a recommended all-share merger with RhythmOne plc

Combination of the two businesses expected to create one of the leading digital advertising companies in the US

$15 million discretionary share buyback to commence immediately post-completion of the merger

Ofer Druker, currently Executive Chairman of Tremor Video DSP, proposed to become CEO of the enlarged Group

·   Taptica remains highly cash generative and the board is confident in the overall outlook for the Group

 

Tim Weller, Non-executive Chairman of Taptica, commented:

 

"2018 was another year of continued progress for Taptica, during which we successfully executed on our strategy to deliver higher-margin revenues and broaden our blue-chip client base internationally.

 

"What is particularly pleasing is the performance of the Company's brand advertising platform, Tremor Video DSP, which has reported a significant improvement in earnings for the year. Tremor is an excellent example of the Company's ability to acquire and integrate businesses and therefore realising significant operating efficiencies in order to improve performance.

 

"Having delivered three consecutive years of outperformance, the board has been disappointed with the recent share price weakness, which has been largely driven by a series of events outside of the Company's control. This, coupled with the board having to pause the November share buy-back, has generated further downward pressure on the share price, and  we appreciate it will take time to rebuild that trust with investors. We are however confident that the Company will strive to deliver further outperformance, continue the agility that we have shown in adapting to the shifts in market dynamics and gain more confidence with investors as we improve our financial performance.

 

"The outlook for the Company remains positive with Taptica continuing to benefit from the global shift in advertising spend away from traditional advertising methods and towards specialist data-driven technology providers and digital video. Taptica expects the growth of subscription-based video and over-the-top media services ("OTT") to continue. Connected TV ("CTV") is becoming one of the main delivery points for OTT content and is expected to grow as audiences continue to embrace digital streaming over multiple devices. The proposed merger with RhythmOne has the potential to open up the required quality of advertising supply to the Taptica performance-based division, as well as to create one of the foremost video advertising companies in the US, with the scale to take advantage of the global trend towards CTV and OTT. The proposed transaction is due to be completed in April, and we look forward to providing an update in due course."

 

For further information please contact:

 

Taptica

+972 3 545 3900

Tim Weller, Non-executive Chairman

Yaniv Carmi, Chief Financial Officer



finnCap

+44 20 7220 0500

Corporate Finance: Jonny Franklin Adams, James Thompson, Hannah Boros


Corporate Broking: Tim Redfern



Vigo Communications

+44 20 7390 0230

Jeremy Garcia, Antonia Pollock, Charlie Neish

 

[email protected]

 

About Taptica

Taptica International Ltd is a global leader in advertising technologies that operates in more than 70 countries. It has two revenue streams: performance-based marketing, provided by its Taptica business, and brand advertising, provided by its Tremor Video DSP business.

 

The Taptica performance business is an end-to-end mobile technology advertising platform that helps the world's top brands reach their most valuable users with the widest range of traffic sources available today. Its proprietary technology leverages big data and, combined with state-of-the-art machine learning, enables quality media targeting at scale. It works with more than 600 advertisers including Amazon, Alibaba, Bytedance, Netmarble, Stubhub and OpenTable.

 

Tremor Video DSP is the leading programmatic video platform, matching advertisers with audiences - wherever they may be. Delivering custom video experiences across all screens, Tremor Video DSP helps advertisers tell captivating brand stories to create meaningful, personalised moments with prospective customers. Tremor Video DSP works with the top agencies and advertisers in the US.

 

Taptica International Ltd is headquartered in Israel with offices in several locations in the US including San Francisco, New York, and globally in Tokyo (Adinnovation), Beijing, Seoul and London, and is traded on the London Stock Exchange (AIM: TAP).

 

Introduction

 

We are delighted with the strategic progress that we have seen across the Group in 2018 and the sustained demand for Taptica's technologies from an increasingly diversified customer base. The Group performed well during the year, achieving an increase in revenues of 31% to $276.9 million (2017: $210.9 million) and Adjusted EBITDA* increasing 29% to $44.1 million (2017: $34.2 million). Adjusted EBITDA* was in-line with management expectations and significantly ahead of the guidance given at the start of 2018. In addition, we saw an increase in both gross profit and gross margin as a result of the increased efficiencies and the scale of media across the Group, enabling campaign optimisation throughout the business.

 

Taptica is an agile business, with a track record of monitoring industry shifts and successfully positioning the business by optimising its offering in order to take advantage of the transitions in the advertising space. Therefore, the Group remains very well-placed to capitalise on the current shift in digital advertising technologies to brand advertising and video.

 

The Company continues to implement its strategy to increase its penetration internationally and to add blue-chip clients. Specifically, progress has been made against the Group's top-level strategic priorities, which are to focus on:

 

·     improving margins, with a focus on higher quality earnings;

·     increasing operating efficiencies, in particular within Tremor Video DSP;

·     developing and leveraging the Company's economies of scale; and

·     continuing to execute on technology enhancements.

 

Post-period end we announced the recommended all-share merger of Taptica with RhythmOne plc in February 2019, which has the potential to be transformational for the Group. It is anticipated that the merger of these two businesses would create one of the leading digital advertising companies in the US, with the capabilities to compete with the world's leading digital advertising groups. It is expected that the proposed transaction will complete in early April 2019.

 

*Adjusted EBITDA is defined as earnings before interest, taxes, depreciation and amortisation, non recurring income/expenses  and share-based payment expenses.

 

Our unique and agile proposition

 

Taptica is a leading player in the advertising technology industry and our agile approach enables us to consistently evolve in this fast-moving sector. We currently have two core defined revenue streams: performance-based marketing activities and our brand advertising business (Tremor Video DSP).

 

Our performance-based marketing activities focus on our proprietary technology advertising platform which helps brands reach valuable users utilising a wide range of traffic sources. Tremor Video, which we acquired in 2017, is a programmatic video platform that enables advertisers to match campaigns to their audiences and deliver custom video experiences across multiple devices.

 

Taptica's unique proposition is underpinned by its abilities to:

 

·     build unique strategic partnerships with exclusive data partners;

·     expand its global presence and therefore meet local demand with global supply;

·     develop its proprietary technology;

·     provide analytical-based support and optimisation; and

·     deliver exceptional customer service and performance.

 

We have established a position in the global advertising technology space which enables us to react quickly to the fast-changing habits of consumers and how they interact with brands and companies. We do this by locating and leveraging new sources of growth whilst continuing to deliver on the strong underlying fundamentals of our business, ultimately enabling us to build our market position and deliver value for stakeholders.

 

Data regulation

 

The appropriate use of data came into the spotlight in 2018, with the introduction by the EU of the General Data Protection Regulation ("GDPR"). The way the performance-based marketing division utilises sensitive personal data focuses on how a user interacts with the particular advertisement that is shown. We do not use any tools that remain in mobile devices - such as cookies - nor do we collect data that is outside the context of the advertisement. Taptica does not misuse data, or collect or store sensitive personal data. In our Tremor Video division, we buy segmental data from reputable, regulatory-compliant third parties such as Nielsen, Oracle and IBM, as targeting particular audiences based on demographics is required by our customers in this division.

 

A growing market opportunity

 

Growth in the advertising technology industry shows no signs of abating and is constantly changing as consumer's habits and preferences continue to evolve. There is an evident shift from more traditional advertising methods as audiences who previously viewed content on desktop screens have shifted to viewing via mobile devices. Furthermore, the trend towards consumption of content on connected TV ("CTV") platforms and over-the-top media ("OTT")continues to accelerate rapidly. 

 

With global video advertising spend expected to grow from $37.45 billion in 2018 to $70.66 billion in 20211, the opportunity for the Group to expand continues to increase, particularly, as this advertising spend has been triggered by the improving targeting abilities around CTV and OTT platform users. OTT content is streamed through the internet directly onto a device and CTV is one of the primary devices through which OTT content is consumed (alongside laptops, mobile devices, tablets or OTT TV boxes).

 

There are projected to be nearly 218 million OTT users and 204 million CTV users in the US by 20222 with all major OTT providers (Amazon, Netflix, Hulu, YouTube) expected to grow their user bases through 2021. CTV devices (Smart TV, Roku, Chromecast, connected game consoles, etc.) are also expected to experience increases in usage through 2021.

 

The Group is well-placed to capitalise on this growth in OTT and CTV through Tremor, not only in mature markets such as the United States, but also fast-growing international markets. This trend also underpins the recommended merger with RhythmOne, as it is anticipated that the enlarged group will gain significant reach into this fast-growing media segment.

 

Whilst it remains the case that both Facebook and Google carry significant influence across the sector, we believe that Taptica's increasing scale and reputation ensures  its market position. As has been the case for a number of years, independent ad tech providers such as Taptica will continue to be the preferred choice of partner as we continue to tailor our offering for customers. 

 

1Source: July 2018 Cowen and Company report "Cowen's Inaugural Midyear Ad Buyer Survey - Ahead Of The Curve Follow Up Series", via eMarketer

 

2Source: Marketer, July 2018

 

Growth strategy

 

We have a multi-pronged growth strategy with the central aim being to evolve within the industry in which we operate. Our core strategic objectives are to:

 

·     continue to focus on operating efficiencies and generate high-quality earnings;

·     capitalise on the shift to video advertising and the focus on the consumer within the industry through our Tremor Video division, and the fast growing market trends of CTV and OTT in the US;

·     leverage our global presence and experience in order to target territories outside of the US with our video advertising offering;

·     augment our technologies through the increased use of automation and data in order to heighten our user targeting abilities;

·     build upon our performance marketing segment by leveraging our highly experienced team to increase demand from global marketing partners for our services; and

·     further review select acquisition opportunities which either enhance our product stack within performance marketing or give us greater penetration into select territories.

 

Operational Review  

 

2018 was a year of significant progress, with the Group delivering strong adjusted EBITDA growth and sustained cash generation.

 

This strategy to improve margins resulted in the Company achieving EBITDA of $44.1 million, representing growth of 29%.

 

Revenue ($'000s)

2018

 

2017

 

% change

Mobile Apps* (Performance based marketing)

123,929

131,544

- 5.8%

Legacy Display and video (Performance based marketing)

6,891

15,631

-55.9%

Branding*

146,052

63,750

+129.1%

Total

276,872

210,925

+31.3%

 

*The comparative period includes months prior to the acquisition of Tremor Video DSP and AdInnovation Inc

 

Taptica continued to expand its Tier 1 client base in the year, adding blue-chip customers to both its performance marketing division and brand advertising segment, with increasing international presence and China,  India and the UK performing particularly strongly during the year.

 

Performance-based marketing

Revenue generated by the performance-based marketing business decreased by 11% to $130.8 million in the year, a significant part of this decline was as a result of an anticipated reduction in legacy revenues in display and video.

 

The 5.8% decline in mobile apps revenue has been as a result of industry movements within the year that have decreased the level of online inventory supply available. The industry has seen the implementation of more stringent measures to combat fraudulent marketing activities, which has resulted in a reduction in the amount of overall traffic that is available for marketers. Therefore, in order to deliver scale, app developers and customers are having to pay a higher cost per user, which has had what we believe to be a short-term impact on revenues but, more recently the Group has seen signs of developers willing to increase their budgets to accommodate this new trend.

 

The division continued to increase its international presence through its operations in Asia Pacific. In Japan, Taptica operates through its majority-owned subsidiary Adinnovation Inc. who offer Taptica's product as an in-house marketing solution throughout Japan. Following its integration, significant strides have been made in developing Adinnovation as a business, with a new corporate structure implemented and an expansion of the partner sales team. In addition, Adinnovation benefits from the partnership with Taptica in the advertising agency business through the media buying within Taptica. The market in Japan continues to grow with the e-commerce subsegment opening-up additional opportunities for Taptica.

 

In China, the performance marketing business continues to perform well, with a focus on leveraging Taptica's relationships within the territory to help local Chinese companies grow globally. In particular, we have seen strong growth in the retail segment with multinational brands increasing their spend with Taptica.

 

Taptica continued to grow its presence in the UK, with the region performing well in the year, particularly within the sports betting segment. Taptica attracted some of the UK's biggest brands in the year, as a result of a partnership with one of the UK's leading marketing agencies. We continue to focus on strengthening our relationships with some of the UK's biggest agencies in order to build upon the positive momentum we have seen in 2018. We have seen a 234% growth in revenues from the UK between 2017 and 2018.

 

Following the expansion of our footprint in India, the Group continued to see further growth in the territory.  Within the Indian and south-east Asian market, supported by our strong sales team, Taptica continued to leverage our partnerships with local agencies and marketers.

 

Taptica's performance business continues to innovate and augment its technology offering. In a continuous effort to ensure regulated, high quality media, the Company introduced its proprietary fraud prevention module, capable of detecting, and eliminating in real time, low quality, non-human, media behavior. Taptica continued to introduce unique buying optimization and automation tools in its Ad Operations group, which ensures campaigns are optimized in real time rather than the traditional daily optimization approach. Taptica finalized a major engineering scalability exercise by migrating its US East data center to an up-scale hosting facility, thus ensuring better performance and scalability, at a lower operational cost. In order to cater to a larger audience of advertisers, the Company extended its ability to integrate with third party attribution tools, and introduced several new attribution models such as server-to-server and view-through.

 

Brand advertising

The Tremor Video DSP ("TVDSP") business traded strongly in the year, generating revenues of $146.1 million. The division continued to perform well with management focusing on media buying efficiencies and improving net margins, which led to a material improvement in gross profit when compared to legacy DSP performance. The division added clients such as TJMaxx, the American department store chain, Hertz, the international car rental company, and Chobani, the top-selling Greek yogurt brand in the US, with the leisure, retail and auto segment verticals performing strongly.

 

Tremor has unique audience creating capabilities powered by an unparalelled ability to connect the big screen to the small screen, reaching consumers wherever and however they engage. This is achieved by partnering with a number of established and well-trusted data providers in order to compile unique data sets, thereby securing maximum return on investment across all chosen distribution channels. Tremor consolidates the data provided by its partners, including TV viewership patterns, geo-behavioural data, keyword targeting and social platform intelligence to precisely target consumers, ensuring the most relevant audiences are reached.

 

Tremor's demand services have gained a significant algorithmic upgrade by introducing new machine learning techniques, perfecting campaign delivery without human intervention. The core engine is now also capable of successfully delivering narrow targeted campaigns, providing the Company the ability to beat the competition where it fails to deliver. Staying on top of changes in the industry, Tremor has improved its geographic and device targeting precision, introduced cross-device targeting, sharpened its TV targeting abilities and continued to innovate its advanced creative platform. The Company continued to leverage the vast ecosystem of service providers to boost its offering, and in 2018 partnered with Grapeshot to enforce brand safety, with DrawBridge to introduce cross device targeting and with Adjuster to ensure realtime KPI matching. 

 

Post period-end, Tremor Video DSP announced the expansion of its suite of CTV capabilities that featured its exclusive data partnerships. Through its platform, marketers are now able to engage CTV audiences with a granularity that was previously only offered on desktop or mobile. Tremor's comprehensive suite of CTV solutions includes seamless activation, holistic audience targeting, custom and advanced creatives, as well as audience measurement and attribution. The development of Tremor's offering in this segment is central to Tremor's ongoing strategy given the proliferation of CTV globally and ongoing R&D in both OTT and CTV.

 

Board changes

In December 2018, Taptica announced the appointment of Rivi Bloch, the Division Chief Executive Officer of the Taptica Performance Advertising, as Interim Chief Executive Officer following the resignation of Hagai Tai from his position as Chief Executive Officer and Director of the Company.

 

It is expected following the completion of the recommended all-share merger with RhythmOne, that Ofer Druker, currently Executive Chairman of Taptica's Tremor Video division, will become Chief Executive Offer of Taptica and the enlarged group. Mr Druker has been instrumental in the successful integration of Tremor Video and Taptica since Tremor's acquisition. Ms Bloch will continue as CEO of Taptica's Performance Division.

 

Proposed all-share merger with RhythmOne (post-period end)

On 4 February 2019, Taptica announced it had reached an agreement with RhythmOne plc on the terms of a recommended offer to be made by Taptica to acquire the entire issued and to be issued ordinary share capital of RhythmOne. It is intended that the offer will be implemented by means of a court-sanctioned scheme of arrangement under Part 26 of the Companies act and it is anticipated to complete at the beginning of April.

 

The combination of the two businesses is expected to create one of the leading video digital advertising companies in the US, delivering significant economies of scale, a global blue-chip customer base and supply chains to compete with the industry leaders.

 

It is the intention of the Enlarged Group to launch a $15 million discretionary share buy-back programme to purchase shares in the market, commencing immediately following the completion of the proposed merger.

 

Outlook

 

While overall the Company has performed to plan in 2018, the proposed merger with RhythmOne plc has the potential to be a step-change for Taptica. The Board believes it will create a leading video advertising business with a strong US and international footprint, coupled with significant economies of scale across the supply chain and an end-to-end advertising technologies stack.

 

The outlook for the Group remains positive and as previously flagged in our February 2019 update, trading at the beginning of the current financial year has been mixed between the two divisions. The Board's expectations for Taptica's brand advertising platform, Tremor Video DSP, remains strong with management focused on delivering sustainable margin improvement in this segment. Taptica's performance-based advertising division has performed to plan at the outset of the current financial year however it has encountered headwinds across the supply chain affecting much of the industry and a few key customers have engaged later this year than in previous years. The Board expects that aside from creating one of the leading digital advertising companies in the US, the proposed merger with RhythmOne will mitigate much of the market volatility within Taptica's performance-based marketing activities by providing additional access to quality supply, as well as to deliver a number of further synergies within both the performance and branding businesses.

 

 

Tim Weller

Non-executive Chairman

18 March 2019

 

Financial review

 

Revenues for the twelve months ended 31 December 2018 increased by 31% to $276.9 million compared with $210.9 million for 2017. As a result, gross profit increased by 38% to $111.4 million (2017: $80.6 million). Cost of sales, which consists primarily of traffic acquisition and data costs that are directly attributable to revenue generated by the Company and based on the revenue share arrangements with audience and content partners, decreased as a proportion of revenue compared with the prior year. This was as a result of increased technology efficiency gains from an improved use of data along with the leveraging of the Company's increased scale in media buying, leading to a significant improvement in gross margins. Consequently, total gross margin was 40.25% (2017: 38.2%).

 

Operating profit for the year increased by 52% to $26.7 million (2017: $17.6 million), demonstrating good operational leverage.

 

Adjusted EBITDA for full year 2018 was $44.1 million compared with $34.2 million for 2017, which is comprised as follows:

 


2018

$'m

2017

$'m

Operating profit

26.7

17.6

Depreciation & Amortisation

10.8

13.5

Share-based payments

8.0

0.9

Acquisition-related costs

0.2

2.2

Extraordinary Income

(1.6)

0

Adjusted EBITDA

44.1

34.2

 

Net Profit for the year increased by 63.6% to 22.5m (2017: $13.7 million).

 

Operating costs for the year increased, primarily as a result of the first full year of reporting for the acquisitions made during 2017 (which included a six-month contribution from Adinnovation and five-month contribution from Tremor Video DSP). The Company continues to selectively invest in areas that management believe should drive better results and business performance whilst focusing on driving efficiencies and savings across its operations.

 

R&D expenses increased to $20.2 million in the year (2017: $17 million), as the Company continued to invest in R&D to support the growing scale of Taptica's technology platform and expansion in its offering. During the year we were also able to consolidate and decrease infrastructure and operating costs within R&D.

 

Sales & Marketing expenses increased to $44.7 million (2017: $31.5 million), with the focus on enhancing brand recognition, expanding the global customer base and investing in the expansion of the US and global offices, whilst simulatanously, the Company decreased its cost base within the performance marketing division.

 

General & administrative expenses increased to $19.9 million (2017: $14.5 million), primarily to support growing the global operations and sales efforts. On a like for like basis, there is no significant change in G&A expenses.

 

The Company continued to be cash generative with cash generated from operating activities of $37.5 million (2017: $30.8 million).

 

In January 2018, the Company raised $30 million of equity in order to reduce the level of debt under the Company's existing debt facility. As at 31 December 2018, cash and bank deposits were $67.1 million after dividend payments of $6.4 million and net cash as at 31 December 2018 of $54.4 million*.

 

During the year, the Company distributed dividend payments of a total of $6.4 million which was in line with the Company's policy of distributing 25% of net profits in dividend payments.

 

During the period, Taptica commenced a company led share buy-back programme funded from the Company's net cash balance, however, shortly after starting the share buy back the Company had to pause the share buy-back as it became in posession of price sensitive information in connection with the potential acquisition of RhythmOne plc. Taptica has announced its intention to launch a discretionary $15 million share buy-back upon the completion of the proposed acquisition of RhythmOne, due to complete in early April 2019. The share buy-back commitment forms parts of Taptica's broader strategy to deliver shareholder value.

 

Yaniv Carmi

Chief Financial Officer

18 March 2019

 

* Net cash is defined as cash and cash equivalents less short and long-term interest-bearing debt including capital and finance leas

 


Auditors' Report to the Shareholders of Taptica International Ltd.

 

 

We have audited the accompanying consolidated statements of financial position of Taptica International Ltd. (hereinafter - "the Company") as at 31 December 2018 and 2017 and the consolidated statements of comprehensive income, statements of changes in equity and statements of cash flows, for each of the two years in the period ended 31 December 2018. These financial statements are the responsibility of the Company's Board of Director and of its Management.  Our responsibility is to express an opinion on these financial statements based on our audit.

 

We conducted our audit in accordance with generally accepted auditing standards in Israel, including standards prescribed by the Auditors Regulations (Manner of Auditor's Performance) - 1973. Such standards require that we plan and perform the audit to obtain reasonable assurance that the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by Management, as well as evaluating the overall financial statements presentation.  We believe that our audit provides a reasonable basis for our opinion.

 

In our opinion, the consolidated financial statements referred to below present fairly, in all material respects, the consolidated financial position of the Company and its consolidated subsidiaries as of 31 December 2018 and 2017 and their results of operations, changes in equity and cash flows for each of the two years in the period ended 31 December 2018, in accordance with International Financial Reporting Standards (IFRS).

 

 

Somekh Chaikin

Certified Public Accountants (Isr.)

Member Firm of KPMG International

 

March 18, 2019

 

 


Consolidated Statements of Financial Position as at 31 December

 



2018

2017


Note

USD thousands

USD thousands

 

Assets



   

Cash and cash equivalents

9

 67,073 

 26,985 

Trade receivables, net

7

 64,329 

 78,554 

Other receivables

7

 6,990 

 3,831 

Total current assets


 138,392 

 109,370 




   

Fixed assets, net

5

 2,879 

 2,141 

Intangible assets, net

6

 53,605 

 61,560 

Deferred tax assets

4

 2,383 

 2,329 

Total non-current assets


 58,867 

 66,030 




   

Total assets


 197,259 

 175,400 




   




   

Liabilities



   

Credit and current maturities of loans


 12,672 

 5,930 

Trade payables

8

 39,630 

 46,232 

Other payables

8

 14,920 

 22,053 

Total current liabilities


 67,222 

 74,215 




   

Employee benefits


 836 

 976 

Long-term loans

17B(2)

 - 

 25,085 

Deferred tax liabilities

4

 991 

 1,587 

Liability for put option on non-controlling interests

17B(1)

 3,941 

 8,619 

Total non-current liabilities


 5,768 

 36,267 




   

Total liabilities


 72,990 

 110,482 




   

Equity

12


   

Share capital


 198 

 180 

Share premium


 65,305 

 32,886 

Capital reserves


 7,713 

 1,276 

Retained earnings


 51,053 

 30,576 




   

Total equity


 124,269 

 64,918 




   

Total liabilities and equity


 197,259 

 175,400 

 

 

Date of approval of the financial statements: March 18, 2019

 

 

The accompanying notes are an integral part of these consolidated financial statements.


 

Consolidated Statements of Comprehensive Income for the Year Ended 31 December

 

 



2018

2017


Note

USD thousands

USD thousands

 

Revenues

10

 276,872 

 210,925 

Cost of sales


 165,440 

 130,350 

Gross profit


 111,432 

 80,575 




   

Research and development expenses


 20,187 

 16,995 

Selling and marketing expenses


 44,702 

 31,460 

General and administrative expenses

11

 19,847 

 14,493 



 84,736 

 62,948 




   

Profit from operations


 26,696 

 17,627 



   

 and business combination related expenses*


 35,642

 30,609 




   

Financing income


 1,251 

 257 

Financing expenses


(778)

(564)

Financing income (expenses), net


 473 

(307)




   

Profit before taxes on income


 27,169 

 17,320 




   

Taxes on income

4

(5,015)

(3,561)




   

Profit for the year


 22,154 

 13,759 

Profit for the year before amortization of purchased intangibles and



   

 business combination related expenses (net of tax)**


 30,960 

 25,015 




   

Other comprehensive income items:



   

Foreign currency translation differences for foreign operation


 361 

(1)




   

Total other comprehensive income for the year


 361 

(1)




   

Total comprehensive income for the year


 22,515 

 13,758 




   

Earnings per share



   

Basic earnings per share (in USD)

13

 0.3281 

 0.2249 

Basic earnings per share (in USD) before amortization of purchased

13

 0.4585 

 0.4088 

 Intangibles and business combination related expenses (net of tax)**




Diluted earnings per share (in USD)

13

          0.3179

 0.2161 

Diluted earnings per share (in USD) before amortization of purchased

13



 Intangibles and business combination related expenses (net of tax)**


 0.4442 

 0.3929   

 

*          Amounting to USD 8,946 thousand (2017: USD 12,982 thousand) of amortization of purchased intangibles acquired in business combination and related acquisition expenses.

**         Amounting to USD 8,806 thousand (2017: USD 11,256 thousand) of amortization of purchased intangibles acquired in business combination and related acquisition expenses, net of tax.

 

The accompanying notes are an integral part of these consolidated financial statements.



 

Consolidated Statements of Changes in Equity for the Year Ended 31 December

 


Share

Share

Capital

Retained



capital

premium

reserves*

Earnings

Total


USD thousands

 

Balance as at






 1 January 2017

175 

 29,759 

 1,238 

 19,552 

 50,724 







Total comprehensive






 income for the year






Profit for the year

 13,759

 13,759 

Other comprehensive






 income

-

-

(1)

 

(1)

Total comprehensive






 income for the year

-

-

(1)

13,759 

13,758 







Transactions with






 owners, recognized






 directly in equity






Revaluation of liability for






 put option on non-






 controlling interests

-

-

-

(123)

(123)

Share based payments

 - 

 24 

 860 

 -  

 884 

Exercise of share options

 5 

 3,103 

(821)

 -

 2,287 

Dividends to owners

 - 

 - 

 - 

(2,612)

(2,612)

Balance as at






 31 December 2017

 180 

 32,886 

 1,276 

 30,576 

 64,918 







Comprehensive






 income for the year






Profit for the year

 - 

 - 

 - 

 22,154 

  22,154 

Other comprehensive






 income

 - 

 

 361 

 - 

 361 

Total comprehensive






 income for the year

 - 

 

 361 

 22,154 

 22,515 







Transactions with






 owners, recognized






 directly in equity






Revaluation of liability for






 put option on non-






 controlling interests

 - 

 

 

 4,678 

 4,678 

Issuance of shares (net of






 issuance cost)

 15 

 29,707 

 - 

 - 

 29,722 

Buy Back shares

 - 

(135)

 - 

 - 

(135)

Share based payments

 - 

 25 

 8,012 

 

 8,037 

Exercise of share options

 3 

 2,822 

(1,936)

 - 

 889 

Dividends to owners

 - 

 - 

 - 

(6,355)

(6,355)

Balance as at






 31 December 2018

 198 

 65,305 

 7,713 

 51,053 

 124,269 

 

* Includes reserves for share-based payments and other comprehensive income.

 

The accompanying notes are an integral part of these consolidated financial statements.



 

Consolidated Statements of Cash Flows for the Year Ended 31 December

 

 




2018

2017




USD thousands

USD thousands

 

Cash flows from operating activities



   

Profit for the year


 22,154 

 13,759 

Adjustments for:



   

Depreciation and amortization


 10,808 

 13,499 

Net financing (income) expense


(505)

 349 

Share-based payment


 8,037 

 884 

Income tax expense


 5,015 

 3,561 




   

Change in trade and other receivables


 15,557 

 2,745 

Change in trade and other payables


(10,580)

 647 

Change in employee benefits


(73)

 533 




   

Income taxes received


 217 

 83 

Income taxes paid


(12,774)

(5,094)

Interest received


 381 

 58 

Interest paid


(693)

(267)

Net cash provided by operating activities


 37,544 

 30,757 

 

Cash flows from investing activities



   

Decrease (increase) in pledged deposits


 51 

(72)

Payment of earn-out


(1,218)

 - 

Acquisition of  fixed assets


(1,461)

(233)

Acquisition and capitalization of intangible assets


(1,444)

(1,471)

Proceeds from sale of intangible assets


 118 

 - 

Acquisition of subsidiaries, net of cash acquired


 - 

(53,010)

Net cash used in investing activities


(3,954)

(54,786)

 

Cash flows from financing activities



   

Issuance of shares


 29,539 

 - 

Loan received from shareholders


 - 

 10,000 

Repayment of loan from shareholders


 - 

(10,000)

Repayment of loans


(18,195)

(174)

Buy back of shares


(135)

 - 

Proceeds from exercise of share options


 889 

 2,287 

Loans received from bank


 - 

 30,000 

Dividends paid


(6,355)

(2,612)

Net cash provided by financing activities


 5,743 

 29,501 

 

Net increase in cash and cash equivalents


 39,333 

 5,472 

Cash and cash equivalents as at the beginning of the year


 26,985 

 21,471 

Effect of exchange rate fluctuations on cash and cash equivalents


 755 

 42 




   

Cash and cash equivalents as at the end of the year


 67,073 

 26,985 

 

 

The accompanying notes are an integral part of these consolidated financial statements.


Note 1 - General

 

A.        Reporting entity

 

Taptica International Ltd. (the "Company" or "Taptica International") formerly named Marimedia Ltd. was incorporated in Israel under the laws of the state of Israel on 20 March 2007, and is listed on the AIM Market of the London Stock Exchange. The address of the registered office is 121 Hahashmonaim Street Tel-Aviv, Israel.

 

Taptica International (AIM: TAP) is a global end-to-end performance-based mobile marketing and brand advertising platform that helps top brands reach their users worldwide. Taptica International works with leading brands and companies in a variety of segments, all over the world. The Company is headquartered in Tel Aviv with offices in USA (the biggest offices are located in San Francisco & New York), Beijing, Seoul, London, Tokyo and New Delhi.

 

On 17 July 2017, Taptica Japan (fully owned subsidiary) purchased 57% of Adinnovation Inc. (hereinafter - "ADI") share capital for a total consideration of up to USD 5.7 million. See also Note 17B(1).

 

On 7 August 2017, Taptica entered into an assets purchase agreement (APA) with US-based company Tremor Video Inc.'s (hereinafter - "Tremor") to purchase their demand-side advertising platform for a total consideration of USD 50 million with a positive net working capital balance of USD 22.5 million. See also Note 17B(2).

 

With respect to a proposed merger announced by the Company subsequent to the balance sheet date, see note 19.

 

 

B.        Definitions

 

In these financial statements -

 

(1)        The Company - Taptica International Ltd. (former name: Marimedia Ltd.)

 

(2)        The Group -     Taptica International Ltd. and its subsidiaries.

 

(3)        Subsidiaries - Companies, the financial statements of which are fully consolidated, directly or indirectly, with the financial statements of the Company.

 

(4)        Related party - As defined by IAS 24, "Related Party Disclosures".

 

 

Note 2 - Basis of Preparation

 

A.        Statement of compliance

 

The consolidated financial statements have been prepared in accordance with International Financial Reporting Standards (IFRS).

 

The consolidated financial statements were authorized for issue by the Company's Board of Directors on March 18, 2019.

 

 

B.        Functional and presentation currency

 

These consolidated financial statements are presented in USD, which is the Company's functional currency, and have been rounded to the nearest thousands, except when otherwise indicated. The USD is the currency that represents the principal economic environment in which the Company operates.

 

 

C.        Basis of measurement

 

The consolidated financial statements have been prepared on a historical cost basis except for the following assets and liabilities:

 

•           Deferred tax assets and liabilities

•           Contingent consideration commitment

•           Put option to non-controlling interests

•           Provisions

 

For further information regarding the measurement of these assets and liabilities see Note 3 regarding significant accounting policies.

 

 

D.        Use of estimates and judgments

 

The preparation of financial statements in conformity with IFRS requires management of the Group to make judgments, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets, liabilities, income and expenses. Actual results may differ from these estimates.

 

The preparation of accounting estimates used in the preparation of the Group's financial statements requires management of the Group to make assumptions regarding circumstances and events that involve considerable uncertainty. Management of the Group prepares estimates on the basis of past experience, various facts, external circumstances, and reasonable assumptions according to the pertinent circumstances of each estimate.

 

Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognized in the period in which the estimates are revised and in any future periods affected.

 

Information about significant judgments (other than those involving estimates) made by the management while implementing Group accounting policies and which have the most significant effect on the amounts recognized in the financial statements is included in Note 6, on intangible assets, with respect to the accounting of software development, and Note 17, on subsidiaries, with respect to business combination.

 

E.         Determination of fair value

 

Preparation of the financial statements requires the Group to determine the fair value of certain assets and liabilities. When determining the fair value of an asset or liability, the Group uses observable market data as much as possible. There are three levels of fair value measurements in the fair value hierarchy that are based on the data used in the measurement, as follows:

 

•           Level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities.

•           Level 2: inputs other than quoted prices included within Level 1 that are observable, either directly or indirectly

•           Level 3: inputs that are not based on observable market data (unobservable inputs).

 

Further information about the assumptions that were used to determine fair value is included in the following notes:

•           Note 14, on share-based payments;

•           Note 15, on financial instruments; and

•           Note 17, on subsidiaries (regarding business combinations).

 

 

Note 3 - Significant Accounting Policies

 

The accounting policies set out below have been applied consistently for all periods presented in these consolidated financial statements, and have been applied consistently by Group entities.

 

A.        Basis of consolidation

 

(1)        Business combinations

 

The Group implements the acquisition method to all business combinations. The acquisition date is the date on which the acquirer obtains control over the acquiree. Control exists when the Group is exposed, or has rights, to variable returns from its involvement with the acquiree and it has the ability to affect those returns through its power over the acquiree. Substantive rights held by the Group and others are taken into account when assessing control.

 

The Group recognizes goodwill on acquisition according to the fair value of the consideration transferred less the net amount of the identifiable assets acquired and the liabilities assumed.

 

The consideration transferred includes the fair value of the assets transferred to the previous owners of the acquiree, the liabilities incurred by the acquirer to the previous owners of the acquiree and equity instruments that were issued by the Company. In addition, the consideration transferred includes the fair value of any contingent consideration. After the acquisition date, the Group recognizes changes in the fair value of contingent consideration classified as a financial liability in profit or loss, whereas contingent consideration classified as an equity instrument is not remeasured.

 

Costs associated with the acquisitions that were incurred by the acquirer in the business combination such as: finder's fees, advisory, legal, valuation and other professional or consulting fees are expensed in the period the services are received.

 

 (2)       Subsidiaries

 

Subsidiaries are entities controlled by the Group. The financial statements of the subsidiaries are included in the consolidated financial statements from the date that control commenced, until the date that control is lost.

 

(3)        Transactions eliminated on consolidation

 

Intra-group balances and transactions, and any unrealized income and expenses arising from intra-group transactions, are eliminated in preparing the consolidated financial statements.

 

(4)        Issuance of put option to non-controlling interests

 

A put option issued by the Company to non-controlling interests that is settled in cash is recognized as a liability at the present value of the exercise price under the anticipated acquisition method. In subsequent periods, the Group elected to account for the changes in the value of the liability in respect of put options in the Equity (see also note 17B(1)).

Accordingly, the Group's share of a subsidiary's profits includes the share of the non-controlling interests to which the Group issued a put option.

 

B.        Foreign currency

 

(1)        Foreign currency transactions

 

Transactions in foreign currencies are translated to the respective functional currencies of the Group at exchange rates at the dates of the transactions. Monetary assets and liabilities denominated in foreign currencies at the reporting date are translated in to the functional currency at the exchange rate on that date. The foreign currency gain or loss on monetary items is the difference between amortized cost in the functional currency at the beginning of the year, adjusted for effective interest and payments during the year, and the amortized cost in foreign currency translated at the exchange rate as of the end of the year.

 

Non-monetary assets and liabilities denominated in foreign currencies that are measured at fair value are retranslated to the functional currency at the exchange rate on the date that the fair value was determined. Non-monetary items that are measured in terms of historical cost in a foreign currency are translated using the exchange rate on the date of the transaction.

 

(2)        Foreign operations

 

The assets and liabilities of foreign operations, including goodwill and fair value adjustments arising on acquisition, are translated to USD at exchange rates at the reporting date. The income and expenses of foreign operations are translated to USD at exchange rates at the dates of the transactions.

 

Foreign currency differences are recognized in other comprehensive income and are presented in equity in the capital reserve.

 

C.        Financial instruments

 

(1)        Non-derivative financial assets - policy applicable as from January 1, 2018

 

Initial recognition and measurement of financial assets

The Group initially recognizes trade receivables and debt instruments issued on the date that they are created. All other financial assets are recognized initially on the trade date at which the Group becomes a party to the contractual provisions of the instrument. A financial asset is initially measured at fair value plus transaction costs that are directly attributable to the acquisition or issuance of the financial asset. A trade receivable without a significant financing component is initially measured at the transaction price. Receivables originating from contract assets are initially measured at the carrying amount of the contract assets on the date classification was changed from contract asset to receivables.

 

Derecognition of financial assets

Financial assets are derecognized when the contractual rights of the Group to the cash flows from the asset expire, or the Group transfers the rights to receive the contractual cash flows on the financial asset in a transaction in which substantially all the risks and rewards of ownership of the financial asset are transferred. When the Group retains substantially all of the risks and rewards of ownership of the financial asset, it continues to recognize the financial asset.

 

Classification of financial assets into categories and the accounting treatment of each category

Financial assets are classified at initial recognition to one of the following measurement categories: amortized cost; fair value through other comprehensive income - investments in debt instruments; fair value through other comprehensive income - investments in equity instruments; or fair value through profit or loss.

 

Financial assets are not reclassified in subsequent periods unless, and only if, the Group changes its business model for the management of financial debt assets, in which case the affected financial debt assets are reclassified at the beginning of the period following the change in the business model.

 

A financial asset is measured at amortized cost if it meets both of the following conditions and is not designated at fair value through profit or loss:

-        It is held within a business model whose objective is to hold assets so as to collect contractual cash flows; and

-        The contractual terms of the financial asset give rise to cash flows representing solely payments of principal and interest on the principal amount outstanding on specified dates.

 

 

A debt instrument is measured at fair value through other comprehensive income if it meets both of the following conditions and is not designated at fair value through profit or loss:

-        It is held within a business model whose objective is achieved by both collecting contractual cash flows and selling financial assets; and

-        The contractual terms of the debt instrument give rise to cash flows representing solely payments of principal and interest on the principal amount outstanding on specified dates.

 

All financial assets not classified as measured at amortized cost or fair value through other comprehensive income as described above, as well as financial assets designated at fair value through profit or loss, are measured at fair value through profit or loss. On initial recognition, the Group designates financial assets at fair value through profit or loss if doing so eliminates or significantly reduces an accounting mismatch that would otherwise arise.

 

The Group has balances of trade and other receivables and deposits that are held within a business model whose objective is collecting contractual cash flows. The contractual cash flows of these financial assets represent solely payments of principal and interest that reflects consideration for the time value of money and the credit risk. Accordingly, these financial assets are measured at amortized cost.

 

Subsequent measurement and gains and losses

 

Financial assets at fair value through profit or loss

These assets are subsequently measured at fair value. Net gains and losses, including any interest income or dividend income, are recognized in profit or loss (other than certain derivatives designated as hedging instruments).

 

 

Subsequent measurement and gains and losses (cont'd)

 

Financial assets at amortized cost

These assets are subsequently measured at amortized cost using the effective interest method. The amortized cost is reduced by impairment losses. Interest income, foreign exchange gains and losses and impairment are recognized in profit or loss. Any gain or loss on derecognition is recognized in profit or loss.

 

 

(2)        Non-derivative financial assets - policy applicable before January 1, 2018

 

Initial recognition and measurement of financial assets

The Group initially recognizes loans and receivables and deposits on the date that they are created. All other financial assets acquired in a regular way purchase, including assets designated at fair value through profit or loss, are recognized initially on the trade date at which the Group becomes a party to the contractual provisions of the instrument, meaning on the date the Group undertook to purchase or sell the asset.

Non-derivative financial instruments comprise investments in equity and debt securities, trade and other receivables, including service concession receivables and cash and cash equivalents.

 

Derecognition of financial assets

Financial assets are derecognized when the contractual rights of the Group to the cash flows from the asset expire, or the Group transfers the rights to receive the contractual cash flows on the financial asset in a transaction in which substantially all the risks and rewards of ownership of the financial asset are transferred.

 

When the Group retains substantially all of the risks and rewards of ownership of the financial asset, it continues to recognize the financial asset.

 

Classification of financial assets into categories and the accounting treatment of each category

 

Loans and receivables

Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. Such assets are recognized initially at fair value plus any directly attributable transaction costs. Subsequent to initial recognition loans and receivables are measured at amortized cost using the effective interest method, less any impairment losses.

Loans and receivables comprise cash and cash equivalents, trade and other receivables, investments in non-marketable debentures and service concession receivables.

Cash and cash equivalents include cash balances available for immediate use and call deposits. Cash equivalents include short-term highly liquid investments (with original maturities of three months or less) that are readily convertible into known amounts of cash and are exposed to insignificant risks of change in value. Bank overdrafts that are repayable on demand and form an integral part of the Group's cash management are included as a component of cash and cash equivalents for the purpose of the statement of cash flows.

 

 

 (3)       Non-derivative financial liabilities

 

Non-derivative financial liabilities include bank overdrafts, loans and borrowings from banks, and trade and other payables.

 

Initial recognition of financial liabilities

The Group initially recognizes debt securities issued on the date that they originated. All other financial liabilities are recognized initially on the trade date at which the Group becomes a party to the contractual provisions of the instrument.

 

Subsequent measurement of financial liabilities

Financial liabilities (other than financial liabilities at fair value through profit or loss) are recognized initially at fair value less any directly attributable transaction costs. Subsequent to initial recognition these financial liabilities are measured at amortized cost using the effective interest method. Financial liabilities are designated at fair value through profit or loss if the Group manages such liabilities and their performance is assessed based on their fair value in accordance with the Group's documented risk management strategy, providing that the designation is intended to prevent an accounting mismatch, or the liability is a combined instrument including an embedded derivative.

 

Subsequent measurement of financial liabilities (cont'd)

Transaction costs directly attributable to an expected issuance of an instrument that will be classified as a financial liability are recognized as an asset in the framework of deferred expenses in the statement of financial position. These transaction costs are deducted from the financial liability upon its initial recognition, or are amortized as financing expenses in the statement of income when the issuance is no longer expected to occur.

 

Derecognition of financial liabilities

Financial liabilities are derecognized when the obligation of the Group, as specified in the agreement, expires or when it is discharged or cancelled.

 

 

(4)        Share capital

 

Ordinary shares

Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of ordinary shares and share options are recognized as a deduction from equity, net of any tax effects.

Incremental costs directly attributable to an expected issuance of an instrument that will be classified as an equity instrument are recognized as an asset in deferred expenses in the statement of financial position. The costs are deducted from equity upon the initial recognition of the equity instruments, or are amortized as financing expenses in the statement of income when the issuance is no longer expected to take place.

 

Treasury shares

When share capital recognized as equity is repurchased by the Group, the amount of the consideration paid, which includes directly attributable costs, net of any tax effects, is recognized as a deduction from equity. Repurchased shares are classified as treasury shares. When treasury shares are sold or reissued subsequently, the amount received is recognized as an increase in equity, and the resulting surplus on the transaction is carried to share premium, whereas a deficit on the transaction is deducted from retained earnings.

D.        Fixed Assets

 

Fixed assets are measured at cost less accumulated depreciation. Depreciation is provided on all property, plant and equipment at rates calculated to write each asset down to its residual value (assumed to be nil), using the straight line method, over its expected useful life as follows:

 


Years

Computers and servers

3

Office furniture and equipment

6-17

Leasehold improvements

The shorter of the lease term and the useful life

 

An asset is depreciated from the date it is ready for use, meaning the date it reaches the location and condition required for it to operate in the manner intended by management.

 

Depreciation methods, useful lives and residual values are reviewed at the end of each reporting year and adjusted if appropriate.

 

E.         Intangible assets

 

(1)        Software development

 

Costs that are directly associated with the development of identifiable and unique software products controlled by the Group are recognized as intangible assets when all the criteria in IAS 38 are met.

Development costs are capitalized only when it is probable that future economic benefit will result from the project and the following criteria are met:

 

•     the technical feasibility of the product has been ascertained;

•     adequate technical, financial and other resources are available to complete and sell or use the intangible asset;

•     the Group can demonstrate how the intangible asset will generate future economic benefits and the ability to use or sell the intangible asset can be demonstrated;

•     it is the intention of management to complete the intangible asset and use it or sell it; and

•     the development costs can be measured reliably.

 

In subsequent periods, these costs are amortized over the useful economic life of the asset.

 

Where these criteria are not met development costs are charged to the statement of comprehensive income as incurred.

 

The estimated useful lives of developed software is three years.

 

Amortization methods, useful lives and residual values are reviewed at the end of each reporting year and adjusted if appropriate.

 

(2)        Acquired software

 

Acquired software licenses are capitalized on the basis of the costs incurred to acquire and bring to use the specific software licenses. These costs are amortized over their estimated useful lives (3-5 years) using the straight line method. Costs associated with maintaining software programs are recognized as an expense as incurred.

 

(3)        Goodwill

 

Goodwill that arises upon the acquisition of subsidiaries is presented as part of intangible assets. For information on measurement of goodwill at initial recognition, see Note 3A(1).

 

In subsequent periods goodwill is measured at cost less accumulated impairment losses. The Group has identified its entire operation as a single cash generating unit (CGU). As of 31 December 2018 and 2017, the CGU's recoverable amount was based on the fair value of the Company's quoted share price (level 1). According to management assessment, no impairment in respect to goodwill has been recorded.

 

(4)        Other intangible assets

 

Other intangible assets that are acquired by the Group, which have finite useful lives, are measured at cost less accumulated amortization and accumulated impairment losses.

 

(5)        Amortization

 

Amortization is a systematic allocation of the amortizable amount of an intangible asset over its useful life. The amortizable amount is the cost of the asset less its accumulated residual value.

 

Internally generated intangible assets, such as software development costs, are not systematically amortized as long as they are not available for use, i.e. they are not yet on site or in working condition for their intended use. Goodwill is not systematically amortized as well, but is tested for impairment at least once a year.

 

The Group examines the amortization methods, useful life and accumulated residual values of its intangible assets at least once a year (usually at the end of each reporting period) in order to determine whether events and circumstances continue to support the decision that the intangible asset has an indefinite useful life.

 

Amortization is recognized in profit or loss on a straight-line basis over the estimated useful lives of the intangible assets from the date they are available for use, since this method most closely reflects the expected pattern of consumption of the future economic benefits embodied in each asset, such as development costs, are tested for impairment at least once a year until such date as they are available for use.

 

The estimated useful lives for the current and comparative periods are as follows:

 

·     Trademarks

1.4-5 years

·     Software (developed and acquired)

3-5 years

·     Customer relationships

3-5.4 years

·     Technology

4.4-5 years

·     Distribution channel

3 years

 

 

In 2017 the Group examined the useful life of intangible assets created in a business combination and as a result changed the estimated economic life of some assets from 5 years to 3 years. The effect of the aforesaid change on amortization expenses for the year ended 31 December, 2017 is USD 437 thousands.

 

 

F.         Impairment

 

(1)        Non-derivative financial assets - policy applicable as from January 1, 2018

 

Financial assets, contract assets and lease receivables

 

The Group recognizes a provision for expected credit losses in respect of:

-           Financial assets at amortized cost;

 

The Group has elected to measure the provision for expected credit losses in respect of trade receivables at an amount equal to the full lifetime credit losses of the instrument.

 

When determining whether the credit risk of a financial asset has increased significantly since initial recognition, and when estimating expected credit losses, the Group considers reasonable and supportable information that is relevant and available. Such information includes quantitative and qualitative information, and an analysis, based on the Group's past experience and informed credit assessment, and it includes forward looking information.

 

Measurement of expected credit losses

 

Expected credit losses are a probability-weighted estimate of credit losses. Credit losses are measured as the present value of the difference between the cash flows due to the Group in accordance with the contract and the cash flows that the Group expects to receive.

 

Presentation of provision for expected credit losses in the statement of financial position

 

Provisions for expected credit losses of financial assets measured at amortized cost and are deducted from the gross carrying amount of the financial assets.

 

Write-off

 

The gross carrying amount of a financial asset is written off when the Group does not have reasonable expectations of recovering a financial asset at its entirety or a portion thereof. This is usually the case when the Group determines that the debtor does not have assets or sources of income that may generate sufficient cash flows for paying the amounts being written off. However, financial assets that are written off could still be subject to enforcement activities in order to comply with the Group's procedures for recovery of amounts due. Write-off constitutes a de-recognition event.

 

 

(2)        Non-derivative financial assets - policy applicable before January 1, 2018

 

A financial asset not carried at fair value through profit or loss is tested for impairment when objective evidence indicates that a loss event has occurred after the initial recognition of the asset, and that the loss event had a negative effect on the estimated future cash flows of that asset that can be estimated reliably.

 

Objective evidence that financial assets are impaired can include:

•           Breach of contract by a debtor;

•           Restructuring of an amount due to the Group on terms that the Group would not consider otherwise;

•           Indications that a debtor or issuer will enter bankruptcy;

•           Adverse changes in the payment status of borrowers;

•           Changes in the economic environment that correlate with insolvency of issuers or the disappearance of an active market for a security;

•           Observable data indicating a measurable decrease in the cash flow expected from a group of financial assets.

 

 

Accounting for impairment losses of financial assets measured at amortized cost

An impairment loss in respect of a financial asset measured at amortized cost is calculated as the difference between its carrying amount and the present value of the estimated future cash flows discounted at the asset's original effective interest rate. Losses are recognized in profit or loss and reflected in a provision for loss against the balance of the financial asset measured at amortized cost. Interest income on the impaired assets is recognized using the interest rate that was used to discount the future cash flows for the purpose of measuring the impairment loss.

 

Reversal of impairment loss

An impairment loss is reversed if the reversal can be related objectively to an event occurring after the impairment loss was recognized (such as repayment by the debtor). For financial assets measured at amortized cost and available-for-sale financial assets that are debt securities, the reversal is recognized in profit or loss. For available-for-sale financial assets that are equity securities, the reversal is recognized directly in other comprehensive income.

 

G.        Impairment of non-financial assets

 

Non-financial assets that are subject to amortization are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognized for the amount by which an asset's carrying amount exceeds its recoverable amount. The recoverable amount is the higher of an asset's fair value less costs to sell and value in use. For the purposes of assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash flows (cash-generating units).

Non-financial assets that were subject to impairment are reviewed for possible reversal of the impairment recognized in respect thereof at each statement of financial position date.

In 2018 and 2017 the Company accelerated amortization of Intangible assets that were created in a business combination and capitalized development costs. The accelerated amortization amounted to USD 43 thousand and USD 5,493 thousand, respectively.

 

H.        Employee benefits

 

(1)        Post-employment benefits

 

The Group's main post-employment benefit plan is under section 14 to the Severance Pay Law ("Section 14"), which is accounted for as a defined contribution plan. In addition, for certain employees, the Group has an additional immaterial plan that is accounted for as a defined benefit plan. These plans are usually financed by deposits with insurance companies or with funds managed by a trustee.

 

(a)        Defined contribution plans

 

A defined contribution plan is a post-employment benefit plan under which an entity pays fixed contributions into a separate entity and has no legal or constructive obligation to pay further amounts. Obligations for contributions to defined contribution pension plans are recognized as an expense in the statement of comprehensive income in the periods during which related services are rendered by employees.

 

According to Section 14 the payment of monthly deposits by a company into recognized severance and pension funds or insurance policies releases it from any additional severance obligation to the employees that have entered into agreements with the company pursuant to such Section 14. The Company has entered into agreements with a majority of its employees in order to implement Section 14. Therefore, the payment of monthly deposits by the Company into recognized severance and pension funds or insurance policies releases it from any additional severance obligation to those employees that have entered into such agreements and therefore the Company incurs no additional liability with respect to such employees.

 

(b)        Defined benefit plans

 

A defined benefit plan is a post-employment benefit plan other than a defined contribution plan. The Group's net obligation in respect of defined benefit pension plans is calculated separately for each plan by estimating the amount of future benefit that employees have earned in return for their service in the current and prior periods. That benefit is discounted to determine its present value, and the fair value of any plan assets is deducted. The Group determines the net interest expense (income) on the net defined benefit liability (asset) for the period by applying the discount rate used to measure the defined benefit obligation at the beginning of the annual period to the then-net defined benefit liability (asset).

 

(2)        Short-term benefits

Short-term employee benefit obligations are measured on an undiscounted basis and are expensed as the related service is provided or upon the actual absence of the employee when the benefit is not accumulated (such as maternity leave).

 

A liability is recognized for the amount expected to be paid under short-term cash bonus or profit-sharing plans if the Group has a present legal or constructive obligation to pay this amount as a result of past service provided by the employee and the obligation can be estimated reliably.

 

The employee benefits are classified, for measurement purposes, as short-term benefits or as other long-term benefits depending on when the Group expects the benefits to be wholly settled.

 

(3)        Share-based payment transactions

The grant date fair value of share-based payment awards granted to employees is recognized as a salary expense with a corresponding increase in equity, over the period that an employee becomes unconditionally entitled to an award. The amount recognized as an expense in respect of share-based payment awards that are conditional upon meeting service vesting conditions, is adjusted to reflect the number of awards that are expected to vest.

 

 

I.          Revenue recognition - Initial application of IFRS 15, Revenue from Contracts with Customers

 

IFRS 15 replaces the current guidance regarding recognition of revenues and presents a new model for recognizing revenue from contracts with customers. The model includes five steps for analyzing transactions so as to determine when to recognize revenue and at what amount. Furthermore, IFRS 15 provides new and more extensive disclosure requirements than those that exist under current guidance.

The standard introduces a new five-step model for recognizing revenue from contracts with customers:

(1)        Identifying the contract with customer

(2)        Identifying distinct performance obligations in the contract.

(3)        Determining the transaction price.

(4)        Allocating the transaction price to distinct performance obligations

(5)        Recognizing revenue when the performance obligations are satisfied.

 

The Group earns its revenue from providing user acquisition services by using technological tools and developments. The Company's business is based on optimizing real time trading of digital advertising between buyers and sellers.

 

The revenue is comprised of different pricing schemes such as Cost per Mil Impression (CPM), performance based metrics that include Cost per Click (CPC) and Cost per Action (CPA) options.

 

Revenue from advertising services is recognized by multiplying an agreed amount per Mil Impression/click/ action with the volumes of these units delivered.

 

The Group acts as the principle in these arrangements and reports revenue earned and costs incurred on a gross basis.

 

As from 1 January 2018, the Group initially applies IFRS 15. The effect of applying IFRS 15 on the financial statements for the period ended 31 December 2018, is immaterial.

 

J.         Classification of expenses

 

Cost of revenues

Cost of revenues consists primarily of video advertising costs, traffic acquisition costs and research cost, that are directly attributable to revenue generated by the Company.

 

Research and development

Research and development expenses consist primarily of compensation and related costs for personnel responsible for the research and development of new and existing products and services and amortization of certain intangible assets (see also Note 6). Where required, development expenditures are capitalized in accordance with the Company's standard internal capitalized development policy in accordance with IAS 38 (also see Note 3E). All research costs are expensed when incurred.

 

Selling and marketing

Selling and marketing expenses consist primarily of compensation and related costs for personnel engaged in customer service, sales, and sales support functions, as well as advertising and promotional expenditures and amortization of certain intangible assets (see also Note 6).

 

General and administrative

General and administrative expenses consist primarily of compensation and related costs for personnel, and include costs related to the Company's facilities, finance, human resources, information technology, legal organizations and fees for professional services. Professional services are principally comprised of outside legal, and information technology consulting and outsourcing services that are not directly related to other operational expenses.

 

K.        Financing income and expenses

 

Financing income mainly comprises foreign currency gains and interest income.

Financing expenses comprises of exchange rate differences, interest and bank fees, interest on loans and other expenses.

 

Foreign currency gains and losses on financial assets and financial liabilities are reported on a net basis as either financing income or financing expenses depending on whether foreign currency movements are in a net gain or net loss position.

 

L.         Income tax expense

 

Income tax comprises current and deferred tax. Current tax and deferred tax are recognized in the statement of comprehensive income except to the extent that they relate to a business combination.

 

Current taxes

Current tax is the expected tax payable (or receivable) on the taxable income for the year, using tax rates enacted or substantively enacted at the reporting date.

 

Deferred taxes

Deferred tax is recognized in respect of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes.

 

Deferred tax is not recognized for the following temporary differences:

•           The initial recognition of goodwill; and

•           Differences relating to investments in subsidiaries to the extent it is probable that they will not   reverse in the foreseeable future, either by way of selling the investment or by way of distributing taxable dividends in respect of the investment.

 

The measurement of deferred tax reflects the tax consequences that would follow the manner in which the Group expects, at the end of the reporting period, to recover or settle the carrying amount of its assets and liabilities. Deferred tax is measured at the tax rates that are expected to be applied to temporary differences when they reverse, based on the laws that have been enacted or substantively enacted by the reporting date.

 

A deferred tax asset is recognized for tax benefits and deductible temporary differences, to the extent that it is probable that future taxable profits will be available against which they can be utilized. Deferred tax assets are reviewed at each reporting date and are reduced to the extent that it is no longer probable that the related tax benefit will be realized.

 

Offset of deferred tax assets and liabilities

Deferred tax assets and liabilities are offset if there is a legally enforceable right to offset current tax liabilities and assets, and they relate to income taxes levied by the same tax authority.

 

M.       Earnings per share

 

The Group presents basic and diluted earnings per share (EPS) data for its ordinary shares. Basic EPS is calculated by dividing the profit or loss attributable to ordinary shareholders of the Company by the weighted average number of ordinary shares outstanding during the year. Diluted EPS is determined by adjusting the weighted average number of ordinary shares outstanding, for the effects of all dilutive potential ordinary shares, which mainly comprise of share options granted to employees and certain equity instruments resulting from business combination transactions.

 

N.        Dividends

 

Dividend distribution to the Group's owners is recognized as a liability in the Group's consolidated statement of financial position on the date on which the dividends are approved by the Group's Board of Directors.

 

 

O.        Leases

 

Finance lease is recognized when the Company assumes substantially all the risks and benefits of ownership and classified as finance leases.

 

Upon initial recognition, the leased assets are measured and a liability is recognized at an amount equal to the lower of its fair value and the present value of the minimum lease payments. Subsequent to initial recognition, the asset is accounted for in accordance with the accounting policy applicable to that asset.

 

Other leases are classified as operating lease, and the leased assets are not recognized on the Company's statement of financial position. Payments made under operating leases, other than conditional lease payments, are recognized in profit or loss on a straight-line basis over the term of the lease. Minimum lease payments made under operating leases are recognized in profit or loss as incurred.

 

P.         New standard and interpretation not yet adopted

 

(1)        IFRIC 23, Uncertainty Over Income Tax Treatments

 

IFRIC 23 clarifies how to apply the recognition and measurement requirements of IAS 12 for uncertainties in income taxes. According to IFRIC 23, when determining the taxable profit (loss), tax bases, unused tax losses, unused tax credits and tax rates when there is uncertainty over income tax treatments, the entity should assess whether it is probable that the tax authority will accept its tax position. Insofar as it is probable that the tax authority will accept the entity's tax position, the entity will recognize the tax effects on the financial statements according to that tax position. On the other hand, if it is not probable that the tax authority will accept the entity's tax position, the entity is required to reflect the uncertainty in its accounts by using one of the following methods: the most likely outcome or the expected value. IFRIC 23 emphasizes the need to provide disclosures of the judgments and assumptions made by the entity regarding uncertain tax positions.

 

IFRIC 23 is effective for annual reporting periods beginning on or after 1 January 2019.

The Group has not yet commenced examining the effect of IFRIC 23 on the financial statements.

 

(2)        IFRS 16, Leases

 

In January 2016, the IASB issued IFRS 16, "Leases" ("the new Lease Standard"). According to the new Lease Standard, a lease is a contract, or part of a contract, that conveys the right to use an asset for a period of time in exchange for consideration.

 

The effects of the adoption of the new Lease Standard are as follows:

 

·    According to the new Lease Standard, lessees are required to recognize all leases in the statement of financial position (excluding certain exceptions, see below). Lessees will recognize a liability for lease payments with a corresponding right-of-use asset, similar to the accounting treatment for finance leases under the existing standard, IAS 17, "Leases". Lessees will also recognize interest expense and depreciation expense separately.

·    Variable lease payments that are not dependent on changes in the Consumer Price Index ("CPI") or interest rates, but are based on performance or use are recognized as an expense by the lessees as incurred and recognized as income by the lessors as earned.

·    In the event of a change in variable lease payments that are CPI-linked, lessees are required to remeasure the lease liability and record the effect of the remeasurement as an adjustment to the carrying amount of the right-of-use asset.

·    The accounting treatment by lessors remains substantially unchanged from the existing standard, namely classification of a lease as a finance lease or an operating lease.

·    The new Lease Standard includes two exceptions which allow lessees to account for leases based on the existing accounting treatment for operating leases - leases for which the underlying asset is of low financial value and short-term leases (up to one year).

 

The new Lease Standard is effective for annual periods beginning on or after January 1, 2019.

 

The Company will apply the modified retrospective approach upon the initial adoption of the new Lease Standard by measuring the right-of-use asset at an amount equal to the lease liability, as measured on the transition date.

 

The Company has a number of lease contracts, mainly leases of an office building. In assessing the impact of the new Lease Standard on the financial statements, the Company evaluated the following matters:

 

·    Options to extend the lease - according to the new Lease Standard, the non-cancellable period of a lease includes periods that are covered by options to extend the lease if the lessee is reasonably certain to exercise the option.

·    Separation of lease components - according to the new Lease Standard, all lease components within a contract should be accounted for separately from non-lease components. A lessee is allowed a practical expedient according to which it can elect, by class of underlying asset, not to separate non-lease components from lease components, and instead account for them as a single lease component.

·    Incremental interest rate - the Company estimates the incremental interest rate to be used for measuring the lease liability and right-of-use asset on the date of initial adoption of the new Lease Standard, based on the lease term and nature of the leased asset.

 

The Company estimated that the effect of the initial adoption of the new Lease Standard as of January 1, 2019, is expected to result in an increase in the Company's total assets and liabilities in the amount to USD 9.1 million.

 

Moreover, the effect of the initial adoption of the new Lease Standard in 2019 is expected to result in a decrease in the Company's lease expenses of USD 2.4 million and an increase in the Company's depreciation and finance expenses of USD 2.3 million and USD 0.2 million - USD 0.3 million, respectively. The total effect of the initial adoption of the new Lease Standard in 2019 is expected to result in an increase of USD 0.1 million in operating profit and a decrease of USD 0.1 million - USD 0.2 million in profit before income taxes.

The estimations above are in accordance to the existing contracts of the Company as at 31 December, 2018.

 

Note 4 - Income Tax

 

A.        Tax under various laws

 

The Company and its subsidiaries are assessed for income tax purposes on a separate basis. Each of the subsidiaries is subject to the tax rules prevailing in the country of incorporation.

 

 

B.        Details regarding the tax environment of the Israeli companies

(1)        Corporate tax rate

Taxable income of the Israeli parent is subject to the Israeli corporate tax at the rate of 24% in 2017 and 23% in 2018.

 

 

(2)        Benefits under the Law for the Encouragement of Capital Investments

 

The Investment Law provides tax benefits for Israeli companies meeting certain requirements and criteria. The Investment Law has undergone certain amendments and reforms in recent years.

The Israeli parliament enacted a reform to the Investment Law, effective January 2011. According to the reform, a flat rate tax applies to companies eligible for the "Preferred Enterprise" status. In order to be eligible for Preferred Enterprise status, a company must meet minimum requirements to establish that it contributes to the country's economic growth and is a competitive factor for the gross domestic product.

 

On December 21, 2016 the Knesset plenum passed the second and third reading of the Economic Efficiency Law (Legislative Amendments for Achieving Budget Objectives in the Years 2017 and 2018) - 2016 in which the Encouragement Law was also amended (hereinafter: "the Amendment"). The Amendment added new tax benefit tracks for a "preferred technological enterprise" and a "special preferred technological enterprise" that awards reduced tax rates to a technological industrial enterprise for the purpose of encouraging activity relating to the development of qualifying intangible assets.

 

Preferred technological income that meets the conditions required in the law, will be subject to a reduced corporate tax rate of 12%, and if the preferred technological enterprise is located in Development Area A to a tax rate of 7.5%. The Amendment is effective as from January 1, 2017.

 

On May 16, 2017 the Knesset Finance Committee approved Encouragement of Capital Investment Regulations (Preferred Technological Income and Capital Gain of Technological Enterprise) - 2017 (hereinafter: "the Regulations"), which provides rules for applying the "preferred technological enterprise" and "special preferred technological enterprise" tax benefit tracks including the Nexus formula that provides the mechanism for allocating the technological income eligible for the benefits.

 

In June 2016, Taptica appealed for a tax ruling to apply "the preferred enterprise" track, which was obtained on April 2017 and will be apply for the years 2016-2020.

 

On 28 December 2016, Taptica Social together with Taptica appealed for a tax ruling for a restructuring, whereby Taptica Social will be merged with and into Taptica in such a manner that Taptica Social will transfer to Taptica all its assets and liabilities for no consideration and thereafter will be liquidated. Accordingly, on 6 June 2017 the merger between the companies was approved by the Israeli Tax Authority and the effective merge date was determined as 31 December 2016. As a result of the merger, the ruling previously obtained by Taptica regarding the preferred income required re- validation from the Israeli tax authority. Therefore Taptica appealed and received on December 2018 re-validation from the Israeli tax authority for the ruling which determines that Taptica owns an industrial enterprise and Preferred Technological Enterprise as defined in the Law for the Encouragement of Capital Investments - 1959. In addition, as a part of the re-validation of the ruling, Taptica also obtained an amendment that includes the acquisition and absorption of Tremor's operation in the rulings and apply the Law for the Encouragement of Capital Investments to this purchased activity as well. The tax rulings which was obtained on December 2018 will apply for the years 2017-2021.

 

On 4 December 2018, the Company together with Taptica submitted a request to the Israeli tax authorities for a tax ruling regarding to restructuring, whereby Taptica will be merged with and into the Company in such a manner that Taptica will transfer to the Company all its assets and liabilities for no consideration and thereafter will be liquidated. As of 31 December 2018 the merger between the companies was not yet approved by the Israeli Tax Authority. Following the expected approval of the restructuring, the tax rulings regarding Taptica owns an industrial enterprise and preferred technological enterprise which was obtained on December 2018 expected to apply on the merged company.

 

C.        Details regarding the tax environment of the non-Israeli companies

 

Non Israeli subsidiaries are taxed according to the tax laws in their countries of residence as reported in their statutory financial statement prepared under local accounting regulations.

 

D.        Composition of income tax expense

 




Year ended 31 December




2018

2017




USD thousands

USD thousands

 

Current tax expense


   

Current year

5,494

 6,372 


5,494

 6,372 

Deferred tax expense (income)


   

Creation and reversal of temporary differences

(954)

(2,656)

Change in tax rate

475

(155)


(479)

(2,811)



   

Income tax expense

5,015

 3,561 

 

E.         Reconciliation between the theoretical tax on the pre-tax profit and the tax expense:

 




Year ended 31 December




2018

2017




USD thousands

USD thousands

 

Profit before taxes on income

27,169

17,320

Primary tax rate of the Company

23%

24%

Tax calculated according to the Company's primary tax rate

6,249

4,157




Additional tax (tax saving) in respect of:



Non-deductible expenses net of tax exempt income *

2,665

229

Effect of reduced tax rate on preferred income



and differences in previous tax assessments

(5,452)

(2,148)

Utilization of tax losses from prior years for which deferred taxes



  were not created

(27)

-

Effect on deferred taxes at a rate different from the



 primary tax rate

1,109

580

Foreign tax rate differential

447

788  

Other differences

24

(45)

Income tax expenses

5,015

3,561

 

*including non- deductible share based compensation expenses

 

F.         Deferred tax assets and liabilities

 

The tax effects of temporary differences that give rise to significant portions of the deferred tax assets and liabilities are presented below:

 







Intangible

Employees




Assets and R&D expenses

Compensation*

 

Other*

 

Total

 


USD thousands

USD thousands

USD thousands

USD thousands

 

Balance of deferred tax asset





 (liability) as at 1 January





 2017

(1,763)

 111

213 

(1,439)






Changes recognized in profit or





 loss

 2,202 

193

261 

 2,656 






Business combination

(1,186)

368

 188 

(630)

Effect of change in tax rate

 168 

25 

(38)

 155 






Balance of deferred tax asset





 (liability) as at 31 December





 2017

(579)

 697

 624 

 742 

 

*Reclasiffied

 

 

 

 






Intangible

Employees




Assets and R&D expenses

Compensation

 

Other

 

Total

 


USD thousands

USD thousands

USD thousands

USD thousands

 

Balance of deferred tax asset





 (liability) as at 1 January





 2018

(579)

 697

 624

 742 






Changes recognized in profit or

697

151

106

954

 loss





Effect of change in tax rate













(168)

(22)

(285)

(475)

          Changes recognized in equity

(24)

 

12

 

183

 

171

 






Balance of deferred tax asset





 (liability) as at 31 December

(74)

838

628

1,392

 2018

 

 

 

 

 

 

Note 5 - Fixed Assets, net

 



Office




Computers

furniture and

Leasehold



And Servers

equipment

improvements

Total


USD thousands

 

Cost





 

Balance as at 1 January 2017

 527 

 158 

 643 

 1,328 

 






 

Additions

 108 

 25 

 100 

 233 

 

Business combinations (see Note 17)

 1,896 

 186 

 58 

 2,140 

 

Disposals

 - 

 - 

(2)

(2)

 

Balance as at 31 December 2017

 2,531 

 369 

 799 

 3,699 

 






 

Additions

 1,202 

 236 

 485 

 1,923 

 


 

 

 

 

 

Balance as at 31 December 2018

 3,733 

 605 

 1,284 

 5,622 

 






 

Depreciation





 

Balance as at 1 January 2017

 420 

 55 

 420 

 895 

 






 

Additions

 512 

 74 

 79 

 665 

 

Disposals

 - 

 - 

(2)

(2)

 

Balance as at 31 December 2017

932 

 129 

 497 

 1,558 

 






 

Additions

 980 

 67 

 138 

 1,185 

 


 

 

 

 

 

Balance as at 31 December 2018

 1,912 

 196 

 635 

 2,743 

 







Carrying amounts












As at 1 January 2017


 107 

 103 

 223 

 433 







As at 31 December 2017


1,599      

 240 

 302 

 2,141 







As at 31 December 2018


 1,821 

 409 

 649 

 2,879 

 

 

 


Note 6 - Intangible Assets, net

 












Customer


Distribution

Residual



Software

Trademarks

relationships

Technology

channel

Goodwill

Total


USD thousands

 

Cost








Balance as at








 1 January 2017

 5,266 

 5,007 

 900 

 10,473 

 1,044 

 19,600 

 42,290 









Additions

 1,471 

 - 

 - 

 - 

 - 

 - 

 1,471 

Business combinations








 (see Note 17)*

 136 

 3,160 

 6,453 

 16,985 

 - 

13,143 

 39,877 









Balance as at








 31 December 2017

 6,873 

 8,167 

 7,353 

 27,458 

 1,044 

 32,743 

 83,638 









Exchange rate differences

4

34

61

-

-

242

341

Additions

1,444

-

-

-

-

-

1,444

Disposals

(134)

-

-

-

-

-

(134)









Balance as at








 31 December 2018

 8,187 

 8,201 

 7,414 

 27,458 

 1,044 

 32,985 

 85,289 









Amortization








Balance as at








 1 January 2017

 3,003 

 1,965 

 357 

 3,641 

 278 

 - 

 9,244 









Additions

2,057 

 2,786 

 864 

 6,593 

 534 

 12,834 









Balance as at








 31 December 2017

 5,060 

 4,751 

 1,221 

 10,234 

 812 

 22,078 









Exchange rate differences

 - 

 10 

 18 

 - 

 - 

 - 

 28 

Additions

 854 

 2,212 

 1,357 

 4,968 

 232 

 - 

 9,623 

Disposals

(45)

 - 

 - 

 - 

 - 

 - 

(45)









Balance as at








 31 December 2018

 5,869 

 6,973 

 2,596 

 15,202 

 1,044 

 - 

 31,684 









Carrying amounts








As at 1 January 2017

 2,263 

 3,042 

 543 

 6,832 

 766 

 19,600 

 33,046 









As at 31 December 2017

1,813 

 3,416 

6,132 

 17,224 

 232 

 32,743 

 61,560 









As at 31 December 2018

 2,318 

 1,228 

 4,818 

 12,256 

 - 

 32,985 

 53,605 

 

Amortization

 

The amortization of technology and software is allocated to research and development expenses and amortization of trademarks, distribution channel and customer relationships is allocated to selling and marketing expenses.

 

With respect to examination performed over the useful life of intangible assets by the Group as of 31 December 2017, see Note 3E(5) and impairment of Intangible assets, see Note 3G.

 

*   Reclassified

 

B.        Capitalized development costs

 

Development costs capitalized in the period amounted to USD 1,093 thousand (2017: USD 1,136 thousand) and were classified under software.

 

 

Note 7 - Trade and Other Receivables



31 December



2018

2017



USD thousands

USD thousands

 

Trade receivables, net

 64,329 

 78,554 



   

Other receivables:


   

Prepaid expenses

 1,328 

 1,044 

Institutions

 5,336 

 2,397 

Related parties

 - 

 4 

Pledged deposits

 326 

 386 


 

 


 6,990 

 3,831 



   


 71,319 

 82,385 

 

 

Note 8 - Trade and Other Payables


31 December



2018

2017



USD thousands

USD thousands

 

Trade payables

 39,630 

 46,232 



   

Other payables:


   

Advances from customers

 1,676 

 1,404 

Wages, salaries and related expenses

 9,620 

 9,251 

Provision for vacation

 841 

 842 

Institutions

 2,492 

 8,143 

Related parties

 - 

 164 

Contingent consideration commitment (see Note 17B (1))

 - 

 1,300 

Others

 291 

 949 


 14,920 

 22,053 



   


 54,550 

 68,285 

 

Note 9 - Cash and Cash Equivalents

 



31 December



2018

2017



USD thousands

USD thousands

 

Cash


40,941 

 22,978 

Bank deposits


 26,132 

 4,007 

Cash and cash equivalents


 67,073 

 26,985 

 

The Group's exposure to credit, and currency risks are disclosed in Note 15 on financial instruments.

 

Note 10 - Revenue

 



Year ended 31 December


2018

2017


USD thousands

USD thousands

 

Branding

 146,052 

 63,750 

Performance

 130,820 

 147,175 





 276,872 

 210,925 

 

 

 

Note 11 - General and Administrative Expenses

 



Year ended 31 December


2018

2017


USD thousands

USD thousands

 

Wages, salaries and related expenses

 8,693 

 6,169 

Share base payments

 3,879 

 172 

Rent and office maintenance

 3,763 

 1,943 

Professional expenses

 1,527 

 1,302 

Depreciation and Amortization

 555 

 323 

Doubtful debts

 507 

 1,745 

Acquisition costs

 177 

 2,202 

Other expenses

 746 

 637 



   


 19,847 

 14,493 

 

Note 12 - Equity

 

A.        Share capital

 



Ordinary shares- number of shares


2018

2017

 

Issued and paid-in share capital as at 31 December

 68,522 

 62,484 



   

Authorized share capital

 300,000 

 300,000 

 

(1)        Rights attached to share

The holders of ordinary shares are entitled to receive dividends as declared from time to time and are entitled to one vote per share at general meetings of the Company. All shares rank equally with regard to the Company's residual assets.

 

(2)        Director share allotment

According to Director's employment commitment letter, the Company is committed to issue shares worth of GBP 6,250 each quarter in consideration of the director's services.

In the year ended 31 December 2018 and 2017, the Company issued 4,933 and 6,001 ordinary shares of a par value of NIS 0.01 based on the share price on the date of the issuance, respectively.

The total expenses recognized in the statement of Comprehensive Income in the year ended 31 December 2018 and 2017 with respect to the director share allotment amounted to USD 33 and USD 35 thousand, respectively.

 

(3)        Issuing new shares

On 22 January 2018, subsequent to the balance sheet date, the Company announced that it has completed the issuing of 4,850,000 new ordinary shares at a price of 450 pence per ordinary share for a total consideration of USD 30 million (US$29.2 net of issuance costs). The issued shares represent approximately 7.7% of the Company's current issued ordinary share capital.

 

(4)        Own share acquisition

On 12 December 2018, the Company acquired 55,000 Ordinary Shares of NIS 0.01 ("Ordinary Shares") at a price of GBP 0.195 per share for a total consideration of GBP 107,250 (USD 134,839). The shares purchased represent approximately 0.08% of the total voting rights of the Company as of the acquisition date.

 

B.        Dividends

 

Details on dividends (in USD thousand):


For the year

For the year


ended

ended


31 December 2018

31 December, 2017


USD thousands

USD thousands

 

Declared and paid

 6,355 

2,612 

 

 

A dividend in the amount of USD 2,612 thousand (USD 0.0432 per ordinary shares) was declared in March 2017, was paid in June and July 2017.

 

A dividend in the amount of USD 3,651 thousand (USD 0.054 per ordinary shares) was declared in March 2018, was paid in June 2018.

 

A dividend in the amount of USD 2,704 thousand (USD 0.0398 per ordinary shares) was declared in September 2018, was paid in November 2018.

 

Note 13 - Earnings per Share

 

Basic earnings per share

 

The calculation of basic earnings per share as at 31 December 2018 and 2017 was based on the profit for the year divided by a weighted average number of ordinary shares outstanding, calculated as follows:

 

Profit for the year




Year ended 31 December




2018

2017




USD thousands

 

Profit for the year

 22,154 

13,759 

 

Weighted average number of ordinary shares:




Year ended 31 December




2018

2017




Shares of NIS 1

Shares of NIS 1




0.01 par value

0.01 par value

 

Weighted average number of ordinary shares used to



 calculate basic earnings per share as at 31 December

 67,520,554 

 61,187,918




Basic earnings per share (in USD)

 0.3281 

0.2249

Basic earnings per share (in USD) before amortization



of purchased intangibles and business combination



related expenses

 0.4585 

0.4088




 

Diluted earnings per share

 

The calculation of diluted earnings per share as at 31 December 2018 and 2017 was based on profit for the year divided by a weighted average number of shares outstanding after adjustment for the effects of all dilutive potential ordinary shares, calculated as follows:

 

Weighted average number of ordinary shares (diluted):

 



Year ended 31 December



2018

2017



Shares of NIS

Shares of NIS



0.01 par value

0.01 par value

 

Weighted average number of ordinary shares used to




 

 calculate basic earnings per share


 67,250,554 

61,187,918

 

Effect of share options on issue


 2,446,429 

2,472,347

 

Weighted average number of ordinary shares used to




 

 calculate diluted earnings per share


 69,696,983 

63,660,265

 





 

Diluted earnings per share (in USD)


 0.3179 

0.2161

 

Diluted earnings per share (in USD) before amortization



of purchased intangibles and business combination



related expenses

 0.4442 

0.3929 

 

Note 14 - Share-Based Payment Arrangements

 

(1)        Expense recognized in the statement of comprehensive income is as follows:

 




Year ended 31 December




2018

2017




USD thousands

 

Selling and marketing



 2,738 

 427 

Research and development



 1,420 

 285 

General and administrative



 3,879 

 172 




 8,037 

 884 

 

(2)        Share-based compensation plan

 

The terms and conditions related to the grants of the share options programs are as follows:

·    All the share options that were granted are non-marketable.

·    All options are to be settled by physical delivery of shares.

·    Vesting conditions are based on a service period of between 0.75-4 years.

On December 4, 2017, the Company's shareholders adopted the Company's 2017 Equity Incentive Plan (the "2017 Plan") to provide for the grant of equity incentive awards to the executive officers and employees of Tremor Video DSP following the acquisition in August 2017, and other U.S.-based employees of the Taptica Group.

 

Under the 2017 Plan, the Company may grant incentive stock options (ISOs that comply with U.S. tax requirements), nonstatutory stock options, restricted shares, restricted share units (RSUs), performance bonus awards, performance units and performance shared.   The maximum number of Ordinary Shares of the Company that may be granted under the 2017 Plan is 7,700,000.

 

 

(3)        New grants during the period

 

During 2018, the Group granted 3,756 thousand share options, 1,380 thousand Performance Share Units (PSUs) and 1,365 thousand Restricted Share Units (RSUs) to its executives officers and employees from outstanding awards under 2017 Plan and 2014 Plan.

 

 

The total expense recognized in the year ended 31 December 2018 with respect to the options granted to employees, amounted to approximately USD 8,004 thousand.

The grant date fair value of the share options granted was measured based on the Black-Scholes option pricing model.

 

 

(4)        The number of share options is as follows:

 


Weighted average exercise price

Number of options


2018

2017

2018

2017


(GBP)

(Thousands)

 

Outstanding at 1 January

1.82

1.55

6,733

 5,526 

Forfeited during the year

2.79

1.90

(2,161)

(1,124)

Exercised during the year

0.55

 0.86

(1,238)

(2,031)

Granted during the year

2.83

2.66

6,501

 4,362 





   

Outstanding at 31 December

2.44

1.82

9,835

 6,733





   

Exercisable at 31 December



1,559

 395 

 

(5)        Information on measurement of fair value of share-based payment plans

 

The fair value of employees share options is measured using the Black-Scholes formula. Measurement inputs include the share price on the measurement date, the exercise price of the instrument, expected volatility, expected term of the instruments, expected dividends, and the risk-free interest rate (based on government debentures).

 

The parameters used in the measurement of the fair values at grant date of the equity-settled share-based payment plans were as follows:

 




The parameters used to calculate fair value:



 


2018

2017




Grant date fair value in USD

0.83-5.92

0.77-5.39

Share price (on grant date) (in GBP)

3.00-4.46

2.39-4.48

Exercise price (in GBP)

0-4.37

0-4.31

Expected volatility (weighted average)

42%

42%

Expected life (weighted average)

3.3-3.9

3.5-3.8

Expected dividends

0.7%-1.35%

0.73%-3.04%

Risk-free interest rate

2.26%-2.73%

1.57%-1.99%

 

 

Note 15 - Financial Instruments

 

A.        Overview

 

The Group has exposure to the following risks from its use of financial instruments:

·           Credit risk

·           Liquidity risk

·           Market risk

This note presents quantitative and qualitative information about the Group's exposure to each of the above risks, and the Group's objectives, policies and processes for measuring and managing risk.

 

B.        Credit risk

 

Credit risk is the risk of financial loss to the Group if a customer or counterparty to a financial instrument fails to meet its contractual obligations, and arises principally from the Group's trade and other receivables.

 

Exposure to credit risk

 

The carrying amount of financial assets represents the maximum credit exposure.

The maximum exposure to credit risk at the reporting date was as follows:

 



31 December




2018

2017




USD thousands

USD thousands

 

Cash and cash equivalents (1)


 67,073 

 26,985 

Trade receivables, net (2)


 64,329 

 78,554 

Other receivables


 326 

 390 




   



 131,728 

 105,929 

 

(1)     At 31 December 2018, USD 997 thousand are held in NIS, USD 3,062 thousand are held in GBP and USD 297 thousand are held in EUR, USD 215 thousand are held in CAD, USD 5,562 thousand are held in JPY, USD 140 thousand are held in KRW and the remainder held in USD.

(2)     At 31 December 2018, the Group included provision to doubtful debts in the amount of USD 2,822 thousand (31 December 2017: USD 2,369 thousand) in respect of collective impairment provision and specific debtors that their collectability is in doubt.

 

C.        Liquidity risk

 

Liquidity risk is the risk that the Group will encounter difficulty in meeting the obligations associated with its financial liabilities that are settled by delivering cash or another financial asset. The Group's approach to managing liquidity is to ensure, as far as possible, that it has sufficient liquidity to meet its liabilities when due, under both normal and stressed conditions, without incurring unacceptable losses or risking damage to the Group's reputation.

 

As of December 31, 2018 and December 31, 2017, the Group's contractual obligation of financial liability is in respect of capital lease, trade and other payables in the amount of USD 40,320 thousand and USD 49,121 thousand, respectively. The contractual maturity of this financial liability is less than one year and in its carrying amount.

 

C.        Liquidity risk (cont'd)

 

In addition, as of December 31, 2018, the Company has a loan from bank which an amount of USD 12,273 thousand (2017- USD 5,454 thousand) will be repaid until one year.

The Company is also committed to comply with certain financial covenants as determined in the financing agreement.

 

In addition, in the framework of the acquisition of Adinnovation INC, as detailed hereunder in Note 17B(1), a mutual option was granted to the Company to acquire the remaining 43% of the shares. As of 31 December, 2018, the amount of the liability inherent in the exercise of the option is USD 3,941 thousand and can be exercise from the third year and for a period of six months.

 

D.        Market risk

 

Market risk is the risk that changes in market prices, such as foreign exchange rates, the CPI, interest rates and equity prices will affect the Group's income or the value of its holdings of financial instruments. The objective of market risk management is to manage and control market risk exposures within acceptable parameters, while optimizing the return.

 

Linkage and foreign currency risks

 

Currency risk

The Group is exposed to currency risk on sales and purchases that are denominated in a currency other than the respective functional currency of the Group, the US dollar (USD). The principal currencies in which these transactions are denominated are NIS, Euro, GBP, CAD, SGD, KRW and JPY.

At any point in time, the Group aims to match the amounts of its assets and liabilities in the same currency in order to hedge the exposure to changes in currency.

In respect of other monetary assets and liabilities denominated in foreign currencies, the Group ensures that its net exposure is kept to an acceptable level by buying or selling foreign currencies at spot rates when necessary to address short-term imbalances.

 

E.         Fair value

 

The Company's financial instruments consist mainly of cash and cash equivalents, bank deposits, trade and other receivables, trade and other payables and contingent consideration. The carrying amounts of these financial instruments, except for the contingent consideration, approximate their fair value because of the short maturity of these investments. The contingent consideration is classified as level 3 under IFRS 13. Such amounts have been recorded initially and subsequently at their fair value (see Note 17).

 

The table hereunder presents reconciliation from the beginning balance to the ending balance of contingent consideration carried at fair value level 3 of the fair value hierarchy.

 





Financial instruments level 3

 

Balance as at December 31, 2016



 200 

Recognition of contingent consideration (see also Note 17B(1))



 1,283 

Expenses recognized in profit and loss



 17 

Settlement of partial contingent consideration



(200)

Balance as at December 31, 2017



 1,300 

 

 

 




Settlement of contingent consideration



(1,218)

Recognized in profit and loss



 (82)

Balance as at December 31, 2018



 

Note 16 - Related Parties

 

A.        Compensation and benefits to key management personnel

 

Executive officers also participate in the Company's share option programs. For further information see Note 14 regarding share-based payments.

 

Compensation and benefits to key management personnel (including directors) that are employed by the Company and its subsidiaries:

 



Year ended 31 December




2018

2017




USD thousands

USD thousands

 

Share-based payments



 3,540 

 153 

Other compensation and benefits



 3,989 

 3,866 





   




 7,529 

 4,019 

 

 

B.        Transactions with related parties

 

Details of transactions with related and interested parties are presented below (all transactions are at market terms, unless otherwise indicated):

 



Year ended 31 December



2018

2017



Value of transactions

Related party

Nature of transaction

USD thousands

 





Webisaba, related company

Purchase of media from the Company

-

(15)

Ehud Levy, Shareholder

Interest on loan (see Note 17B(2))

-

(34)

 

 

C.        See also Note 17B(2) with respect to a bridge loan from related party.

 

Note 17 - Subsidiaries

 

A.        Details in respect of subsidiaries

 

Presented hereunder is a list of the Group's subsidiary:

 



Principal

The Group's ownership interest in



location of the

the subsidiary for the year ended



Company's

December 31

Name of company


activity

2018

2017

 

Taptica LTD

Israel

100%

100%

Taptica INC

USA

100%

100%

Tremor Video DSP

USA

100%

100%

Tremor Video PTE Ltd.*

Singapore

100%

100%

Adinnovation INC

Japan

57%

57%

Taptica Japan

Japan

100%

100%

Taptica UK

United Kingdom

100%

100%

Taptica Korea

Korea

100%

100%

Taptica CN

China

100%

100%

 

* The subsidiary completed liquidation subsequent to the balance sheet date.

 

B.        Acquisition of subsidiaries and business combinations

 

(1)        Acquisition of Adinnovation INC

 

On 17 July 2017 (hereinafter - "the acquisition date") the Company completed the acquisition of a majority shareholdings in Adinnovation Inc. ("ADI") a leader in Japan's mobile advertising industry through a wholly owned subsidiary.

 

In accordance with the terms of the acquisition agreement, the Company acquired 57% of the issued share capital of ADI for a total consideration of USD 5.7 million of which USD 4.4 million was paid immediately upon the acquisition date and the remainder USD 1.3 million will be paid after 12 months following the acquisition date subject to ADI meeting certain performance obligations. In March 2018, the Company paid the earn out payment for ADI acquisition in the amount of USD 1.2 million.

 

In addition, the Company has a call option to purchase the remaining 43% of the issued share capital of ADI for a price of 8x net profit and for a period of six months commencing three years after closing. Thereafter, ADI's minority shareholders have a put option for a period of three months to sell at a price of 7x net profit. As a result of the aforesaid, the Company recognized the acquisition of full control (100%) over ADI and recorded liability inherent in exercise of the option according to its discounted value. The amount of the liability as at the acquisition date is estimated at USD 8,496 thousand and was estimated based on ADI's current business results and forecasts of ADI for the third year capitalized with annual discount rate of 2.9%. The Company elected to recognized changes in the value of the liability on every reporting date in the equity. As from the acquisition date until 31 December, 2017 the Company recorded a revaluation to increase the liability in the amount of USD 123 thousand. In 2018 the Company recorded a revaluation to decrease the liability in the amount of USD 4,678 thousand.

 

The purchase price was allocated to the acquired tangible assets, intangible assets and liabilities on the basis of their fair value at the acquisition date. Presented hereunder are the assets and liabilities that were allocated to ADI at the acquisition date:

 






As at 17 July, 2017

USD thousands

 

Current assets:



Cash and cash equivalents


 3,127 

Trade receivables


 4,400 

Other receivables


 64 

Non-current assets:



Property, plant and equipment


 17 

Intangible assets(1)


 12,242 

Current liabilities:



Other payables


(912)

Trade payables


(3,517)

Non-current liabilities:



Other liabilities


(290)

Liability for put-option on non-controlling interests


(8,496)

Deferred tax liabilities, net


(944)

Contingent consideration


(1,283)



 4,408 

 

(1)        Comprised as follow:

 




Fair value as at 17 July, 2017





Brand and domain name



 1,224 

Customer relations



 2,182 

Goodwill



 8,703 

Purchased Intangible assets



 133 




 12,242 

 

 

The aggregate cash flow derived for the Group as a result of the ADI's acquisition in 2017:

 





USD thousands

 

Cash and cash equivalents paid




 4,408 

Add- acquisition costs




 353 

Less- Cash and cash equivalents of the subsidiary




 3,127 










 1,634 

 

(2)        Acquisition of Tremor Video's Demand side platform

 

On 7 August 2017 (hereinafter - the Closing Date) the Company entered into an agreement to purchase from Tremor Video (the "Seller") its demand-side platform ("DSP"). DSP is the Seller's patented auto-optimization solution for buying effective, programmatic cross-screen video brand advertising. The total consideration for the transaction amounted to USD 50 million and the Company received a commitment for the transfer of working capital in the total amount of USD 22.5 million to be executed about 90 days after the date of closing the transaction.

As part of the acquisition, the Company acquired also 100% of the issued shares of Tremor Video PTE Ltd, a Singapore subsidiary of Tremor Video Inc.

 

In order to finance the transaction, the Company took a bridge loan, until execution of bank financing agreement, in the amount of USD 10 million from shareholder (related party) holding 10.8% of the Company through a company owned by it. The loan bears interest of 5% p.a., was received on the date of closing the transaction and was fully repaid on 29 August 2017. In 30 September 2017, the Company signed on financing agreement with HSBC for loan in the amount of $30 million that will be repaid in 11 quarterly payments in the amount of USD 2.7 million as from 30 September 2018. The loan bears interest on the outstanding balance of principal at the rate of Libor plus 1.375% that is payable at the end of one, two or three months, selected by the borrower. In accordance with the terms of the financing agreement, the Company is obliged to comply with certain financial covenants. As of 31 December, 2018 and 2017, the Company comply with the requirements. On March 2018, the Company repaid USD 15 million out of the loan. As of 31 December 2018 the principal amount is USD 12.3 million.

 

The purchase cost was allocated to the acquired tangible assets, intangible assets and liabilities on the basis of their fair value at the acquisition date. Presented hereunder are the assets and liabilities that were allocated to Tremor video's DSP at the acquisition date:

 






As at 7 August, 2017

USD thousands

 

Current assets:





Cash and cash equivalents




 476 

Trade receivables




 43,426 

Other receivables




 94 

Prepaid expenses




 3,256 

Non-current assets:





Property, plant and equipment




 2,126 

Intangible assets(1)




 27,632 

Deferred tax assets, net




 314 

Current liabilities:





Other payables




(5,380)

Trade payables




(20,498)

Non-current liabilities:





Other long-term liabilities




(1,446)





 50,000 

 

(1)        Comprised as follow:

 




Fair value as at 7 August 2017

 

Brand and domain name



 1,936 

Technology



 16,985 

Customer relations



 4,271 

Residual goodwill



 4,440 




 27,632 

 

 

The aggregate cash flow derived for the Group as a result of the Tremor Video acquisition in 2017:

 





USD thousands

 

Cash and cash equivalents paid




 50,000 

Add- acquisition costs




 1,852 

Less- Cash and cash equivalents of the subsidiaries




 476 










 51,376 

 

Note 18 - Operating Segments

 

The Group has a single reportable segment as a provider of marketing services.

 

Geographical information

 

The Company is domiciled in Israel and it produces its income primarily in USA, Israel, China, Germany Korea, Japan, India and UK.

 

In presenting information on the basis of geographical segments, segment revenue is based on the geographical location of customers.

 



Year ended 31 December



2018

2017



USD thousands

USD thousands

 




   




   

America


 182,067 

 115,905 

Asia


 72,061 

 60,825 

Europe


 18,867 

 25,580 

Israel


 3,483 

 4,696 

Others


 394 

 3,919 

Consolidated              


 276,872 

 210,925 

 

 

 

Note 19 - Subsequent Events

 

On February 4, 2019, the Company announced a proposed merger (hereinafter- "the offer") with RhythmOne Plc ("RhythmOne", AIM:RTHM) whereby the Company will acquire the entire issued and to be issued ordinary share capital of RhythmOne under the UK Takeover Code.

 

Each RhythmOne shareholder will be entitled to receive 28 new shares of the Company for every 33 RhythmOne shares held, so that following the completion of the offer, the Company's current shareholders will hold 50.1% and, RhythmOne Shareholders will hold 49.9% of the merged Group.

 

Following the completion of the offer the merged Group intends to launch a $15 million discretionary share buy back program. The expected date for the approval of the offer is March 22, 2019.

 

 

 


This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact [email protected] or visit www.rns.com.
 
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