Interim Results

RNS Number : 6779Q

Marimedia Ltd

03 September 2014

3 September 2014

Marimedia Ltd.

("Marimedia" or the "Company")

Interim Results for the six months ended 30 June 2014

Marimedia (AIM: MARI), a provider of proprietary technology solutions for optimising online advertising revenue for website owners globally, announces its maiden interim results for the six months ended 30 June 2014.

Financial Highlights

· Revenues increased by 59.1% to $30.8 million (H1 2013: $19.4 million)

· Gross margins of 30.3% (H1 2013: 30.5%). Gross profit increased by 57.7% to $9.3 million (H1 2013: $5.9 million)

· Profit before tax increased by 41.7% to $5.1 million (H1 2013: $3.6 million)

· Net cash from operating activities increased by 61.3% to $3.8 million (H1 2013: $2.4 million)

· Adjusted EBITDA* increased by 54.1% to $5.8 million (H1 2013: $3.8 million)

· Fully diluted earnings per share of $0.08 (H1 2013: $0.06)

· Cash and cash equivalents as at 30 June 2014 were $29.5 million (31 December 2013: $3.2 million; 30 June 2013: $3.0 million)

Operational Highlights

· Admitted to AIM on 28 May 2014; placing of $50 million (gross) of which $30 million was raised for the Company

· Extended coverage through increasing number of advertisers and signing-up increasing number of publishers

· Increased capacity and organisational efficiencies:

o Expanded employee base, primarily key technology personnel but also business development, sales and marketing

o Implemented organisational structure changes to enhance video and mobile offering

o Developed new campaign management tools to increase process and automisation efficiency

· Developed technology and product offering:

o Improved Qadabra technology platform with enhanced algorithm

o Launched improved self-serve platform for small publishers

o Developed offering of display, rich media and mobile products

Post Period End

· Exercised option to purchase the entire issued share capital of Taptica Ltd ("Taptica") - expected to be completed in late September 2014

Hagai Tal, Chief Executive Officer of Marimedia, stated: "We are pleased to be announcing our maiden interim results - the best half year results in the history of the Company - following our listing on AIM in May 2014. The strong growth we report is a testament to the strategy we implemented three years ago and has seen us grow revenues by 253%. The growth momentum we achieved in the second half of 2013 continued into the first half of this year as we increased the number of business partners and connections with online digital advertising platforms thereby generating higher levels of volume and impressions for publishers.

"Looking ahead, the Company has entered the second half of 2014 with good visibility in revenues. With funds raised in the recent placing, we have begun investment to continue to diversify the market segments we serve and investing in R&D to remain ahead of competition as well as moving aggressively into the mobile space through the acquisition of Taptica. As a result, the Board remains confident about delivering significant revenue and profit growth for the full year 2014 compared with the previous year."

*Non-GAAP Measures

· This announcement contains references to adjusted EBITDA. This financial measure does not have any standardised meaning prescribed by IFRS and is therefore referred to as a non-GAAP measure. The non-GAAP measures used by Marimedia may not be comparable to similar measures used by other companies.

· Adjusted EBITDA is defined as profit before interest, taxes, depreciation and amortisation and share-based payment expenses. Marimedia's management believes that this measure is a useful supplemental metric as it provides an indication of the results generated by the Company's principal business activities prior to how the results are affected by the accounting standards associated with the Company's share-based payment expenses.

Enquiries

Marimedia
Hagai Tal, Chief Executive Officer	+972 9 953 2700

N+1 Singer
Jonny Franklin-Adams, Jen Boorer	+44 20 7496 3000

Luther Pendragon
Harry Chathli, Claire Norbury, Oliver Hibberd	+44 20 7618 9100

About Marimedia

Marimedia Ltd (AIM: MARI) operates in the fast-growing digital media market. Marimedia optimises online advertising revenue for publishers (i.e. website owners) globally through Qadabra, its self-developed proprietary software, which uses complex algorithms to establish the optimal, revenue-generating match of publisher advertising inventory with advertiser space. The Company's technology platform creates an auction that runs almost instantaneously (in milliseconds) to buy and sell advertisements on a per impression basis.

Overview

Marimedia achieved strong progress in the first half of 2014, maintaining the momentum of the prior year, with an increase in revenues of almost 60% to $30.8 million compared with $19.4 million for the first six months of 2013. This growth was primarily due to the Company increasing the number of business partners and connections with online digital advertising platforms thereby generating higher levels of volume and impressions for publishers.

Marimedia was admitted to AIM on 28 May 2014, having raised $30 million before costs and expenses. The Company is focused on pursuing its growth strategy of investing in mobile advertising technologies to keep pace with the market, which, post-period end, resulted in Marimedia exercising its option to acquire Taptica.

Operational Review

During the period, the Board of Marimedia undertook a number of actions to facilitate the future growth of the business. Firstly, in line with the stated strategy of investing in technology to further develop its real time bidding and mobile market capabilities, the number of key personnel in technology functions were increased. Additionally, staff were added across business development, sales and marketing, which enabled Marimedia to enhance its brand recognition and, as a result, expand its global customer base to beyond 40 countries.

At the same time, changes were implemented to the organisational and management structure to improve focus on specific segments and ensure customer retention levels are maintained. The Company developed new campaign management tools that increased process automisation and streamlined implementation to enhance the effectiveness and efficiency of the advertising campaigns, and enable each manager to handle a greater number of customer accounts. As a result of these improvements, and despite the employment of new personnel, the average monthly ARPU (per employee) grew by 12% to $57.4K in the first half of the year compared with $51.4K in the first half of 2013.

Marimedia further developed Qadabra, its principal technology platform, by enhancing the complex analytical algorithms that analyse past performance data in order to establish the optimal, revenue-generating match of publisher advertising space being offered online with advertiser advertisements, improving the hosting infrastructure and strengthening fraud detection capabilities. Marimedia connected Qadabra to additional online digital advertising platforms to provide publishers with a greater number of advertisers' bids on a near-instantaneous auction basis. These developments enhance Marimedia's offering to publishers by enabling them to better manage their advertising impression inventory and maximise revenue from digital media.

The Company also launched a new version of its self-serve platform for smaller publishers with improved user interface, scalability and backend code. In addition, it further developed its offering of display, rich media and mobile products, in line with anticipated market developments.

Admission to AIM

Marimedia was admitted to AIM and dealings in its ordinary shares commenced on 28 May 2014. The Company successfully placed $50 million (£29.8 million) before costs and expenses via the placing of 11,672,001 new ordinary shares and 7,780,224 existing ordinary shares at a price of 153 pence per share. The Board expects the listing to enhance the Company's profile and visibility with customers and partners, particularly in its key growth markets.

The purpose of the placing to the Company was to accelerate the Company's growth strategy by increasing investment in technology to further develop its real-time bidding and mobile market capabilities and seek access to new customers and markets through targeted acquisitions.

Post Period End - Taptica

In line with Marimedia's strategy, the Company has exercised its option to purchase the entire issued share capital of Taptica with the transaction scheduled for completion in late September 2014.

Taptica, an Israeli company, is an affiliate of Marimedia that specialises in mobile advertising and purchases advertising space from Marimedia. Taptica is a mobile user acquisition platform for brands and app developers that replaces the "cookie" functionality and allows platform users to target valuable mobile users.

Taptica's technology utilises artificial intelligence and machine learning on a big data scale in order to enable data-driven mobile targeting and user acquisition. This enables platform users to find more valuable users for their advertising campaigns in order to create a better return on investment. Taptica works directly with publishers and its technology is enabled to operate on both iOS and Android devices. Taptica currently has a database of 50 million user profiles and is presently receiving 5 billion requests daily.

The Board of Marimedia believes that a combined business offering will allow up-selling of the Taptica offering to publishers, which will make Marimedia a more attractive partner for publishers and provide scale and value-add to the Company. Additionally, the Board believes that this will further differentiate the business offering, enhance its technological lead and create further barriers to entry for competition. Marimedia and Taptica have commenced strategic discussions with regard to the development of the mobile technology.

Financial Review

Revenues for the six months ended 30 June 2014 increased by 59.1% to $30.8 million compared with $19.4 million for the first half of 2013. Fully diluted earnings per share were $0.08 (H1 2013: $0.06).

Operating profitincreased by 37.7% to $4.9 million compared with $3.6 million for the first half of 2013, and profit before tax increased by 41.7% to$5.1 million (H1 2013: $3.6 million). Adjusted EBITDA* increased by 54.1% to $5.8 million (H1 2013: $3.8 million).

Gross margins were 30.3% (H1 2013: 30.5%). Gross profit increased by 57.7% to $9.3 million (H1 2013: $5.9 million).

The Company continued to maintain a strong cash flow with net cash provided by operating activities increasing by 61.3% to $3.8 million (H1 2013: $2.4 million).

As at 30 June 2014, cash and cash equivalents were $29.5 million compared with $3.2 million at 31 December 2013 and $3.0 million at 30 June 2013.

Outlook

The Company has entered the second half of 2014 with good visibility in revenues. Further investments continue to be made to diversify the market segments it serves and in R&D to remain ahead of competition. Additionally, the Company is moving aggressively into the mobile space through the acquisition of Taptica and, consequently, is already experiencing increasing interest from publishers for its new one-stop offer on mobile, video and web. Marimedia anticipates that revenues generated from mobile and video will continue to increase through the second half of 2014 and beyond into 2015. As a result, the Board remains confident about delivering significant revenue and profit growth for full year 2014 compared with the previous year.

Condensed Interim Statements of Financial Position as at

30 June		31 December
2014	2013	2013
(Unaudited)		(Audited)
USD thousands		USD thousands

Assets
Cash and cash equivalents	29,528	3,018	3,216
Investment in money market funds	544	512	537
Trade receivables	9,931	4,780	6,882
Other receivables	2,658	896	852
Total current assets	42,661	9,206	11,487

Fixed assets	523	416	389
Intangible assets	989	601	827
Deferred tax assets	406	23	7
Total non-current assets	1,918	1,040	1,223

Total assets	44,579	10,246	12,710


Liabilities
Trade payables	9,261	5,516	7,248
Other payables	2,046	1,088	4,768
Total current liabilities	11,307	6,604	12,016

Employee benefits	186	130	160
Total non-current liabilities	186	130	160

Total liabilities	11,493	6,734	12,176

Equity
Share capital	179	* -	*-
Share premium	27,756	-	-
Reserves	769	120	182
Retained earnings	4,382	3,392	352
Total equity	33,086	3,512	534

Total liabilities and equity	44,579	10,246	12,710

(*) Less than 1 thousand USD

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

Condensed Interim Statements of Comprehensive Income

Six months ended 30 June		Year ended
		31 December
2014	2013	2013
(Unaudited)		(Audited)
USD thousands		USD thousands

Revenues	30,818	19,367	43,315
Cost of sales	(21,494)	(13,454)	(29,189)
Gross profit	9,324	5,913	14,126

Research and development expenses	673	370	795
Selling and marketing expenses	2,532	1,287	3,149
General and administrative expenses	1,197	681	1,753
Operating profit	4,922	3,575	8,429

Financing income	180	31	148
Financing expenses	(37)	(30)	(44)
Financing income, net	143	1	104

Profit before taxes on income	5,065	3,576	8,533

Taxes on income	1,035	627	1,431
Profit for the period	4,030	2,949	7,102


Earnings per share
Basic earnings per share (in USD)	0.077	0.059	0.142
Diluted earnings per share (in USD)	0.075	0.058	0.138

Other comprehensive income items that
will not be transferred to profit or loss
Remeasurement of defined benefit plan	-	-	(5)
Taxes on other comprehensive
income items that will not be
transferred to profit or loss	-	-	1
Total other comprehensive income for
the year that will not be transferred to
profit or loss, net of tax	-	-	(4)
Total comprehensive income for the period	4,030	2,949	7,098

Condensed Interim Statements of Changes in Equity


Share	Share	Capital	Retained
capital	premium	Reserves (**)	earnings	Total
US$ thousands

For the six months ended 30 June, 2014
(unaudited)
Balance as at 1 January, 2014	*-	-	182	352	534
Total comprehensive income for the period
Profit for the period	-	-	-	4,030	4,030
Total comprehensive income for the period	-	-	-	4,030	4,030

Transactions with owners, recognized
directly in equity
Share-based payments	-	126	611	-	737
Exercise of options	1	29	(24)	-	6
Bonus issue shares	144	(144)	-	-	-
Initial public offering	34	27,745	-	-	27,779

Balance as at 30 June, 2014	179	27,756	769	4,382	33,086

For the six months ended 30 June, 2013
Balance as at 1 January, 2013	*-	-	57	443	500
Total comprehensive income for the period
Profit for the period	-	-	-	2,949	2,949
Total comprehensive income for the period	-	-	-	2,949	2,949

Transactions with owners, recognized
directly in equity
Share-based payments	-	-	63	-	63

Balance as at 30 June, 2013	* -	-	120	3,392	3,512

For the year ended 31 December, 2013
Balance as at 1 January, 2013	*-	-	57	443	500
Total comprehensive income for the year
Profit for the year	-	-	-	7,102	7,102
Other comprehensive income for the year,
net of tax	-	-	(4)	-	(4)
Total comprehensive income for the year		-	(4)	7,102	7,098

Transactions with owners, recognized
directly in equity
Share-based payments	-	-	129	-	129
Dividends	-	-	-	(7,193)	(7,193)

Balance as at 31 December, 2013	*-	-	182	352	534

(*) Less than 1 thousand USD

(**) Includes reserves for share-based payments and remeasurement of defined benefit plan

Condensed Interim Statements of Cash Flows

Six months ended 30 June		Year ended
		31 December
2014	2013	2013
(Unaudited)		(Audited)
USD thousands		USD thousands

Cash flows from operating activities
Profit for the period	4,030	2,949	7,102
Adjustments for:
Depreciation and amortization	170	144	292
Net financing expense (income)	13	26	(132)
Gain on curtailment or settlement of
defined benefit plan	-	-	(5)
Share-based payment transactions	737	63	129
Income tax expense	1,035	627	1,431

Change in trade and other receivables	(3,620)	(1,207)	(3,440)
Change in trade and other payables	2,253	594	3,434
Change in employee benefits	26	27	57
Income taxes received	278	-	-
Income taxes paid	(1,130)	(872)	(1,607)
Net cash provided by operating activities	3,792	2,351	7,261

Cash flows from investing activities
Increase in pledged deposits	-	-	(206)
Acquisition of fixed assets	(193)	(164)	(209)
Disposal of fixed assets	-	24	44
Loan granted	(1,237)	-	-
Proceeds from sale of investments on money
market fund	-	699	728
Development expenditure recognized as
intangible assets	(274)	(187)	(509)
Net cash (used in) provided by investing activities	(1,704)	372	(152)

Cash flows from financing activities
Exercise of options	6	-	-
Initial Public Offering	27,289	-	-
Dividends paid	(3,147)	(2,559)	(6,775)

Net cash (used in) provided by financing activities	24,148	(2,559)	(6,775)

Net increase in cash and cash equivalents	26,236	164	334
Cash and cash equivalents as at the
beginning of the year	3,216	2,836	2,836
Effect of exchange rate fluctuations on
cash and cash equivalents	76	18	46

Cash and cash equivalents as at the end
of the period	29,528	3,018	3,216

NOTES TO THE CONDENSED INTERIM FINANCIAL STATEMENTS

Note 1 - General

A. Reporting entity

Marimedia Ltd. (the "Company") was incorporated in Israel under the laws of the state of Israel on 20 March, 2007. The address of the registered office is 6 Maskit street Herzeliya, Israel 46140.

Marimedia enables publishers (e.g. websites, blogs) to optimize their advertising revenue. Marimedia uses its proprietary technology, Qadabra, that gathers the maximum relevant advertiser bids and creates an auction for the publisher's on-line advertising space on a per impression/view basis. Marimedia's comprehensive trading desk solution optimizes monetization (conversion of ad space to revenue) for small to large publishers globally through analyzing and leveraging extensive advertiser demand.

Marimedia's large and diverse publisher inventory is in high demand by advertisers who are constantly in search of Marimedia's ability to measure, track and increase revenues; offering an opportunity for global outreach and potential growth.

On 28 May 2014, the Company's shares were listed for trading on the London Stock Exchange in the Company's initial public offering.

B. Definitions

In these financial statements -

(1) The Company - Marimedia Ltd.

(2) Related Party - Within its meaning in IAS 24 (2009), "Related Party Disclosures".

Note 2 - Basis of Preparation

A. Statement of compliance

These condensed interim financial statements have been prepared in accordance with IAS 34 Interim Financial Reporting and do not include all of the information required for full annual financial statements. They should be read in conjunction with the financial statements as at and for the year ended 31 December, 2013 (hereinafter - "the annual financial statements").

These condensed interim financial statements were authorized for issue by the Company's Board of Directors on 2 September, 2014.

B. Use of estimates and judgments

The preparation of financial statements in conformity with IFRSs requires management 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 significant judgments made by management in applying the Company's accounting policies and the principal assumptions used in the estimation of uncertainty were the same as those that applied to the annual financial statements.

Note 3 - Significant Accounting Policies

The accounting policies applied by the Company in these condensed interim financial statements are the same as those applied by the Company in its annual financial statements.

A. IFRS 9 (2014), Financial Instruments

A final version of the standard, which includes revised guidance on the classification and measurement of financial instruments, and a new model for measuring impairment of financial assets. In accordance with IFRS 9 (2014), there are three principal categories for measuring financial assets: amortized cost, fair value through profit and loss and fair value through other comprehensive income. The basis of classification for debt instruments is the entity's business model for managing financial assets and the contractual cash flow characteristics of the financial asset. Investments in equity instruments will be measured at fair value through profit and loss (unless the entity elected at initial recognition to present fair value changes in other comprehensive income).

IFRS 9 (2014) requires that changes in fair value of financial liabilities designated at fair value through profit or loss that are attributable to changes in its credit risk, should usually be recognized in other comprehensive income.

IFRS 9 (2014) is effective for annual periods beginning on or after January 1, 2018 with early adoption being permitted. It will be applied retrospectively with some exemptions.

The Company has not yet commenced examining the effects of adopting IFRS 9 (2014) on the financial statements.

B. 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. IFRS 15 provides two approaches for recognizing revenue: at a point in time or over time. 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.

IFRS 15 is applicable for annual periods beginning on or after January 1, 2017 and earlier application is permitted. IFRS 15 includes various alternative transitional provisions, so that companies can choose between one of the following alternatives at initial application: full retrospective application, full retrospective application with practical expedients, or application as from the mandatory effective date, with an adjustment to the balance of retained earnings at that date in respect of transactions that are not yet complete.

The Company has not yet commenced examining the effects of adopting IFRS 15 on the financial statements.

Note 4 - Material Events in the Reporting Period and Subsequent Events

1. On 2 April 2014, the Company entered into an option agreement with Taptica Ltd. ("Taptica") and its shareholders, which granted the Company the option to purchase 100% of the outstanding share capital of Taptica Ltd. ("Taptica") and to cause all outstanding options, warrants and other convertible securities of Taptica to be cancelled, for a purchase price contingent upon Taptica's financial performance during the period of three months preceding the exercise of the option, ranging from $7.6 million to $19.6 million (the "Option Agreement"). The option was exercisable between 2 April 2014 and 1 August 2014.

Under the Option Agreement, the purchase price payable to Taptica's shareholders shall be paid: (i) 50% in cash and (ii) 50% by issuance of Ordinary Shares of the Company to Taptica's shareholders, based on the placing price of £1.53 per share.

In addition, the Company and Taptica entered into a loan agreement whereby the Company agreed to lend to Taptica an amount of up to $1.5 million (the "Credit Line"). Taptica may draw under the Credit Line, from time to time until the earlier of (i) the exercise of the option and (ii) 1 August 2014, amounts up to the aggregate amount of the Credit Line. Each credit instalment shall bear interest at an annual fixed rate equal to three percent on the outstanding principal of such credit instalment.

The principal and interest accrued on every credit instalment shall be repaid on 1 August 2015. However, in the event that the option is expired the outstanding amount of the credit instalment and interest accrued shall be converted into Taptica shares. As of 30 June 2014 Taptica has drawn an amount of $1.2 million under the Credit Line, which is included in other receivables.

On 31 July 2014 the Company exercised the option, and, in accordance with the option agreement, Taptica deferred the closing to late September 2014. Subject to the completion of the transaction as contemplated, Taptica will therefore be consolidated in the Company's 2014 annual report.

2. On 30 April, 2014, 49,990,000 Ordinary Shares were issued pursuant to a distribution by way of a bonus issue of 4,999 Ordinary Shares for each Ordinary Share issue on 30 April, 2014. Correspondingly, options granted prior to this distribution were adjusted accordingly.

3. On 28 May 2014, the Company's shares were listed for trading on the London Stock Exchange in the Company's initial public offering ("IPO"). As part of the IPO, the Company issued 11,672,001 ordinary shares, of NIS 0.01 par value in consideration for a gross amount of £17,858,162 (nearly $30,000,000). Subsequent to the IPO the number of shares is 61,913,744. The share issue costs amounted to $2.6 million.

In addition, as part of the IPO, existing company shareholders sold 7,780,224 shares to the public in consideration of £11,903,743 (nearly $20,000,000)

Note 5 - Share-Based Payment Arrangements

A. In January and February 2014 the Company issued 32 and 272 share options to employees at an exercise price of $2,850 and $11,400 respectively. The adjusted amount of share options and exercise price, as a result of a bonus issue of 4,999 Ordinary Shares on 30 April 2014 for each existing Ordinary Share, is 160,000 and 1,360,000 and, $0.57 and $2.28, respectively. The options granted in January 2014 and 38 of the options granted in February 2014 vested upon the initial public offering at 28 May 2014. The remaining options issued on February 2014 vest over a period of two years from the grant date.

All the outstanding share options granted prior to 2014, vested upon the initial public offering.

The total expense recognized in the condensed interim statement of comprehensive income in the 6 months period ended 30 June 2014, amounted to approximately USD 611 thousand.

B. The number of share options is as follows:

	Number of
	options
	2014

Outstanding at 1 January			2,065,000
Granted during the period			1,520,000
Exercise during the period			(192,724)

Outstanding at 30 June			3,392,276

Note 6 - Capital and Reserves

A. Share capital (in thousands of shares of NIS 0.01 par value)

				For the six
				months ended
				30 June, 2014
				(Unaudited)

Issued and paid-in share capital			61,914

Authorized share capital			10,000,000

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.

Note 6 - Capital and Reserves (cont'd)

B. Dividends

Details on dividends (in USD thousands unless stated otherwise):