Nexxen International Ltd
Annual Report 2023
One platform.
Endless opportunities.
Nexxen operates in the rapidly-
growing digital advertising industry
with significant exposure to video
advertising; one of the most engaging
and fastest-growing formats
STRATEGIC REPORT
01 Nexxen Today
02 Chairperson’s Statement
04 Our Markets
06 Chief Executive Officer’s Review
10 Successful Integration – Amobee
11
12 Chief Financial Officer’s Review
Growing Opportunities – Investment in VIDAA
GOVERNANCE
16 Board of Directors
18 Corporate Governance Report
21 The Board and the Committees
26 Takeovers & Mergers
28 Directors’ Report
33 Compensation Report
FINANCIAL STATEMENTS
36 Financial Statements
39 Auditors’ Report to the Shareholders of Nexxen
International Ltd.
40 Consolidated Statements of Financial Position
41 Consolidated Statements of Operation and
Other Comprehensive Income (Loss)
42 Consolidated Statements of Changes in Equity
43 Consolidated Statements of Cash Flows
44 Notes to Consolidated Financial Statements
66 Directors, Secretary & Advisers
Our Mission
Our brands bring together an
end-to-end platform to enable
powerful partnerships and deliver
results across the advertising
ecosystem.
Nexxen Today
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NEXXEN’S SIGNIFICANT DATA SCALE
& CUSTOMER FOOTPRINT POSITIONS
THE COMPANY FOR LONG-TERM
MARKET SHARE GAINS
HIGHLIGHTS
>199 Billion
Daily ad requests
$314.2m
Contribution ex-TAC
~50mUS households for TV viewership data
$299.0m
Programmatic Revenue
~225,000
Active sites or apps where ads
can be shown
>85%of campaigns data-enabled
>1,000
Advertiser & agency customers
$207.5m
Video Revenue
$85.5m
CTV Revenue
$83.2m
Adjusted EBITDA
26%Adjusted EBITDA margin as
a % of Contribution ex-TAC
In-house data platform
Significant audience
segment data
Substantial customer
footprint and access to
1st party data
Strong third-party data
provider relationships
Nexxen Discovery
Robust retargeting
capabilities
>1,600
Publishers
>65Third-Party data partners
29%CTV revenue as % of programmatic revenue
~39%of all campaigns using proprietary
Nexxen data
69%Video revenue as % programmatic revenue
334New actively-spending first-time
advertisers customers added
372New supply partners added
ADVERTISERS
We enable advertisers
and agencies to
leverage significant
and powerful data to
plan and activate video
advertising campaigns
programmatically
PUBLISHERS
And we enable digital
publishers to maximize
ad inventory revenue
programmatically
Nexxen International Ltd Annual Report 2023
Nexxen International Ltd Annual Report 2023
01
STRATEGIC REPORT
Chairperson’s Statement
CHRISTOPHER STIBBS
Non-Executive Chairperson
“ 2023 was a transformational year
for the business in which we have
created a strong platform for
future growth, underpinned by
the integration of Amobee and
our subsequent rebranding from
Tremor International to Nexxen.”
KEY STRENGTHS &
DIFFERENTIATORS
Flexible unified end-to-end platform
maximizes revenue and profitability
opportunities
First-mover advantage for enabling
linear TV and CTV cross-planning
for advertisers, agencies, and
broadcasters
“One-stop-shop” for customers
fueled by robust, scaled, and
unique data
Significant Video and CTV revenue
footprint with strong growth runway
Significant Programmatic
revenue footprint
Global ACR data exclusivity and ad
monetization exclusivity (in U.S., U.K.,
Canada, and Australia) through
investment in VIDAA
Veteran leadership team and Board
Proven track record of acquiring and
successfully integrating companies
History of returning value to
shareholders through share
repurchase programs
Our business made considerable
progress, both in evolving our product
stack and in enhancing our global
talent base through the recruitment of
key personnel into the Group. Against a
backdrop of geopolitical and macro-
economic pressures and a complex
integration of Amobee, the business
delivered Contribution ex-TAC of $314.2
million and Adjusted EBITDA of $83.2
million, whilst maintaining a healthy
balance sheet. This resulted in a net
cash position of $134.3 million at the
period’s end.
Our focus in 2023 was on making
Nexxen a more adaptable business,
preparing for the changing landscape
we expect to see over the coming
years. Customers are being forced
to navigate changes in privacy and
identity, as well as becoming more
sophisticated in leveraging data. They
are therefore seeking partners who
can provide simplicity, expertise and
flexibility, all of which we believe Nexxen
can now deliver.
The acquisition and integration of
Amobee was the latest step in creating
a flexible, unified, data-driven platform
and product suite focused on CTV and
video. The completed integration made
our tech ecosystem’s value proposition
even stronger, and we now operate a
self-service platform that can plan
holistic TV campaigns, find and reach
audiences wherever they consume
media, have direct access to premium
supply and exclusive data (including
VIDAA’s global ACR data), and provide
cost advantages for customers buying
end-to-end. This functionality strongly
differentiates us for major advertisers,
agencies, and publishers, and we believe
that our technology positions us well to
attract new customers and increase
spending and product adoption over
time with our existing customers.
In conjunction with this major integration,
and as a broader strategic transition,
we undertook a rebrand from Tremor
International to Nexxen. This rebranding
has enabled the business to create one
complete and cohesive package for
customers, united under a shared name.
It has allowed us to unite our disparate
brands, simplify the Company’s story
and our product offering, and better
highlight our unified data-driven
end-to-end platform to customers.
We believe that this move has better
positioned Nexxen as a leader in the
video, data, and CTV advertising
ecosystems, and will ideally position
the business to increase market share
in the coming years through the ability
to seamlessly package multiple solutions
critical to helping customers meet and
exceed their advertising goals.
In December 2023, Nexxen launched
a new $20 million Ordinary share
repurchase programme as part of
our ongoing commitment to create
long-term shareholder value and
maintaining an efficient balance sheet.
The Company recently received
authorization to repurchase up to an
additional $50 million of its Ordinary
Shares.
Nexxen is now a truly global business,
operating from several strategic
locations around the world and
employing roughly 900 staff. I would like
to thank our global teams for all their
hard work and commitment whilst we
integrated Amobee, rebranded and
navigated a challenging backdrop.
While results throughout 2023 were
impacted by difficult market conditions,
we have created a solid foundation for
the future of our business, and are
strongly positioned for long-term growth
and market share gains, and to emerge
as true, future leaders in the video and
TV ad tech arenas.
CHRISTOPHER STIBBS
Non-Executive Chair
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02
Nexxen International Ltd Annual Report 2023
Nexxen International Ltd Annual Report 2023
03
STRATEGIC REPORT
Our Markets
Nexxen operates in the rapidly-
growing digital advertising industry
with significant exposure to video
advertising; one of the most engaging
and fastest-growing formats
NEXXEN IS POSITIONED AT THE CENTER
OF INDUSTRY GROWTH TRENDS
Linear converging
with CTV
Industry and customer
spend consolidation
Video is Driving and Outpacing Digital Advertising Growth
~66%
of Nexxen’s
contribution ex-TAC
derived from
video*
DIGITAL AD SPENDING – US
$ billions
DIGITAL AD SPENDING –
WORLDWIDE
$ billions
VIDEO AD SPENDING – US
$ billions
2027
2026
2025
2024
2023
410
372
338
303
269
4 YR. CAGR
11%
2027
2026
2025
2024
2023
911
833
754
677
603
4 YR. CAGR
11%
2027
2026
2025
2024
2023
157
139
123
108
4 YR. CAGR 15%
90
*Nexxen’s video revenue percentage reflects full year 2023 figure
Within Video Advertising, CTV is Growing at the Fastest Rate, Fueled
by Linear TV Budgets Shifting Towards, and Converging with, Digital
~27%
of Nexxen’s
Contribution ex-TAC**
is from CTV
DESKTOP / LAPTOP AD SPENDING – US
$ billions
MOBILE AD SPENDING – US
$ billions
CTV AD SPENDING – US
$ billions
2027
2026
2025
2024
2023
95
88
81
75
69
4 YR. CAGR
8%
2027
2026
2025
2024
2023
275
248
224
199
176
4 YR. CAGR
12%
2027
2026
2025
2024
2023
41
37
33
29
4 YR. CAGR 14%
24
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Data for audience
finding, targeting,
measurement, and
returns maximization
Supply path
optimization
Industry stats come from eMarketer data as of March 2024
**Nexxen’s CTV percentage reflects full year 2023 figure
End-to-end
platforms
Content and data
exclusivity creating
differentiation
Continued growth
within CTV / video /
programmatic / AVOD
Nexxen’s TV-focused tech and data
stack positions it for accelerated
future CTV growth
~48%
of total US TV ad
spending is projected
to be allocated to
CTV by 2027
~39%
of total US TV
ad spending is
projected to be
allocated to
CTV
2027
2026
2025
2024
2023
41
37
33
29
24
45
50
51
59
59
86
87
84
88
83
~29%
of total US
TV ad spending
is allocated
to CTV
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Nexxen International Ltd Annual Report 2023
Nexxen International Ltd Annual Report 2023
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STRATEGIC REPORT
Chief Executive Officer’s Review
OFER DRUKER
Chief Executive Officer
“ Now that the foundations have
been firmly laid, we remain
confident that we are very well-
placed to generate Contribution
ex-TAC growth, significantly
improve profitability, achieve
outsized long-term market share
gains, and position ourselves as
true leaders in the video and TV
ad tech space.”
INTRODUCTION
2023 was a transformative year,
characterised by significantly advancing
and enhancing our technology and
product stack, as well as rebranding the
Company to Nexxen. The tech and
product enhancements were achieved
mainly by successfully completing the
integration of our largest acquisition to
date, along with bolstering our talent
base with industry veterans and Ad Tech
experts. All of these critical operational
successes were achieved despite the
challenging macroeconomic backdrop,
highlighting the resiliency and
advantages of our diverse operating
model.
In the year-ended 31 December 2023,
the Company generated Contribution
ex-TAC of $314.2 million, reflecting a
1% increase compared to the prior
year (2022: $309.7 million), whilst our
programmatic revenue grew by 9%
to $299.0 million (2022: $274.4 million).
Adjusted EBITDA stood at $83.2 million
for the year ended 31 December 2023
(2022: $144.9 million). The Company
attributes this year-on-year decrease in
Adjusted EBITDA to the dual challenges
of strategically integrating Amobee –
a business that initially generated
significant losses and whose business
lines operate at a lower profitability
profile than the standalone pre-
acquisition Nexxen business – and
navigating an advertising market
impacted by industry headwinds. With
these hurdles overcome, we expect to
be able to shift our primary investment
focus towards innovation and our share
repurchase program to generate
long-term value for our customers and
shareholders.
Despite these challenges, significant
progress was made in executing our
strategic vision to combine Nexxen’s
and Amobee’s data-driven and highly
synergistic platforms, successfully
rebranding to Nexxen to simplify and
enhance the holistic value proposition
of the Company’s advanced technology
offering, and expanding our CTV
partnership roster. Much of 2023’s focus
had been on installing the engines for
future growth. Now that the foundations
have been firmly laid, we remain
confident that we are very well-placed
to generate Contribution ex-TAC growth,
significantly improve profitability, achieve
outsized long-term market share gains,
and position ourselves as true leaders
in the video and TV ad tech space.
OPERATIONAL REVIEW
Successfully Completed the Integration
of Amobee
2023 saw Nexxen fully integrate
Amobee, the largest acquisition in the
Company’s history, into its service
offering. This integration, which was
completed in mid-2023, resulted in one
of the most comprehensive, unified
data-driven CTV and video-focused
AdTech platforms on the open internet,
purpose-built to help customers on
both sides of the ecosystem exceed
their digital advertising goals and KPIs.
We already see positive upside
following this successful integration. In
Q1 2023, we made the strategic decision
to migrate Tremor Video’s CTV and
video algorithms and capabilities to the
Amobee DSP, now referred to as Nexxen
DSP, which greatly enhanced our
self-service capabilities and positions
us strongly to grow our client share
amongst the world’s largest advertisers
and agencies. The Nexxen Discovery
Platform, gained through the Amobee
acquisition and integration, has
become an important component in our
‘cookie deprecation strategy’ while
serving as a data-fueled B.I. tool that
leverages content consumption data
from across the internet, social media,
and TV, significantly enhancing audience
knowledge for better targeting and
reach extension. This product is already
generating considerable interest
amongst political advertisers and
agencies ahead of the 2024 U.S.
election cycle.
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Looking ahead, we believe our unified
technology offering leaves us well-
placed to showcase a strong
competitive advantage and serves as
a key differentiator for our business
with major advertisers, agencies, CTV
players, and broadcasters, while giving
us enhanced confidence in our ability
to accelerate Contribution ex-TAC growth,
CTV market share gains, and profitability
in the coming year and beyond.
Rebranded to Nexxen
The momentum generated from the
integration of Amobee was further
bolstered by the strategic rebranding
of the Company’s major products and
platforms to Nexxen. The new unified
brand name and identity encompass
all the Company’s key strategic growth
pillars, namely our DSP, SSP and data
management platforms. Nexxen
embodies our vision for a robust and
flexible end-to-end platform that can
be tailored specifically to meet our
partners’ diverse needs by enabling
effective data-driven video campaigns
across all screens, with a specialization
in CTV. We were pleased to achieve this
milestone in tandem with the integration
of Amobee. This consolidation of the
brand portfolio better positions the
Company, with significantly added
scale and a simplified value proposition,
to hold a leadership position in the
future CTV advertising arena.
Looking ahead, we believe that our
cohesive video and CTV-focused
platform will stand us in good stead to
drive superior ROI outcomes through
advanced audience discovery and
planning tools with cross-platform
capabilities that ensure incremental
reach in converged linear and CTV,
unique and exclusive data sets
including ACR, and powerful, dynamic
data-driven creative.
>1,000
Active corporate
& agency
customers*
>1,600Active
publishers*
*As of 12/31/2023
NEXXEN WELL-POSITIONED
FOR LEADERSHIP AND
MARKET SHARE GAINS IN
THE VIDEO AND CTV
ADVERTISING ECOSYSTEMS
~66% of Contribution
ex-TAC from Video*
~27% of Contribution
ex-TAC from CTV*
~90% of Revenue from
Programmatic Activities*
First-to-Market Cross-Platform
Planner (Linear TV & CTV)
Significant data including
exclusive global access to
VIDAA’s ACR data
End-to-end platform
benefits and robust CTV
OEM relationships attractive
to TV advertising customers
*Data as of full year 2023
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STRATEGIC REPORT
Chief Executive Officer’s Review
continued
2024 PRODUCT
FOCUSES & STRATEGY
SELF-SERVICE ENTERPRISE
Enhancing and expanding
self-service enterprise capabilities
INNOVATION
Leveraging A.I. and machine
learning to speed up development
times and enhance audience and
activation tools
PRODUCTS / TECH / DATA
Continuous focus on enhancing
products, tech capabilities, and
data footprint to improve our
customers’ results
ACR DATA MONETIZATION
Enhancing ACR data capabilities
to expand ACR data monetization
Expanded CTV Partnerships and
Offerings Despite Challenging Year for
CTV Advertising
Nexxen’s CTV revenue was $85.5 million
in 2023, reflecting a 12% decrease from
the previous year (2022: $97.2 million).
CTV revenue was impacted by a
combination of factors, including the
SAG-AFTRA strike, reduced budgets and
CTV spending from some of the
Company’s largest small- and mid-sized
agency customers. The Company’s
largest small- and mid-sized agency
customers encouragingly continued to
spend within Nexxen’s broad suite of
platform offerings despite challenging
market conditions, but opted for
lower-cost solutions such as mobile
video, audio, and display to maximize
audience reach at a lower price point.
In spite of these conditions, the Company
retained the overwhelming majority of
its major customer base and actively
scaled and expanded its CTV partnership
roster, and in doing so, established
relationships with more of the world’s
major smart TV OEMs. In May, we
partnered with TCL FFALCON (“TCL”). The
partnership granted customers direct
access to TCL’s innovative ad units on
premium CTV/OTT inventory in the TCL
Channel, providing them with the
opportunity to deliver highly impactful
ads to receptive audiences across the
globe. We have since expanded this
partnership (in 2024) to also exclusively
sell TCL’s native display inventory as a
preferred supply partner, enabling
Nexxen to offer customers expanded
reach across a significant number of TV
screens with flexibility across formats to
enhance advertising outcomes.
In addition, in May, Nexxen created a
first-to-market Green Media Product for
CTV via a global partnership with
Scope3. The partnership enables
Scope3’s carbon emission
measurement methodology to be
applied to CTV inventory with buyers
able to access GMP curated deals
through the Nexxen SSP to achieve
performance goals while mapping and
measuring carbon emissions of their
media spend within CTV. This has
generated significant interest from, and
adoption by, agencies, as sustainability
has become an increasingly core focus
for agencies and their customers.
The company built on the momentum
gained by the partnerships in May
and, in August, we partnered with
Lumen and TVision to deliver the first
omnichannel Attention Measurement
solution for advertisers across CTV,
online video, and display. This
partnership augments the launch of
Nexxen’s full Attention Measurement
offering, which spans the lifecycle of an
advertiser’s campaign, from creative
testing to media curation to real-time
measurement and optimization, all
through Nexxen’s end-to-end platform.
By leveraging all elements of the
offering, advertisers can plan against,
activate on, and optimize for consumer
attention across screens, including CTV.
In November, we expanded the
Company’s international CTV growth
opportunity through the launch of TV
Viewership Audiences across the United
Kingdom, as well as the expansion of its
broader TV Intelligence offering in the
United States – a suite of targeting,
planning and measurement capabilities
rooted in contextual and exclusive
automatic content recognition data. Both
the launch and expansion are the result
of the consolidation and integration of
TV targeting and measurement solutions
into the Company’s Data platform and
DSP. We saw notable and increased
adoption during Q4 2023, and we
anticipate further growth in both
markets in 2024.
As we look ahead, Nexxen maintains its
belief that CTV will be a crucial
component in helping the Company
capture a greater portion of market
share in the years ahead, especially
when considering the Company’s
exposure to CTV and its differentiators
for customers. We believe that we will
achieve CTV revenue growth in 2024
amidst optimism that macroeconomic
conditions will improve, our larger
customers’ budgets and spending will
increase, and that customers will seek
our premium, differentiated suite of
CTV solutions.
Cross-Platform Planner and ACR
Adoption
In August, we announced a partnership
with H/L, a renowned multiservice and
independent agency that’s been
making momentum for local, regional
and national marketers for nearly 40
years. As the digital and linear worlds
converge, we look forward to continuing
to work with H/L, and in turn, unleash a
consolidated, cross-channel approach
that drives superior outcomes for
advertisers on a local level.
VIDAA and Hisense
Following our $25 million investment in
VIDAA in 2022, we were also pleased to
report that VIDAA – whose global ACR
data can be monetized and distributed
exclusively by Nexxen through at least
the end of 2026 – grew its reach to over
25 million Connected TVs during 2023,
expanding and enhancing Nexxen’s TV
viewership data footprint. We believe
that we have created a powerful
partnership with the fastest growing
global CTV operating system, and one
of the largest and fastest growing
smart TV OEM brands. We look forward
to reviewing the platform’s ongoing
development in due course.
Share Repurchase Program
On December 20, 2023, Nexxen
launched a new $20 million Ordinary
share repurchase program, following
approval from the Israeli Court and the
Company’s Board of Directors. During
Q4, the Company repurchased 221,506
shares at an average price of 201.01
pence, reflecting a total investment of
£446,139, or $565,714. In March 2024, we
also announced a further share
repurchase program to purchase an
additional $50 million Ordinary shares,
which launched in May 2024. We are
committed to maintaining an efficient
balance sheet and therefore seek to
return excess capital, not required for
other business priorities, to our
shareholders, particularly whilst
shares trade at what we believe to
be a considerable discount to fair
market value.
Business Wins
We were delighted to report that the
Company maintained its strong
business momentum throughout 2023
following the integration of Amobee,
despite broader market challenges. We
added a significant number of new
customers on the buy- and sell-sides of
the ecosystem, while retaining the vast
majority of the Company’s highest-
spending customers throughout 2023.
Across the year, Nexxen DSP generated
a significant level of customer adoption.
We were delighted to report that 334
new actively-spending first-time
advertiser customers selected Nexxen’s
DSP platform for finding audiences,
targeting, and measurement, as well as
planning and activating campaigns
across the digital advertising
ecosystem. Pleasingly, our DSP solution
has been shown to have cross-sector
appeal, with uptake ranging across a
diverse mix of industries, such as
entertainment, food and beverage,
automotive, and financial industries,
demonstrating our cross-sector appeal.
Simultaneously, Nexxen SSP added 372
new supply partners during 2023.
Looking forward, we are focused on
continuing to diversify our customer
base while enhancing our product
offering to ensure we remain the go-to
name for advertisers, agencies, CTV
media companies, and broadcasters in
the digital advertising industry
Growth Strategy
Nexxen’s robust performance across
2023 was reinforced by our ability to
withstand macroeconomic headwinds
which stifled budgets and reduced
advertising spending across the
industry, particularly in managed
service campaigns. Nevertheless, we
continue to have confidence in our
long-term strategic vision and remain
cautiously optimistic that
macroeconomic conditions will
improve in 2024 and, as a result, drive
greater demand for CTV advertising.
To meet this demand, Nexxen will
continue to focus on enhancing and
expanding our technological
capabilities mainly around self-service
enterprise capabilities to increase the
attractiveness of our platform and
therefore enhance the experience for
our customers. We already believe we
possess a strong offering in the
marketplace, which can provide robust
solutions to the major industry trends,
and in some cases we offer a unique
and advanced solution that
differentiate us in the market, mainly
around TV data capabilities. As we
close the chapter on the Amobee
integration, we can now direct more
resources to R&D and product
innovation to help cement our position
as a household name in a rapidly
expanding market. In parallel, we are
confident that our sales teams are
poised to help drive new business
development opportunities and, in turn,
expand our operational footprint. We
are confident that our technology and
data stack now offer the necessary
components to enable market share
gains within the digital advertising
realm without the need for additional
M&A anytime soon.
Summary and Outlook
In closing, 2023 proved to be a year of
intense operational activity for Nexxen,
culminating in the dual milestones of
integrating Amobee and successfully
consolidating our brand portfolio under
one name. With these milestones
achieved, we believe that the Company
will now be entering an exciting phase
of growth which will help reinforce
Nexxen’s status at the forefront of the
digital advertising arena.
Looking ahead to 2024, we will continue
to focus on expanding our base of
end-to-end customers, leveraging us
for multiple enterprise tech and data
solutions, growing our data licensing
revenue, and expanding our major
streaming, TV, and agency partnerships
to drive growth and increased
profitability. We continue to view the
macroeconomic backdrop in which we
operate with cautious optimism, hoping
that the signs of improvement continue
and reverse headwinds into tailwinds.
On behalf of Nexxen management, I
would like to thank everyone at the
Company for their hard work and
unrelenting commitment during 2023,
which, as previously stated, was a year
not without challenges. The significant
operational progress that was achieved
during 2023 has provided Nexxen with a
solid foundation to further strengthen
its position across the digital advertising
market in 2024 and beyond.
OFER DRUKER
Chief Executive Officer
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NEXXEN STRONGLY POSITIONED FOR ACCELERATED GROWTH IN 2024 AND BEYOND
Completed integration of Amobee —
enhancing platform’s self-service DSP and
TV planning capabilities while growing U.S.
and international customer base
Rebranded to Nexxen — better positioning
Company with customers and investors
Created and unified one of the most
advanced and data rich platforms in ad
tech — a byproduct of ~$1 billion in total
R&D investment
Expanded and enhanced CTV and data
partnership roster — partnering with the
major CTV OEMs
Diversified into new data licensing and
other revenue streams — expected to
further scale in 2024
Achievements in 2023 strongly position Company
to “land and expand” with customers, grow
Contribution ex-TAC and market share, expand
profitability, and fuel investment in innovation
and share repurchases in 2024
08
Nexxen International Ltd Annual Report 2023
Nexxen International Ltd Annual Report 2023
09
STRATEGIC REPORT
Successful integration
Nexxen / Amobee
Growing opportunities
$25 Million Investment in VIDAA
Created one of the most
tech-advanced and data
rich platforms in Ad Tech
Significantly increased
scale, demand, and
customer base
Substantially enhanced
enterprise self-service DSP
capabilities and data assets
Added linear TV planning
capabilities, enabling
creation of cross-platform
planning tech (linear & CTV)
Added Nexxen Discovery
(data-fueled audience
insights B.I. tool)
Opened major cross selling
opportunities
• Closed Acquisition in September 2022
• Largest Acquisition in Company’s History
• Completed Integration in Mid-2023
• ~$65 Million Annualized Operating Cost Synergies Achieved
In 2022, Nexxen invested $25 Million
in VIDAA, a CTV Operating System /
Streaming Platform, and Subsidiary
of Hisense
Through the investment, Nexxen
gained:
• Equity Stake in VIDAA
• Exclusive Global Access to VIDAA’s
ACR Data for CTV Targeting and
Measurement for Several Years
• Ad Monetization Exclusivity on VIDAA
Media in the U.S., U.K., Canada and
Australia for Several Years
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COMPLETED AMOBEE INTEGRATION MADE OUR PLATFORM’S ALREADY POWERFUL
VALUE PROPOSITION EVEN STRONGER
VIDAA INVESTMENT ENABLING DIVERSIFICATION INTO DATA LICENSING REVENUE STREAMS,
REFLECTING AN EXCITING GROWTH OPPORTUNITY
DSP
CROSS-PLATFORM PLANNER
NEXXEN DISCOVERY
TARGETING
RESEARCH & MEASUREMENT
DSP
Video / CTV
Capabilities
Amobee’s DSP capabilities strengthened
Nexxen DSP’s self-service capabilities
and brought lower funnel performance
tools necessary to bring performance-
related CTV products to market
Amobee acquisition brought linear
planning capabilities to combine with
Nexxen’s pre-existing CTV planning
capabilities to create a first-to-market
solution to holistically plan across
linear TV and digital
Combines first-party audience data
with web, social media and TV data to
identify and target the right users at the
right time while serving as an important
component for Nexxen’s cookie
deprecation preparedness strategy
Major DSPs
for Segment
Targeting
Major DSPs for
Enterprise &
Managed Sales
Pre-existing DSP and SSP revenue
more vulnerable to shocks in
advertising demand
License to
Measurement
Companies
License to
Industry
Research
Companies
New data licensing revenue
less vulnerable to advertising
demand shocks
10 Nexxen International Ltd Annual Report 2023
Nexxen International Ltd Annual Report 2023
11
STRATEGIC REPORT
Chief Financial Officer’s Review
SAGI NIRI
Chief Financial Officer
HISTORY OF SIGNIFICANT ADJUSTED
EBITDA MARGINS AND STRONG
ADJUSTED EBITDA MARGINS
“ We were able to achieve these key milestones
while significantly enhancing our technology
and data assets, launching critical new
products and partnerships, and taking
advantage of a discounted valuation
opportunity in the market, repurchasing
approximately 2% of shares outstanding to
generate what we believe will be added
long-term value for our shareholders.”
ADJUSTED EBITDA
$ millions
2023
83.2
2022
2021
2020
60.5
2019
60.4
144.9
161.2
ADJUSTED EBITDA MARGIN
As a % of contribution ex-TAC
2023
2022
2021
2020
2019
26
33
37
47
53
Company historically possessed
one of the highest Adjusted EBITDA
margins in Ad Tech and expects
to expand margins after realizing
benefits from completed Amobee
integration and as macro conditions
improve.
With the combination of the successfully
completed integration of Amobee and
our rebranding to Nexxen, we are proud
to report that 2023 has been a
transformational year for the business,
and one which has laid a strong
foundation for future growth. The joint
effect of these two major steps for the
company strongly positions us to
capture a larger share of video and TV
advertising opportunities with the
world’s largest advertisers, agencies,
CTV companies, and broadcasters.
We were able to achieve these key
milestones while significantly enhancing
our technology and data assets,
launching critical new products and
partnerships, and taking advantage of a
discounted valuation opportunity in the
market, repurchasing approximately 2%
of shares outstanding to generate what
we believe will be added long-term value
for our shareholders.
Impressively, the Company generated
these successes while strengthening its
balance sheet and remaining highly
profitable and cash generative, despite
a difficult market environment that
continued to negatively impact
advertising budgets and demand
throughout the year. To this point, in
2024, the Company has continued
significantly strengthening its balance
sheet through substantial debt
repayment, and further increased its
share repurchase authorisation.
Adjusted EBITDA decreased by
$61.7 million from $144.9 million for
the year ended 31 December 2022
to $83.2 million for the year ended
31 December 2023. The decrease was
attributable to a combination of factors,
including challenging macroeconomic
conditions that disproportionately
impacted budgets and spending for our
highest-spending small- and mid-sized
agency customers, to whom we are
heavily-indexed, as well as a shift by
those customers and others towards
our lower-cost programmatic solutions.
Adjusted EBITDA for the year ended
31 December 2023 was also challenged
by the complex combination of Amobee’s
and Nexxen’s talent bases, which required
a significant amount of management
and sales team focus, negatively
impacting revenue, as well as the
integration of Amobee’s business lines,
which operate at a lower profitability
profile than the pre-acquisition
standalone Nexxen business
Revenue decreased by $3.3 million, or
1.0%, to $332.0 million for the year ended
31 December 2023, from $335.3 million
for the year ended 31 December 2022.
The decrease was largely driven by
continued weakness in the macro-
economic environment related to a
combination of factors including rising
interest rates, rising inflation, geopolitical
conflicts, and recession concerns, which
caused uncertainty amongst advertisers,
resulting in reduced budgets, spending,
and demand. The Company experienced
a $27.9 million reduction in revenue
related to the Company’s non-core,
non-programmatic business lines, which
was partially offset by a $24.6 million
increase in revenue related to the
Company’s core business focused on
programmatic activities.
Cost of revenues (exclusive of depreci-
ation and amortization) increased by
$1.5 million, or 2.5%, to $62.3 million for
the year ended 31 December 2023,
from $60.7 million for the year ended
31 December 2022. The increase was
primarily driven by a $9.4 million
increase in costs associated with
increased revenue from programmatic
activities and offset by a $7.9 million
decrease in costs associated with
reduced revenue related to the
Company’s non-core, non-programmatic
business lines.
Gross profit margin decreased slightly
to 81% for the year ended 31 December
2023 (2022: 82%). This decrease was
attributable to a combination of lower
revenue and increased costs of revenues
(exclusive of depreciation and
amortization) year-over-year from 2022.
Research and development expenses
increased by $16.0 million, or 47.6%,
to $49.7 million for the year ended
31 December 2023, from $33.7 million for
the year ended 31 December 2022. The
increase in research and development
costs was driven mainly by a $24.5 million
increase in salaries and wages attribut-
able to increased headcount, to maintain
and support further development of our
platform, and a $1.6 million increase in
expenses related to investment in
research and development and
engineering tools and services, offset
by a $5.5 million increase related to
investment in technology and product
innovation capitalization and a
$4.7 million decrease in share-based
compensation expense.
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Nexxen International Ltd Annual Report 2023
13
STRATEGIC REPORT
Chief Financial Officer’s Review
continued
Selling and marketing expenses
increased by $16.0 million, or 17.7%, to
$105.9 million for the year ended
31 December 2023, from $90.0 million for
the year ended 31 December 2022. The
increase was largely attributable to a
$21.5 million increase in salaries and
wages related to increased headcount,
and a $1.3 million increase in sales and
marketing tools, sponsorship and events,
and client-related expenses. This increase
was partially offset by a $6.8 million
decrease in share-based compensation
expense.
General and administrative expenses
decreased by $17.0 million, or 24.9%,
to $51.1 million for the year ended
31 December 2023, from $68.0 million for
the year ended 31 December 2022. The
decrease in general and administrative
expenses was driven mainly by a
$19.8 million decrease in share-based
compensation expense, a $5.8 million
decrease in costs associated with the
acquisition of Amobee in 2022, and a
$4.5 million decrease in professional
service fees and expenses mainly due
to director and officer liability insurance
and legal expenses, which decreased
largely due to legal reimbursement
received during the year from Alphonso.
This decrease was partially offset by a
$7.5 million increase in allowance for
expected credit losses; a $2.3 million
increase in rent-associated expenses
such as utilities, parking, insurance, and
maintenance; a $2.9 million increase in
salaries and wages associated with
increased headcount; and a $0.4 million
increase in general and administrative
tools.
Depreciation and amortization
expenses increased by $35.6 million, or
83.3%, to $78.3 million for the year ended
31 December 2023, from $42.7 million for
the year ended 31 December 2022. The
increase was primarily attributable to a
combination of a $12.5 million increase
in intellectual property amortization, an
$8.7 million increase in amortization of
old trademarks related to obtaining new
trademarks in association with the
Company’s rebranding to Nexxen, an
$8.5 million increase in depreciation on
servers and computers, a $4.7 million
increase in depreciation on lease assets,
a $3.1 million increase in customer
relationship amortization and a
$0.4 million increase in depreciation
related to fixtures, leasehold improve-
ments. This increase was partially offset
by a $2.0 million decrease related to
amortization on unfavorable contracts
associated with the acquisition of
Amobee and a $0.3 million decrease in
amortization of internally developed
software.
As of 31 December 2023, our net cash*
increased by 16%, from $115.5 million for
the year ended 31 December 2022 to
$134.3 million for the year ended 31
December 2023. The increase was
Adjusted EBITDA
Total comprehensive income (loss) for the year
Foreign currency translation differences for foreign operation
Foreign currency translation for subsidiary sold reclassified to profit and loss
Taxes on income
Financial expense (income), net
Depreciation and amortization
Stock-based compensation
Other expenses
Restructuring
Acquisition-related cost
Year Ended December 31
2022
$’000
16,238
6,499
–
19,688
2,327
42,700
50,505
540
307
6,085
2023
$’000
(18,127)
(2,126)
(1,234)
2,503
2,008
78,285
19,169
1,765
796
171
Adjusted EBITDA
144,889
83,210
Profit (loss) from operations
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 expenses (income), net
Profit (loss) from operations
2022
2023
Year Ended December 31
As reported
$’000
335,250
60,745
33,659
89,953
68,005
42,700
(4,564)
44,752
As a
percentage
of revenue
As reported
$ ’000
As a
percentage
of revenue
100.0%
18.1
10.0
26.8
20.3
12.7
(1.4)
13.3
331,993
62,270
49,684
105,914
51,051
78,285
1,765
100.0%
18.8
15.0
31.9
15.4
23.6
0.5
(16,976)
(5.1)
primarily driven by the $60.7 million net
cash provided by operating activities.
Net cash provided by operating activities
was derived from our $21.5 million total
comprehensive loss for the year,
adjusted for non-cash adjustments of
$103.5 million, including depreciation
and amortization of $78.3 million, share-
based compensation of $19.2 million, net
finance expense of $1.7 million, loss on
the sale of a business unit of $1.8 million,
loss on leases of $0.1 million, and tax
expense of $2.5 million.
In addition, there was $21.3 million in
cash used in operating activities, which
included a $30.6 million decrease in
accounts receivable, a $43.1 million
decrease in accounts payable,
$8.4 million paid in net income taxes
and $0.5 million in net interest paid,
including $8.5 million in interest paid,
offset by $8.0 million in interest received.
The overall increase in net cash was
partially offset by net cash used in
financing and investing activities. Net
cash used in financing activities was
$26.5 million for the year ended
31 December 2023, which was derived
from $17.3 million related to lease
repayment and $9.5 million related to
the acquisition of the Company’s own
shares, partially offset by $0.2 million
related to proceeds from the exercise of
share options. Net cash used in investing
activities was $17.0 million for the year
ended 31 December 2023, which was
derived from $15.1 million related to the
acquisition and capitalization of
intangible assets, $4.5 million related to
the acquisition of fixed assets, partially
offset by $1.5 million in pledged deposits,
$1.1 million in lease payment receipts,
and $0.05 million in repayments from a
loan to a third party.
In addition to the $134.3 million net cash
balance as of 31 December 2023, the
Company also had $80 million undrawn
on its Revolving Credit Facility which can
be utilized for general corporate purposes,
or other purposes not prohibited under
the Company’s Credit Agreement,
including potential future strategic
investments and initiatives. On 9 April
2024, the Company repaid its
outstanding indebtedness under the
secured Term Loan A, and the
outstanding amount under the
Revolving Credit Facility (together
the “Credit Agreement”), entered on
12 September 2022. The Company’s
payment to the Lenders under the Credit
Agreement was approximately $100
million, which satisfied all of the
Company’s debt obligations under the
Term A Secured Loan, in the amount of
$90 million, and the previously drawn
down amount of approximately $10
million under the Revolving Credit
Facility. The Company did not incur any
early termination penalties as a result
of the repayment of indebtedness.
Following the Company’s repayment, it
now has $0 long-term debt and $90
million undrawn on its Revolving Credit
Facility, which remains available for use.
SAGI NIRI
Chief Financial Officer
.
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* Net cash is defined as cash and cash equivalents
less short and long-term interest-bearing debt
including capital leases
Full year 2023 results include the combined financial
performance of Nexxen and Amobee while full year
2022 results include Amobee only from 12 September
2022 through 31 December 2022
14
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Nexxen International Ltd Annual Report 2023
15
GOVERNANCE
Board of Directors
CHRISTOPHER STIBBS
Non-Executive Chairperson
OFER DRUKER
Chief Executive Officer
SAGI NIRI
Chief Financial Officer
YANIV CARMI
Chief Operating 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, a
digital advertising technology
company. From November 2017
to April 2019, Mr. Druker served as
our Executive Chairperson 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. (LSA:MTMY), 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.
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-Gurion University and an
M.B.A. in Financial Management
from Tel Aviv University.
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. From July 2013 to August
2019, he served as Chief Executive
of The Economist Group Ltd. (the
“Economist Group”), a media
company. 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 (NYSE:PSO), a
publishing company and
Incisive Media, a B2B information
and events company. Mr. Stibbs
is a fellow of the Associations of
Chartered Accountants and
Corporate Treasurers and
currently serves as a non-
executive director at Oxford
University Press and serves as a
Chairperson of Times Higher
Education, IWSR Topco Limited
and Sagacity Solutions Ltd.
NEIL JONES
Senior Non-Executive Director
JOANNA PARNELL
Non-Executive Director
LISA KLINGER
Non-Executive Director
DANIEL KERSTEIN
Non-Executive Director
Neil Jones has served as a
member of our board of
directors since 2014. Mr. Jones
has spent most of his career in
the media sector leading the
Finance and M&A functions
of UK listed businesses. He is
currently Corporate
Development Director of Inizio
Group Limited, the international
life science services company
created from the merger of
UDG Healthcare plc and
Huntsworth plc (“Huntsworth”)
in August 2021. Prior to that he
was Chief Operating Officer
and Chief Financial Officer at
Huntsworth plc from February
2016. 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 Chief Financial
Officer at Tarsus Group plc, an
international media company.
Mr. Jones has a B.A. in Economics
from the University of
Manchester and completed
his ACA in July 1990 with
PricewaterhouseCoopers.
Mr. Jones is also a non-executive
Director of Sivota plc a UK listed
special opportunities vehicle
that invests in under-valued
technology business.
REBEKAH BROOKS
Non-Executive Director
Rebekah Brooks has served as a
member of our board of
directors since June 2020. Since
2015, Ms. Brooks has been Chief
Executive of British newspaper
publisher News Corp UK &
Ireland Limited, part of New News
Corporation (NASDAQ:NWSA), a
mass media and publishing
company (“News Corp”), 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.
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, a digital marketing
agency (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.
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 held from 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 plc and GroupM’s
media service company,
Mindshare Media UK Limited,
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 plc, Nestle S.A. and
American Express Company.
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.
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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, between
2018 and 2019, Ms. Klinger served
as Chief Financial Officer at
Ideal Image Development
Corp, an L Catterton portfolio
company and the largest U.S.
retail provider of nonsurgical
cosmetic and aesthetic
procedures. Prior to that,
between 2016 and 2017, she
held the role of Chief Financial
and Administrative Officer at
Peloton Interactive Inc.,
(NASDAQ:PTON), the leading
connected fitness platform.
Ms. Klinger’s previous Chief
Financial Officer roles include
Vince Holding Corp. (NYSE:VNCE),
a fashion apparel company
and The Fresh Market, Inc., a
specialty food retailer. At both
companies, Ms. Klinger led
go-public processes and
subsequently served on the
Executive Leadership team of
the public entities. Ms. Klinger
also held senior finance roles at
Limited Brands and at Michael’s
Stores, Inc. where she was
Senior Vice President, Finance
and Treasurer, and Acting Chief
Financial Officer. She currently
serves on the Board of Directors
and as Audit Committee Chair
of Emerald Holdings, Inc. (NYSE:
EEX), a leading U.S. business-to-
business platform producer of
trade shows, events,
conferences, marketing, and
B2B software solutions, since
2018, and also serves on the
Board of Directors and both
the Audit Committee and
Compensation Committee of
The Container Store Group, Inc.
(NYSE:TCS), the leading specialty
retailer of storage, organization
products, custom closets and
in-home services in North
America. Ms. Klinger also served
on the Board of Directors and
Audit Committee of Party City
Holdco, Inc. (NYSE: PRTY), a
vertically integrated party
goods supplier and retailer
from 2015 to 2021. Ms. Klinger
holds a B.S.B.A. in Finance from
Bowling Green State University.
Daniel Kerstein has served as
a member of our board of
directors since December 2023.
Currently, Mr. Kerstein holds the
position of Managing Director,
M&A, Head of Structuring
Solutions and Shareholder
Advisory at TD Securities. From
2011 through 2023, Mr. Kerstein
held the position of Managing
Director, M&A and Global Head
of Activist Defense and ESG
Advisory at Barclays, where he
managed a global team of
bankers focused on activist-
shareholder defense and ESG
advisory. From 2007 through
2011, Mr. Kerstein held the position
of Managing Director, Global
Finance at Barclays and Lehman
Brothers where he led a team
of structuring experts, lawyers
and accountants, applying
accounting, tax, regulatory and
general financial expertise to
address changing market and
regulatory environments to
create innovative financial
products and strategic
alternatives focused on
maximizing corporate and
shareholder value and
improving company returns.
Mr. Kerstein joined Lehman
Brothers in 2003 from Merrill
Lynch. From 1997 through 2003,
Mr. Kerstein held the position
Vice President, Corporate
Finance Investment Banking at
Merrill Lynch. Mr. Kerstein holds
a B.A. from CUNY, Queens
College and a J.D. from Harvard
Law School.
RHYS SUMMERTON
Non-Executive Director
Rhys Summerton has served as
a member of our board of
directors since December 2023.
From 2014 through the present,
Mr. Summerton holds the
position of Fund Manager and
Investor at Milkwood Capital, a
long-term, value-oriented,
global investment company.
During this time, Mr. Summerton
has successfully promoted the
value realization of a number of
investments through efficient
capital allocation and decision
making. From 2009 to 2013,
Mr. Summerton held the
position of Managing Director
and Global Head of Emerging
Market Equity Research at
Citigroup, managing the
number 1 ranked research
franchise. Prior to that, Mr.
Summerton was a telecoms
and media analyst at Citigroup
and Cazenove. Mr. Summerton
is a Chartered Accountant,
through Ernst & Young.
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Nexxen International Ltd Annual Report 2023
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GOVERNANCE
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 Nexxen. This report
describes the framework for corporate governance and
internal controls that the directors have established to
enable them to carry out this responsibility.
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”), and the City Code on Takeovers and
Mergers does not apply to the Company. 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 its 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.
DELIVER GROWTH
1. Establish a purpose, strategy and business model which
promotes long-term value for shareholders
Nexxen consistently reiterates its growth strategy in both its
communications, which include RNS, filings with the SEC,
presentations to stakeholders, and its financial results
statements.
We believe that programmatic advertising is still an under
penetrated market that will experience robust growth over
the next decade as ad budgets continue to shift to digital
and as digital continues to shift towards programmatic
execution. Our corporate purpose and intent is to capitalize
on these secular trends by pursuing growth opportunities
that include:
• Focus on Core Areas of Growth in Video and CTV
CTV is one of the fastest growth formats within digital
advertising, and this trend is expected to continue over the
next several years according to eMarketer. In the United
States, CTV ad spend is expected to grow at a CAGR of
approximately 15% from 2023 to 2027, and Video is expected
to grow at a CAGR of approximately 16%, reaching roughly
$156.9 billion by 2027. Digital video and CTV comprise
approximately 69% of our revenue without performance
activity for the year ended December 31, 2023, and are core
focuses for us. We plan to leverage our existing expertise in
Video and CTV to increase our market share and introduce
new technologies and solutions.
• Introduce New Products and Invest in our Technology Stack
As we grow our market share and add new customers, we
continue to invest in our technology stack and develop new
innovative products. We are continuously trying to introduce
new innovative solutions and products to the rapidly evolving
digital advertising market. Some potential areas of growth
and investment include enhancing our proprietary data sets,
enhancing our CTV solution capabilities and marketplace,
enhancing our audience targeting capabilities, expanding
our alternative identifier solutions and enhancing our global
platform coverage capabilities.
We are providing customers with creative alternatives to plan
and execute their campaigns, giving them complimentary
scale and opportunities to enhance current audience targeting
strategies. For example, we offer, and will continue to enhance,
contextual targeting solutions from content data collected
via our publisher partnerships as well as third-party solutions
integrated into our ecosystem.
There is market movement away from cookie-based tracking
which has created an increase in demand for alternative
solutions. We have partnerships, and are integrating, with major
alternative identifier solutions such as Identity Link and Unified
ID 2.0. We are committed to helping define and support new
privacy requirements and identifier mechanisms as industry
standards evolve. We believe that not everyone in the industry
will adopt a single solution alternative to cookie-based
tracking and we are building our platform to support various
identifier solutions.
• Strengthen Our Relationship with Existing Customers
We are constantly improving functionality on our platform to
attract new customers and encourage our existing customer
base to allocate more of their ad spend and ad inventory to
our platform. We believe as programmatic gains more
widespread adoption and as brands and publishers continue
to focus on Video and CTV, we are well-positioned to increase
our customer base and generate additional revenue from
existing customers.
• Expand Our International Footprint and United States
Market Share
We continue to acquire new publishers and advertisers
globally and invest in expanding our global footprint,
providing significant global demand and supply of digital ad
impressions across all channels and formats. We will
continue to invest in third-party integrations, maintaining
and enhancing our platform’s flexibility. We are leveraging
our existing technology stack to provide innovative solutions
to new and existing customers regardless of location or
platform. We consistently innovate and develop new tools
and products that enable our customers to maximize their
benefit from using our platform and services.
• Continue to Bolster our Data Capabilities
We leverage real-time data, artificial intelligence and
machine learning capabilities to synthesize, aggregate
and contextualize vast amounts of data sets to help our
advertisers and publishers optimize their digital ad spend/
inventory. Our DMP solution was architected to be flexible,
which allows us to deliver impactful and unique insights that
are agnostic to format or device type. By owning our own
proprietary DMP solution, we are able to provide robust
analytics, insights, and better segmentation on a global
basis. We believe this gives us a large competitive
advantage and enables higher ROI to our advertisers and
optimal yield on digital inventory to our publishers.
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• Leverage our Industry Expertise and Target Select
Acquisitions
We have been successful in past acquisitions and may
direct our industry experience and focus to identify future
complementary acquisitions to further broaden our scale
and technology solutions. To the extent we identify attractive
acquisition opportunities, we have the experience, leadership
and track record to successfully execute strategic transactions
and integrate acquired businesses into our platform.
account their feedback in determining the recommended
slate of directors, including two new directors, nominated by
the Borad for election at the annual meeting.
Nexxen 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.
2. Promote a corporate culture that is based on ethical
values and behaviours
Nexxen’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. Nexxen 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 Nexxen’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.
3. Seek to understand and meet shareholder needs and
expectations
Nexxen encourages dialogue with both its institutional and
private retail shareholders, responding quickly and with
transparency to all queries received. The Company provides
the contact details for its IR advisers on its website. Nexxen
also engages with investors via its UK broker Cavendish.
Ofer Druker, Nexxen’s CEO, Sagi Niri, Nexxen’s CFO, and William
Eckert, Nexxen’s Vice President of IR, meet regularly with
institutional investors, usually in relation to the issuance of
financial results, and endeavour to accommodate all
meeting requests from investors.
The Board recognises the AGM as an important opportunity
to meet private shareholders. 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 hosted an investor
presentation in November 2022 specifically to engage with
the private investor community.
Five of Nexxen’s eight non-executive directors are UK-based
and available to meet with shareholders as requested. This
includes the Non-Executive 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 Nexxen’s
brokers, 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. Leading
up to our 2023 annual meeting of shareholders, members of
our Board of Directors, including our Chairman, met frequently
with shareholders about a variety of topics and took into
4. Take into account wider stakeholder interests, including
social and environmental responsibilities, and their
implications for long-term success
Nexxen’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: “I
C.A.N.” (Each day, we strive to be as Innovative, Committed +
Collaborative and Authentic as possible, with No Ego).
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.
The Company communicates and builds relationships with
external stakeholders via its marketing efforts, including
social media, events, PR, direct marketing and online
advertising. The Company offers to meet with stakeholders at
regular events globally, and occasionally directly contacts
investors to offer meetings.
Nexxen 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 young people and collaborating with schools that
care for underprivileged children. Nexxen also regularly
donates to charitable organisations.
5. Embed effective risk management, internal controls and
assurance activities, considering both opportunities and
threats, throughout the organisation
The risks to the business and how these are mitigated are
detailed on pages 28 to 31 and its internal control measures
on pages 24 and 25 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 its
meetings. 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, including the internal auditor, Fahn Kanne Control
Management Ltd., Grant Thornton Israel, as/when needed to
support execution on strategy and risk mitigation, and holding
executive sessions with external auditor, 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.
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Nexxen International Ltd Annual Report 2023
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GOVERNANCE
Corporate Governance Report
continued
The Board and the Committees
MAINTAIN A DYNAMIC MANAGEMENT FRAMEWORK
8. Evaluate Board performance based on clear and relevant
BOARD OF DIRECTORS
objectives, seeking continuous improvement
The Board conducts annually, with the assistance of outside
legal counsel, 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.
The executive directors are subject to an annual performance
review during which 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.
9. Establish a remuneration policy which is supportive of
long-term value creation and the Company’s purposes,
strategy and culture.’
The Compensation Committee report on pages 22 to 24 of
this Annual Report details the Company’s compensation
policy and philosophy.
BUILD TRUST
10. Communicate how the company is governed and is
performing by maintaining a dialogue with shareholders
and other relevant stakeholders
Nexxen describes its communication practices in its annual
report under ‘Relationship with Shareholders’ (page 24 of this
report).
6. Establish and 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 24 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 the General Counsel and are able to
take independent professional advice in the furtherance of
the duties, if necessary, at the Company’s expense.
The time devoted by directors to their duties varies
depending on the activities of the company. In 2023, the
board held 10 meetings. The Board typically holds at least
one meeting annually to review strategy and interact with
senior managers. All executive directors work full-time for
Nexxen and the non-executive Chairman spends a minimum
of three to four days per month on Nexxen business. This is
primarily typically via in-person or virtual meetings, 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 in-person or virtual
meetings, and phone calls with management and other
board members.
The Board conducts, with the assistance of outside legal
counsel, an annual self-assessment to, among other things,
evaluate the effectiveness of its operations and the
operations of each of its committees.
7. Maintain appropriate governance structures and ensure
that, individually and collectively, 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 16 to 17 of this report.
All of the directors remain active in their respective business
lines, many in the media and marketing industry – working for
public and private companies – which ensures that their
skillsets remain highly complementary to the Nexxen business.
The Sustainability, Nominating and Governance 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. Prior to any new
member joining the Board, a search for candidates is
conducted, with any subsequent appointment made on
merit, against objective criteria, and with due regard for the
benefits of diversity on the Board, including gender. A Board
diversity matrix is maintained on the Company’s website. The
Sustainability, Nominating and Governance Committee also
considers succession planning.
Under the Companies Law and our amended and restated
articles of association, our business and affairs are managed
under the direction of our board of directors. Our board of
directors may exercise all powers and may take all actions
that are not specifically granted to our shareholders or to
executive management. Our Chief Executive Officer (referred
to as a “general manager” under the Companies Law) is
responsible for our day-to-day management. Our Chief
Executive Officer is appointed by, and serves at the discretion
of, our board of directors, subject to the employment
agreement that we have entered into with him. All other
executive officers are appointed by the Chief Executive Officer,
subject to applicable corporate approvals, and are subject to
the terms of any applicable employment or consulting
agreements that we may enter into with them.
Under our amended and restated articles of association, the
number of directors on our board of directors will be no less
than four and no more than eleven directors. At each annual
general meeting of our shareholders, the election or re-
election of directors following the expiration of the term of
office of the directors will be for a term of office that expires
on next annual general meeting following such election or
re-election.
Our directors are appointed by a simple majority vote of
holders of our ordinary shares, participating and voting at an
annual general meeting of our shareholders, provided that (i)
in the event of a contested election, the method of calculation
of the votes and the manner in which the resolutions will be
presented to our shareholders at the general meeting shall
be determined by our board of directors in its discretion, and
(ii) in the event that our board of directors does not or is
unable to make a determination on such matter, then the
directors will be elected by a majority of the voting power
represented at the general meeting in person or by proxy and
voting on the election of directors provided that if the number
of nominees so elected exceeds the number of directors that
are proposed by the board of directors to be elected, then as
among such elected nominees the election shall be by a
plurality of the votes cast. Each director holds office until the
annual general meeting of our shareholders for the year in
which such director’s term expires, unless the tenure of such
director expires earlier pursuant to the Companies Law or unless
such director is removed from office as described below.
Under our amended and restated articles of association, the
approval of the holders of at least 65% of the total voting
power of our shareholders is generally required to remove
any of our directors from office or amend the provision
requiring the approval of at least 65% of the total voting power
of our shareholders to remove any of our directors from office.
In addition, vacancies on our board of directors may only be
filled by a vote of a simple majority of the directors then in
office. A director so appointed will hold office until the next
annual general meeting of our shareholders for the election
of the class of directors in respect of which the vacancy was
created, or in the case of a vacancy due to the number of
directors being less than the maximum number of directors
stated in our amended and restated articles of association,
until the next annual general meeting of our shareholders for
the election of the class of directors to which such director
was assigned by our board of directors.
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Board Composition
The Board is currently comprised of three executive directors,
Ofer Druker, Yaniv Carmi and Sagi Niri, and eight non-executive
directors, Christopher Stibbs (Chairperson of the Board),
Neil Jones, Joanna Parnell, Lisa Klinger, Rebekah Brooks,
Norman Johnston, Daniel Kerstein, and Rhys Summerton. 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, and Chief Financial
Officer, Sagi Niri, and the Chief Legal Officer, Amy Rothstein,
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 Chairperson 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. The Board also holds regular virtual
meetings 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, attend 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 and Chief
Legal Officer. 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,
Compensation and Sustainability, Nominating and
Governance committees of the Board with formally
delegated duties and responsibilities.
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GOVERNANCE
The Board and the Committees
continued
AUDIT COMMITTEE
Companies Law Requirements
Under the Companies Law, the board of directors of a public
company must appoint an audit committee consisting of at
least three directors.
• Recommending to the board of directors the retention and
termination of the internal auditor, and the internal auditor’s
engagement fees and terms, in accordance with the
Companies Law as well as approving the yearly or periodic
work plan proposed by the internal auditor;
Listing Requirements
Under the corporate governance rules of Nasdaq, we are
required to maintain an audit committee consisting of at
least three independent directors, each of whom is financially
literate and one of whom has accounting or related financial
management expertise.
Our audit committee consists of Neil Jones, Joanna Parnell
and Lisa Klinger. Lisa Klinger serves as the chairperson of the
audit committee. All members of our audit committee meet
the requirements for financial literacy under the applicable
rules and regulations of the SEC and the corporate
governance rules of Nasdaq.
Our board of directors has determined that Neil Jones is an
audit committee financial expert as defined by the SEC rules
and has the requisite financial experience as defined by the
corporate governance rules of Nasdaq.
Our board of directors has determined that each member of
our audit committee is “independent” as such term is defined
in Rule 10A-3(b)(1) under the Exchange Act, which is different
from the general test for independence of board and
committee members.
Audit Committee Role
Our board of directors has adopted an audit committee
charter setting forth the responsibilities of the audit committee,
which are consistent with the Companies Law, the SEC rules
and the corporate governance rules of Nasdaq and include:
• Retaining and terminating our independent auditors, subject
to ratification by the board of directors, and in the case of
retention, to ratification by the shareholders;
• Pre-approving audit and non-audit services to be provided
by the independent auditors and related fees and terms;
• Overseeing the accounting and financial reporting
processes of our company and audits of our financial
statements, the effectiveness of our internal
• Control over financial reporting and making such reports as
may be required of an audit committee under the rules and
regulations promulgated under the Exchange Act;
• Reviewing with management and our independent auditor
our annual and quarterly financial statements prior to
publication or filing (or submission, as the case may be) to
the SEC;
• Reviewing with our general counsel and/or external counsel,
as deemed necessary, legal and regulatory matters that
could have a material impact on the financial statements;
• Identifying irregularities in our business administration by
among other things, consulting with the internal auditor or
with the independent auditor, and suggesting corrective
measures to the board of directors;
• Reviewing policies and procedures with respect to
transactions between the Company and officers and
directors (other than transactions related to the
compensation or terms of service of officers and directors),
or affiliates of officers or directors, or transactions that are
not in the ordinary course of the
• Company’s business and deciding whether to approve such
acts and transactions if so required under the Companies
Law; and
• Establishing procedures for the handling of employees’
complaints as to the management of our business and the
protection to be provided to such employees.
A copy of the audit committee charter is available to investors
and others on our website at investors.nexxen.com/
governance/governance-overview.
COMPENSATION COMMITTEE
Companies Law Requirements
Under the Companies Law, the board of directors of a public
company must appoint a compensation committee
consisting of at least three directors.
Listing Requirements
Under the corporate governance rules of Nasdaq, we are
required to maintain a compensation committee consisting
of at least two independent directors.
Our compensation committee consists of Neil Jones, Joanna
Parnell, Lisa Klinger and Daniel Kerstein. Neil Jones serves as
chairperson of the committee. Our board of directors has
determined that each member of our compensation
committee is independent under the corporate governance
rules of Nasdaq, including the additional independence
requirements applicable to the members of a compensation
committee.
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Compensation Committee Role
In accordance with the Companies Law, the roles of the
compensation committee are, among others, as follows:
• Making recommendations to the board of directors with
respect to the approval of the compensation policy for office
holders;
• Reviewing the implementation of the compensation policy
and periodically making recommendations to the board of
directors with respect to any amendments or updates of the
compensation policy;
• Resolving whether or not to approve arrangements with
respect to the terms of office and employment of office
holders; and
• Exempting, under certain circumstances, transactions with
our Chief Executive Officer from the approval of our
shareholders.
Our board of directors has adopted a compensation
committee charter setting forth the responsibilities of the
committee, which are consistent with the corporate
governance rules of Nasdaq and include among others:
• Recommending to our board of directors for its approval a
compensation policy in accordance with the requirements
of the Companies Law as well as other compensation
policies, incentive-based compensation plans and equity-
based compensation plans, and overseeing the development
and implementation of such policies and recommending to
our board of directors any amendments or modifications
the committee deems appropriate, including as required
under the Companies Law;
• Reviewing and approving the granting of options and other
incentive awards to our Chief Executive Officer and other
executive officers, including reviewing and approving
corporate goals and objectives relevant to the compensation
of our Chief Executive Officer and other executive officers,
including evaluating their performance in light of such goals
and objectives;
• Approving and exempting certain transactions regarding
office holders’ compensation pursuant to the Companies
Law; and
• Administering our equity-based compensation plans,
including without limitation, approving the adoption of such
plans, amending and interpreting such plans and the
awards and agreements issued pursuant thereto, and
making awards to eligible persons under the plans and
determining the terms of such awards.
A copy of the compensation committee charter is available
to investors and others on our website at investors.nexxen.
com/governance/governance-overview.
Compensation Policy under the Companies Law
In general, under the Companies Law, a public company
must have a compensation policy approved by its board of
directors after receiving and considering the
recommendations of the compensation committee.
The compensation policy must be based on certain
considerations, include certain provisions and reference
certain matters as set forth in the Companies Law. The
compensation policy must serve as the basis for decisions
concerning the financial terms of employment or
engagement of office holders, including exculpation,
insurance, indemnification or any monetary payment or
obligation of payment in respect of employment or
engagement. The compensation policy must be determined
and later reevaluated according to certain factors, including:
the advancement of the company’s objectives, business plan
and long-term strategy; the creation of appropriate
incentives for office holders, while considering, among other
things, the company’s risk management policy; the size and
the nature of the company’s operations; and with respect to
variable compensation, the contribution of the office holder
towards the achievement of the company’s long-term goals
and the maximization of its profits, all with a long-term
objective and according to the position of the office holder.
The compensation policy must furthermore consider the
following additional factors:
• The education, skills, experience, expertise and
accomplishments of the relevant office holder;
• The office holder’s position and responsibilities;
• Prior compensation agreements with the office holder;
• The ratio between the cost of the terms of employment of an
office holder and the cost of the employment of other
employees of the company, including employees employed
through contractors who provide services to the company, in
particular the ratio between such cost to the average and
median salary of such employees of the company, as well
as the impact of disparities between them on the work
relationships in the company;
• If the terms of employment include variable components
— the possibility of reducing variable components at the
discretion of the board of directors and the possibility of
setting a limit on the value of non-cash variable equity-
based components; and
• If the terms of employment include severance compensation
— the term of employment or office of the office holder, the
terms of the office holder’s compensation during such
period, the company’s performance during such period, the
office holder’s individual contribution to the achievement of
the company goals and the maximization of its profits and
the circumstances under which he or she is leaving the
company.
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GOVERNANCE
The Board and the Committees
continued
The compensation policy must also include, among other
things:
• With regards to variable components:
• With the exception of office holders who report to the chief
executive officer, a means of determining the variable
components on the basis of long-term performance and
measurable criteria; provided that the company may
determine that an immaterial part of the variable
components of the compensation package of an office
holder shall be awarded based on non-measurable criteria,
if such amount is not higher than three months’ salary per
annum, taking into account such office holder’s contribution
to the company;
• The ratio between variable and fixed components, as well as
the limit of the values of variable components at the time of
their payment, or in the case of equity-based
compensation, at the time of grant;
• A condition under which the office holder will return to the
company, according to conditions to be set forth in the
compensation policy, any amounts paid as part of the office
holder’s terms of employment, if such amounts were paid
based on information later to be discovered to be wrong,
and such information was restated in the company’s
financial statements;
• The minimum holding or vesting period of variable equity-
based components to be set in the terms of office or
employment, as applicable, while taking into consideration
long-term incentives; and
• A limit to retirement grants.
Our compensation policy was last adopted by our
compensation committee, board of directors and
shareholders on December 27, 2023 and is filed as an exhibit
to this Annual Report.
SUSTAINABILITY, NOMINATING AND
GOVERNANCE COMMITTEE
Our sustainability, nominating and governance committee
consists of Neil Jones, Joana Parnell and Christopher Stibbs.
Christopher Stibbs serves as chairperson of the committee.
Our board of directors has adopted a sustainability,
nominating and governance committee charter setting forth
the responsibilities of the committee, which include:
• Overseeing and assisting our board in reviewing and
recommending nominees for election as directors;
• Assessing the performance of the members of our board; and
• Establishing and maintaining effective corporate governance
policies and practices, including, but not limited to, developing
and recommending to our board a set of corporate
governance guidelines applicable to our business; and
• To oversee our policies, programs and strategies related to
environmental, social and governance.
A copy of the sustainability, nominating and governance
committee charter is available to investors and others on our
website at investors.nexxen.com/governance/governance-
overview.
CONFLICTS OF INTEREST
Subject to the provisions of the Companies Law, no Director
shall be disqualified by virtue of his office from holding any
office or place of profit in the Company or in any company in
which the Company shall be a shareholder or otherwise
interested, or from contracting with the Company as vendor,
purchaser or otherwise, nor shall any such contract, or any
contract or arrangement entered into by or on behalf of the
Company in which any Director shall be in any way interested,
be voided, nor, other than as required under the Companies
Law, shall any Director be liable to account to the Company
for any profit arising from any such office or place of profit or
realized by any such contract or arrangement by reason only
of such Director’s holding that office or of the fiduciary relations
thereby established, but the nature of his interest, as well as
any material fact or document, must be disclosed by him at
the meeting of the Board at which the contract or arrangement
is first considered, if his interest then exists, or, in any other
case, at no later than the first meeting of the Board after the
acquisition of his interest. The Board shall be entitled to
delegate its approval power under Section 271 of the
Companies Law to a committee of the Board or to such person
it deems appropriate, whether generally, with respect to a
certain contract or transaction or with respect to certain types
of contracts or transactions, and the power of such committee
or person shall be regarded as another method of approval
within the meaning of Section 271 of the Companies Law.
RELATIONSHIP WITH SHAREHOLDERS
The Company encourages the participation of both institutional
and private investors. The Chief Executive Officer, Chief Financial
Officer and Head of Investor Relations meet regularly with
institutional investors, usually in regard to the issuance of
quarterly 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.nexxen.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 Consulting in the UK, and
KCSA in the US.
INTERNAL CONTROLS
Evaluation of Disclosure Controls and Procedures
We maintain disclosure controls and procedures (as defined
in Rules 13a-15(e) and 15d-15(e) under the Exchange Act that
are designed to ensure that information required to be
disclosed in the Company’s reports that we file or submit
under the Exchange Act is recorded, processed, summarized
and reported within the time periods specified in the SEC’s
rules and forms and that such information is accumulated
and communicated to our management, including our Chief
Executive Officer and Chief Financial Officer, as appropriate to
allow timely decisions regarding required disclosures. Any
controls and procedures can provide only reasonable
assurance of achieving the desired objectives of the
disclosure controls and procedures. Our management, with
the participation of our Chief Executive Officer and Chief
Financial Officer, has evaluated the effectiveness of the
design and operation of our disclosure controls and
procedures as of December 31, 2023. Based upon that
evaluation, our Chief Executive Officer and Chief Financial
Officer concluded that, as of December 31, 2023, our
disclosure controls and procedures were effective.
Management’s Annual Report on Internal Control over
Financial Reporting
Our management is responsible for establishing and
maintaining effective internal control over financial reporting
and for its assessment of the effectiveness of internal control
over financial reporting. Internal control over financial
reporting is defined in Rules 13a-15(f) and 15d-15(f) under the
Exchange Act as a process designed to provide reasonable
assurance regarding the reliability of financial reporting and
the preparation of financial statements for external purposes
in accordance with generally accepted accounting principles,
and includes those policies and procedures that (1) pertain to
the maintenance of records that, in reasonable detail,
accurately and fairly reflect the transactions and dispositions
of the assets of the Company; (2) provide reasonable
assurance that transactions are recorded as necessary to
permit preparation of financial statements in accordance
with generally accepted accounting principles, and that
receipts and expenditures of the Company are being made
only in accordance with authorizations of management and
directors of the Company; and (3) provide reasonable
assurance regarding prevention or timely detection of
unauthorized acquisition, use, or disposition of the Company’s
assets that could have a material effect on the audited
consolidated financial statements. Because of its inherent
limitations, internal control over financial reporting may not
prevent or detect material misstatements. Also, projections of
any evaluation of effectiveness to future periods are subject
to the risk that controls may become inadequate because of
changes in conditions, or that the degree of compliance with
the policies or procedures may deteriorate. Our management
conducted an assessment of the effectiveness of our internal
control over financial reporting based on the criteria set forth
in “Internal Control – Integrated Framework (2013)” issued by
the Committee of Sponsoring Organizations of the Treadway
Commission. Based on this assessment, our management
concluded that, as of December 31, 2023, our internal control
over financial reporting was effective.
This Annual Report does not include an attestation report of
our registered public accounting regarding internal control over
financial reporting firm because we are currently an emerging
growth company in accordance with the Exchange Act.
Changes in Internal Control over Financial Reporting
There were no changes in our internal control over financial
reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the
Exchange Act) that occurred during the period covered by
this Annual Report that have materially affected, or are
reasonably likely to materially affect, our internal control over
financial reporting.
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 appoint-
ment 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.
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GOVERNANCE
Takeovers & Mergers
MERGERS
The Companies Law permits merger transactions if approved
by each party’s board of directors and, unless certain
conditions described under the Companies Law are met, a
simple majority of the outstanding shares of each party to
the merger that are represented and voting on the merger.
The board of directors of a merging company is required
pursuant to the Companies Law to discuss and determine
whether in its opinion there exists a reasonable concern that
as a result of a proposed merger, the surviving company will
not be able to satisfy its obligations towards its creditors, such
determination taking into account the financial status of the
merging companies. If the board of directors determines that
such a concern exists, it may not approve a proposed merger.
Following the approval of the board of directors of each of the
merging companies, the boards of directors must jointly
prepare a merger proposal for submission to the Israeli
Registrar of Companies.
For purposes of the shareholder vote of a merging company
whose shares are held by the other merging company, or by
a person or entity holding 25% or more of the voting rights at
the general meeting of shareholders of the other merging
company, or by a person or entity holding the right to appoint
25% or more of the directors of the other merging company,
unless a court rules otherwise, the merger will not be deemed
approved if a majority of the shares voted on the matter at
the general meeting of shareholders (excluding abstentions)
that are held by shareholders other than the other party to
the merger, or by any person or entity who holds 25% or more
of the voting rights of the other party or the right to appoint
25% or more of the directors of the other party, or any one on
their behalf including their relatives or corporations controlled
by any of them, vote against the merger. In addition, if the
nonsurviving entity of the merger has more than one class of
shares, the merger must be approved by each class of
shareholders. If the transaction would have been approved
but for the separate approval of each class or the exclusion of
the votes of certain shareholders as provided above, a court
may still approve the merger upon the request of holders of
at least 25% of the voting rights of a company, if the court
holds that the merger is fair and reasonable, taking into
account the valuation of the merging companies and the
consideration offered to the shareholders. If a merger is with a
company’s controlling shareholder or if the controlling
shareholder has a personal interest in the merger, then the
merger is instead subject to the same special majority
approval that governs all extraordinary transactions with
controlling shareholders.
Under the Companies Law, each merging company must
deliver to its secured creditors the merger proposal and
inform its unsecured creditors of the merger proposal and its
content. Upon the request of a creditor of either party to the
proposed merger, the court may delay or prevent the merger
if it concludes that there exists a reasonable concern that, as
a result of the merger, the surviving company will be unable
to satisfy the obligations of the merging company, and may
further give instructions to secure the rights of creditors.
In addition, a merger may not be completed unless at least
50 days have passed from the date that a proposal for
approval of the merger is filed with the Israeli Registrar of
Companies and 30 days from the date that shareholder
approval of both merging companies is obtained.
Special Tender Offer
The Companies Law provides that an acquisition of shares of
an Israeli public company must be made by means of a
special tender offer if as a result of the acquisition the purchaser
would become a holder of 25% or more of the voting rights in
the company. This requirement does not apply if there is
already another holder of 25% or more of the voting rights in
the company. Similarly, the Companies Law provides that an
acquisition of shares of an Israeli public company must be
made by means of a special tender offer if as a result of the
acquisition the purchaser would become a holder of more
than 45% of the voting rights in the company, if there is no
other shareholder of the company who holds more than 45%
of the voting rights in the company. These requirements do
not apply if (i) the acquisition occurs in the context of a
private placement by the company that received shareholder
approval as a private placement whose purpose is to give the
purchaser 25% or more of the voting rights in the company, if
there is no person who holds 25% or more of the voting rights
in the company or as a private placement whose purpose is
to give the purchaser 45% of the voting rights in the company,
if there is no person who holds 45% of the voting rights in the
company, (ii) the acquisition was from a shareholder holding
25% or more of the voting rights in the company and resulted
in the purchaser becoming a holder of 25% or more of the
voting rights in the company, or (iii) the acquisition was from a
shareholder holding more than 45% of the voting rights in the
company and resulted in the purchaser becoming a holder of
more than 45% of the voting rights in the company. A special
tender offer must be extended to all shareholders of a
company. A special tender offer may be consummated only if
(i) at least 5% 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 (excluding the
purchaser, its controlling shareholders, holders of 25% or more
of the voting rights in the company and any person having a
personal interest in the acceptance of the tender offer, or
anyone on their behalf, including any such person’s relatives
and entities under their control).
In the event that a special tender offer is made, a company’s
board of directors is required to express its opinion on the
advisability of the offer, or shall abstain from expressing any
opinion if it is unable to do so, provided that it gives the
reasons for its abstention. The board of directors shall also
disclose any personal interest that any of the directors has
with respect to the special tender offer or in connection
therewith. An office holder in a target company who, in his or
her capacity as an office holder, performs an action the
purpose of which is to cause the failure of an existing or
foreseeable special tender offer or is to impair the chances of
its acceptance, is liable to the potential purchaser and
shareholders for damages, unless such office holder acted in
good faith and had reasonable grounds to believe he or she
was acting for the benefit of the company. However, office
holders of the target company may negotiate with the
potential purchaser in order to improve the terms of the
special tender offer, and may further negotiate with third-
parties in order to obtain a competing offer.
If a special tender offer is accepted, then shareholders who
did not respond to or that had objected the offer may accept
the offer within four days of the last day set for the acceptance
of the offer and they will be considered to have accepted the
offer from the first day it was made.
In the event that 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 at the time of the offer 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
purchased in contradiction to the special tender offer rules
under the Companies Law will have no rights and will become
dormant shares.
FULL TENDER OFFER
A person wishing to acquire shares of a public Israeli company
who would, as a result, hold over 90% of the target company’s
voting rights or the target company’s issued and outstanding
share capital (or of a class thereof), is required by the
Companies Law to make a tender offer to all of the company’s
shareholders for the purchase of all of the issued and
outstanding shares of the company (or the applicable class).
If (a) the shareholders who do not accept the offer hold less
than 5% of the issued and outstanding share capital of the
company (or the applicable class) and the shareholders who
accept the offer constitute a majority of the offerees that do
not have a personal interest in the acceptance of the tender
offer or (b) the shareholders who did not accept the tender
offer hold less than 2% of the issued and outstanding share
capital of the company (or of the applicable class), all of the
shares that the acquirer offered to purchase will be transferred
to the acquirer by operation of law. A shareholder who had its
shares so transferred may petition an Israeli court within six
months from the date of acceptance of the full tender offer,
regardless of whether such shareholder agreed to the offer, to
determine whether the tender offer was for less than fair value
and whether the fair value should be paid as determined by
the court. However, an offeror may provide in the offer that a
shareholder who accepted the offer will not be entitled to
petition the court for appraisal rights as described in the
preceding sentence, as long as the offeror and the company
disclosed the information required by law in connection with
the full tender offer. If the full tender offer was not accepted in
accordance with any of the above alternatives, the acquirer
may not acquire shares of the company that will increase its
holdings to more than 90% of the company’s voting rights or
the company’s issued and outstanding share capital (or of
the applicable class) from shareholders who accepted the
tender offer. Shares purchased in contradiction to the full
tender offer rules under the Companies Law will have no
rights and will become dormant shares.
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GOVERNANCE
Directors’ Report
PRINCIPAL ACTIVITIES
DIRECTORS’ RESPONSIBILITIES
Nexxen is a flexible unified platform that helps empower
durable growth across the media supply chain. Our end-to-
end, video-first platform facilitates and optimizes engaging
advertising campaigns for brands, media groups and
content creators worldwide—enabling powerful partnerships
and delivering meaningful results. A leader in CTV, data, and
Video, Nexxen’s footprint is expanding across some of the
industry’s fastest-growing activities, driven by a global team
of seasoned technologists and digital natives.
BUSINESS REVIEW
The information that fulfils the requirements of the business
review, including details of the 2023 results, principal risks and
uncertainties and the outlook for future years, are set out in
the Chairman’s, Chief Executive Officer’s and Chief Financial
Officer’s statements on pages 2 to 15, and in this Directors’
Report.
DIRECTORS
The following Directors held office as indicated below for the
year ended 31 December 2023 and up to the date of signing
the consolidated financial statements except where
otherwise shown.
Christopher Stibbs - Non-Executive Chairperson
(Throughout 2023-present)
Ofer Druker - Chief Executive Officer and Director
(Throughout 2023-present)
Sagi Niri - Chief Financial Officer and Director
(Throughout 2023-present)
Yaniv Carmi - Chief Operating Officer and Director
(Throughout 2023-present)
Rebekah Brooks - Non-Executive Director
(Throughout 2023-present)
Norm Johnston - Non-Executive Director
(Throughout 2023-present)
Neil Jones - Senior Non-Executive Director
(Throughout 2023-present)
Joanna Parnell - Non-Executive Director
(Throughout 2023-present)
Lisa Klinger - Non-Executive Director
(Throughout 2023-present)
Daniel Kerstein - Non-Executive Director
(December 2023-present)
Rhys Summerton - Non-Executive Director
(December 2023-present)
DIRECTORS’ COMPENSATION AND INTERESTS
The Compensation Report is set out on pages 33 to 35. It
includes details of Directors’ compensation, 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.
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.
A full detailed list of principle risks and uncertainties is
disclosed within in the Company’s latest Form 20-f located
here: https://investors.nexxen.com/static-files/adbbaca7-
60d4-41d0-ae3c-0a509cc6fd28
An abbreviated list is detailed below:
Risks Relating to Our Business
• Our success and revenue growth are 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.
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• 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.
• 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.
• We must grow rapidly to become a market leader and to
• If CTV develops in ways that prevent advertisements from
accomplish our strategic objectives. If we fail to grow, or fail
to manage our growth effectively, the value of our company
may decline.
being delivered to consumers, our business, results of
operations and financial condition may be adversely
affected.
• The market for programmatic buying for advertising
campaigns is evolving. If this market develops slower or
differently than we expect, our business, operating results
and financial condition could be adversely affected.
• 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
and other liability that could adversely affect our business,
results of operations and financial condition.
• If the use of digital advertising is rejected by consumers,
• 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 or market changes 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.
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.
• The United Kingdom’s withdrawal from the European Union
may have a negative effect on global economic conditions,
financial markets and our business.
• 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.
Risks Relating to Global Operations Including Location in
Israel and Our Employees
• 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.
• We face potential liability and harm to our business based
on the human factor of inputting information into our platform.
• Inability to attract and retain other highly skilled employees
• We are subject to cybersecurity risks to operational systems,
security systems, infrastructure and personal data
processed by us or third-party vendors or suppliers and any
material failure, weakness, interruption, cyber event, incident
or breach of security could prevent us from effectively
operating our business.
• Any failure to protect our intellectual property rights could
negatively impact our business.
could harm our business.
• The impact of political, economic and military conditions in
Israel, including the ongoing Israel-Hamas war and other
conditions in Israel, and surrounding regions, 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.S.
corporations.
Risks Relating to the Market in Which We Operate
• If the non-proprietary technology, software, products and
• Provisions of Israeli law and our amended and restated
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.
articles of association may delay, prevent, or make
undesirable an acquisition of all or a significant portion of
our ADSs or assets.
• 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, inflation, supply constraints, geopolitical issues,
and pandemics, can make it difficult to predict our revenue
and could adversely affect our business, results of
operations and financial condition.
• Our amended and restated articles of association provide
that unless we consent to an alternate forum, the federal
district courts of the United States shall be the exclusive
forum for the resolution of any claims arising under the
Securities Act of 1933, as amended (the “Securities Act”),
which may limit the ability of our shareholders to initiate
litigation against us or increase the cost thereof.
• Our global operations subject us to certain risks beyond our
• It may be difficult to enforce a U.S. judgment against us, our
control and may adversely affect our financial results.
• Our business and operations have been, and may in the
future be, adversely affected by health epidemics,
pandemics and other outbreaks of infectious disease, such
as the global pandemic caused by COVID-19.
officers and directors in Israel or the United States, or to
assert U.S. securities laws claims in Israel or serve process on
our officers and directors.
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Nexxen International Ltd Annual Report 2023
Nexxen International Ltd Annual Report 2023
29
GOVERNANCE
Directors’ Report
continued
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.
Risks Relating to Our ADSs
• The price of our ADSs and the trading volume of our ADSs
may be volatile, and you may lose all or part of 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 publishers, and when
we will generate revenue from them.
• There was no public market for our ADSs prior to the listing of
our ADSs on the Nasdaq Global Market effective in June 2021
(the “IPO”), and an active trading market may not develop at
the rate and volume expected which may impact investors’
ability to sell our ADSs.
• 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.
• If we do not meet the expectations of equity research analysts,
if they do not publish research or reports about our business
or if they issue unfavorable commentary or downgrade our
ADSs, the price of our ADSs and trading volume could decline.
• Any future acquisitions or strategic investments could be
difficult to 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.
• We are a party to a credit agreement which contains a
number of covenants that may restrict our current and
future operations and could adversely affect our ability to
execute business needs.
• The dual listing of our ordinary shares and our ADSs may
adversely affect the liquidity and value of our ordinary
shares and ADSs.
• We qualify as an emerging growth company, as defined in
the Securities Act, and we cannot be certain if the reduced
disclosure requirements applicable to emerging growth
companies will make our ADSs less attractive to investors
because we may rely on these reduced disclosure
requirements.
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 are foreign private issuer and, as a result, we will not be
subject to U.S. proxy rules and will be subject to Exchange Act
reporting obligations that, to some extent, are more lenient
and less frequent than those of a U.S. domestic public
company.
• We may lose our “foreign private issuer” status in the future,
which could result in significant additional costs and
expenses.
• The market price of our ADSs could be negatively affected
by future issuances and sales of our ADSs or ordinary shares.
• If publishers, buyers, and data providers do not obtain
necessary and requisite consents from consumers for us to
process their personal data, we could be subject to fines
and liability.
• We cannot guarantee that we will repurchase any of our
ordinary shares pursuant to our announced repurchase
plan or that our repurchase plan will enhance long-term
shareholder value.
• We generally do not have a direct relationship with
consumers who view advertisements placed through our
platform, so we may not be able to disclaim liabilities from
such consumers through terms of use on our platform.
• There can be no assurance that we will not be classified as a
passive foreign investment company, which could result in
adverse U.S. federal income tax consequences to United
States Holders of our ADSs.
• We face potential liability and harm to our business based
on the nature of our business and the content on our
platform and we are, and may be in the future, involved in
commercial disputes with counterparties with whom we do
business.
• 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.
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• If a United States person is treated as owning at least 10% of
our shares (by vote or value), such holder may be subject to
adverse U.S. federal income tax consequences.
• We have broad discretion over the use of proceeds we
received in our IPO and may not apply the proceeds in ways
that increase the value of your investment.
• We incur increased costs as a result of operating as a U.S.
listed public company, and our management is required to
devote substantial time to new compliance initiatives and
corporate governance practices.
RESEARCH AND DEVELOPMENT
Our business model enables us to invest into our research
and development efforts, which have helped grow our
business. Our platform is extremely efficient at managing
large amounts of complex data and is leveraged by both our
advertisers and publishers in real time. We are committed to
innovative technologies and rapid introduction of enhanced
functionalities to support the dynamic needs of our advertisers
and publishers. We therefore expect technology and
development expense to increase as we continue to invest in
our platform to support increased volume of advertising
spend and our international expansion.
• Because we may not pay any cash dividends on our ADSs in
the future, capital appreciation, if any, may be holders of
ADSs sole source of gains and they may never receive a
return on their investment.
• Securities traded on AIM may carry a higher risk than
securities traded on other exchanges, which may impact the
value of your investment.
• You may not be able to exercise your right to vote the
ordinary shares underlying your ADSs.
• Holders of the ADSs are not able to exercise the preemptive
subscription rights related to the ordinary shares that they
represent and may suffer dilution of their equity holding in
the event of future issuances of our ordinary shares.
• Holders of ADSs may not receive distributions on our ordinary
shares in the form of ADSs or any value for them if it is illegal
or impractical to make them available to holders of ADSs.
• ADS holders may not be entitled to a jury trial with respect to
claims arising under the deposit agreement, which could
result in less favorable outcomes to the plaintiff(s) in any
such action.
• Holders of our ADSs or ordinary shares have limited choice of
forum, which could limit your ability to obtain a favorable
judicial forum for complaints against us, the depositary or
our respective directors, officers or employees.
• Holders of ADSs may be subject to limitations on transfer of
their ADSs.
• Exposure to foreign currency exchange rate fluctuations
could negatively impact our results of operations.
• A small number of significant beneficial owners of our
shares have significant influence over matters requiring
shareholder approval, which could delay or prevent a
change of control.
Our technology and development team is mainly based in
the United States and Israel and is comprised of 252 employees.
Research and development expenses were $49.7 million,
$33.7 million and $18.4 million in 2023, 2022 and 2021,
respectively, and accounted for17.3%, 14.7%, and 9.4% of our
operating expenses in 2023, 2022 and 2021 respectively.
Our success depends, in part, on our ability to protect the
proprietary methods and technologies that we develop or
otherwise acquire. We rely on a combination of patent,
trademark, copyright, trade secret laws, confidentiality
procedures and contractual provisions to protect our
proprietary methods and technologies and own more than
50 patents.
We recently rebranded our Company’s various businesses
under the name “nexxen” and associated Nexxen logo, in
order to further promote our unified service and product
offerings. The Company has been working on this rebranding
in its public facing assets. The Company has already
obtained international trademark registration for these
trademarks. The Company has also received Notices of
Publication from the United States and Australian Trademark
Offices for our U.S. and Australian Trademark Applications on
“nexxen” and the nexxen logo. The Company is actively
prosecuting similar trademark applications in Canada, China,
the European Union, Israel, Japan, Mexico, Singapore, and the
United Kingdom. The Company also uses and actively
protects other trademarks in various jurisdictions and holds
trademark registrations for the Perk mark in the United States
and the Perk logo in Australia, New Zealand, United Kingdom,
and WIPO.
We generally enter into confidentiality and/or license
agreements with our employees, consultants, vendors and
advertisers, and we generally limit access to, and distribution
of, our proprietary information. We intend to pursue additional
intellectual property protection to the extent we believe it
would be beneficial and cost effective.
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Nexxen International Ltd Annual Report 2023
Nexxen International Ltd Annual Report 2023
31
GOVERNANCE
Directors’ Report
continued
Compensation Report
SHARE CAPITAL AND SUBSTANTIAL SHAREHOLDINGS
DIRECTORS’ COMPENSATION
Details of the share capital of the Company as at 31 December 2023 are set out in Note 15 to the consolidated financial statements.
At May 14, 2024, the total issued and outstanding number of Ordinary Shares were 139,111,318 and 56,231,353 Ordinary Shares
were held in treasury as dormant shares. The following held 3% or more of the ordinary share capital of Nexxen:
Shareholder
Mithaq Capital
Toscafund Asset Management
Schroder Investment Management
News Corp
Lombard Odier Asset Management (Europe) Limited
JB Capital Partners
Hargreaves Lansdown Asset Management
Interactive Investor
River & Mercantile Asset Management
%
25.8%
13.8%
10.3%
6.1%
5.0%
4.0%
3.7%
3.5%
3.5%
INDEPENDENT AUDITORS
Somekh Chaikin, a member firm of KPMG International (“KPMG”), located in Tel Aviv, Israel (PCAOB ID No. 1057), has served as our
independent registered public accounting firm for the fiscal years ended December 31, 2023 and 2022. The following are KPMG
fees for professional services in each of the respective years:
Audit Fees(1)
Audit-related fees(2)
Tax fees
Total
Year ending December 31
2023
$’000
826
–
281
1,107
2022
$’000
842
130
288
1,260
(1) “Audit fees” are the aggregate fees billed for professional services rendered for the audit of our annual financial statements
or services that are normally provided by the accountant in connection with statutory and regulatory filings or engagements.
(2) “Audit-related fees” are the aggregate fees billed for assurance and related services that are reasonably related to the
performance of the audit and are not reported under audit fees. These fees primarily consist of accounting consultations
regarding the accounting treatment of matters that occur in the regular course of business, implications of new accounting
pronouncements and other accounting issues that occur from time to time.
Pre-Approval Policies and Procedures
The advance approval of our audit committee or members thereof, to whom approval authority has been delegated, is
required for all audit and non-audit services provided by our auditors.
Our audit committee has adopted a pre-approval policy for the engagement of our independent accountant to perform
certain audit and non-audit services. Pursuant to this policy, which is designed to assure that such engagements do not
impair the independence of our auditors, the audit committee pre-approves annually a catalog of specific audit and
non-audit services in the categories of audit service, audit-related service and tax services that may be performed by our
independent accountants.
The Board recognises that Directors’ Compensation 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 and
the NASDAQ, 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’ COMPENSATION
The policy of the Board is to provide executive compensation packages designed to attract, motivate and retain Directors of
the caliber necessary to maintain the Company’s position. It aims to provide sufficient levels of compensation to do this, but to
avoid paying more than is necessary. The compensation will also reflect the Director’s responsibilities.
COMPENSATION OF EXECUTIVES AND OTHER MANAGERS
Aggregate Compensation of Office Holders
The aggregate compensation, including share-based compensation, paid by us and our subsidiaries to our executive officers
and directors for the year ended December 31, 2023 was approximately $13.5 million. This amount includes approximately $0.2
million set aside or accrued to provide pension, severance, retirement or similar benefits or expenses, but does not include
business travel, relocation, professional and business association dues and expenses reimbursed to office holders, and other
benefits commonly reimbursed or paid by companies in Israel.
As of December 31, 2023, 1,602,500 RSUs and PSUs granted to our executive officers and directors were outstanding under our
equity incentive plans.
Compensation Disclosure in Accordance with Israeli Law
The table below is required under applicable Israeli Law and sets forth the compensation earned by our five most highly
compensated office holders during or with respect to the year ended December 31, 2023. We refer to the five individuals for
whom disclosure is provided herein as our “Covered Executives.” For purposes of the table and the summary below, “compensation”
includes base salary, bonuses, equity-based compensation, retirement or termination payments, and any benefits or
perquisites such as car, phone and social benefits, as well as any undertaking to provide such compensation in the future.
Summary Compensation Table
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Name and Principal Position(2)
Based Salary
Benefits and
Prerequisites(3)
Variable
Compensation(4)
Equity-Based
Compensation(5)
Total
Information Regarding Covered Executives(1)
Ofer Druker
Chief Executive Officer
Yaniv Carmi
Chief Operating Officer
Sagi Niri
Chief Financial Officer
Chance Lee Johnson
Chief Commercial Officer
Tal Mor
Chief Technology Officer
720,000
76,291
468,000
5,908,292
7,173,213
600,000
73,491
312,000
2,612,659
3,598,150
324,367
91,613
195,000
2,088,681
2,699,661
350,000
62,129
328,186
489,491
1,229,806
256,250
54,228
227,500
629,715
1,167,693
(1) In accordance with Israeli law, all amounts reported in the table are in terms of cost to the Company, as recorded in our
audited consolidated financial statements for the year ended December 31, 2023.
(2) All current officers listed in the table are full-time employees. Cash compensation amounts denominated in currencies
other than the U.S. dollar were converted into U.S. dollars at the average conversion rate for the year ended December 31, 2023.
(3) Amounts reported in this column include benefits and perquisites, including those mandated by applicable law. Such
benefits and perquisites may include, to the extent applicable to each executive, payments, contributions and/or
allocations for savings funds, pension, severance, vacation, car or car allowance, medical insurances and benefits, risk
insurances (such as life, disability and accident insurances), convalescence pay, payments for Medicare and social
security, tax gross-up payments and other benefits and perquisites consistent with our guidelines, regardless of whether
such amounts have actually been paid to the executive
(4) Amounts reported in this column refer to variable compensation such as earned commissions, incentives and earned or
paid bonuses as recorded in our audited consolidated financial statements for the year ended December 31, 2023.
(5) Amounts reported in this column represent the expense recorded in our audited consolidated financial statements for the
year ended December 31, 2023 with respect to equity-based compensation, reflecting also equity awards made in
previous years which have vested during the current year. Assumptions and key variables used in the calculation of such
amounts are described in Note 17 to our audited consolidated financial statements, which are included in this Annual Report.
32
Nexxen International Ltd Annual Report 2023
Nexxen International Ltd Annual Report 2023
33
GOVERNANCE
Compensation Report
continued
Executive Officers
Chief Executive Officer and Executive Director. Ofer Druker, our Chief Executive Officer and executive director, currently receives
an annual base salary of $720,000, and he is eligible to an annual bonus equal to up to 100% of his annual base salary (or
$720,000), subject to compliance with annual performance criteria to be determined by the compensation committee each year.
In 2021, our compensation committee, board of directors and shareholders approved to grant to Mr. Druker, effective upon
completion of the IPO, 2,625,000 RSUs and 1,125,000 PSUs pursuant to our 2017 Equity Incentive Plan (the “2017 Plan”). The RSUs
vest gradually over a period of three years, with 8.33% of the grant vesting each quarter, subject to Mr. Druker continuing to be
employed by the group on the applicable vesting date. The PSUs vest gradually over a period of three years, with 33.33% of
each grant vesting each year, subject to (i) Mr. Druker continuing to be employed by the group on the applicable vesting date,
and (ii) compliance with performance-based metrics as determined by the compensation committee. The vesting of the RSUs
and PSUs shall accelerate in full automatically upon the consummation of a change in control of the Company. Mr. Druker was
not granted any equity awards in 2022 or 2023.
Chief Operating Officer and Executive Director. Yaniv Carmi, our Chief Operating Officer and executive director, has a current
annual base salary of $600,000, and he is eligible to an annual bonus equal to up to 80% of his annual base salary (or
$480,000), subject to compliance with annual performance criteria to be determined by the compensation committee each
year. Mr. Carmi is entitled to a special bonus of £300,000 (or $381,939) in the event of a company sale (or a pro rata portion in
the case of a partial sale).
In 2021, our compensation committee, board of directors and shareholders approved to grant to Mr. Carmi, effective upon the
IPO, 1,155,000 RSUs and 495,000 PSUs pursuant to our 2017 Plan. The RSUs vest gradually over a period of three years, with 8.33%
of the grant vesting each quarter, subject to Mr. Carmi continuing to be employed by the group on the applicable vesting date.
The PSUs vest gradually over a period of three years, with 33.33% of each grant vesting each year, subject to (i) Mr. Carmi
continuing to be employed by the group on the applicable vesting date, and (ii) compliance with performance-based metrics
as determined by the compensation committee. The vesting of the RSUs and PSUs shall accelerate in full automatically upon
the consummation of a change in control of the Company. Mr. Carmi was not granted any equity awards in 2022 or 2023.
Chief Financial Officer and Executive Director. Sagi Niri, our Chief Financial Officer and executive director, has a current annual
base salary of NIS 1,200,000 (approximately $324,367), and he is eligible to an annual bonus equal to up to 92% of his annual
base salary (or $300,000), subject to compliance with annual performance criteria to be determined by the compensation
committee each year. In 2021, our compensation committee, board of directors and shareholders approved to grant to Mr. Niri,
effective upon the completion of the IPO, 945,000 RSUs and 405,000 PSUs pursuant to our Global Share Incentive Plan (2011), as
amended (the “2011 Plan”). The RSUs vest gradually over a period of three years, with 8.33% of the grant vesting each quarter,
subject to Mr. Niri continuing to be employed by the group on the applicable vesting date. The PSUs vest gradually over a
period of three years, with 33.33% of each grant vesting each year, subject to (i) Mr. Niri continuing to be employed by the group
on the applicable vesting date, and (ii) compliance with performance-based metrics as determined by the compensation
committee. The vesting of the RSUs and PSUs shall accelerate in full automatically upon the consummation of a change in
control of the Company. Mr. Niri was not granted any equity awards in 2022 or 2023.
Non-Executive Directors
We currently pay the chairman of our board of directors an annual cash retainer of £150,000 (approximately $187,080) and
each of our other nonexecutive directors an annual cash retainer of £43,000 (approximately $53,629). In addition, we pay the
chair of our audit committee an annual cash retainer of $18,000 and the chair of our compensation committee an annual
cash retainer of £7,000 (approximately $8,730), and we pay our senior non-executive director, Neil Jones, an additional annual
cash retainer of £5,000 (approximately $6,236).
EQUITY INCENTIVE PLANS
2011 Equity Incentive Plan
We maintain the 2011 Plan, under which we may grant equity-based incentive awards to attract, motivate and retain the talent
for which we compete.
The 2011 Plan is administered by our board of directors with the assistance of the compensation committee, and provides for
the grant of options, restricted shares and restricted share units.
The 2011 Plan provides for granting awards under various tax regimes, including, without limitation, in compliance with Section
102 of the Israeli Income Tax Ordinance (New Version), 5721-1961 (the “Ordinance”). Section 102 of the Ordinance allows
employees, directors and officers who are not controlling shareholders and are considered Israeli residents to receive
favorable tax treatment for compensation in the form of shares, restricted share units or options, subject to the terms and
conditions set forth in the Ordinance. Our non-employee service providers and controlling shareholders may only be granted
awards under section 3(i) of the Ordinance, which does not provide for similar tax benefits.
2017 Equity Incentive Plan
We maintain the 2017 Plan under which we may grant equity-based incentive awards to attract, motivate and retain the talent
for which we compete.
The 2017 Plan is administered by our board of directors with the assistance of the compensation committee.
The 2017 Plan provides for granting awards under various tax regimes, including, without limitation, awards granted to our
United States employees or service providers, including those who are deemed to be residents of the United States for tax
purposes, Section 422 of the Internal Revenue Code (the “IRC”) and Section 409A of the IRC.
The 2017 Plan provides for the grant of stock options (including incentive stock options and nonqualified stock options),
restricted shares, restricted share units, performance bonus awards, performance units and performance shares. Options
granted under the 2017 Plan to our employees who are U.S. residents may qualify as “incentive stock options” within the
meaning of Section 422 of the IRC, or may be non-qualified stock options.
On December 27, 2023, our shareholders approved (i) an increase of 1,250,000 ordinary shares to the share reserve of the 2011
Plan, and (ii) an increase of 3,750,000 ordinary shares to the share reserve of the 2017 Plan.
As of December 31, 2023, a total of 3,705,228 options to purchase ordinary shares, with a weighted average exercise price of
£6.21 ($7.91) per share and 2,973,572 RSUs and PSUs were outstanding under the 2011 Plan and 2017 Plan, collectively. As of
December 31, 2023, 6,202,712 ordinary shares were available for future issuance under the 2011 Plan and 2017 Plan, collectively.
In connection with the SpearAd acquisition in October 2021, we issued the sellers 370,000 restricted share awards subject to
time and performance vesting criteria. As of December 31, 2023, 69,999 of such restricted share awards were outstanding. The
restricted share awards were not issued as part of the Company’s equity incentive plans.
NEW GRANTS DURING THE PERIOD
During 2023, the Group granted 0 thousand share options and 497 thousand Restricted Share Units (RSUs) and Performance
Stock Units (PSUs) to its executive officers and employees from outstanding awards under Nexxen’s equity incentive plans.
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Ofer Druker*
Yaniv Carmi**
Sagi Niri***
* Ofer Druker: 1,250,000 RSU/PSU vested during 2023
** Yaniv Carmi: 550,000 RSU/PSU vested during 2023
*** Sagi Niri: 520,000 RSU/PSU vested during 2023
DIRECTORS’ AND RELATED PARTIES INTERESTS
As of May 14 2024:
Number of
RSU/ PSU
granted
Total number of
RSU/PSU held as
of May 14 2024
0
0
0
593,750
261,250
283,750
Ofer Druker
Yaniv Carmi
Sagi Niri
Joanna Parnell
Neil Jones
Christopher Stibbs
Rebekah Brooks
Norman Johnston
Lisa Klinger
Daniel Kerstein
Rhys Summerton
Number of
ordinary shares
Number of
ordinary shares
under option,
RSUs and PSUs
Percentage
holding of Total
Voting Rights
Percentage
holding on a fully
diluted basis
4,416,379
2,050,787
1,443,900
Nil
8,000
Nil
Nil
Nil
Nil
Nil
Nil
593,750
261,250
283,750
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
3.17%
1.47%
1.04%
Nil
0.01%
Nil
Nil
Nil
Nil
Nil
Nil
3.37%
1.56%
1.16%
Nil
0.01%
Nil
Nil
Nil
Nil
Nil
Nil
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Nexxen International Ltd Annual Report 2023
35
FINANCIAL STATEMENTS
Financial Statements
USE OF NON-IFRS FINANCIAL INFORMATION
FORWARD LOOKING STATEMENTS
In addition to our IFRS results, we review certain non-IFRS financial measures to help us evaluate our business, measure our
performance, identify trends affecting our business, establish budgets, measure the effectiveness of investments in our
technology and development and sales and marketing, and assess our operational efficiencies. These non-IFRS measures
include Contribution ex-TAC, Adjusted EBITDA, Adjusted EBITDA Margin, Non-IFRS Net Income, and Non-IFRS Earnings per share,
each of which is discussed below.
These non-IFRS financial measures are not intended to be considered in isolation from, as substitutes for, or as superior to, the
corresponding financial measures prepared in accordance with IFRS. You are encouraged to evaluate these adjustments and
review the reconciliation of these non-IFRS financial measures to their most comparable IFRS measures, and the reasons we
consider them appropriate. It is important to note that the particular items we exclude from, or include in, our non-IFRS
financial measures may differ from the items excluded from, or included in, similar non-IFRS financial measures used by other
companies. See “Reconciliation of Revenue to Contribution ex-TAC,” “Reconciliation of Total Comprehensive Income (Loss) to
Adjusted EBITDA,” and “Reconciliation of Net Income (Loss) to Non-IFRS Net Income,” included as part of this press release.
• Contribution ex-TAC: Contribution ex-TAC for Nexxen is defined as gross profit plus depreciation and amortization
attributable to cost of revenues and cost of revenues (exclusive of depreciation and amortization) minus the Performance
media cost (“traffic acquisition costs” or “TAC”). Performance media cost represents the costs of purchases of impressions
from publishers on a cost-per-thousand impression basis in our non-core Performance activities. Contribution ex-TAC is a
supplemental measure of our financial performance that is not required by, or presented in accordance with, IFRS.
Contribution ex-TAC should not be considered as an alternative to gross profit as a measure of financial performance.
Contribution ex-TAC is a non-IFRS financial measure and should not be viewed in isolation. We believe Contribution ex-TAC is
a useful measure in assessing the performance of Nexxen, because it facilitates a consistent comparison against our core
business without considering the impact of traffic acquisition costs related to revenue reported on a gross basis.
• Adjusted EBITDA: We define Adjusted EBITDA for Nexxen as total comprehensive income (loss) for the period adjusted for
foreign currency translation differences for foreign operations, foreign currency translation for subsidiary sold reclassified to
profit and loss, financing expenses (income), net, tax expenses, depreciation and amortization, stock-based compensation,
restructuring, acquisition-related costs and other expenses, net. Adjusted EBITDA is included in the press release because it is
a key metric used by management and our board of directors to assess our financial performance. Adjusted EBITDA is
frequently used by analysts, investors, and other interested parties to evaluate companies in our industry. Management
believes that Adjusted EBITDA is an appropriate measure of operating performance because it eliminates the impact of
expenses that do not relate directly to the performance of the underlying business.
• Adjusted EBITDA Margin: We define Adjusted EBITDA Margin as Adjusted EBITDA on a Contribution ex-TAC basis.
• Non-IFRS Income (Loss) and Non-IFRS Earnings (Loss) per Share: We define non-IFRS earnings (loss) per share as non-IFRS
income (loss) divided by non-IFRS weighted-average shares outstanding. Non-IFRS income (loss) is equal to net income
(loss) excluding stock-based compensation, and cash- and non-cash-based acquisition and related expenses, including
amortization of acquired intangible assets, merger-related severance costs, and transaction expenses. In periods in which
we have non-IFRS income, non-IFRS weighted-average shares outstanding used to calculate non-IFRS earnings per share
includes the impact of potentially dilutive shares. Potentially dilutive shares consist of stock options, restricted stock awards,
restricted stock units, and performance stock units, each computed using the treasury stock method. We believe non-IFRS
earnings (loss) per share is useful to investors in evaluating our ongoing operational performance and our trends on a per
share basis, and also facilitates comparison of our financial results on a per share basis with other companies, many of
which present a similar non-IFRS measure. However, a potential limitation of our use of non-IFRS earnings (loss) per share is
that other companies may define non-IFRS earnings per share differently, which may make comparison difficult. This
measure may also exclude expenses that may have a material impact on our reported financial results. Non-IFRS earnings
(loss) per share is a performance measure and should not be used as a measure of liquidity. Because of these limitations, we
also consider the comparable IFRS measure of net income.
We do not provide a reconciliation of forward-looking non-IFRS financial metrics, because reconciling information is not
available without an unreasonable effort, such as attempting to make assumptions that cannot reasonably be made on a
forward-looking basis to determine the corresponding IFRS metric.
The information contained within this announcement is deemed by the Company to constitute inside information as
stipulated under the Market Abuse
This annual report contains forward-looking statements, including forward-looking statements within the meaning of Section
27A of the United States Securities Act of 1933, as amended, and Section 21E of the United States Securities and Exchange Act of
1934, as amended. Forward-looking statements are identified by words such as “anticipates,” “believes,” “expects,” “intends,” “may,”
“can,” “will,” “estimates,” and other similar expressions. However, these words are not the only way Nexxen identifies forward-
looking statements. All statements contained in this annual report that do not relate to matters of historical fact should be
considered forward-looking statements, including without limitation statements regarding anticipated financial results for full
year 2024 and beyond; anticipated benefits of Nexxen’s strategic transactions and commercial partnerships; anticipated
features and benefits of Nexxen’s products and service offerings; Nexxen’s positioning for accelerated growth and continued
future growth in both the US and international markets in 2024 and beyond; Nexxen’s medium- to long-term prospects;
management’s belief that Nexxen is well-positioned to benefit from future industry growth trends and Company-specific
catalysts; the Company’s expectations with respect to Video revenue; the potential negative impact of ongoing macroeconomic
headwinds and uncertainty that have limited advertising activity and the anticipation that these challenges could continue to
have an impact for the remainder of 2024 and beyond; the Company’s plans with respect to its cash reserves and its intent to
not undertake any major acquisitions in the near-term; its continued focus in 2024 on expanding its base of end-to-end
customers, growing data licensing revenue and expanding its streaming, TV, and agency partnerships to drive growth and
increased profitability; the expectation of launching its TV Intelligence solution in additional major international markets in
2024, enhancing and expanding the Company’s international CTV growth opportunity; the anticipated benefits from the
Company’s investment in VIDAA and its enhanced strategic relationship with Hisense; the anticipated benefits of the
rebranding of the Tremor group to Nexxen, and the Company’s plans with respect thereto, as well as any other statements
related to Nexxen’s future financial results and operating performance. These statements are neither promises nor guarantees
but involve known and unknown risks, uncertainties and other important factors that may cause Nexxen’s actual results,
performance or achievements to be materially different from its expectations expressed or implied by the forward-looking
statements, including, but not limited to, the following: negative global economic conditions; global conflicts and war,
including the current terrorist attacks by Hamas, and the war and hostilities between Israel and Hamas and Israel and
Hezbollah, and how those conditions may adversely impact Nexxen’s business, customers, and the markets in which Nexxen
competes; changes in industry trends; the risk that Nexxen will not realize the anticipated benefits of its acquisition of Amobee
and strategic investment in VIDAA; and, other negative developments in Nexxen’s business or unfavourable legislative or
regulatory developments. Nexxen cautions you not to place undue reliance on these forward-looking statements. For a more
detailed discussion of these factors, and other factors that could cause actual results to vary materially, interested parties
should review the risk factors listed in the Company’s most recent Annual Report on Form 20-F, filed with the U.S. Securities and
Exchange Commission (www.sec.gov) on March 6, 2024. Any forward-looking statements made by Nexxen in this annual
report speak only as of the date of this annual report, and Nexxen does not intend to update these forward-looking statements
after the date of this annual report, except as required by law.
Nexxen, and the Nexxen logo are trademarks of Nexxen International Ltd. in the United States and other countries. All other
trademarks are the property of their respective owners. The use of the word “partner” or “partnership” in this annual report
does not mean a legal partner or legal partnership.
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Nexxen International Ltd Annual Report 2023
Nexxen International Ltd Annual Report 2023
37
FINANCIAL STATEMENTS
Financial Statements
continued
Auditors’ Report to the Shareholders of Nexxen International Ltd.
(Formerly -Tremor International Ltd.)
Reconciliation of Total Comprehensive Income (Loss) to Adjusted EBITDA
Total comprehensive income (loss)
Foreign currency translation differences
for foreign operation
Foreign currency translation for subsidiary sold
reclassified to profit and loss
Tax expenses
Financial expense (income), net
Depreciation and amortization
Stock-based compensation
Acquisition related costs
Restructuring
Other expense
2023
$’000
5,341
2022
$’000
9,796
%
2023
$’000
2022
$’000
%
(45%)
(18,127)
16,238
(212%)
(2,114)
(4,735)
(2,126)
6,499
–
6,487
(105)
21,047
1,386
–
–
–
–
5,040
717
17,184
7,986
93
307
540
(1,234)
–
2,503
2,008
78,285
19,169
171
796
1,765
19,688
2,327
42,700
50,505
6,085
307
540
Adjusted EBITDA
32,042
36,928
(13%)
83,210
144,889
(43%)
Reconciliation of Revenue to Contribution ex-TAC
2023
$’000
2022
$’000
%
2023
$’000
2022
$’000
Revenues
95,916
107,697
(11%)
331,993
335,250
Cost of revenues (exclusive of depreciation and
amortization)
(17,886)
(17,265)
(62,270)
(60,745)
Depreciation and amortization attributable
to Cost of Revenues
(13,682)
(11,810)
(50,825)
(25,367)
Gross profit (IFRS)
64,348
78,622
(18%)
218,898
Depreciation and amortization attributable
to Cost of Revenues
Cost of revenues (exclusive of depreciation
and amortization)
Performance media cost
13,682
11,810
50,825
17,886
(5,392)
17,265
(4,695)
62,270
(17,810)
60,745
(25,524)
249,138
25,367
(12%)
Somekh Chaikin
17 Ha’arba’a Street, PO Box 609
KPMG Millennium Tower
Tel Aviv 6100601, Israel
+972 3 684 8000
We have audited the accompanying consolidated statements of financial position of Nexxen International Ltd. and its
subsidiaries (formerly Tremor International and hereinafter – “the Company”) as of December 31, 2023 and 2022 and the
related consolidated statements of operation and other comprehensive income, statements of changes in equity and
statements of cash flows, for each of the three years in the period ended December 31, 2023. These financial statements are
the responsibility of the Company’s Board of Director and of its Management. Our responsibility is to express an opinion on
these financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing standards in Israel, including standards prescribed
by the Auditors Regulations (Manner of Auditor’s Performance) – 1973. Such standards require that we plan and perform the
audit to obtain reasonable assurance that the financial statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also
includes assessing the accounting principles used and significant estimates made by Management, as well as evaluating the
overall financial statements presentation. We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the consolidated
financial position of the Company and its subsidiaries as of December 31, 2023 and 2022 and their results of operations,
changes in equity and cash flows for each of the three years in the period ended December 31, 2023, in accordance with
International Financial Reporting Standards (IFRS).
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%
(1%)
Somekh Chaikin
Member Firm of KPMG International
March 6, 2024
Contribution ex-TAC (Non-IFRS)
90,524
103,002
(12%)
314,183
309,726
1%
Reconciliation of Net Income (Loss) to Non-IFRS Net Income
Net Income (loss)
Acquisition related costs
Amortization of acquired intangibles
Restructuring
Stock-based compensation expense
Other expense
Tax effect of Non-IFRS adjustments(1)
2023
$’000
3,227
–
14,931
–
1,386
–
(5,086)
2022
$’000
5,061
93
8,496
307
7,986
540
(262)
%
(36%)
2023
$’000
(21,487)
171
42,952
796
19,169
1,765
(11,153)
2022
$’000
22,737
6,085
20,768
307
50,505
540
(9,130)
%
(195%)
Non-IFRS Income
14,458
22,221
(35%)
32,213
91,812
(65%)
Weighted average shares outstanding—diluted
(in millions)(2)
Non-IFRS diluted Earnings Per Share (in USD)
147.5
0.10
147.6
0.15
145.2
0.22
153.1
0.60
(35%)
(63%)
(1) Non-IFRS income includes the estimated tax impact from the expense items reconciling between net income (loss) and non-IFRS income
(2) Non-IFRS earnings per share is computed using the same weighted-average number of shares that are used to compute IFRS earnings per share
38
Nexxen International Ltd Annual Report 2023
Nexxen International Ltd Annual Report 2023
39
KPMG Somekh Chaikin, an Israeli partnership and a member firm of the KPMG global organization of independent member firms affiliated with
KPMG International Limited, a private English company limited by guarantee
FINANCIAL STATEMENTS
Consolidated Statements of Financial Position
as at 31 December 2023
Consolidated Statements of Operation
and Other Comprehensive Income (Loss)
as at 31 December 2023
Note
2003
$’000
2022
$’000
Note
2023
$’000
2022
$’000
2021
$’000
Assets
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
Investment in shares
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
Long-term debt
Other long-term liabilities
Deferred tax liabilities
Total non-current liabilities
Total liabilities
Shareholders’ equity:
Share capital
Share premium
Other comprehensive loss
Retained earnings
Total shareholders’ equity
Total liabilities and shareholders’ equity
Date of approval of the financial statements: March 6, 2024.
The accompanying notes are an integral part of these consolidated financial statements.
10
8
8
5
6
7
4
18
6
9
9
6
11
4
15
234,308
201,973
8,293
7,010
451,584
21,401
31,900
362,000
12,393
25,000
525
217,500
219,837
23,415
750
461,502
29,874
23,122
398,096
18,161
25,000
406
453,219
494,659
904,803
956,161
12,106
183,296
29,098
4,937
14,104
212,690
44,355
9,417
229,437
280,566
237
24,955
99,072
6,800
754
131,818
238
15,234
98,544
8,802
1,162
123,980
361,255
404,546
417
410,563
(2,441)
135,009
543,548
904,803
413
400,507
(5,801)
156,496
551,615
956,161
Revenues
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 operating costs
Operating Profit (loss)
Financing income
Financing expenses
Financing expenses, net
Profit (loss) before taxes on income
Tax benefit (expenses)
Profit (loss) for the year
Other comprehensive income (loss) items:
Foreign currency translation differences for foreign operations
Foreign currency translation for subsidiary sold reclassified to profit and loss
Total other comprehensive income (loss) for the year
Total comprehensive income (loss) for the year
Earnings per share
Basic earnings (loss) per share (in USD)
Diluted earnings (loss) per share (in USD)
12
13
14
4
16
16
331,993
335,250
341,945
62,270
49,684
105,914
51,051
78,285
1,765
60,745
33,659
89,953
68,005
42,700
(4,564)
71,651
18,422
74,611
63,499
40,259
(959)
286,699
229,753
195,832
(16,976)
44,752
74,462
(8,192)
10,200
2,008
(18,984)
(2,503)
(2,284)
4,611
2,327
42,425
(19,688)
(21,487)
22,737
2,126
1,234
3,360
(18,127)
(0.15)
(0.15)
(6,499)
–
(6,499)
16,238
0.15
0.15
(483)
2,670
2,187
72,275
948
73,223
(2,632)
–
(2,632)
70,591
0.51
0.48
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The accompanying notes are an integral part of these consolidated financial statements.
40
Nexxen International Ltd Annual Report 2023
Nexxen International Ltd Annual Report 2023
41
FINANCIAL STATEMENTS
Consolidated Statements of Changes in Equity
as at 31 December 2023
Consolidated Statements of Cash Flows
as at 31 December 2023
Balance as of January 1, 2021
Total Comprehensive income (loss) for the year
Profit for the year
Other comprehensive loss:
Foreign currency translation
Total comprehensive income (loss) for the year
Transactions with owners, recognized directly in equity
Revaluation of liability for put option on
non-controlling interests
Own shares acquired
Share based compensation
Exercise of share options
Issuance of shares
Issuance of Restricted shares
Share
capital
$’000
Share
premium
$’000
380
264,831
Other
com-
prehensive
income (loss)
$’000
3,330
Retained
Earnings
$’000
Total
$’000
60,472
329,013
–
–
–
–
(3)
–
17
47
1
–
–
–
–
(6,640)
41,822
1,353
136,111
(1)
–
73,223
73,223
(2,632)
–
(2,632)
(2,632)
73,223
70,591
–
–
–
–
–
–
64
–
–
–
–
–
64
(6,643)
41,822
1,370
136,158
–
Cash flows from operating activities:
Profit (loss) for the year
Adjustments for:
Depreciation and amortization
Net financing expense
Loss from disposals of fixed and intangible assets
Loss (gain) on leases modification
Loss (gain) on sale of business unit
Share-based compensation and restricted shares
Tax (benefit) expense
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
2023
$’000
2022
$’000
2021
$’000
(21,487)
22,737
73,223
78,285
1,699
2
119
1,765
19,169
2,503
30,603
(43,077)
(1)
352
(8,721)
8,016
(8,486)
42,700
2,147
542
56
–
50,505
19,688
57,050
(100,145)
(179)
1,175
(14,784)
2,103
(587)
40,259
2,023
–
(377)
(982)
42,818
(948)
(11,676)
26,845
(69)
2,231
(3,185)
496
(570)
Balance as of December 31, 2021
442
437,476
698
133,759
572,375
Net cash provided by operating activities
60,741
83,008
170,088
Total Comprehensive Income (loss) for the year
Profit for the year
Other comprehensive loss:
Foreign Currency Translation
Total comprehensive Income (loss) for the year
–
–
–
–
–
–
–
22,737
22,737
(6,499)
–
(6,499)
(6,499)
22,737
16,238
Transactions with owners, recognized directly in equity
Own shares acquired
Share based compensation
Exercise of share options
(50)
–
21
(86,202)
47,049
2,184
–
–
–
–
–
–
(86,252)
47,049
2,205
Balance as of December 31, 2022
413
400,507
(5,801)
156,496
551,615
Total Comprehensive Income (loss) for the year
Loss for the year
Other comprehensive income:
Foreign Currency Translation
Foreign Currency Translation for subsidiary sold
Total comprehensive Income (loss) for the year
Transactions with owners, recognized directly in equity
Own shares acquired
Share based compensation
Exercise of share options
–
–
–
–
(8)
–
12
–
–
–
–
–
(21,487)
(21,487)
2,126
1,234
–
–
2,126
1,234
3,360
(21,487)
(18,127)
(9,306)
19,141
221
–
–
–
–
–
–
(9,314)
19,141
233
Balance as of December 31, 2023
417
410,563
(2,441)
135,009
543,548
Cash flows from investing activities
Change in pledged deposits, net
Payments on finance lease receivable
Repayment of long-term loans
Acquisition of fixed assets
Acquisition and capitalization of intangible assets
Proceeds from sale of business unit
Investment in shares
Acquisition of subsidiaries, net of cash acquired
1,498
1,112
51
(4,495)
(15,126)
–
–
–
(213)
1,306
–
(6,433)
(8,750)
1,180
(25,000)
(195,084)
(11)
2,454
–
(3,378)
(4,966)
415
–
(11,001)
Net cash used in investing activities
(16,960)
(232,994)
(16,487)
Cash flows from financing activities
Acquisition of own shares
Proceeds from exercise of share options
Leases repayment
Issuance of shares, net of issuance cost
Receipt of long-term debt, net of transaction cost
Payment of financial liability
Net cash provided by (used in) financing activities
Net increase (decrease) 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
(9,518)
233
(17,262)
–
–
–
(86,048)
2,205
(12,018)
–
98,917
–
(6,643)
1,370
(10,009)
134,558
–
(2,414)
(26,547)
3,056
116,862
17,234
(146,930)
270,463
217,500
(426)
367,717
(3,287)
97,463
(209)
234,308
217,500
367,717
The accompanying notes are an integral part of these consolidated financial statements.
The accompanying notes are an integral part of these consolidated financial statements.
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43
FINANCIAL STATEMENTS
Notes to Consolidated Financial Statements
as at 31 December 2023
1. GENERAL
2. BASIS OF PREPARATION continued
a. Reporting entity:
Nexxen International Ltd. (the “Company” or “Nexxen International”), formerly known as Tremor 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 and the American Depositary Shares (“ADSs”), each of which represents two ordinary
shares of the Company, represented by the American Depositary Receipts (“ADR”) are listed on the Nasdaq Capital Market. The
address of the registered office is 82 Yigal Alon Street Tel-Aviv, 6789124, Israel.
Nexxen International is a global Company offering a unified data-driven 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) in real-time and at scale. Nexxen International’s technology stack is comprised of a Demand Side Platform
(“DSP”), Supply-Side Platform (“SSP”), Ad Server, and Data Management Platform (“DMP”), empowering customers on both the
buy- and sell-sides of the ecosystem to leverage a full suite of data-driven planning and technology solutions to achieve
greater efficiency, effectiveness, and outcomes in their advertising efforts. The Company’s DSP solution is delivered through
wholly owned subsidiary Nexxen Inc. (formerly known as Amobee Inc. and which also includes Tremor Video Inc.’s activity that
was transferred to Nexxen Inc. in 2023) and is designed to assist customers in a self-managed or full-service capacity to plan
and execute digital marketing campaigns in real-time across various ad formats. The Company’s SSP solution (delivered
through Nexxen Group LLC, formerly known as Unruly Group, LLC) is designed to monetize digital inventory for publishers by
enabling their content to have the necessary code and requirements for programmatic advertising integration, and provides
access to significant amounts of data and unique demand to drive more effective inventory management and revenue
optimization. The Company’s “DMP” integrates both its DSP and SSP solutions, enabling advertisers and publishers to use data
from various sources, including web, social media, Connected TV and linear TV, and mobile devices, to optimize results of their
advertising campaigns. Following the acquisition of Nexxen Inc., the Company gained a Linear TV Planning feature, enabling
sellers at national broadcasters to generate linear TV plans during and after upfronts. Nexxen International Ltd. is
headquartered in Israel and maintains offices throughout the U.S., Canada, EMEA and Asia-Pacific.
On June 12, 2023, the Company initially rebranded all of its core products and platforms under the unified Nexxen brand. On
January 2, 2024, the Company’s name was officially changed to Nexxen International Ltd. and, in connection with the change,
its stock ticker on both the NASDAQ and London Stock Exchange changed from “TRMR” to “NEXN”. The Company believes
rebranding and unifying under Nexxen has enhanced its commercial focus, and has better conveyed the holistic value
proposition of its end-to-end technology stack to the market for its next phase of growth. As part of the rebranding, the
Company changed the expected useful life of its previous brands, which completed by the end of the year. See Note 7.
b. Definitions:
In these financial statements –
The Company – Nexxen International Ltd.
The Group
Subsidiaries
– Nexxen International Ltd. and its subsidiaries.
– Companies, the financial statements of which are fully consolidated, directly, or indirectly, with the financial
statements of the Company such as Nexxen Group LLC, Unruly Holding Ltd, Tremor Video Inc, Nexxen Inc.
Related party
– As defined by IAS 24, “Related Party Disclosures”.
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 5, 2024.
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 thousand, 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:
Provisions
• Deferred and current tax assets and liabilities
•
• Derivatives
•
Investment in shares
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
and impairment testing for goodwill, in Note 4, on Income Tax, with respect to uncertain tax position, in Note 18 on investments
in shares.
e. Change in classification:
The Company changed the classification of the current maturities of the unfavorable contract from other payables to other
long-term liabilities. Comparative amounts were reclassified for consistency in the amount of USD 1,350 thousand.
f. 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:
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• Note 17, on share-based compensation;
• Note 18, on financial instruments;
• Note 18, on investments in shares.
3. MATERIAL 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 the Group.
a. Financial instruments:
1. Non-derivative financial assets
The Company’s non-derivative financial assets, which are measured at amortized cost, mainly consist of accounts receivable
which are held to collect and deposits. Accounts receivable represent amounts owed by customers resulting from business
transactions, and they are recognized at their original invoiced values, adjusted for expected credit losses. Loss rates are
based on historical collection experience, while taking into consideration current customer information, collection history, and
other relevant data at each reporting period.
The Company’s non-derivative financial assets, which are measured at fair value through profit and loss, consist of investment
in shares. Net gains and losses are recognized in profit or loss, finance income/expenses.
2. Non-derivative financial liabilities
The Company’s non-derivative financial liabilities mainly include trade and other payables, and loan, all measured at
amortized cost.
3. Treasury shares:
When share capital recognized as equity is repurchased by the Group, the amount of the consideration paid, which includes
directly attributable costs, net of any tax effects, is recognized as a deduction from equity. Repurchased shares are classified
as a deduction in Share Premium.
For further information regarding the measurement of these assets and liabilities see Note 3 regarding material accounting
policies.
44
Nexxen International Ltd Annual Report 2023
Nexxen International Ltd Annual Report 2023
45
FINANCIAL STATEMENTS
Notes to Consolidated Financial Statements
as at 31 December 2023
continued
3. MATERIAL ACCOUNTING POLICIES continued
3. MATERIAL ACCOUNTING POLICIES continued
b. 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
Leasehold improvements
3-5
3-17
The shorter of the lease term and the useful life
Years
Intangible assets and liabilities:
c.
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 direct labor costs that are directly attributable to preparing the asset for its intended use. Other
development expenditure is recognized in profit or loss as incurred.
The estimated useful lives of developed software are three years.
2. Goodwill:
The Group has identified its entire operation as a single cash generating unit (CGU). The Company conducts an annual
assessment of goodwill impairment on an annual basis, at year end. According to management assessment as of December
31, 2023, no impairment in respect to goodwill has been recorded. See note 7.
3. Amortization:
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.
Amortization is recognized in the statements of operation and other comprehensive income (loss) on a straight-line basis over
the estimated useful lives of the intangible assets from the date they are available for use.
The estimated useful lives for the current and comparative periods are as follows:
years
Trademark
Software (developed and acquired)
Customer relationships
Technology
Fully depreciated, See note 7
3
3-6
3-5.25
4. Unfavorable contracts
In the business combinations of Nexxen Inc., the Company recognizes a liability for contracts when their terms are unfavorable
compared to market terms, to represent the off-market element at the acquisition date. As of December 31, 2023, the
aggregated liability balance, in the amount of USD 6.7 million, is entirely classified as long-term.
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d. Share Based Compensation:
Compensation expense related to stock options, restricted stock units and performance stock units. The Group’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.
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.
e. 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”) for the Israeli
employees and under section 401K for US employees, which is accounted for as a 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.
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.
f. Revenue recognition:
The Group 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 Group generates revenue through platform fees that are tailored to fit the customer’s specific utilization of its 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.
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 Group’s platforms.
Publishers provide digital advertising inventory to the Group’s platform in the form of advertising requests, or ad request. When
the Group 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 Group 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.
The Company concluded that its Programmatic activity (i) 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.
46
Nexxen International Ltd Annual Report 2023
Nexxen International Ltd Annual Report 2023
47
FINANCIAL STATEMENTS
Notes to Consolidated Financial Statements
as at 31 December 2023
continued
3. MATERIAL ACCOUNTING POLICIES continued
As a result, the Group reports its Programmatic business, tech stack, features, business models and activity as an agent and
therefore presented revenue from Programmatic on a net basis.
For the Performance activity the Company is the primary obligor to provide the services and, as such, revenue is presented on
a gross basis.
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 Group estimates and records reduction to revenue for volume discounts based on expected volume during the incentive
term.
The Group generally invoices buyers at the end of each month for the full purchase price of ad impressions monetized in that
month. Accounts receivables 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.
g. Classification of expenses
Cost of revenue
Cost of revenues (exclusive of depreciation and amortization) primarily consists of hosting fees and data costs for both
Programmatic and Performance activities, as well as media costs for Performance activities that are directly attributable to
revenue generated by the Company and generally based on the revenue share arrangements with audience and content
partners. See Note 13.
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 3c(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.
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 external legal, and information technology consulting
and outsourcing services that are not directly related to other operational expenses.
h. Financing income and expenses:
Generally, foreign currency differences from a monetary item receivable from or payable to a foreign operation, including
foreign operations that are subsidiaries, are recognized in profit or loss in the consolidated financial statements.
Foreign exchange gains and losses arising from a monetary item receivable from or payable to a foreign operation, the
settlement of which is neither planned nor likely in the foreseeable future, are considered to form part of a net investment in a
foreign operation and are recognized in other comprehensive income (loss), and are presented within equity as part of the
currency translation reserve.
Financing income mainly comprises foreign currency gains and interest income.
Financing expense primarily includes exchange rate differences, interest and bank fees.
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.
i. Taxes on income
The Company operates in multiple tax jurisdictions.
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 likely than
not that the Group will have to use its economic resources to pay the obligation.
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Leases:
3. MATERIAL ACCOUNTING POLICIES continued
j.
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.
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.
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
years
1-8.5
1-5.5
k.
Initial application of new standards, amendments to standards and interpretations
Amendment to IAS 1, Presentation of Financial Statements: “Disclosure of Accounting Policies.
As a result of applying the Amendment, the extent of the accounting policy disclosure provided in the financial statements for
2023 was reduced and adjusted according to the Company’s specific circumstances.
l. New standards, amendments to standards and interpretations not yet adopted:
Amendment to IAS 1, Presentation of Financial Statements: Classification of Liabilities as Current or Non-Current and
subsequent amendment: Non-Current Liabilities with Covenants.
The Group is examining the effects of the Amendment on the financial statements with no plans for early adoption.
4. INCOME TAX
a. Details regarding the tax environment of the Israeli companies:
1. Corporate tax rate
Taxable income of the Israeli companies is subject to the Israeli corporate tax at the rate of 23% in the years 2023, 2022 and 2021.
2. Benefits under the Law for the Encouragement of Capital Investments (Investment Law)
The Investment Law provides tax benefits for Israeli companies meeting certain requirements and criteria. According to the
Investment Law, 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.
The Investment Law also added a new tax benefit tracks effective January 1, 2017 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 Investment Law 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 and preferred
technological income, to an individual shareholder or foreign resident, subject to double taxation prevention treaties.
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.
The Company obtained tax rulings confirming that the Company is eligible for the benefits under the Investment Law. The tax
rulings which were obtained applied for the years 2017-2021. The Company approached the Israeli Tax Authority on December
28, 2023, for the renewal of the tax ruling, regarding industrial enterprise and preferred technological enterprise, for the next
five years beginning in 2022. The tax ruling has not been accepted yet.
48
Nexxen International Ltd Annual Report 2023
Nexxen International Ltd Annual Report 2023
49
FINANCIAL STATEMENTS
Notes to Consolidated Financial Statements
as at 31 December 2023
continued
4. INCOME TAX continued
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.
Israel
c. Carry forward losses
1.
As of December 31, 2023, the net operating loss carryforwards, or NOLs are approximately USD 20.4 million (2022: nil), and the
Capital Loss to carry forward is approximately USD 3 million (2022: USD 0.1 million). The losses carryforward do not expire under
Israeli tax laws.
2. US
The Group submit a US federal consolidated tax return.
Provisions enacted in the Tax Cuts and Jobs Act in 2017 related to the capitalization for tax purposes of research and
experimental expenditures (“R&E”) became effective on January 1, 2022. These new R&E provisions require us to capitalize
certain research and experimental expenditures and amortize them on the U.S. tax return over five or fifteen years, depending
on where these costs are conducted. The tax expense in the U.S. would increase as a result, unless these provisions are
modified through legislative processes in the future. The Company applies the new enacted act in the current year tax
provision and the deferred tax asset.
The Group has several U.S. federal NOLs, following previous acquisitions:
1.
Approximately USD 100.8 million, which will expire starting 2038. As of December 31, 2023, the NOLs are approximately
USD 56.7 million (2022: USD 65.7 million).
2.
Approximately USD 315 million which can be utilized over the next 52 years. As of December 31, 2023, the NOLs are
approximately USD 307.2 million (2022: USD 315 million).
In addition, the Group has USD 0.5 million NOLs from previous years.
4. INCOME TAX continued
d. Composition of income tax benefit:
Current tax expense (income)
Current year
Deferred tax expense (income)
Creation and reversal of temporary differences
Tax expenses (benefit)
2023
$’000
2022
$’000
2021
$’000
(2,331)
14,378
7,220
4,834
2,503
5,310
19,688
(8,168)
(948)
The following are the domestic and foreign components of the Group’s income taxes:
Domestic
US
International
Tax expenses (benefit)
2023
$’000
(5,352)
8,712
(857)
2,503
2022
$’000
5,766
11,578
2,344
19,688
e. Reconciliation between the theoretical tax on the pre-tax profit and the tax expense:
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2021
$’000
4,995
(961)
(4,982)
(948)
2021
$’000
72,275
23%
16,623
In addition, the Capital Loss to carry forward is approximately USD 27.7 million (2022: nil). Capital losses can be carried back for
three years, and forward for five years.
Profit (Loss) before taxes on income
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 carryforwards for all
such NOLs. NOL’s arising in a tax year ending on 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 2020and 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, the acquired companies in the US underwent ownership changes for tax
purposes (i.e., a change of more than 50% in stock ownership involving 5% shareholders) on the acquisition date. As a result, the
use of the Company’s total US NOL carryforwards and tax credits generated prior to the ownership change is subject to annual
use limitations under Section 382 and potentially also under section 383 of the Code and comparable state income tax laws.
3. International
As of December 31, 2023, the NOLs are approximately USD 19.2 million (2022: USD 22.3 million).
In addition, the Capital Loss to carry forward is approximately USD 0.9 million (2022: nil). The ability to carry losses forward
(or backwards) depends on the specific jurisdiction which the Company operates in.
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*
Difference between measurement basis of income/expenses for tax purposes and
measurement basis of income/expenses for financial reporting purposes
Effect of reduced tax rate on preferred loss (income)
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
Recognition of deferred taxes for tax losses and benefits from previous years for
which deferred taxes were not created in the past
Recognition in temporary differences for which deferred taxes are not recognized
Foreign tax rate differential
Tax (benefit) expenses
Effective income tax rate
*including non-deductible share-based compensation expenses.
2023
$’000
2022
$’000
(18,984)
42,425
23%
(4,366)
23%
9,758
3,329
11,642
(3,364)
–
4,963
(90)
892
(4,852)
656
1,971
2,503
(13%)
(654)
(4,625)
(2,539)
2,697
(1,104)
35
4,478
19,688
46%
–
(7,226)
(1,117)
(3,329)
(4,586)
–
2,051
(948)
(1%)
50
Nexxen International Ltd Annual Report 2023
Nexxen International Ltd Annual Report 2023
51
FINANCIAL STATEMENTS
Notes to Consolidated Financial Statements
as at 31 December 2023
continued
4. INCOME TAX continued
5. FIXED ASSETS, NET
f. Deferred tax assets and liabilities:
The tax effects of temporary differences that give rise to significant portions of the deferred tax assets and liabilities are
presented below:
Computers
and Servers
$’000
Office
furniture and
equipment
$’000
Leasehold
improvements
$’000
Intangible
Assets
and R&D
expenses
$’000
Employees
Compen-
sation
$’000
Carry-
forward
Losses
$’000
Accrued
Expenses
$’000
Doubtful
Debt
$’000
Other
$’000
Total
$’000
Balance of deferred tax asset (liability)
as of January 1, 2022
(5,587)
12,074
9,835
2,939
3,099
676
23,036
Business combination
Changes recognized in profit or Loss
Effect of change in tax rate
Changes recognized in equity
(11,313)
5,019
–
187
1,502
(2,927)
14
(3,417)
7,857
(2,486)
237
(24)
1,322
(2,590)
–
22
973
(1,332)
–
11
2,158
(1,249)
4
(5)
2,499
(5,565)
255
(3,226)
Balance of deferred tax asset (liability)
as of December 31, 2022
(11,694)
7,246
15,419
1,693
2,751
1,584
16,999
Discontinuance of Consolidation
Changes recognized in profit or Loss
Effect of change in tax rate
Changes recognized in equity
168
(524)
–
(79)
(57)
(3,837)
30
(34)
–
411
–
102
(532)
(960)
–
6
(99)
643
–
–
(1)
(597)
–
–
(521)
(4,864)
30
(5)
Balance of deferred tax asset (liability)
as of December 31, 2023
(12,129)
3,348
15,932
207
3,295
986
11,639
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.
g. Uncertain tax positions:
As of December 31, 2023, and 2022, the Company has gross unrecognized tax benefits of approximately USD 6,383 thousand
and USD 7,188 thousand, respectively. The Company classifies liabilities for unrecognized tax benefits in current tax.
h. Tax assessment:
The Company considers tax year 2018 and 2019 for Israel and the US federal group, respectively as closed for tax assessment.
Cost
Balance as of January 1, 2022
Exchange rate differences
Additions*
Business combinations
Disposals
Balance as of December 31, 2022
Exchange rate differences
Additions*
Disposals
Balance as of December 31, 2023
Accumulated Depreciation
Balance as of January 1, 2022
Exchange rate differences
Disposals
Additions
Balance as of December 31, 2022
Exchange rate differences
Disposals
Additions
Balance as of December 31, 2023
Carrying amounts
As of December 31, 2023
As of December 31, 2022
8,839
53
8,375
22,256
(892)
38,631
(7)
3,783
(482)
41,925
5,698
57
(890)
4,957
9,822
(9)
(482)
12,314
21,645
20,280
28,809
445
41
5
351
(28)
814
(13)
63
(114)
750
269
41
(28)
61
343
(8)
(111)
210
434
316
471
*As of December 31, 2023, USD 2,030 thousand additions have not been paid (2022: USD 1,900 thousand).
I
C
G
E
T
A
R
T
S
T
R
O
P
E
R
E
C
N
A
N
R
E
V
O
G
I
L
A
C
N
A
N
I
F
S
T
N
E
M
E
T
A
T
S
Total
$’000
10,054
114
8,385
23,254
(1,256)
770
20
5
647
(336)
1,106
40,551
(23)
779
(94)
(43)
4,625
(690)
1,768
44,443
623
18
(336)
207
512
(1)
(93)
545
963
805
594
6,590
116
(1,254)
5,225
10,677
(18)
(686)
13,069
23,042
21,401
29,874
52
Nexxen International Ltd Annual Report 2023
Nexxen International Ltd Annual Report 2023
53
FINANCIAL STATEMENTS
Notes to Consolidated Financial Statements
as at 31 December 2023
continued
6. LEASES
a. Leases in which the Group is the lessee:
The Group applies IFRS 16, Leases. The Group has lease agreements with respect to the following items:
– Offices;
– Data center;
Information regarding material lease agreements:
1.
a. 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 2024 and 2028 from several lessors.
A lease liability in the amount of USD 21,381 thousand and USD 18,513 thousand as of December 31, 2023, and December 31, 2022,
respectively, and right-of-use asset in the amount of USD 11,027 thousand and USD 7,753 thousand as of December 31, 2023,
and December 31, 2022, respectively have been recognized in the statement of financial position 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 2024 and 2028. 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 15,680 thousand and USD 10,825 thousand as of December 31, 2023, and December 31, 2022,
respectively, and right-of-use asset in the amount of USD 14,888 thousand and USD 10,520 thousand as of December 31, 2023,
and December 31, 2022, 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:
Less than one year (0-1)
One to five years (1-5)
Total
Current maturities of lease liability
Long-term lease liability
3) Right-of-use assets – Composition:
Balance as of January 1, 2022
Business Combinations
Depreciation and amortization on right-of-use assets
Additions
Lease modifications
Disposals
Exchange rate differences
Balance as of December 31, 2022
Discontinuance of consolidation
Depreciation and amortization on right-of-use assets
Net additions
Lease modifications
Disposals
Exchange rate differences
2023
$’000
12,106
24,955
37,061
12,106
24,955
Offices
$’000
Data center
$’000
5,424
6,103
(4,533)
1,113
(74)
(205)
(75)
7,753
(64)
(4,422)
7,871
20
(119)
(12)
2,849
10,633
(4,693)
1,783
–
(52)
–
10,520
–
(10,579)
14,969
(22)
–
2022
$’000
14,104
15,234
29,338
14,104
15,234
Total
$’000
8,273
16,736
(9,226)
2,896
(74)
(257)
(75)
18,273
(64)
(15,001)
22,840
20
(141)
(12)
Balance as of December 31, 2023
11,027
14,888
25,915
6. LEASES continued
4. Amounts recognized in statement of operation:
Interest expenses on lease liability
Depreciation and amortization of right-of-use assets
Gain (loss) recognized in profit or loss
Total
5. Amounts recognized in the statement of cash flows:
Cash outflow for leases
b. Leases in which the Group is a lessor:
1.
The Group subleases offices at the US 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,
Sublease receipts
Additions
Business combinations
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)
Total net investment in the lease as of December 31,
4. Amounts recognized in statement of operation:
Gain from finance subleases
Financing income on the net investment in the lease
Total
I
C
G
E
T
A
R
T
S
T
R
O
P
E
R
E
C
N
A
N
R
E
V
O
G
I
L
A
C
N
A
N
I
F
S
T
N
E
M
E
T
A
T
S
2023
$’000
(1,885)
(15,001)
(119)
(17,005)
2022
$’000
(587)
(9,226)
(74)
(9,887)
2021
$’000
(570)
(6,334)
7
(6,897)
2023
$’000
2022
$’000
2021
$’000
(19,147)
(12,605)
(10,579)
Offices
2023
$’000
4,849
(1,112)
2,248
–
5,985
2023
$’000
1,772
4,213
5,985
Offices
2022
$’000
–
199
199
Offices
2022
$’000
5,682
(1,306)
310
163
4,849
2022
$’000
1,084
3,765
4,849
Offices
2021
$’000
301
245
546
Offices
2023
$’000
–
221
221
54
Nexxen International Ltd Annual Report 2023
Nexxen International Ltd Annual Report 2023
55
FINANCIAL STATEMENTS
Notes to Consolidated Financial Statements
as at 31 December 2023
continued
7.
INTANGIBLE ASSETS, NET
7.
INTANGIBLE ASSETS, NET continued
Cost
Balance as of January 1, 2022
Exchange rate differences
Additions
Disposals
Business combinations
Balance as of December 31, 2022
Exchange rate differences
Additions
Disposals
Software
$’000
Trademarks
$’000
Customer
relationships
$’000
Technology
$’000
Goodwill
$’000
Total
$’000
24,687
(50)
8,750
(1,199)
–
32,188
25
15,187
(12)
36,367
(1,262)
–
(19,570)
7,654
23,189
485
–
(23,674)
50,108
(1,455)
–
(2,393)
29,169
75,429
455
–
(1,845)
53,192
(548)
–
(4,851)
85,684
133,477
272
–
–
156,712
(3,216)
–
–
92,244
245,740
874
–
(262)
321,066
(6,531)
8,750
(28,013)
214,751
510,023
2,111
15,187
(25,793)
Impairment testing for intangible assets
The Company’s qualitative assessment during the years ended December 31, 2023, and December 31, 2022, did not indicate
that it is more likely than not that the recoverable amount of its intangible assets, and other long-lived assets is less than their
aggregate carrying amount.
As of December 31, 2023, and as of December 31, 2022, the estimated recoverable amount based on Company’s market value
was lower than the carrying amount, and therefore the recoverable amount was estimated based on value in use and was
determined by discounting the future cash flows. The estimated value in use was higher than the carrying amount, and
therefore there was no need for impairment.
Key assumptions used in the calculation of recoverable amounts are as of December 31, 2023:
Post-tax discount rate
Terminal value growth rate
EBITDA growth rate
14% (WACC)
3%
26%-42%
Balance as of December 31, 2023
47,388
–
74,039
133,749
246,352
501,528
Key assumptions used in the calculation of recoverable amounts are as of December 31, 2022:
Amortization
Balance as of January 1, 2022
14,876
29,786
28,223
39,961
Exchange rate differences
Additions
Disposals
Balance as of December 31, 2022
Exchange rate differences
Additions
Disposals
2
6,189
(659)
20,408
15
7,172
12,145
355
11,174
(12)
(23,674)
(585)
2,514
(914)
9,289
(19,570)
(2,393)
(198)
10,257
(4,851)
34,205
45,169
353
12,407
(1,845)
157
21,499
–
45,120
66,825
–
–
–
–
–
–
–
–
–
112,846
(1,695)
28,249
(27,473)
111,927
880
52,252
(25,531)
139,528
Balance as of December 31, 2023
27,583
Carrying amounts
As of December 31, 2023
As of December 31, 2022
19,805
11,780
–
–
11,044
28,919
41,224
66,924
246,352
362,000
88,308
245,740
398,096
Capitalized development costs
Development costs capitalized in the period amounted to USD 14,222 thousand (2022: USD 8,743 thousand) and were classified
under software.
Acceleration of Trademarks
As detailed in Note 1, following the decision to rebrand to Nexxen, the Group accelerated the amortization of its trademark
assets, whose useful life ended on December 31, 2023.
Post-tax discount rate
Terminal value growth rate
EBITDA growth rate
15% (WACC)
3%
21%-33%
The cash flow projections include specific estimates for four years and a terminal value growth rate 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.
8. TRADE AND OTHER RECEIVABLES
Trade receivables:
Trade receivables
Allowance for expected credit losses
Trade receivables, net
Other receivables:
Prepaid expenses
Loan to a third party
Institutions
Pledged deposits
Acquisition consideration adjustment
Other
9: TRADE AND OTHER PAYABLES
Trade payables
Other payables:
Contract liabilities
Wages, salaries and related expenses
Provision for vacation
Institutions
Interest to pay
Pledged deposits
Others
2023
$’000
2022
$’000
219,396
(17,423)
229,975
(10,138)
201,973
219,837
4,988
104
1,309
1,569
–
323
8,293
14,425
–
1,281
3,036
4,673
–
23,415
2023
$’000
2022
$’000
183,296
212,690
8,366
13,319
1,922
1,603
1,757
284
1,847
29,098
6,540
24,539
1,869
1,659
1,504
362
7,882
44,355
I
C
G
E
T
A
R
T
S
T
R
O
P
E
R
E
C
N
A
N
R
E
V
O
G
I
L
A
C
N
A
N
I
F
S
T
N
E
M
E
T
A
T
S
56
Nexxen International Ltd Annual Report 2023
Nexxen International Ltd Annual Report 2023
57
FINANCIAL STATEMENTS
Notes to Consolidated Financial Statements
as at 31 December 2023
continued
10. CASH AND CASH EQUIVALENTS
Cash
Bank deposits
Cash and cash equivalents
The majority of cash and cash equivalents bear interest of 3% to 5.5%.
2023
$’000
105,997
128,311
234,308
2022
$’000
173,568
43,932
217,500
15. SHAREHOLDERS’ EQUITY
Issued and paid-in share capital:
Balance as of January 1
Own shares held by the Group
Share based compensation
The Group’s exposure to credit, and currency risks are disclosed in Note 18 on financial instruments.
Issued and paid-in share capital as of December 31
11. LONG-TERM DEBT
In September 2022, Nexxen Group US Holdings Inc. (formerly known as Unruly Group US Holding Inc.) entered into a USD 90 million
senior secured term loan facility (the Term Loan Facility) and a USD 90 million senior secured revolving credit facility (the
Revolving Credit Facility and, together with the Term Loan Facility, collectively, the Credit Facilities). The Company used the net
proceeds of the Term Loan Facility and USD 10 million of net proceeds of the Revolving Credit Facility to finance the acquisition
of Nexxen Inc. The loan period is 3 years from the date it was obtained.
The Company is obligated to pay a commitment fee on the undrawn amounts of the Revolving Credit Facility at an annual
rate, determined by the Company’s total net leverage ratio. The Credit Facilities require compliance with various financial and
non-financial covenants, including affirmative and negative covenants. The financial covenants require that the total net
leverage ratio not exceed 3x and the interest coverage ratio not be less than 4x, in each case measured as of the end of each
fiscal quarter. As of December 31, 2023, the Company is in compliance with all related covenants.
During the twelve-month periods ended December 31, 2023, the Company recognized interest expenses in the amounts of
USD 6,854 thousand. Total interest paid during the twelve months ended December 31, 2023, was USD 6,601 thousand.
12. REVENUES
Programmatic
Performance
2023
$’000
299,005
32,988
2022
$’000
274,355
60,895
331,993
335,250
2021
$’000
266,616
75,329
341,945
For the year ended December 31, 2023, no individual buyer accounted for more than 10% of revenue. For the year ended
December 31, 2022 one buyer represents 10.7% of revenue. For the year ended December 31, 2021 one buyer represents 13.6%
of revenue.
13. COST OF REVENUE
Programmatic
Performance
Cost of Revenue
14: GENERAL AND ADMINISTRATIVE EXPENSES
Wages, salaries and related expenses
Share base payments
Rent and office maintenance
Professional expenses
Doubtful debts
Acquisition costs
Other expenses
2023
$’000
44,385
17,885
62,270
2023
$’000
21,835
12,121
2,432
7,686
4,337
171
2,469
51,051
2022
$’000
35,110
25,635
60,745
2022
$’000
18,933
31,878
319
12,233
(3,167)
6,012
1,797
2021
$’000
31,572
40,079
71,651
2021
$’000
17,755
32,250
549
7,136
4,958
253
598
68,005
63,499
Ordinary Shares
2023
Number
of shares
2022
Number
of shares
144,477,962
(2,729,597)
4,413,644
154,501,629
(16,906,795)
6,883,128
146,162,009
144,477,962
500,000,000 500,000,000
I
C
G
E
T
A
R
T
S
T
R
O
P
E
R
E
C
N
A
N
R
E
V
O
G
I
L
A
C
N
A
N
I
F
S
T
N
E
M
E
T
A
T
S
Authorized share capital
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.
Own shares acquisition:
During 2022, the Board of Directors approved the share buyback programs of up to USD 95 million of its ordinary shares out of
which the Group repurchased 16,906,795 ordinary shares in aggregate amount of USD 86.3 million and during 2023, the Company
repurchased 2,505,851 ordinary shares in aggregate amount of USD 8.7 million which was financed by existing cash resources.
On December 18, 2023, the Company has received approval from the Israeli court for its motion to buy back an additional USD
20 million of its ordinary shares from time-to-time through June 18, 2024. In 2023, the Company repurchased 221,506 ordinary
shares in aggregate amount of USD 0.6 million which was financed by existing cash resources.
In addition, in July 2023, the Group repurchased 2,240 restricted ordinary shares that did not vest from one of its employees for
no consideration.
16. EARNINGS (LOSS) PER SHARE
Basic earnings (loss) per share
The calculation of basic earnings (loss) per share as for the year ending December 31, 2023, 2022 and 2021 was based on the
profit (loss) for the year divided by a weighted average number of ordinary shares outstanding, calculated as follows:
Profit (loss) for the year:
Profit (loss) for the year
Weighted average number of ordinary shares:
Weighted average number of ordinary shares used to calculate basic
earnings (loss) per share as at December 31
Basic earnings (loss) per share (in USD)
2023
$’000
2022
$’000
2021
$’000
(21,487)
22,737
73,223
2023
Shares of
NIS 0.01
par value
2022
Shares of
NIS 0.01
par value
2021
Shares of
NIS 0.01
par value
143,589,188
149,937,339
144,493,989
(0.15)
0.15
0.51
Diluted earnings (loss) per share
The calculation of diluted earnings (loss) per share as of December 31, 2023, 2022 and 2021 was based on profit (loss) 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:
58
Nexxen International Ltd Annual Report 2023
Nexxen International Ltd Annual Report 2023
59
FINANCIAL STATEMENTS
Notes to Consolidated Financial Statements
as at 31 December 2023
continued
16. EARNINGS (LOSS) PER SHARE continued
Weighted average number of ordinary shares (diluted):
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)
2023
Shares of
NIS 0.01
par value
2022
Shares of
NIS 0.01
par value
2021
Shares of
NIS 0.01
par value
143,589,188
–
149,937,339
3,120,304
144,493,989
8,212,903
143,589,188
153,057,643
152,706,892
(0.15)
0.15
0.48
At December 31, 2023 6,749 thousand share options, RSUs and PSUs (in 2022 and 2021: 8,851 thousand and 3,061 thousand,
respectively) were excluded from the diluted weighted average number of ordinary shares calculation as their effect would
have been anti-dilutive.
17. SHARE-BASED COMPENSATION 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 ordinary shares or ADSs.
• Vesting conditions are based on a service period of between 0.5-4 years.
b. Stock Options:
The number of share options is as follows:
Outstanding of 1 January
Forfeited during the year
Exercised during the year
Granted during the year
Outstanding of December 31
Exercisable of December 31
Number of options
Weighted average
exercise price
2023
‘000
4,772
(721)
(346)
–
3,705
2,086
2022
‘000
6,026
(828)
(1,046)
620
4,772
1,814
2023
(USD)
7.31
6.33
0.67
–
7.91
2022
(USD)
6.54
7.61
1.96
7.22
7.31
The total expense recognized in the year ended December 31, 2023, with respect to the options granted to employees,
amounted to approximately USD 2,429 thousand (2022: USD 5,867 thousand).
c. Restricted Share Units:
During 2023 and 2022, the Group granted 352,800 and 777,448 Restricted Share Units (RSUs) 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
Outstanding at December 31
Number of RSU’s
2023
‘000
5,288
(254)
(3,295)
353
2,092
2022
‘000
8,146
(261)
(3,374)
777
5,288
Weighted-Average Grant
Date Fair Value
2023
2022
8.277
6.275
8.208
2.160
7.601
8.606
9.948
8.091
4.596
8.277
The total expense recognized in the year ended December 31, 2023, with respect to the RSUs granted to employees, amounted
to approximately USD 13,356 thousand (2022: USD 31,923 thousand).
I
C
G
E
T
A
R
T
S
T
R
O
P
E
R
E
C
N
A
N
R
E
V
O
G
I
L
A
C
N
A
N
I
F
S
T
N
E
M
E
T
A
T
S
17. SHARE-BASED COMPENSATION ARRANGEMENTS continued
d. Performance Stock Units:
During 2023 and 2022, the Group granted 143,700 and 168,048 Performance Stock Units (PSUs) 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
Outstanding at December 31
Number of PSU’s
2023
‘000
1,992
(254)
(930)
144
952
2022
‘000
4,486
(80)
(2,582)
168
1,992
Weighted-Average Grant
Date Fair Value
2023
2022
8.937
6.328
9.320
2.160
8.238
6.796
9.952
4.891
4.453
8.937
The vesting of the PSUs is subject to continuous 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, 2023, with respect to the PSUs granted to employees, amounted
to approximately USD 3,384 thousand (2022: USD 12,715 thousand).
e. Expense recognized in the statement of operation and other comprehensive income is as follows:
Selling and marketing
Research and development
General and administrative
18. FINANCIAL INSTRUMENTS
a. Overview:
2023
$’000
3,740
3,308
12,121
19,169
2022
$’000
10,594
8,034
31,877
50,505
2021
$’000
7,094
3,474
32,250
42,818
The Group has exposure to the following risks from its use of financial instruments:
• Credit risk
•
• Market risk
Liquidity 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 current liability
Forward exchange contracts used for hedging
Total
2023
$‘000
2022
$‘000
123
–
123
–
(209)
(209)
60
Nexxen International Ltd Annual Report 2023
Nexxen International Ltd Annual Report 2023
61
FINANCIAL STATEMENTS
Notes to Consolidated Financial Statements
as at 31 December 2023
continued
18. FINANCIAL INSTRUMENTS continued
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.
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.
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
2023
$’000
234,308
201,973
1,996
525
2022
$’000
217,500
219,837
7,709
406
438,802
445,452
18. FINANCIAL INSTRUMENTS continued
At December 31, 2023, USD 14,027 thousand are held in AUD, USD 5,653 thousand are held in NIS, USD 4,571 thousand are held in
EUR, USD 2,981 thousand are held in SGD, USD 2,692 thousand are held in CAD, USD 2,665 thousand are held in GBP, USD 2,040
thousand are held in JPY, USD 1,493 thousand are held in other currencies and the remainder held in USD.
As of December 31, 2023, no individual vendor accounted for more than 10% of trade payables. As of December 31, 2022, one
vendor accounted for 12.7% of trade payables.
f. 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 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.
GBP/USD
Profit / (Loss)
Increase / (Decrease) in Shareholders’ Equity
NIS/USD
Profit / (Loss)
Increase / (Decrease) in Shareholders’ Equity
2023
+10%
$’000
(1,832)
(9)
2023
+10%
$’000
353
384
-10%
$’000
1,832
9
-10%
$’000
(353)
(384)
2022
+10%
$’000
(2,893)
(94)
-10%
$’000
2,893
94
2022
+10%
$’000
(139)
(107)
-10%
$’000
139
107
-10%
$’000
2,615
320
2023
2022
+10%
$’000
(2,348)
(6)
-10%
$’000
2,348
6
+10%
$’000
(2,615)
(320)
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A
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S
T
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P
E
R
E
C
N
A
N
R
E
V
O
G
I
L
A
C
N
A
N
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T
N
E
M
E
T
A
T
S
(a) At December 31, 2023, the Group included provision for doubtful debts in the amount of USD 17,423 thousand (December 31,
2022: USD 10,138 thousand) in respect of collective impairment provision and specific debtors that their collectability is in doubt.
As of December 31, 2023, two buyers accounted for 16.2% and 16.5% of trade receivables. As of December 31, 2022, two buyers
accounted for 15.7% and 14.1% of trade receivables.
SGD/USD
Profit / (Loss)
Increase / (Decrease) in Shareholders’ Equity
Balance at January 1
Allowance for doubtful debts expenses (income)
Discontinuance of consolidation
Write-off
Exchange rate difference
Balance at December 31
Allowance for Doubtful debts
2023
$’000
10,138
7,622
(275)
(22)
(40)
17,423
2022
$’000
13,870
(3,167)
–
(542)
(23)
10,138
d. 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, 2023, and December 31, 2022, the Group’s contractual obligation of financial liability is in respect of leases,
trade, and other payables in the amount of USD thousand and USD 332,782 thousand and USD 361,820 thousands, respectively.
The contractual maturity of the financial liability that is less than one year is in the amount of USD 201,955 thousand and USD
239,240 thousand for December 31, 2023, and December 31, 2022, respectively.
e. Market risk:
Market risk is the risk that changes in market prices, such as foreign exchange rates, the CPI, interest rates and equity prices will
affect the Group’s income or the value of its holdings of financial instruments. The objective of market risk management is to
manage and control market risk exposures within acceptable parameters, while optimizing the return.
Linkage and foreign currency risks
Currency risk
The Group is 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, 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.
Interest rate risk
The Group has a cash flow risk due to its variable-rate debt instruments. A 5% increase in the interest rate would result in a loss
and a decrease in shareholders’ equity of USD 3.7 million. However, it will be offset by a gain and shareholders’ increase of USD
2.8 million due to available cash and cash equivalents. As a result, there would be a net effect of USD 0.9 million.
g. Level 3 financial instruments carried at fair value
On August 18, 2022, the Company completed a USD 25 million investment in VIDAA, a smart TV operating system, streaming
platform, and subsidiary of Hisense. Through its investment, the Company received a 2.5% equity stake in VIDAA, a multi-year
extension to exclusively share of VIDAA’s global ACR data for targeting and measurement across the Company’s platform, and
ad monetization exclusivity on VIDAA media in the U.S., U.K., Canada, and Australia
The investment in shares is a financial asset measured at fair value through profit or loss under level 3.
Financial assets measured at fair value through profit or loss:
Investment in shares
2023
Level 3
$’000
2022
Level 3
$’000
25,000
25,000
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63
21. OPERATING SEGMENTS
The Group has a single reportable segment as a provider of marketing services.
Geographical information
In presenting information on the basis of geographical segments, segment revenue is based on the geographical location
of consumers.
America
APAC
EMEA
Total
2023
$’000
311,780
6,537
13,676
2022
$’000
303,106
20,031
12,113
2021
$’000
304,686
20,931
16,328
331,993
335,250
341,945
22. CONTINGENT LIABILITY
On May 18, 2021, the Company filed a complaint against Alphonso, Inc. (“Alphonso”) in the Supreme Court of the State of New
York, County of New York (the “Court”), asserting claims for breach of contract, tortious interference with business relations,
intentional interference with contractual relations, unjust enrichment, and conversion.
The lawsuit arose out of Alphonso’s breach of a Strategic Partnership Agreement and an Advance Payment Obligation and
Security Agreement (the “Security Agreement”) with us, and LG Electronics Inc.’s (“LG”) tortious interference with the Company’s
contractual relationships and business relations and related misconduct. On February 23, 2024, the Company entered into a
settlement and release agreement with Alphonso and LG and the parties have agreed to dismiss the Alphonso Lawsuit.
In March 2023, Alphonso remitted USD 11.3 million to the Company, comprising USD 7.25 million related to a secured advance
repayment and USD 4.1 million related to additional interest, penalties and fees including reimbursement of certain legal fees.
On June 21, 2022, Alphonso filed a complaint against the Company in the United States District Court for the Northern District of
California, asserting claims for misappropriation of trade secrets under federal and state law. On October 11, 2023, Alphonso
dismissed its claims in the lawsuit with prejudice. On October 25, 2023, the Company filed a bill of costs to recover allowable
legal costs from Alphonso. The Company’s request for legal costs is pending with the Court.
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FINANCIAL STATEMENTS
Notes to Consolidated Financial Statements
as at 31 December 2023
continued
18. FINANCIAL INSTRUMENTS continued
Valuation processes used by the Company
The fair value of non-marketable shares is determined by external valuer on an annual basis.
The principal unobservable inputs are as follows:
•
•
•
The estimated royalties from App share and remote-control button which is based on the expected increase in market share.
The average operating profit margin which is based on the stage of research and development.
The discount rate, which is based on the risk-free rate for 10-year debentures issued by the government in the relevant
market, adjusted for a risk premium to reflect both the risk of investing in equities, the systematic risk of company and
entity specific risk to the extent not already reflected in the cash flows.
h. Financial instruments measured at fair value for disclosure purposes only.
The fair value of the long term debt is estimated by discounting future principal and interest cash flows by the market interest
rate of 7.064% on the date of measurement which is USD 97,291 thousands.
19: RELATED PARTIES
Compensation and benefits to key management personnel
Executive officers also participate in the Company’s share option programs. For further information see Note 17 regarding
share-based compensation.
Compensation and benefits to key management personnel (including directors) that are employed by the Company and its
subsidiaries:
Share-based compensation
Other compensation and benefits
Total
20. SUBSIDIARIES
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 UK
YuMe Inc*
Perk.com Canada Inc
R1Demand LLC*
Nexxen Group LLC (f/k/a Unruly Group LLC)
Nexxen Group US Holdings Inc. (f/k/a Unruly Group US Holding Inc)*
Nexxen Holdings Ltd (f/k/a Unruly Holdings Limited)*
Nexxen Group Ltd (f/k/a Unruly Group Limited)*
Unruly Media GmbH
Unruly Media Pte Ltd*
Nexxen Pty Ltd (f/k/a Unruly Media Pty Ltd)
Unruly Media KK
Unmedia Video Distribution Sdn Bhd
SpearAd GmbH
Nexxen Inc. (f/k/a Amobee Inc)*
Amobee EMEA Limited
Amobee International Inc
Amobee Ltd
Amobee Asia Pte Ltd*
Amobee ANZ Pty Ltd
2023
$’000
11,527
3,988
15,515
2022
$’000
30,914
4,433
35,347
2021
$’000
31,283
6,752
38,035
Principal location of
the Company’s
activity
The Group’s ownership interest
in the subsidiary for the year ended
December 31
2022
2023
USA
USA
Japan
UK
USA
Canada
USA
USA
USA
UK
UK
Germany
Singapore
Australia
Japan
Malaysia
Germany
USA
UK
USA
Israel
Singapore
Australia
100%
100%
–
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
*Under these companies, there are seventeen (17) wholly owned subsidiaries that are inactive and in liquidation process.
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65
Directors, Secretary and Advisers
DIRECTORS:
Christopher John Stibbs
Non-Executive Chairperson
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
Daniel Kerstein
Non-Executive Director
Rhys Summerton
Non-Executive Director
COMPANY SECRETARY
Yaniv Carmi
ADVISERS:
Registered Office:
82 Yigal Alon St, 13th Floor, Tel Aviv, 6789124, Israel
Nominated Adviser and Joint Broker
Cavendish Capital Markets Ltd
1 Bartholomew Close, London, UK EC1A 7BL
Legal Advisers – English Law
Pillsbury Winthrop Shaw Pittman LLP
Tower 42, Level 21, 25 Old Broad Street,
London, EC2N 1HQ
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
US Investor Relations
KCSA
420 Fifth Ave, Third Floor, New York, NY 10018
UK Financial PR and Investor Relations
Vigo Consulting
78-79 New Bond Street, London W1S 1RZ
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
66 Nexxen International Ltd Annual Report 2023
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Nexxen International Ltd.
82 Yigal Alon st.
(13th floor)
Tel-Aviv
Israel
6789124
www.nexxen.com