https://www.ivc-online.com/LinkClick.aspx?fileticket=d0tSSB_wMH8%3d&portalid=0×tamp=1705398553249
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.
Apester is at the forefront of
this trend, enabling content creators to leverage interactive
elements to captivate their audiences, and create personalised
content experiences through features such as targeted polls,
quizzes, and user-generated content initiatives.
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 $1.4 million as at 31 December 2022.
Sivota Plc
Strategic report for the year ended 31
December 2023 (continued)
Apester
Apester's management team is mainly focusing on
gross margin and monthly EBITDA at this stage of its development.
The gross margin and the EBITDA in the year 2023 and the period
from the date of Apester's acquisition to the end 2022 were as
follows:
|
For the
year ended 31 December
2023
|
For the period from 12 May
2022 to 31 December 2022
|
|
|
|
Gross margin
|
22%
|
26%
|
EBITDA ($ thousand)
|
(2,483)
|
(2,630)
|
|
|
|
|
|
|
|
| |
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:
|
Male
|
Female
|
Total
|
Directors of the Company
|
3
|
-
|
3
|
Other key management personnel, other than
directors of the Company
|
1
|
2
|
3
|
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.
Stakeholder
|
Their
interest
|
Engagement
method
|
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
|
Employees
|
·
Welfare
·
Business sustainability
·
High standard of management
·
Ethical behaviour
·
Continual professional growth
|
·
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
|
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
|
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:
|
Number of Ordinary
Shares
|
|
Percentage of Ordinary
shares
|
Tim Weller - Non-Executive
Chairman
|
400,000
|
|
3.18%
|
Ziv Ben-Barouch - CEO
|
531,396
|
|
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:
Group
|
Company
|
· the
Consolidated Statement of Comprehensive Income;
|
· the
Company Statement of Financial Position;
|
· the
Consolidated Statement of Financial Position;
|
· the
Company Statement of Changes in Equity;
|
· the
Consolidated Statement of Changes in Equity;
|
· the
Company Statement of Cash flows;
|
· the
Consolidated Statement of Cash flows;
|
· and
related notes to the financial statements
|
· and
related notes to the financial statements
|
|
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)
New risk
|
Identified in the prior year
|
|
|
|
|
|
|
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.
|
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.
|
|
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.
|
|
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.
|
· 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.
|
|
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.
|
|
|
|
|
|
| |
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.
|
|
|
Materiality
|
$230,000 (2022 - $425,000)
|
$111,000 (2022 - $255,000)
|
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.
|
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
|
|
For the year
ended
31
December
|
|
|
Note
|
2023
|
|
2022
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues
|
5
|
5,622
|
|
5,918
|
|
Cost of
revenues
|
|
(4,370)
|
|
(4,361)
|
|
Gross Profit
|
|
1,252
|
|
1,557
|
|
Operating expenses:
|
|
|
|
|
|
Research and development
expenses
|
6
|
(1,576)
|
|
(1,553)
|
|
Sales and marketing
expenses
|
7
|
(1,169)
|
|
(1,309)
|
|
General and administrative
expenses
|
8
|
(3,413)
|
|
(3,513)
|
|
Total operating
expenses
|
|
(6,158)
|
|
(6,375)
|
|
|
|
|
|
|
|
Operating loss before impairment
|
|
(4,906)
|
|
(4,818)
|
|
|
|
|
|
|
|
Impairment loss
|
14
|
(7,123)
|
|
-
|
|
|
|
|
|
|
|
Operating loss
|
|
(12,029)
|
|
(4,818)
|
|
|
|
|
|
|
|
Financial income
|
|
-
|
|
-
|
|
Financial expenses
|
|
(292)
|
|
(295)
|
|
Financial expenses, net
|
9
|
(292)
|
|
(295)
|
|
|
|
|
|
|
|
Loss before taxes
|
|
(12,321)
|
|
(5,113)
|
|
|
|
|
|
|
|
Taxes on income
|
12
|
(3)
|
)
|
(1)
|
|
|
|
|
|
|
|
Net loss
|
|
(12,324)
|
|
(5,114)
|
|
|
|
|
|
|
|
Net loss attributable to the
owners
|
|
(8,323)
|
|
(3,199)
|
|
Net
loss attributable to non-controlling interest
|
|
(4,001)
|
|
(1,915)
|
|
Net loss
|
|
(12,324)
|
|
(5,114)
|
|
|
|
|
|
|
|
Total comprehensive loss
|
|
(12,324)
|
|
(5,114)
|
|
Total
comprehensive loss attributable to the owners
|
|
(8,323)
|
|
(3,199)
|
|
Total
comprehensive loss attributable to non-controlling
interest
|
|
(4,001)
|
|
(1,915)
|
|
Total comprehensive loss
|
|
(12,324)
|
|
(5,114)
|
|
Loss per share:
|
13
|
|
|
|
|
Basic loss per ordinary share in
U.S. dollars
|
|
(0.66)
|
|
(0.38)
|
|
Diluted loss per ordinary share in
U.S. dollars
|
|
(0.66)
|
|
(0.38)
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
The
accompanying notes are an integral part of the financial
statements.
SIVOTA PLC
CONSOLIDATED STATEMENT OF
FINANCIAL POSITION
U.S. dollars in
thousands
|
Note
|
|
As at
31
December
|
|
|
|
2023
|
|
2022
|
ASSETS
|
|
|
|
|
|
Non-current
assets
|
|
|
|
|
|
Intangible assets, net
|
4;
14
|
|
5,200
|
|
13,950
|
Property and equipment,
net
|
|
|
15
|
|
34
|
Total non-current assets
|
|
|
5,215
|
|
13,984
|
Current
assets
|
|
|
|
|
|
Trade receivables
|
16
|
|
1,084
|
|
2,467
|
Other receivables
|
17
|
|
249
|
|
399
|
Cash and cash
equivalents
|
|
|
969
|
|
4,439
|
Total current assets
|
|
|
2,302
|
|
7,305
|
Total assets
|
|
|
7,517
|
|
21,289
|
EQUITY AND LIABILITIES
|
|
|
|
|
|
Equity
|
|
|
|
|
|
Ordinary share capital
|
18
|
|
157
|
|
157
|
Deferred shares
|
18
|
|
65
|
|
65
|
Capital
reserve from transactions with non-controlling interests
|
19(b)
|
|
(426)
|
|
(413)
|
Share premium
|
|
|
15,139
|
|
15,139
|
Accumulated losses
|
|
|
(12,020)
|
|
(3,697)
|
Total equity attributable to the owners
|
|
|
2,915
|
|
11,251
|
Non-controlling
interests
|
4;
19(b)
|
|
1,203
|
|
5,141
|
Total equity
|
|
|
4,118
|
|
16,392
|
Current
liabilities
|
|
|
|
|
|
Trade payables
|
20
|
|
796
|
|
2,042
|
Other payables
|
21
|
|
1,047
|
|
1,449
|
Long term loan - current
portion
|
4(e)
|
|
727
|
|
-
|
Total current liabilities
|
|
|
2,570
|
|
3,491
|
Non-current
liabilities
|
|
|
|
|
|
Long term loan
|
4(e)
|
|
829
|
|
1,394
|
Employee benefits
|
|
|
-
|
|
12
|
Total non-current liabilities
|
|
|
829
|
|
1,406
|
Total equity and liabilities
|
|
|
7,517
|
|
21,289
|
|
|
|
|
|
|
|
|
|
|
|
| |
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
|
Note
|
|
As at 31
December
|
|
|
|
2023
|
|
2022
|
ASSETS
|
|
|
|
|
|
Non-current
assets
|
|
|
|
|
|
Investment in
subsidiaries
|
15
|
|
1,035
|
|
11,904
|
Loan to subsidiary
|
4(d)
|
|
841
|
|
1,420
|
Total non-current assets
|
|
|
1,876
|
|
13,324
|
Current
assets
|
|
|
|
|
|
Other receivables
|
17
|
|
111
|
|
52
|
Loan to subsidiary - current
portion
|
4(d)
|
|
750
|
|
-
|
Cash and cash
equivalents
|
|
|
474
|
|
1,076
|
Total current assets
|
|
|
1,335
|
|
1,128
|
Total assets
|
|
|
3,211
|
|
14,452
|
EQUITY AND LIABILITIES
|
|
|
|
|
|
Equity
|
|
|
|
|
|
Ordinary share capital
|
18
|
|
157
|
|
157
|
Deferred shares
|
18
|
|
65
|
|
65
|
Share premium
|
|
|
15,139
|
|
15,139
|
Accumulated losses
|
|
|
(12,504)
|
|
(1,245)
|
Total equity
|
|
|
2,857
|
|
14,116
|
Current
liabilities
|
|
|
|
|
|
Trade payables
|
20
|
|
35
|
|
3
|
Other payables
|
21
|
|
319
|
|
333
|
Total current liabilities
|
|
|
354
|
|
336
|
Total equity and liabilities
|
|
|
3,211
|
|
14,452
|
|
|
|
|
|
|
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 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:
|
|
|
|
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:
|
|
|
|
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
|
|
|
|
|
|
|
|
|
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
|
|
|
|
|
|
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
|
|
|
|
|
|
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
|
|
|
|
|
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
|
|
|
|
|
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
|
|
|
|
|
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
|
|
|
|
|
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
|
|
|
|
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
|
|
|
|
|
|
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
|
|
|
|
|
|
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
|
|
|
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
|
|
|
|
|
|
|
|
Group
|
Company
|
Group
|
Company
|
|
|
|
|
|
Trade
receivables from contracts with
customers
|
1,084
|
-
|
2,456
|
-
|
Less - provision for expected
credit losses
|
|
|
|
|
Trade receivables, net
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
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:
|
|
|
|
|
|
|
|
Group
|
Company
|
Group
|
Company
|
|
|
|
|
|
Customer A
|
163
|
-
|
241
|
-
|
|
|
|
|
|
| |
SIVOTA PLC
NOTES TO THE FINANCIAL
STATEMENTS
U.S. dollars in
thousands
Note 17 - Other
receivables
|
|
|
|
|
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
|
|
|
|
|
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:
|
|
|
|
|
|
|
|
|
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
|
|
|
|
|
Group
|
Company
|
Group
|
Company
|
|
|
|
|
|
Employees
and payroll accruals
|
340
|
-
|
676
|
36
|
Warrants
|
23
|
-
|
23
|
-
|
Accrued
expenses and other liabilities
|
684
|
319
|
750
|
297
|
Total
|
|
|
|
|
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:
|
|
|
|
|
|
|
|
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:
|
|
|
|
|
|
|
|
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:
|
|
|
|
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:
|
|
|
|
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
|
|
|
|
|
|
|
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).