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Annual Report and Accounts
For the year ended 31 December 2020
Tremor International Ltd.
82 Yigal Alon st.
(13th floor)
Tel-Aviv
Israel
6789124
www.tremorinternational.com
A Global Leader in All-Screen
Video Advertising Technologies
DIRECTORS, SECRETARY & ADVISERS
DIRECTORS:
Christopher John Stibbs – Non-Executive Chairman
Ofer Israel Druker – Chief Executive Officer and Executive Director
Yaniv Carmi – Chief Operating Officer and Executive Director
Sagi Niri – Chief Financial Officer and Executive Director
Joanna Rachael Parnell – Non-Executive Director
Neil Garth Jones – Non-Executive Director
Rebekah Mary Brooks – Non-Executive Director
Norman Thomas Johnston – Non-Executive Director
Lisa Klinger – Non-Executive Director
COMPANY SECRETARY:
Yaniv Carmi
REGISTERED OFFICE:
82 Yigal Alon St, 13th Floor, Tel Aviv, 6789124, Israel
NOMINATED ADVISER AND JOINT BROKER
finnCap Ltd, 60 New Broad Street, London EC2M 1JJ
JOINT BROKER
Stifel Nicolaus Europe Limited, 150 Cheapside, London EC2V 6ET
LEGAL ADVISERS – ENGLISH LAW
Charles Russell Speechlys, LLP 5 Fleet Place, London EC4M 7RD
LEGAL ADVISERS – ISRAELI LAW
Naschitz, Brandes, Amir & Co, Advocates 5 Tuval Street Tel Aviv 6789717, Israel
REPORTING ACCOUNTANTS AND AUDITORS
KPMG Somekh Chaikin KPMG Millennium Tower 17 Ha’arba’a Street P.O.B. 609 Tel Aviv 61006, Israel
KPMG UK 15 Canada Square Canary Wharf London E14 5GL
FINANCIAL PUBLIC RELATIONS ADVISER
Vigo Consulting, Sackville House, 40 Piccadilly, London W1J 0DR
REGISTRAR
Link Market Services (Guernsey) Limited, Mont Crevelt House, Bulwer Avenue, St Sampson, Guernsey GY2 4LH
DEPOSITARY:
Link Market Trustees Limited, The Registry 34 Beckenham Road, Beckenham, Kent BR3 4TU
This report is printed on paper certified in accordance with the FSC®
(Forest Stewardship Council®) and is recyclable and acid-free.
Pureprint Ltd is FSC certified and ISO 14001 certified showing that
it is committed to all roundexcellence and improving environmental
performance is an important part of this strategy.
Pureprint Ltd aims to reduce at source the effect its operations have on
the environment and is committed to continual improvement, prevention
of pollution and compliance with any legislationor industry standards.
Pureprint Ltd is a Carbon / Neutral® Printing Company.
Designed & Produced by KW Partners
(www.kwpartners.co.uk)
A Global Leader in All-Screen
Video Advertising Technologies
CORPORATE GOVERNANCE
Board of Directors
Corporate Governance Report
The Board and Committees
Takeovers & Mergers
Directors’ Report
Remuneration Report
STRATEGIC REPORT
Our “End-to-End” Technology Platform
Chairman’s Statement
Tremor is Well-Positioned to Capitalise
on a Significant Opportunity
Key Ecosystem Trends Driving Growth
Chief Executive Officer’s Review
Our “End-to-End” Technology Platform
DSP: Optimize Advertising Campaigns
& Improve Roi
DMP: Real-Time, Intelligent Decision
making Through Data-Driven Insights
SSP: Optimize Inventory Management
& Revenue Yield
Chief Financial Officer’s Review
02
04
06
07
08
11
12
12
13
14
16
18
21
25
26
29
FINANCIAL STATEMENTS
Auditors' Report to the Shareholders
of Tremor International Ltd.
Consolidated Statements of
Financial Position
Statement of Operation and Other
Comprehensive Income
Consolidated Statements of Changes
in Shareholder's Equity
Consolidated Statement of Cash Flows
Notes to the Consolidated
Financial Statements
Directors, Secretary
& Advisers
31
32
33
34
35
36
IBC
01
TREMOR INTERNATIONAL LTD.STRATEGIC REPORTANNUAL REPORT 2020 OUR “END-TO-END” TECHNOLOGY PLATFORM
Significant benefits for both advertisers & publishers
Benefits to advertisers
✔ Optimizing & increasing audience
reach & engagement
✔ Robust data assets
✔ Omni-channel connectivity,
optimizing campaign impact
✔ Creative capabilities
S
R
E
S
I
T
R
E
V
D
A
DSP
Our Clients: Top-Tier Global Brands and Agencies
Launched and maintained by Unruly, the U7 Council represents influential decision-makers from the world’s
biggest brands & media agencies, who actively partner with us to shape the future of the industry
02
TREMOR INTERNATIONAL LTD.
ANNUAL REPORT 2020
Benefits for publishers
✔ Premium, high-value
campaigns representing
a wide range of advertisers
✔ First and third-party data,
maximizes revenue generation
✔ Flexibility via wide breadth
of ad formats
✔ UnrulyX CTRL, a proprietary
insights & reporting dashboard,
facilitating Direct, Preferred,
and Open Auction
programmatic deals
E M O R D
M
P
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U
B
L
I
S
H
E
R
S
SSP
Audiences
Significant Premium Global Media Reach
CTV PARTNERS
ADS ON GLOBAL SITES THAT CONSUMERS TRUST
Exclusive Access to 50+ World Renowned Publications
TREMOR INTERNATIONAL LTD.
ANNUAL REPORT 2020
0303
TREMOR INTERNATIONAL LTD.STRATEGIC REPORTANNUAL REPORT 2020 CHAIRMAN’S STATEMENT
" Tremor ultimately performed
strongly and achieved significant
strategic progress during 2020.
"
Christopher Stibbs
Chairman
Chairman Statement Issued
on 10 March 2021
In my first final results statement as
Chairman of Tremor, there is no question
that the Covid-19 pandemic, which is still
influencing our daily lives, has had a
significant impact on the global
economy. Despite these challenges,
Tremor ultimately performed strongly
and achieved significant strategic
progress during 2020. This momentum
has continued into Q1 2021, providing a
further endorsement of Tremor’s
strategy and that the Company has solid
foundations in place to deliver future
growth.
Despite starting 2020 well, our core
digital advertising markets were
adversely impacted as a result of the
pandemic, however the team’s rapid
action, which included the accelerated
integration of Unruly – which the
Company acquired in January 2020 –
and the implementation of a number of
cost-saving initiatives, ensured the
Company’s robustness. This meant that
Tremor was aptly placed to benefit from
the recovery of these markets in the
second half, which began in Q3 2020
and was further reinforced in the final
quarter of the year. Tremor’s strategic
focus on video, and specifically CTV and
self-serve proved particularly effective,
as Covid-19 has highlighted the value of
on-screen in-home advertising globally.
The Company traded strongly during
2020 as a whole, achieving a 12%
increase in 1contribution ex-TAC to 184.3
million (2019: $164.0 million), primarily
driven by the performance of our
Programmatic activities generating an
increase of 30% to $161.6 million (2019:
$124.2 million) as a result of our strategic
shift to focus on our Programmatic
activities as a key growth driver. This led
to Adjusted EBITDA of $60.5 million in
2020 (2019: $60.4 million), with our
Adjusted EBITDA outturn impacted by
the adverse impacts of Covid-19 in H1
2020. Overall, this is particularly
impressive given the global
macroeconomic uncertainty during the
year, with certain sectors including the
hospitality and leisure industries yet to
recover to pre-pandemic levels.
Pleasingly, significant momentum was
achieved in Q4 2020, not only in
Tremor’s topline performance – with the
Company achieving record revenues –
but also across all strategic areas such
as CTV and self-serve.
In March 2020, the Company
strengthened its management team and
board of directors as a result of Tremor’s
continued operational progress, with
Yaniv Carmi, previously the Company’s
Chief Financial Officer appointed Chief
Operating Officer, and Sagi Niri joining
the Company as Chief Financial Officer.
In addition, as part of the acquisition of
Unruly, Rebekah Brooks and Norman
Johnston were also appointed to the
board as non-executive directors in the
first half of the year.
In August 2020, Tim Weller stepped
down as Non-executive Chairman
having held the position for six years,
during which time he oversaw the
acquisitions that have enabled the
re-shaping of the Company’s platform,
and I took up the position of Non-
executive Chairman in September 2020.
On behalf of the board and
management team, I would like to thank
Tim for his significant contribution and
dedication to the Company during
his tenure.
Tremor continues to be a highly cash
generative business, maintaining a
strong balance sheet, which enabled us
to complete $10 million in share
buybacks in the year at an average price
of 148.05 pence per share, and
commence a further $10 million share
buyback programme in December
2020. The board continues to evaluate
the best use of the Company’s capital
to create value for its stakeholders.
As ever, the Board continues to assess
strategic acquisitions alongside
continued investment in Tremor’s
existing infrastructure and workforce.
1Contribution ex-TAC is defined as our gross profit plus depreciation and amortization attributable to cost of revenues and cost of revenues (exclusive of depreciation
and amortization) minus both the Programmatic media cost and the Performance media cost (collectively, “traffic acquisition costs” or “TAC”)
04
TREMOR INTERNATIONAL LTD. ANNUAL REPORT 2020
STRATEGIC REPORT
We do believe that the realization of
the significant value that exists within
Tremor’s platform, technology and
teams supplemented by the recent
share buybacks has resulted in a
re-rating of the business, which is
beginning to create significant value
for all our key stakeholders.
significant strides that the Company
undertook during 2020 to augment
Tremor’s platform coupled with its sharp
focus on the high growth digital video
advertising markets, the board believes
positions the Company for strong future
growth, building on the momentum
achieved in the second half of 2020.
and performance in guiding the
business during this time. I believe that
the significant work undertaken in 2020
has resulted in Tremor being in the
strongest position in its history, and we
look to the future with real confidence in
delivering material growth. ■
The Company has entered 2021 in a very
strong position and continues to see
significant ongoing traction for its
solutions as a further reinforcement of
its strategy. Whilst clearly the ongoing
Covid-19 pandemic continues to cast
uncertainty across the wider
macroeconomic backdrop, the
Finally, on behalf of the board and
management team, I would like to thank
the entire Tremor team worldwide for
their commitment and hard work during
what has been a particularly challenging
period for every individual. In addition,
I would like to thank Tremor’s senior
management team for their dedication
Christopher Stibbs
Non-executive Chairman
10 March 2021
TREMOR INTERNATIONAL LTD.
ANNUAL REPORT 2020
05
TREMOR IS WELL-POSITIONED TO CAPITALIZE
ON NEXT-GENERATION OPPORTUNITIES
DIGITAL AD SPENDING WORLDWIDE
US$ in billions
CAGR
11%
$646
$700
$524
$586
$455
Source: eMarketer, March 2021
2021E
2022E
2023E
2024E
2025E
2021 AD SPEND
$748bn
Total Digital
$455bn
Total Digital
$13bn
U.S. CTV
$55bn
U.S. VIDEO
06
TREMOR INTERNATIONAL LTD. ANNUAL REPORT 2020
KEY ECOSYSTEM TRENDS DRIVING OUR GROWTH
STRATEGIC REPORT
Video
CTV & Mobile
78%
of contribution ex-TAC is generated
through the video ad format growing at
31% in the past year
75%
of programmatic revenue is generated
through Mobile & CTV, growing at
34% in the past year
BY FORMATS
U.S. ad spend 2021-2025 CAGR
BY DEVICES
U.S. ad spend 2021-2025 CAGR
16%
12%
13%
20%
12%
10%
0%
Linear TV
Search
Display
Video
Desktop
Mobile
Conneted TV
The CTV Opportunity
CTV
ad spend is in the early innings with outsized growth potential,
as it follows consumers’ shift in video consumption
U.S. CTV AD SPENDING
US in billions
PAY TV vs CTV IN THE U.S.
% of U.S. in billions
CAGR
20%
$28
Pay TV
CTV
74%
72%
77%
65%
$13
81%
83%
84%
61%
58%
54%
2021E
2025E
2018A
2019A
2020A
2021E
2022E
CHIEF EXECUTIVE OFFICER’S REVIEW
" The record performance that Tremor achieved
during the second half of 2020 and the strong start
of 2021 is a clear endorsement of our strategy, the
Company’s platform and our ability to generate
sustainable organic growth.
" Ofer Druker
Chief Executive Officer
Chief Executive Officer's Statement
Issued on 10 March 2021
INTRODUCTION
2020 was a great year for Tremor
despite the effects of Covid-19 that
mainly impacted the Company in the
second quarter of the year. Like many
other global businesses, we were
impacted by the fact that many of our
clients halted their activity and changed
their strategy as a result of the
uncertainty that Covid-19 created
globally. It is important to mention that
some of our clients in sectors such as
hospitality and travel, are still not back
to pre-pandemic levels.
The success of our strategy was
emphasized and accelerated in 2020,
with real evidence that we have the right
foundations in place. This is
demonstrated by the following:
1. Connected TV (“CTV”) – with
average consumer CTV usage time
surging in 2020, this resulted in
advertisers shifting their budgets to
CTV to engage with their potential
clients. Tremor delivered a
significant growth in CTV net
revenues in the year, with CTV
representing 20% of net revenues,
and we strongly believe that this
trend will continue
2. Data – Tremor’s ‘bread and butter’ is
data usage and we continue to
leverage our advantage as one of
the only companies that owns and
operates a Data Management
Platform (“DMP”)
3. Video – Tremor is primarily focused
on video, the fastest growing format in
online advertising and is unique in that it
has a technology stack created around
video, with video accounting for 70% of
revenues in 2020 and 82% in Q4 2020
4. End-to-end platform – our platform
continues to offer a number of
advantages to advertisers and
publishers including deliverability,
prices, simplicity and reach
5. M&A capabilities – in January 2020
we acquired Unruly, and we
integrated it into the Company
despite limitations brought about
by Covid-19. We have driven
significant results from the Unruly
assets as demonstrated by our
strong growth in H2 2020. We
believe this is another unique and
fundamental capability for Tremor
and will underpin our growth both
organically and via acquisition
The Company traded strongly during
2020 as a whole, achieving a 12%
increase in contribution ex-TAC to
$184.3 million (2019: $164.0 million),
primarily driven by the 30% increase
in contribution ex-TAC from our
Programmatic activities to $161.6 million
(2019: $124.2 million). The Group
generated Adjusted EBITDA of $60.5
million (2019: $60.4 million). Tremor
achieved this performance despite the
industry-wide headwinds relating to the
Covid-19 pandemic which adversely
impacted trading in the first half of the
year, in addition to the integration of
Unruly in the first six months of the year
requiring resources and management
attention.
Tremor continues to be highly cash-
generative. Our strong cash position
leaves us well-placed to consider further
share buybacks, and selectively evaluate
additional strategic acquisitions.
OPERATIONAL REVIEW
Key Performance Indicators
In 2020, we introduced three revenue
KPIs to monitor our performance across
our key strategic growth drivers of CTV,
Private Marketplaces and Self-serve.
Despite the unprecedented operating
environment that we experienced
through much of the year, we performed
extremely well against each of these
three metrics.
Net Revenues generated from CTV
increased by 164% in the full year when
compared to 2019. In addition, our
growth within Tremor’s programmatic
activities, Self-serve and Private
Marketplaces, delivered increases of
415% and 1,637% respectively in the full
year 2020.
Net Revenue KPIs
Connected TV
PMPs
Self-serve Platform
08
TREMOR INTERNATIONAL LTD.
ANNUAL REPORT 2020
2019
($m)
14.0
1.2
0.7
2020
($m)
36.8
21.1
3.6
%
growth
164%
1,637%
415%
CONNECTED TV
CTV is the most exciting and highest
growth segment within video, and we
have continued to see rapid adoption of
CTV advertising throughout the year. In
2020, more than 300 clients executed
CTV campaigns with Tremor Video,
which marks a 71% increase year-on-
year. Adoption of CTV continues
unabated with over 100 million
households using CTV in the United
States alone, with that number set to
grow to c. 113 million by 20243,
representing nearly 86% of all US
households. This has led to an increase
in CTV advertising spend, which is
expected to grow to over $11 billion in
the US alone in 2021.
Through Tremor Video’s unique
end-to-end technology stack – including
its managed and self-service demand
side platform (DSP), premium supply
footprint strengthened by the
integration of Unruly, and its centralised
data management platform (DMP)—a
wide breadth and depth of audience
data can be layered across all CTV
media to provide advertisers with
precision-based targeting across
premium scale.
Throughout the year, Tremor continued
to deepen its relationships with leading
CTV publishers, adding 101 new
publishers to our network in the last
quarter of the year, a c. 90% increase
compared to Q4 2019, highlighting our
clients’ confidence in our unique
end-to-end technology stack.
There also continues to be meaningful
tailwinds in CTV, which the industry
anticipates will enhance future growth,
with a disproportionately low amount of
advertising spend in CTV versus number
of viewing hours, of 9% and 26%
respectively.
PMP ACTIVITY
Our PMP offering has seen a 1,637%
increase in net revenue year-on-year, as
we continue to build relationships with
tier one agency customers by providing
high-quality video and CTV media,
enhanced by our targeting capabilities.
The Unruly brand contributed to the
strength of our offering and assisted us
in establishing strong relationships with
the leading global advertisers.
In addition, our self-serve platform has
also seen a significant 415% increase in
net revenue year-on-year. This growth
demonstrates the strength of our
technology stack offering in the market,
which is being adopted by an increasing
number of partners in the USA. We will
maintain innovation around data usage
which is integrated into our self-serve
capabilities and we anticipate these will
become more effective during the
second half of 2021.
TV INTELLIGENCE SOLUTIONS
The Company’s ongoing strategy
relating to connected TV (CTV) and
addressable TV retargeting continues to
evolve, with clear value now attributed
to Tremor’s end-to-end platform further
strengthened by the upcoming
introduction of our enhanced suite of TV
intelligence solutions which was
accelerated by LG’s acquisition of
Alphonso and the winding down of
Alphonso as an exclusive technology
partner of Tremor.
These enhancements are intended to
address the ever-dynamic needs of
advertisers in four key areas:
Audience Reach
• Access to a blend of data across a
nationally represented US TV
viewing footprint comprised of 12
million+ households and 100
million+ addressable devices in the
US, with plans to increase this scale
via the integration of additional data
sources
• Partner-agnostic solution that will
be able to aggregate multiple data
sources and is not restricted to a
single data provider, offering more
turnkey audience activation for
advertisers
• Enhanced ability to scale audience
reach at the regional level
POWERFUL STRATEGIC GROWTH DRIVERS
ORGANIC
GROWTH DRIVERS
• CTV, PMP (Private Market
Place) and Self Serve
TECH INNOVATION
• Heavy investment in
customized data segments
• Self serve Demand
and Supply platforms
• CTV marketplace
GLOBAL EXPANSION
• International markets
beyond US
• Global advertisers
M&A
• Focused on Data tech,
assets and partnerships
• Evaluate selected
opportunities, mainly
on adding demand
TREMOR INTERNATIONAL LTD.
09
STRATEGIC REPORTANNUAL REPORT 2020 CHIEF EXECUTIVE OFFICER’S REVIEW CONTINUED
GROWTH STRATEGY
The second half of 2020 saw the
Company’s broader strategy come into
fruition as we delivered record growth.
We believe Tremor remains well-placed
to continue to deliver meaningful
growth, by leveraging its key strategic
priorities of:
• Growth drivers: our Connected TV,
Private Marketplace and Self-serve
offerings
• Technology innovation: continued
significant investment including
within the Company’s customized
data segments, our self-self,
demand and supply platforms and
CTV marketplace
• Global expansion: broadening our
reach into international markets
beyond the US and forging
additional relationships with global
advertisers as well as leveraging
existing partnerships
• M&A: continue to evaluate select
acquisition targets with a focus on
data technology, assets and
partnerships, as well as the potential
to add on the demand-side
UBER SETTLEMENT
In December 2020, we reached an
agreement to settle the complaint
brought by Uber Technologies, Inc.
("Uber") against Taptica, the Company's
legacy performance marketing business.
As we noted at the time of settlement,
whilst there was no court finding as to
wrongdoing by the Company or indeed
the merits of the lawsuit, the Board
elected to settle with Uber in order to
resolve the matter in a timely manner
and avoid any further expenses relating
to a drawn-out litigation process, and
paid $1.7 million, which resulted in the
full dismissal of the case.
OUTLOOK
Tremor has made a very solid start to
2021, with the traction we experienced
in the second half of 2020 continuing
into the first quarter. While we are
pleased to see the continued roll out of
vaccination programmes worldwide,
management continues to monitor the
Covid-19 pandemic very closely.
As a board, we believe that Tremor has
all of the components to deliver
significant and sustained growth
through our technology offering, the
dynamics of the markets within which
we operate, and our team. The growth
that we demonstrated in the second half
of 2020, we believe marks an inflection
point for our business, and is just the
start of an exciting period. We are
currently looking to the future with real
confidence in delivering continued
growth in the medium- to long-term.
The Company continues to explore,
from time to time, the possibility of
transactions in the capital markets,
including the potential for a dual-listing
of shares in the United States. No
assurance can be made that any such
transaction will be completed in the
near term or at all. If applicable, the
Company will provide further
information in due course.
I would like to personally thank our
workforce for their hard work and
fortitude over the last year. The success
Tremor has enjoyed this year is a
testament to the talent and
professionalism that all of our teams
have displayed. ■
Ofer Druker
Chief Executive Officer
10 March 2021
3Source: e-Marketer
4Source: e-Marketer
Programmatic Execution
• Managed service, self-service and
hybrid platforms that will maximize
the efficiency, speed and precision
of campaign delivery across a
robust supply network fueled by
deep media relationships
• Expansive breadth and depth of
predictive, granular audience data
via our DMP that can be coupled
with TV viewing data – including
program-level CTV data segments
– to reach the most relevant and
responsive consumers
Analytics
• Advanced and customizable
measurement solutions that can be
actively used to inform campaign
optimization
• Ability to track campaign
performance across the full
spectrum of priority KPIs, from
top-funnel to bottom-funnel
Client Service
• Commitment to developing
campaign strategies unique to the
nuanced objectives and needs of
each individual client, not a one-
size-fits-all service model
• Proactive, problem-solving
approach to generating the most value
for our clients
Management believes that our enhanced
TV intelligence offering, when launched,
will further solidify our leadership
position and allow us to cultivate even
stronger client relationships in the future.
COVID-19 RESPONSE
Clearly much of 2020 was dominated by
the global Covid-19 pandemic with the
impact of lockdown on the global
advertising industry affecting the
Company’s trading in the first half of
2020. However, the Company
introduced a number of measures
intended to mitigate the impact in H1
2020 including cost-cutting initiatives,
as well as accelerating the integration of
Unruly, which was completed two
months ahead of the initial schedule.
The result of these measures was cost
savings of c.$24 million in the year
ended 31 December 2020 versus the
yearly budget.
Covid-19 continues to provide an
uncertain backdrop to the global
markets, however we believe our
business and workforce has responded
incredibly well to the restrictions the
pandemic has brought about, as we
continued to deliver growth in 2020.
10
TREMOR INTERNATIONAL LTD.ANNUAL REPORT 2020 OUR “END-TO-END” TECHNOLOGY PLATFORM
DEMAND-SIDE
DATA MANAGEMENT
SUPPLY-SIDE
E M O R D
M
P
R
T
S
R
E
S
I
T
R
E
V
D
A
DSP
P
U
B
L
I
S
H
E
R
S
SSP
Audiences
VIDEO
FOCUS
TV
RETARGET-
TING
SAAS &
MANAGED
OFFERING
CREATIVE
STUDIO
MASSIVE
REACH
SAAS &
MANAGED
OFFERING
OMNI-
CHANNEL
EXCLUSIVE
SUPPLY
100
BILLION
DAILY AD
REQUESTS
250
MILLION
OF DAILY AD
IMPRESSIONS
500
TERABYTES
OF DAILY DATA
PROCESSED
100
MILLION
DAILY UNIQUE
SITES/APPS
DSP: OPTIMIZE ADVERTISING CAMPAIGNS
& IMPROVE ROI
Access to wide-reaching and high-quality
ad inventory, audience targeting and
advanced reporting
Designed to empower advertisers to
optimize their video & CTV campaigns
for efficiency & ROI using AI and
ML/DLfor automation
Self-service solution for advertisers and
agencies enabling them more control
over planinng and execution
Managed-service optionality enables
advertisers to benefit from the experience
and guidance of our team of experts
DEMAND-SIDE
+1,200 BRANDS
Managed
and Self-
Service
DSP
+400 AGENCIES
VIDEO FOCUS
SAAS & MANAGED
OFFERING
TV RETARGETING
CREATIVE STUDIO
DMP: REAL-TIME, INTELLIGENT DECISION-
MAKING THROUGH DATA-DRIVEN INSIGHTS
Fully integrated and flexible solution
sitting at the center of the platform
Provides real-time, device-agnostic,
and data-driven marketing to
maximize campaign performance
& impact
Leverages first- and
third-party data to identify
and reach curated audiences
E M O R D
M
P
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T
DATA MANAGEMENT
EMOTION-BASED
INSIGHTS (EQ)
✔
AD VERIFICATION
GEO/LOCATION-BASED
TARGETING
AUTOMATIC CONTENT
RECOGNITION (ACR)
AUDIENCE ATTRIBUTES
& BEHAVIORS
CONTEXTUALIZED
TARGETING
SSP: OPTIMIZE INVENTORY MANAGEMENT
& REVENUE YIELD
Self-service solution for advertisers and
agencies, enabling them more control
over planning and execution
Access to large data sets, unique
demand (Tremor DSP) and private
marketplaces (PMPs)
Direct relationships with omni-channel
publishers & platforms facilitating supply
path optimization process for all parties
Model-driven KPI & yield automation
increases publishers’ inventory value
while delivering higher performance
for advertisers
SUPPLY SIDE
~1,450 PUBLISHERS
WEB PUBLISHERS
SSP
MOBILE PUBLISHERS
CTV PUBLISHERS
DSP
PMP
Self-
Service
DSP
OMP
SAAS & MANAGED OFFERING
MASSIVE REACH
EXCLUSIVE SUPPLY
CHIEF FINANCIAL OFFICER’S REVIEW
" The second half of 2020 saw a significant
resurgence of advertising spend. Adjusted EBITDA
in H2 2020 increased c. 32 times vs H1 2020.
"
Chief Financial Officer Statement Issued on 10 March 2021
(in thousands)
Total comprehensive income (loss) for the period
Foreign currency translation differences for foreign operation
Taxes on income
Financial expense (income), net
Depreciation and amortization
Stock-based compensation
Other expenses (income)
Restructuring
Acquisition-related cost
Adjusted EBITDA
Sagi Niri
Chief Financial Officer
Year Ended
December 31,
2019
2020
$6,363
$4,975
(139)
(2,636)
315
32,359
15,809
–
5,500
2,840
(2,836)
(9,581)
1,417
45,187
14,490
1,700
4,637
524
$60,411
$60,513
Our adjusted EBITDA remained largely unchanged at $60.5 million for the year ended 31 December 31 2020, (2019: $60.4 million).
This was primarily driven by the increase in our Programmatic activity, mainly attributable to the revenue growth in CTV, our self-serve
platform and our DSP’s offering in private marketplaces. This was offset by the decrease in our Performance activity.
In the first half of 2020, our business was negatively impacted by the COVID-19 pandemic, which resulted in a decrease in advertising
demand globally. As client activity started to recover, the second half of 2020 saw a significant resurgence of advertising spend.
Adjusted EBITDA in H2 2020 increased approximately 33 times vs H1 2020, which represented 51% year-over-year increase over our
Adjusted EBITDA for H2 2019. Consequently, our full year adjusted EBITDA for 2020 remains intact, although some verticals have still
not recovered, including travel, retail and hospitality.
(in thousands, except for percentages)
Revenues
Cost of revenues (exclusive of depreciation and amortization shown separately below)
Research and development
Selling and marketing
General and administrative
Depreciation and amortization
Other income (loss)
Profit (loss) from operations
14
Year Ended
Year Ended
December 31, 2019(1)
December 31, 2020
As
reported
As a % of
revenue
As
reported
As a % of
revenue
$325,760
100%
$211,920
100%
187,246
16,168
52,351
34,433
32,359
(700)
3,903
57.5
5.0
16.1
10.6
9.9
(0.2)
1.2
59,807
13,260
68,765
29,678
45,187
1,248
(6,025)
28.2
6.3
32.4
14.0
21.3
0.6
(2.8)
TREMOR INTERNATIONAL LTD.ANNUAL REPORT 2020
STRATEGIC REPORT
Revenue decreased by $113.8 million, or
35%, to $211.9 million for the year ended
31 December 2020 (2019: $325.8
million). This decrease is primarily
because effective from 1 January 2020,
we recognize revenue on a net basis for
the Programmatic activity, which had
been recognized on a gross basis
historically, including for 2019.
If revenue for 2019 had been presented
on a comparable basis to facilitate
comparability, our revenue would have
increased by $3.5 million, or 2%, to
$211.9 million for the year ended 31
December 2020 (2019: $208.5 million).
The increase was mainly attributable to
the growth of $37.5 million in our
Programmatic businesses, which
includes multiple integrated growth
initiatives such as CTV, our self-serve
platform and the Private MarketPlace
solutions. CTV serves as a robust
growth driver for our core businesses,
supported by an increasing number of
industry leading CTV partners. However,
this is largely offset by the decline of
$34 million in our Performance
activities, due to our strategic shift away
from these activities.
Cost of revenues (exclusive of
depreciation and amortization)
decreased by $127.4 million, or 68%, to
$59.8 million for the year ended 31
December 2020 (2019: $187.2 million).
This is primarily because effective
January 1, 2020, we recognize revenue
on a net basis for the Programmatic
activity, which had been recognized on
a gross basis historically, including for
2019. If revenue for 2019 had been
presented on a comparable basis to
facilitate comparability, cost of revenue
(exclusive of depreciation and
amortization) for the year ended
December 31, 2019 would be
$69,945 thousand.
If revenue for 2019 had been presented
on a comparable basis to facilitate
comparability, our cost of revenue
(exclusive of depreciation and
amortization) would have decreased by
$10.1 million, or 14%, to $59.8 million for
the year ended 31 December 2020
(2019: $69.9 million). This decrease was
primarily driven by lowered costs due to
our strategic shift away from
Performance activities, partially offset
by the greater usage of hosting and data
services in our core business.
Research and development expenses
decreased by $2.9 million for the year
ended 31 December 2020 (2019: $16.2
million). This was primarily the result of
decreases in (i) wages and salaries of
$1.7 million attributable to the
efficiencies and consolidation of our
research and development efforts, (ii)
the expense for research and
development and engineering tools and
services of $1.1 million and (iii)
capitalized costs of $0.1 million.
Selling and marketing expenses
increased by $16.4 million, or 31.4%, to
$68.8 million for the year ended
December 31, 2020 (2019: $52.3 million).
This increase was driven by (i) the
wages, salaries and share-based
payments of $13.9 million related to the
Unruly acquisition, (ii) the share-based
payment program of $3.3 million for our
business managers and (iii) the salary
increase of $1.3 million as a result of our
business growth, which was partially
offset by a decrease in marketing and
other costs of $2.1 million driven by the
efficiency improvements during the
Covid-19 pandemic.
General and administrative expenses
decreased by $4.8 million, or 13.8%,
to $29.7 million for the year ended
December 31, 2020 (2019: $34.4
million). This decrease was primarily
driven by the decrease in wages, salaries
and share-based payments of $1.5
million, as well as the recovery in 2019
of $4.1 million doubtful debts provision
as a result of higher collection rates and
employee related and other
administrative costs of $0.4 million. This
was partially offset by the increase in
professional services and acquisition
costs of $1.2 million.
As at 31 December 2020, our net cash*
increased by 26%, from $76.9 million for
the year ended December 31, 2019 to
$96.8 million for the year ended 31
December 2020. This increase was
primarily driven by (i) the net cash
provided by operating activities of $35.2
million, mainly due to the increase in
accounts receivable, and (ii) the net
cash provided by investing activities of
$4.9 million, including the net cash
provided by the acquisition of Unruly,
partially offset by the net cash used in
financing activities of $22.4 million,
primarily for leases repayment and
acquisition of our own shares. ■
* Net cash is defined as cash and cash equivalents
less short and long-term interest-bearing debt
including capital leases
Sagi Niri
Chief Financial Officer
10 March 2021
TREMOR INTERNATIONAL LTD.
ANNUAL REPORT 2020
15
BOARD OF DIRECTORS
Christopher
Stibbs
Non-Executive
Chairman
Ofer Druker
Chief Executive
Officer
Sagi Niri
Chief Financial
Officer
Ofer Druker has served as our Chief
Executive Officer and as a member of
our board of directors since April 2019
following the completion of the merger
with RhythmOne. From November 2017
to April 2019, Mr. Druker served as our
Executive Chairman of the Tremor Video
division and was instrumental in our
successful integration of Tremor Video
after its acquisition in August 2017.
Previously, Mr. Druker was the founder
and Chief Executive Officer of Matomy
Media Group Ltd., a data-driven
advertising company (“Matomy”) until
April 2017, having built Matomy from its
inception in 2007 into a digital media
company. Mr. Druker was responsible for
leading and integrating Matomy’s most
important strategic transactions,
including the acquisitions of Team
Internet, Media Whiz, Mobfox and
Optimatic.
Sagi Niri has served as our Chief
Financial Officer since March 2020 and
as a member of our board of directors
since June 2020. Mr. Niri has over 20
years of experience in finance and
leadership roles in the technology and
real estate sectors. Mr. Niri previously
served as Chief Executive Officer of
Labs (“Labs”), and Chief Financial
Officer of LabTech Investments Ltd.,
Labs’ parent company, which owns and
manages office, retail and residential
real estate in London. In addition, Mr.
Niri spent over nine years at Matomy,
initially as Chief Operating Officer/Chief
Financial Officer and more recently as
Chief Executive Officer. Mr. Niri is a
member of the Institute of Certified
Public Accountants in Israel and holds
an M.B.A. in Finance from Manchester
University and a B.A. in Corporate
Finance from the College of
Management in Israel.
Christopher Stibbs has served as a
member of our board of directors since
May 2019 and as our Non-Executive
Chairperson since September 2020. Mr.
Stibbs has over 25 years of experience
as an executive in the media industry.
Until August 2019, he served as Chief
Executive of The Economist Group (the
“Economist Group”). Previously, he held
a number of roles within the group
including head of the Economist
Intelligence Unit (the group’s B2B arm)
and Chief Financial Officer. He is
credited with overseeing the Economist
Group’s resilience and transition through
the unprecedented disruption
experienced by the publishing industry
over the last 15 years. Prior to this, he
held positions with Pearson and Incisive
Media. Mr. Stibbs is a fellow of the
Associations of Chartered Accountants
and Corporate Treasurers, currently has
a non-executive role at Oxford
University Press and is Chairman of
Times Higher Education.
Yaniv Carmi
Chief Operating
Officer
Yaniv Carmi has served as our Chief
Operating Officer since March 2020 and
as a member of our board of directors
since 2014. Mr. Carmi previously served
as our Chief Financial Officer from
January 2010 to March 2020. He is
currently responsible for the delivery of
our business plan and driving our
growth ambitions. Mr. Carmi was
instrumental in our initial public offering
of our ordinary shares on AIM in 2014
and in the subsequent global expansion
in operations, including significant M&A
activity. He is an experienced finance
professional, whose previous roles
include tax and audit senior at KPMG
Israel. Mr. Carmi is also a Certified Public
Accountant and holds a B.A. in
Economics and Accounting from
Ben-GurionUniversity and an M.B.A. in
Financial Management from Tel Aviv
University.
16
TREMOR INTERNATIONAL LTD.ANNUAL REPORT 2020 Lisa Klinger
Non-Executive Director
Lisa Klinger has served as a member of
our board of directors since April 2021.
Ms. Klinger has nearly 30 years of
experience in international finance. Most
recently, Ms. Klinger was Chief Financial
Officer at Ideal Image Development
Corp, one of the largest cosmetic and
aesthetic services providers in the
United States, between 2018 and 2019,
and prior to that she held the role of
Chief Financial and Administrative
Officer between 2016 and 2017 at
Peloton Interactive Inc., the American
exercise equipment and media
company. Ms. Klinger has also held
senior finance roles at Fresh Market Inc.,
where she was Executive and Vice
President, Chief Financial Officer for
three years, as well as at Michaels Stores
Inc., where she was Senior Vice
President, Finance and Treasurer for
four years, and Acting Chief Financial
Officer. Ms. Klinger is currently a
member of the board of directors and
the chair of the audit committee of
Emerald Holding Inc. (NYSE:EEX), a
leading operator of B2B trade shows in
the United States, and a member of the
board of directors of PartyCity HoldCo
Inc. (NYSE:PRTY), a party goods retailer
in North America. Ms. Klinger holds a
B.S.B.A. in Finance from Bowling Green
State University.
Neil Jones
Senior Non-Executive Director
Neil Jones has served as a member of
our board of directors since 2014. Mr.
Jones is currently Chief Operating
Officer and a member of the board of
directors of Huntsworth plc, a
healthcare communications and public
relations group, which is listed on the
Main Market of the London Stock
Exchange. Between February 2016 and
October 2019, Mr. Jones held the
position of Chief Financial Officer at
Huntsworth plc. He joined Huntsworth
plc from ITE Group plc, the international
exhibitions group, where he held the
position of Chief Financial Officer from
2008. Between 2003 and 2008, Mr.
Jones was Group Finance Director at
Tarsus Group plc, and prior to that, he
spent five years as Finance Director
(Europe) at Advanstar Communications.
Mr. Jones has a B.A. in Economics from
the University of Manchester and
completed the ACA in July 1990 with
Price Waterhouse.
Joanna Parnell
Non-Executive Director
Joanna Parnell has served as a member
of our board of directors since 2014. Ms.
Parnell is the Co-Founder of strategic
marketing consultancy Project50,
designing commercial growth strategies
for C-suite business leaders in the
United Kingdom and the United States.
Previously, Ms. Parnell was Managing
Partner at Wavemaker (formerly MEC),
one of the world’s leading media agency
networks and owned by WPP plc, where
she led the paid digital and data team,
overseeing the agency’s focus on data
driven campaigns. Prior to moving to
Wavemaker in March 2016, Ms. Parnell
was Director of Strategy and sat on the
management team at Unique Digital
(now a WPP plc company), with
responsibility for setting product and
business strategy, including leading the
multichannel planning strategy (cross-
device and cross-platform), managing
product heads and driving key initiatives
across data buying, attribution
modelling and biddable media
adaptation. Ms. Parnell has a Masters in
German and Business from the
University of Edinburgh and studied at
the London School of Marketing
between 2005 and 2006.
Rebekah Brooks
Non-Executive Director
Rebekah Brooks has served as a
member of our board of directors since
June 2020. Ms. Brooks is Chief
Executive of British newspaper publisher
News Corp UK and Ireland, part of News
Corp, a position she has held since 2015,
having first joined News Corp in 1989.
Starting as a feature writer for the News
of the World, Ms. Brooks became Editor
of the Sun in 2003, a position she held
until July 2009. From 2009 to 2011, she
served as Chief Executive of News
International, overseeing a period of
significant growth in newspaper
operating profit and paid-for digital
subscriptions at The Times. Following
her appointment as Chief Executive of
News Corp UK and Ireland, Ms. Brooks
restructured the Sun’s online strategy,
driving significant audience growth. In
2016, she also oversaw the strategic
acquisition of Wireless, the owner of
national radio brands talkSPORT,
talkRADIO and Virgin Radio. Ms. Brooks
is a Director of News Group Newspapers
and Times Newspapers, and a Non-
Executive Director of PA Group, the
parent company of the Press
Association.
Norm Johnston
Non-Executive Director
Norm Johnston has served as a member
of our board of directors since June
2020. Mr. Johnston is a veteran
employee of News Corp. Until recently,
he was the Chief Executive Officer of
Unruly, the digital advertising business
we acquired in January 2020, a position
he has held since April 2018. Mr.
Johnston has been involved in digital
marketing since joining the marketing
industry’s first digital agency, Modem
Media in 1995. In 1997, Mr. Johnston
launched Modem Media UK (“Modem”),
one of Britain’s first and most successful
digital agencies. After Modem was
acquired by Publicis in 2007, Mr.
Johnston joined WPP and GroupM’s
Mindshare, where he held a number of
senior roles between 2007 and 2018,
including Global Chief Digital Officer
and Global Chief Executive Officer of its
FAST business unit, a team of over
2,000 specialists in 115 cities working for
global clients such as Unilever, Nestle
and American Express. Mr. Johnston
holds a B.A. in Economics and Political
Science from Northwestern University
and an M.B.A. in Marketing from Duke
University’s Fuqua School of Business.
17
TREMOR INTERNATIONAL LTD.CORPORATE GOVERNANCEANNUAL REPORT 2020 CORPORATE GOVERNANCE REPORT
The Board is responsible to shareholders
for the effective direction and control of
the Company, with the aim of generating
long-term success for Tremor. This
report describes the framework for
corporate governance and internal
controls that the directors have
established to enable them to carry out
this responsibility.
DELIVER GROWTH
1.Establish a strategy and business
model which promote long-term value
for shareholders
Tremor consistently reiterates its
strategy in its communications, which
include RNS announcements and
presentations to stakeholders, and
particularly at its financial results.
The directors recognise the importance
of high standards of corporate
governance and have chosen to adopt
the Quoted Companies Alliance
Corporate Governance Code (the “QCA
Code”) as the basis of the Company’s
governance framework. This is in line
with the London Stock Exchange’s AIM
Rules requiring all AIM-listed companies
to adopt and comply with a recognised
corporate governance code. As an
Israeli company, the Company also
complies with the corporate governance
provisions of Israel’s Companies Law,
5759-1999 (the “Companies Law”).
In addition, the Company is subject to
the corporate governance rules of the
U.S. Securities and Exchange
Commission (the “SEC”) and Nasdaq as
described in the Company’s filings with
the SEC.
The Board believes that good corporate
governance reduces risks within the
business, promotes confidence and trust
amongst its stakeholders and is an
important part of the effectiveness and
efficiency of the Company’s
management framework.
The QCA Code includes ten broad
principles that the Board strives to
implement in order to deliver on their
responsibilities to the Company’s
shareholders. The table below
references how the Board complies with
the principles of the QCA Code. The
QCA Code can be found on the QCA’s
website: www.theqca.com.
Tremor believes that programmatic
advertising is still an underpenetrated
market that will experience robust
growth over the next decade as ad
budgets continue to shift to digital and
digital continues to shift towards
programmatic execution. Tremor
intends to capitalize on these secular
trends by pursuing growth opportunities
that include:
–
–
–
–
–
–
Focus on Core Areas of Growth in
Video and CTV
Introduce New Products and Invest
in Tremor’s Technology Stack
Strengthen Tremor’s Relationship
with Existing Customers
Expand Tremor’s International
Footprint and United States Market
Share
Continue to Bolster Tremor’s Data
Capabilities
Leverage Tremor’s Industry
Expertise and Target Select
Acquisitions
The key challenges to the business and
how these are mitigated are detailed on
pages 26 to 28 of this report.
Tremor also provides stakeholders with
in-depth reviews of its strategy and how
it manages risks at Capital Markets Days
and investor teach-ins.
2.Seek to understand and meet
shareholder needs and expectations
Tremor encourages dialogue with both
its institutional and private shareholders,
responding quickly and with
transparency to all queries received. The
Company provides the contact details
for its IR advisers on its website. Tremor
also engages with investors via its
brokers, finnCap and Stifel.
Ofer Druker, Tremor’s CEO, and Sagi
Niri, Tremor’s CFO, meet regularly with
institutional investors, usually in relation
to the issuance of financial results, and
both endeavour to accommodate all
meeting requests from investors.
The Board recognises the AGM as an
important opportunity to meet private
shareholders, however the Covid-19
pandemic meant that shareholders were
unable to attend the 2020 AGM in
person. The directors – both non-
executive and executive – are typically
also available to speak to shareholders
informally immediately following the
AGM. The Company’s executive
directors also hosted an investor
presentation in September 2020
specifically to engage with the private
investor community.
Five of Tremor’s six non-executive
directors are UK-based and available to
meet with shareholders as requested.
This includes the Chairman, who liaises
regularly with shareholders
(independent of management) and
seeks to understand voting decisions/
intentions where appropriate. The
Chairman either directly, or indirectly
through Tremor’s broker, regularly
solicits feedback from the Company’s
investors. The Chairman also receives
questions from shareholders and looks
to address them in a timely manner.
Regular reports are provided to the
Board on meetings with shareholders
and any concerns are communicated.
Tremor also seeks to meet the needs of
shareholders on an ad hoc basis where
necessary, such as with webcasts and
separate presentations attended by
analysts and private investors.
18
TREMOR INTERNATIONAL LTD.ANNUAL REPORT 2020 3.Take into account wider stakeholder
and social responsibilities and their
implications for long-term success
Tremor’s management team encourages
employees to share their feedback,
ideas, and thoughts by promoting a
transparent organisational culture and
an “open door” policy. Employees share
their feedback with their managers on a
regular basis one-on-one. Those
participating in the leadership
programmes are asked to share their
thoughts in group discussions and
provide any feedback they might have in
regard to management, culture and the
Company’s actions. The Company also
introduced internal surveys to garner
employee feedback and satisfaction and
to receive suggestions. The Company
shares its list of core values with all
employees, which are the foundation of
its culture: “everything is possible”
(referring to endless and equal
opportunities for personal and
professional growth) and “work hard –
play hard” (which refers to the
importance of diligence and
collaboration).
Staff retention rate is a key
consideration and is a factor in
determining the bonus payment of the
executive directors. Retention is also a
matter reported on to the Board. Each
year (with the exception of 2020 due to
COVID-19), at least one board meeting is
held at the Company’s headquarters in
Israel, when the non-executive directors
interact with the employees and present
to them.
The Company communicates and builds
relationships with external stakeholders
via its marketing efforts, including social
media, events, PR, direct marketing,
online advertising among other
initiatives. The Company offers to meet
with stakeholders at regular events
globally, and occasionally directly
contacts investors to offer meetings.
Tremor has a ‘People & Culture’
programme, which includes providing
employees with opportunities for
volunteering in the community – with a
particular focus on education – such as
tutoring youth at risk and collaborating
with schools that care for
underprivileged children. Tremor also
regularly donates to voluntary
associations.
4.Embed effective risk management,
considering both opportunities and
threats, throughout the organisation
The risks to the business and how these
are mitigated are detailed on pages 26
to 28 and its internal control measures
on pages 23 to 24 of this report.
Both the executive directors and senior
managers are responsible for reviewing
and evaluating risk on an ongoing basis
and the Board considers risks to the
business at every board meeting. The
Board also allocates certain meetings to
have a more in-depth review of strategy
and risk.
The Audit Committee of the Board
consults with external advisers as/when
needed to support execution on
strategy and risk mitigation, such as
holding executive sessions with KPMG
to discuss the audit process and the
manner in which the Company’s finance
team is expanding to address the
significant international growth of the
business.
MAINTAIN A DYNAMIC
MANAGEMENT FRAMEWORK
5.Maintain the Board as a well-
functioning, balanced team led
by the chair
The composition, roles and
responsibilities of the Board and its
committees are set out on pages 21
to 23 of this report. The number of
meetings of the Board and the
committees are also detailed.
High level and in-depth analytic
materials, including the minutes from
the prior meeting, are sent in a timely
manner ahead of each committee or
board meeting allowing Board members
adequate time to review them. After
each meeting, the minutes are sent to
the chair for review and approval. All
directors have direct access to the
advice and services of the Company
Secretary and are able to take
independent professional advice in the
furtherance of the duties, if necessary, at
the Company’s expense.
The composition of the Board is outlined
on pages 21 to 23 of this report.
The time devoted by directors to their
duties varies depending on the activities
of the company. In 2020, the board held
21 meetings. Each year (with the
exception of 2020 due to COVID-19), the
Board typically holds at least one 3-day
meeting to review strategy and interact
with senior managers. All executive
directors work full-time for Tremor and
the non-executive Chairman spends a
minimum of three to four days per
month on Tremor business. This is
primarily typically via in-person
meetings – which in 2020 were hosted
virtually – or phone calls with
management, brokers and shareholders.
The other non-executive directors spend
a minimum of two days per month on
their duties, primarily through typically
formal face-to-face meetings, although
these were also hosted virtually during
2020 and phone calls with management
and other board members.
6.Ensure that between them the
directors have the necessary up-to-
date experience, skills and capabilities
The composition of the Board and the
credentials of the individual directors
are outlined on pages 21 to 23 of this
report. All of the directors remain active
in the media and marketing industry –
working for public and private
companies – which ensures that their
skillsets remain up to date.
The Nomination Committee of the
Board oversees the hiring process and
makes recommendations to the Board
on new board appointments as well as
re-election of existing directors. Where
new board appointments are considered
the search for candidates is conducted,
and appointments are made, on merit,
against objective criteria and with due
regard for the benefits of diversity on
the Board, including gender. The
Nomination Committee also considers
succession planning.
7.Evaluate Board performance based
on clear and relevant objectives,
seeking continuous improvement
The Board currently runs a self-
evaluation process on its effectiveness
and encourages open and transparent
communication.
All directors are subject to re-election
by the shareholders each year
(excluding the external non-executive
directors, which are subject to re-
election every three years, in
accordance with Israeli law).
19
TREMOR INTERNATIONAL LTD.CORPORATE GOVERNANCEANNUAL REPORT 2020 CORPORATE GOVERNANCE REPORT CONTINUED
9.Maintain governance structures
and processes that are fit for purpose
and support good decision-making
by the Board
The Corporate Governance Report on
pages 18 to 20 of this report details the
corporate governance structures and
processes for the Company.
BUILD TRUST
10.Communicate how the company
is governed and is performing
by maintaining a dialogue with
shareholders and other relevant
stakeholders
Tremor describes it communication
practices in its annual report under
‘Relationship with Shareholders’
(page 23 of this report).
The executive directors are subject to an
annual performance review when they
are measured against pre-set criteria.
The Board constantly looks to ensure
that the executive management of the
Company evolves. The Company
conducts a leadership programme to
ensure talent can be promoted within
the business. If there are skills gaps, the
Company looks to fill those externally.
At present, the directors are confident
there is sufficient talent within the
Company to be able to appoint new
leadership from within.
8.Promote a corporate culture that is
based on ethical values and behaviours
Tremor’s ‘People & Culture’ programme
is designed to preserve the culture of
the Company. It includes “lecture of the
month” which is used to present
different private and public social
initiatives that aim to encourage
employee volunteering and social
awareness. Tremor also offers
volunteering opportunities directly to its
employees.
The Company has a ‘Leadership
Programme’ that is designed to facilitate
career progression while promoting
leadership based on Tremor’s core
values and ethical behaviour. Similarly,
the Company’s recruiting efforts and
methods are based on the notion of
being the culture’s gate keepers: aiming
to recruit people who are a cultural fit
and share a common ground of ethical
values and behaviours.
The Company’s senior management
team observes the culture of the
Company in operation at the local
business units (throughout its
geographies) through visits and
maintaining company culture is a matter
discussed by the Board. The Board also
maintains regular dialogue with
company management outside of the
executive directors to monitor the
disposition of the broader employee-
base and ensure the continuation of a
healthy, growth-oriented culture.
20
TREMOR INTERNATIONAL LTD.ANNUAL REPORT 2020 THE BOARD AND COMMITTEES
BOARD OF DIRECTORS
The Board is responsible for the overall
strategy and financial performance of
the Company and has a formal schedule
of matters reserved for its approval. In
order to lead the development of the
strategy of the Company and the
progress of financial performance, the
Board is provided with timely and
comprehensive information that enables
the Board to review and monitor the
performance of the Company and to
ensure the Company is able to achieve
its strategic goals.
BOARD COMPOSITION
The Board is currently comprised of
three executive directors, Ofer Druker,
Yaniv Carmi and Sagi Niri, and six
non-executive directors, Christopher
Stibbs (Chairman of the Board), Neil
Jones, Joanna Parnell, Lisa Klinger,
Rebekah Brooks and Norman Johnston.
The balance between executive and
non-executive directors does not allow
any group to dominate the Board’s
decision making.
Collectively, the non-executive directors
bring a valuable range of expertise in
assisting the Company to achieve its
strategic aims. The effectiveness of the
Board benefits from the following skills
and experience which the current Board
members possess: advertising, media,
finance and accounting, governance,
research and development and
technology expertise.
OPERATION OF THE BOARD
The Company Secretary, Yaniv Carmi,
together with Chief Financial Officer,
Sagi Niri, are responsible for ensuring
that the Company complies with the
statutory and regulatory requirements
and maintains high standards of
corporate governance. They support
and work closely with the Chairman of
the Board, the Chief Executive Officer
and the Board committee chairs in
setting agendas for meetings of the
Board and its committees and support
the transfer of timely and accurate
information flow from and to the Board
and the management of the Company.
The Board holds its meetings in
accordance with its scheduled calendar.
During 2020, the Board met virtually on
21 occasions. The Board also holds
regular telephone calls to update the
members on operational and other
business, and the Board convenes
occasionally for additional updates and
conversations on ad-hoc emerging
matters that arise in-between the
scheduled Board meetings. A majority
of the Board members, which
constitutes the legal quorum for a board
meeting, attended each of the board
meetings. Each board meeting is
preceded by a clear agenda and any
relevant information is provided to
directors in advance of the meeting.
An agreed procedure exists for directors
in the furtherance of their duties to take
independent professional advice. Newly
appointed directors are to be made
aware of their responsibilities through
the Company Secretary. The Company
provides the directors with training
sessions via internal meetings,
presentations and conversations which
are being conducted by Company
advisors, management and other
relevant persons during the year in
order to enable greater awareness and
understanding of the Company’s
business and the environment in which it
operates.
The Board has established properly
constituted Audit, Remuneration,
Nomination and Disclosure Committees
of the Board with formally delegated
duties and responsibilities.
AUDIT COMMITTEE
Responsibilities
The Audit Committee has responsibility
for ensuring that the financial
performance of the Company is
properly reported on and reviewed, and
its role includes monitoring the integrity
of the financial statements of the
Company (including annual and interim
accounts and results announcements),
reviewing internal control and risk
management systems, reviewing any
changes to accounting policies,
reviewing and monitoring the extent of
the non-audit services undertaken by
external auditors and advising on the
appointment of external auditors.
In addition, under the Companies Law,
the Audit Committee is required to
monitor the effectiveness of the internal
control environment of the Company,
including consulting with the internal
auditor and independent accountants,
to review, classify and approve related
party transactions and extraordinary
transactions, to review taxation and
transfer pricing, to review the internal
auditor’s audit plan and to establish and
monitor whistle-blower procedures.
Audit Committee Composition
The UK Corporate Governance Code
recommends that an audit committee
should comprise at least three members
who are independent non-executive
directors, and that at least one member
should have recent and relevant
financial experience.
The Audit Committee comprises Neil
Jones, Joanna Parnell and Norman
Johnston, and is chaired by Neil Jones.
Following the appointment of Lisa
Klinger to the Board in April 2021, Ms
Klinger is expected to replace Norman
Johnston as a member of the Audit
Committee and subsequently succeed
Mr Jones as the Chair of the Audit
Committee.
Operation of the Audit Committee
The Committee operates under written
terms of reference and meets at least
twice a year with the Company’s
external auditors, and with the Executive
Directors present by invitation only. The
Committee meets with the external
auditors without the Executive Directors
present as it considers appropriate.
During 2020, the Committee met on two
occasions. A majority of the Committee
members, which constitutes the legal
quorum for a Committee meeting,
attended each of the Committee
meetings. Each Committee meeting is
preceded by a clear agenda and any
relevant information is provided to the
Committee members in advance of the
meeting.
21
TREMOR INTERNATIONAL LTD.CORPORATE GOVERNANCEANNUAL REPORT 2020 THE BOARD AND COMMITTEES CONTINUED
Among others, the Committee reviewed
the financial performance and approved
the 2019 annual financial statements and
the H1 2020 financial statements of the
Company, recommended the
reappointment of KPMG as group
auditors, and hosted an executive
session with KPMG. In addition, the
reappointment of KPMG as group
auditors was also approved at the
Company’s 2020 Annual General
Meeting.
REMUNERATION COMMITTEE
Responsibilities
The Remuneration Committee has
responsibility for determining, within the
agreed terms of reference, the
Company’s policy on the remuneration
packages of the Company’s Chief
Executive Officer, the Chairman of the
Board, the executive and non-executive
directors, the Company Secretary and
other senior executives. The
Remuneration Committee also has
responsibility for: (i) recommending to
the Board a remuneration policy for
directors and executives and monitoring
its implementation; (ii) approving and
recommending to the Board and the
Company’s shareholders, the total
individual remuneration package of the
Chairman of the Board, each executive
and non-executive director and the
Chief Executive Officer (including
bonuses, incentive payments and share
options or other share awards); and (iii)
approving and recommending to the
Board the total individual remuneration
package of the Company Secretary and
all other senior executives (including
bonuses, incentive payments and share
options or other share awards), in each
case within the terms of the Company’s
policy and in consultation with the
Chairman of the Board and/or the Chief
Executive Officer. No director or
manager may be involved in any
discussions as to their own
remuneration.
Remuneration Committee Composition
The UK Corporate Governance Code
recommends that a remuneration
committee should comprise at least
three members who are independent
non-executive directors. The
Remuneration Committee comprises
Joanna Parnell, Neil Jones and Norman
Johnston, and is chaired by Joanna
Parnell. Following the appointment of
Lisa Klinger to the Board in April 2021,
Ms Klinger is expected to replace
Norman Johnston as a member of the
Remuneration Committee, and Mr Jones
will succeed Ms Parnell as the Chair of
the Remuneration Committee.
Operation of the
Remuneration Committee
The Committee operates under written
terms of reference.
During 2020, the Committee met on five
occasions. A majority of the Committee
members, which constitutes the legal
quorum for a Committee meeting,
attended each of the Committee
meetings. Each Committee meeting is
preceded by a clear agenda and any
relevant information is provided to the
Committee members in advance of the
meeting.
During these meetings the Committee
reviewed and recommended to the
Board the remuneration package for Mr
Niri, who was appointed Chief Financial
Officer, and subsequently Executive
Director, in 2020, and approved the
2019 KPI achievements and set the 2020
KPI goals for the executive directors and
management. The Committee also
reviewed and recommended to the
Board grant of equity incentive awards
to the Company’s management and
employees, including Mr Niri, and the
amendment to the vesting terms and
exercise price of employee options. The
Committee also determined and agreed
with the Board the Company’s
remuneration philosophy and the
principles of its remuneration policy for
executives, ensuring that these are in
line with the business strategy,
objectives, values and long-term
interests of the Company and comply
with all regulatory requirements.
NOMINATION COMMITTEE
Responsibilities
The Nomination Committee has
responsibility for reviewing the
structure, size and composition
(including the skills, knowledge and
experience) of the Board, and giving full
consideration to succession planning. It
also has responsibility for
recommending new appointments to
the Board.
Nomination Committee Composition
The UK Corporate Governance Code
recommends that a nomination
committee should comprise at least
three members who are independent
non-executive directors. The
Nomination Committee comprises
Christopher Stibbs, Neil Jones and
Joanna Parnell, and is chaired by
Christopher Stibbs.
Operation of the
Nomination Committee
The Committee operates under written
terms of reference. During 2020, the
Committee met on three occasions. A
majority of the Committee members,
which constitutes the legal quorum for a
Committee meeting, attended the
Committee meeting. Each Committee
meeting is preceded by a clear agenda
and any relevant information is provided
to the Committee members in advance
of the meeting.
During these meetings, the Committee
reviewed and recommended to the
Board the re-election of executive
directors, Ofer Druker, Yaniv Carmi and
Sagi Niri and non-executive directors,
Tim Weller, Neil Jones, Joanna Parnell,
Rebekah Brooks, and the election of
executive director Sagi Niri and the
non-executive director Norman
Johnston, which was approved at the
Company’s 2020 Annual General
Meeting. Ofer Druker, Yaniv Carmi and
Sagi Niri and, non-executive directors,
Christopher Stibbs, Rebekah Brooks and
Norman Johnston will be standing for
re-election at the forthcoming Annual
General Meeting. The Nomination
Committee also recommended in 2020
the appointment of Christopher Stibbs
as Tremor’s new non-executive chairman
to replace Tim Weller who retired in
2020.
22
TREMOR INTERNATIONAL LTD.ANNUAL REPORT 2020 The Nomination Committee’s members
believe that the directors put forward
for re-election at the forthcoming
Annual General Meeting continue to be
effective and demonstrate commitment
to their role.
DISCLOSURE COMMITTEE
Responsibilities
The Disclosure Committee has
responsibility for assisting the Board in
fulfilling its responsibilities in respect of
the requirement to make timely and
accurate disclosure of all information
that is required to be disclosed to meet
legal and regulatory obligations,
including compliance with MAR.
The Disclosure Committee comprises
Christopher Stibbs, Neil Jones and Sagi
Niri, and is chaired by Christopher
Stibbs.
Operation of the Disclosure Committee
The Committee operates under written
terms of reference. A majority of the
Committee members (including one
non-executive director) constitutes the
legal quorum for a Committee meeting.
Information is provided to the
Committee members in advance of the
meeting. During 2020, the Committee
met on one occasion, to review and
approve the 2019 results announcement.
BOARD AND COMMITTEES
EVALUATION
The performance of the Board, its
committees and individual members is
assessed on an evaluation of Board
performance survey conducted on an
annual basis via questionnaire and
detailed Board discussion. An
implementation plan is then actioned for
any matters arising.
CONFLICTS OF INTEREST
The Company has procedures for the
disclosure and review of any conflicts, or
potential conflicts, of interest in
compliance with the Companies Law,
which the directors may have and for
the authorization of such conflict
matters by the Board.
Under the Companies Law, any
transaction of the Company with a
director or any transaction of the
Company in which a director has a
personal interest requires the approval
of the Board. The transaction must not
be approved if it is not in the Company’s
best interest. If the transaction is an
extraordinary transaction (i.e. a
transaction that is not in the ordinary
course of business, that is not on market
terms or that is likely to have a material
impact on a company’s profitability,
assets or liabilities), then Audit
Committee approval is required in
addition to Board approval.
If the transaction concerns exculpation,
indemnification, insurance or
remuneration of the director, then the
approvals of the Remuneration
Committee, the Board and the
shareholders by way of ordinary
resolution are required (in that order).
A director who has a personal interest in
a matter that is considered at a meeting
of the Board, the Audit Committee or
the Remuneration Committee may not
attend that meeting or vote on that
matter, unless a majority of the Board,
the Audit Committee or the
Remuneration Committee, as applicable,
has a personal interest in the matter. If a
majority of the Board, the Audit
Committee or the Remuneration
Committee, as applicable, has a
personal interest in the transaction, then
shareholder approval, by way of
ordinary resolution, is also required. The
authorisation of a conflict matter, and
the terms of authorisation, may be
reviewed at any time by the Board.
The Board considers that these
procedures are operating effectively.
There have been no matters of a
material nature arising requiring
assessment by the Board as a potential
conflict during the year.
RELATIONSHIP WITH SHAREHOLDERS
The Company encourages the
participation of both institutional and
private investors. The Chief Executive
Officer and Chief Financial Officer meet
regularly with institutional investors,
usually in regard to the issuance of half
and full year results. Communication
with private individuals is maintained
through the Annual General Meeting
and the Company’s annual and interim
reports. In addition, further details on
the strategy and performance of the
Company can be found on its website
(www.tremorinternational.com), which
includes copies of the Company’s press
releases.
Regular updates are provided to the
Board on meetings with shareholders
and analysts, and brokers’ opinions.
Non-executive directors are available to
meet major shareholders, if required.
Investors are also encouraged to
contact the Company’s Investor
Relations advisors, Vigo
Communications.
INTERNAL CONTROLS
The Board maintains full control and
direction over appropriate strategic,
financial, organisational and compliance
issues. The Company’s organisational
structure has clearly defined lines of
authority, responsibility and
accountability, which is reviewed
regularly. The annual budget and
forecasts are reviewed by the Board
prior to approval being given. This
includes the identification and
assessment of the business risks
inherent in the Company and the digital
media industry as a whole along with
associated financial risks.
23
TREMOR INTERNATIONAL LTD.CORPORATE GOVERNANCEANNUAL REPORT 2020 THE BOARD AND COMMITTEES CONTINUED
AUDIT AND AUDITOR INDEPENDENCE
An additional responsibility of the Audit
Committee is to keep under review the
scope and cost effectiveness of the
external audit. This includes
recommending to the Board the
appointment of the external auditors
and reviewing the scope of the audit,
approving the audit fee and, on an
annual basis, the Committee being
satisfied that the auditors are
independent.
Somekh Chaikin, member firm of KPMG
International, is retained to perform
audit and audit-related work on the
Company and its subsidiaries. The Audit
Committee monitors the nature and
extent of non-audit work undertaken by
the auditors. It is satisfied that there are
adequate controls in place to ensure
auditor independence and objectivity.
Periodically, the Audit Committee
monitors the cost of non-audit work
undertaken by the auditors. The Audit
Committee considers that it is in a
position to take action if at any time it
believes that there is a risk of the
auditors’ independence being
undermined through the award of
this work.
The Board has overall responsibility for
the Company’s systems of internal
control and for monitoring their
effectiveness. Although no system of
internal control can provide absolute
assurance against material misstatement
or loss, the Company’s systems are
designed to provide the directors with
reasonable assurance that issues are
identified on a timely basis and dealt
with appropriately. The Company’s key
internal financial control procedures
include:
• a review by the Board of actual
results compared with budget and
forecasts;
• reviews by the Board of year-end
forecasts;
• the establishing of procedures for
acquisitions, capital expenditure
and expenditure incurred in the
ordinary course of business;
• the appraisal and approval of
proposed acquisitions; and
• the appointing of experienced and
suitably qualified staff to take
responsibility for key business
functions to ensure maintenance of
high standards of performance.
The external auditors are engaged to
express an opinion on the financial
statements. They discuss with
management the reporting of
operational results and the financial
condition of the Company, to the extent
necessary to express their audit opinion.
In accordance with Companies Law, the
Board must appoint an internal auditor
nominated following the
recommendation of the Audit
Committee. The primary role of the
internal auditor is to examine whether a
company’s actions comply with the law
and proper business procedure. The
internal auditor may be an employee of
the Company but may not be an
interested party or office holder, or a
relative of any interested party or office
holder and may not be a member of the
Company’s independent accounting
firm or its representative. The
Company’s internal auditor is Yisrael
Gewirtz (Fahn Kanne Control
Management Ltd., Grant Thornton
Israel).
24
TREMOR INTERNATIONAL LTD.ANNUAL REPORT 2020 TAKEOVERS & MERGERS
As the Company is incorporated in Israel,
it is subject to Israeli law and the City
Code on Takeovers and Mergers does
not apply to the Company, except to the
extent share control limits are
incorporated into the Company’s Articles
of Association.
MERGERS
The Companies Law permits merger
transactions, provided that each party to
the transaction obtains the approval of
its board of directors and shareholders
(excluding certain merger transactions
which do not require the approval of the
shareholders, as set forth in the
Companies Law).
Pursuant to the Company’s Articles of
Association, the shareholders of the
Company are required to approve the
merger by the affirmative vote of a
majority of the Ordinary Shares of the
Company represented at the
shareholders meeting in person or by
proxy and voting thereon. In addition, for
purposes of the shareholder vote of each
party, the merger will not be deemed
approved if a majority of the shares not
held by the other party, or by any person
who holds 25 per cent. or more of the
shares or the right to appoint 25 per
cent. or more of the directors of the
other party, has voted against the
merger.
The Companies Law requires the parties
to a proposed merger to file a merger
proposal with the Israeli Registrar of
Companies, specifying certain terms of
the transaction. Each merging
company’s board of directors and
shareholders must approve the merger.
Shares in one of the merging companies
held by the other merging company or
certain of its affiliates are
disenfranchised for purposes of voting
on the merger. A merging company
must inform its creditors of the proposed
merger. Any creditor of a party to the
merger may seek a court order blocking
the merger, if there is a reasonable
concern that the surviving company will
not be able to satisfy all of the
obligations of the parties to the merger.
Moreover, a merger may not be
completed until at least 50 days have
passed from the time that the merger
proposal was filed with the Israeli
Registrar of Companies and at least 30
days have passed from the approval of
the shareholders of each of the merging
companies.
In addition, the provisions of the
Companies Law that deal with
‘‘arrangements’’ between a company
and its shareholders may be used to
effect squeeze-out transactions in which
the target company becomes a wholly-
owned subsidiary of the acquirer. These
provisions generally require that the
merger be approved by a majority of the
participating shareholders holding at
least 75 per cent. of the shares voted on
the matter, as well as 75 per cent. of
each class of creditors. In addition to
shareholder approval, court approval of
the transaction is required.
Under the Companies Law, in the event
the Company enters into a merger or an
“arrangement” under the Companies
Law (as described above), the provisions
of the Companies Law and the Articles
of Association rules with respect to
tender offers (as described below) do
not apply.
A special tender offer must be extended
to all shareholders of a company, but the
offeror is not required to purchase
shares representing more than 5 per
cent. of the voting power attached to the
company’s outstanding shares,
regardless of how many shares are
tendered by shareholders. A special
tender offer may be consummated only
if (i) at least 5 per cent. of the voting
power attached to the company’s
outstanding shares will be acquired by
the offeror and (ii) the number of shares
tendered in the offer exceeds the
number of shares whose holders
objected to the offer.
If a special tender offer is accepted, then
the purchaser or any person or entity
controlling it or under common control
with the purchaser or such controlling
person or entity may not make a
subsequent tender offer for the
purchase of shares of the target
company and may not enter into a
merger with the target company for a
period of one year from the date of the
offer, unless the purchaser or such
person or entity undertook to effect
such an offer or merger in the initial
special tender offer. Shares that are
acquired in violation of this requirement
to make a tender offer will be deemed
Dormant Shares (as defined in the
Companies Law) and will have no rights
whatsoever for so long as they are held
by the acquirer.
SPECIAL TENDER OFFER
The Companies Law provides that an
acquisition of shares of a public Israeli
company must be made by means of a
special tender offer if, as a result of the
acquisition, the purchaser could become
a holder of 25 per cent. or more of the
voting rights in the Company. This rule
does not apply if there is already
another holder of at least 25 per cent.
of the voting rights in the Company.
Similarly, the Companies Law provides
that an acquisition of shares in a public
company must be made by means of a
tender offer if, as a result of the
acquisition, the purchaser could become
a holder of more than 45 per cent. of the
voting rights in the company, if there is
no other shareholder of the company
who holds more than 45 per cent. of the
voting rights in the company.
FULL TENDER OFFER
Under the Companies Law, a person may
not purchase shares of a public company
if, following the purchase, the purchaser
would hold more than 90 per cent. of the
company’s shares or of any class of
shares, unless the purchaser makes a
tender offer to purchase all of the target
company’s shares or all the shares of the
particular class, as applicable. If, as a
result of the tender offer, either:
• the purchaser acquires more than
95 per cent. of the company’s
shares or a particular class of shares
and a majority of the shareholders
that did not have a Personal Interest
accepted the offer; or the
appointing of experienced and
suitably qualified staff to take
responsibility for key business
functions to ensure maintenance of
high standards of performance.
• the purchaser acquires more than
98 per cent. of the company’s
shares or a particular class of
shares;
then, the Companies Law provides that
the purchaser automatically acquires
ownership of the remaining shares.
However, if the purchaser is unable to
purchase more than 95 per cent. or 98
per cent., as applicable, of the
company’s shares or class of shares, the
purchaser may not own more than 90
per cent. of the shares or class of shares
of the target company.
25
TREMOR INTERNATIONAL LTD.CORPORATE GOVERNANCEANNUAL REPORT 2020 DIRECTORS’ REPORT
PRINCIPAL ACTIVITIES
We are a global company offering an
end-to-end software platform that
enables advertisers to reach relevant
audiences and publishers to maximize
yield on their digital advertising
inventory. We use our proprietary
technology to deliver impactful brand
stories to target audiences through
digital ad technology and advanced
audience data. Our omni-channel
capabilities deliver global advertising
campaigns across all formats and
channels, with an expertise in video
format ads on all devices (“Video”)
and Connected TV (“CTV”).
BUSINESS REVIEW
The information that fulfils the
requirements of the business review,
including details of the 2020 results,
principal risks and uncertainties are set
out in the Chairman’s, Chief Executive
Officer’s and Chief Financial Officer’s
statements on pages 4 to 5, 8 to 10 and
14 to 15 as issued on 10 March 2021 and
in this Directors’ Report.
DIRECTORS
The following Directors held office as
indicated below for the year ended 31
December 2020 and up to the date of
signing the consolidated financial
statements except where otherwise
shown.
Christopher Stibbs – Non-Executive
Chairman (Throughout 2020-present,
appointed Chairman on 1 September
2020, previously Non-Executive
Director)
Ofer Druker – Chief Executive Officer
(Throughout 2020-present)
Yaniv Carmi – Chief Operating Officer
(Throughout 2020-present)
Sagi Niri – Chief Financial Officer
(Appointed 18 June 2020-present)
Joanna Parnell – Non-Executive Director
(Throughout 2020-present)
Neil Jones – Non-Executive Director
(Throughout 2020-present)
Rebekah Brooks – Non-Executive
Director (Appointed 31 March
2020-present)
Norman Johnston – Non-Executive
Director (Appointed 18 June
2020-present)
Lisa Klinger – Non-Executive Director
(Appointed 30 April 2021-present)
Tim Weller – Non-Executive Chairman
(Resigned 31 August 2020)
DIRECTORS’ REMUNERATION
AND INTERESTS
The Remuneration Report is set out on
pages 29 to 30. It includes details of
Directors’ remuneration, interests in the
Ordinary Shares of the Company and
share options.
CORPORATE GOVERNANCE
The Board’s Corporate Governance
Report is set out on pages 18 to 20.
DIRECTORS’ RESPONSIBILITIES
The Companies Law requires the
Directors to prepare financial
statements for each financial year which
give a true and fair view of the state of
affairs of the Company as at the end of
the relevant financial year pursuant to
applicable accounting standards.
The Directors, after considering the risks
and uncertainties and after reviewing
the Company’s operating budgets,
investment plans and financing
arrangements, consider that the
Company has sufficient resources at
their disposal to continue their
operations for the foreseeable future.
Accordingly, the financial statements
have been prepared on a going concern
basis.
PRINCIPLE RISKS AND
UNCERTAINTIES
The Directors assess and monitor the
key risks of the business on an ongoing
basis. Following are the principal risks
and uncertainties that could have a
material effect on the Company’s
performance:
Risks Relating to Tremor’s Business
• Our success and revenue growth is
dependent on adding new
advertisers and publishers,
effectively educating and training
our existing advertisers and
publishers on how to make full use
of our platform and increasing
usage of our platform by advertisers
and publishers.
• Our business depends on our ability
to maintain and expand access to
advertising spend, including spend
from a limited number of DSPs,
agencies and advertisers.
• Our business depends on our ability
to maintain and expand access to
valuable inventory from publishers,
including our largest publishers.
• If we fail to make the right
investment decisions in our
platform, or if we fail to innovate
and develop new solutions that are
adopted by advertisers and
publishers, we may not attract and
retain advertisers and publishers,
which could have an adverse effect
on our business, results of
operations and financial condition.
• Significant parts of our business
depend on relationships with data
providers for data sets used to
deliver targeted campaigns.
• Our business depends on our ability
to collect, use and disclose certain
data, including CTV data, to deliver
advertisements. Any limitation
imposed on our collection, use or
disclosure of this data could
significantly diminish the value of
our platform and cause us to lose
publishers, advertisers and revenue.
Consumer tools, regulatory
restrictions and technological
limitations all threaten our ability to
use and disclose data.
• If the use of third-party “cookies,”
mobile device IDs, CTV data
collection or other tracking
technologies is restricted without
similar or better alternatives (and
adoption of such alternatives), our
platform’s effectiveness could be
diminished and our business, results
of operations and financial
condition could be adversely
affected.
• Our failure to meet content and
inventory standards and provide
services that our advertisers and
publishers trust could harm our
brand and reputation and
negatively impact our business,
operating results and financial
condition.
• We must grow rapidly to remain a
market leader and to accomplish
our strategic objectives. If we fail to
grow, or fail to manage our growth
effectively, the value of our
company may decline.
• The market for programmatic
buying for advertising campaigns is
relatively new and evolving. If this
market develops slower or
differently than we expect, our
business, operating results and
financial condition could be
adversely affected.
26
TREMOR INTERNATIONAL LTD.ANNUAL REPORT 2020 • The extent to which the ongoing
COVID-19 pandemic, including the
resulting global economic
uncertainty, and measures taken in
response to the pandemic, could
adversely affect our business,
results of operations and financial
condition will depend on future
developments, which are highly
uncertain and difficult to predict.
• Any decrease in the use of the
advertising or publishing channels
that we primarily depend on, or
failure to expand into emerging
channels, could adversely affect our
business, results of operations and
financial condition.
• If CTV develops in ways that
prevent advertisements from being
delivered to consumers, our
business, results of operations and
financial condition may be adversely
affected.
• The market in which we participate
is intensely competitive, and we
may not be able to compete
successfully with our current or
future competitors.
• Seasonal fluctuations in advertising
activity could have a material
impact on our revenue, cash flow
and operating results.
• If we do not effectively grow and
train our sales and support teams,
we may be unable to add new
customers or increase usage of our
platform by our existing customers
and our business will be adversely
affected.
• The United Kingdom’s withdrawal
from the European Union may have
a negative effect on global
economic conditions, financial
markets and our business.
• If we fail to detect or prevent fraud
on our platform, or malware
intrusion into the systems or devices
of our publishers and their
consumers, publishers could lose
confidence in our platform and we
could face legal claims that could
adversely affect our business,
results of operations and financial
condition.
• If the use of digital advertising is
rejected by consumers, through
opt-in, opt-out or ad-blocking
technologies or other means, it
could have an adverse effect on our
business, results of operations and
financial condition.
• We must scale our platform
infrastructure to support
anticipated growth and transaction
volume. If we fail to do so, we may
limit our ability to process inventory
and we may lose revenue.
• Disruptions to service from our
third-party data center hosting
facilities and cloud computing and
hosting providers could impair the
delivery of our services and harm
our business.
• We face potential liability and harm
to our business based on the human
factor of inputting information into
our platform.
• Any failure to protect our
intellectual property rights could
negatively impact our business.
Risks Relating to the Market in
Which We Operate
• If the non-proprietary technology,
software, products and services
that we use are unavailable, have
future terms we cannot agree to or
do not perform as we expect, our
business, operating results and
financial condition could be harmed.
• Our revenue and results of
operations are highly dependent on
the overall demand for advertising.
Factors that affect the amount of
advertising spending, such as
economic downturns and the
COVID-19 pandemic, can make it
difficult to predict our revenue and
could adversely affect our business,
results of operations and financial
condition.
Risks Relating to Our Employees
and Location in Israel
• Our long-term success depends on
our ability to operate internationally
making us susceptible to risks
associated with cross-border sales
and operations.
• We depend on our executive
officers and other key employees,
and the loss of one or more of these
employees could harm our business.
• Inability to attract and retain other
highly skilled employees could harm
our business.
• Conditions in Israel could materially
and adversely affect our business.
• Your rights and responsibilities as
our shareholder will be governed by
Israeli law, which may differ in some
respects from the rights and
responsibilities of shareholders of
U.K. companies.
• It may be difficult to enforce a U.K.
judgment against us, our officers
and directors in Israel or the U.K., or
to assert U.K. securities laws claims
in Israel or serve process on our
officers and directors.
Risks Relating to Our Financial Position
• Our operating history makes it
difficult to evaluate our business
and prospects and may increase the
risk associated with your
investment.
• We often have long sales cycles,
which can result in significant time
and investment between initial
contact with a prospect and
execution of an agreement with an
advertiser or publisher, making it
difficult to project when, if at all, we
will obtain new advertisers or
publisher and when we will generate
revenue from them.
• We are subject to payment-related
risks and, if our advertisers do not
pay or dispute their invoices, our
business, financial condition and
operating results may be adversely
affected.
• Future acquisitions or strategic
investments could be difficult to
identify and integrate, divert the
attention of management, and
could disrupt our business, dilute
shareholder value and adversely
affect our business, results of
operations and financial condition.
27
TREMOR INTERNATIONAL LTD.CORPORATE GOVERNANCEANNUAL REPORT 2020 DIRECTORS’ REPORT CONTINUED
RESEARCH AND DEVELOPMENT
All three of the Company’s revenue
streams rely on the use of technological
tools and in particular, machine learning
that leverages data for real-time
bidding. In the opinion of the Directors,
continuity of investment in this area is
essential for the maintenance of the
Company’s market position and for
future growth. Tremor’s research and
development team is predominantly
based at the Company’s headquarters in
Israel and in the US. In Tel Aviv, Tremor
has c. 33 R&D staff and in the US,
Tremor has c.54 R&D personnel across a
number of locations including New York.
Research and development expenses
during the year were $33.1 million
(2019: $33.1 million).
SHARE CAPITAL AND
SUBSTANTIAL SHAREHOLDINGS
Details of the share capital of the
Company as at 31 December 2020 are
set out in Note 3 to the consolidated
financial statements.
INDEPENDENT AUDITORS
The Audit Committee of the Board of
Directors reviews annually the quality
and cost effectiveness of the external
audit and the independence and
objectivity of the external auditors.
KPMG Somekh Chaikin was engaged to
perform the 2020 audit. The total fee
paid to the Company’s auditors for audit
services rendered to the Company
during that year was $555,000.
SHAREHOLDERS
At 18 June 2021, the total issued and outstanding number of Ordinary Shares
were 149,728,168 and 28,891,296 Ordinary Shares were held in treasury as
dormant shares.
The following held 3% or more of the ordinary share capital of Tremor:
Shareholders
Mithaq Capital SPC
Toscafund Asset Management
Schroder Investment Management
News Corp
JB Capital Partners
Hargreaves Lansdown Asset Management
Interactive Investor
River & Mercantile Asset Management
Amount
31,500,000
21,712,529
19,884,735
8,525,323
5,561,531
5,209,121
4,938,252
4,918,920
%
21.0%
14.5%
13.3%
5.7%
3.7%
3.5%
3.3%
3.3%
Please Note: Any of the new shareholders in the IPO is holding over 3% of the ordinary share capital of Tremor
Risks Relating to Legal or
Regulatory Constraints
• We are subject to regulation with
respect to political advertising,
which lacks clarity and uniformity.
• We are subject to laws and
regulations related to data privacy,
data protection and information
security and consumer protection
across different markets where we
conduct our business, including in
the United States, the European
Economic Area (“EEA”) and the
United Kingdom and industry
requirements and such laws,
regulations and industry
requirements are constantly
evolving and changing.
• We face potential liability and harm
to our business based on the nature
of our business and the content on
our platform.
• We are subject to anti-bribery,
anti-corruption and similar laws and
non-compliance with such laws can
subject us to criminal penalties or
significant fines and harm our
business and reputation.
The Company’s risk management
methods rely on a combination of
internally-developed controls and
monitoring and observation of market
behaviour. Commercial risks are
managed through Tremor’s
technological lead as well as through
establishing partnerships with key
publishers, and Tremor Video DSP is
also focused on establishing and
maintaining exclusive relationships with
key data providers. The Company
invests significant resources in research
to continually develop its technology to
enhance its offer and algorithms. Its
ability to address and align to industry
changes with speed and flexibility has
been demonstrated, particularly with
the successful transition to become a
mobile-focused business.
Regarding data protection regulation,
and GDPR specifically, Tremor is
committed to data protection
compliance throughout its offering and
is taking all steps necessary to ensure a
structured approach to managing its
business. The relevant aspects have
been reviewed, and necessary actions
have been taken. Tremor will continue to
update and implement ongoing review,
processes and policies in order to meet
industry developments and ensure
Tremor satisfies the requirements under
the applicable law.
28
TREMOR INTERNATIONAL LTD.ANNUAL REPORT 2020 REMUNERATION REPORT
DIRECTORS’ REMUNERATION
The Board recognises that Directors’
remuneration is of legitimate interest to
the shareholders. The Company
operates within a competitive
environment, performance depends on
the individual contributions of the
Directors and employees and it believes
in rewarding vision and innovation. As
an Israeli company listed on the AIM
market of the London Stock Exchange,
the Company is not required to comply
with the requirements of Schedule 8 to
the Large and Medium-sized Companies
and Groups (Accounts and Reports)
Regulations 2008.
POLICY ON DIRECTORS’
REMUNERATION
The policy of the Board is to provide
executive remuneration packages
designed to attract, motivate and retain
Directors of the calibre necessary to
maintain the Company’s position. It aims
to provide sufficient levels of
remuneration to do this, but to avoid
paying more than is necessary. The
remuneration will also reflect the
Director’s responsibilities.
REMUNERATION
The remuneration of the Directors in
2020 was as follows (all amounts in GBP
– NIS 4.413: GBP 1, USD 1.285: GBP):
Christopher Stibbs*
89,949
Ofer Druker
Yaniv Carmi
Sagi Niri**
Neil Jones
Joanna Parnell
Rebekah Brooks***
Norman Johnston****
Tim Weller*****
‘4,409,816
2,252,540
917,863
58,248
53,156
33,648
22,396
102,160
* Appointed Chairman of the Board on 1 September
2020, previously Non-executive Director
** Appointed to the Board on 18 June 2020
***Appointed Non-executive Director 31 March 2020
**** Appointed Non-executive Director 18 June 2020
***** Resigned 31 August 2020
29
TREMOR INTERNATIONAL LTD.CORPORATE GOVERNANCEANNUAL REPORT 2020 REMUNERATION REPORT CONTINUED
REMUNERATION OF EXECUTIVES AND OTHER MANAGERS
The remuneration of the Company’s five most highly compensated executives and managers (including two of its executive
directors) in 2020 was as follows (all amounts in GBP):
Ofer Druker
Yaniv Carmi
Assaf Suprasky
Anthony Flaccavento
Sagi Niri
NEW GRANTS DURING THE PERIOD
As of 28 May 2021:
Base
salary
Bonus
Share-
based
Total
481,276
481,276
3,447,265
4,409,816
409,048
327,238
1,516,254 2,252,540
270,244
282,817
1,010,133
1,563,193
298,596
186,588
441,476
926,660
257,073
98,294
562,496
917,863
During 2020, the Group granted 1,801 thousand share options and 8,701 thousand Restricted Share Units (RSUs) and Performance
Stok Units (PSUs) to its executive officers and employees from outstanding awards under Tremor’s equity incentive plans.
Number of
Restricted
Share Units
(RSUs) and
Performance
stock units
(PSUs) granted
Total
number of
Restricted
Share Units
(RSUs) and
Performance
stock units
(PSUs) held
Nil
Nil
959,680
490,538
600,000
420,000
Number of
ordinary
shares
under
option,
RSUs and
PSUs
Number of
ordinary
shares
2,751,805
959,680
1,210,661
490,538
176,400
420,000
Nil
5,000
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Percentage
holding of
Total
Voting
Rights
Percentage
holding on
a fully
diluted
basis
1.84%
0.81%
0.12%
Nil
2.36%
1.08%
0.38%
Nil
0.00%
0.00%
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Director
Ofer Druker*
Yaniv Carmi**
Sagi Niri
*Ofer Druker exercised 2,867,232 RSU/PSU during 2020
** Yaniv Carmi exercised 1,177,293 RSU/PSU during 2020
DIRECTORS’ AND RELATED PARTIES INTERESTS
As of 18 June 2021:
Ofer Druker
Yaniv Carmi
Sagi Niri
Joanna Parnell
Neil Jones
Christopher Stibbs
Rebekah Brooks***
Norman Johnston****
Lisa Klinger
***Appointed Non-executive Director 31 March 2020
**** Appointed Non-executive Director 18 June 2020
30
TREMOR INTERNATIONAL LTD.ANNUAL REPORT 2020 AUDITORS' REPORT TO THE SHAREHOLDERS
OF TREMOR INTERNATIONAL LTD.
FINANCIAL STATEMENTS
In our opinion, the consolidated financial
statements referred to above present
fairly, in all material respects, the
consolidated financial position of the
Company and its subsidiaries as of
December 31, 2020 and 2019 and their
results of operations, changes in
shareholders’ equity and cash flows for
each of the two years in the period
ended December 31, 2020, in
accordance with International Financial
Reporting Standards (IFRS).
Somekh Chaikin
Certified Public Accountants (Isr.)
Member Firm of KPMG International
March 10, 2021
We have audited the accompanying
consolidated statements of financial
position of Tremor International Ltd.
and its subsidiaries (hereinafter – “the
Company”) as of December 31, 2020
and 2019 and the related consolidated
statements of operation and other
comprehensive income, statements of
changes in shareholders’ equity and
statements of cash flows, for each of
the two years in the period ended
December 31, 2020. These financial
statements are the responsibility of the
Company's Board of Director and of its
Management. Our responsibility is to
express an opinion on these financial
statements based on our audit.
We conducted our audit in accordance
with generally accepted auditing
standards in Israel, including standards
prescribed by the Auditors Regulations
(Manner of Auditor’s Performance) –
1973. Such standards require that we
plan and perform the audit to obtain
reasonable assurance that the financial
statements are free of material
misstatement. An audit includes
examining, on a test basis, evidence
supporting the amounts and disclosures
in the financial statements. An audit also
includes assessing the accounting
principles used and significant estimates
made by Management, as well as
evaluating the overall financial
statements presentation. We believe
that our audit provides a reasonable
basis for our opinion.
31
TREMOR INTERNATIONAL LTD.ANNUAL REPORT 2020 CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
as at 31 December 2020
Assets:
Cash and cash equivalents
Trade receivables, net
Other receivables
Current tax assets
Total current assets
Fixed assets, net
Right-of-use assets
Intangible assets, net
Deferred tax assets
Other long term assets
Total non-current assets
Total assets
Liabilities and shareholders’ equity
Liabilities:
Current maturities of lease liabilities
Trade payables
Other payables
Current tax liabilities
Total current liabilities
Employee benefits
Long-term lease liabilities
Deferred tax liabilities
Other long term liabilities
Total non-current liabilities
Total liabilities
Shareholders’ equity:
Share capital
Share premium
Other comprehensive income
Retained earnings
Total shareholders’ equity
Note
10
8
8
5
6
7
4
6
9
9
6
4
19(b)
14
Total liabilities and shareholders’ equity
Date of approval of the financial statements: March 10, 2021
The accompanying notes are an integral part of these consolidated financial statements.
32
December 31
2020
USD
thousands
2019
USD
thousands
97,463
153,544
17,615
2,029
79,047
96,829
9,729
3,611
270,651
189,216
3,292
18,657
3,132
21,003
224,500
210,285
31,717
1,834
17,606
1,332
280,000
253,358
550,651
442,574
9,047
125,863
47,122
3,162
9,637
70,428
25,049
3,973
185,194
109,087
495
12,162
15,963
7,824
36,444
221,638
556
14,632
17,687
–
32,875
141,962
380
351
264,831
240,989
3,330
494
60,472
58,778
329,013
300,612
550,651
442,574
TREMOR INTERNATIONAL LTD.ANNUAL REPORT 2020 STATEMENT OF OPERATION AND OTHER COMPREHENSIVE INCOME
for the Year Ended 31 December 2020
Revenues
Expenses
Cost of Revenues (Exclusive of Depreciation and Amortization
shown separately below)
Research and development expenses
Selling and marketing expenses
General and administrative expenses
Depreciation and amortization
Other expenses (income), net
Total expenses
Operating Profit (Loss)
Financing income
Financing expenses
Financing expenses, net
Profit (Loss) before taxes on income
Tax benefit
Profit for the year
Other comprehensive income items:
Foreign currency translation differences for foreign operation
Total other comprehensive income for the year
Total comprehensive income for the year
Earnings per share
Basic earnings per share (in USD)
Diluted earnings per share (in USD)
Note
11a
11b
12
13
4
15
15
The accompanying notes are an integral part of these consolidated financial statements.
Year ended December 31
2020
USD
thousands
2019
USD
thousands
211,920
325,760
59,807
187,246
13,260
68,765
29,678
45,187
1,248
16,168
52,351
34,433
32,359
(700)
217,945
321,857
(6,025)
3,903
(445)
1,862
1,417
(7,442)
9,581
2,139
2,836
2,836
4,975
0.016
0.015
(773)
1,088
315
3,588
2,636
6,224
139
139
6,363
0.056
0.054
33
TREMOR INTERNATIONAL LTD.FINANCIAL STATEMENTSANNUAL REPORT 2020 CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY
for the Year Ended 31 December 2020
Balance as of January 1, 2019
Total Comprehensive income for the year
198
72,663
355
51,053
124,269
Share
capital
Share
premium
Other
com-
prehensive
income
USD thousands
Retained
Earnings
Total
Profit for the year
Other comprehensive Income:
Foreign currency translation
Total comprehensive income for the year
Transactions with owners, recognized directly in
shareholders’ equity
Revaluation of liability for put option on non-
controlling interests
Issuance of shares (net of issuance cost)
Own shares acquired
Share based payments
Exercise of share options
–
–
–
–
184
–
–
–
–
175,166
(41)
(24,696)
–
10
16,042
1,814
–
6,224
6,224
139
139
–
6,224
139
6,363
–
–
–
–
–
1,501
1,501
–
–
–
–
175,350
(24,737)
16,042
1,824
Balance as of December 31, 2019
351
240,989
494
58,778
300,612
Total Comprehensive Income for the year
Profit for the year
Other comprehensive Income:
Foreign Currency Translation
Total comprehensive Income for the year
Transactions with owners, recognized directly in
shareholders’ equity
Issuance of shares in a Business Combination
Revaluation of liability for put option on non–
controlling interests
Own shares acquired
Share based payments
Exercise of share options
–
–
–
25
–
–
–
–
14,092
–
(15)
(9,950)
–
19
18,770
930
–
2,139
2,139
2,836
–
2,836
2,836
2,139
4,975
–
–
–
–
–
–
14,117
(445)
(445)
–
–
–
(9,965)
18,770
949
Balance as of December 31, 2020
380
264,831
3,330
60,472
329,013
The accompanying notes are an integral part of these consolidated financial statements.
34
TREMOR INTERNATIONAL LTD.ANNUAL REPORT 2020 CONSOLIDATED STATEMENTS OF CASH FLOWS
for the Year Ended 31 December 2020
Cash flows from operating activities:
Profit for the year
Adjustments for:
Depreciation and amortization
Net financing expense (income)
Loss on sale of fixed assets
Gain on leases change contracts
Gain on sale of business unit
Share-based payment
Tax benefit
Change in trade and other receivables
Change in trade and other payables
Change in employee benefits
Income taxes received
Income taxes paid
Interest received
Interest paid
Net cash provided by operating activities
Cash flows from investing activities
Change in pledged deposits
Leases Receipt
Repayment of long-term loans
Acquisition of fixed assets
Acquisition and capitalization of intangible assets
Proceeds from sale of intangible assets
Proceeds from sale of business unit
Increase in bank deposit, net
Acquisition of subsidiaries, net of cash acquired
Net cash provided by investing activities
Cash flows from financing activities
Repayment of loans
Acquisition of own shares
Proceeds from exercise of share options
Leases repayment
Net cash used in financing activities
Net increase in cash and cash equivalents
Cash and cash equivalents as of the beginning of year
Effect of exchange rate fluctuations on cash and cash equivalents
Cash and cash equivalents as of the end of year
The accompanying notes are an integral part of these consolidated financial statements.
Year ended December 31
2020
USD
thousands
2019
USD
thousands
2,139
45,187
1,310
3
6,224
32,359
(19)
11
(2,103)
(2,705)
(503)
(700)
14,490
15,809
(9,581)
(2,636)
(39,351)
36,466
25,882
(34,203)
(23)
1,168
(290)
3,184
(2,855)
(8,089)
517
(1,117)
604
(942)
35,163
45,073
229
2,885
817
(594)
(4,858)
–
232
–
6,208
4,919
841
1,669
–
(1,063)
(5,672)
6
–
(57)
23,714
19,438
–
(17,273)
(9,965)
(24,737)
949
1,824
(13,351)
(12,607)
(22,367)
(52,793)
17,715
79,047
701
11,718
67,073
256
97,463
79,047
35
TREMOR INTERNATIONAL LTD.FINANCIAL STATEMENTSANNUAL REPORT 2020
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
as at 31 December 2020
1 GENERAL
a Reporting entity:
Tremor International Ltd. (the “Company” or “Tremor International”), formerly known as Taptica International Ltd., was
incorporated in Israel under the laws of the State of Israel on March 20, 2007. The ordinary shares of the Company are listed on
the AIM Market of the London Stock Exchange. The address of the registered office is 121 Hahashmonaim Street Tel-Aviv, Israel.
Tremor International is a global Company offering an end-to-end software platform that supports a wide range of media types
(e.g., video, display, etc.) and devices (e.g., mobile, Connected TVs, streaming devices, desktop, etc.), creating an efficient
marketplace where advertisers (buyers) are able to purchase high quality advertising inventory from publishers (sellers) at scale.
Tremor Video Inc. (“Tremor Video’’), a wholly owned subsidiary, is the Company’s Demand Side Platform (“DSP”) providing
full-service and self-managed marketplace access to advertisers and agencies in order to execute their digital marketing
campaigns in real time across various ad formats. RhythmOne PLC (“RhythmOne’’) and Unruly Holding Ltd (“Unruly”), both
wholly owned subsidiaries, provide access to the Sell Side Platform (“SSP”) which is designed to monetize digital inventory for
publishers and app developers by enabling their content to have the necessary code and requirements for programmatic
advertising integration. The SSP provides access to significant amounts of data, unique demand and a comprehensive product
suite to drive more effective inventory management and revenue optimization. The Company also provides a Data Management
Platform (“DMP”) solution which integrates both DSP and SSP solutions enabling advertisers and publishers to use data from
various sources in order to optimize results of their advertising campaigns.
Tremor International Ltd. is headquartered in Israel and maintains offices throughout the US, Canada, EMEA and Asia-Pacific.
On April 1, 2019, the Company completed an acquisition transaction with RhythmOne and on January 4, 2020 the Company
completed an acquisition transaction with Unruly, see Note 19b. Following the acquisition of RhythmOne and Unruly, the
Company invested and developed capabilities both in the DSP and SSP solutions which launched in 2020 to offer an end-to-end
platform that provides customers access to an advertising marketplace in an efficient and scalable manner utilizing machine
learning, artificial intelligence and advanced algorithms. As a result of those acquisitions and their influence on the Company’s
operation and other changes in the industry practice, the Company has changed revenue presentation as of 2020 to a net basis
with respect to its programmatic activity (see Note 3k).
The global spread of COVID-19, which was declared a global pandemic by the World Health Organization in March 2020, has
created significant volatility, global macro-economic uncertainty and disruption in the business and financial markets. The
COVID-19 pandemic and efforts to control its spread have curtailed the movement of people, goods, and services worldwide,
including in the regions in which we and our customers and partners operate, and are impacting economic activity and financial
markets. The spread of the COVID-19 pandemic has resulted in, regional quarantines, labor shortages or stoppages, changes in
consumer purchasing patterns, and overall economic instability.
The COVID-19 pandemic has negatively impacted the first half of the year 2020, and may continue to negatively impact, our
revenue and results of operations, the extent and duration of which we may not be able to accurately predict. The Company has
introduced a number of measures to mitigate the impact of COVID-19, including cost-cutting initiatives with respect to reducing
operating expenses, reducing headcount, freezing new hires, as well as accelerating the integration of Unruly which has been
completed two months ahead of schedule. The Company continues to monitor and assess the impact of the COVID-19 pandemic
on its operation, its customers and potential customers.
b Definitions:
In these financial statements –
The Company – Tremor International Ltd.
The Group – Tremor International Ltd. and its subsidiaries.
Subsidiaries – Companies, the financial statements of which are fully consolidated, directly or indirectly, with the financial
statements of the Company such as RhythmOne PLC, Unruly Holding Ltd, Tremor Video Inc.
Related party – As defined by IAS 24, “Related Party Disclosures”.
36
TREMOR INTERNATIONAL LTD.ANNUAL REPORT 2020 2 BASIS OF PREPARATION
a Statement of compliance:
The consolidated financial statements have been prepared in accordance with International Financial Reporting Standards (IFRS)
as issued by the International Accounting Standards Board ("IASB").
The consolidated financial statements were authorized for issue by the Company’s Board of Directors on March 10, 2021.
b Functional and presentation currency:
These consolidated financial statements are presented in US Dollars (USD), which is the Company’s functional currency, and have
been rounded to the nearest thousands, except when otherwise indicated. The USD is the currency that represents the principal
economic environment in which the Company operates.
c Basis of measurement:
The consolidated financial statements have been prepared on a historical cost basis except for the following assets and liabilities:
• Deferred and current tax assets and liabilities
• Put option to non-controlling interests
• Provisions
• Derivatives
For further information regarding the measurement of these assets and liabilities see Note 3 regarding significant accounting
policies.
d Use of estimates and judgments:
The preparation of financial statements in conformity with IFRS requires management of the Group to make judgments,
estimates and assumptions that affect the application of accounting policies and the reported amounts of assets, liabilities,
income and expenses. Actual results may differ from these estimates.
The preparation of accounting estimates used in the preparation of the Group’s financial statements requires management of the
Group to make assumptions regarding circumstances and events that involve considerable uncertainty. Management of the
Group prepares estimates on the basis of past experience, various facts, external circumstances, and reasonable assumptions
according to the pertinent circumstances of each estimate.
Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognized in the
period in which the estimates are revised and in any future periods affected.
Information about assumptions made by the Group with respect to the future and other reasons for uncertainty with respect to
estimates that have a significant risk of resulting in a material adjustment to carrying amounts of assets and liabilities in the next
financial year are included in Note 6, on leases, with respect to determining the lease term and determining the discount rate of a
lease liability, in Note 7, on intangible assets, with respect to the accounting of software development capitalization, in Note 4, on
Income Tax, with respect to uncertain tax position and Note 19, on subsidiaries, with respect to business combinations.
e Determination of fair value:
Preparation of the financial statements requires the Group to determine the fair value of certain assets and liabilities. When
determining the fair value of an asset or liability, the Group uses observable market data as much as possible. There are three
levels of fair value measurements in the fair value hierarchy that are based on the data used in the measurement, as follows:
• Level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities.
• Level 2: inputs other than quoted prices included within Level 1 that are observable, either directly or indirectly.
• Level 3: inputs that are not based on observable market data (unobservable inputs).
Further information about the assumptions that were used to determine fair value is included in the following notes:
• Note 16, share-based payments;
• Note 17, financial instruments; and
• Note 19, subsidiaries (regarding business combinations).
f Change in classification
During the current year the Company reclassified the share-based compensation to share premium and reclassified other
expenses (income) to operating expenses.
Furthermore, there was a correction of immaterial error in accrual for credit presented net of accounts receivables to other
payables.
This classification did not have any effect on the profit of year ended in December 31, 2019.
37
TREMOR INTERNATIONAL LTD.FINANCIAL STATEMENTSANNUAL REPORT 2020 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS CONTINUED
as at 31 December 2020
3 SIGNIFICANT ACCOUNTING POLICIES
The accounting policies set out below have been applied consistently for all periods presented in these consolidated financial
statements and have been applied consistently by Group entities.
a Basis of consolidation:
1 Business combinations:
The Group implements the acquisition method to all business combinations. The acquisition date is the date on which the
acquirer obtains control over the acquiree. Control exists when the Group is exposed, or has rights, to variable returns from its
involvement with the acquiree and it has the ability to affect those returns through its power over the acquiree. Substantive rights
held by the Group and others are taken into account when assessing control.
The Group recognizes goodwill on acquisition according to the fair value of the consideration transferred less the net amount of
the identifiable assets acquired and the liabilities assumed.
The consideration transferred includes the fair value of the assets transferred to the previous owners of the acquiree, the
liabilities incurred by the acquirer to the previous owners of the acquiree and equity instruments that were issued by the Group.
In addition, the consideration transferred includes the fair value of any contingent consideration. After the acquisition date, the
Group recognizes changes in the fair value of contingent consideration classified as a financial liability in profit or loss.
If share-based payment awards (replacement awards) are required to be exchanged for awards held by the acquiree’s employees
(acquiree’s awards) and relate to past services, then all or a portion of the amount of the acquirer’s replacement awards is
included in measuring the consideration transferred in the business combination. This determination is based on the market-
based value of the replacement awards compared with the market-based value of the acquiree’s awards and the extent to which
the replacement awards relate to past and/or future service. The unvested portion of the replacement award that is attributed to
post-acquisition services is recognized as a compensation cost following the business combination.
Costs associated with the acquisitions that were incurred by the acquirer in the business combination such as: finder’s fees,
advisory, legal, valuation and other professional or consulting fees are expensed in the period the services are received.
2 Subsidiaries:
Subsidiaries are entities controlled by the Group. The financial statements of the subsidiaries are included in the consolidated
financial statements from the date that control commenced, until the date that control is lost.
3 Transactions eliminated on consolidation:
Intra-group balances and transactions, and any unrealized income and expenses arising from intra-group transactions, are
eliminated in preparing the consolidated financial statements.
Issuance of put option to non-controlling interests:
4
A put option issued by the Company to non-controlling interests that is settled in cash is recognized as a liability at the present
value of the exercise price under the anticipated acquisition method. In subsequent periods, the Group elected to account for the
changes in the value of the liability in respect of put options in shareholders’ equity (see also Note 17(e)).
Accordingly, the Group’s share of a subsidiary’s profits includes the share of the non-controlling interests to which the Group
issued a put option.
b Foreign currency:
1 Foreign currency transactions:
Transactions in foreign currencies are translated to the respective functional currencies of the Group at exchange rates at the
dates of the transactions. Monetary assets and liabilities denominated in foreign currencies at the reporting date are translated in
to the functional currency at the exchange rate on that date. The foreign currency gain or loss on monetary items is the
difference between amortized cost in the functional currency at the beginning of the year, adjusted for effective interest and
payments during the year, and the amortized cost in foreign currency translated at the exchange rate as of the end of the year.
Non-monetary assets and liabilities denominated in foreign currencies that are measured at fair value are retranslated to the
functional currency at the exchange rate on the date that the fair value was determined. Non-monetary items that are measured
in terms of historical cost in a foreign currency are translated using the exchange rate on the date of the transaction.
2 Foreign operations:
The assets and liabilities of foreign operations, including goodwill and fair value adjustments arising on acquisition, are translated
to USD at exchange rates at the reporting date. The income and expenses of foreign operations are translated to USD at
exchange rates at the dates of the transactions.
Foreign currency differences are recognized in other comprehensive income and are presented in shareholders’ equity.
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TREMOR INTERNATIONAL LTD.ANNUAL REPORT 2020 3 SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
c Financial instruments:
1 Non-derivative financial assets
Initial recognition and measurement of financial assets
The Group initially recognizes trade receivables and debt instruments issued on the date that they are created. All other financial
assets are recognized initially on the trade date at which the Group becomes a party to the contractual provisions of the
instrument. A financial asset is initially measured at fair value plus transaction costs that are directly attributable to the
acquisition or issuance of the financial asset. A trade receivable without a significant financing component is initially measured at
the transaction price. Receivables originating from contract assets are initially measured at the carrying amount of the contract
assets on the date classification was changed from contract asset to receivables.
Derecognition of financial assets
Financial assets are derecognized when the contractual rights of the Group to the cash flows from the asset expire, or the Group
transfers the rights to receive the contractual cash flows on the financial asset in a transaction in which substantially all the risks
and rewards of ownership of the financial asset are transferred. When the Group retains substantially all of the risks and rewards
of ownership of the financial asset, it continues to recognize the financial asset.
Classification of financial assets into categories and the accounting treatment of each category
Financial assets are classified at initial recognition to one of the following measurement categories: amortized cost; fair value
through other comprehensive income – investments in debt instruments; fair value through other comprehensive income –
investments in equity instruments; or fair value through profit or loss.
Financial assets are not reclassified in subsequent periods unless, and only if, the Group changes its business model for the
management of financial debt assets, in which case the affected financial debt assets are reclassified at the beginning of the
period following the change in the business model.
The Group has balances of trade and other receivables and deposits that are held within a business model whose objective is
collecting contractual cash flows. The contractual cash flows of these financial assets represent solely payments of principal and
interest that reflects consideration for the time value of money and the credit risk. Accordingly, these financial assets are
measured at amortized cost.
Subsequent measurement and gains and losses
Financial assets at amortized cost
These assets are subsequently measured at amortized cost using the effective interest method. The amortized cost is reduced by
impairment losses. Interest income, foreign exchange gains and losses and impairment are recognized in profit or loss. Any gain
or loss on derecognition is recognized in profit or loss.
2 Non-derivative financial liabilities
Non-derivative financial liabilities include trade and other payables.
Initial recognition of financial liabilities
The Group initially recognizes debt securities issued on the date that they originated. All other financial liabilities are recognized
initially on the trade date at which the Group becomes a party to the contractual provisions of the instrument.
Subsequent measurement of financial liabilities
Financial liabilities (other than financial liabilities at fair value through profit or loss) are recognized initially at fair value less any
directly attributable transaction costs. Subsequent to initial recognition these financial liabilities are measured at amortized cost
using the effective interest method. Financial liabilities are designated at fair value through profit or loss if the Group manages
such liabilities and their performance is assessed based on their fair value in accordance with the Group’s documented risk
management strategy, providing that the designation is intended to prevent an accounting mismatch, or the liability is a
combined instrument including an embedded derivative.
Transaction costs directly attributable to an expected issuance of an instrument that will be classified as a financial liability are
recognized as an asset in the framework of deferred expenses in the statement of financial position. These transaction costs are
deducted from the financial liability upon its initial recognition, or are amortized as financing expenses in the statement of
income when the issuance is no longer expected to occur.
Derecognition of financial liabilities
Financial liabilities are derecognized when the obligation of the Group, as specified in the agreement, expires or when it is
discharged or cancelled.
39
TREMOR INTERNATIONAL LTD.FINANCIAL STATEMENTSANNUAL REPORT 2020 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS CONTINUED
as at 31 December 2020
3 SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Offset of financial instruments
Financial assets and liabilities are offset and the net amount presented in the statement of financial position when, and only
when, the Group currently has a legal right to offset the amounts and intends either to settle on a net basis or to realize the asset
and settle the liability simultaneously.
3 Derivative financial instruments:
Economic hedges
Hedge accounting is not applied to derivative instruments that economically hedge financial assets and liabilities denominated in
foreign currencies. Changes in the fair value of such derivatives are recognized in profit or loss under financing income or
expenses.
4 Share capital:
Ordinary shares
Ordinary shares are classified as shareholders’ equity. Incremental costs directly attributable to the issue of ordinary shares and
share options are recognized as a deduction from shareholders’ equity, net of any tax effects.
Incremental costs directly attributable to an expected issuance of an instrument that will be classified as an equity instrument are
recognized as an asset in deferred expenses in the statement of financial position. The costs are deducted from shareholders’
equity upon the initial recognition of the equity instruments or are amortized as financing expenses in the statement of income
when the issuance is no longer expected to take place.
Treasury shares
When share capital recognized as equity is repurchased by the Group, the amount of the consideration paid, which includes
directly attributable costs, net of any tax effects, is recognized as a deduction from shareholders’ equity. Repurchased shares are
classified as a deduction in Share Premium. When treasury shares are sold or reissued subsequently, the amount received is
recognized as an increase in shareholders’ equity, and the resulting surplus on the transaction is carried to share premium,
whereas a deficit on the transaction is deducted from retained earnings.
d. Fixed Assets:
Fixed assets are measured at cost less accumulated depreciation. The cost of fixed assets includes expenditure that is directly
attributable to the acquisition of the asset. Depreciation is provided on all property and equipment at rates calculated to write
each asset down to its residual value (assumed to be nil), using the straight line method, over its expected useful life as follows:
Computers and servers
Office furniture and equipment
Years
3
3-17
Leasehold improvements
The shorter of the lease term and the useful life
An asset is depreciated from the date it is ready for use, meaning the date it reaches the location and condition required for it to
operate in the manner intended by management.
Depreciation methods, useful lives and residual values are reviewed at the end of each reporting year and adjusted if appropriate.
e.
Intangible assets:
1 Software development:
Expenditure on research activities, undertaken with the prospect of gaining new scientific or technical knowledge and
understanding, is recognized in profit or loss when incurred.
Development activities involve a plan or design for the production of new or substantially improved products and processes.
Development expenditure is capitalized only if development costs can be measured reliably, the product or process is technically
and commercially feasible, future economic benefits are probable, and the Group has the intention and sufficient resources to
complete development and to use or sell the asset. The expenditure capitalized in respect of development activities includes the
cost of materials, direct labor and overhead costs that are directly attributable to preparing the asset for its intended use, and
capitalized borrowing costs. Other development expenditure is recognized in profit or loss as incurred.
In subsequent periods, capitalized development expenditure is measured at cost less accumulated amortization and accumulated
impairment losses.
Where these criteria are not met development costs are charged to the statement of operation and other comprehensive income
as incurred.
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TREMOR INTERNATIONAL LTD.ANNUAL REPORT 2020 3 SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
The estimated useful lives of developed software are three years.
Amortization methods, useful lives and residual values are reviewed at the end of each reporting year and adjusted if appropriate.
2 Acquired software:
Acquired software licenses are capitalized on the basis of the costs incurred to acquire and bring to use the specific software
licenses. These costs are amortized over their estimated useful lives (3 years) using the straight line method. Costs associated
with maintaining software programs are recognized as an expense as incurred.
3 Goodwill:
Goodwill that arises upon the acquisition of subsidiaries is presented as part of intangible assets. For information on
measurement of goodwill at initial recognition, see Note 3a(1).
In subsequent periods goodwill is measured at cost less accumulated impairment losses. The Group has identified its entire
operation as a single cash generating unit (CGU). According to management assessment, no impairment in respect to goodwill
has been recorded.
4 Other intangible assets:
Other intangible assets that are acquired by the Group, which have finite useful lives, are measured at cost less accumulated
amortization and accumulated impairment losses.
5 Amortization:
Amortization is a systematic allocation of the amortizable amount of an intangible asset over its useful life. The amortizable
amount is the cost of the asset less its accumulated residual value.
Internally generated intangible assets, such as software development costs, are not systematically amortized as long as they are
not available for use, i.e. they are not yet on site or in working condition for their intended use. Goodwill is not systematically
amortized as well, but is tested for impairment at least once a year.
The Group examines the amortization methods, useful life and accumulated residual values of its intangible assets at least once a
year (usually at the end of each reporting period) in order to determine whether events and circumstances continue to support
the decision that the intangible asset has an indefinite useful life.
Amortization is recognized in the statements of other comprehensive income on a straight-line basis over the estimated useful
lives of the intangible assets from the date they are available for use, since this method most closely reflects the expected pattern
of consumption of the future economic benefits embodied in each asset, such as development costs, are tested for impairment at
least once a year until such date as they are available for use.
The estimated useful lives for the current and comparative periods are as follows:
• Trademarks
• Software (developed and acquired)
• Customer relationships
• Technology
• Others
1.75-5 years
3 years
3-5.75 years
1-5 years
1-3 years
Amortization methods, useful lives and residual values are reviewed at the end of each reporting year and adjusted if appropriate.
In the reporting period the Company changed the expected useful life of intangible asset items. For further information see Note
7 regarding the basis of preparation of the financial statements.
Impairment:
f
Non-derivative financial assets
Financial assets, contract assets and lease receivables
The Group recognizes a provision for expected credit losses in respect of:
– Financial assets at amortized cost;
– Lease receivables.
The Group has elected to measure the provision for expected credit losses in respect of financial assets and lease receivables at
an amount equal to the full lifetime credit losses of the instrument.
41
TREMOR INTERNATIONAL LTD.FINANCIAL STATEMENTSANNUAL REPORT 2020 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS CONTINUED
as at 31 December 2020
3 SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
When determining whether the credit risk of a financial asset has increased significantly since initial recognition, and when
estimating expected credit losses, the Group considers reasonable and supportable information that is relevant and available.
Such information includes quantitative and qualitative information, and an analysis, based on the Group’s past experience and
informed credit assessment, and it includes forward looking information.
Measurement of expected credit losses
Expected credit losses are a probability-weighted estimate of credit losses. Credit losses are measured as the present value of
the difference between the cash flows due to the Group in accordance with the contract and the cash flows that the Group
expects to receive.
With respect to other debt assets, the Group measures the provision for expected credit losses at an amount equal to the full
lifetime expected credit losses, other than the provisions hereunder that are measured at an amount equal to the 12-month
expected credit losses:
– Debt instruments that are determined to have low credit risk at the reporting date; and
– Other debt instruments and deposits, for which credit risk has not increased significantly since initial recognition.
Presentation of provision for expected credit losses in the statement of financial position
Provisions for expected credit losses of financial assets measured at amortized cost and are deducted from the gross carrying
amount of the financial assets.
Write-off
The gross carrying amount of a financial asset is written off when the Group does not have reasonable expectations of recovering
a financial asset at its entirety or a portion thereof. This is usually the case when the Group determines that the debtor does not
have assets or sources of income that may generate sufficient cash flows for paying the amounts being written off. However,
financial assets that are written off could still be subject to enforcement activities in order to comply with the Group's procedures
for recovery of amounts due. Write-off constitutes a de-recognition event.
Impairment of non-financial assets:
g
Non-financial assets that are subject to amortization are reviewed for impairment whenever events or changes in circumstances
indicate that the carrying amount may not be recoverable. An impairment loss is recognized for the amount by which an asset’s
carrying amount exceeds its recoverable amount. The recoverable amount is the higher of an asset’s fair value less costs to sell
and value in use. For the purposes of assessing impairment, assets are grouped at the lowest levels for which there are separately
identifiable cash flows (cash-generating units).
Non-financial assets that were subject to impairment are reviewed for possible reversal of the impairment recognized in respect
thereof at each financial reporting date.
h Restricted Deposit:
The Company classifies certain restricted deposit balances within prepaid expenses and other current assets on the consolidated
balance sheets based upon the term of the remaining restrictions. At December 31, 2020 and 2019 the Company had restricted
deposit of USD 49 thousand and USD 119 thousand, respectively.
i Share Based Compensation:
Compensation expense related to stock options, restricted stock units and performance stock units. The Company’s employee
stock purchase plan is measured and recognized in the consolidated financial statements based on the fair value of the awards
granted. The fair value of each option award is estimated on the grant date using the Black-Scholes option-pricing model.
Stock-based compensation expense related to stock options and restricted stock is recognized over the requisite service periods
of the awards.
Determining the fair value of stock options awards requires judgment. The Company’s use of the Black-Scholes option pricing
model requires the input of subjective assumptions. The assumptions used in the Company’s option-pricing model represent
management’s best estimates. These estimates involve inherent uncertainties and the application of management’s judgment.
These assumptions and estimates are as follows:
Risk-Free Interest Rate. The risk-free interest rate is based on the yields of U.S. Treasury securities with maturities approximating
the expected term of the awards.
Expected Term. The expected term of an award is calculated based on the vesting date and the expiration date of the award.
Volatility. The Company determined the price volatility based on daily price observations over a period equivalent to the
expected term of the award.
42
TREMOR INTERNATIONAL LTD.ANNUAL REPORT 2020 3 SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Dividend Yield. The dividend yield assumption is based on the Company’s history and current expectations of dividend payouts.
Fair Value of Common Stock. The fair value of common stock is based on the closing price of the Company's common stock on
the grant date
j Employee benefits:
1 Post-employment benefits:
The Group’s main post-employment benefit plan is under section 14 to the Severance Pay Law ("Section 14"), which is accounted
for as a defined contribution plan. In addition, for certain employees, the Group has an additional immaterial plan that is
accounted for as a defined benefit plan. These plans are usually financed by deposits with insurance companies or with funds
managed by a trustee.
a Defined contribution plans:
A defined contribution plan is a post-employment benefit plan under which an entity pays fixed contributions into a separate
entity and has no legal or constructive obligation to pay further amounts. Obligations for contributions to defined contribution
pension plans are recognized as an expense in the statement of comprehensive income in the periods during which related
services are rendered by employees.
According to Section 14, the payment of monthly deposits by a Company into recognized severance and pension funds or
insurance policies releases it from any additional severance obligation to the employees that have entered into agreements with
the Company pursuant to such Section 14. The Company has entered into agreements with a majority of its employees in order to
implement Section 14 and as such, no additional liability with respect to such employees exist.
b Defined benefit plans:
A defined benefit plan is a post-employment benefit plan other than a defined contribution plan. The Group’s net obligation in
respect of defined benefit pension plans is calculated separately for each plan by estimating the amount of future benefit that
employees have earned in return for their service in the current and prior periods. That benefit is discounted to determine its
present value, and the fair value of any plan assets is deducted. The Group determines the net interest expense (income) on the
net defined benefit liability (asset) for the period by applying the discount rate used to measure the defined benefit obligation at
the beginning of the annual period to the then-net defined benefit liability (asset).
2 Short-term benefits:
Short-term employee benefit obligations are measured on an undiscounted basis and are expensed as the related service is
provided or upon the actual absence of the employee when the benefit is not accumulated (such as maternity leave).
A liability is recognized for the amount expected to be paid under short-term cash bonus or profit-sharing plans if the Group has
a present legal or constructive obligation to pay this amount as a result of past service provided by the employee and the
obligation can be estimated reliably.
The employee benefits are classified, for measurement purposes, as short-term benefits or as other long-term benefits
depending on when the Group expects the benefits to be wholly settled.
Share-based payment arrangements in which equity instruments are granted by the parent Company to the employees of the
Company are accounted for by the Company as equity-settled share-based payment transactions.
k Revenue recognition:
The Company recognizes revenue through the following five-step model:
(1) Identifying the contract with customer.
(2) Identifying distinct performance obligations in the contract.
(3) Determining the transaction price.
(4) Allocating the transaction price to distinct performance obligations.
(5) Recognizing revenue when the performance obligations are satisfied.
The Company generates revenue from transactions where it provides access to a platform for the purchase and sale of digital
advertising inventory.
Its customers are both ad buyers, including brands and agencies, and digital publishers.
The Company generates revenue through platform fees that are tailored to fit the customer’s specific utilization of our solutions
and include: (i) a percentage of spend, (ii) flat fees and (iii) fixed costs per mile (“CPM”). CPM refers to a payment option in which
customers pay a price for every 1,000 impressions an advertisement receives.
43
TREMOR INTERNATIONAL LTD.FINANCIAL STATEMENTSANNUAL REPORT 2020 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS CONTINUED
as at 31 December 2020
3 SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
The Company maintains agreements with each publisher and buyer in the form of written service agreements, which set out the
terms of the relationship, including payment terms and access to the Company’s platform.
Publishers provide digital advertising inventory to the Company’s platform in the form of advertising requests, or ad request.
When the Company receives ad requests from a publisher, it send bid requests to buyers, which enable buyers to bid on sellers’
digital advertising inventory according to a predefined set of parameters (e.g., demographics, intent, location, etc.). Winning bids
create advertising, or paid impressions, for the publisher to present to the buyers.
The Company generates revenue from its Programmatic and Performance activities. Programmatic revenue is derived from the
end-to-end platform of programmatic advertising, which uses software and algorithms to match buyers and sellers of digital
advertising in a technology-driven marketplace. Performance revenue is derived from non-core activities, consisting of mobile-
based activities that help brands reach their users.
Till the acquisitions of RhythmOne and its integration into the Company and the acquisition of Unruly in the beginning of 2020
(i.e. for the year ended December 31, 2019), the Company determined that it operated as a principal with respect to its
Programmatic activity and therefore presented revenue on a gross basis mainly as: (i) the Company operated predominantly
through a DSP platform prior to the acquisition and full integration of RhythmOne, (ii) the Company was highly involved in
execution of the process, which required certain manual operations by Company employees and (iii) the Company determined
that it had an implicit obligation to provide credits and inducements to customers to encourage use of the platform. That is, the
Company determined, on this basis, that it had an implicit obligation to provide advertising space to customers, even though the
contractual terms and conditions (including its Master Service Agreements (MSA) and Insertion Order (I/O)) do not explicitly
state that the Company is obliged to deliver customers an applicable advertising space or to provide inducements to the
customer. Consequently, the Company concluded that it was the primarily responsible for fulfillment of the contract.
Following the full integration with RhythmOne and the acquisition of Unruly in 2020, the Company positions itself as a stronger
digital advertising platform in the marketplace with an integrated, end-to-end platform connecting the DSP and SSP sides of the
business in a unified platform. As a result, the Company has changed its Programmatic business, tech stack, features, business
models and activity as follow: (i) The Company implemented a material change in its tech stack and operations, offering new
services and features that increased automation across the platform, significantly decreasing the need for Company employees
to manually operate the platform; and (ii) The Company decreased significantly the level of credits and inducements offered to
its customers.
The Company further concluded that as a result of such change in its Programmatic activity (i) it does not have manual control
over the process, (ii) the Company is not primarily responsible for fulfillment, (iii) the Company has no inventory risk and (iv) the
Company obtains only momentary a title to the advertising space offered via the end-to-end platform.
The Performance activity has not changed and the Company is still the primary obligor to provide the services and, as such,
revenue is presented on a gross basis for the Performance activity. Management is focused on driving growth with the
Programmatic activity through the end-to-end platform, while the Performance activity is declining over time.
The Company estimates and records reduction to revenues for volume discounts based on expected volume during the incentive
term.
The Company generally invoices buyers at the end of each month for the full purchase price of ad impressions monetized in that
month. Accounts receivable are recorded at the amount of gross billings for the amount it is responsible to collect and accounts
payable are recorded at the net amount payable to publishers. Accordingly, both accounts receivable and accounts payable
appear large in relation to revenue reported on a net basis.
l Classification of expenses:
Cost of revenue
Cost of revenue includes expenses related to third-party hosting fees and the cost of data purchased from third parties, traffic
acquisition costs, data and hosting that are directly attributable to revenue generated by the Company (see Note 11b).
Research and development
Research and development expenses consist primarily of compensation and related costs for personnel responsible for the
research and development of new and existing products and services. Where required, development expenditures are capitalized
in accordance with the Company's standard internal capitalized development policy in accordance with IAS 38 (also see Note
3e(1)). All research costs are expensed when incurred.
Selling and marketing
Selling and marketing expenses consist primarily of compensation and related costs for personnel engaged in customer service,
sales, and sales support functions, as well as advertising and promotional expenditures.
44
TREMOR INTERNATIONAL LTD.ANNUAL REPORT 2020 3 SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
General and administrative
General and administrative expenses consist primarily of compensation and related costs for personnel, and include costs related
to the Company’s facilities, finance, human resources, information technology, legal organizations and fees for professional
services. Professional services are principally comprised of outside legal, and information technology consulting and outsourcing
services that are not directly related to other operational expenses.
m Financing income and expenses:
Financing income mainly comprises foreign currency gains and interest income.
Financing expenses comprises of exchange rate differences, interest and bank fees, interest on loans and other expenses.
Foreign currency gains and losses on financial assets and financial liabilities are reported on a net basis as either financing
income or financing expenses depending on whether foreign currency movements are in a net gain or net loss position.
Income tax expense:
n
Income tax comprises current and deferred tax. Current tax and deferred tax are recognized in the statement of comprehensive
income except to the extent that they relate to a business combination.
Current taxes
Current tax is the expected tax payable (or receivable) on the taxable income for the year, using tax rates enacted or
substantively enacted at the reporting date.
Deferred taxes
Deferred tax is recognized in respect of temporary differences between the carrying amounts of assets and liabilities for financial
reporting purposes and the amounts used for taxation purposes.
Deferred tax is not recognized for the following temporary differences:
• The initial recognition of goodwill; and
• Differences relating to investments in subsidiaries to the extent it is probable that they will not reverse in the foreseeable
future, either by way of selling the investment or by way of distributing taxable dividends in respect of the investment.
The measurement of deferred tax reflects the tax consequences that would follow the manner in which the Group expects, at the
end of the reporting period, to recover or settle the carrying amount of its assets and liabilities. Deferred tax is measured at the
tax rates that are expected to be applied to temporary differences when they reverse, based on the laws that have been enacted
or substantively enacted by the reporting date.
A deferred tax asset is recognized for tax benefits and deductible temporary differences, to the extent that it is probable that
future taxable profits will be available against which they can be utilized. Deferred tax assets are reviewed at each reporting date
and are reduced to the extent that it is no longer probable that the related tax benefit will be realized.
Offset of deferred tax assets and liabilities
Deferred tax assets and liabilities are offset if there is a legally enforceable right to offset current tax liabilities and assets, and
they relate to income taxes levied by the same tax authority.
Uncertain tax positions
A provision for uncertain tax positions, including additional tax and interest expenses, is recognized when it is more probable
than not that the Group will have to use its economic resources to pay the obligation.
o Leases:
Determining whether an arrangement contains a lease
On the inception date of the lease, the Group determines whether the arrangement is a lease or contains a lease, while examining
if it conveys the right to control the use of an identified asset for a period of time in exchange for consideration. In its assessment
of whether an arrangement conveys the right to control the use of an identified asset, the Group assesses whether it has the
following two rights throughout the lease term:
(a) The right to obtain substantially all the economic benefits from use of the identified asset; and
(b) The right to direct the identified asset’s use.
For lease contracts that contain non-lease components, such as services or maintenance, that are related to a lease component,
the Group elected to account for the contract as a single lease component without separating the components.
45
TREMOR INTERNATIONAL LTD.FINANCIAL STATEMENTSANNUAL REPORT 2020 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS CONTINUED
as at 31 December 2020
3 SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Leased assets and lease liabilities
Contracts that award the Group control over the use of a leased asset for a period of time in exchange for consideration, are
accounted for as leases. Upon initial recognition, the Group recognizes a liability at the present value of the balance of future
lease payments (these payments do not include certain variable lease payments), and concurrently recognizes a right-of-use
asset at the same amount of the lease liability, adjusted for any prepaid or accrued lease payments or provision for impairment,
plus initial direct costs incurred in respect of the lease.
Since the interest rate implicit in the Group's leases is not readily determinable, the incremental borrowing rate of the lessee is
used. Subsequent to initial recognition, the right-of-use asset is accounted for using the cost model, and depreciated over the
shorter of the lease term or useful life of the asset.
The lease term
The lease term is the non-cancellable period of the lease plus periods covered by an extension or termination option if it is
reasonably certain that the lessee will or will not exercise the option, respectively.
Variable lease payments
Variable lease payments that depend on an index or a rate, are initially measured using the index or rate existing at the
commencement of the lease and are included in the measurement of the lease liability. When the cash flows of future lease
payments change as the result of a change in an index or a rate, the balance of the liability is adjusted against the right-of-use
asset.
Other variable lease payments that are not included in the measurement of the lease liability are recognized in profit or loss in the
period in which the event or condition that triggers payment occurs.
Depreciation of right-of-use asset
After lease commencement, a right-of-use asset is measured on a cost basis less accumulated depreciation and accumulated
impairment losses and is adjusted for re-measurements of the lease liability. Depreciation is calculated on a straight-line basis
over the useful life or contractual lease period, whichever earlier, as follows:
• Buildings
• Data centers
1-8 years
1-3 years
Reassessment of lease liability
Upon the occurrence of a significant event or a significant change in circumstances that is under the control of the Group and
had an effect on the decision whether it is reasonably certain that the Group will exercise an option, which was not included
before in the lease term, or will not exercise an option, which was previously included in the lease term, the Group re-measures
the lease liability according to the revised leased payments using a new discount rate. The change in the carrying amount of the
liability is recognized against the right-of-use asset, or recognized in profit or loss if the carrying amount of the right-of-use asset
was reduced to zero.
Lease modifications
When a lease modification increases the scope of the lease by adding a right to use one or more underlying assets, and the
consideration for the lease increased by an amount commensurate with the stand-alone price for the increase in scope and any
appropriate adjustments to that stand-alone price to reflect the contract’s circumstances, the Group accounts for the
modification as a separate lease.
In all other cases, on the initial date of the lease modification, the Group allocates the consideration in the modified contract to
the contract components, determines the revised lease term and measures the lease liability by discounting the revised lease
payments using a revised discount rate.
For lease modifications that decrease the scope of the lease, the Group recognizes a decrease in the carrying amount of the
right-of-use asset in order to reflect the partial or full cancellation of the lease, and recognizes in profit or loss a profit (or loss)
that equals the difference between the decrease in the right-of-use asset and re-measurement of the lease liability.
For other lease modifications, the Group re-measures the lease liability against the right-of-use asset.
Subleases
In leases where the Group subleases the underlying asset, the Group examines whether the sublease is a finance lease or
operating lease with respect to the right-of-use received from the head lease. The Group examined the subleases existing on the
date of initial application based on the remaining contractual terms at that date.
46
TREMOR INTERNATIONAL LTD.ANNUAL REPORT 2020 3 SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
p Earnings per share:
The Group presents basic and diluted earnings per share (EPS) data for its ordinary shares. Basic EPS is calculated by dividing
the profit or loss attributable to ordinary shareholders of the Company by the weighted average number of ordinary shares
outstanding during the year, adjusted for treasury shares. Diluted EPS is determined by adjusting the profit or loss attributable to
ordinary shareholders of the Company and the weighted average number of ordinary shares outstanding, after adjustment for
treasury shares, for the effects of all dilutive potential ordinary shares, which comprise restricted stock.
q New standards, amendments to standards and interpretations not yet adopted:
Amendment to IFRS 3, Business Combinations
The Amendment adds an exception to the principle for recognizing liabilities in IFRS 3. According to the exception, contingent
liabilities are to be recognized according to the requirements of IAS 37 and IFRIC 21 and not according to the conceptual
framework. The Amendment prevents differences in the timing of recognizing liabilities that could have led to the recognition of
gains and losses immediately after the business combination (day 2 gain or loss). The Amendment also clarifies that contingent
assets are not to be recognized on the date of the business combination. The Amendment is effective for annual periods
beginning on or after January 1, 2022. The Group has not yet commenced examining the effects of the Amendment on the
financial statements.
Amendments to IFRS 9
The Amendments include practical expedients regarding the accounting treatment of modifications in contractual terms that are
a result of the interest rate benchmark reform (a reform that in the future will lead to the replacement of interest rates such as the
Libor and Euribor). Thus for example:
–
–
–
When certain modifications are made in the terms of financial assets or financial liabilities as a result of the reform, the entity
shall update the effective interest rate of the financial instrument instead of recognizing a gain or loss.
Certain modifications in lease terms that are a result of the reform shall be accounted for as an update to lease payments
that depend on an index or rate.
Certain modifications in terms of the hedging instrument or hedged item that are a result of the reform shall not lead to the
discontinuance of hedge accounting.
The Amendments are applicable retrospectively as from January 1, 2021 with early application permitted.
In the opinion of the Group, application of the Amendments is not expected to have a material effect on the financial statements.
4 INCOME TAX
a Details regarding the tax environment of the Israeli companies:
1 Corporate tax rate
Taxable income of the Israeli parent is subject to the Israeli corporate tax at the rate of 23% in 2020 and 2019.
2 Benefits under the Law for the Encouragement of Capital Investments
The Investment Law provides tax benefits for Israeli companies meeting certain requirements and criteria. The Investment Law
has undergone certain amendments and reforms in recent years.
The Israeli parliament enacted a reform to the Investment Law, effective January 2011. According to the reform, a flat rate tax
applies to companies eligible for the “Preferred Enterprise” status. In order to be eligible for Preferred Enterprise status, a
company must meet minimum requirements to establish that it contributes to the country’s economic growth and is a
competitive factor for the gross domestic product.
On December 22, 2016 the Knesset plenum passed the Economic Efficiency Law (Legislative Amendments for Achieving Budget
Objectives in the Years 2017 and 2018) – 2016, by which the Encouragement Law was also amended (hereinafter: “the
Amendment”). The Amendment added new tax benefit tracks for a “preferred technological enterprise” and a “special preferred
technological enterprise” that awards reduced tax rates to a technological industrial enterprise for the purpose of encouraging
activity relating to the development of qualifying intangible assets.
Preferred technological income that meets the conditions required in the law, will be subject to a reduced corporate tax rate of
12%, and if the preferred technological enterprise is located in Development Area A to a tax rate of 7.5%. The Amendment is
effective as from January 1, 2017.
The Amendment also provides that no tax will apply to a dividend distributed out of preferred income to a shareholder that is an
Israeli resident company. A tax rate of 20% shall apply to a dividend distributed out of preferred income to an individual
shareholder or foreign resident, subject to double taxation prevention treaties.
47
TREMOR INTERNATIONAL LTD.FINANCIAL STATEMENTSANNUAL REPORT 2020 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS CONTINUED
as at 31 December 2020
4 INCOME TAX (CONTINUED)
On May 16, 2017 the Knesset Finance Committee approved Encouragement of Capital Investment Regulations (Preferred
Technological Income and Capital Gain of Technological Enterprise) – 2017 (hereinafter: “the Regulations”), which provides rules
for applying the “preferred technological enterprise” and “special preferred technological enterprise” tax benefit tracks including
the Nexus formula that provides the mechanism for allocating the technological income eligible for the benefits.
In June 2016, Taptica, a wholly owned subsidiary, appealed for a tax ruling to apply "the preferred enterprise" track, which was
obtained on April 2017 and will be apply for the years 2016-2020.
On 28 December 2016, Taptica Social, a wholly owned subsidiary, together with Taptica appealed for a tax ruling for a
restructuring, whereby Taptica Social will be merged with and into Taptica in such a manner that Taptica Social will transfer to
Taptica all its assets and liabilities for no consideration and thereafter will be liquidated. Accordingly, on 6 June 2017 the merger
between the companies was approved by the Israeli Tax Authority and the effective merge date was determined as December 31
2016. As a result of the merger, the ruling previously obtained by Taptica regarding the preferred income required re-validation
from the Israeli tax authority. Therefore Taptica appealed and received on December 2018 re-validation from the Israeli tax
authority for the ruling which determines that Taptica owns an industrial enterprise and Preferred Technological Enterprise as
defined in the Law for the Encouragement of Capital Investments – 1959. In addition, as a part of the re-validation of the ruling,
Taptica also obtained an amendment that includes the acquisition and absorption of Tremor’s operation in the rulings and apply
the Law for the Encouragement of Capital Investments to this purchased activity as well. The tax rulings which was obtained on
December 2018 will apply for the years 2017-2021.
On December 3, 2018, the Company together with Taptica submitted a request to the Israeli tax authorities for a tax ruling
regarding to restructuring, whereby Taptica will be merged with and into the Company in such a manner that Taptica will transfer
to the Company all its assets and liabilities for no consideration and thereafter will be liquidated. As of May 08, 2019, the merger
between the companies approved by the Israeli Tax Authority and the effective merge date was determined as December 31,
2018. Following the approval of the restructuring, the tax ruling regarding Taptica owns an industrial enterprise and preferred
technological enterprise which was obtained on December 2018 will apply on the merged Company for the years 2017-2021 with
relative agreed changes.
b Details regarding the tax environment of the non-Israeli companies:
Non Israeli subsidiaries are taxed according to the tax laws in their countries of residence as reported in their statutory financial
statement prepared under local accounting regulations.
1 US
As of the acquisition date of RhythmOne, RhythmOne had U.S. federal net operating loss carryforwards, or NOLs, of
approximately USD 100.8 million as for the acquisition date, which will expire starting 2038. As of December 31, 2020 the NOLs
are approximately USD 102 million.
Additionally, for tax years beginning after December 31, 2017, the Tax Cuts and Jobs Act limits the NOL deduction to 80% of
taxable income, repeals carryback of all NOLs arising in a tax year ending after 2017 and permits indefinite carryforward for all
such NOLs. NOL’s arising in a tax year ending in or before 2017 can offset 100% of taxable income, are available for carryback,
and expire 20 years after they arise. It should be noted that the Coronavirus Aid, Relief and Economic Security (“CARES”) Act
suspended the 80% limitation for tax years 2018, 2019 and 2020 and allowed for a 5 year carryback for NOLs for tax years
beginning after December 31, 2017 and before January 1, 2021.
Pursuant to Section 382 of the Internal Revenue Code, RhythmOne underwent ownership changes for tax purposes (i.e. a more
than 50% change in stock ownership in aggregated 5% shareholders) on April 2, 2019. As a result, the use of the Company’s total
US NOL carryforwards and tax credits generated prior to the ownership change will be subject to annual use limitations under
Section 382 and may under section 383 of the Code and comparable state income tax laws.
International
2
As of the acquisition date of Unruly, Unruly had an International NOLs of approximately USD 24 million. As of December 31, 2020
the NOLs are approximately USD 10.8 million.
48
TREMOR INTERNATIONAL LTD.ANNUAL REPORT 2020 4 INCOME TAX (CONTINUED)
c Composition of income tax expense:
Current tax expense
Current year
Deferred tax (income)
Creation and reversal of temporary differences
Tax benefit
The following are the domestic and foreign components of the Company’s income taxes (in thousands):
Domestic
US
International
Tax Benefit
d Reconciliation between the theoretical tax on the pre-tax profit and the tax expense:
Profit (Loss) before taxes on income
Primary tax rate of the Company
Tax calculated according to the Company’s primary tax rate
Additional tax (tax saving) in respect of:
Non-deductible expenses net of tax exempt income (*)
Effect of reduced tax rate on preferred income and differences in previous tax assessments
Utilization of tax losses from prior years for which deferred taxes were not created
Effect on deferred taxes at a rate different from the primary tax rate
Foreign tax rate differential
Other differences
Tax benefit
Effective income tax rate
(*) including non-deductible share based payment expenses.
Year ended 31 December
2020
USD
thousands
2019
USD
thousands
3,022
4,571
(12,603)
(7,207)
(9,581)
(2,636)
Year ended 31 December
2020
USD
thousands
2019
USD
thousands
1,661
(5,646)
(5,596)
(639)
(416)
(1,581)
(9,581)
(2,636)
Year ended 31 December
2020
USD
thousands
2019
USD
thousands
(7,442)
3,588
23%
(1,712)
23%
825
(2,509)
170
3,584
(1,433)
(5,887)
(5,050)
(768)
(873)
947
178
311
–
(9,581)
(2,636)
129%
(73%)
49
TREMOR INTERNATIONAL LTD.FINANCIAL STATEMENTSANNUAL REPORT 2020 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS CONTINUED
as at 31 December 2020
4 INCOME TAX (CONTINUED)
e Deferred tax assets and liabilities:
The tax effects of temporary differences that give rise to significant portions of the deferred tax assets and liabilities
are presented below:
Intangible
Assets and
R&D
expenses
Employees
Com-
pensation
Carry-
forward
Losses
Accrued
Expenses
Doubtful
Debt
Other
Total
USD thousands
Balance of deferred tax asset
(liability) as of January 1, 2019
Business combinations
(74)
(20,720)
Changes recognized in profit or Loss
3,704
Effect of change in tax rate
Changes recognized in
Shareholders’ equity
Balance of deferred tax asset
(liability) as of December 31, 2019
Business combinations
Changes recognized in profit or Loss
Effect of change in tax rate
Changes recognized in
shareholders’ equity
Balance of deferred tax asset
(liability) as of December 31, 2020
838
–
2,631
–
215
–
8,000
435
–
–
59
98
2,326
–
–
379
3,729
800
–
–
190
1,392
(2)
(8,895)
(2,689)
7,207
–
–
–
215
–
–
(17,090)
3,684
8,435
2,483
4,908
(2,501)
(81)
(4,409)
4,626
–
85
1,190
–
(162)
4,280
2,330
3,380
–
–
250
1,723
–
–
168
530
(1,046)
(1,352)
3,036
12,603
–
–
–
–
160
4,278
(17,035)
9,239
14,145
4,456
3,724
1,225
15,754
As of each reporting date, the Company’s management considers new evidence, both positive and negative, that could impact
management’s view with regard to future realization of deferred tax assets.
As of December 31, 2020 and 2019, the Company had gross unrecognized tax benefits of approximately USD 4,471 thousand and
USD 3,946 thousand, respectively. The Company classifies liabilities for unrecognized tax benefits in Current tax liabilities.
50
TREMOR INTERNATIONAL LTD.ANNUAL REPORT 2020 5 FIXED ASSETS, NET
Cost
Balance as of January 1, 2019
Exchange rate differences
Classification due to implementation of IFRS16
Additions
Business combinations (See Note 19)
Disposals
Computers
And
Servers
Office
furniture
and
equipment
Leasehold
improve-
ments
Total
USD thousands
3,733
605
1,284
5,622
–
(945)
869
2,023
(106)
–
–
16
109
(6)
2
–
178
271
–
2
(945)
1,063
2,403
(112)
Balance as of December 31, 2019
5,574
724
1,735
8,033
Exchange rate differences
Additions
Business combinations (See Note 19)
Disposals
13
1,768
346
14
15
411
4
77
73
(18)
(32)
(19)
31
1,860
830
(69)
Balance as of December 31, 2020
7,683
1,132
1,870
10,685
Depreciation
Balance as of January 1, 2019
1,912
196
635
2,743
Classification due to implementation of IFRS16
Disposals
Additions
Balance as of December 31, 2019
Exchange rate differences
Disposals
Additions
(527)
(95)
2,149
3,439
35
(16)
1,523
–
(1)
–
–
185
447
(527)
(96)
2,781
380
2
(31)
472
1,082
4,901
18
(19)
55
(66)
508
2,503
Balance as of December 31, 2020
4,981
823
1,589
7,393
Carrying amounts
As of December 31, 2019
As of December 31, 2020
2,135
2,702
344
309
653
281
3,132
3,292
51
TREMOR INTERNATIONAL LTD.FINANCIAL STATEMENTSANNUAL REPORT 2020 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS CONTINUED
as at 31 December 2020
6 LEASES
a Leases in which the Group is the lessee:
The Group applies IFRS 16, Leases, as from January 1, 2019. The Group has lease agreements with respect to the following items:
– Offices;
– Data center;
1
a)
Information regarding material lease agreements:
The Group leases Offices mainly in the United States of America (US), Israel, Canada and UK with contractual original lease
periods ends between the years 2021 and 2027 from several lessors. The Group did not assume renewals in determination of
the lease term unless the renewals are deemed to be reasonably assured at lease commencement.
A lease liability and right-of-use asset in the amount of USD 16,121 thousand and USD 5,925 thousand, and USD 21,105 thousand
and USD 13,155 thousand respectively, have been recognized in the statement of financial position as of December 31, 2020 and
December 31, 2019 in respect of leases of offices.
b)
The Group leases data center and related network infrastructure with contractual original lease periods ends between the
years 2021 and 2023. The Group did not assume renewals in determination of the lease term unless the renewals are deemed
to be reasonably assured at lease commencement.
A lease liability in the amount of USD 5,088 thousand and USD 3,164 thousand as of December 31, 2020 and December 31, 2019,
respectively and right-of-use asset in the amount of USD 4,897 thousand and USD 3,560 thousand as of December 31, 2020 and
December 31, 2019, respectively have been recognized in the statement of financial position in respect of data centers.
2 Lease liability:
Maturity analysis of the Group's lease liabilities:
December 31
2020
USD
thousands
2019
USD
thousands
9,047
10,241
1,921
9,637
12,088
2,544
21,209
24,269
9,047
9,637
12,162
14,632
Less than one year (0-1)
One to five years (1-5)
More than five years (5+)
Total
Current maturities of lease liability
Long-term lease liability
52
TREMOR INTERNATIONAL LTD.ANNUAL REPORT 2020 6 LEASES (CONTINUED)
3 Right-of-use assets – Composition:
Balance as of January 1, 2019
Business combinations (See Note 19)
Depreciation on right-of-use assets
Additions
Provision for Impairment
Lease modifications
Disposals
Offices Data center
Total
USD thousands
9,336
845
10,181
12,992
11,924
24,916
(5,644)
(5,258)
(10,902)
391
33
424
(2,994)
(145)
(3,139)
(124)
(802)
(3,839)
(3,963)
–
(802)
Balance as of December 31, 2019
13,155
3,560
16,715
Business combinations (See Note 19)
Depreciation on right-of-use assets
Additions
Provision for Impairment
Lease modifications
Disposals
Exchange rate differences
1,026
–
1,026
(6,958)
(4,422)
(11,380)
1,629
1,808
(143)
(4,570)
(22)
5,680
145
–
7,309
1,953
(143)
(77)
(4,647)
11
(11)
Balance as of December 31, 2020
5,925
4,897
10,822
4 Amounts recognized in statement of operation:
Interest expenses on lease liability
Depreciation and amortization of right-of-use assets, net
Gains recognized in profit or loss
Total
5 Amounts recognized in the statement of cash flows:
Cash outflow for leases
Year ended 31 December
2020
USD
thousands
2019
USD
thousands
(1,117)
(779)
(8,855)
(9,109)
1,829
1,749
(8,143)
(8,139)
Year ended 31 December
2020
USD
thousands
2019
USD
thousands
(14,468)
(13,386)
53
TREMOR INTERNATIONAL LTD.FINANCIAL STATEMENTSANNUAL REPORT 2020 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS CONTINUED
as at 31 December 2020
6 LEASES (CONTINUED)
b. Leases in which the Group is a lessor:
1
The Group subleases offices at US, Canada and UK for periods expiring in 2027.
Information regarding material lease agreements:
2 Net investment in the lease:
Presented hereunder is the movement in the net investment in the lease:
Balance as of January 1,
Business combinations
Sublease receipts
Additions
Disposals
Balance as of December 31,
3 Maturity analysis of net investment in finance leases:
Less than one year (0-1)
One to five years (1-5)
More than five years (5+)
Offices
Year ended 31 December
2020
USD
thousands
2019
USD
thousands
4,288
–
1,064
3,327
(3,246)
(1,669)
7,094
(301)
1,566
–
7,835
4,288
Year ended 31 December
2020
USD
thousands
2019
USD
thousands
2,153
3,816
1,866
2,367
1,921
–
Total net investment in the lease as of December 31,
7,835
4,288
4 Amounts recognized in statement of operation:
Offices
Year ended 31 December
2020
USD
thousands
2019
USD
thousands
274
361
956
71
635
1,027
Gain from subleases
Financing income on the net investment in the lease
Total
54
TREMOR INTERNATIONAL LTD.ANNUAL REPORT 2020 7
INTANGIBLE ASSETS, NET
Cost
Software
Trade-
marks
Customer
relation-
ships
Technology
Others
Goodwill
Total
USD thousands
Balance as of January 1, 2019
8,187
8,201
7,414
27,458
1,044
32,985
85,289
Exchange rate differences
Additions
Business combinations (see Note 19)
–
5,672
5,378
12
–
21
–
–
–
17,470
30,284
17,629
–
–
–
85
–
118
5,672
100,633
171,394
Balance as of December 31, 2019
19,237
25,683
37,719
45,087
1,044
133,703
262,473
Exchange rate differences
Additions
–
4,858
529
–
567
–
73
–
47
–
1,280
–
2,496
4,858
Business combinations (see Note 19)
–
10,427
10,054
1,658
1,068
17,878
41,085
Balance as of December 31, 2020
24,095
36,639
48,340
46,818
2,159
152,861
310,912
Amortization
Balance as of January 1, 2019
5,869
6,973
2,596
15,202
1,044
–
31,684
Exchange rate differences
Additions
Balance as of December 31, 2019
Exchange rate differences
Additions
–
3,363
9,232
–
5,214
13
4,472
11,458
202
8,976
23
5,238
7,857
285
9,053
–
7,395
22,597
(162)
9,598
–
–
1,044
70
988
Balance as of December 31, 2020
14,446
20,636
17,195
32,033
2,102
–
–
–
–
–
–
36
20,468
52,188
395
33,829
86,412
Carrying amounts
As of December 31, 2019
As of December 31, 2020
10,005
9,649
14,225
16,003
29,862
22,490
31,145
14,785
–
57
133,703
210,285
152,861
224,500
Capitalized development costs
Development costs capitalized in the period amounted to USD 4,816 thousand (2019: USD 4,651 thousand) and were classified
under software.
Impairment testing for intangible assets
The Company's qualitative assessment during the years ended December 31, 2020, and 2019, did not indicate that it is more likely
than not that the fair value of its goodwill, intangible assets, and other long-lived assets is less than the aggregate carrying
amount.
As of December 31, 2020, the recoverable amount of goodwill was based on fair value less cost of disposal. The fair value less
costs of disposals was estimated according to the quoted price of the Company’s ordinary shares. The estimated recoverable
amount was higher than the carrying amount, and therefore there was no need for impairment.
As of December 31, 2019, the fair value less cost of disposals based on the quoted price was lower than the carrying amount. As
such, the recoverable amount was estimated based on value in use and was determined by discounting the future cash flows. The
estimated recoverable amount was higher than the carrying amount, and therefore there was no need for impairment.
55
TREMOR INTERNATIONAL LTD.FINANCIAL STATEMENTSANNUAL REPORT 2020 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS CONTINUED
as at 31 December 2020
INTANGIBLE ASSETS, NET (CONTINUED)
7
Key assumptions used in the calculation of recoverable amounts are:
Pre-tax discount rate
Terminal value growth rates
EBITDA growth rate
13% (WACC)
3%
12%-34%
The cash flow projections includes specific estimates for five years and terminal value growth rates thereafter. EBITDA growth
rate is expressed as the annual growth rate in the initial five years of the plans used for impairment testing and has been mainly
based on past experience and management expectations.
The estimated recoverable amount exceeds its carrying amount by approximately $91,953 thousand. Management has identified
two key assumptions for which there reasonably could be a possible change that could cause the carrying amount to exceed the
recoverable amount. The table below shows the amount that these two assumptions are required to change individually in order
for the estimated recoverable amount to be equal to the carrying amount.
Increase in Pre-tax discount rate
Decrease in Terminal value growth rate
2019
%
27%
100%
Following the acquisition of Unruly, the Company examined the useful life of intangible assets acquired in the past and
determined to change the estimated economic life of part of the trademarks asset from 4.75 years to 2.75 years. The effects of
the aforesaid change on amortization expenses for the year ended December 31, 2020, 2021, 2022 and 2023 is USD 1,512
thousands, USD 3,024 thousands, (USD 2,268) thousands and (USD 2,268) thousands, respectively.
8 TRADE AND OTHER RECEIVABLES
December 31
2020
USD
thousands
2019
USD
thousands
162,580
119,205
(9,036)
(22,376)
153,544
96,829
14,053
689
1,165
872
836
7,196
1,099
966
368
100
17,615
9,729
Trade receivables:
Trade receivables
Allowance for doubtful debts
Trade receivables, net
Other receivables:
Prepaid expenses
Loan to third party
Institutions
Pledged deposits
Other
56
TREMOR INTERNATIONAL LTD.ANNUAL REPORT 2020 9 TRADE AND OTHER PAYABLES
Trade payables
Other payables:
Advances from customers
Wages, salaries and related expenses
Related Parties
Provision for vacation
Institutions
Ad spend liability
Liability for options on non-controlling interest
Others
10 CASH AND CASH EQUIVALENTS
Cash
Bank deposits
Cash and cash equivalents
The Group’s exposure to credit, and currency risks are disclosed in Note 17 on financial instruments.
11A REVENUE
Programmatic (1)
Performance
December 31
2020
USD
thousands
2019
USD
thousands
125,863
70,428
13,406
13,853
2,746
554
1,112
5,987
2,903
6,561
8,717
9,109
–
612
300
–
2,440
3,871
47,122
25,049
December 31
2020
USD
thousands
2019
USD
thousands
44,825
52,638
54,486
24,561
97,463
79,047
Year ended December 31
2020
USD
thousands
2019
USD
thousands
161,625
241,464
50,295
84,296
211,920
325,760
(1) In 2020 and 2019 programmatic revenue is reported on net basis and gross basis, respectively and performance revenue
reported on gross basis for both years (see Note 3k).
Media cost amounted to USD 117,301 thousand in the year ended December 31, 2019.
57
TREMOR INTERNATIONAL LTD.FINANCIAL STATEMENTSANNUAL REPORT 2020 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS CONTINUED
as at 31 December 2020
11B COST OF REVENUE
Programmatic (1)
Performance
Cost of Revenue
Year ended December 31
2020
USD
thousands
2019
USD
thousands
31,918
142,676
27,889
44,570
59,807
187,246
(1) In 2020 and 2019 programmatic revenue is reported on net basis and gross basis, respectively and performance revenue
reported on gross basis for both years (see Note 3k). Media cost amounted to USD 117,301 thousand in the year ended
December 31, 2019.
12 GENERAL AND ADMINISTRATIVE EXPENSES
Wages, salaries and related expenses
Share base payments
Rent and office maintenance
Professional expenses
Doubtful debts
Acquisition costs
Other expenses
Year ended December 31
2020
USD
thousands
2019
USD
thousands
15,274
9,420
(483)
4,766
(1,091)
524
1,268
11,973
14,100
232
1,282
3,003
2,840
1,003
29,678
34,433
13 OTHER EXPENSES (INCOME), NET
On December 31, 2019, the Company entered into an Asset Purchase Agreement (as amended on February 14, 2020), with
Netaktion LLC pursuant to which it sold to Netaktion LLC, RhythmOne’s, owned and operated websites business for a purchase
price consisting of (i) USD 100 thousand in cash, (ii) USD 600 thousand payable in the form of promissory note payable in
eighteen (18) installment payments from April 2021 through December, 2022, and (iii) up to USD 2,800 thousand payable under
a profit sharing arrangement derived from the percentage of future profit.
The Company recognized an immediate capital gain of USD 700 thousand. As of December 31, 2020, the outstanding balance of
the promissory note was USD 618 thousand including interest.
On October 5, 2020, the Company entered into an Asset Purchase Agreement pursuant to which it sold to Fols Media LLC certain
ad exchange operations for a purchase price consisting of (i) USD 51.6 thousand in cash, (ii) USD 85 thousand payable in the form
of a bearing interest promissory note payable in 2020 through 2022 and (iii) up to USD 1,200 thousand payable under a revenue
sharing arrangement derived from a percentage of future revenue.
The Company recognized an immediate capital gain of USD 502.6 thousand. As of December 31, 2020, the Company recognized
USD 116 thousand in revenue sharing, and the outstanding balance of the promissory note was USD 71 thousand including
interest.
The Company recognized a total amount of USD 1,700 thousand paid to Uber, in relation to the full dismissal of the case against
the Company (see Note 21a).
58
TREMOR INTERNATIONAL LTD.ANNUAL REPORT 2020 14 SHAREHOLDERS’ EQUITY
Issued and paid-in share capital:
Balance as of January 1
Own shares held by the Group
Share based compensation
Shares issued in business combination
Ordinary Shares
2020
Number
of shares
2019
Number
of shares
124,223,182
68,521,997
(5,277,220)
(14,552,741)
6,444,944
3,517,441
8,525,323
66,736,485
Issued and paid-in share capital as of December 31
133,916,229
124,223,182
Authorized share capital
300,000,000
300,000,000
1 Rights attached to share:
The holders of ordinary shares are entitled to receive dividends as declared from time to time and are entitled to one vote per
share at general meetings of the Company. All shares rank equally with regard to the Company’s residual assets.
2 Director share allotment:
According to Director's employment commitment letter, the Company is committed to issue shares worth of GBP 6,250 each
quarter in consideration of the director's services.
In the year ended December 31, 2019, the Company issued 8,761 ordinary shares of a par value of NIS 0.01 based on the share
price on the date of the issuance, only for the first quarter of 2019.
The total expenses recognized in the statement of Operation and Other Comprehensive Income in the year ended December 31,
2019 with respect to the director share allotment amounted to USD 8 thousand.
Issuing new public shares:
3
Following the acquisition of Unruly, as described in Note 19b, the Company issued 8,525,323 shares at a quoted price of GBP 1.51
(USD 1.98) per share to former Unruly shareholders which became admitted to trading on AIM on January 10, 2020 and are
subject to a 18-months lock-up.
In April 2019, following the acquisition of RhythmOne, as described in Note 19c, the Company issued 66,736,485 new shares for
every 33 RhythmOne shares held, so that following the completion of the Acquisition, the Company's current shareholders held
50.1% and, RhythmOne Shareholders held 49.9% of the merged Group.
4 Own shares acquisition:
Following the Acquisition of RhythmOne, as described in Note 1, and as part of the Company’s Board of Director approvals in
April 2019 and June 2019 for a share buyback program for a total consideration of USD 25,000 thousand, the Company
purchased during the year ended December 31, 2019 14,552,741 shares (of which 5,743,731 were purchased from former related
parties) for a total consideration of USD 24,737 thousands.
In March 2020, following the Company's Board of Director approvals for a share buyback program for a total consideration of
USD 10,000 thousand, the Company purchased during the twelve months period ended December 31, 2020 5,277,220 shares for
a total consideration of USD 9,965 thousand.
The Ordinary Shares acquired pursuant to the buyback programs reclassified as dormant shares under the Israeli Companies Law
(without any rights attached thereon) and held in treasury.
On December 17, 2020 the Company has received approval from the Israeli court authorizing the distribution of a dividend and
the repurchase of up to USD 20,000 thousand of the Company's Ordinary Shares, if the Company elect to do so.
On December 22, 2020, the Company's Board of Directors has approved another share buyback program for an aggregate
purchase price of up to USD 10,000 thousand.
Although the Company have paid dividends and share buybacks in the past, the Company does not anticipate paying any
dividends in the foreseeable future. The Company currently intend to retain future earnings, if any, to finance operations and
expand its business.
59
TREMOR INTERNATIONAL LTD.FINANCIAL STATEMENTSANNUAL REPORT 2020 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS CONTINUED
as at 31 December 2020
15 EARNINGS PER SHARE
Basic earnings per share
The calculation of basic earnings per share as of December 31, 2020 and 2019 was based on the profit for the year divided by a
weighted average number of ordinary shares outstanding, calculated as follows:
Profit for the year:
Profit for the year
Weighted average number of ordinary shares:
Weighted average number of ordinary shares used
to calculate basic earnings per share as at December 31
Basic earnings per share (in USD)
Year ended December 31
2020
USD
thousands
2019
USD
thousands
2,139
6,224
Year ended December 31
2020
Shares
of NIS
0.01 par
value
2019
Shares
of NIS
0.01 par
value
133,991,210
111,231,769
0.016
0.056
Diluted earnings per share:
The calculation of diluted earnings per share as of December 31, 2020 and 2019 was based on profit or for the year divided by a
weighted average number of shares outstanding after adjustment for the effects of all dilutive potential ordinary shares,
calculated as follows:
Weighted average number of ordinary shares (diluted):
Year ended December 31
2020
Shares
of NIS
0.01 par
value
2019
Shares
of NIS
0.01 par
value
133,991,210
111,231,769
4,714,985
3,576,114
138,706,195
114,807,883
0.015
0.054
Weighted average number of ordinary shares used
to calculate basic earnings per share
Effect of share options on issue
Weighted average number of ordinary shares used
to calculate diluted earnings per share
Diluted earnings per share (in USD)
60
TREMOR INTERNATIONAL LTD.ANNUAL REPORT 2020 16 SHARE-BASED PAYMENT ARRANGEMENTS
a. Share-based compensation plan:
The terms and conditions related to the grants of the share options programs are as follows:
• All the share options that were granted are non-marketable.
• All options are to be settled by physical delivery of shares.
• Vesting conditions are based on a service period of between 0.5-4 years.
On April 2, 2019 the Company's shareholders adopted the New Tremor International Ltd. Management Incentive Scheme to
provide for the grant of 11,772,932 equity incentive awards to executive officers. In addition, following the Acquisition of
RhythmOne, the Company's shareholders adopted RhythmOne Plan to provide for the grant of 1,328,908 equity incentive award
to RhythmOne executives and employees.
As part of the New Tremor International Ltd. Management Incentive Scheme, and following the acquisition of RhythmOne, the
Company's shareholders approved a modification in the exercise price of 1,200,000 Company share options awarded to the CEO
of the Group, out of which 1,080,000 share options will be vested subject to meet the performance-based metrics, and the
remaining options will be vested over a shorter service periods. Furthermore, restricted stock units of 400,000 to the Group’s
CEO were modified for a shorter vesting periods.
As described in Note 1, part of the acquisition of RhythmOne, 849,325 RhythmOne's options and 1,058,776 RSU's were replaced
by to 458,946 and 869,962 of the Company's options and RSU's, respectively.
As part of the acquisition of Unruly, as described in Note 1, the Group granted 415,074 restricted share units (RSU’s) to Unruly
executives and employees to replace the pre-acquisition equity incentive awards held by such Unruly executives and employees.
b Stock Options:
During 2020 and 2019, the Group granted 1,801,000 and 458,946 share options to its executive officers and employees,
respectively.
The number of share options is as follows:
Outstanding at 1 January
Forfeited during the year
Exercised during the year
Granted during the year
Option assumed in Merger
Outstanding at December 31
Exercisable at December 31
Number of
options
Weighted average
exercise price
2020
2019
2020
2019
(Thousands)
(GBP)
4,828
7,731
(1,621)
(2,290)
(1,227)
(1,072)
1,801
–
3,781
51
–
459
4,828
2,054
2.89
2.86
0.53
1.62
–
1.60
3.10
3.22
0.57
–
4.38
2.89
In January 2020, the Company’s Board of Directors approved a change in the exercise price and vesting terms relating to
2,204,174 options for ordinary shares held by certain employees (the “Amended Options”), as follows:
61
TREMOR INTERNATIONAL LTD.FINANCIAL STATEMENTSANNUAL REPORT 2020 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS CONTINUED
as at 31 December 2020
16 SHARE-BASED PAYMENT ARRANGEMENTS (CONTINUED)
Originally granted
Amended Granted
Grated
date
March 20, 2017
June 18, 2017
Number of
options
217,000
116,000
November 5, 2017
391,000
January 23, 2018
1,163,000
June 20, 2018
April 2, 2019 (*)
52,000
265,174
Exercise price
(GBP)
2.44
2.99
4.31
4.37
4.37
Exercisable date from
March 20, 2019
June 18, 2019
November 5, 2019
January 23, 2020
June 20, 2020
2.06-18.27
April 2, 2019
(*) Granted as part of RhythmOne’s acquisition as listed above.
Exercise price
(GBP)
Exercisable
date from
1.60
1.60
1.60
1.60
1.60
1.60
July 28, 2021
July 28, 2021
July 28, 2021
July 31, 2021
July 31, 2021
July 28, 2021
The options that had a vesting date up to July 2021 will now vest and become exercisable on July 2021, while the vesting and
exercise periods of the rest of the options remain unchanged. The incremental fair value (amounting to USD 1,282 thousand) is
recognized over the remaining vesting period. The new expiration date is one year after the last exercise date.
Information on measurement of fair value of share-based payment plans:
The fair value of employees share options is measured using the Black-Scholes formula. Measurement inputs include the share
price on the measurement date, the exercise price of the instrument, expected volatility, expected term of the instruments,
expected dividends, and the risk-free interest rate (based on government debentures) (See Note 3i).
The parameters used in the measurement of the fair values at grant date of the equity-settled share-based payment plans were
as follows:
Grant date fair value in USD
Share price (on grant date) (in GBP)
Exercise price (in GBP)
Expected volatility (weighted average)
Expected life (weighted average)
Expected dividends
Risk-free interest rate
2020
2019
0.76-1.267
0.01-0.56
1.27-2.22
1.79
1.38-2.24
1.56-18.27
60%
3.5-3.75
0.00%
0.15%-1.46%
45%
0-3.38
1.35%
2.3%
The total expense recognized in the year ended December 31, 2020 with respect to the options granted to employees, amounted
to approximately USD 2,693 thousand.
62
TREMOR INTERNATIONAL LTD.ANNUAL REPORT 2020 16 SHARE-BASED PAYMENT ARRANGEMENTS (CONTINUED)
c Restricted Share Units:
During 2020 and 2019, the Group granted 3,334,074 and 5,220,480 Restricted Share Units (RSU’s) to its executive officers and
employees, respectively.
The number of restricted share units is as follows:
Outstanding at 1 January
Forfeited during the year
Exercised during the year
Granted during the year
Restricted stock units assumed in acquisition during the year
Outstanding at December 31
Number of RSU’s
Weighted-Average Grant
Date Fair Value
2020
2019
2020
2019
(Thousands)
3,969
(46)
1,024
(198)
(3,480)
(2,077)
2,919
415
3,777
4,350
870
3,969
2.372
2.511
2.296
2.538
2.786
2.364
4.673
3.744
2.574
2.035
2.347
2.372
The total expense recognized in the year ended December 31, 2020 with respect to the options granted to employees, amounted
to approximately USD 7,443 thousand.
d Performance Stock Units:
During 2020 and 2019, the Group granted 725,000 and 4,350,796 Performance Stock Units (PSU’s) to its executive officers,
respectively.
The number of performance stock units is as follows:
Outstanding at January 1
Forfeited during the year
Exercised during the year
Granted during the year
Number of PSU’s
Weighted-Average Grant
Date Fair Value
2020
2019
2020
2019
(Thousands)
5,071
(206)
(1,738)
725
1,080
–
(360)
4,351
2.105
2.211
2.185
2.592
2.904
–
2.904
1.973
Outstanding at December 31
3,852
5,071
2.155
2.105
The vesting of the PSU’s is subject to continues employment and compliance with the performance criteria determined by the
Company’s Remuneration Committee and the Company’s Board of Directors.
The total expense recognized in the year ended December 31, 2020 with respect to the options granted to employees, amounted
to approximately USD 4,354 thousand.
63
TREMOR INTERNATIONAL LTD.FINANCIAL STATEMENTSANNUAL REPORT 2020 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS CONTINUED
as at 31 December 2020
16 SHARE-BASED PAYMENT ARRANGEMENTS (CONTINUED)
e Expense recognized in the statement of operation and other comprehensive income is as follows:
Selling and marketing
Research and development
General and administrative
Year ended December 31
2020
USD
thousands
2019
USD
thousands
4,515
555
9,420
1,257
452
14,100
14,490
15,809
17 FINANCIAL INSTRUMENTS
a Overview:
The Group has exposure to the following risks from its use of financial instruments:
• Credit risk
• Liquidity risk
• Market risk
This note presents quantitative and qualitative information about the Group’s exposure to each of the above risks, and the
Group’s objectives, policies and processes for measuring and managing risk.
In order to manage these risks and as described hereunder, the Group executes transactions in derivative financial instruments.
Presented hereunder is the composition of the derivatives:
Derivatives presented under current assets
Forward exchange contracts used for hedging
Derivatives presented under non-current assets
Forward exchange contracts used for hedging
Total
December 31
2020
USD
thousands
2019
USD
thousands
836
1,335
2,171
–
–
–
b Risk management framework:
The Board of Directors has overall responsibility for the establishment and oversight of the Group’s risk management framework.
The Board is responsible for developing and monitoring the Group’s risk management policies.
The Group’s risk management policies are established to identify and analyze the risks faced by the Group, to set appropriate risk
limits and controls, and to monitor risks and adherence to limits. Risk management policies and systems are reviewed regularly to
reflect changes in market conditions and the Group’s activities. The Group, through its training and management of standards
and procedures, aims to develop a disciplined and constructive control environment in which all employees understand their
roles and obligations.
The Group Audit Committee oversees how management monitors compliance with the Group’s risk management policies and
procedures and reviews the adequacy of the risk management framework in relation to the risks faced by the Group. The Group
Audit Committee is assisted in its oversight role by Internal Audit. Internal Audit undertakes both regular and ad hoc reviews of
risk management controls and procedures, the results of which are reported to the Audit Committee.
64
TREMOR INTERNATIONAL LTD.ANNUAL REPORT 2020 17 FINANCIAL INSTRUMENTS (CONTINUED)
c Credit risk:
The Group’s credit risk is arise from the risk of financial loss if a customer or counterparty to a financial instrument fails to meet
its contractual obligations.
d Exposure to credit risk
The carrying amount of financial assets represents the maximum credit exposure.
The maximum exposure to credit risk at the reporting date was as follows:
Cash and cash equivalents
Trade receivables, net (a)
Other receivables
long term deposit
Long Term Receivables
December 31
2020
USD
thousands
2019
USD
thousands
97,463
79,047
153,544
96,829
2,379
499
1,335
1,567
965
367
255,220
178,775
(a) At December 31, 2020, the Group included provision for doubtful debts in the amount of USD 9,036 thousand
(December 31, 2019: USD 22,376 thousand) in respect of collective impairment provision and specific debtors that
their collectability is in doubt.
Balance at January 1
Business combination
Allowance for doubtful debts expenses
Write-off bad debt
Exchange rate difference
Balance at December 31
Allowance for
Doubtful debts
2020
USD
thousands
2019
USD
thousands
22,376
1,201
(1,091)
(13,397)
(53)
2,822
16,417
3,394
(303)
46
9,036
22,376
65
TREMOR INTERNATIONAL LTD.FINANCIAL STATEMENTSANNUAL REPORT 2020 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS CONTINUED
as at 31 December 2020
17 FINANCIAL INSTRUMENTS (CONTINUED)
e Liquidity risk:
Liquidity risk is the risk that the Group will encounter difficulty in meeting the obligations associated with its financial liabilities
that are settled by delivering cash or another financial asset. The Group’s approach to managing liquidity is to ensure, as far as
possible, that it has sufficient liquidity to meet its liabilities when due, under both normal and stressed conditions, without
incurring unacceptable losses or risking damage to the Group’s reputation
As of December 31, 2020 and December 31, 2019, the Group’s contractual obligation of financial liability is in respect of leases,
trade and other payables in the amount of USD 161,875 thousand and USD 101,008 thousand, respectively. The contractual
maturity of the financial liability that is less than one year is in the amount of USD 147,243 thousand and USD 86,376 thousand for
December 31, 2020 and December 31, 2019, respectively.
As part of the framework of the acquisition of Adinnovation INC (ADI) on July 17, 2017, the Company has a call option to purchase
the remaining 43% of the issued share capital of ADI for a price of 8x net profit and for a period of six months commencing three
years after closing. Thereafter, ADI's minority shareholders have a put option for a period of three months to sell at a price of 7x
net profit. As a result of the aforesaid, the Company recognized the acquisition of full control (100%) over ADI and recorded
liability inherent in exercise of the option according to its discounted value. The amount of the liability as at the acquisition date is
estimated at USD 8,496 thousand and was estimated based on ADI's current business results and forecasts of ADI for the third
year capitalized with annual discount rate of 2.9%. The Company elected to recognized changes in the value of the liability on
every reporting date in shareholders’ equity. In 2019, the Company recorded a revaluation to decrease the liability by USD 1,501
thousand, and in 2020, it was increased by USD 445 thousand.
In accordance with the terms of the framework acquisition, the Company exercised part of the call option on December 5, 2020,
which will increase the Company’s share in ADI to 82%, following the closing, for total consideration of USD 1,734 thousand which
was not paid as of December 31, 2020. The remaining value of the option liability as of December 31, 2020 is USD 1,169 thousand
(see Note 22).
f Market risk:
Market risk is the risk that changes in market prices, such as foreign exchange rates, the CPM, interest rates and equity prices will
affect the Group’s income or the value of its holdings of financial instruments. The objective of market risk management is to
manage and control market risk exposures within acceptable parameters, while optimizing the return.
At December 31, 2020, USD 371 thousand are held in NIS, USD 7,369 thousand are held in GBP, USD 2,061 thousand are held in
EUR, USD 1,369 thousand are held in CAD, USD 6,591 thousand are held in JPY, USD 512 thousands are held in MXN, USD 1,120
thousand are held in SGD, USD 110 thousand are held in KRW, USD 1,835 thousands are held in AUD and USD 700 thousand are
held in other currencies and the remainder held in USD.
g Sensitivity analysis:
A change as of December 31 in the exchange rates of the following currencies against the USD, 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 shareholders’ equity by the amounts shown below (after 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. The
analysis is performed on the same basis for 2019.
2020
+10%
USD
thousands
2020
-10%
USD
thousands
2019
+10%
USD
thousands
2019
-10%
USD
thousands
85
(1,139)
(85)
1,139
–
479
–
(479)
2020
+10%
USD
thousands
2020
-10%
USD
thousands
2019
+10%
USD
thousands
2019
-10%
USD
thousands
(798)
835
798
(835)
(790)
906
790
(906)
GBP/USD
Profit / (Loss)
Increase / (Decrease) in Shareholders’ Equity
NIS/USD
Profit / (Loss)
Increase / (Decrease) in Shareholders’ Equity
66
TREMOR INTERNATIONAL LTD.ANNUAL REPORT 2020 Linkage and foreign currency risks
Currency risk
The Group is not exposed to currency risk on sales and purchases that are denominated in a currency other than the respective
functional currency of the Group, the USD. The principal currencies in which these transactions are denominated are GBP, NIS,
Euro, CAD, SGD, KRW, MXN, AUD and JPY.
At any point in time, the Group aims to match the amounts of its assets and liabilities in the same currency in order to hedge the
exposure to changes in currency.
In respect of other monetary assets and liabilities denominated in foreign currencies, the Group ensures that its net exposure is
kept to an acceptable level by buying or selling foreign currencies at spot rates when necessary to address short-term
imbalances.
18 RELATED PARTIES
a Compensation and benefits to key management personnel
Executive officers also participate in the Company’s share option programs. For further information see Note 16 regarding
share-based payments.
Compensation and benefits to key management personnel (including directors) that are employed by the Company and its
subsidiaries:
Share-based payments
Other compensation and benefits
Year ended December 31
2020
USD
thousands
2019
USD
thousands
7,061
3,932
12,607
3,948
10,993
16,555
b
c
As of December 31, 2020, an amount of USD 2,746 thousand was due to a related party for proceeds due to sale of shares
(See Note 9).
In 2019, an amount of USD 130 thousand was paid to a related party due to its efforts in the acquisition of RhythmOne.
67
TREMOR INTERNATIONAL LTD.FINANCIAL STATEMENTSANNUAL REPORT 2020 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS CONTINUED
as at 31 December 2020
19 SUBSIDIARIES
a Details in respect of subsidiaries:
Presented hereunder is a list of the Group’s subsidiary:
Name of company
Taptica Inc
Tremor Video Inc
Adinnovation Inc
Taptica Japan
Taptica UK
RhythmOne PLC
RhythmOne Holding Inc
YuMe Inc *
Perk.com US Inc *
Perk.com Canada Inc
R1Demand LLC *
RhythmOne LLC
Unruly holdings Ltd*
Unruly Group Ltd
Unruly Media GmbH
Unruly Media Pte Ltd*
Unruly Media Pty Ltd
Unruly Media KK
Unmedia Video Distribution Sdn Bhd
Unruly Media Inc
Principal location of
the Company’s activity
The Group’s ownership interest in the
subsidiary for the year ended December 31
USA
USA
Japan
Japan
United Kingdom
UK
USA
USA
USA
Canada
USA
USA
UK
UK
Germany
Singapore
Australia
Japan
Malaysia
USA
2020
100%
100%
57%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
2019
100%
100%
57%
100%
100%
100%
100%
100%
100%
100%
100%
100%
0%
0%
0%
0%
0%
0%
0%
0%
*Under these companies, there are twenty five (25) wholly owned subsidiaries that are inactive and in liquidation process.
68
TREMOR INTERNATIONAL LTD.ANNUAL REPORT 2020 19 SUBSIDIARIES (CONTINUED)
b Acquisition of subsidiaries and business combinations during the current period:
Acquisition of Unruly:
On January 4, 2020, the Company completed the acquisition of Unruly Holdings Limited and Unruly Media Inc. from News Corp
UK & Ireland Limited (UK Seller) and News Preferred Holdings Inc. (US Seller) for total consideration of: (i) issuance of 7,960,111
Ordinary Shares of the Company to the UK Seller in exchange for a loan in the amount of GBP 12,020 thousand (USD 15,729
thousand) between UK Seller (as lender) and Unruly Group Limited (as borrower); (ii) GBP 1 to UK Seller for 100% of the issued
share capital of Unruly Holdings Limited; and (iii) issuance of 565,212 Ordinary Shares of the Company to the US Seller and USD 1
for 100% of the issued share capital of Unruly Media Inc.
The issuance of an aggregate 8,525,323 Ordinary Shares of the Company to UK Seller and US Seller represented approximately
6.91% of the Company's issued voting share capital at such time. The Sellers agreed not to sell, transfer or otherwise dispose of
such Company Ordinary Shares for an 18-month period, subject to customary exceptions.
At the same time, Tremor Video entered into a Master Service Agreement (MSA) with the UK seller for an exclusive right to sell
outstream video on various News Corp titles world-wide on a committed ad spend of GBP 30,000 thousand over a three-year
period with an option to extend the MSA by two quarters at the discretion of UK seller. The obligation for the net discounted
future payments exceeding market fair value aggregated to USD 14,073 thousand and is recognized according to the actual
consumption. As of December 31, 2020, the ad spend liability balance aggregated to USD 13,811 thousand.
The following summarizes the major classes of consideration transferred, and the recognized amounts of assets acquired and
liabilities assumed at the acquisition date:
Equity instruments issued (1)
Ad spend liability (2)
UK debt (3)
Total purchase price
USD
thousands
936
14,073
13,181
28,190
(1) The fair value of the Ordinary shares issued was based on the quoted price of GBP 1.51 per share considering the restrictions
on sell of the shares as detail above.
(2) The Ad spend liability fair value was determined based on the unfavorable aspect of the contract to the Company relative to
market prices. The Ad spend liability is included in other payables and other long term liabilities.
(3) The fair value of the UK debt was based on the quoted price of GBP 1.51 per share considering the restrictions on sell of the
shares as detail above.
69
TREMOR INTERNATIONAL LTD.FINANCIAL STATEMENTSANNUAL REPORT 2020 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS CONTINUED
as at 31 December 2020
19 SUBSIDIARIES (CONTINUED)
Identifiable assets acquired and liabilities assumed:
Cash and Cash equivalents
Accounts Receivables
Other receivables
Institutions-Tax income
Fixed Assets
Deferred tax assets
Long term lease assets
Intangible assets
Current maturities of lease liabilities
Trade payables
Other Payables
Long-term lease liabilities
Deferred tax liabilities
Net identifiable assets
USD
thousands
7,095
19,383
1,761
211
830
3,363
1,026
23,207
(2,403)
(24,564)
(11,343)
(3,845)
(4,409)
10,312
Measurement of fair values:
The fair value of the brand and the technology is based on the discounted estimated royalty payments that have been generated
if as a result of the trademark being licensed.
The fair value of the non-compete is based on the differences between two discounted estimated cash flow models, with and
without the asset in place.
The fair value of customer relationships and backlog is determined using the multi-period excess earnings method, whereby the
subject asset is valued after deducting a fair return on all other assets that are part of creating the related cash flows.
The following table summarizes the components of the acquired intangible assets and estimated useful lives (in thousands,
except for estimated useful life) as of the acquisition date:
Amount
USD
thousands
Estimated
Useful Life
1
1.5
1
5
5
162
906
1,658
10,054
10,427
23,207
Backlog
Non Compete
Technology
Customer relations
Brand
70
TREMOR INTERNATIONAL LTD.ANNUAL REPORT 2020 19 SUBSIDIARIES (CONTINUED)
The aggregate cash flow derived for the Company as a result of the Unruly acquisition:
Cash and cash equivalents at Unruly
Acquisition costs
Acquisition of subsidiary – Cash
Goodwill
Goodwill was recognized as a result of the acquisition as follows:
Consideration transferred
Less fair value of identifiable net assets
Goodwill
USD
thousands
7,095
(887)
6,208
USD
thousands
28,190
10,312
17,878
The goodwill is attributable mainly to the increase offering to customers, enhanced opportunities for growth and the synergies
expected to be achieved from integration into the Company’s digital advertising platforms (see also Note 7 on intangible assets).
None of the goodwill recognized is expected to be deductible for tax purposes.
Acquisition-related costs
The Company incurred acquisition-related costs of USD 887 thousand related to finders’ fees, legal fees and due diligence costs.
These costs have been included in general and administrative expenses in the statement of operation.
c Acquisition of business combination in prior periods
Acquisition of RhythmOne:
On April 1, 2019, the Company completed Acquisition Transaction (hereinafter- "Acquisition") with RhythmOne Plc, a Company
incorporated under the laws of England and Wales, whereby the Company acquired the entire issued ordinary shares of
RhythmOne and each RhythmOne shareholder received 28 new shares of the Company (as such new 66,736,485 shares of the
Company were issued , see also Note 14(3)) for every 33 RhythmOne shares held, so that following the completion of the
Acquisition, the Company's current shareholders held 50.1% and, RhythmOne Shareholders held 49.9% of the merged Group. In
addition, 849,325 options and 1,058,776 restricted shares units over RhythmOne share awarded were rolled over to 458,946 the
Company's options and to 869,962 the Company's restricted units (hereinafter- "Replacement Award"). The consideration of the
Acquisition amounted to USD 176,421 thousand (including consideration allocated to issuance of ordinary shares and
Replacement Award).
71
TREMOR INTERNATIONAL LTD.FINANCIAL STATEMENTSANNUAL REPORT 2020 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS CONTINUED
as at 31 December 2020
20 OPERATING SEGMENTS
The Group has a single reportable segment as a provider of marketing services.
Geographical information
The Company is domiciled in Israel and it produces its income primarily in USA, Israel, China, Germany, Japan, India and UK.
In presenting information on the basis of geographical segments, segment revenue is based on the geographical location of
customers.
America
APAC
EMEA
Total (1)
Year ended December 31
2020
USD
thousands
2019
USD
thousands
180,515
261,534
20,804
33,052
10,601
31,174
211,920
325,760
(1) In the year ended December 31, 2020 and 2019 programmatic revenue is reported on a net basis and gross basis,
respectively and performance revenue reported on gross basis in both years (see Note 3k).
In 2019, media cost amounted to USD 113,251 thousand in America, USD 887 thousand in APAC and USD 3,163 thousand in EMEA.
21 CONTINGENT LIABILITY
a
On December 10, 2020, Taptica entered into a settlement agreement with Uber. There was no court finding as to wrongdoing
by the Company or on the merits of the lawsuit. The Company made no admission of any liability or wrongdoing. In the
settlement it was agreed that Taptica will pay a total amount of USD 1,700 thousand to Uber, which resulted in the full
dismissal of the case against Taptica.
b
In January 2018, AlmondNet, Inc. and its affiliates (Datonics LLC and Intent IQ) contacted RhythmOne asserting that
RhythmOne’s online advertising system infringes eleven U.S. Patents owned by the AlmondNet Group. As of the date of this
report, a claim was never filed and RhythmOne is currently in a commercial agreement with AlmondNet’s affiliate. The
Company believes that the likelihood of a material loss is remote but at this point is unable to reasonably estimate any
potential loss and financial impact to the Company resulting from this matter.
22 SUBSEQUENT EVENTS
D.A. Consortium, Inc., a minority shareholder of ADI, exercised, effective March 5, 2021, its put option pursuant to the
Shareholders Agreement dated July 17, 2016, as amended November 20, 2020, to sell to Taptica Japan GK, a wholly owned
subsidiary, its entire shareholding in ADI, reflecting 2,120 Class B Shares of ADI, for a purchase price equal to seven times the
actual net profit of ADI for the last fiscal year, see Note 17 (e), reflecting approximately USD 1,169 thousand. Following the closing
of the put option exercise, the Company will own through its subsidiary 100% of the share capital of ADI.
72
TREMOR INTERNATIONAL LTD.ANNUAL REPORT 2020 DIRECTORS, SECRETARY & ADVISERS
DIRECTORS:
Christopher John Stibbs – Non-Executive Chairman
Ofer Israel Druker – Chief Executive Officer and Executive Director
Yaniv Carmi – Chief Operating Officer and Executive Director
Sagi Niri – Chief Financial Officer and Executive Director
Joanna Rachael Parnell – Non-Executive Director
Neil Garth Jones – Non-Executive Director
Rebekah Mary Brooks – Non-Executive Director
Norman Thomas Johnston – Non-Executive Director
Lisa Klinger – Non-Executive Director
COMPANY SECRETARY:
Yaniv Carmi
REGISTERED OFFICE:
82 Yigal Alon St, 13th Floor, Tel Aviv, 6789124, Israel
NOMINATED ADVISER AND JOINT BROKER
finnCap Ltd, 60 New Broad Street, London EC2M 1JJ
JOINT BROKER
Stifel Nicolaus Europe Limited, 150 Cheapside, London EC2V 6ET
LEGAL ADVISERS – ENGLISH LAW
Charles Russell Speechlys, LLP 5 Fleet Place, London EC4M 7RD
LEGAL ADVISERS – ISRAELI LAW
Naschitz, Brandes, Amir & Co, Advocates 5 Tuval Street Tel Aviv 6789717, Israel
REPORTING ACCOUNTANTS AND AUDITORS
KPMG Somekh Chaikin KPMG Millennium Tower 17 Ha’arba’a Street P.O.B. 609 Tel Aviv 61006, Israel
KPMG UK 15 Canada Square Canary Wharf London E14 5GL
FINANCIAL PUBLIC RELATIONS ADVISER
Vigo Consulting, Sackville House, 40 Piccadilly, London W1J 0DR
REGISTRAR
Link Market Services (Guernsey) Limited, Mont Crevelt House, Bulwer Avenue, St Sampson, Guernsey GY2 4LH
DEPOSITARY:
Link Market Trustees Limited, The Registry 34 Beckenham Road, Beckenham, Kent BR3 4TU
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Annual Report and Accounts
For the year ended 31 December 2020
Tremor International Ltd.
82 Yigal Alon st.
(13th floor)
Tel-Aviv
Israel
6789124
www.tremorinternational.com
A Global Leader in All-Screen
Video Advertising Technologies