Final Results
Sivota Plc
Company number 12897590
Annual Report and Financial Statements
For the year ended 31 December 2023
Sivota Plc
Table of Contents
Company Information 2
Chairman's report 3
Strategic report 5
Corporate Governance statement 15
Directors' report 21
Directors' remuneration report 27
Report of the Independent Auditors 34
Consolidated Statement of Comprehensive Income 40
Consolidated Statement of Financial Position 41
Parent Statement of Financial Position 42
Consolidated Statement of Changes in Shareholders' Equity 43
Parent Statement of Changes in Shareholders' Equity 45
Consolidated Statement of Cash Flows 47
Parent Company Statement of Cash Flows 49
Notes to the Financial Statements 51
Sivota Plc
Company Information
For the year ended 31 December 2023
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Directors Tim Weller - Non-Executive Chairman Ziv Ben-Barouch - CEO Neil Jones - Non-Executive Director, Secretary |
Registered Office The Scalpel 52 Lime Street, London, England EC3M 7AF |
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Auditors Haysmacintyre LLP 10 Queen Street Place London, England EC4R 1AG |
Register Computershare Investor Services PLC The Pavilions Bridgwater Rd Bristol, England BS13 8AE
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Financial Adviser & Broker Canaccord Genuity Limited 88 Wood Street London, England EC2V 7QR |
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Sivota Plc
Chairman's report for the year ended 31 December 2023
Dear Shareholders,
I am pleased to present the annual report of Sivota Plc (hereinafter referred to as the 'Company' or 'Sivota') for the year ended 31 December 2023. Sivota and its subsidiaries are collectively referred to as the Group.
The year was marked by both the implementation of strategic and operational changes within Apester ('subsidiary') as well as the pursuit of new investment opportunities.
Since Apester's acquisition in May 2022, Sivota has brought about reorganisational changes in the subsidiary and made notable progress in team culture, product infrastructure stability and a profitability-oriented business model.
In August 2023, we announced the appointment of Anni Ben Yair as Apester's new Chief Executive Officer (CEO) and I am delighted that we have been able to appoint someone of her calibre to the role. Anni is an experienced digital media and technology executive. Her significant experience in scaling technology and digital media businesses, in addition to fully leveraging sales and marketing activities, is ideally suited to supporting Apester's next phase of growth.
Since the appointment of the new CEO, Apester has achieved several operational developments including the appointment of a new Chief Technology Officer to lead its technology strategy, and appointment of a Head of Growth, working on the redeployment of Apester's demand stack with our partners to further improve our quality and pricing, launching a new US based sales team and advanced negotiations with prominent US media outlets across multiple key industries. In addition, Apester recorded improved performance across several Key Performance Indicators (KPIs) including media rates, fill rates, and deal profitability. As an outcome to Apester's focus on profitability, it terminated non-profitable engagements and therefore has seen a short-term reduction in revenues will improve gross profit.
In 2023, Sivota continued to pursue investment opportunities to acquire additional later stage technology companies.
In January 2024, Sivota entered into a non-binding term sheet with a leading online technology platform operating across the travel sector (the "Target"). Sivota intends to raise up to £2.5 million through the issue of new ordinary shares in order to provide the Target with a convertible loan to fund its working capital commitments for the short term. Pursuant to the term sheet, Sivota also has the ability to acquire up to 51% of the share capital of the Target for a consideration of $15 million, subject to the satisfaction of certain conditions.
Sivota remains well-positioned to capitalise on new and attractive investment opportunities within the Israeli technology marketplace. Although, we remain cognisant of the heightened risk in technology markets in general and the Company's target market.
Sivota Plc
Chairman's report for the year ended 31 December 2023 (continued)
I would like to extend my gratitude to the board, management, and Apester's team for their diligent efforts, as well as to our shareholders for their ongoing trust and support.
We remain committed to delivering value and growth, and I look forward to providing you with further updates on our progress in the coming year.
Tim Weller,
Non-Executive Chairman
30 April 2024
Sivota Plc
Strategic report for the year ended 31 December 2023
The Directors present the Strategic Report of Sivota and its subsidiaries (the 'Group') for the year ended 31 December 2023.
The Group's business strategy and execution
Israeli Technology
Israel has one of the most entrepreneurial and multi-cultural workforces in the world, producing technologies, innovations, and research adopted around the globe and across various sectors. Many of modern innovations that are part of the daily life across the globe were developed in Israel. According to the Global Innovation Index 2023, Israel is ranked as one of the top 15 Worlds' Innovation Leaders [i].
Israel's high-technology funding in 2023 amounted to $6.9 billion invested across 393 deals[ii]. 
Sivota Plc
Strategic report for the year ended 31 December 2023 (continued)
Foreign investment into the Israeli technology sector
Israeli tech companies have raised $80.1 billion since 2015 with the majority of that capital (72%) deployed by foreign investors. In 2023, foreign investors invested in Israeli technology companies a total of $5.1 billion, 76% of the total funds raised by Israeli tech companies in the year.
The majority of these non-Israeli financial investors are predominantly from the United States who, in leveraging well established US-Israeli connections, have made numerous investments into the Israeli technology market, with a considerable degree of success. However, European/UK investors have had less exposure and have not necessarily had the right connections to participate in this segment to this date.
The Company seeks to bridge that gap by using the experience, connections and local knowhow of the Directors, in particular that of the CEO.
Market Opportunities
Israel has a large number of innovative, later stage, technology companies offering foreign investors a wide selection of investment opportunities. Moreover, there may be opportunities to acquire controlling stakes in companies that have not taken advantage of technology that could help transition a traditional business model to drive further growth.
Sivota Plc
Strategic report for the year ended 31 December 2023 (continued)
The Directors believe that sectors such as logistics, retail and finance which predominantly remain offline businesses in Israel could produce potential target companies which could greatly benefit from Sivota's approach and ability to introduce them to potential technology solutions.
There may also be opportunities to acquire a controlling interest in non-Israeli founded or related companies that are seeking to benefit from the technology solutions that Sivota may be able to offer. The Directors will consider such opportunities on a case-by-case basis and Investors should note that the Company may therefore acquire controlling stakes in businesses which are not non-Israeli founded or related.
The Company believes there will be an opportunity to invest in businesses that have stalled in the current more challenging global financial and pollical environment, which under new leadership and with available fundings can rebuild their valuation. The Directors also expect to see an increase in M&A activities, mainly by companies looking to acquire competitors to increase their market share, create economies of scale or add new products and services to their existing offerings.
Acquisition Targets, Sourcing and Execution
Sivota, through the Directors, has a strong local presence and a significant business network in Israel. The Company believes these networks, relationships, and partnerships are all essential for identifying future investments and developing a robust investment pipeline.
The Company looks to acquire companies with strong fundamentals that the Directors believe will reward Investors over time. The general investment strategy is to acquire controlling stakes in underperforming, later stage Israeli-related technology companies to ensure fast, ambitious and sustainable scale. The Directors intend to function as a key partner to the target companies during both the acquisition process, and in the implementation of the growth plan post-acquisition.
Although the Company evaluates a range of technology companies, a particular areas of focus is in relation to companies already involved in data (artificial intelligence, machine learning, Big Data), digital marketing, and eCommerce.
The Directors believe that they have a competitive advantage in the Israeli market, both in terms of deal flow and the ability to overcome the culture gap which foreign investors can face while working with Israeli founders and management teams.
Sivota Plc
Strategic report for the year ended 31 December 2023 (continued)
Sivota's strategy is to seek investment opportunities in companies which have most, if not all, of the following attributes:
· later stage of growth;
· organic and/or external growth potential;
· unique technology;
· Israeli-related/founded companies;
· international exposure/potential; and
· target opportunities where management execution and a focused strategy will deliver significant valuation uplift.
Turning around an underperforming company and regaining the trust of every stakeholder is a job that requires decisive action. In order to achieve this, Sivota will roll out a methodology based on enhanced transparency and involvement within each target company. Sivota starts with the preparation of an objective and uncompromising diagnostic plan (which will be capable of being amended from time to time to take into account any changing circumstances). This strategic, operational and financial diagnostic is the basis of the turnaround plan, which sets the goals and changes required to be executed in order to achieve these goals.
Any company in which Sivota acquires controlling stakes will regularly communicate the progress of its turnaround to all its stakeholders.
In putting the diagnostic plan into practice, Sivota seeks to:
· build a growth plan with the Company's management to leverage opportunity, securing the financing of investments
· communicate the strategy, plan and its progress on a regular and clear basis
· be thorough with its analysis and due diligence, and present a pragmatic approach to the implementation
· implement the plan with transparency including engaging in discussions with employee representatives
· help to grow the organisational culture through leadership
The Directors all have hands-on operational as well as investment and M&A experience in various jurisdictions, having worked for small and medium-sized businesses, both as managers and as owners. The management team has therefore experienced the financial and operational issues frequently encountered by companies, and knows where to go and how to find, clear unbiased advice for specific business needs.
Sivota Plc
Strategic report for the year ended 31 December 2023 (continued)
Strategy execution during 2023
Since Apester's acquisition, Sivota has been implementing strategic and operational changes within Apester. This includes appointing a new CEO, board members and key executives, developing product infrastructure stability and a profitability-oriented business model. These changes reflect the Company's commitment to driving growth and enhancing value for its stakeholders. This has been further explained in the relevant sections of this report.
Apester's strategy
Overview
Apester is an innovative digital experience software platform that enables brands, publishers and e-commerce businesses to create and distribute interactive digital experiences and collect the resultant first party data to better understand their customers and accelerate their business performance.
Apester provides publishers with interactive engagement with their users. Apester's software platform enables a number of engagement tools, including polls, quizzes, stories, surveys, mobile dynamic landing pages, and onboarding forms. Publishers use Apester's platform to create an authentic, visual, interactive experience to engage with their customers.
Apester's technology optimises customer experiences across platforms: desktop, mobile and in-app, allowing customers to publish engaging experiences and distribute them across multiple digital assets in a consistent format.
Apester's platform is based on three major components:
- Interaction content editor: an intuitive user interface that allows to create and customise the interaction units;
- Embeddable units: interactive units that are easily embedded within websites and domains, seamlessly integrating with existing content. This ensures a cohesive and immersive user experience, promoting higher engagement rates and longer user sessions;
- Data Analytics: Data Management layer that allows customers to collect, store and 'own' Zero-Party and First-Party engagement data generated from experiences and applications created by Apester. Artificial Intelligence (AI) driven analytics deliver valuable insight into customer segmentations - trends, sentiments and preferences, empowering brands and publishers to personalise their offering, target their messaging, and convert engagement into sales.
Apester serves businesses such as The Telegraph, RTL, Sport 1 DE, BCN, and La Gazette.
Sivota Plc
Strategic report for the year ended 31 December 2023 (continued)
Market positioning
Apester's consolidated, all-inclusive, digital engagement & monetisation platform provides a genuine 'one-stop shop' for publishers supporting desktop, mobile and apps with a streamlined creation, distribution and analysis benefiting its customers with community engagement growth and audience segmentation at a granular level with the information provided by actual users' indications and actions.
Customers who have implemented Apester's engagement solutions on desktop, mobile or app reported significantly improved engagement of their users, measured through multiple KPIs such as time on site, click-through rate (CTR), registrations, and more.
Apester's platform provides a unique competitive advantage by leveraging both the engagement capabilities along monetisation, this allows the publishers to onboard Apester with no expensive commitment while benefiting from the collected and stored 'own' Zero-Party and First-Party engagement data which is generated from experiences and applications created on Apester. This gives Apester's customers' valuable insights into customer segmentations such as trends, sentiment and preferences, empowering brands and publishers to engage audiences in scale with a personalised offering, target their messaging, and convert engagement into sales.
In summary, Apester's platform is a simple, cost-effective and scalable technology, built for the next phase of digital business. Code free, it allows untrained users to create interactive experiences in a matter of minutes through Apester Studio. This personalised content can then be distributed across multiple digital media channels, at scale and through a single cloud-based, self-serve platform, and later gather data and analyse to improve performance.
Revenue Model
Apester operates a blended engagement product and performance revenue model based on subscription fees, usage, self-serve and pre-packaged models. Apester also operates revenue share models allowing Apester to grow with its top-tier publishers, applying its own demand stack capabilities to support revenue-oriented monetisation strategies.
Market overview
Apester operates at the intersection of the thriving market for interactive content creation and the rapidly expanding advertising technology (ad tech) industry, offering publishers and brands innovative solutions to monetise their content while enhancing audience engagement.
The market for interactive content creation platforms has experienced rapid growth in recent years, driven by increasing demand for engaging digital experiences. Content creators, publishers, and marketers are constantly seeking innovative ways to capture and retain audience attention in an increasingly competitive online environment. Apester operates in a highly dynamic market characterised by technological advancements, shifting consumer preferences, and evolving content consumption habits.
Sivota Plc
Strategic report for the year ended 31 December 2023 (continued)
Over recent years, traditional static content formats are being replaced by interactive formats that offer greater engagement and interactivity. Consumers increasingly expect personalised experiences tailored to their interests and preferences.
The global digital content creation market has been valued at USD 25.6 billion in 2022 and is estimated to expand at a CAGR of 13.5% from 2023 to 2030, reaching to $70 billion[iii].
Apester's integration with the ad tech ecosystem plays a pivotal role in its business model, offering publishers and content creators the ability to monetise their interactive content units effectively through programmatic advertising. As the digital advertising landscape continues to evolve, the demand for innovative ad formats and targeting capabilities is driving substantial growth in the ad tech market. Apester's platform facilitates data-driven targeting capabilities, which are essential for delivering personalised ad experiences and maximising campaign effectiveness. The adoption of data-driven targeting solutions is expected to accelerate as advertisers prioritise audience segmentation and relevancy in their ad campaigns.
According to research[iv] the global ad spend has reached USD 679.7 billion in 2023 and is expected to reach USD 965.6 billion by 2028:
Sivota Plc
Strategic report for the year ended 31 December 2023 (continued)
The promise of data
In the post-cookie era, where 3rd party and user level data is less available, the advertising world will have to find new methodologies to interact with the end user to practise more reliable targeting and personalisation. Entered First-party data puts publishers and App owners back in control. Interactive Advertising Bureau (IAB) reports that around 71% of brands, agencies and publishers are increasing their first-party datasets as a result of new legislations entered in 2024, and expected to enter into force over the near term[v]. The ability to provide insights based on publishers' own data while complying with the new legislations is Apester's major competitive advantage.
Growth strategy
Online customer engagement is now a necessity for brands and publishers in what is a highly crowded digital space. Generating high-quality and sustained users interaction across the user journey is central to driving performance and ensuring publisher's enable content based monetisation strategies to stay competitive. Apester's end-to-end platform facilitates conversational marketing, providing an open stream of communication between customers and marketers that results in brand uplift and higher conversion rates.
Apester's strategy is to focus on publishers, across some verticals such as sports, news and entertainment, which are looking to engage their users in a competitive marketplace. Apester's platform enables businesses to better engage with their audience simultaneously via different platforms, creating an improved experience for customers. Apester's platform further enables businesses to analyse engagement and performance for business optimisation.
In order to accelerate growth in this sector, Apester plans to invest in the following areas:
● Automated content creation at scale.
● Data analytics based on the collected first-party data, and analysis of customer insights and preference, along the ability to enhance audience segmentation being processed within the publisher's DMP.
● Improving and enhancing the platform capabilities while focusing on publishers operational needs.
Sivota Plc
Strategic report for the year ended 31 December 2023 (continued)
An important technological competitive advantage is Apester's data layer which allows customers to collect, store, and 'own' Zero-Party and First-Party engagement data generated from experiences and applications created on Apester. This highly benefits Apester's customers and offers valuable insights into customer segmentations such as trends, sentiment and preferences, empowering brands and publishers to personalise their offering, target their messaging, and convert engagement into sales. Apester's data capabilities are a key competitive factor, allowing customers to use publishers' own data without any reliance on cookies, which is in accordance with the latest evolution of online data collection methods and privacy regulations.
Apester plans to continue developing these capabilities to integrate with complementary data collection tools which will provide customers a full suite of data capabilities that will provide Apester's customers with tools for improving their performance and enabling them to better interact with their own customers.
Apester's strategy is to focus on the publishers and performance marketing sectors, while enabling brands to run effective campaigns on its platform. Apester's platform also enables e-commerce businesses to better engage with their audience simultaneously via different platforms, creating an improved experience for customers.
Key performance indicators (KPIs) of the Group
At this stage in its development, the Group is focusing on financing and operating KPI's.
Financing
As a result of a negotiation and due-diligence process in 2023, in January 2024 the Company entered into a non-binding term sheet (the 'Term Sheet') with a leading online technology platform operating across the travel sector (the 'Target'). The Company intends to raise up to $3.2 million through the issue of up to 2,515,741 new ordinary shares of one pence each (the New Shares) in order to provide the Target with a convertible loan to fund its working capital commitments for the short term. As of the date if this report, the Company is in the process of finalising investment agreements.
Pursuant to the Term Sheet, Sivota also has the ability to acquire up to 51% of the share capital of the Target for a consideration of $15 million, subject to the satisfaction of certain conditions, which will be funded by additional fundraising.
Sivota Plc
Strategic report for the year ended 31 December 2023 (continued)
Revenues and Expenditure
In 2023 the Group generated revenues of $5.6 million compared to revenues of $5.9 million generated in the period from Apester's acquisition in May 2022 to 31 December 2022.
The gross profit in 2023 was $1.3 million or 22% of the revenues, compared to the gross profit of $1.6 million or 26% of the revenues, in the period from Apester's acquisition in May 2022 to 31 December 2022.
The Group's operating loss before impairment for 2023 was $4.9 million compared to $4.8 million for 2022, when Apester's financial results in 2022 were included from the date of its acquisition.
The International Accounting Standards (IAS) require that a company ensures that its assets are carried at no more than their recoverable value. Under IAS 36, when the carrying amount of the assets exceeds its recoverable amount an impairment loss is recorded. Following review of recorded intangible asset values at year end, the Group booked an impairment loss of $7.1 million in its 2023 accounts. The impairment loss was mainly due to Apester's losses and the decrease in Apester's revenues as a result of Apester's change in strategy which led to terminating customer accounts that did not meet minimal profitability conditions as well as changes to growth strategy and customer accounts.
Since Apester's acquisition, the Company has been implementing a number of strategic and operational changes within Apester, including the appointment of a new CEO, new board members and key executives. The directors believe the new management team will lead the business to fully exploit a number of near-term growth initiatives.
Financial position
At 31 December 2023 the Group had a cash balance of $1.0 million compared to $4.4 million as at 31 December 2022. The change in the cash balance is explained by cash used for the operating activities.
As at 31 December 2023 trade receivables of the Group were $1.1 million compared to $2.5 million as at 31 December 2022. The trade receivables have decreased as a result of the decrease in the revenues that partly explained by Apester's change in strategy which led to terminating customer accounts which did not meet minimal profitability conditions.
The trade and other payables of the Group as at 31 December were $1.8 million compared to $3.5 million as at 31 December 2022. The decrease is explained by the decrease in the revenues and costs' cut off in 2023.
The debt as at 31 December 2023 was $1.6 million compared to $1.4 million as at 31 December 2022.
Sivota Plc
Strategic report for the year ended 31 December 2023 (continued)
Apester
Apester's management team is mainly focusing on gross margin and monthly EBITDA at this stage of its development. The gross margin and the EBITDA in the year 2023 and the period from the date of Apester's acquisition to the end 2022 were as follows:
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For the year ended 31 December 2023 |
For the period from 12 May 2022 to 31 December 2022 |
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Gross margin |
22% |
26% |
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EBITDA ($ thousand) |
(2,483) |
(2,630) |
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Gross margin
Given the indirect operational expenses are relatively not variable during short periods of time, the management uses gross margin indicator to maximise the profitability of Apester.
EBITDA
The management regularly reviews the EBITDA of Apester with the goal to minimise operating costs when possible and prudently manage its cash resources.
Employees
With the exception of the Directors, the Group has 15 employees.
All current members of the Board, including the Chief Executive Officer, are key management personnel. For more information about the Company's directors see the director's remuneration report and Note 10 to the financial statements. For more information about key management personnel other than directors of the Company see Note 11 to the financial statements. The average number of persons of each sex who were directors and employees of the Group during the reported period:
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Male |
Female |
Total |
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Directors of the Company |
3 |
- |
3 |
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Other key management personnel, other than directors of the Company |
1 |
2 |
3 |
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Other employees of the Group |
12 |
6 |
18 |
The Group is still at an early stage of development and does not yet have the scale of board that would facilitate it being able to effectively meet Disclosure Guidance and Transparency Rules (DTR) rules on board diversity.
Sivota Plc
Strategic report for the year ended 31 December 2023 (continued)
Social, Community and Human Rights Issues
As the Group is still at an early stage of development and further consideration will need to be given to social, community and human rights issues affecting its business.
Principal risks and uncertainties and risk management
The Group operates in an uncertain environment and is subject to a number of risk factors. The Directors have carried out an assessment of the principal risks facing the Group, including those that threaten its business model, future performance, solvency or liquidity.
The Group continues to monitor the principal risks and uncertainties to ensure that any emerging risks are identified, managed, and mitigated.
Keeping pace with technological developments
Apester's ability to attract new customers and increase revenue from existing customers largely depends on its ability to enhance and improve its existing solutions and introduce compelling new technology products. The success of any enhancement to its solutions depends on several factors, including timely completion and delivery, competitive pricing, adequate quality testing, integration with other technologies and the Apester platform, and overall market acceptance. Apester seeks to mitigate this risk by continuing to improve its solutions and products.
Changes to the digital advertising landscape
Apester's current revenues are derived partly from revenue sharing agreements for advertising space sold through its platform. Such revenues are dependent on the worldwide demand and ask prices for advertising, which are mainly controlled by large market participants, such as search engines. If a search engine decides to reduce its pricing or demand for advertising space is depressed, this will adversely affect Apester's revenues.
Financing
Although the Directors have confidence in the future revenue earning potential of the Group from its interests in Apester, there can be no certainty that the Group will achieve or sustain profitability or positive cash flow from its operating activities. If Apester does not meet its targets the Group may not be able to obtain additional external financing and also the resultant credit risk associated with the loan advanced to Apester. The board regularly reviews the revenues, KPIs and expenditures of Apester and continues to prudently manage its cash resources and has minimised ongoing operating costs.
Additionally, if the Group intends to acquire further businesses the Company will likely need to raise further funds.
Further, the war in Israel as described below may have an adverse effect on the ability of the Group to raise additional funds.
Sivota Plc
Strategic report for the year ended 31 December 2023 (continued)
Difficulties in acquiring suitable targets
The Company's strategy and future success are dependent to a significant extent on its ability to identify sufficient suitable acquisition opportunities and to execute these transactions on terms consistent with the Company's strategy. If the Company cannot identify suitable acquisitions, or execute any such transactions successfully, this will have an adverse effect on its financial and operational performance.
Security, political and economic instability in Israel and the Middle East
Apester is incorporated under the laws of the State of Israel, and its principal offices and research and development facilities are located in Israel. In addition, Sivota seeks additional target companies based in Israel. Therefore, security, political and economic conditions in the Middle East, particularly in Israel, may affect Group's business directly.
In October 2023, Hamas, an Islamist terrorist group infiltrated Israel's southern border and carried out a series of attacks against civilian and military targets. Shortly following the attack, Israel's security cabinet declared war against Hamas. The intensity and duration of Israel's ongoing war against Hamas is difficult to predict. While our operations and business have not been materially impacted by the ongoing war to date, future disruptions could materially adversely affect our business as a direct result of employees located in Israel called for reserve duty or of third parties boycotting business with Israeli companies as a political step.
Taxation
The Group will be subject to taxation in several different jurisdictions, and adverse changes to the taxation laws of such jurisdictions could have an adverse effect on its profitability.
Financial risk management
The Group's principal financial instruments comprise mainly cash, trade receivables, trade and other payables and convertible loans. It is, and has been throughout the year under review, the Group's policy that no trading in financial instruments shall be undertaken. The main risks arising from the Group's financial instruments are credit risk, liquidity risk and foreign exchange risk. The board reviews and agrees on policies for managing each of these risks and they are summarised below.
Credit risk
The Group usually extends 30-60-day term to its customers. The Group regularly monitors the credit extended to its customers and their general financial condition but does not require collateral as security for these receivables. Given the payment history of the Group's customers, the risk is not material.
Sivota Plc
Strategic report for the year ended 31 December 2023 (continued)
Liquidity risk
Prudent liquidity risk management implies maintaining sufficient cash reserves to fund the Group's operating activities. Management prepares and monitors forecasts of the Group's cash flows and cash balances monthly and ensures the Group maintains sufficient liquid funds to meet its expected future liabilities.
Foreign exchange risk
The Group operates in a number of overseas jurisdictions and carries out transactions in a number of currencies. Part of the Group's revenues is received in GBP, EURO and in New Israeli Shekels ("NIS"). A significant portion of the Group's expenses is paid NIS and GBP. Therefore, the Group is exposed to fluctuations in the foreign exchange rates in USD against the GBP, EURO and NIS. The Group does not have a policy of using hedging instruments but will continue to keep this under review. The Group operates foreign currency bank accounts to help mitigate the foreign currency risk.
Section 172(1) Statement - Promotion of the Company for the benefit of the members as a whole
The Board believes they have acted in a way most likely to promote the success of the Company for the benefit of its members as a whole, as required by section 172.
This section serves as the Company's section 172 statement and should be read in conjunction with the Strategic report and the Directors' report. Section 172 of the Companies Act 2006 requires Directors to act in a way that they consider, in good faith, would most likely promote the success of the Company for the benefit of its members as a whole, taking into account the factors listed in s172 in regard to:
· the likely consequences of any decision in the long term;
· the interests of the Company's employees;
· the need to foster the Company's business relationships with suppliers, customers and others;
· the impact of the Company's operations on the community and the environment;
· the desirability of the Company's maintaining a reputation for high standards of business conduct; and
· the need to act fairly between members of the Company.
Sivota Plc
Strategic report for the year ended 31 December 2023 (continued)
The following table acts as Sivota's 172(1) statement by setting out the key stakeholder groups, their interests and how the Company has engaged with them over the reporting period.
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Stakeholder |
Their interest |
Engagement method |
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Investors |
· Business sustainability · High standard of governance · Comprehensive review of financial performance of the business · Ethical behaviour · Awareness of long-term strategy and direction · Continual approval of market perception of the business · Delivering long term value |
· Annual and Interim reports · Regular operations and trading updates · RNS Announcements · Investor relations section on website · AGM · Shareholder circulars · Shareholder liaison through board which encourages open dialogue with the Company's investors · Board encourages open dialogue with the Company's investors · Social media |
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Employees |
· Welfare · Business sustainability · High standard of management · Ethical behaviour · Continual professional growth
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· Employees' welfare and development programs · Multi-channel engagement through weekly and quarterly meetings · Weekly emails sent to all staff summarising the key events of the week across the business · Team socials and annual events · Professional trainings |
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Customers and suppliers |
· Successful partnership · Ethical behaviour · Compliance with regulations |
· Development an effective relationship with our customers and suppliers · Ongoing regular meetings with the key advertising agencies, publishers and social media platforms · Customers' support |
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Regulatory bodies |
· Compliance with regulations · Worker pay and conditions · Health & Safety · Insurance |
· Annual report · Website · Direct contact with regulators · Compliance update at board meetings · Regular communications with relevant governments |
Tim Weller, Non-Executive Chairman 30 April 2024
Sivota Plc
Corporate governance statement for the year ended 31 December 2023
The Company is not required to comply with the UK Corporate Governance Code, which is applicable to all companies whose securities are admitted to trading to the premium segment of the Official List. Nevertheless, the Directors are committed to maintaining high standards of corporate governance and propose, so far as is practicable given the Company's size and nature, to voluntarily adopt and comply with the certain aspects of the Quoted Companies Alliance (QCA) Code.
The Board considers that, due to the size and current activities of the Company, its current composition and structure is appropriate to maintain effective oversight of the Company's activities. The structure of the Board will be reviewed as and when the activities of the Company progress to a sufficient size and complexity to require additional independent oversight. It is intended that additional Directors will be appointed in the near future once prospective acquisitions have been identified and that independence will be one of the factors taken into account at such time.
Subject to the Companies Act 2006, the Company's Articles and to any directions given by special resolution of the Company, the business of the Company will be managed by the Board, which may exercise all the powers of the Company, whether relating to the management of the business or not. No alteration of the Company's Articles and no such direction given by the Company shall invalidate any prior act of the Board which would have been valid if such alteration had not been made or such direction had not been given.
The Board meets regularly to review, formulate and approve the Group's strategy, budgets, and corporate actions and oversee the Group's progress toward its goals.
The Directors shall devote as much time as is necessary for the proper performance of their duties.
The Chairman's main responsibility is the leadership and management of the Board's business and its governance. The Chairman meets regularly and separately with the CEO and the Directors to discuss matters for the Board.
Detail of Directors remuneration is given in the Directors' remuneration report.
Sivota Plc
Corporate governance statement for the year ended 31 December 2023 (continued)
The Board of Directors
Active directors:
The Directors who held office during the financial year and to the reporting date, together with details of their interest in the shares of the Company at the reporting date were:
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Number of Ordinary Shares |
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Percentage of Ordinary shares |
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Tim Weller - Non-Executive Chairman |
400,000 |
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3.18% |
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Ziv Ben-Barouch - CEO |
531,396 |
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4.22% |
|
|
Neil Jones - Non-Executive Director |
17,100 |
|
0.14% |
|
Tim Weller - Non-Executive Chairman
Tim Weller is a successful entrepreneur. He is the founder of Incisive Media and was Chairman until its successful sale to EagleTree Private Equity in March 2022. He successfully floated Incisive on the Main Market of the London Stock Exchange in 2000. In 2006 he led the £275 million management buyout which took the company private again. Tim has more than 15 years' experience chairing and investing in public and private equity backed businesses. He was Non-Executive Director and Chairman of RDF Media from 2005-2010 and was also Non-Executive Chairman of Polestar from 2009-2011 until its sale to Sun European Partners LLP. Tim was Independent Non-Executive Director and Chairman of Tremor International between 2014 and August 2020. He was Chairman of TI Media, one of the largest consumer magazine and digital publishers in the UK from April 2019 to May 2020 following its sale to Future Plc. He is also Chairman of Trustpilot, a leading provider of trusted company reviews and led its $1.4 billion IPO in March 2021. Tim was Chairman of Superawesome, a leading technology company that powers the global kids' digital media ecosystem until its sale to Epic Games in September 2020. Mr Weller was a member of the Shadow Cabinet New Enterprise Council, which advised the then Shadow Chancellor of the Exchequer, George Osborne, on business and enterprise prior to the 2010 General Election, and was voted Ernst & Young Entrepreneur of the Year - London in 2001. In 2005, he received the publishing industry's top honour - the Marcus Morris award.
Sivota Plc
Corporate governance statement for the year ended 31 December 2023 (continued)
Ziv Ben-Barouch - CEO
Ziv Ben-Barouch is an experienced operator and leader with decades of experience in finance and investments within technology companies. He has a proven track record of leading corporate turnarounds, M&A, IPOs, and strategically guiding companies as they build their business. Ziv is the co-founder and managing partner of Pereg Ventures, a US-Israeli Venture Capital Firm focused on B2B data companies which is backed by investments from Nielsen, a world leader in marketing intelligence, the Tata Group, and other leading financial institutions. At Pereg, Ziv has led and participated in the direct investment of 13 early stage technology companies that have raised in combined excess of $250M in follow-on investments from leading investors and led on the disposal of two portfolio companies to NYSE listed counterparties. Prior to founding Pereg, he was Senior Principal and CFO at Viola, a technology-focused investment group with over $3 billion in assets under management. Before joining Viola, Ziv was the CFO of SpaceNet Inc, a specialty telecommunications company providing managed network solutions by satellite and terrestrial technologies for business, government and residential users in North America. He led SpaceNet's turnaround and participated in SpaceNet's parent company's $70 million NASDAQ listing. Ziv has key relationships with Israeli and international investment firms in the technology space which he will be able to leverage to assist Sivota. Ziv is an Israeli Certified Public Accountant.
Neil Jones - Non-Executive Director
Neil has held Board positions in UK multi-national public & private companies for over 20 years. He has a deep understanding of the UK Corporate Governance code and Board procedures from these and other NED positions. He is currently Group Corporate Development Director at Inizio an international healthcare and communications group formed by the combination of Huntsworth PLC and UDG PLC both of which were taken private by Private Equity Group Clayton, Dubilier & Rice in 2020 & 2021, having previously held the position of COO & CFO at Huntsworth since February 2016. Prior to Huntsworth he was CFO of ITE Group plc (Now Hyve plc), a FTSE listed international organiser of exhibitions and conferences and before that he was Group Finance Director of Tarsus Group plc, another international trade exhibition organiser. He is also the Senior Independent Director of Tremor International, a dual listed (Nasdaq & AIM) Ad-Tech company. Neil is a member of the ICAEW, qualifying with PWC in 1990.
Role of the Board
The Board sets the Group's strategy, ensuring the necessary resources are in place to achieve the agreed priorities. It is accountable to shareholders for the creation and delivery of long-term shareholder value. To achieve this, the Board directs and monitors the Group's affairs within a framework of control which enables risk to be reviewed and managed effectively.
Sivota Plc
Corporate governance statement for the year ended 31 December 2023 (continued)
Board meetings
The core activities of the Board are carried out in scheduled meetings and regular reviews of the business are conducted. Additional meetings and conference calls are arranged to consider matters which would require discussions outside of scheduled meetings. The Directors maintain frequent contact with each other to discuss issues of concern and keep them fully briefed to the Group's operations. There were 12 Board meetings held during the year, except for 1 meeting all the other meetings were attended by all the Directors. .
Directors' indemnities
To the extent permitted by law and the Articles, the Company has made qualifying third-party indemnity provisions for the benefit of its directors during the year, which remain in force at the date of this report.
Policy for new appointments and amendments to articles
Without prejudice to the power of the Company to appoint any person to be a Director pursuant to the Articles the Board shall have power at any time to appoint any person who is willing to act as a Director, either to fill a vacancy or as an addition to the existing Board, but the total number of Directors shall not exceed any maximum number fixed in accordance with the Articles. Pursuant to the Companies Act 2006, the Company may amend its Articles of Association via special resolution, achieved by way of a vote at a General Meeting of the shareholders.
Board Committees
The Board established an Audit Committee and a Remuneration and Nomination Committee with effect from the Company's admission to trading on the Main Market. In addition, the Board established an Acquisitions Committee which will consider potential targets where a Director has a potential conflict and, following the completion of readmission in September 2022 the Board established a risk committee that monitors the financial and commercial performance of investments.
Audit Committee
The Audit Committee consists of Neil Jones and Tim Weller, each of whom has recent and relevant financial experience. The Audit Committee will normally meet at least twice a year at the appropriate times in the reporting and audit cycle. The committee has responsibility for, amongst other things, the monitoring of the financial integrity of the financial statements of the Group and the involvement of the Group's auditors in that process. It will focus in particular on compliance with accounting policies and ensuring that an effective system of internal financial control is maintained. The ultimate responsibility for reviewing and approving the annual report and accounts and the half-yearly reports, remains with the Board.
Sivota Plc
Corporate governance statement for the year ended 31 December 2023 (continued)
The terms of reference of the Audit Committee cover such issues as membership and the frequency of meetings, as mentioned above, together with requirements of any quorum for and the right to attend meetings. The duties of the Audit Committee covered in the terms of reference are: financial reporting, internal controls, internal audit, external audit and reserving. The terms of reference also set out the authority of the committee to carry out its duties.
In addition, the Audit Committee considers the nature and extent of the non-audit services provided by the auditors. During the reported period the non-audit services were provided to support the admission and readmission processes.
During the reporting period the Audit Committee held meetings on 27 April and 26 September 2023 which were chaired by Tim Weller and were attended by all its members.
Remuneration and Nomination Committee
The Remuneration and Nomination Committee consists of Tim Weller and Neil Jones. The Remuneration and Nomination Committee will meet at least once a year. It has responsibility for the determination of specific remuneration packages for executive directors and any senior executives or managers of the Group, including pension rights and any compensation payments, recommending and monitoring the level and structure of remuneration for senior management, and the implementation of share option, or other performance-related, schemes. No remuneration consultants provided advice or services about directors' remuneration during the course of the latest reporting period.
The Remuneration and Nomination Committee is also be responsible for considering and making recommendations to the Board with respect of appointments to the Board, the board committees and the chairmanship of the board committees. It is also responsible for keeping the structure, size and composition of the Board under regular review, taking into account the Company's commitment to developing a diverse pipeline of directors and for making recommendations to the Board with regard to any changes necessary. The Remuneration and Nomination Committee also considers succession planning, taking into account the skills and expertise that will be needed on the Board in the future.
The terms of reference of the Remuneration and Nomination Committee cover such issues as membership and frequency of meetings, as mentioned above, together with the requirements for a quorum and the right to attend meetings. The duties of the Remuneration and Nomination Committee covered in the terms of reference relate to the following: determining and monitoring policy on and setting level of remuneration, early termination, performance-related pay, pension arrangements, authorising claims for expenses from the chief executive officer and chairman, reporting and disclosure, share schemes and appointment of remuneration consultants. The terms of reference also set out the reporting responsibilities and the authority of the committee to carry out its duties.
Sivota Plc
Corporate governance statement for the year ended 31 December 2023 (continued)
The first Remuneration and Nomination Committee meeting was held in January 2023 and was attended by all its members.
Acquisitions Committee
The Acquisitions Committee consists of all Independent Directors, in the event of a potential acquisition target being introduced to the Group by a Director where that Director has an interest or other conflict of interest. In such circumstances, the Acquisitions Committee will have a full remit to negotiate the terms of such transaction (including engaging and liaising with professional advisers) and the conflicted or interested Director will not be invited to join or attend any meetings of the committee. No committee meetings were held during the reporting period.
Risk Committee
The Risk Committee consists of Tim Weller and Neil Jones. The Risk Committee plans to meet at least once a year. It monitors Group compliance with statutory obligations and its internal policies, and confirms that the Group's management has appropriate controls in place to identify, prepares for and implement legislative and regulatory changes which affect its operations.
The Risk Committee also is responsible for reviewing the significant identified risks (principal risks) of the Group and ensuring that there is the risk management process in place that measure, monitor, manage and mitigate the Group's principal risk exposures.
The Risk Committee held meetings relating to 2022 on 19 December 2022, and relating to 2023 which was postponed to and held on 9 April 2024. Both the meetings were chaired by Tim Weller and attended by all the Directors.
Internal auditors
The internal auditors of the Company are Chaikin Cohen Rubin & Co, appointed by the Company in December 2022. The internal auditors provide their audit based on an audit plan. Each year specific topics will be identified by the Audit Committee for audit during that year. Each report of the internal auditors will be discussed by the Audit Committee and if necessary by the Board and its results will be learned from and implemented as required.
By Order of the Board
Tim Weller
Chairman
30 April 2024
Sivota Plc
Directors' report for the year ended 31 December 2023
The Directors submit their report with the audited Financial Statements for the year ended 31 December 2023.
General information
Sivota was incorporated as a public Limited Company under the laws of England and Wales with registered number 12897590 on 22 September 2020.
Sivota was established in order to acquire controlling stakes and then act as a holding company for various target businesses operating or founded in Israel, predominantly in the technology sector.
In July 2021 the Company completed a placing of 1,085,000 ordinary shares for a consideration of $1.4 million (gross) and was listed on the Main Market (Standard Segment) of the London Stock Exchange (LSE).
In December 2021, the Company announced that it had entered into non-binding term sheet with Apester. As a result, the Company's shares were suspended pending the completion of the transaction and the publication of the prospectus in relation to its enlarged group.
In May 2022, the Company completed the fundraising by placing and direct subscription of 11,500,000 of its new ordinary shares for a consideration of $14.2 million (gross) followed by completing the acquisition of a majority stake in Apester, an Israeli-incorporated business which operates an innovative digital experience software platform that enables brands, publishers and creators to publish and monetise new interactive digital experiences on their sites and apps.
In September 2022, the Company published the prospectus and completed its readmission to the LSE.
Since Apester's acquisition, Sivota has been implementing a number of strategic and operational changes within Apester, including the appointment of a new CEO, new board members and key executives. The directors believe the new management team will lead the business to fully exploit a number of near-term growth initiatives.
In January 2024, Sivota entered into a non-binding term sheet with a leading online technology platform operating across the travel sector as described in the Company's strategic report.
The Company continues to seek additional investment opportunities. Raising additional funds by the Company for new investments is challenging due to the current market and political situation. However, the directors believe with the broader macroeconomic environment weakening, seed investment will become harder to source for potential investees, creating more opportunities for the Company's team.
Sivota Plc
Directors' report for the year ended 31 December 2023 (continued)
Results for the year and distributions
The Group results are set out in the consolidated statement of comprehensive income.
In 2023 the Group generated revenues of $5.6 million, with a gross profit of $1.3 million.
The total comprehensive loss for the year 2023 was $11.0 million. The total comprehensive loss for the year 2023 before impairment loss was $5.2 million.
The Board regularly reviews the revenues, KPIs and expenditures of the Group and continues to prudently manage its cash resources and to minimise its ongoing operating costs.
The Company has paid no distribution or dividends since its incorporation.
The Company made no political donations in 2023 (2022: Nil)
Post Balance Sheet Events
In January 2024, Sivota entered into a non-binding term sheet with a leading online technology platform operating across the travel sector (the "Target"). Sivota intends to raise up to $3.2 million through the issue of new ordinary shares in order to provide the Target with a convertible loan to fund its working capital commitments for the short term. Pursuant to the term sheet, Sivota also has the ability to acquire up to 51% of the share capital of the Target for a consideration of $15 million, subject to the satisfaction of certain conditions.
In March 2024 the Company and the additional Apester's shareholder, that lent Apester convertible loans, signed an amendment to the convertible loan agreements to defer the loan repayments by one year. For more information see Note 4(d) and (f) to the Financial Statements.
Employees and greenhouse gas (GHG) emissions
The Company currently has no trade or employees located in the UK. Therefore, the Company has minimal carbon or greenhouse gas emissions as it is not practical to obtain emissions data at this stage. It does not have responsibility for any emissions producing sources under the Companies Act 2006.
Climate-related financial disclosures
The Group does not trade or has no employees located in UK and its sole executive director is not located in the UK. The Company therefore not made any disclosures consistent with TCFD recommendations and recommended disclosures.
Sivota Plc
Directors' report for the year ended 31 December 2023 (continued)
Going forward, as the Company grows and if starts or acquires operations in the UK, it will take steps and develop plans to enable the Directors to make consistent disclosures in the future, which will include relevant timeframes for being able to make those disclosers.
The Company is headquartered in the UK, which has made a commitment to reaching a net-zero economy. The Company has not considered that commitment in developing a transition plan because, as the Company does not trade in the UK nor has any employees located in the UK, it does not contribute any carbon emissions to the economy. The Company's main operating subsidiary, Apester, is based in Israel, which has also made a commitment to reaching a net-zero economy. The Company has not considered that commitment in developing a transition plan in Israel as Apester's carbon emissions are minimal.
Going concern
The Group projects that it will need to raise further debt or equity finance to fund the planned business development. The Group is expected to further generate losses from operations during 2024 which will be expressed in negative cash flows from operating activity. Hence the continuation of the Group's operations depends on raising the required financing resources or reaching profitability, which are not guaranteed at this point. Whilst the directors are confident they will be able to raise the additional finance required, this is not guaranteed and hence there is a material uncertainty in respect of going concern. However, the directors have, at the time of approving the financial statements, a reasonable expectation that the Group will have adequate resources to continue in operational existence for the period to 30 April 2025 which is twelve months from the signing of this report. For this reason, the directors continue to adopt the going-concern basis of accounting in preparing the financial statements.
External Auditors
So far as the directors are aware, there is no relevant audit information of which the Group's auditors are unaware, and they have taken all steps that they ought to have taken as directors in order to make themselves aware of any relevant audit information and to establish that the Group's auditors are aware of that information.
In January 2024, the Board approved the appointment of Haysmacintyre LLP as the Company's auditor who succeed the previous auditor - Crowe U.K. LLP. The appointment of Haysmacintyre LLP is for the financial year ended 31 December 2023. The re-appointment of Haysmacintyre LLP as auditor for the financial year ending 31 December 2024 will be subject to approval by the Company's shareholders at the next Annual General Meeting of the Company, to be held in June 2024. The previous auditor has deposited with the Company a statement confirming that there are no matters to be brought to the attention of the Company's members or creditors.
Sivota Plc
Directors' report for the year ended 31 December 2023 (continued)
Share capital and substantial shareholders
The issued share capital of the Company consists of 12,585,000 ordinary shares and 4,950,000 deferred shares. The ordinary shares carry one vote per ordinary share and each ordinary share carries an equal right to dividends declared on the ordinary shares. The ordinary shares have equal voting rights and rank pari-passu for the distribution of dividends and repayment of capital. The deferred shares carry no voting rights, no rights to dividends and on a return of capital are only entitled to a return once a sum of £1,000,000 has been paid on each ordinary share. Further details of the Company's share capital are given in Note 18 to the financial statements.
As far as the Company is aware, there are no agreements between holders of securities that may restrict the transfer of securities or voting rights however the Board may, in its absolute discretion, refuse to register any transfer of a share in certificated form only in certain circumstances which do not prohibit the transfer of a single class of share which is fully paid up. No single person directly or indirectly, individually or collectively, exercises control over the Company and the Company has not issued any class of share carrying special rights regarding control of the Company. The Directors are aware of the following persons, who had an interest in 3% or more of the issued ordinary share capital of the Company as at 30 April 2024:
|
Shareholder |
Number of Ordinary Shares |
Percentage of ordinary shares |
|
Prytek Investment Holdings Pte Ltd |
1,787,950 |
14.21% |
|
Ophir Yahalom |
1,670,020 |
13.27% |
|
Ronen Kirsh |
1,418,728 |
11.27% |
|
Schroders Investment Management Ltd |
1,247,750 |
9.91% |
|
Trico Fuchs Ltd |
1,213,392 |
9.64% |
|
Ehud Levy |
1,023,167 |
8.13% |
|
Hagai Tal |
606,207 |
4.82% |
|
Ziv Ben-Barouch |
531,396 |
4.22% |
|
Herald Investment Management |
500,000 |
3.97% |
|
Tim Weller |
400,000 |
3.18% |
Sivota Plc
Directors' report for the year ended 31 December 2023 (continued)
Responsibility statement
The Directors are responsible for preparing the Strategic Report, Directors' Report and the Financial Statements in accordance with applicable law and regulations.
Company law requires the directors to prepare financial statements for each financial year. Under that law, the directors have elected to prepare the financial statements in accordance with International Financial Reporting Standards (''IFRSs''). Under company law, the directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the company and of the profit or loss of the company for that year.
In preparing these Financial Statements, the Directors are required to:
· select suitable accounting policies and then apply them consistently;
· present information and make judgements that are reasonable, prudent and provide relevant, comparable and understandable information;
· state whether applicable Accounting Standards have been followed, subject to any material departures disclosed and explained in the financial statements;
· provide additional disclosures when compliance with the specific requirements in IFRS is insufficient to enable users to understand the impact of particulars transactions, other events and conditions on the entity's financial position and financial performance; and
· make an assessment of the Group's ability to continue as a going concern.
The Directors are responsible for keeping adequate accounting records that are sufficient to show and explain the Group's transactions and disclose with reasonable accuracy at any time the financial position of the Group to enable them to ensure that the financial statements comply with the requirements of the Companies Act 2006. They have general responsibility for taking such steps as are reasonably open to them to safeguard the assets of the Group and to prevent and detect fraud and other irregularities.
The Directors are responsible for the maintenance and integrity of the corporate and Financial Statements. Legislation governing the preparation and dissemination of Financial Statements may differ from one jurisdiction to another.
We confirm that to the best of our knowledge:
· the Financial Statements, prepared in accordance with International Accounting Standards in conformity with the requirements of the UK Companies Act 2006, give a true and fair view of the assets, liabilities, financial position and profit or loss of the Group for the year;
· the Director's report includes a fair review of the development and performance of the business and the position of the Group, together with a description of the principal risks and uncertainties that they face;
Sivota Plc
Directors' report for the year ended 31 December 2023 (continued)
· the annual report and financial statements, taken as a whole, are fair, balanced and understandable and provide the information necessary for shareholders to assess the Company's performance, business model and strategy.
The Directors are responsible for maintaining the Group's systems of controls and risk management in order to safeguard its assets.
By Order of the Board
Tim Weller, Chairman
30 April 2024
Sivota Plc
Directors' remuneration report for the year ended 31 December 2023
The Remuneration and Nomination Committee have responsibility for the determination of specific remuneration packages for executive directors.
The current directors' remuneration comprises a basic fee or salary and at present there is no long-term incentive plan or share option package for the directors.
Directors' remuneration
Neil Jones
According to the appointment letter signed on in July 2021, Neil Jones agreed not to be paid any fees until the Company had undertaken a fundraising of at least £8,000,000. Following the completion of fundraising by the Company in May 2022 he is paid £22,500 per annum to act as a non-executive director of the Company.
According to the appointment letter, Neil will be eligible for participation in the Company's share option plan when adopted.
In addition, Neil agreed to subscribe at 1.71% of the Company's issued share capital at the admission in July 2021. These ordinary shares will be subject to lock-in pursuant to which Neil will not be able to sell or dispose of such ordinary shares for a period of 4 years.
Neil's appointment was for an initial period of 12 months from admission and will continue unless terminated by either party giving to the other not less than 3 months' notice or without notice in cases the Company can terminate the appointment immediately.
In January 2024, Neil Jones and the Company entered into agreement to defer the payments of the director fee until the earlier of 31 December 2024 or the date of the next fundraising.
Tim Weller
According to the appointment letter signed in July 2021, Tim Weller agreed not to be paid any fees until the Company had undertaken a fundraising of at least £8,000,000. Following the completion of fundraising by the Company in May 2022 he is paid £70,000 per annum to act as a non-executive director of the Company.
If the Company's market capitalisation exceeds £100,000,000 the Board will consider an increase in the fee.
According to the appointment letter, Tim will be eligible for participation in the Company's share option plan when adopted.
In addition, Tim agreed to subscribe £100,000 for the Company's issued share capital at the admission in July 2021.
Sivota Plc
Directors' remuneration report for the year ended 31 December 2023 (continued)
Tim's appointment will continue unless terminated by either party giving to the other not less than 6 months' notice or without notice in certain circumstances where the Company can terminate the appointment immediately.
In January 2024, Tim Weller and the Company entered into agreement to defer the payments of the director fee until the earlier of 31 December 2024 or the date of the next fundraising.
Ziv Ben-Barouch
According the employment agreement signed in July 2021 Ziv Ben-Barouch was paid a salary of £18,000 per annum to act as chief executive officer. Following the completion of fundraising by the Company in May 2022 he is paid a salary of £70,000 per annum.
The Company may, in its absolute discretion pay a bonus of such amount, at such intervals and subject to such conditions as the Company may in its absolute discretion determine taking into account specific performance targets.
Ziv's appointment commenced on the admission in July 2021 and shall continue until terminated by either party giving to the other not less than 6 months' written notice or without notice in cases the Company can terminate the appointment immediately.
In January 2024, Ziv Ben-Barouch and the Company entered into agreement to defer the payments of the director fee until the earlier of 31 December 2024 or the date of the next fundraising.
Remuneration of the Directors:
|
|
For the year ended 31 December 2023 |
For the year ended 31 December 2022 |
||||||
|
|
Base fee |
Base Salary |
Other(*) |
Total |
Base fee |
Base Salary |
Other(*) |
Total |
|
|
in U.S dollars in thousands |
in U.S dollars in thousands |
||||||
|
Tim Weller |
90 |
- |
- |
90 |
54 |
- |
- |
54 |
|
Neil Jones |
27 |
- |
- |
27 |
17 |
- |
- |
17 |
|
Ziv Ben-Barouch |
- |
90 |
- |
90 |
- |
59 |
- |
59 |
|
Total |
117 |
90 |
- |
207 |
71 |
59 |
- |
130 |
(*) there are no remunerations other than base fee or salary.
There were no performance measures associated with any aspect of Directors' remuneration during the year.
Sivota Plc
Directors' remuneration report for the year ended 31 December 2023 (continued)
Other matters
The Company currently does not have any annual or long-term incentive schemes in place for any of the Directors and as such there are no disclosures in this respect.
The Company does not have any pension plans for any of the Directors and does not pay pension amounts in relation to their remuneration.
The Company has not paid out any excess retirement benefits to any Directors or past Directors. The Company has not paid any compensation to past Directors.
The Company has not paid any payments for loss of office during the year.
Directors' interests in shares as at 30 April 2024:
|
|
Number of ordinary shares |
Percentage of ordinary shares |
|
Neil Jones |
17,100 |
0.14% |
|
Tim Weller |
400,000 |
3.18% |
|
Ziv Ben-Barouch |
531,396 |
4.22% |
The Company does not currently have in place any requirements or guidelines for any directors to own shares.
The Company is not aware of any changes in the interests of each director that have occurred between the end of the period of review and the date of the AGM notice.
The Company is not aware of any disclosures made to the Company in accordance with DTR 5.
Sivota Plc
Directors' remuneration report for the year ended 31 December 2023 (continued)
Total Shareholder Return
The table above illustrates the total return of Sivota shareholders over the period from the first listening in July 2021 to 31 December 2023 compared to the FTSE 350, when Sivota's shares were suspended from the trading at the London Stock Exchange as a result of the readmission process that began in December 2021 and was completed in September 2022.
The table above illustrates the total return of Sivota shareholders over the period from the readmission completed in September 2022 to 31 December 2023 compared to the FTSE 350.
Sivota Plc
Directors' remuneration report for the year ended 31 December 2023 (continued)
Changes in the Company employees' remuneration
Neil Jones and Tim Weller did not receive a fee prior to the completion of the fundraise in May 2022. Following the completion of the fundraise, Neil Jones receives fees of £22,500 per annum, and Tim Weller receives fees of £70,000 per annum. There were no changes in the director's remuneration since May 2022.
Similarly, the remuneration paid to the Chief Executive Officer, Ziv Ben-Barouch increased in May 2022 following the completion of the fundraising from £18,000 per annum to £70,000 per annum. There was no change in the CEO's remuneration since May 2022.
The remuneration of the CEO, being the only executive director of the Company, for the year 2024 to which the Remuneration Policy will apply, will be only his salary in accordance with his service agreement. There will be no elements of such remuneration which are subject to any performance measures and so the salary is fixed.
Since its incorporation, the Company has employed one employee outside of the UK, other than the directors, whose employment began in March 2022. There has been no change to this individual's remuneration during the reporting period. However, the Company will ensure any subsequent changes are reflected in ongoing annual reports.
Remuneration policy
The Remuneration Policy the main aspects of which set out below will be put for approval to Shareholders at the Company's Annual General Meeting to be held in 2024. The effective date of this Policy is the date on which the Policy is approved by shareholders. No remuneration or loss of office payment may be made to a director unless they are consistent with the policy once approved by Shareholders. There are currently no provisions for loss of office payments in any service contract or letter of appointment beyond the relevant contractual notice period.
The Company strives to develop and implement its Remuneration Policy as a fair, consistent, competitive program of financial compensation to the balanced with responsibilities that have been taken.
The Remuneration Policy is designed to reflect remuneration trends and employment conditions across the Company, to support the Company's business strategy and to help the Company promote and attain its objective of long-term success. No remuneration consultants provided advice or services about the Remuneration Policy and the Company did not consult with employees.
The Remuneration Committee intends the Remuneration Policy to apply for one year and will undertake an annual review of the policy to ensure the content continues to reflect the Company's business strategy.
Sivota Plc
Directors' remuneration report for the year ended 31 December 2023 (continued)
If the Company seeks to appoint further directors, it will seek to align any remuneration package with the Company's growth aims for the Group. The Company has no specific policy on the setting of notice periods under directors' service contracts.
Shareholders' views have not been taken into account in relation to the directors' remuneration policy, however as the Company and its Group grow and any changes are required to the policy, the Company will consider doing so.
The remuneration of the CEO, being the only executive director of the Company, for the first year to which the Remuneration Policy will apply, will be only his salary in accordance with his service agreement. There will be no elements of such remuneration which are subject to any performance measures and so the salary is fixed.
Below is a table summarising the main aspects of the remuneration framework for the executive director:
|
Fixed element and purpose |
Operation |
Maximum potential salary/opportunity |
Performance metrics |
|
Base salary and related statutory cost |
|||
|
To provide a basic salary commensurate with role and experience which is comparable with that for similar companies of a similar size. The quantum of salary is also traded off against the Company's financial resources and its ability to pay salary for a sustainable period. |
Salary is reviewed and approved annually by the Company's Remuneration Committee |
not applicable - basic salary only |
not applicable |
|
Pensions |
|
|
|
|
The aim at present is to comply with current legislation. |
Paid to in accordance with local legislation.
|
according to the current legislation |
not applicable |
|
Incentives/bonuses |
|
|
|
|
not applicable |
not applicable |
not applicable |
not applicable |
|
Share option schemes |
|
|
|
|
not applicable |
not applicable |
not applicable |
not applicable |
Sivota Plc
Directors' remuneration report for the year ended 31 December 2023 (continued)
The remuneration of the non-executive directors of the Company, for will only their annual fee in accordance with letter of appointment. There will be no elements of such remuneration which are subject to any performance measures and so those fees are fixed. Non-executive directors will not receive any loss of office payments beyond the payment of any contractual notice provision.
By Order of the Board
Tim Weller
Chairman
30 April 2024
Independent auditor's report
to the members of Sivota PLC
Opinion
We have audited the financial statements of Sivota PLC (the 'parent company') and its subsidiaries (the 'group') for the year ended 31 December 2023 which comprise:
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Group |
Company |
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· the Consolidated Statement of Comprehensive Income; |
· the Company Statement of Financial Position;
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· the Consolidated Statement of Financial Position;
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· the Company Statement of Changes in Equity; |
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· the Consolidated Statement of Changes in Equity; |
· the Company Statement of Cash flows; |
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· the Consolidated Statement of Cash flows; |
· and related notes to the financial statements |
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· and related notes to the financial statements |
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The financial reporting framework that has been applied in their preparation is applicable law and UK adopted International Financial Reporting Standards (IFRSs).
In our opinion, the financial statements:
· give a true and fair view of the state of the group's and of the parent company's affairs as at 31 December 2023 and of the group's loss for the period then ended;
· have been properly prepared in accordance with UK adopted IFRSs; and
· have been prepared in accordance with the requirements of the Companies Act 2006.
Basis for opinion
We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our responsibilities under those standards are further described in the Auditor's responsibilities for the audit of the financial statements section of our report.
We are independent of the group in accordance with the ethical requirements that are relevant to our audit of the financial statements in the UK, including the FRC's Ethical Standard as applied to listed entities, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
An overview of the scope of our audit
As part of our audit planning procedures, we sought to plan the scope of our audit by reviewing the group composition and respective results and position of the components. As the group comprises a parent holding company, a small standalone cost centre subsidiary and trading subgroup the principal focus of our group audit was on the parent and the trading group in order to provide sufficient appropriate audit evidence in respect of the scope of our work as auditors of the group financial statements.
The scope of the audit and our audit strategy was developed by using our audit planning process to obtain an understanding of the Group and its subsidiaries, its activities, its internal control environment, and developments in its business in the year.
Our audit testing was informed by our understanding of the group and accordingly was designed to focus on areas where we assessed there to be the most significant risks of material misstatement. The trading subgroup audit was performed by a component audit firm in Israel. The audit of the parent and its small standalone cost centre subsidiary was performed by Haysmacintyre.
Material uncertainty related to going concern
We draw attention to Note 3a in the financial statements, which indicates that the group and company's ability to continue as a going concern is dependent on future fund raising. As stated in Note 3a, these conditions and uncertain future events, along with other matters as set forth in Note 3a, indicate that a material uncertainty exists that may cast significant doubt on the group's and company's ability to continue as a going concern. Our opinion is not modified in respect of this matter.
In auditing the financial statements, we have concluded that the directors' use of the going concern basis of accounting in the preparation of the financial statements is appropriate.
Our evaluation of the directors' assessment of the group's and company's ability to continue to adopt the going concern basis of accounting included:
· Discussing management's assessment of the group's ability to remain a going concern;
· Reviewing and understanding the cash flow forecasts for the period to end of April 2025 which are a key element of management's going concern assessment;
· Assessing and challenging the inputs and judgements made in the preparation of the cash flow forecasts for the period to end of April 2025; and
· Performing stress tests including sensitivity analysis to model the effect of changing assumptions made or amending key data used in management's cash flow forecasts and considering the impact on the group's ability to adopt the going concern basis.
Our responsibilities and the responsibilities of the directors with respect to going concern are described in the relevant sections of this report.
Key audit matters
Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the financial statements of the current period and include the most significant assessed risks of material misstatement (whether or not due to fraud) we identified, including those which had the greatest effect on:
· the overall audit strategy,
· the allocation of resources in the audit; and
· directing the efforts of the engagement team.
These matters were addressed in the context of our audit of the financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.
In determining the key audit matters we considered the:
· Areas of higher risks of material misstatement or significant risks identified in accordance with ISA (UK) 315
· Significant audit judgements on financial statement line items that involved significant management judgement such as accounting estimates, and
· The impact of significant events and transactions during the period covered by the audit.
In addition to the matter described in the material uncertainty related to going concern, the following table summarises the key audit matters we have identified and rationale for their identification together with how we responded to each in our audit and our key observations.
Risk magnitude key (Note - this is our first audit of Sivota PLC)
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Revenue recognition
Fraud in revenue recognition is a rebuttable presumed significant risk under ISA (UK) 240. Revenue is considered a key performance indicator by management as they follow a strategy to grow the group's activities. The recognition of revenue is therefore a key focus for most stakeholders.
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Specific tests were designed and performed to consider whether revenue has been recorded in the correct period and is free from misstatement: · Key sales contracts were obtained and inspected. · A sample of sales invoices were reviewed and subsequent cash receipts agreed to the amounts invoiced. · The accounting treatment and policies for revenue recognition for each material class of revenue was reviewed and assessed. · The group's performance obligations were reviewed and compliance with these assessed when revenue transactions were substantively tested. · The presentation of revenue was reviewed and considered including an assessment of whether the group acted as a principal or agent. · Post year end credit notes were reviewed for any indications that sales recognised in the year had been subsequently reversed. · Trade receivables at the year-end were reviewed to assess whether revenue recognised prior to the year-end had been appropriately recognised. |
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Key observations: |
No material adjustments to revenue were noted as a result of the audit work performed. The group's policies for the recognition of revenue together with the basis for the presentation and disclosure of revenue are considered reasonable and appropriate. |
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Risk of impairment of intangible assets and goodwill (Note 14)
There is a risk that previously intangible assets capitalised, including goodwill, are impaired.
IAS 36 requires that the assets of an entity are carried at no more than their recoverable amount and sets out indicators of impairment which should be considered in the preparation of financial statements. Although the group's principal trading activity is a relatively early growth stage of its life, the continued generation of trading losses is an indicator of potential impairment. Accordingly, there is a risk that the intangible assets, including goodwill, are recorded in excess of their recoverable amounts.
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· We obtained and assessed management's rationale for the recognition of an impairment of its goodwill and customer relationship assets. · We obtained and reviewed management's calculations of the valuation of the group's developed technology. · We critically assessed the methodology used by management to calculate the valuation and used an in-house valuation expert to assess the methodology. · We tested the arithmetical accuracy of the models and underlying data used by management in their impairment assessment and where appropriate agreed the underlying forecasts to the board approved budgets. · We compared the approved budgets to post year end actual results. · We considered the forecasting ability of management by comparing budgets to actual performance. · With the assistance of our valuation expert, we assessed and challenged the estimates and judgements made and assumptions used, the key inputs being: o Forecast future results. o Royalty rate. o Discount rate. o Growth rates. · We obtained evidence to assess the assumptions used and performed our own sensitivity analysis on the growth rate and discount rate. · We challenged management about the assumptions and estimates made within their model. · We reviewed the financial statement disclosures and considered the appropriateness of the disclosed sensitivities that are included. |
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Key observations |
We concur with management's decision to impair goodwill and customer relationship intangible assets given the subsidiary's change in strategy and reassessment of its customer base towards higher margin work.
Our work assessing the valuation of the developed technology assets revealed the valuation model used and subsequent impairment assessment to be highly sensitive to changes in assumptions about future sales growth and other inputs.
As a result of our work and challenge of management, an impairment of the technology assets has been recognised.
Despite this impairment, the valuation of the asset remains sensitive (see Note 14) to the subsidiary continuing to achieve the forecast growth. If the forecast growth is not achieved, further impairment may be necessary in future years. If the forecast growth is exceeded there may be a reversal of the impairment recognised to date.
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The table below shows our judgement of the magnitude and likelihood of key audit matter risk:
Our application of materiality
The scope and focus of our audit were influenced by our assessment and application of materiality. We define materiality as the magnitude of misstatement that could reasonably be expected to influence the readers and the economic decisions of the users of the financial statements. We use materiality to determine the scope of our audit and the nature, timing and extent of our audit procedures and to evaluate the effect of misstatements, both individually and on the financial statements as a whole.
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Materiality |
$230,000 (2022 - $425,000) |
$111,000 (2022 - $255,000) |
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Benchmark |
Materiality has been based on blended benchmark of earnings (losses) and gross assets. |
This was principally determined as being 2% of draft net assets but revised down following impairment charges booked against investments. |
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Basis for, and judgements used in the determination of materiality |
As the group made no acquisitions in the year and the principal subsidiary has been trading through the year, assessment of materiality was principally based on the group's performance but made allowance for the importance of group's intangible assets. |
The parent company is a holding company, and it was therefore considered appropriate to use an asset based materiality benchmark. |
Performance materiality - Performance materiality was set at 60% of materiality, being $138,000 (31 December 2022 - 70% of materiality being $154,000). Our performance materiality was reduced from 70% used by the previous auditors because this was our first audit of the group.
Reporting threshold - The reporting threshold to the audit committee was set as 5% of materiality, being $11,500 (31 December 2022 - $11,000). If, in our opinion in differences below this level warranted reporting on qualitative grounds, these would also be reported.
Differences in materiality levels from the previous audit - The prior year audit was performed in a period in which a significant business combination occurred. The previous auditors therefore used a materiality calculation based on total assets. In the year ended 31 December 2023 there has been no major business combinations. Accordingly, our assessment of materiality was principally based on trading performance but made allowance for the importance of group's intangible assets.
Other information
The directors are responsible for the other information. The other information comprises the information included in the annual report, other than the financial statements and our auditor's report thereon. Our opinion on the financial statements does not cover the other information and, except to the extent otherwise explicitly stated in our report, we do not express any form of assurance conclusion thereon.
In connection with our audit of the financial statements, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements, or our knowledge obtained in the audit or otherwise appears to be materially misstated. If we identify such material inconsistencies or apparent material misstatements, we are required to determine whether there is a material misstatement in the financial statements or a material misstatement of the other information. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard.
Opinions on other matters prescribed by the Companies Act 2006
In our opinion, based on the work undertaken in the course of the audit:
· the information given in the strategic report and the directors' report for the financial period for which the financial statements are prepared is consistent with the financial statements; and
· the strategic report and the directors' report have been prepared in accordance with applicable legal requirements.
Matters on which we are required to report by exception
In the light of the knowledge and understanding of the group and the parent company and its environment obtained in the course of the audit, we have not identified material misstatements in the strategic report or the directors' report.
We have nothing to report in respect of the following matters in relation to which the Companies Act 2006 requires us to report to you if, in our opinion:
· adequate accounting records have not been kept by the parent company, or returns adequate for our audit have not been received from branches not visited by us; or
· the parent company financial statements are not in agreement with the accounting records and returns; or
· certain disclosures of directors' remuneration specified by law are not made; or
· we have not received all the information and explanations we require for our audit.
Responsibilities of directors
As explained more fully in the directors' responsibilities statement, the directors are responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view, and for such internal control as the directors determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.
In preparing the financial statements, the directors are responsible for assessing the group's and the parent company's ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the directors either intend to liquidate the group or the parent company or to cease operations, or have no realistic alternative but to do so.
Auditor's responsibilities for the audit of the financial statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinion. Reasonable assurance is a high level of assurance but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.
Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line with our responsibilities, outlined above, to detect material misstatements in respect of irregularities, including fraud. The extent to which our procedures are capable of detecting irregularities, including fraud is detailed below. However, the primary responsibility for the prevention and detection of fraud rests with both those charged with governance of the Company and management:
Explanation as to what extent the audit was considered capable of detecting irregularities, including fraud
Based on our understanding of the company and industry, we identified that the principal risks of non-compliance with laws and regulations related to compliance with Companies Law and Listing Rules. We considered the extent to which non-compliance might have a material effect on the financial statements. We also considered those laws and regulations that have a direct impact on the preparation of the financial statements such as tax laws.
We evaluated management's incentives and opportunities for fraudulent manipulation of the financial statements (including the risk of override of controls) and determined that the principal risks were related to inappropriate revenue recognition and the risk of management bias in accounting estimates. Audit procedures performed by the engagement team included:
· Discussions with management including consideration of known or suspected instances of non-compliance with laws and regulation and fraud;
· The evaluation of management's controls designed to prevent and detect irregularities;
· The identification and review of manual journals, in particular journal entries which shared key risk characteristics; and
· The review and challenge of assumptions, estimates and judgements made by management in their recognition of accounting estimates.
Because of the inherent limitations of an audit, there is a risk that we will not detect all irregularities, including those leading to a material misstatement in the financial statements or non-compliance with regulation. This risk increases the more that compliance with a law or regulation is removed from the events and transactions reflected in the financial statements, as we will be less likely to become aware of instances of non-compliance. The risk is also greater regarding irregularities occurring due to fraud rather than error, as fraud involves intentional concealment, forgery, collusion, omission or misrepresentation.
A further description of our responsibilities for the audit of the financial statements is located on the Financial Reporting Council's website at: www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditor's report.
Other matters we are required to address
Following the recommendation of the Audit Committee, we were appointed by the Board in January 2024 to audit the financial statements for the year ending 31 December 2023. The period of total uninterrupted engagement is therefore less than 1 year.
The non-audit services prohibited by the FRC's Ethical Standard were not provided to the Company and we remain independent of the group in conducting our audit. No other services in addition to the audit were provided by the firm to the group.
Our audit opinion is consistent with the additional report to the Audit Committee.
Use of our report
This report is made solely to the company's members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act 2006. Our audit work has been undertaken so that we might state to the company's members those matters we are required to state to them in an Auditor's report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the company and the company's members as a body, for our audit work, for this report, or for the opinions we have formed.
Tom Stock FCA (Senior Statutory Auditor)
For and on behalf of Haysmacintyre LLP, Statutory Auditors
10 Queen Street Place
London EC4R 1AG
30 April 2024
SIVOTA PLC
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
U.S. dollars in thousands
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For the year ended 31 December |
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Note |
2023 |
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2022 |
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Revenues |
5 |
5,622 |
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5,918 |
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Cost of revenues |
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(4,370) |
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(4,361) |
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Gross Profit |
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1,252 |
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1,557 |
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Operating expenses: |
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Research and development expenses |
6 |
(1,576) |
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(1,553) |
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Sales and marketing expenses |
7 |
(1,169) |
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(1,309) |
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General and administrative expenses |
8 |
(3,413) |
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(3,513) |
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Total operating expenses |
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(6,158) |
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(6,375) |
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Operating loss before impairment |
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(4,906) |
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(4,818) |
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Impairment loss |
14 |
(7,123) |
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- |
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Operating loss |
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(12,029) |
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(4,818) |
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Financial income |
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- |
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- |
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Financial expenses |
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(292) |
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(295) |
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Financial expenses, net |
9 |
(292) |
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(295) |
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Loss before taxes |
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(12,321) |
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(5,113) |
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Taxes on income |
12 |
(3) |
) |
(1) |
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Net loss |
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(12,324) |
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(5,114) |
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Net loss attributable to the owners |
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(8,323) |
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(3,199) |
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Net loss attributable to non-controlling interest |
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(4,001) |
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(1,915) |
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Net loss |
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(12,324) |
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(5,114) |
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Total comprehensive loss |
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(12,324) |
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(5,114) |
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Total comprehensive loss attributable to the owners |
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(8,323) |
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(3,199) |
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Total comprehensive loss attributable to non-controlling interest |
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(4,001) |
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(1,915) |
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Total comprehensive loss |
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(12,324) |
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(5,114) |
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Loss per share: |
13 |
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Basic loss per ordinary share in U.S. dollars |
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(0.66) |
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(0.38) |
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Diluted loss per ordinary share in U.S. dollars |
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(0.66) |
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(0.38) |
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The accompanying notes are an integral part of the financial statements.
SIVOTA PLC
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
U.S. dollars in thousands
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Note |
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As at 31 December |
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2023 |
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2022 |
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ASSETS |
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Non-current assets |
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Intangible assets, net |
4; 14 |
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5,200 |
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13,950 |
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Property and equipment, net |
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15 |
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34 |
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Total non-current assets |
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5,215 |
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13,984 |
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Current assets |
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Trade receivables |
16 |
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1,084 |
|
2,467 |
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Other receivables |
17 |
|
249 |
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399 |
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Cash and cash equivalents |
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|
969 |
|
4,439 |
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Total current assets |
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2,302 |
|
7,305 |
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Total assets |
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7,517 |
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21,289 |
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EQUITY AND LIABILITIES |
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Equity |
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Ordinary share capital |
18 |
|
157 |
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157 |
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Deferred shares |
18 |
|
65 |
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65 |
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Capital reserve from transactions with non-controlling interests |
19(b) |
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(426) |
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(413) |
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Share premium |
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15,139 |
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15,139 |
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Accumulated losses |
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(12,020) |
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(3,697) |
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Total equity attributable to the owners |
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|
2,915 |
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11,251 |
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Non-controlling interests |
4; 19(b) |
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1,203 |
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5,141 |
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Total equity |
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4,118 |
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16,392 |
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Current liabilities |
|
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Trade payables |
20 |
|
796 |
|
2,042 |
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Other payables |
21 |
|
1,047 |
|
1,449 |
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Long term loan - current portion |
4(e) |
|
727 |
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- |
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Total current liabilities |
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2,570 |
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3,491 |
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Non-current liabilities |
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Long term loan |
4(e) |
|
829 |
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1,394 |
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Employee benefits |
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- |
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12 |
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Total non-current liabilities |
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|
829 |
|
1,406 |
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Total equity and liabilities |
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7,517 |
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21,289 |
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The accompanying notes are an integral part of the financial statements.
The accompanying notes are an integral part of the financial statements.
The financial statements on page 40 to 78 were authorised for issue by the board of directors on 30 April 2024 and were signed on its behalf by Ziv Ben-Barouch.
Ziv Ben-Barouch, CEO
30 April 2024
Company Registration Number: 12897590
SIVOTA PLC
PARENT STATEMENT OF FINANCIAL POSITION
U.S. dollars in thousands
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|
Note |
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As at 31 December |
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2023 |
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2022 |
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ASSETS |
|
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Non-current assets |
|
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Investment in subsidiaries |
15 |
|
1,035 |
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11,904 |
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Loan to subsidiary |
4(d) |
|
841 |
|
1,420 |
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Total non-current assets |
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|
1,876 |
|
13,324 |
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Current assets |
|
|
|
|
|
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Other receivables |
17 |
|
111 |
|
52 |
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Loan to subsidiary - current portion |
4(d) |
|
750 |
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- |
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Cash and cash equivalents |
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|
474 |
|
1,076 |
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Total current assets |
|
|
1,335 |
|
1,128 |
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Total assets |
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|
3,211 |
|
14,452 |
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EQUITY AND LIABILITIES |
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Equity |
|
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|
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Ordinary share capital |
18 |
|
157 |
|
157 |
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Deferred shares |
18 |
|
65 |
|
65 |
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Share premium |
|
|
15,139 |
|
15,139 |
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Accumulated losses |
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|
(12,504) |
|
(1,245) |
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Total equity |
|
|
2,857 |
|
14,116 |
|
Current liabilities |
|
|
|
|
|
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Trade payables |
20 |
|
35 |
|
3 |
|
Other payables |
21 |
|
319 |
|
333 |
|
Total current liabilities |
|
|
354 |
|
336 |
|
Total equity and liabilities |
|
|
3,211 |
|
14,452 |
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The Company has taken advantage of the exemption allowed under section 408 of the Companies Act 2006 and has not presented its own Statement of Comprehensive Income in these financial statements. The net loss of the Parent Company for the year was $11,259 thousand ($747 thousand for the year ended 31 December 2022).
The accompanying notes are an integral part of the financial statements.
The financial statements on page 40 to 78 were authorised for issue by the board of directors on 30 April 2024 and were signed on its behalf by Ziv Ben-Barouch.
Ziv Ben-Barouch, CEO
30 April 2024
Company Registration Number: 12897590
SIVOTA PLC
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
U.S. dollars in thousands
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Ordinary share capital |
Deferred shares |
Share premium |
Capital reserve from transactions with non-controlling interests |
Accumulated losses |
Total equity attributable to the owners |
Non-controlling interests |
Total equity |
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The accompanying notes are an integral part of the financial statements.
SIVOTA PLC CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY U.S. dollars in thousands |
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|
|
Ordinary share capital |
Deferred shares |
Share premium |
Capital reserve from transactions with non-controlling interests |
Accumulated losses |
Total equity attributable to the owners |
Non-controlling interests |
Total equity |
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The accompanying notes are an integral part of the financial statements.
SIVOTA PLC
PARENT STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY
U.S. dollars in thousands
|
|
Ordinary share capital |
Deferred shares |
Share premium |
Accumulated losses |
Total equity |
|
|
|
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For the year ended 31 December 2023
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The accompanying notes are an integral part of the financial statements.
SIVOTA PLC
PARENT STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY
U.S. dollars in thousands
|
|
Ordinary share capital |
Deferred shares |
Share premium |
Accumulated losses |
Total equity |
|
|
|
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For the year ended 31 December 2022
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Comprehensive expense for the year |
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The accompanying notes are an integral part of the financial statements.
SIVOTA PLC
CONSOLIDATED STATEMENT OF CASH FLOWS
U.S. dollars in thousands
|
|
For the year ended 31 December |
||||||
|
|
2023 |
2022 |
|||||
|
Cash flows from operating activities |
|
|
|||||
|
Net loss |
(12,324) |
(5,114) |
|||||
|
Adjustments for: |
|
|
|||||
|
Depreciation and amortisation |
1,646 |
1,076 |
|||||
|
Impairment loss |
7,123 |
- |
|||||
|
Subsidiary share-based payment expense |
44 |
273 |
|||||
|
Financial expenses, net |
241 |
83 |
|||||
|
Working capital adjustments: |
|
|
|||||
|
Decrease (increase) in trade receivables |
1,383 |
(762) |
|||||
|
Decrease (increase) in other receivables |
150 |
(55) |
|||||
|
Decrease in trade and other payables |
(1,648) |
(816) |
|||||
|
Decrease in long term employee benefits |
(12) |
(46) |
|||||
|
Net cash used by operating activities |
(3,397) |
(5,361) |
|||||
|
Cash flows from investing activities |
|
|
|||||
|
Decrease in short-term deposit |
- |
7 |
|||||
|
Net cash acquired on acquisition of subsidiary - see Note 4 |
- |
337 |
|||||
|
Convertible loan acquisition - see Note 4(d) |
- |
(1,654) |
|||||
|
Net cash used by investing activities |
- |
(1,310) |
|||||
|
|
|
|
|||||
|
Cash flows from financing activities |
|
|
|||||
|
Proceeds from the issue of ordinary shares, net of issuance costs |
- |
11,848 |
|||||
|
Repayment of lease liability |
- |
(9) |
|||||
|
Exercise of subsidiary's options |
6 |
8 |
|||||
|
Loan repayments |
- |
(1,512) |
|||||
|
Net cash flow provided by financing activities |
6 |
10,335 |
|||||
|
|
|
|
|||||
|
Net (decrease)/increase in cash and cash equivalents |
(3,391) |
3,664 |
|||||
|
Effect of foreign exchange rate changes |
(79) |
(237) |
|||||
|
Cash and cash equivalents at beginning of year |
4,439 |
1,012 |
|||||
|
Cash and cash equivalents at end of year |
969 |
4,439 |
|||||
|
|
|
|
|
||||
|
|
|
|
|
||||
The accompanying notes are an integral part of the financial statements.
SIVOTA PLC
CONSOLIDATED STATEMENT OF CASH FLOWS
U.S. dollars in thousands
|
|
|
|||||||
|
|
(a) Financing non-cash transactions |
|
||||||
|
|
|
|
|
|||||
|
|
|
For the year ended 31 December |
|
|||||
|
|
|
2023 |
2022 |
|
||||
|
|
Debt offset against the payment for share capital of the Company |
- |
2,182 |
|
||||
|
|
Receivables from exercise of subsidiary's options |
- |
7 |
|
||||
The accompanying notes are an integral part of the financial statements.
SIVOTA PLC
PARENT STATEMENT OF CASH FLOWS
U.S. dollars in thousands
|
|
For the year ended 31 December |
|||||
|
|
2023 |
2022 |
||||
|
Cash flows from operating activities |
|
|
||||
|
Net loss |
(11,259) |
(747) |
||||
|
Impairment loss |
10,869 |
- |
||||
|
Financial expenses (income), net |
(171) |
52 |
||||
|
Working capital adjustments: |
|
|
||||
|
Increase (decrease) in other receivables |
(59) |
3 |
||||
|
Increase in trade and other payables |
18 |
102 |
||||
|
Net cash used by operating activities |
(602) |
(590) |
||||
|
Cash flows from investing activities |
|
|
||||
|
Investment in subsidiary |
- |
(9,398) |
||||
|
Convertible loan acquisition |
- |
(1,654) |
||||
|
Net cash used by investing activities |
- |
(11,052) |
||||
|
|
|
|
||||
|
Cash flows from financing activities |
|
|
||||
|
Proceeds from the issue of ordinary shares, net of issuance costs |
- |
11,848 |
||||
|
Net cash flow provided by financing activities |
- |
11,848 |
||||
|
|
|
|
||||
|
Net (decrease)/increase in cash and cash equivalents |
(602) |
206 |
||||
|
Effect of foreign exchange rate changes |
- |
(142) |
||||
|
Cash and cash equivalents at beginning of year |
1,076 |
1,012 |
||||
|
Cash and cash equivalents at end of year |
474 |
1,076 |
||||
|
|
|
|
|
|||
|
|
|
|
|
|||
The accompanying notes are an integral part of the financial statements.
SIVOTA PLC
PARENT STATEMENT OF CASH FLOWS
U.S. dollars in thousands
|
(a) Financing non-cash transactions |
|
|
|||
|
|
|
|
|||
|
|
For the year ended 31 December |
||||
|
|
2023 |
2022 |
|||
|
Debt offset against the payment for share capital of the Company |
- |
2,182 |
|||
|
|
|
|
|||
|
|
|
|
|||
The accompanying notes are an integral part of the financial statements.
|
|
|
|
|
|
|
|
|
|
|
|
SIVOTA PLC
NOTES TO THE FINANCIAL STATEMENTS
U.S. dollars in thousands
Note 1 - General information
The Company is a public limited company incorporated and registered in England and Wales on 22 September 2020 with registered company number 12897590 and its registered office situated in England and Wales with its registered office at New London House, 172 Drury Lane, London WC2B 5QR.
On 22 July 2021 the company completed a placing and listed on the Main Market (Standard Segment) of the London Stock Exchange ("LSE").
In December 2021, the Company announced that it had entered into non-binding term sheet with Apester. As a result, the Company's shares were suspended pending the completion of the transaction and the publication of the prospectus in relation to its enlarged group. On 12 May 2022, the Company completed the acquisition and in September 2022, published the prospectus and completed its readmission to the LSE.
The cash consideration for the Acquisition was funded through a $14.2 million (gross) placing and direct subscription of 11,500,000 new ordinary shares of Sivota of one pence each.
Note 2 - Definitions
In these financial statements:
|
The Company |
- |
Sivota PLC |
|
The Group |
- |
The Company and its consolidated subsidiaries |
|
|
|
|
|
Subsidiaries |
- |
Entities that are controlled (as defined in IFRS 10) by the Company and whose accounts are consolidated with those of the Company
|
|
Related parties |
- |
as defined in IAS 24 |
|
Dollar/USD |
- |
U.S. dollar/"$"
|
Note 3 - Significant accounting policies
The following accounting policies have been applied consistently in the financial statements for all periods presented, unless otherwise stated.
a. Basis of accounting
The Group Financial Statements have been prepared in accordance with UK adopted International Accounting Standards.
The financial statements have been prepared on the historical cost basis. Historical cost is generally based on the fair value of the consideration given in exchange for goods and services.
The financial information of the Group is presented in U.S. dollars ("$"), which is the Group's functional currency of the principal operations following the acquisition of Group's principal subsidiary, Apester Ltd, in May 2022. Following the Acquisition in May 2022, the Company has changed its presentation accounting policy in order to align its functional and presentation
SIVOTA PLC
NOTES TO THE FINANCIAL STATEMENTS
U.S. dollars in thousands
currency to be U.S. dollars. As this is a change in accounting policy, it has been applied retrospectively as required by IAS 8. The rates applied for the purpose of the translating the
assets and liabilities was the current exchange rate as at the date of each statement of financial position. Income and expenses for each statement of comprehensive income were translated at exchange rate at the dates of the transactions.
Going concern
The Group has raised finance in 2022, to fund the acquisition of Apester and the Group's working capital management. The Group projects that it will need to raise further debt or equity finance to fund the planned business development. The Group is expected to further generate losses from operations during 2024 which will be expressed in negative cash flows from operating activity. Hence the continuation of the Group's operations depends on raising the required financing resources or reaching profitability, which are not guaranteed at this point. Whilst the directors are confident they will be able to realise the additional finance required, this is not guaranteed and hence there is a material uncertainty in respect of going concern. However, the directors have, at the time of approving the financial statements, a reasonable expectation that the Group will have adequate resources to continue in operational existence for the foreseeable future, which is defined as twelve months from the signing of this report. For this reason, the directors continue to adopt the going-concern basis of accounting in preparing the financial statements.
b. Basis of consolidation
The consolidated financial statements incorporate the financial statements of the Company and entities controlled by the Company and its Subsidiaries made up to 31 December each year. Control is achieved when the Company:
- has the power over the investee;
- is exposed, or has rights, to variable returns from its involvement with the investee; and
- has the ability to use its power to affects its returns.
The Company reassesses whether or not it controls an investee if facts and circumstances indicate that there are changes to one or more of the three elements of control listed above.
Consolidation of a subsidiary begins when the Company obtains control over the subsidiary and ceases when the Company loses control of the subsidiary. Specifically, the results of subsidiaries acquired or disposed of during the year are included in profit
or loss from the date the Company gains control until the date when the Company ceases to control the subsidiary.
Where necessary, adjustments are made to the financial statements of subsidiaries to bring the accounting policies used into line with the Group's accounting policies.
All intragroup assets and liabilities, equity, income, expenses and cash flows relating to transactions between the members of the Group are eliminated on consolidation.
Non-controlling interests in subsidiaries are identified separately from the Group's equity therein. Those interests of non-controlling shareholders that are present ownership interests entitling their holders to a proportionate share of net assets upon liquidation may initially be measured at fair value or at the non-controlling interests' proportionate share of the fair value of
SIVOTA PLC
NOTES TO THE FINANCIAL STATEMENTS
U.S. dollars in thousands
the acquiree's identifiable net assets. The choice of measurement is made on an acquisition-by-acquisition basis. Other non-controlling interests are initially measured at fair value.
Subsequent to acquisition, the carrying amount of non-controlling interests is the amount of those interests at initial recognition plus the non-controlling interests' share of subsequent changes in equity.
Profit or loss and each component of other comprehensive income are attributed to the owners of the Company and to the non-controlling interests. Total comprehensive income of the
subsidiaries is attributed to the owners of the Company and to the non-controlling interests even if this results in the non-controlling interests having a deficit balance.
Changes in the Group's interests in subsidiaries that do not result in a loss of control are accounted for as equity transactions. The carrying amount of the Group's interests and the non-controlling interests are adjusted to reflect the changes in their relative interests in the subsidiaries. Any difference between the amount by which the non-controlling interests are adjusted and the fair value of the consideration paid or received is recognised directly in equity and attributed to the owners of the Company.
c. Business combinations
Business combinations are accounted for by applying the acquisition method. The cost of the acquisition is measured at the fair value of the consideration transferred on the date of acquisition with the addition of non-controlling interests in the acquiree. In each business combination, the Company chooses whether to measure the non-controlling interests in the acquiree based on their fair value on the date of acquisition or at their proportionate share in the fair value of the acquiree's net identifiable assets.
Direct acquisition costs are expensed as incurred.
Goodwill is initially measured at cost, which represents the excess of the acquisition consideration and the amount of non-controlling interests over the net identifiable assets acquired and liabilities assumed. After initial recognition, goodwill is measured at cost less any accumulated impairment losses.
Intangible assets acquired in a business combination are measured at fair value at the acquisition date. Intangible assets with a finite useful life are amortised over their useful life and reviewed for impairment whenever there is an indication that the asset may be impaired. The amortisations period and the amortisation method for an intangible asset are reviewed at least at each year end.
d. Cash and cash equivalents
Cash equivalents are considered as highly liquid investments, including unrestricted short-term bank deposits with an original maturity of three months or less from the date of acquisition or with a maturity of more than three months, but which are redeemable on demand without penalty and which form part of the Group's cash management.
SIVOTA PLC
NOTES TO THE FINANCIAL STATEMENTS
U.S. dollars in thousands
e. Intangible assets
Separately acquired intangible assets are measured on initial recognition at cost including directly attributable costs. Expenditures relating to internally generated intangible assets, excluding capitalised research and development expenditures, are recognised in profit or loss when incurred.
Intangible assets with a finite useful life are amortised over their useful life and reviewed for impairment whenever there is an indication that the asset may be impaired. The amortisations period and the amortisation method for an intangible asset are reviewed at least at each year end.
Amortisation is calculated on a straight-line basis over the useful life of the assets at annual rates as follows:
|
|
Number of years |
|
|
|
|
Developed technology |
6.6 |
|
Customer relationships |
9.6 |
|
|
|
Research and development expenditures
Research expenditures are recognised in profit or loss when incurred.
An intangible asset arising from a development project or from the development phase of an internal project is recognised if the Group can demonstrate: the technical feasibility of completing the intangible asset so that it will be available for use or sale; the Group's intention to complete the intangible asset and use or sell it; the Group's ability to use or sell the intangible asset; how the intangible asset will generate future economic benefits; the availability of adequate technical, financial and other resources to complete the intangible asset; and the Group's ability to measure reliably the expenditure attributable to the intangible asset during its development.
The asset is measured at cost less any accumulated amortisation and any accumulated
impairment losses. Amortisation of the asset begins when development is completed, and the asset is available for use. The asset is amortised over its useful life. Testing of impairment is performed annually over the period of the development project.
SIVOTA PLC
NOTES TO THE FINANCIAL STATEMENTS
U.S. dollars in thousands
f. Impairment policy
The Group evaluates the need to record an impairment of the carrying amount of non-financial assets whenever events or changes in circumstances indicate that the carrying amount is not recoverable.
If the carrying amount of non-financial assets exceeds their recoverable amount, the assets are reduced to their recoverable amount. The recoverable amount is the higher of fair value less costs of sale and value in use. In measuring value in use, the expected future cash flows are discounted using a pre-tax discount rate that reflects the risks specific to the asset. The recoverable amount of an asset that does not generate independent cash flows is determined for the cash-generating unit to which the asset belongs. Impairment losses are recognised in profit or loss.
The impairment test is performed annually, on 31 December, or more frequently if events or changes in circumstances indicate that there is an impairment.
g. Earnings per share
Earnings per share are calculated by dividing the net income (loss) attributable to equity holders of the Company by the weighted average number of Ordinary Shares outstanding during the period. The Company's share of earnings of investees is included based on the earnings per share of the investees multiplied by the number of shares held by the Company.
If the number of Ordinary Shares outstanding increases as a result of a capitalisation, bonus issue, or share split, the calculation of earnings per share for all periods presented are adjusted retrospectively.
Potential Ordinary shares are included in the computation of diluted earnings per share when their conversion decreases earnings per share from continuing operations. Potential Ordinary shares that are converted during the period are included in diluted
Earnings per share only until the conversion date and from that date in basic earnings per share.
h. Revenue recognition
Revenue from contracts with customers is recognised when the control over the services is transferred to the customer and the group has performed its obligations to the customer. The transaction price is the amount of the consideration that is expected to be received based on the contract terms.
Revenue from rendering of services is recognised over time, during the period the customer simultaneously receives and consumes the benefits provided by the Group's performance. The Group charges its customers based on payment terms agreed upon in specific agreements, most of them are 60-75 days.
The Group generates revenues mainly from revenue share business model (hereafter: "rev-share model"). Revenues from rev-share model are based on the Group's installed software platform at Publisher's site. When an end-customer is using the Group's platform, the Group generates revenue from the rev-share model, with whom it has contracted, and split the revenues with the Publishers, such 50% to 80% of the revenues collected are passed through to the Publisher.
SIVOTA PLC
NOTES TO THE FINANCIAL STATEMENTS
U.S. dollars in thousands
The Group has no obligation for discounts, incentives or refunds subsequent to revenue generation.
In determining the amount of revenue from contracts with customers, the Group evaluates whether it is a principal or an agent in the arrangement. The Group is principal when the Group controls the promised services before transferring them to the customer. In these circumstances, the Group recognises revenue for the gross amount of the consideration. Revenues from rev-share model are presented on a gross basis as the Group acts as a principal and is exposed to the risks associated with the transaction.
i. Leases
The Group as a lessee assesses whether a contract is or contains a lease, at inception of the contract. The Group recognises a right-of-use asset and a corresponding lease liability with respect to all lease arrangements in which it is the lessee, except for short-term leases, that defined as leases with a lease term of 12 months or less.
j. Foreign currencies
The functional currency of the Group is U.S. dollar ("$"), as the dollar is the primary currency of the economic environment in which the Group has operated and expects to continue to operate in the foreseeable future.
In preparing the financial statements of the Group entities, transactions in currencies other than the entity's functional currency (foreign currencies) are recognised at the rates of exchange prevailing on the dates of the transactions. At each reporting date, monetary assets and liabilities that are denominated in foreign currencies are retranslated at the rates prevailing at that date. Non-monetary items carried at fair value that are denominated in foreign currencies are translated at the rates prevailing at the date when the fair value was determined. Non-monetary items that are measured in terms of historical cost in a foreign currency are not retranslated. Exchange differences are recognised in profit or loss in the period in which they arise.
k. Retirement and termination benefit costs
Payments to defined contribution retirement benefit plans are recognised as an expense when employees have rendered service entitling them to the contributions. Payments made to state-managed retirement benefit plans are accounted for as payments to defined contribution plans where the Group's obligations under the plans are equivalent to those arising in a defined contribution retirement benefit plan.
All of the Group's employees that are employed by the Company's Israeli subsidiaries have subscribed to Section 14 of Israel's Severance Pay Law, 5723-1963 ("Section 14"). Pursuant to Section 14, the Group's employees, covered by this section, are entitled only to monthly deposits, at a rate of 8.33% of their monthly salary, made on their behalf by the subsidiaries.
Payments in accordance with Section 14 release the Group from any future severance liabilities in respect of those employees. Neither severance pay liabilities nor severance pay funds under Article 14 for such employees are recorded in the Group's balance sheet. In 2023 and 2022 the Group recognised related to defined contribution retirement benefit plans in the amount of $164 and $146 thousand respectively.
SIVOTA PLC
NOTES TO THE FINANCIAL STATEMENTS
U.S. dollars in thousands
l. Short-term and other long-term employee benefits
A liability is recognised for benefits accruing to employees in respect of wages and salaries, annual leave and sick leave in the period the related service is rendered at the undiscounted amount of the benefits expected to be paid in exchange for that service.
Liabilities recognised in respect of short-term employee benefits are measured at the undiscounted amount of the benefits expected to be paid in exchange for the related service.
m. Taxation
The tax currently payable is based on the taxable profit for the year. Taxable profit differs from net profit as reported in the income statement because it excludes items of income or expense that are taxable or deductible in other periods and it further excludes items that are never taxable
or deductible. The Group's liability for current tax is calculated using tax rates that have been enacted or substantively enacted by the reporting date.
Deferred income tax is provided for using the liability method on temporary differences at the reporting date between the tax basis of assets and liabilities and their carrying amounts for financial reporting purposes. Deferred income tax liabilities are recognised in full for all temporary differences. Deferred income tax assets are recognised for all deductible temporary differences carried forward of unused tax credits and unused tax losses to the extent that it is probable that taxable profits will be available against which the deductible temporary differences, and carry-forward of unused tax credits and unused losses can be utilised. Unrecognised deferred income tax assets are reassessed at each reporting date and are recognised to the extent that is probable that future taxable profits will allow the deferred income tax asset to be recovered.
As at 31 December 2023 the management believed that the deferred tax assets are not likely to be realisable in the foreseeable future and therefore no deferred income tax was recognised.
n. Property, plant and equipment
Property and equipment are measured at cost, including directly attributable costs, less
accumulated depreciation.
Depreciation is calculated on a straight-line basis over the useful life of the assets at annual rates as follows:
|
|
Number of years |
|
|
|
|
Computer and electronic equipment |
3-7 |
|
Office furniture and equipment |
15 |
|
Leasehold improvements |
10 |
The useful life, depreciation method and residual value of an asset are reviewed at least each year-end and any changes are accounted for prospectively as a change in accounting estimate.
Depreciation of an asset ceases at the earlier of the date that the asset is classified as held for sale and the date that the asset is derecognised. An asset is derecognised on disposal or when no further economic benefits are expected from its use.
SIVOTA PLC
NOTES TO THE FINANCIAL STATEMENTS
U.S. dollars in thousands
o. Financial instruments
Financial assets and financial liabilities are recognised in the Group's statement of financial position when the Group becomes a party to the contractual provisions of the instrument.
Financial assets and financial liabilities are initially measured at fair value, except for trade receivables that do not have a significant financing component which are measured at transaction price. Transaction costs that are directly attributable to the acquisition or issue of financial assets and financial liabilities (other than financial assets and financial liabilities at fair value through profit or loss) are added to or deducted from the fair value of the financial assets or financial liabilities, as appropriate, on initial recognition. Transaction costs directly attributable
to the acquisition of financial assets or financial liabilities at fair value through profit or loss are recognised immediately in profit or loss.
Financial assets
All financial assets are recognised and derecognised on a trade date where the purchase or sale of a financial asset is under a contract whose terms require delivery within the timeframe established by the market concerned, and are initially measured at fair value, plus transaction costs, except for those financial assets classified as at fair value through profit or loss, which are initially measured at fair value.
The Group derecognises a financial asset only when the contractual rights to cash flows from the asset expire, or when it transfers the financial asset and substantially all the risks and rewards of ownership of the asset to another entity.
Financial assets are classified into the following specified categories: financial assets "at fair value through profit or loss", or FVTPL, "at fair value through other comprehensive income" or at amortised cost on the basis of the Group's business model for managing financial assets and the contractual cash flow characteristics of the financial asset.
Income is recognised on an effective interest basis for debt instruments other than those financial assets classified as at FVTPL.
As at the reporting date the Group holds no financial assets or investments other than cash and trade receivables.
Financial liabilities and equity
Financial liabilities are initially measured at fair value when the Group becomes a party to their contractual arrangements. Transaction costs are included in the initial measurement of financial liabilities, with the exception of financial liabilities classified at fair value through profit or loss. The subsequent measurement of financial liabilities is discussed below. A financial liability is derecognised when the obligation under the liability is discharged, cancelled or expires.
Debt and equity instruments are classified as either financial liabilities or as equity in accordance with the substance of the contractual arrangements and the definitions of a financial liability and an equity instrument.
Equity instruments
An equity instrument is any contract that evidences a residual interest in the assets of an entity after deducting all of its liabilities. Equity instruments issued by the Group are recognised at the proceeds received, net of direct issue costs.
SIVOTA PLC
NOTES TO THE FINANCIAL STATEMENTS
U.S. dollars in thousands
Financial liabilities
All financial liabilities are measured subsequently at amortised cost using the effective interest method or at FVTPL.
Financial liabilities are classified as at fair value through profit or loss if the financial liability is either held for trading or it is designated as such upon initial recognition.
Financial liabilities at FVTPL are measured at fair value, with any gains or losses arising on changes in fair value recognised in profit or loss to the extent that they are not part of a designated hedging relationship. Warrants issued by the Group that have cashless or net share settlement mechanism is classified as derivative and measured at fair value, with any gains or losses arising on changes in fair value recognised in profit or loss.
Other financial liabilities
Trade and other payables are initially measured at fair value, net of transaction costs, and are subsequently measured at amortised cost, where applicable, using the effective interest method, with interest expense recognised on an effective yield basis.
p. Share-based payments
Share-based payment transactions of the Group's equity-settled share-based payments to employees and others providing similar services are measured at the fair value of the equity instruments at the grant date. The fair value excludes the effect of non-market-based vesting conditions. Details regarding the determination of the fair value of equity-settled share-based transactions are set out in Note 19.
The fair value determined at the grant date of the equity-settled share-based payments is expensed on a straight-line basis over the vesting period, based on the Group's estimate of the number of equity instruments that will eventually vest. At each reporting date, the Group revises its estimate of the number of equity instruments expected to vest as a result of the effect of non-market-based vesting conditions. The impact of the revision of the original estimates, if any, is recognised in profit or loss such that the cumulative expense reflects the revised estimate, with a corresponding adjustment to reserves.
Equity-settled share-based payment transactions with parties other than employees are measured at the fair value of the goods or services received, except where that fair value cannot be estimated reliably, in which case they are measured at the fair value of the equity instruments granted, measured at the date the entity obtains the goods or the counterparty renders the service.
q. Critical accounting judgements and key sources of estimation uncertainty
In applying the Group's accounting policies, which are described in Note 3, the directors are required to make judgements (other than those involving estimations) that have a significant impact on the amounts recognised and to make estimates and assumptions about the carrying amounts of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience and other factors that are considered to be relevant. Actual results may differ from these estimates.
The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised if the revision
affects only that period, or in the period of the revision and future periods if the revision affects both current and future periods.
SIVOTA PLC
NOTES TO THE FINANCIAL STATEMENTS
U.S. dollars in thousands
- Business combinations
The Group is required to allocate the acquisition cost of the subsidiary and activities through business combinations on the basis of the fair value of the acquired assets and assumed liabilities. The Group used external valuations to determine the fair value. The valuations include management estimates and assumptions as for future cash flow projections from the acquired business and selection of models to compute the fair value of the acquired components and their depreciation period.
- Impairment of intangible assets
The Group reviews its intangible assets at least once a year. This requires management to make an estimate of the projected future revenues and cash flows from the continuing use of the cash generating units to which the assets are allocated, to choose a suitable discount rate for those cash flows, and other parameters used in measuring value in use of the tested intangible assets.
- Research and development expenses
According to the accounting treatment, as described above, the Group's management examined whether the conditions for recognising development costs as intangible assets are met. The Group conclude that, development costs relating to the group software platform did not meet the conditions for recognition of as an intangible asset.
- Share-based payment.
The fair value of share-based payment transactions is calculated using the fair value of Group company's ordinary shares at the date of granting the options, this fair value is estimated by using valuation techniques that are based on actual purchasing price when applicable and measurement of the share's price by valuation technique of discounting future cash flows or other valuation techniques. For more information, see Note 19.
r. Adoption of new and revised standards and interpretations.
New standards, interpretations and amendments effective from 1 January 2023.
There were no new standards or interpretations effective for the first time for periods beginning on or after 1 January 2023 that had a significant effect on the Group's Financial Statements.
New standards, interpretations and amendments not yet effective
At the date of authorisation of these Financial Statements, a number of amendments to existing standards and interpretations, which have not been applied in these Financial Statements, were in issue but not yet effective for the year presented. The Directors do not expect that the adoption of these standards will have a material impact on the financial information of the Group in future periods.
At the date of authorisation of the Group financial information, the Directors have reviewed the standards in issue by the International Accounting Standards Board and the International Financial Reporting Interpretations Committee, which are effective for the accounting periods ending on or after the stated effective date. These are:
· Amendments to IAS 1 - Classification of Liabilities as Current or Non-current
SIVOTA PLC
NOTES TO THE FINANCIAL STATEMENTS
U.S. dollars in thousands
· Amendments to IAS 1 - Non-current Liabilities with Covenants
· Amendments to IAS 7 and IFRS 7 - Supplier Finance Arrangements
In the Directors view, none of these standards would have a material impact on the financial reporting of the Group.
Note 4 - Business combination
a. On 24 January 2022 the Company entered into a Share Purchase Agreement ("Acquisition") with Apester Ltd, a digital marketing engagement platform, that was completed on 12 May 2022. Under the terms of Acquisition Apester issued to the Company 14,947,409 Preferred Seed Shares for an aggregate consideration of $12.0 million of which $6.0 million was paid on 13 May 2022 and the further $6.0 million was paid on 12 August 2022. The Preferred Seed Shares provide the Company with 57.5% of Apester's share capital.
The acquisition costs in amount of $0.3 million and $0.2 million were recorded in general and administrative expenses in 2022 and 2021 respectively. According to the Share Purchase Agreement Apester paid to Sivota $0.4 million as part of the transaction costs.
b. Pursuant to the articles of association of Apester, that were exercised following Acquisition completion, the Company also has certain veto and consent rights, including the right to appoint a majority of directors to the Apester's Board.
c. In addition, amongst other customary provisions, the Share Purchase Agreement contains various warranties typical in a transaction of this nature from Apester in favour of the Company, regarding the operations, employees and the business and assets of Apester.
d. Following the Acquisition, the Company entered into two convertible loan assignment agreements with lenders to Apester, pursuant to which $1.654 million in convertible loans, including accrued interest, were assigned to the Company (the "loan"). The convertible loan bears interest at a rate of 6% per annum and will be capable of conversion by the Company into Preferred Seed Shares in Apester, par value NIS 0.01 each, at a conversion price per share of $0.8028147 dollars. If converted in full, the Preferred Seed Shares would represent approximately 6.6% of Apester's share capital as at 31 December 2023. If the convertible loan is not so converted, Apester will be required to repay all outstanding principal and interest on the loan in full in 24 monthly instalments starting February 2024. In March 2024 the Company signed an amendment to the loan agreement to defer the loan repayment by one year.
e. Following the Acquisition and pursuant to the agreement with the Apester's shareholder ("the Shareholder"), the Shareholder's loan in amount of $2.182 million, including accrued interest, was fully settled by offset against the payment for share capital of the Company.
f. The remaining Shareholder's loan in amount of $1.5 million shall bear interest at the rate of 6% per annum, accrued from the actual funding date, will be capable of conversion by the Shareholder into Preferred Seed Shares in Apester, par value NIS 0.01 each, at a conversion price per share of $0.8028147 dollars. If converted in full, the Preferred Seed Shares would represent approximately 6.3% of Apester's share capital as at 31 December 2023. If the convertible loan is not converted, Apester will be required to repay all outstanding principal and interest on the loan in full in 24 monthly instalments starting February 2024. In March 2024 the Shareholder signed an amendment to the loan agreement to defer the loan repayment by one year.
SIVOTA PLC
NOTES TO THE FINANCIAL STATEMENTS
U.S. dollars in thousands
Note 5 - Operating Segments
a. General
The operating segments are identified on the basis of information that is reviewed by the chief operating decision maker ("CODM") to make decisions about resources to be allocated and assess its performance.
The Group has one operating segment - digital media
b. Geographic information:
Revenues classified by geographical areas based on client location:
|
|
For the year ended 31 December |
||
|
|
2023 |
2022 |
|
|
|
Group |
||
|
|
|
|
|
|
European countries |
1,446 |
1,904 |
|
|
North America |
2,037 |
2,076 |
|
|
UK and Ireland |
1,436 |
1,338 |
|
|
Other countries |
703 |
600 |
|
|
|
5,622 |
5,918 |
|
a. Additional information on revenues:
Revenues from major customers, which each account for 10% or more of total revenues reported in the financial statements:
|
|
For the year ended 31 December |
|
|
|
2023 |
2022 |
|
|
Group |
|
|
Customer A |
1,087 |
798 |
|
Customer B |
416 |
568 |
|
Customer C |
581 |
323 |
Note 6 - Research and development expenses
|
|
For the year ended 31 December |
|
|
|
2023 |
2022 |
|
|
Group |
|
|
Payroll and related expenses (*) |
960 |
955 |
|
Share-based compensation by subsidiary |
(7) |
13 |
|
Other |
623 |
585 |
|
|
1,576 |
1,553 |
(*) the average monthly number of employees is 9 compared to 11 in 2022
SIVOTA PLC
NOTES TO THE FINANCIAL STATEMENTS
U.S. dollars in thousands
Note 7 - Sales and marketing expenses
|
|
For the year ended 31 December |
|
|
|
2023 |
2022 |
|
|
Group |
|
|
Payroll and related expenses (*) |
755 |
981 |
|
Share-based compensation by subsidiary |
(23) |
19 |
|
Other |
437 |
309 |
|
|
1,169 |
1,309 |
(*) the average monthly number of employees is 6 compared to 8 in 2022.
Note 8 - General and administrative expenses
|
|
For the year ended 31 December |
|
|
|
2023 |
2022 |
|
|
Group |
|
|
Payroll and related expenses (*) |
760 |
976 |
|
Share-based compensation by subsidiary |
74 |
241 |
|
Amortisation of intangible assets |
1,627 |
1,039 |
|
Professional services |
462 |
937 |
|
Directors' remuneration - see Note 10 |
207 |
130 |
|
Other |
283 |
190 |
|
|
3,413 |
3,513 |
|
|
|
|
(*) - key management remuneration is disclosed in Note 11.
- the average monthly number of employees is 6 compared to 11 in 2022.
Note 9 - Financial expenses, net
|
|
For the year ended 31 December |
|
|
|
2023 |
2022 |
|
|
Group |
|
|
Financial income: Exchange rate differences |
- |
- |
|
Financial expenses: Exchange rate differences |
130 |
191 |
|
Interest on loans (*) |
162 |
104 |
|
|
292 |
295 |
(*) including interest on the convertible loan from Apester's Shareholder measured at amortised cost in the amount of $162 and $74 thousand in 2023 and 2022 respectively, see Note 4(e).
SIVOTA PLC
NOTES TO THE FINANCIAL STATEMENTS
U.S. dollars in thousands
Note 10 - Directors' remuneration
The directors' remuneration in the reporting period was as follows:
|
|
For the year ended 31 December |
|
|
|
2023 |
2022 |
|
|
Group |
|
|
Base fees |
207 |
130 |
There was no other component of remuneration.
The directors' fee payable as at 31 December 2023 and 2022 were $183 thousand and $143 thousand respectively.
In January 2024, the Directors and the Company entered into agreement to defer the payments of the director fees, including the director fees payable as at 31 December 2023, until the earlier of 31 December 2024 or the date of the next fundraising.
Note 11 - Key management personnel
The number of key management (excluding members the Board) employees throughout the reporting period was as follows:
|
|
For the year ended 31 December |
|
|
|
2023 |
2022 |
|
By the Company |
1 |
1 |
|
By the Group |
2 |
2 |
The transactions with the key management (excluding member the Board) employees in the reporting period were as follows:
|
|
|
For the year ended 31 December |
|
|
|
|
2023 |
2022 |
|
|
Group |
||
|
Salaries |
294 |
131 |
|
|
Social security |
17 |
5 |
|
|
Pension and other costs |
50 |
28 |
|
|
Share-based compensation by subsidiary(*) |
59 |
88 |
|
|
|
|
420 |
252 |
(*) In August 2023, Apester's CEO was granted 1,395,013 options to Apester's shares. For more
information see Note 19(4).
In October 2022, Apester's former CEO was granted 1,395,013 options to Apester's shares.
For more information see Note 19(3). As a result of the resignation of the former CEO all
options were forfeited.
The short-benefits payable as at 31 December 2023 and 2022 were $24 and $29 thousand respectively.
SIVOTA PLC
NOTES TO THE FINANCIAL STATEMENTS
U.S. dollars in thousands
Note 12 - Taxes on Income
a. In 2023, the Group used 23.50% (2022: 19.00%) as the corporate effective tax rate.
The Group has made no provision for taxation as it has not yet generated any taxable income. A reconciliation of income tax expense, applicable to the loss before taxation at the statutory tax rate to the income tax expense at the effective tax rate of the Group, is as follows:
|
|
For the year ended 31 December |
||
|
|
2023 |
2022 |
|
|
|
|
Group |
|
|
|
Loss before tax |
(12,321) |
(5,113) |
|
|
U.K. corporation tax credit at rate of 23.50% |
(2,895) |
(971) |
|
|
Effect of non-deductible expenses |
2,081 |
313 |
|
|
Differences in overseas tax rates |
(22) |
(174) |
|
|
Effect of tax benefit of losses |
839 |
833 |
|
Current tax |
3 |
1 |
|
b. Carryforward net operating losses:
As of 31 December 2023, the Company has an estimated accumulated net operating losses, amounting to $0.75 million which may be carried forward and offset against taxable income in the future for an indefinite period.
As of 31 December 2023, Apester has an estimated accumulated net operating losses, amounting to $50 million which may be carried forward and offset against taxable income in the future for an indefinite period.
As of 31 December 2023, the U.K. subsidiary of Apester has an estimated net operating loss carry forward for income tax purposes of $48 thousand, which may be carried forward and offset against taxable income in the future for an indefinite period.
As of 31 December 2023, the U.S. subsidiary has an estimated net operating loss carry forward for income tax purposes of $2.2 million, which may be carried forward and offset against taxable income in the future for an indefinite period.
SIVOTA PLC
NOTES TO THE FINANCIAL STATEMENTS
U.S. dollars in thousands
c. Tax rates:
(1) The U.K. corporate income tax rate is 25%.
The principal tax rates applicable to the subsidiaries whose place of incorporation is outside U.K. are:
Israel
The Israeli corporate income tax is 23%.
Amendment 73 to the law for the Encouragement of Capital Investments, 1959 also prescribes special tax tracks for technological enterprises, which became effective in 2017, as follows:
- Technological preferred enterprise - an enterprise for which total consolidated revenues of its parent company and all subsidiaries are less than NIS 10 billion. A preferred technological enterprise, as defined in the law, which is located in the center of Israel, will be subject to tax at a rate of 12% on profits deriving from intellectual property.
- Any dividends distributed to "foreign companies", as defined in the law, deriving from income from the technological enterprises will be subject to a withholding tax at a rate of 4%.
U.S.
The U.S. federal corporate income tax rate is approximately 21%.
d. Tax assessments:
The Company has not received final tax assessments since its incorporation. Apester has tax assessments considered as final up to and including the year 2016. Other subsidiaries of the Company have not received final tax assessments since their incorporation.
SIVOTA PLC
NOTES TO THE FINANCIAL STATEMENTS
U.S. dollars in thousands
Note 13 - Loss per share
The calculation of the basic and diluted loss per share is based on the following data:
|
|
For the year ended 31 December |
||
|
|
2023 |
2022 |
|
|
Loss for the period attributable to the equity holders of the Company - U.S. dollars |
(8,323,000) |
(3,199,000) |
|
|
|
|
|
|
|
Weighted average number of ordinary shares for the purpose of basic and diluted earnings per share |
12,585,000 |
8,426,096 |
|
|
|
|
|
|
|
Basic and diluted loss per share - U.S. dollars |
(0.66) |
(0.38) |
|
Diluted earnings per share have not been disclosed on the basis the company was loss making and therefore the impact of any potentially dilutive ordinary shares would be anti-dilutive.
Note 14 - Intangible assets, net of amortisation and impairment
|
|
Developed technology |
Customer relationships |
Goodwill |
Total |
|
||
|
|
Group |
|
|||||
|
Cost: |
|
|
|||||
|
Balance as at 31 December 2022 |
8,655 |
3,033 |
3,301 |
14,989 |
|
||
|
Balance as at 31 December 2023 |
8,655 |
3,033 |
3,301 |
14,989 |
|
||
|
|
|
|
|
|
|
||
|
Accumulated amortisation and impairment: |
|
|
|
|
|
||
|
Balance as at 31 December 2022 |
(837) |
(202) |
- |
(1,039) |
|
||
|
Amortisation for the year |
(1,311) |
(316) |
- |
(1,627) |
|
||
|
Impairment loss (*) |
(1,307) |
(2,515) |
(3,301) |
(7,123) |
|
||
|
Balance as at 31 December 2023 |
(3,455) |
(3,033) |
(3,301) |
(9,789) |
|
||
|
|
|
|
|
|
|
||
|
Amortised cost as at 31 December 2023 |
5,200 |
- |
- |
5,200 |
|
||
|
Amortised cost as at 31 December 2022 |
7,818 |
2,831 |
3,301 |
13,950 |
|
||
(*) Additional information on impairment loss
In 2023, due to Apester's losses and Apester's change in strategy which led to terminating customer accounts that did not meet minimal profitability conditions the Group impaired goodwill and customer relationships to nil.
SIVOTA PLC
NOTES TO THE FINANCIAL STATEMENTS
U.S. dollars in thousands
In addition, the Group reviewed the carrying amount of the developed technology. The impairment test involved comparing the carrying amount of the developed technology with its recoverable amount, calculated using the relief from royalty method. The relief from royalty method determines the value of the asset by calculating how much the Group would save by owning the asset instead of licensing it from a third party.
The key assumptions used in calculating the value of the developed technology:
- forecast revenue growth rate of 30% in the years 2024-2026, followed by growth rate of 6%
thereafter.
- royalty rate of 12%.
- pre-tax discount rate applied to the cash flow projection is 18.93%.
As a result, in 2023, the Group recorded a total impairment loss for the amount of $7,123 thousand, which was included in the consolidated statement of comprehensive income.
Sensitivity analyses of changes in assumptions:
With respect to the assumptions used in determining the value in use, management believes that a change in key assumptions, in particular, the growth rate in the forecasted revenues, would result in an additional impairment of the developed technology.
If the forecasted revenue growth rate in the years 2024-2026 is 10% lower than the management's estimates, the Group would have to recognise an additional impairment in the amount of $1.0 million.
If the royalty rate used in the calculation had been 2% lower than the management's estimates the Group would have had to recognise an additional impairment in the amount of $0.9 million.
If the pre-tax discount rate applied to the cash flow projection is 2% higher than the management's estimates, the Group would have to recognise an additional impairment in the amount of $0.3 million.
Note 15 - Investment in subsidiary
|
|
As at 31 December |
|
|
|
2023 |
2022 |
|
|
Company |
|
|
|
|
|
|
Investment in Apester in May 2022-- see Note 4 |
11,904 |
11,904 |
|
Impairment |
(10,869) |
- |
|
Balance as at 31 December 2023 |
1,035 |
11,904 |
SIVOTA PLC
NOTES TO THE FINANCIAL STATEMENTS
U.S. dollars in thousands
Details of the Company's subsidiaries at 31 December 2023 are as follows:
|
|
|
|
|
|
||||
|
|
Place of incorporation |
Portion of ordinary shares held |
Principal activity |
Registered address |
||||
|
Apester Ltd. |
Israel |
53.95% |
digital marketing engagement platform |
Itzhak Sade 8, Tel Aviv |
||||
|
Apester UK Ltd. |
U.K. |
53.95% |
digital marketing engagement platform |
201 Haverstock Hill, London, NW3 4QG |
||||
|
Apester Inc. |
U.S.A. |
53.95% |
digital marketing engagement platform |
Rockville ,MD 20852 ,11300 Rockville pike |
||||
|
Sivota IL Ltd |
Israel |
100% |
finance and administrative services for the parent company |
Tuval 5, Tel-Aviv |
||||
Note 16 - Trade receivable
|
|
|
|
|
|||
|
As at 31 December |
||||||
|
2023 |
2022 |
|||||
|
|
Group |
Company |
Group |
Company |
||
|
|
|
|
|
|
||
|
Trade receivables from contracts with customers |
1,084 |
- |
2,456 |
- |
||
|
Less - provision for expected credit losses |
- |
- |
- |
- |
||
|
Trade receivables, net |
1,084 |
- |
2,456 |
- |
||
|
|
|
|
|
|
||
As of at December 2023, the Group has no material amounts that are past due and not impaired.
Additional information of trade receivables
Balances of major Customers, which each account for 10% or more of the total balance of trade receivables:
|
|
|
|
|
|||
|
As at 31 December |
||||||
|
2023 |
2022 |
|||||
|
|
Group |
Company |
Group |
Company |
||
|
|
|
|
|
|
||
|
Customer A |
163 |
- |
241 |
- |
||
SIVOTA PLC
NOTES TO THE FINANCIAL STATEMENTS
U.S. dollars in thousands
Note 17 - Other receivables
|
|
As at 31 December |
|||
|
2023 |
2022 |
|||
|
|
Group |
Company |
Group |
Company |
|
|
|
|
|
|
|
Government authorities |
157 |
9 |
263 |
5 |
|
Prepaid expenses |
49 |
24 |
65 |
24 |
|
Subsidiaries |
- |
78 |
- |
23 |
|
Security deposits |
43 |
- |
53 |
|
|
Other |
- |
- |
18 |
- |
|
Total |
249 |
111 |
399 |
52 |
Note 18 - Share capital
a. Composition of share capital:
|
|
|
|
|
|
Class of shares |
|
Issued and outstanding number of shares |
|
|
|
|
|
|
|
Ordinary shares of £0.01 par value |
|
12,585,000 |
|
|
Deferred shares of £0.01 par value |
|
4,950,000 |
|
- The company has no authorised share capital limit.
- All shares are fully paid.
- The deferred shares carry no voting rights, no rights to dividends and on a return of capital are only entitled to a return once a sum of £1,000,000 has been paid on each ordinary share. The entire class of deferred share can be acquired by the Company at any time for no consideration.
Note 19 - Share-based compensation by subsidiary
a. As at the reporting date the Company does not have a share incentive plan and has not granted any options.
b. Share-based compensation by subsidiary
Under Apester's 2015 Global Share Incentive Plan (the "Plan"), Apester may grant options to its own shares to directors, employees and consultants of Apester or its subsidiaries. Each option granted under the Plan is exercisable to Apester's shares until the earlier of ten years from the date of the grant of the option or the expiration date of the Plan. The options vest primarily over four years. Any options, which are forfeited before expiration, become available for future grants.
SIVOTA PLC
NOTES TO THE FINANCIAL STATEMENTS
U.S. dollars in thousands
The movements in Apester's share options are as follows:
|
|
Number of options |
Weighted average exercise price |
|
|
|
U.S. dollars |
|
Apester's share options outstanding at the date of the Acquisition on 12 May 2022 |
2,742,116 |
0.34 |
|
The changes in the period from 12 May 2022 to 31 December 2022: |
|
|
|
Share options exercised (1) |
(1,656,537) |
0.01 |
|
Share options forfeited |
(590,499) |
0.34 |
|
Share options granted (3) |
1,395,091 |
0.80 |
|
Apester's share options outstanding as at 31 December 2022 |
1,890,171 |
0.84 |
|
The changes in 2023: |
|
|
|
Share options exercised (2) |
(23,950) |
0.23 |
|
Share options forfeited |
(2,169,520) |
0.83 |
|
Share options granted (4) |
2,945,241 |
0.80 |
|
Apester's share options outstanding as at 31 December 2023 |
2,641,942 |
0.80 |
|
Apester's share options exercisable as at 31 December 2023 |
625,538 |
0.81 |
The weighted average remaining contractual life for the options outstanding as of 31 December 2023 was 7.7 years.
(1) During the period from the Acquisition date to 31 December 2022 Apester issued 1,656,537 ordinary shares upon the exercise of options by former employees for the consideration of $15 thousand. As a result, the Company's share in Apester share capital was reduced from 57.5% to 54.1%. The difference of $413 thousand between the amount by which the non-controlling interests are adjusted and the consideration paid was recognised directly in equity and attributed to the owners of the Company.
(2) In 2023 Apester issued 23,950 ordinary shares upon the exercise of options by former employees for the consideration of $6 thousand. As a result, the Company's share in Apester share capital was reduced from 54.1% to 53.9%. The difference of $13 thousand between the amount by which the non-controlling interests are adjusted and the consideration paid was recognised directly in equity and attributed to the owners of the Company.
(3) In October 2022, Apester granted 1,395,091 options to its former CEO exercisable to 1,395,091 its ordinary shares at an exercise price of $0.803 dollars. 174,386 options were to vest in 6 months from the grant date and 1,220,705 options were to vest over a period of 42 months in in equal quarterly installments with each installment vesting at the end of the 3 months period thereafter. The options were exercisable for a period of up to 10 years. The total fair value of the options granted was $527 thousand at the grant date, calculated using the Black-Scholes option pricing model.
SIVOTA PLC
NOTES TO THE FINANCIAL STATEMENTS
U.S. dollars in thousands
The following table specifies the inputs used for the fair value measurement of the grant:
Exercised price in U.S dollars 0.803
Dividend yield 0%
Expected volatility of the share price 56.91%
Risk- free interest rate 3.56%
Expected life if share option in yeas 4
Share price in U.S dollars 0.803
Following the resignation of the former CEO, the options were fully forfeited.
(4) In August 2023 Apester granted 1,395,091 options to its CEO exercisable to 1,395,091 its ordinary shares at an exercise price of $0.803 dollars. 174,386 options will vest in 6 months from the grant date and 1,220,705 options will vest over a period of 42 months in in equal quarterly installments with each installment vesting at the end of the 3 months period thereafter. The options are exercisable for a period of up to 10 years. The total fair value of the options granted was $179 thousand at the grant date, calculated using the Black-Scholes option pricing model.
The following table specifies the inputs used for the fair value measurement of the grant:
Exercised price in U.S dollars 0.803
Dividend yield 0%
Expected volatility of the share price 56.91%
Risk- free interest rate 4.53%
Expected life if share option in yeas 10
Share price in U.S dollars 0.26
(5) In 2023 Apester granted 1,550,150 options to its employees exercisable to 1,550,150 its ordinary shares at an exercise price of $0.803 dollars, 906,224 of which were forfeited during 2023 as a result of the resignation of part of the employees. The remaining 643,926 options will vest over 4 years when 160,982 options will vest in 12 months from the grant date and 482,944 options will vest over a period of 36 months in equal quarterly installments with each installment vesting at the end of the 3 months period thereafter. The options are exercisable for a period of up to 10 years. The total fair value of the options granted was $82 thousand at the grant date, calculated using the Black-Scholes option pricing model.
The following table specifies the inputs used for the fair value measurement of the grant:
Exercised price in U.S dollars 0.803
Dividend yield 0%
Expected volatility of the share price 56.91%
Risk- free interest rate 3.65%-4.57%
Expected life if share option in yeas 10
Share price in U.S dollars 0.23-0.31
SIVOTA PLC
NOTES TO THE FINANCIAL STATEMENTS
U.S. dollars in thousands
c. The share-based compensation costs recognised in the financial statements for services received:
|
|
For the year ended 31 December |
|
|
|
2023 |
2022 |
|
|
Group |
|
|
Share-based compensation by subsidiary |
44 |
273 |
The share-based compensation costs recognised against an increase in equity attributable to non-controlling interests.
Note 20 - Trade payables
Balances of major vendors, which each account for 10% or more of the total
balance of trade payables:
|
|
|
|
|
||||
|
|
As at 31 December |
||||||
|
2023 |
2022 |
||||||
|
|
Group |
Company |
Group |
Company |
|||
|
|
|
|
|
|
|||
|
Vendor A |
153 |
- |
604 |
- |
|||
|
Vendor B |
120 |
- |
260 |
- |
|||
|
Vendor C |
104 |
- |
73 |
- |
|||
|
Non major balances |
419 |
- |
1,105 |
- |
|||
|
|
796 |
- |
2,042 |
- |
|||
|
|
|
|
|
|
|||
Note 21 - Other payables
|
|
As at 31 December |
|||
|
2023 |
2022 |
|||
|
|
Group |
Company |
Group |
Company |
|
|
|
|
|
|
|
Employees and payroll accruals |
340 |
- |
676 |
36 |
|
Warrants |
23 |
- |
23 |
- |
|
Accrued expenses and other liabilities |
684 |
319 |
750 |
297 |
|
Total |
1,047 |
319 |
1,449 |
333 |
SIVOTA PLC
NOTES TO THE FINANCIAL STATEMENTS
U.S. dollars in thousands
Note 22 - Financial instruments
a. Classification of financial assets and liabilities:
The financial assets and financial liabilities in the statement of financial position are
classified by groups of financial instruments as follows:
|
Financial assets: |
|
|
|
|||
|
As at 31 December |
||||||
|
2023 |
2022 |
|||||
|
|
Group |
Company |
Group |
Company |
||
|
Financial assets measured at amortised cost: |
|
|
|
|
||
|
Loan to subsidiary |
- |
1,591 |
- |
1,420 |
||
|
Trade receivables |
1,084 |
- |
2,467 |
- |
||
|
Cash and cash equivalents |
969 |
474 |
4,439 |
1,076 |
||
|
Total financial assets measured at amortised cost |
2,053 |
2,065 |
6,906 |
2,496 |
||
|
Total current |
2,053 |
1,224 |
6,909 |
1,076 |
||
|
Total non-current |
- |
841 |
- |
1,420 |
||
|
|
|
|
|
|
||
|
Financial liabilities: |
|
|
|
|||
|
As at 31 December |
||||||
|
2023 |
2022 |
|||||
|
|
Group |
Company |
Group |
Company |
||
|
Financial liabilities measured at amortised cost: |
|
|
|
|
||
|
Trade payables |
796 |
35 |
2,042 |
3 |
||
|
Other payables |
1,024 |
319 |
1,426 |
247 |
||
|
Long term loan |
1,556 |
- |
1,394 |
- |
||
|
Total financial liabilities measured at amortised cost |
3,376 |
354 |
4,862 |
250 |
||
|
FVTPL - warrants (see note (c) below) |
23 |
- |
23 |
- |
||
|
Total financial liabilities |
3,399 |
354 |
4,885 |
250 |
||
|
Total current |
2,570 |
354 |
3,491 |
250 |
||
|
Total non-current |
829 |
- |
1,394 |
- |
||
SIVOTA PLC
NOTES TO THE FINANCIAL STATEMENTS
U.S. dollars in thousands
b. Financial risks factors
The Group's activities expose it to various financial risks.
Market risk - foreign exchange risk
A significant portion of the Group's revenues is received in USD. The Group also has
revenues that are received in GBP, EURO and New Israeli Shekels ("NIS"). A significant
portion of the Croup's expenses is paid in NIS and GBP. Therefore, the Group is exposed
to fluctuations in the foreign exchange rates in USD against GBP, EURO and NIS.
Credit risk
The Group usually extends 30-60-day term to its customers. The Group regularly monitors
the credit extended to its customers and their general financial condition but does not
require collateral as security for these receivables.
The Group always recognises lifetime expected credit losses (ECL) for trade receivables.
The expected credit losses on these financial assets are estimated based on the Group's
historical credit loss experience, adjusted for factors that are specific to the debtors, general
economic conditions and an assessment of both the current as well as the forecast direction
of conditions at the reporting date, including time value of money where appropriate.
The Group considers the following as constituting an event of default for internal credit risk
management purposes if information developed internally or obtained from external
sources indicates that the debtor is unlikely to pay its creditors, including the Group, in full
(without taking into account any collateral held by the Group).
Irrespective of the above analysis, the Group considers that default has occurred when a
financial asset is more than 90 days past due unless the Group has reasonable and
supportable information to demonstrate that a more lagging default criterion is more
appropriate.
Given the payment history of the Company's customers, the ECL provision amounted, if
any, to immaterial amounts.
The Group maintains cash and cash equivalents in various financial institutions. These
financial institutions are located in the UK, Israel, and US.
SIVOTA PLC
NOTES TO THE FINANCIAL STATEMENTS
U.S. dollars in thousands
Liquidity risk
The table below summarises the maturity profile of the Group's financial liabilities based on
contractual undiscounted payments (including interest payments):
As of 31 December 2023:
|
|
Less than one year |
From one to three years |
||
|
|
Group |
Company |
Group |
Company |
|
|
|
|
|
|
|
Trade payables |
796 |
35 |
- |
- |
|
Other payables |
1,024 |
319 |
- |
- |
|
Warrants |
23 |
- |
- |
- |
|
Long term loan |
- |
- |
1,955 |
- |
|
Total financial liabilities |
1,843 |
354 |
1,955 |
- |
As of 31 December 2022:
|
|
Less than one year |
From one to three years |
||
|
|
Group |
Company |
Group |
Company |
|
|
|
|
|
|
|
Trade payables |
2,042 |
3 |
- |
- |
|
Other payables |
1,426 |
247 |
- |
- |
|
Warrants |
23 |
- |
- |
- |
|
Long term loan |
- |
- |
1,844 |
- |
|
Total financial liabilities |
3,491 |
250 |
1,844 |
- |
c. Fair value
The carrying amounts of the Group's financial assets and liabilities approximate their fair
value, except of warrants derivative financial liability that are measured in fair value through
profit and loss category (FVTPL).
d. Sensitivity tests relating to changes in market factors
A change as at 31 December 2023 in the exchange rates of the following currencies against
the U.S. Dollar, as indicated below would have affected the measurement of financial
instruments denominated in a foreign currency and would have increased (decreased)
profit or loss and equity by the amounts shown below (before tax). This analysis is based
on foreign currency exchange rate that the Group considered to be reasonably possible at
the end of the reporting period. The analysis assumes that all other variables, in particular
interest rates, remain constant and ignores any impact of forecasted sales and purchases.
SIVOTA PLC
NOTES TO THE FINANCIAL STATEMENTS
U.S. dollars in thousands
|
|
As at 31 December 2023 |
|
|
|
|
Group |
Company |
|
|
Sensitivity test to changes in GBP to Dollar exchange rate: |
|
|
|
|
Gain (loss) from the change: |
|
|
|
|
Increase of 10% in exchange rate |
(43) |
(24) |
|
|
Decrease of 10% in exchange rate |
43 |
24 |
|
|
Sensitivity test to changes in Euro to Dollar exchange rate: |
|
|
|
|
Gain (loss) from the change: |
|
|
|
|
Increase of 10% in exchange rate |
(9) |
- |
|
|
Decrease of 10% in exchange rate |
9 |
- |
|
|
Sensitivity test to changes in NIS to Dollar exchange rate: |
|
|
|
|
Gain (loss) from the change: |
|
|
|
|
Increase of 10% in exchange rate |
43 |
- |
|
|
Decrease of 10% in exchange rate |
(43) |
- |
|
|
|
|
|
|
Note 23 - Balances and transactions with related parties
Details of directors' remuneration and key management personnel are disclosed in Note 10 and 11.
The details of convertible loan from Apester's shareholder are disclosed in Note 4(e).
|
|
For the year ended at 31 December |
|
|
|
2023 |
2022 |
|
Convertible loan interest expenses |
162 |
74 |
|
|
|
|
SIVOTA PLC
NOTES TO THE FINANCIAL STATEMENTS
U.S. dollars in thousands
Note 25 - Auditors remuneration
The Company auditors' remuneration for the reported period was as follows:
|
|
For the year ended 31 December |
|
|
|
2023 |
2022 |
|
Audit fees |
227 |
143 |
|
Non-audit fees for readmission reports |
- |
64 |
Note 26 - Subsequent events
In January 2024, Sivota entered into a non-binding term sheet with a leading online technology platform operating across the travel sector (the "Target"). Sivota intends to raise up to $3.2 million through the issue of new ordinary shares in order to provide the Target with a convertible loan to fund its working capital commitments for the short term. Pursuant to the term sheet, Sivota also has the ability to acquire up to 51% of the share capital of the Target for a consideration of $15 million, subject to the satisfaction of certain conditions.
In March 2024 the Company and the additional Apester's shareholder, that lent Apester convertible loans, signed an amendment to the convertible loan agreements to defer the loan repayments by one year. For more information see Note 4(d) and (f).
[i] https://www.wipo.int/edocs/pubdocs/en/wipo-pub-2000-2023-en-main-report-global-innovation-index-2023-16th-edition.pdf
[ii] https://www.ivc-online.com/LinkClick.aspx?fileticket=d0tSSB_wMH8%3d&portalid=0×tamp=1705398553249
[iii] https://www.grandviewresearch.com/industry-analysis/digital-content-creation-market-report#:~:text=Report%20Overview,13.5%25%20from%202023%20to%202030.
[v] https://www.iab.com/insights/2024-state-of-data-report/
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