REG - Sivota PLC - Final Results
30/04/2024 13:15
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RNS Number : 6427M Sivota PLC 30 April 2024
Sivota Plc
Company number 12897590
Annual Report and Financial Statements
For the year ended 31 December 2023
Sivota Plc
Table of Contents
Company
Information
2
Chairman's
report
3
Strategic report
5
Corporate Governance
statement
15
Directors'
report
21
Directors' remuneration
report
27
Report of the Independent Auditors
34
Consolidated Statement of Comprehensive Income
40
Consolidated Statement of Financial
Position
41
Parent Statement of Financial
Position
42
Consolidated Statement of Changes in Shareholders'
Equity 43
Parent Statement of Changes in Shareholders' Equity
45
Consolidated Statement of Cash
Flows
47
Parent Company Statement of Cash
Flows
49
Notes to the Financial
Statements
51
Sivota Plc
Company Information
For the year ended 31 December 2023
Directors Registered Office
Tim Weller - Non-Executive Chairman The Scalpel
Ziv Ben-Barouch - CEO 52 Lime Street,
Neil Jones - Non-Executive Director, Secretary London, England
EC3M 7AF
Auditors Register
Haysmacintyre LLP Computershare Investor Services PLC
10 Queen Street Place The Pavilions
London, England Bridgwater Rd
EC4R 1AG Bristol, England
BS13 8AE
Financial Adviser & Broker
Canaccord Genuity Limited
88 Wood Street
London, England
EC2V 7QR
Sivota Plc
Chairman's report for the year ended 31 December 2023
Dear Shareholders,
I am pleased to present the annual report of Sivota Plc (hereinafter referred
to as the 'Company' or 'Sivota') for the year ended 31 December 2023. Sivota
and its subsidiaries are collectively referred to as the Group.
The year was marked by both the implementation of strategic and operational
changes within Apester ('subsidiary') as well as the pursuit of new investment
opportunities.
Since Apester's acquisition in May 2022, Sivota has brought about
reorganisational changes in the subsidiary and made notable progress in team
culture, product infrastructure stability and a profitability-oriented
business model.
In August 2023, we announced the appointment of Anni Ben Yair as Apester's new
Chief Executive Officer (CEO) and I am delighted that we have been able to
appoint someone of her calibre to the role. Anni is an experienced digital
media and technology executive. Her significant experience in scaling
technology and digital media businesses, in addition to fully leveraging sales
and marketing activities, is ideally suited to supporting Apester's next phase
of growth.
Since the appointment of the new CEO, Apester has achieved several operational
developments including the appointment of a new Chief Technology Officer to
lead its technology strategy, and appointment of a Head of Growth, working on
the redeployment of Apester's demand stack with our partners to further
improve our quality and pricing, launching a new US based sales team and
advanced negotiations with prominent US media outlets across multiple key
industries. In addition, Apester recorded improved performance across several
Key Performance Indicators (KPIs) including media rates, fill rates, and deal
profitability. As an outcome to Apester's focus on profitability, it
terminated non-profitable engagements and therefore has seen a short-term
reduction in revenues will improve gross profit.
In 2023, Sivota continued to pursue investment opportunities to acquire
additional later stage technology companies.
In January 2024, Sivota entered into a non-binding term sheet with a leading
online technology platform operating across the travel sector (the "Target").
Sivota intends to raise up to £2.5 million through the issue of new ordinary
shares in order to provide the Target with a convertible loan to fund its
working capital commitments for the short term. Pursuant to the term sheet,
Sivota also has the ability to acquire up to 51% of the share capital of the
Target for a consideration of $15 million, subject to the satisfaction of
certain conditions.
Sivota remains well-positioned to capitalise on new and attractive investment
opportunities within the Israeli technology marketplace. Although, we remain
cognisant of the heightened risk in technology markets in general and the
Company's target market.
Sivota Plc
Chairman's report for the year ended 31 December 2023 (continued)
I would like to extend my gratitude to the board, management, and Apester's
team for their diligent efforts, as well as to our shareholders for their
ongoing trust and support.
We remain committed to delivering value and growth, and I look forward to
providing you with further updates on our progress in the coming year.
Tim Weller,
Non-Executive Chairman
30 April 2024
Sivota Plc
Strategic report for the year ended 31 December 2023
The Directors present the Strategic Report of Sivota and its subsidiaries (the
'Group') for the year ended 31 December 2023.
The Group's business strategy and execution
Israeli Technology
Israel has one of the most entrepreneurial and multi-cultural workforces in
the world, producing technologies, innovations, and research adopted around
the globe and across various sectors. Many of modern innovations that are part
of the daily life across the globe were developed in Israel. According to the
Global Innovation Index 2023, Israel is ranked as one of the top 15 Worlds'
Innovation Leaders (( i (#_ftn1) )).
Israel's high-technology funding in 2023 amounted to $6.9 billion invested
across 393 deals(( ii (#_ftn2) )).
Sivota Plc
Strategic report for the year ended 31 December 2023 (continued)
Foreign investment into the Israeli technology sector
Israeli tech companies have raised $80.1 billion since 2015 with the majority
of that capital (72%) deployed by foreign investors. In 2023, foreign
investors invested in Israeli technology companies a total of $5.1 billion,
76% of the total funds raised by Israeli tech companies in the year.
(https://www.ivc-online.com/LinkClick.aspx?fileticket=d0tSSB_wMH8%3d&portalid=0×tamp=1705398553249
(https://www.ivc-online.com/LinkClick.aspx?fileticket=d0tSSB_wMH8%3d&portalid=0×tamp=1705398553249)
)
The majority of these non-Israeli financial investors are predominantly from
the United States who, in leveraging well established US-Israeli connections,
have made numerous investments into the Israeli technology market, with a
considerable degree of success. However, European/UK investors have had less
exposure and have not necessarily had the right connections to participate in
this segment to this date.
The Company seeks to bridge that gap by using the experience, connections and
local knowhow of the Directors, in particular that of the CEO.
Market Opportunities
Israel has a large number of innovative, later stage, technology companies
offering foreign investors a wide selection of investment opportunities.
Moreover, there may be opportunities to acquire controlling stakes in
companies that have not taken advantage of technology that could help
transition a traditional business model to drive further growth.
Sivota Plc
Strategic report for the year ended 31 December 2023 (continued)
The Directors believe that sectors such as logistics, retail and finance which
predominantly remain offline businesses in Israel could produce potential
target companies which could greatly benefit from Sivota's approach and
ability to introduce them to potential technology solutions.
There may also be opportunities to acquire a controlling interest in
non-Israeli founded or related companies that are seeking to benefit from the
technology solutions that Sivota may be able to offer. The Directors will
consider such opportunities on a case-by-case basis and Investors should note
that the Company may therefore acquire controlling stakes in businesses which
are not non-Israeli founded or related.
The Company believes there will be an opportunity to invest in businesses that
have stalled in the current more challenging global financial and pollical
environment, which under new leadership and with available fundings can
rebuild their valuation. The Directors also expect to see an increase in
M&A activities, mainly by companies looking to acquire competitors to
increase their market share, create economies of scale or add new products and
services to their existing offerings.
Acquisition Targets, Sourcing and Execution
Sivota, through the Directors, has a strong local presence and a significant
business network in Israel. The Company believes these networks,
relationships, and partnerships are all essential for identifying future
investments and developing a robust investment pipeline.
The Company looks to acquire companies with strong fundamentals that the
Directors believe will reward Investors over time. The general investment
strategy is to acquire controlling stakes in underperforming, later stage
Israeli-related technology companies to ensure fast, ambitious and sustainable
scale. The Directors intend to function as a key partner to the target
companies during both the acquisition process, and in the implementation of
the growth plan post-acquisition.
Although the Company evaluates a range of technology companies, a particular
areas of focus is in relation to companies already involved in data
(artificial intelligence, machine learning, Big Data), digital marketing, and
eCommerce.
The Directors believe that they have a competitive advantage in the Israeli
market, both in terms of deal flow and the ability to overcome the culture gap
which foreign investors can face while working with Israeli founders and
management teams.
Sivota Plc
Strategic report for the year ended 31 December 2023 (continued)
Sivota's strategy is to seek investment opportunities in companies which have
most, if not all, of the following attributes:
· later stage of growth;
· organic and/or external growth potential;
· unique technology;
· Israeli-related/founded companies;
· international exposure/potential; and
· target opportunities where management execution and a focused
strategy will deliver significant valuation uplift.
Turning around an underperforming company and regaining the trust of every
stakeholder is a job that requires decisive action. In order to achieve this,
Sivota will roll out a methodology based on enhanced transparency and
involvement within each target company. Sivota starts with the preparation of
an objective and uncompromising diagnostic plan (which will be capable of
being amended from time to time to take into account any changing
circumstances). This strategic, operational and financial diagnostic is the
basis of the turnaround plan, which sets the goals and changes required to be
executed in order to achieve these goals.
Any company in which Sivota acquires controlling stakes will regularly
communicate the progress of its turnaround to all its stakeholders.
In putting the diagnostic plan into practice, Sivota seeks to:
· build a growth plan with the Company's management to leverage
opportunity, securing the financing of investments
· communicate the strategy, plan and its progress on a regular and
clear basis
· be thorough with its analysis and due diligence, and present a
pragmatic approach to the implementation
· implement the plan with transparency including engaging in
discussions with employee representatives
· help to grow the organisational culture through leadership
The Directors all have hands-on operational as well as investment and M&A
experience in various jurisdictions, having worked for small and medium-sized
businesses, both as managers and as owners. The management team has
therefore experienced the financial and operational issues frequently
encountered by companies, and knows where to go and how to find, clear
unbiased advice for specific business needs.
Sivota Plc
Strategic report for the year ended 31 December 2023 (continued)
Strategy execution during 2023
Since Apester's acquisition, Sivota has been implementing strategic and
operational changes within Apester. This includes appointing a new CEO, board
members and key executives, developing product infrastructure stability and a
profitability-oriented business model. These changes reflect the Company's
commitment to driving growth and enhancing value for its stakeholders. This
has been further explained in the relevant sections of this report.
Apester's strategy
Overview
Apester is an innovative digital experience software platform that enables
brands, publishers and e-commerce businesses to create and distribute
interactive digital experiences and collect the resultant first party data to
better understand their customers and accelerate their business performance.
Apester provides publishers with interactive engagement with their users.
Apester's software platform enables a number of engagement tools, including
polls, quizzes, stories, surveys, mobile dynamic landing pages, and onboarding
forms. Publishers use Apester's platform to create an authentic, visual,
interactive experience to engage with their customers.
Apester's technology optimises customer experiences across platforms: desktop,
mobile and in-app, allowing customers to publish engaging experiences and
distribute them across multiple digital assets in a consistent format.
Apester's platform is based on three major components:
- Interaction content editor: an intuitive user interface that allows
to create and customise the interaction units;
- Embeddable units: interactive units that are easily embedded within
websites and domains, seamlessly integrating with existing content. This
ensures a cohesive and immersive user experience, promoting higher engagement
rates and longer user sessions;
- Data Analytics: Data Management layer that allows customers to
collect, store and 'own' Zero-Party and First-Party engagement data generated
from experiences and applications created by Apester. Artificial Intelligence
(AI) driven analytics deliver valuable insight into customer segmentations -
trends, sentiments and preferences, empowering brands and publishers to
personalise their offering, target their messaging, and convert engagement
into sales.
Apester serves businesses such as The Telegraph, RTL, Sport 1 DE, BCN, and La
Gazette.
Sivota Plc
Strategic report for the year ended 31 December 2023 (continued)
Market positioning
Apester's consolidated, all-inclusive, digital engagement & monetisation
platform provides a genuine 'one-stop shop' for publishers supporting desktop,
mobile and apps with a streamlined creation, distribution and analysis
benefiting its customers with community engagement growth and audience
segmentation at a granular level with the information provided by
actual users' indications and actions.
Customers who have implemented Apester's engagement solutions on desktop,
mobile or app reported significantly improved engagement of their users,
measured through multiple KPIs such as time on site, click-through rate (CTR),
registrations, and more.
Apester's platform provides a unique competitive advantage by leveraging both
the engagement capabilities along monetisation, this allows the publishers to
onboard Apester with no expensive commitment while benefiting from the
collected and stored 'own' Zero-Party and First-Party engagement data which is
generated from experiences and applications created on Apester. This
gives Apester's customers' valuable insights into customer segmentations
such as trends, sentiment and preferences, empowering brands and publishers
to engage audiences in scale with a personalised offering, target their
messaging, and convert engagement into sales.
In summary, Apester's platform is a simple, cost-effective and scalable
technology, built for the next phase of digital business. Code free, it allows
untrained users to create interactive experiences in a matter of minutes
through Apester Studio. This personalised content can then be distributed
across multiple digital media channels, at scale and through a single
cloud-based, self-serve platform, and later gather data and analyse to
improve performance.
Revenue Model
Apester operates a blended engagement product and performance revenue model
based on subscription fees, usage, self-serve and pre-packaged models. Apester
also operates revenue share models allowing Apester to grow with its top-tier
publishers, applying its own demand stack capabilities to support
revenue-oriented monetisation strategies.
Market overview
Apester operates at the intersection of the thriving market for interactive
content creation and the rapidly expanding advertising technology (ad tech)
industry, offering publishers and brands innovative solutions to monetise
their content while enhancing audience engagement.
The market for interactive content creation platforms has experienced rapid
growth in recent years, driven by increasing demand for engaging digital
experiences. Content creators, publishers, and marketers are constantly
seeking innovative ways to capture and retain audience attention in an
increasingly competitive online environment. Apester operates in a highly
dynamic market characterised by technological advancements, shifting consumer
preferences, and evolving content consumption habits.
Sivota Plc
Strategic report for the year ended 31 December 2023 (continued)
Over recent years, traditional static content formats are being replaced by
interactive formats that offer greater engagement and interactivity. Consumers
increasingly expect personalised experiences tailored to their interests and
preferences.
Apester is at the forefront of this trend, enabling content creators to
leverage interactive elements to captivate their audiences, and create
personalised content experiences through features such as targeted polls,
quizzes, and user-generated content initiatives.
The global digital content creation market has been valued at USD 25.6 billion
in 2022 and is estimated to expand at a CAGR of 13.5% from 2023 to 2030,
reaching to $70 billion iii (#_ftn3) .
Apester's integration with the ad tech ecosystem plays a pivotal role in its
business model, offering publishers and content creators the ability to
monetise their interactive content units effectively through programmatic
advertising. As the digital advertising landscape continues to evolve, the
demand for innovative ad formats and targeting capabilities is driving
substantial growth in the ad tech market. Apester's platform facilitates
data-driven targeting capabilities, which are essential for delivering
personalised ad experiences and maximising campaign effectiveness. The
adoption of data-driven targeting solutions is expected to accelerate as
advertisers prioritise audience segmentation and relevancy in their ad
campaigns.
According to research iv (#_ftn4) the global ad spend
has reached USD 679.7 billion in 2023 and is expected to reach USD 965.6
billion by 2028:
Sivota Plc
Strategic report for the year ended 31 December 2023 (continued)
The promise of data
In the post-cookie era, where 3rd party and user level data is less available,
the advertising world will have to find new methodologies to interact with the
end user to practise more reliable targeting and personalisation. Entered
First-party data puts publishers and App owners back in control. Interactive
Advertising Bureau (IAB) reports that around 71% of brands, agencies and
publishers are increasing their first-party datasets as a result of new
legislations entered in 2024, and expected to enter into force over the near
term v (#_ftn5) . The ability to provide insights based on publishers' own
data while complying with the new legislations is Apester's major competitive
advantage.
Growth strategy
Online customer engagement is now a necessity for brands and publishers in
what is a highly crowded digital space. Generating high-quality and sustained
users interaction across the user journey is central to driving performance
and ensuring publisher's enable content based monetisation strategies to stay
competitive. Apester's end-to-end platform facilitates conversational
marketing, providing an open stream of communication between customers and
marketers that results in brand uplift and higher conversion rates.
Apester's strategy is to focus on publishers, across some verticals such as
sports, news and entertainment, which are looking to engage their users in a
competitive marketplace. Apester's platform enables businesses to better
engage with their audience simultaneously via different platforms, creating an
improved experience for customers. Apester's platform further enables
businesses to analyse engagement and performance for business optimisation.
In order to accelerate growth in this sector, Apester plans to invest in the
following areas:
● Automated content creation at scale.
● Data analytics based on the collected first-party data, and analysis
of customer insights and preference, along the ability to enhance audience
segmentation being processed within the publisher's DMP.
● Improving and enhancing the platform capabilities while focusing
on publishers operational needs.
Sivota Plc
Strategic report for the year ended 31 December 2023 (continued)
An important technological competitive advantage is Apester's data layer which
allows customers to collect, store, and 'own' Zero-Party and First-Party
engagement data generated from experiences and applications created on
Apester. This highly benefits Apester's customers and offers valuable insights
into customer segmentations such as trends, sentiment and preferences,
empowering brands and publishers to personalise their offering, target their
messaging, and convert engagement into sales. Apester's data capabilities are
a key competitive factor, allowing customers to use publishers' own data
without any reliance on cookies, which is in accordance with the latest
evolution of online data collection methods and privacy regulations.
Apester plans to continue developing these capabilities to integrate with
complementary data collection tools which will provide customers a full suite
of data capabilities that will provide Apester's customers with tools for
improving their performance and enabling them to better interact with their
own customers.
Apester's strategy is to focus on the publishers and performance marketing
sectors, while enabling brands to run effective campaigns on its platform.
Apester's platform also enables e-commerce businesses to better engage with
their audience simultaneously via different platforms, creating an improved
experience for customers.
Key performance indicators (KPIs) of the Group
At this stage in its development, the Group is focusing on financing and
operating KPI's.
Financing
As a result of a negotiation and due-diligence process in 2023, in January
2024 the Company entered into a non-binding term sheet (the 'Term Sheet') with
a leading online technology platform operating across the travel sector (the
'Target'). The Company intends to raise up to $3.2 million through the issue
of up to 2,515,741 new ordinary shares of one pence each (the New Shares) in
order to provide the Target with a convertible loan to fund its working
capital commitments for the short term. As of the date if this report, the
Company is in the process of finalising investment agreements.
Pursuant to the Term Sheet, Sivota also has the ability to acquire up to 51%
of the share capital of the Target for a consideration of $15 million, subject
to the satisfaction of certain conditions, which will be funded by additional
fundraising.
Sivota Plc
Strategic report for the year ended 31 December 2023 (continued)
Revenues and Expenditure
In 2023 the Group generated revenues of $5.6 million compared to revenues of
$5.9 million generated in the period from Apester's acquisition in May 2022 to
31 December 2022.
The gross profit in 2023 was $1.3 million or 22% of the revenues, compared to
the gross profit of $1.6 million or 26% of the revenues, in the period from
Apester's acquisition in May 2022 to 31 December 2022.
The Group's operating loss before impairment for 2023 was $4.9 million
compared to $4.8 million for 2022, when Apester's financial results in 2022
were included from the date of its acquisition.
The International Accounting Standards (IAS) require that a company ensures
that its assets are carried at no more than their recoverable value. Under IAS
36, when the carrying amount of the assets exceeds its recoverable amount an
impairment loss is recorded. Following review of recorded intangible asset
values at year end, the Group booked an impairment loss of $7.1 million in its
2023 accounts. The impairment loss was mainly due to Apester's losses and the
decrease in Apester's revenues as a result of Apester's change in strategy
which led to terminating customer accounts that did not meet minimal
profitability conditions as well as changes to growth strategy and customer
accounts.
Since Apester's acquisition, the Company has been implementing a number of
strategic and operational changes within Apester, including the appointment of
a new CEO, new board members and key executives. The directors believe the new
management team will lead the business to fully exploit a number of near-term
growth initiatives.
Financial position
At 31 December 2023 the Group had a cash balance of $1.0 million compared to
$4.4 million as at 31 December 2022. The change in the cash balance is
explained by cash used for the operating activities.
As at 31 December 2023 trade receivables of the Group were $1.1 million
compared to $2.5 million as at 31 December 2022. The trade receivables have
decreased as a result of the decrease in the revenues that partly explained by
Apester's change in strategy which led to terminating customer accounts which
did not meet minimal profitability conditions.
The trade and other payables of the Group as at 31 December were $1.8 million
compared to $3.5 million as at 31 December 2022. The decrease is explained by
the decrease in the revenues and costs' cut off in 2023.
The debt as at 31 December 2023 was $1.6 million compared to $1.4 million as
at 31 December 2022.
Sivota Plc
Strategic report for the year ended 31 December 2023 (continued)
Apester
Apester's management team is mainly focusing on gross margin and monthly
EBITDA at this stage of its development. The gross margin and the EBITDA in
the year 2023 and the period from the date of Apester's acquisition to the end
2022 were as follows:
For the For the period from 12 May 2022 to 31 December 2022
year ended 31 December 2023
Gross margin 22% 26%
EBITDA ($ thousand) (2,483) (2,630)
Gross margin
Given the indirect operational expenses are relatively not variable during
short periods of time, the management uses gross margin indicator to maximise
the profitability of Apester.
EBITDA
The management regularly reviews the EBITDA of Apester with the goal to
minimise operating costs when possible and prudently manage its cash
resources.
Employees
With the exception of the Directors, the Group has 15 employees.
All current members of the Board, including the Chief Executive Officer, are
key management personnel. For more information about the Company's directors
see the director's remuneration report and Note 10 to the financial
statements. For more information about key management personnel other than
directors of the Company see Note 11 to the financial statements. The
average number of persons of each sex who were directors and employees of the
Group during the reported period:
Male Female Total
Directors of the Company 3 - 3
Other key management personnel, other than directors of the Company 1 2 3
Other employees of the Group 12 6 18
The Group is still at an early stage of development and does not yet have the
scale of board that would facilitate it being able to effectively meet
Disclosure Guidance and Transparency Rules (DTR) rules on board diversity.
Sivota Plc
Strategic report for the year ended 31 December 2023 (continued)
Social, Community and Human Rights Issues
As the Group is still at an early stage of development and further
consideration will need to be given to social, community and human rights
issues affecting its business.
Principal risks and uncertainties and risk management
The Group operates in an uncertain environment and is subject to a number of
risk factors. The Directors have carried out an assessment of the principal
risks facing the Group, including those that threaten its business model,
future performance, solvency or liquidity.
The Group continues to monitor the principal risks and uncertainties to ensure
that any emerging risks are identified, managed, and mitigated.
Keeping pace with technological developments
Apester's ability to attract new customers and increase revenue from existing
customers largely depends on its ability to enhance and improve its existing
solutions and introduce compelling new technology products. The success of any
enhancement to its solutions depends on several factors, including timely
completion and delivery, competitive pricing, adequate quality testing,
integration with other technologies and the Apester platform, and overall
market acceptance. Apester seeks to mitigate this risk by continuing to
improve its solutions and products.
Changes to the digital advertising landscape
Apester's current revenues are derived partly from revenue sharing agreements
for advertising space sold through its platform. Such revenues are dependent
on the worldwide demand and ask prices for advertising, which are mainly
controlled by large market participants, such as search engines. If a search
engine decides to reduce its pricing or demand for advertising space is
depressed, this will adversely affect Apester's revenues.
Financing
Although the Directors have confidence in the future revenue earning potential
of the Group from its interests in Apester, there can be no certainty that the
Group will achieve or sustain profitability or positive cash flow from its
operating activities. If Apester does not meet its targets the Group may not
be able to obtain additional external financing and also the resultant credit
risk associated with the loan advanced to Apester. The board regularly reviews
the revenues, KPIs and expenditures of Apester and continues to prudently
manage its cash resources and has minimised ongoing operating costs.
Additionally, if the Group intends to acquire further businesses the Company
will likely need to raise further funds.
Further, the war in Israel as described below may have an adverse effect on
the ability of the Group to raise additional funds.
Sivota Plc
Strategic report for the year ended 31 December 2023 (continued)
Difficulties in acquiring suitable targets
The Company's strategy and future success are dependent to a significant
extent on its ability to identify sufficient suitable acquisition
opportunities and to execute these transactions on terms consistent with the
Company's strategy. If the Company cannot identify suitable acquisitions, or
execute any such transactions successfully, this will have an adverse effect
on its financial and operational performance.
Security, political and economic instability in Israel and the Middle East
Apester is incorporated under the laws of the State of Israel, and its
principal offices and research and development facilities are located in
Israel. In addition, Sivota seeks additional target companies based in Israel.
Therefore, security, political and economic conditions in the Middle East,
particularly in Israel, may affect Group's business directly.
In October 2023, Hamas, an Islamist terrorist group infiltrated Israel's
southern border and carried out a series of attacks against civilian and
military targets. Shortly following the attack, Israel's security cabinet
declared war against Hamas. The intensity and duration of Israel's ongoing war
against Hamas is difficult to predict. While our operations and business have
not been materially impacted by the ongoing war to date, future disruptions
could materially adversely affect our business as a direct result of employees
located in Israel called for reserve duty or of third parties boycotting
business with Israeli companies as a political step.
Taxation
The Group will be subject to taxation in several different jurisdictions, and
adverse changes to the taxation laws of such jurisdictions could have an
adverse effect on its profitability.
Financial risk management
The Group's principal financial instruments comprise mainly cash, trade
receivables, trade and other payables and convertible loans. It is, and has
been throughout the year under review, the Group's policy that no trading in
financial instruments shall be undertaken. The main risks arising from the
Group's financial instruments are credit risk, liquidity risk and foreign
exchange risk. The board reviews and agrees on policies for managing each of
these risks and they are summarised below.
Credit risk
The Group usually extends 30-60-day term to its customers. The Group regularly
monitors the credit extended to its customers and their general financial
condition but does not require collateral as security for these receivables.
Given the payment history of the Group's customers, the risk is not material.
Sivota Plc
Strategic report for the year ended 31 December 2023 (continued)
Liquidity risk
Prudent liquidity risk management implies maintaining sufficient cash reserves
to fund the Group's operating activities. Management prepares and monitors
forecasts of the Group's cash flows and cash balances monthly and ensures the
Group maintains sufficient liquid funds to meet its expected future
liabilities.
Foreign exchange risk
The Group operates in a number of overseas jurisdictions and carries out
transactions in a number of currencies. Part of the Group's revenues is
received in GBP, EURO and in New Israeli Shekels ("NIS"). A significant
portion of the Group's expenses is paid NIS and GBP. Therefore, the Group is
exposed to fluctuations in the foreign exchange rates in USD against the GBP,
EURO and NIS. The Group does not have a policy of using hedging instruments
but will continue to keep this under review. The Group operates foreign
currency bank accounts to help mitigate the foreign currency risk.
Section 172(1) Statement - Promotion of the Company for the benefit of the
members as a whole
The Board believes they have acted in a way most likely to promote the success
of the Company for the benefit of its members as a whole, as required by
section 172.
This section serves as the Company's section 172 statement and should be read
in conjunction with the Strategic report and the Directors' report. Section
172 of the Companies Act 2006 requires Directors to act in a way that they
consider, in good faith, would most likely promote the success of the Company
for the benefit of its members as a whole, taking into account the factors
listed in s172 in regard to:
· the likely consequences of any decision in the long term;
· the interests of the Company's employees;
· the need to foster the Company's business relationships with
suppliers, customers and others;
· the impact of the Company's operations on the community and the
environment;
· the desirability of the Company's maintaining a reputation for high
standards of business conduct; and
· the need to act fairly between members of the Company.
Sivota Plc
Strategic report for the year ended 31 December 2023 (continued)
The following table acts as Sivota's 172(1) statement by setting out the key
stakeholder groups, their interests and how the Company has engaged with them
over the reporting period.
Stakeholder Their interest Engagement method
Investors · Business sustainability · Annual and Interim reports
· High standard of governance · Regular operations and trading updates
· Comprehensive review of financial performance of the business · RNS Announcements
· Ethical behaviour · Investor relations section on website
· Awareness of long-term strategy and direction · AGM
· Continual approval of market perception of the business · Shareholder circulars
· Delivering long term value · Shareholder liaison through board which encourages open dialogue with
the Company's investors
· Board encourages open dialogue with the Company's investors
· Social media
Employees · Welfare · Employees' welfare and development programs
· Business sustainability · Multi-channel engagement through weekly and quarterly meetings
· High standard of management · Weekly emails sent to all staff summarising the key events of the
week across the business
· Ethical behaviour
· Team socials and annual events
· Continual professional growth
· Professional trainings
Customers and suppliers · Successful partnership · Development an effective relationship with our customers and
suppliers
· Ethical behaviour
· Ongoing regular meetings with the key advertising agencies,
· Compliance with regulations publishers and social media platforms
· Customers' support
Regulatory bodies · Compliance with regulations · Annual report
· Worker pay and conditions · Website
· Health & Safety · Direct contact with regulators
· Insurance · Compliance update at board meetings
· Regular communications with relevant governments
Tim Weller, Non-Executive Chairman 30 April 2024
Sivota Plc
Corporate governance statement for the year ended 31 December 2023
The Company is not required to comply with the UK Corporate Governance Code,
which is applicable to all companies whose securities are admitted to trading
to the premium segment of the Official List. Nevertheless, the Directors are
committed to maintaining high standards of corporate governance and propose,
so far as is practicable given the Company's size and nature, to voluntarily
adopt and comply with the certain aspects of the Quoted Companies Alliance
(QCA) Code.
The Board considers that, due to the size and current activities of the
Company, its current composition and structure is appropriate to maintain
effective oversight of the Company's activities. The structure of the Board
will be reviewed as and when the activities of the Company progress to a
sufficient size and complexity to require additional independent oversight. It
is intended that additional Directors will be appointed in the near future
once prospective acquisitions have been identified and that independence will
be one of the factors taken into account at such time.
Subject to the Companies Act 2006, the Company's Articles and to any
directions given by special resolution of the Company, the business of the
Company will be managed by the Board, which may exercise all the powers of the
Company, whether relating to the management of the business or not. No
alteration of the Company's Articles and no such direction given by the
Company shall invalidate any prior act of the Board which would have been
valid if such alteration had not been made or such direction had not been
given.
The Board meets regularly to review, formulate and approve the Group's
strategy, budgets, and corporate actions and oversee the Group's progress
toward its goals.
The Directors shall devote as much time as is necessary for the proper
performance of their duties.
The Chairman's main responsibility is the leadership and management of the
Board's business and its governance. The Chairman meets regularly and
separately with the CEO and the Directors to discuss matters for the Board.
Detail of Directors remuneration is given in the Directors' remuneration
report.
Sivota Plc
Corporate governance statement for the year ended 31 December 2023 (continued)
The Board of Directors
Active directors:
The Directors who held office during the financial year and to the reporting
date, together with details of their interest in the shares of the Company at
the reporting date were:
Number of Ordinary Shares Percentage of Ordinary shares
Tim Weller - Non-Executive Chairman 400,000 3.18%
Ziv Ben-Barouch - CEO 531,396 4.22%
Neil Jones - Non-Executive Director 17,100 0.14%
Tim Weller - Non-Executive Chairman
Tim Weller is a successful entrepreneur. He is the founder of Incisive Media
and was Chairman until its successful sale to EagleTree Private Equity in
March 2022. He successfully floated Incisive on the Main Market of the London
Stock Exchange in 2000. In 2006 he led the £275 million management buyout
which took the company private again. Tim has more than 15 years' experience
chairing and investing in public and private equity backed businesses. He was
Non-Executive Director and Chairman of RDF Media from 2005-2010 and was also
Non-Executive Chairman of Polestar from 2009-2011 until its sale to Sun
European Partners LLP. Tim was Independent Non-Executive Director and
Chairman of Tremor International between 2014 and August 2020. He was Chairman
of TI Media, one of the largest consumer magazine and digital publishers in
the UK from April 2019 to May 2020 following its sale to Future Plc. He is
also Chairman of Trustpilot, a leading provider of trusted company reviews and
led its $1.4 billion IPO in March 2021. Tim was Chairman of Superawesome, a
leading technology company that powers the global kids' digital media
ecosystem until its sale to Epic Games in September 2020. Mr Weller was a
member of the Shadow Cabinet New Enterprise Council, which advised the then
Shadow Chancellor of the Exchequer, George Osborne, on business and enterprise
prior to the 2010 General Election, and was voted Ernst & Young
Entrepreneur of the Year - London in 2001. In 2005, he received the publishing
industry's top honour - the Marcus Morris award.
Sivota Plc
Corporate governance statement for the year ended 31 December 2023 (continued)
Ziv Ben-Barouch - CEO
Ziv Ben-Barouch is an experienced operator and leader with decades of
experience in finance and investments within technology companies. He has a
proven track record of leading corporate turnarounds, M&A, IPOs, and
strategically guiding companies as they build their business. Ziv is the
co-founder and managing partner of Pereg Ventures, a US-Israeli Venture
Capital Firm focused on B2B data companies which is backed by investments from
Nielsen, a world leader in marketing intelligence, the Tata Group, and other
leading financial institutions. At Pereg, Ziv has led and participated in
the direct investment of 13 early stage technology companies that have raised
in combined excess of $250M in follow-on investments from leading investors
and led on the disposal of two portfolio companies to NYSE listed
counterparties. Prior to founding Pereg, he was Senior Principal and CFO at
Viola, a technology-focused investment group with over $3 billion in assets
under management. Before joining Viola, Ziv was the CFO of SpaceNet Inc, a
specialty telecommunications company providing managed network solutions by
satellite and terrestrial technologies for business, government and
residential users in North America. He led SpaceNet's turnaround and
participated in SpaceNet's parent company's $70 million NASDAQ listing. Ziv
has key relationships with Israeli and international investment firms in the
technology space which he will be able to leverage to assist Sivota. Ziv is
an Israeli Certified Public Accountant.
Neil Jones - Non-Executive Director
Neil has held Board positions in UK multi-national public & private
companies for over 20 years. He has a deep understanding of the UK Corporate
Governance code and Board procedures from these and other NED positions. He is
currently Group Corporate Development Director at Inizio an international
healthcare and communications group formed by the combination of Huntsworth
PLC and UDG PLC both of which were taken private by Private Equity Group
Clayton, Dubilier & Rice in 2020 & 2021, having previously held the
position of COO & CFO at Huntsworth since February 2016. Prior to
Huntsworth he was CFO of ITE Group plc (Now Hyve plc), a FTSE listed
international organiser of exhibitions and conferences and before that he was
Group Finance Director of Tarsus Group plc, another international trade
exhibition organiser. He is also the Senior Independent Director of Tremor
International, a dual listed (Nasdaq & AIM) Ad-Tech company. Neil is a
member of the ICAEW, qualifying with PWC in 1990.
Role of the Board
The Board sets the Group's strategy, ensuring the necessary resources are in
place to achieve the agreed priorities. It is accountable to shareholders for
the creation and delivery of long-term shareholder value. To achieve this, the
Board directs and monitors the Group's affairs within a framework of control
which enables risk to be reviewed and managed effectively.
Sivota Plc
Corporate governance statement for the year ended 31 December 2023 (continued)
Board meetings
The core activities of the Board are carried out in scheduled meetings and
regular reviews of the business are conducted. Additional meetings and
conference calls are arranged to consider matters which would require
discussions outside of scheduled meetings. The Directors maintain frequent
contact with each other to discuss issues of concern and keep them fully
briefed to the Group's operations. There were 12 Board meetings held during
the year, except for 1 meeting all the other meetings were attended by all the
Directors. .
Directors' indemnities
To the extent permitted by law and the Articles, the Company has made
qualifying third-party indemnity provisions for the benefit of its directors
during the year, which remain in force at the date of this report.
Policy for new appointments and amendments to articles
Without prejudice to the power of the Company to appoint any person to be a
Director pursuant to the Articles the Board shall have power at any time to
appoint any person who is willing to act as a Director, either to fill a
vacancy or as an addition to the existing Board, but the total number of
Directors shall not exceed any maximum number fixed in accordance with the
Articles. Pursuant to the Companies Act 2006, the Company may amend its
Articles of Association via special resolution, achieved by way of a vote at a
General Meeting of the shareholders.
Board Committees
The Board established an Audit Committee and a Remuneration and Nomination
Committee with effect from the Company's admission to trading on the Main
Market. In addition, the Board established an Acquisitions Committee which
will consider potential targets where a Director has a potential conflict and,
following the completion of readmission in September 2022 the Board
established a risk committee that monitors the financial and commercial
performance of investments.
Audit Committee
The Audit Committee consists of Neil Jones and Tim Weller, each of whom has
recent and relevant financial experience. The Audit Committee will normally
meet at least twice a year at the appropriate times in the reporting and audit
cycle. The committee has responsibility for, amongst other things, the
monitoring of the financial integrity of the financial statements of the Group
and the involvement of the Group's auditors in that process. It will focus in
particular on compliance with accounting policies and ensuring that an
effective system of internal financial control is maintained. The ultimate
responsibility for reviewing and approving the annual report and accounts and
the half-yearly reports, remains with the Board.
Sivota Plc
Corporate governance statement for the year ended 31 December 2023 (continued)
The terms of reference of the Audit Committee cover such issues as membership
and the frequency of meetings, as mentioned above, together with requirements
of any quorum for and the right to attend meetings. The duties of the Audit
Committee covered in the terms of reference are: financial reporting, internal
controls, internal audit, external audit and reserving. The terms of reference
also set out the authority of the committee to carry out its duties.
In addition, the Audit Committee considers the nature and extent of the
non-audit services provided by the auditors. During the reported period the
non-audit services were provided to support the admission and readmission
processes.
During the reporting period the Audit Committee held meetings on 27 April and
26 September 2023 which were chaired by Tim Weller and were attended by all
its members.
Remuneration and Nomination Committee
The Remuneration and Nomination Committee consists of Tim Weller and Neil
Jones. The Remuneration and Nomination Committee will meet at least once a
year. It has responsibility for the determination of specific
remuneration packages for executive directors and any senior executives or
managers of the Group, including pension rights and any compensation payments,
recommending and monitoring the level and structure of remuneration for senior
management, and the implementation of share option, or other
performance-related, schemes. No remuneration consultants provided advice or
services about directors' remuneration during the course of the latest
reporting period.
The Remuneration and Nomination Committee is also be responsible for
considering and making recommendations to the Board with respect of
appointments to the Board, the board committees and the chairmanship of the
board committees. It is also responsible for keeping the structure, size and
composition of the Board under regular review, taking into account the
Company's commitment to developing a diverse pipeline of directors and for
making recommendations to the Board with regard to any changes necessary. The
Remuneration and Nomination Committee also considers succession planning,
taking into account the skills and expertise that will be needed on the Board
in the future.
The terms of reference of the Remuneration and Nomination Committee cover such
issues as membership and frequency of meetings, as mentioned above, together
with the requirements for a quorum and the right to attend meetings. The
duties of the Remuneration and Nomination Committee covered in the terms of
reference relate to the following: determining and monitoring policy on and
setting level of remuneration, early termination, performance-related pay,
pension arrangements, authorising claims for expenses from the chief executive
officer and chairman, reporting and disclosure, share schemes and appointment
of remuneration consultants. The terms of reference also set out the reporting
responsibilities and the authority of the committee to carry out its duties.
Sivota Plc
Corporate governance statement for the year ended 31 December 2023 (continued)
The first Remuneration and Nomination Committee meeting was held in January
2023 and was attended by all its members.
Acquisitions Committee
The Acquisitions Committee consists of all Independent Directors, in the event
of a potential acquisition target being introduced to the Group by a Director
where that Director has an interest or other conflict of interest. In such
circumstances, the Acquisitions Committee will have a full remit to negotiate
the terms of such transaction (including engaging and liaising with
professional advisers) and the conflicted or interested Director will not be
invited to join or attend any meetings of the committee. No committee meetings
were held during the reporting period.
Risk Committee
The Risk Committee consists of Tim Weller and Neil Jones. The Risk Committee
plans to meet at least once a year. It monitors Group compliance with
statutory obligations and its internal policies, and confirms that the Group's
management has appropriate controls in place to identify, prepares for and
implement legislative and regulatory changes which affect its operations.
The Risk Committee also is responsible for reviewing the significant
identified risks (principal risks) of the Group and ensuring that there is the
risk management process in place that measure, monitor, manage and mitigate
the Group's principal risk exposures.
The Risk Committee held meetings relating to 2022 on 19 December 2022, and
relating to 2023 which was postponed to and held on 9 April 2024. Both the
meetings were chaired by Tim Weller and attended by all the Directors.
Internal auditors
The internal auditors of the Company are Chaikin Cohen Rubin & Co,
appointed by the Company in December 2022. The internal auditors provide their
audit based on an audit plan. Each year specific topics will be identified by
the Audit Committee for audit during that year. Each report of the internal
auditors will be discussed by the Audit Committee and if necessary by the
Board and its results will be learned from and implemented as required.
By Order of the Board
Tim Weller
Chairman
30 April 2024
Sivota Plc
Directors' report for the year ended 31 December 2023
The Directors submit their report with the audited Financial Statements for
the year ended 31 December 2023.
General information
Sivota was incorporated as a public Limited Company under the laws of England
and Wales with registered number 12897590 on 22 September 2020.
Sivota was established in order to acquire controlling stakes and then act as
a holding company for various target businesses operating or founded in
Israel, predominantly in the technology sector.
In July 2021 the Company completed a placing of 1,085,000 ordinary shares for
a consideration of $1.4 million (gross) and was listed on the Main Market
(Standard Segment) of the London Stock Exchange (LSE).
In December 2021, the Company announced that it had entered into non-binding
term sheet with Apester. As a result, the Company's shares were suspended
pending the completion of the transaction and the publication of the
prospectus in relation to its enlarged group.
In May 2022, the Company completed the fundraising by placing and direct
subscription of 11,500,000 of its new ordinary shares for a consideration of
$14.2 million (gross) followed by completing the acquisition of a majority
stake in Apester, an Israeli-incorporated business which operates an
innovative digital experience software platform that enables brands,
publishers and creators to publish and monetise new interactive digital
experiences on their sites and apps.
In September 2022, the Company published the prospectus and completed its
readmission to the LSE.
Since Apester's acquisition, Sivota has been implementing a number of
strategic and operational changes within Apester, including the appointment of
a new CEO, new board members and key executives. The directors believe the new
management team will lead the business to fully exploit a number of near-term
growth initiatives.
In January 2024, Sivota entered into a non-binding term sheet with a leading
online technology platform operating across the travel sector as described in
the Company's strategic report.
The Company continues to seek additional investment opportunities. Raising
additional funds by the Company for new investments is challenging due to the
current market and political situation. However, the directors believe with
the broader macroeconomic environment weakening, seed investment will become
harder to source for potential investees, creating more opportunities for the
Company's team.
Sivota Plc
Directors' report for the year ended 31 December 2023 (continued)
Results for the year and distributions
The Group results are set out in the consolidated statement of comprehensive
income.
In 2023 the Group generated revenues of $5.6 million, with a gross profit of
$1.3 million.
The total comprehensive loss for the year 2023 was $11.0 million. The total
comprehensive loss for the year 2023 before impairment loss was $5.2 million.
The Board regularly reviews the revenues, KPIs and expenditures of the Group
and continues to prudently manage its cash resources and to minimise its
ongoing operating costs.
The Company has paid no distribution or dividends since its incorporation.
The Company made no political donations in 2023 (2022: Nil)
Post Balance Sheet Events
In January 2024, Sivota entered into a non-binding term sheet with a leading
online technology platform operating across the travel sector (the "Target").
Sivota intends to raise up to $3.2 million through the issue of new ordinary
shares in order to provide the Target with a convertible loan to fund its
working capital commitments for the short term. Pursuant to the term sheet,
Sivota also has the ability to acquire up to 51% of the share capital of the
Target for a consideration of $15 million, subject to the satisfaction of
certain conditions.
In March 2024 the Company and the additional Apester's shareholder, that lent
Apester convertible loans, signed an amendment to the convertible loan
agreements to defer the loan repayments by one year. For more information
see Note 4(d) and (f) to the Financial Statements.
Employees and greenhouse gas (GHG) emissions
The Company currently has no trade or employees located in the UK. Therefore,
the Company has minimal carbon or greenhouse gas emissions as it is not
practical to obtain emissions data at this stage. It does not have
responsibility for any emissions producing sources under the Companies Act
2006.
Climate-related financial disclosures
The Group does not trade or has no employees located in UK and its sole
executive director is not located in the UK. The Company therefore not made
any disclosures consistent with TCFD recommendations and recommended
disclosures.
Sivota Plc
Directors' report for the year ended 31 December 2023 (continued)
Going forward, as the Company grows and if starts or acquires operations in
the UK, it will take steps and develop plans to enable the Directors to make
consistent disclosures in the future, which will include relevant timeframes
for being able to make those disclosers.
The Company is headquartered in the UK, which has made a commitment to
reaching a net-zero economy. The Company has not considered that commitment in
developing a transition plan because, as the Company does not trade in the UK
nor has any employees located in the UK, it does not contribute any carbon
emissions to the economy. The Company's main operating subsidiary, Apester, is
based in Israel, which has also made a commitment to reaching a net-zero
economy. The Company has not considered that commitment in developing a
transition plan in Israel as Apester's carbon emissions are minimal.
Going concern
The Group projects that it will need to raise further debt or equity finance
to fund the planned business development. The Group is expected to further
generate losses from operations during 2024 which will be expressed in
negative cash flows from operating activity. Hence the continuation of the
Group's operations depends on raising the required financing resources or
reaching profitability, which are not guaranteed at this point. Whilst the
directors are confident they will be able to raise the additional finance
required, this is not guaranteed and hence there is a material uncertainty in
respect of going concern. However, the directors have, at the time of
approving the financial statements, a reasonable expectation that the Group
will have adequate resources to continue in operational existence for the
period to 30 April 2025 which is twelve months from the signing of this
report. For this reason, the directors continue to adopt the going-concern
basis of accounting in preparing the financial statements.
External Auditors
So far as the directors are aware, there is no relevant audit information of
which the Group's auditors are unaware, and they have taken all steps that
they ought to have taken as directors in order to make themselves aware of any
relevant audit information and to establish that the Group's auditors are
aware of that information.
In January 2024, the Board approved the appointment of Haysmacintyre LLP as
the Company's auditor who succeed the previous auditor - Crowe U.K. LLP. The
appointment of Haysmacintyre LLP is for the financial year ended 31 December
2023. The re-appointment of Haysmacintyre LLP as auditor for the financial
year ending 31 December 2024 will be subject to approval by the Company's
shareholders at the next Annual General Meeting of the Company, to be held in
June 2024. The previous auditor has deposited with the Company a statement
confirming that there are no matters to be brought to the attention of the
Company's members or creditors.
Sivota Plc
Directors' report for the year ended 31 December 2023 (continued)
Share capital and substantial shareholders
The issued share capital of the Company consists of 12,585,000 ordinary shares
and 4,950,000 deferred shares. The ordinary shares carry one vote per ordinary
share and each ordinary share carries an equal right to dividends declared
on the ordinary shares. The ordinary shares have equal voting rights and rank
pari-passu for the distribution of dividends and repayment of capital. The
deferred shares carry no voting rights, no rights to dividends and on a return
of capital are only entitled to a return once a sum of £1,000,000 has been
paid on each ordinary share. Further details of the Company's share capital
are given in Note 18 to the financial statements.
As far as the Company is aware, there are no agreements between holders of
securities that may restrict the transfer of securities or voting rights
however the Board may, in its absolute discretion, refuse to register any
transfer of a share in certificated form only in certain circumstances which
do not prohibit the transfer of a single class of share which is fully paid
up. No single person directly or indirectly, individually or collectively,
exercises control over the Company and the Company has not issued any class of
share carrying special rights regarding control of the Company. The Directors
are aware of the following persons, who had an interest in 3% or more of the
issued ordinary share capital of the Company as at 30 April 2024:
Shareholder Number of Ordinary Shares Percentage of ordinary shares
Prytek Investment Holdings Pte Ltd 1,787,950 14.21%
Ophir Yahalom 1,670,020 13.27%
Ronen Kirsh 1,418,728 11.27%
Schroders Investment Management Ltd 1,247,750 9.91%
Trico Fuchs Ltd 1,213,392 9.64%
Ehud Levy 1,023,167 8.13%
Hagai Tal 606,207 4.82%
Ziv Ben-Barouch 531,396 4.22%
Herald Investment Management 500,000 3.97%
Tim Weller 400,000 3.18%
Sivota Plc
Directors' report for the year ended 31 December 2023 (continued)
Responsibility statement
The Directors are responsible for preparing the Strategic Report, Directors'
Report and the Financial Statements in accordance with applicable law and
regulations.
Company law requires the directors to prepare financial statements for each
financial year. Under that law, the directors have elected to prepare the
financial statements in accordance with International Financial Reporting
Standards (''IFRSs''). Under company law, the directors must not approve the
financial statements unless they are satisfied that they give a true and fair
view of the state of affairs of the company and of the profit or loss of the
company for that year.
In preparing these Financial Statements, the Directors are required to:
· select suitable accounting policies and then apply them
consistently;
· present information and make judgements that are reasonable,
prudent and provide relevant, comparable and understandable information;
· state whether applicable Accounting Standards have been followed,
subject to any material departures disclosed and explained in the financial
statements;
· provide additional disclosures when compliance with the specific
requirements in IFRS is insufficient to enable users to understand the impact
of particulars transactions, other events and conditions on the entity's
financial position and financial performance; and
· make an assessment of the Group's ability to continue as a going
concern.
The Directors are responsible for keeping adequate accounting records that are
sufficient to show and explain the Group's transactions and disclose with
reasonable accuracy at any time the financial position of the Group to enable
them to ensure that the financial statements comply with the requirements of
the Companies Act 2006. They have general responsibility for taking such steps
as are reasonably open to them to safeguard the assets of the Group and to
prevent and detect fraud and other irregularities.
The Directors are responsible for the maintenance and integrity of the
corporate and Financial Statements. Legislation governing the preparation and
dissemination of Financial Statements may differ from one jurisdiction to
another.
We confirm that to the best of our knowledge:
· the Financial Statements, prepared in accordance with
International Accounting Standards in conformity with the requirements of the
UK Companies Act 2006, give a true and fair view of the assets, liabilities,
financial position and profit or loss of the Group for the year;
· the Director's report includes a fair review of the development
and performance of the business and the position of the Group, together with a
description of the principal risks and uncertainties that they face;
Sivota Plc
Directors' report for the year ended 31 December 2023 (continued)
· the annual report and financial statements, taken as a whole, are
fair, balanced and understandable and provide the information necessary for
shareholders to assess the Company's performance, business model and strategy.
The Directors are responsible for maintaining the Group's systems of controls
and risk management in order to safeguard its assets.
By Order of the Board
Tim Weller, Chairman
30 April 2024
Sivota Plc
Directors' remuneration report for the year ended 31 December 2023
The Remuneration and Nomination Committee have responsibility for the
determination of specific remuneration packages for executive directors.
The current directors' remuneration comprises a basic fee or salary and at
present there is no long-term incentive plan or share option package for the
directors.
Directors' remuneration
Neil Jones
According to the appointment letter signed on in July 2021, Neil Jones agreed
not to be paid any fees until the Company had undertaken a fundraising of at
least £8,000,000. Following the completion of fundraising by the Company in
May 2022 he is paid £22,500 per annum to act as a non-executive director of
the Company.
According to the appointment letter, Neil will be eligible for participation
in the Company's share option plan when adopted.
In addition, Neil agreed to subscribe at 1.71% of the Company's issued share
capital at the admission in July 2021. These ordinary shares will be subject
to lock-in pursuant to which Neil will not be able to sell or dispose of such
ordinary shares for a period of 4 years.
Neil's appointment was for an initial period of 12 months from admission and
will continue unless terminated by either party giving to the other not less
than 3 months' notice or without notice in cases the Company can terminate the
appointment immediately.
In January 2024, Neil Jones and the Company entered into agreement to defer
the payments of the director fee until the earlier of 31 December 2024 or the
date of the next fundraising.
Tim Weller
According to the appointment letter signed in July 2021, Tim Weller agreed not
to be paid any fees until the Company had undertaken a fundraising of at least
£8,000,000. Following the completion of fundraising by the Company in May
2022 he is paid £70,000 per annum to act as a non-executive director of the
Company.
If the Company's market capitalisation exceeds £100,000,000 the Board will
consider an increase in the fee.
According to the appointment letter, Tim will be eligible for participation in
the Company's share option plan when adopted.
In addition, Tim agreed to subscribe £100,000 for the Company's issued share
capital at the admission in July 2021.
Sivota Plc
Directors' remuneration report for the year ended 31 December 2023 (continued)
Tim's appointment will continue unless terminated by either party giving to
the other not less than 6 months' notice or without notice in certain
circumstances where the Company can terminate the appointment immediately.
In January 2024, Tim Weller and the Company entered into agreement to defer
the payments of the director fee until the earlier of 31 December 2024 or the
date of the next fundraising.
Ziv Ben-Barouch
According the employment agreement signed in July 2021 Ziv Ben-Barouch was
paid a salary of £18,000 per annum to act as chief executive officer.
Following the completion of fundraising by the Company in May 2022 he is paid
a salary of £70,000 per annum.
The Company may, in its absolute discretion pay a bonus of such amount, at
such intervals and subject to such conditions as the Company may in its
absolute discretion determine taking into account specific performance
targets.
Ziv's appointment commenced on the admission in July 2021 and shall continue
until terminated by either party giving to the other not less than 6 months'
written notice or without notice in cases the Company can terminate the
appointment immediately.
In January 2024, Ziv Ben-Barouch and the Company entered into agreement to
defer the payments of the director fee until the earlier of 31 December 2024
or the date of the next fundraising.
Remuneration of the Directors:
For the year ended For the year ended
31 December 2023 31 December 2022
Base fee Base Salary Other(*) Base fee Base Salary
Total Other(*) Total
in U.S dollars in thousands in U.S dollars in thousands
Tim Weller 90 - - 90 54 - - 54
Neil Jones 27 - - 27 17 - - 17
Ziv Ben-Barouch - 90 - 90 - 59 - 59
Total 117 90 - 207 71 59 - 130
(*) there are no remunerations other than base fee or salary.
There were no performance measures associated with any aspect of Directors'
remuneration during the year.
Sivota Plc
Directors' remuneration report for the year ended 31 December 2023 (continued)
Other matters
The Company currently does not have any annual or long-term incentive schemes
in place for any of the Directors and as such there are no disclosures in this
respect.
The Company does not have any pension plans for any of the Directors and does
not pay pension amounts in relation to their remuneration.
The Company has not paid out any excess retirement benefits to any Directors
or past Directors. The Company has not paid any compensation to past
Directors.
The Company has not paid any payments for loss of office during the year.
Directors' interests in shares as at 30 April 2024:
Number of ordinary shares Percentage of ordinary shares
Neil Jones 17,100 0.14%
Tim Weller 400,000 3.18%
Ziv Ben-Barouch 531,396 4.22%
The Company does not currently have in place any requirements or guidelines
for any directors to own shares.
The Company is not aware of any changes in the interests of each director that
have occurred between the end of the period of review and the date of the AGM
notice.
The Company is not aware of any disclosures made to the Company in accordance
with DTR 5.
Sivota Plc
Directors' remuneration report for the year ended 31 December 2023 (continued)
Total Shareholder Return
The table above illustrates the total return of Sivota shareholders over the
period from the first listening in July 2021 to 31 December 2023 compared to
the FTSE 350, when Sivota's shares were suspended from the trading at the
London Stock Exchange as a result of the readmission process that began in
December 2021 and was completed in September 2022.
The table above illustrates the total return of Sivota shareholders over the
period from the readmission completed in September 2022 to 31 December 2023
compared to the FTSE 350.
Sivota Plc
Directors' remuneration report for the year ended 31 December 2023 (continued)
Changes in the Company employees' remuneration
Neil Jones and Tim Weller did not receive a fee prior to the completion of the
fundraise in May 2022. Following the completion of the fundraise, Neil Jones
receives fees of £22,500 per annum, and Tim Weller receives fees of £70,000
per annum. There were no changes in the director's remuneration since May
2022.
Similarly, the remuneration paid to the Chief Executive Officer, Ziv
Ben-Barouch increased in May 2022 following the completion of the fundraising
from £18,000 per annum to £70,000 per annum. There was no change in the
CEO's remuneration since May 2022.
The remuneration of the CEO, being the only executive director of the Company,
for the year 2024 to which the Remuneration Policy will apply, will be only
his salary in accordance with his service agreement. There will be no
elements of such remuneration which are subject to any performance measures
and so the salary is fixed.
Since its incorporation, the Company has employed one employee outside of the
UK, other than the directors, whose employment began in March 2022. There has
been no change to this individual's remuneration during the reporting period.
However, the Company will ensure any subsequent changes are reflected in
ongoing annual reports.
Remuneration policy
The Remuneration Policy the main aspects of which set out below will be put
for approval to Shareholders at the Company's Annual General Meeting to be
held in 2024. The effective date of this Policy is the date on which the
Policy is approved by shareholders. No remuneration or loss of office payment
may be made to a director unless they are consistent with the policy once
approved by Shareholders. There are currently no provisions for loss of office
payments in any service contract or letter of appointment beyond the relevant
contractual notice period.
The Company strives to develop and implement its Remuneration Policy as a
fair, consistent, competitive program of financial compensation to the
balanced with responsibilities that have been taken.
The Remuneration Policy is designed to reflect remuneration trends and
employment conditions across the Company, to support the Company's business
strategy and to help the Company promote and attain its objective of long-term
success. No remuneration consultants provided advice or services about the
Remuneration Policy and the Company did not consult with employees.
The Remuneration Committee intends the Remuneration Policy to apply for one
year and will undertake an annual review of the policy to ensure the content
continues to reflect the Company's business strategy.
Sivota Plc
Directors' remuneration report for the year ended 31 December 2023 (continued)
If the Company seeks to appoint further directors, it will seek to align any
remuneration package with the Company's growth aims for the Group. The Company
has no specific policy on the setting of notice periods under directors'
service contracts.
Shareholders' views have not been taken into account in relation to the
directors' remuneration policy, however as the Company and its Group grow and
any changes are required to the policy, the Company will consider doing so.
The remuneration of the CEO, being the only executive director of the Company,
for the first year to which the Remuneration Policy will apply, will be only
his salary in accordance with his service agreement. There will be no elements
of such remuneration which are subject to any performance measures and so the
salary is fixed.
Below is a table summarising the main aspects of the remuneration framework
for the executive director:
Maximum potential salary/opportunity Performance metrics
Fixed element and purpose Operation
Base salary and related statutory cost
To provide a basic salary commensurate with role and experience which is Salary is reviewed and approved annually by the Company's Remuneration not applicable - basic salary only not applicable
comparable with that for similar companies of a similar size. The quantum of Committee
salary is also traded off against the Company's financial resources and its
ability to pay salary for a sustainable period.
Pensions
The aim at present is to comply with current legislation. Paid to in accordance with local legislation. according to the current legislation not applicable
Incentives/bonuses
not applicable not applicable not applicable not applicable
Share option schemes
not applicable not applicable not applicable not applicable
Sivota Plc
Directors' remuneration report for the year ended 31 December 2023 (continued)
The remuneration of the non-executive directors of the Company, for will only
their annual fee in accordance with letter of appointment. There will be no
elements of such remuneration which are subject to any performance measures
and so those fees are fixed. Non-executive directors will not receive any loss
of office payments beyond the payment of any contractual notice provision.
By Order of the Board
Tim Weller
Chairman
30 April 2024
Independent auditor's report
to the members of Sivota PLC
Opinion
We have audited the financial statements of Sivota PLC (the 'parent company')
and its subsidiaries (the 'group') for the year ended 31 December 2023 which
comprise:
Group Company
· the Consolidated Statement of Comprehensive Income; · the Company Statement of Financial Position;
· the Consolidated Statement of Financial Position; · the Company Statement of Changes in Equity;
· the Consolidated Statement of Changes in Equity; · the Company Statement of Cash flows;
· the Consolidated Statement of Cash flows; · and related notes to the financial statements
· and related notes to the financial statements
The financial reporting framework that has been applied in their preparation
is applicable law and UK adopted International Financial Reporting Standards
(IFRSs).
In our opinion, the financial statements:
· give a true and fair view of the state of the group's and of the
parent company's affairs as at 31 December 2023 and of the group's loss for
the period then ended;
· have been properly prepared in accordance with UK adopted IFRSs;
and
· have been prepared in accordance with the requirements of the
Companies Act 2006.
Basis for opinion
We conducted our audit in accordance with International Standards on Auditing
(UK) (ISAs (UK)) and applicable law. Our responsibilities under those
standards are further described in the Auditor's responsibilities for the
audit of the financial statements section of our report.
We are independent of the group in accordance with the ethical requirements
that are relevant to our audit of the financial statements in the UK,
including the FRC's Ethical Standard as applied to listed entities, and we
have fulfilled our other ethical responsibilities in accordance with these
requirements. We believe that the audit evidence we have obtained is
sufficient and appropriate to provide a basis for our opinion.
An overview of the scope of our audit
As part of our audit planning procedures, we sought to plan the scope of our
audit by reviewing the group composition and respective results and position
of the components. As the group comprises a parent holding company, a small
standalone cost centre subsidiary and trading subgroup the principal focus of
our group audit was on the parent and the trading group in order to provide
sufficient appropriate audit evidence in respect of the scope of our work as
auditors of the group financial statements.
The scope of the audit and our audit strategy was developed by using our audit
planning process to obtain an understanding of the Group and its subsidiaries,
its activities, its internal control environment, and developments in its
business in the year.
Our audit testing was informed by our understanding of the group and
accordingly was designed to focus on areas where we assessed there to be the
most significant risks of material misstatement. The trading subgroup audit
was performed by a component audit firm in Israel. The audit of the parent
and its small standalone cost centre subsidiary was performed by
Haysmacintyre.
Material uncertainty related to going concern
We draw attention to Note 3a in the financial statements, which indicates that
the group and company's ability to continue as a going concern is dependent on
future fund raising. As stated in Note 3a, these conditions and uncertain
future events, along with other matters as set forth in Note 3a, indicate that
a material uncertainty exists that may cast significant doubt on the group's
and company's ability to continue as a going concern. Our opinion is not
modified in respect of this matter.
In auditing the financial statements, we have concluded that the directors'
use of the going concern basis of accounting in the preparation of the
financial statements is appropriate.
Our evaluation of the directors' assessment of the group's and company's
ability to continue to adopt the going concern basis of accounting included:
· Discussing management's assessment of the group's ability to
remain a going concern;
· Reviewing and understanding the cash flow forecasts for the
period to end of April 2025 which are a key element of management's going
concern assessment;
· Assessing and challenging the inputs and judgements made in the
preparation of the cash flow forecasts for the period to end of April 2025;
and
· Performing stress tests including sensitivity analysis to model
the effect of changing assumptions made or amending key data used in
management's cash flow forecasts and considering the impact on the group's
ability to adopt the going concern basis.
Our responsibilities and the responsibilities of the directors with respect to
going concern are described in the relevant sections of this report.
Key audit matters
Key audit matters are those matters that, in our professional judgment, were
of most significance in our audit of the financial statements of the current
period and include the most significant assessed risks of material
misstatement (whether or not due to fraud) we identified, including those
which had the greatest effect on:
· the overall audit strategy,
· the allocation of resources in the audit; and
· directing the efforts of the engagement team.
These matters were addressed in the context of our audit of the financial
statements as a whole, and in forming our opinion thereon, and we do not
provide a separate opinion on these matters.
In determining the key audit matters we considered the:
· Areas of higher risks of material misstatement or significant
risks identified in accordance with ISA (UK) 315
· Significant audit judgements on financial statement line items
that involved significant management judgement such as accounting estimates,
and
· The impact of significant events and transactions during the
period covered by the audit.
In addition to the matter described in the material uncertainty related to
going concern, the following table summarises the key audit matters we have
identified and rationale for their identification together with how we
responded to each in our audit and our key observations.
Risk magnitude key (Note - this is our first audit of Sivota PLC)
New risk Identified in the prior year
Revenue recognition Specific tests were designed and performed to consider whether revenue has
been recorded in the correct period and is free from misstatement:
· Key sales contracts were obtained and inspected.
Fraud in revenue recognition is a rebuttable presumed significant risk under
ISA (UK) 240. · A sample of sales invoices were reviewed and subsequent cash
receipts agreed to the amounts invoiced.
Revenue is considered a key performance indicator by management as they follow
a strategy to grow the group's activities. · The accounting treatment and policies for revenue recognition for
each material class of revenue was reviewed and assessed.
The recognition of revenue is therefore a key focus for most stakeholders.
· The group's performance obligations were reviewed and compliance
with these assessed when revenue transactions were substantively tested.
· The presentation of revenue was reviewed and considered including
an assessment of whether the group acted as a principal or agent.
· Post year end credit notes were reviewed for any indications that
sales recognised in the year had been subsequently reversed.
· Trade receivables at the year-end were reviewed to assess whether
revenue recognised prior to the year-end had been appropriately recognised.
Key observations: No material adjustments to revenue were noted as a result of the audit work
performed. The group's policies for the recognition of revenue together with
the basis for the presentation and disclosure of revenue are considered
reasonable and appropriate.
Risk of impairment of intangible assets and goodwill (Note 14) · We obtained and assessed management's rationale for the
recognition of an impairment of its goodwill and customer relationship assets.
· We obtained and reviewed management's calculations of the
There is a risk that previously intangible assets capitalised, including valuation of the group's developed technology.
goodwill, are impaired.
· We critically assessed the methodology used by management to
calculate the valuation and used an in-house valuation expert to assess the
methodology.
IAS 36 requires that the assets of an entity are carried at no more than their
recoverable amount and sets out indicators of impairment which should be · We tested the arithmetical accuracy of the models and underlying
considered in the preparation of financial statements. data used by management in their impairment assessment and where appropriate
agreed the underlying forecasts to the board approved budgets.
Although the group's principal trading activity is a relatively early growth
stage of its life, the continued generation of trading losses is an indicator · We compared the approved budgets to post year end actual results.
of potential impairment.
· We considered the forecasting ability of management by comparing
Accordingly, there is a risk that the intangible assets, including goodwill, budgets to actual performance.
are recorded in excess of their recoverable amounts.
· With the assistance of our valuation expert, we assessed and
challenged the estimates and judgements made and assumptions used, the key
inputs being:
o Forecast future results.
o Royalty rate.
o Discount rate.
o Growth rates.
· We obtained evidence to assess the assumptions used and performed
our own sensitivity analysis on the growth rate and discount rate.
· We challenged management about the assumptions and estimates made
within their model.
· We reviewed the financial statement disclosures and considered
the appropriateness of the disclosed sensitivities that are included.
Key observations We concur with management's decision to impair goodwill and customer
relationship intangible assets given the subsidiary's change in strategy and
reassessment of its customer base towards higher margin work.
Our work assessing the valuation of the developed technology assets revealed
the valuation model used and subsequent impairment assessment to be highly
sensitive to changes in assumptions about future sales growth and other
inputs.
As a result of our work and challenge of management, an impairment of the
technology assets has been recognised.
Despite this impairment, the valuation of the asset remains sensitive (see
Note 14) to the subsidiary continuing to achieve the forecast growth. If
the forecast growth is not achieved, further impairment may be necessary in
future years. If the forecast growth is exceeded there may be a reversal of
the impairment recognised to date.
The table below shows our judgement of the magnitude and likelihood of key
audit matter risk:
Our application of materiality
The scope and focus of our audit were influenced by our assessment and
application of materiality. We define materiality as the magnitude of
misstatement that could reasonably be expected to influence the readers and
the economic decisions of the users of the financial statements. We use
materiality to determine the scope of our audit and the nature, timing and
extent of our audit procedures and to evaluate the effect of misstatements,
both individually and on the financial statements as a whole.
Materiality $230,000 (2022 - $425,000) $111,000 (2022 - $255,000)
Benchmark Materiality has been based on blended benchmark of earnings (losses) and gross This was principally determined as being 2% of draft net assets but revised
assets. down following impairment charges booked against investments.
Basis for, and judgements used in the determination of materiality As the group made no acquisitions in the year and the principal subsidiary has The parent company is a holding company, and it was therefore considered
been trading through the year, assessment of materiality was principally based appropriate to use an asset based materiality benchmark.
on the group's performance but made allowance for the importance of group's
intangible assets.
Performance materiality - Performance materiality was set at 60% of
materiality, being $138,000 (31 December 2022 - 70% of materiality being
$154,000). Our performance materiality was reduced from 70% used by the
previous auditors because this was our first audit of the group.
Reporting threshold - The reporting threshold to the audit committee was set
as 5% of materiality, being $11,500 (31 December 2022 - $11,000). If, in our
opinion in differences below this level warranted reporting on qualitative
grounds, these would also be reported.
Differences in materiality levels from the previous audit - The prior year
audit was performed in a period in which a significant business combination
occurred. The previous auditors therefore used a materiality calculation
based on total assets. In the year ended 31 December 2023 there has been no
major business combinations. Accordingly, our assessment of materiality was
principally based on trading performance but made allowance for the importance
of group's intangible assets.
Other information
The directors are responsible for the other information. The other information
comprises the information included in the annual report, other than the
financial statements and our auditor's report thereon. Our opinion on the
financial statements does not cover the other information and, except to the
extent otherwise explicitly stated in our report, we do not express any form
of assurance conclusion thereon.
In connection with our audit of the financial statements, our responsibility
is to read the other information and, in doing so, consider whether the other
information is materially inconsistent with the financial statements, or our
knowledge obtained in the audit or otherwise appears to be materially
misstated. If we identify such material inconsistencies or apparent material
misstatements, we are required to determine whether there is a material
misstatement in the financial statements or a material misstatement of the
other information. If, based on the work we have performed, we conclude that
there is a material misstatement of this other information, we are required to
report that fact. We have nothing to report in this regard.
Opinions on other matters prescribed by the Companies Act 2006
In our opinion, based on the work undertaken in the course of the audit:
· the information given in the strategic report and the directors'
report for the financial period for which the financial statements are
prepared is consistent with the financial statements; and
· the strategic report and the directors' report have been prepared
in accordance with applicable legal requirements.
Matters on which we are required to report by exception
In the light of the knowledge and understanding of the group and the parent
company and its environment obtained in the course of the audit, we have not
identified material misstatements in the strategic report or the directors'
report.
We have nothing to report in respect of the following matters in relation to
which the Companies Act 2006 requires us to report to you if, in our opinion:
· adequate accounting records have not been kept by the parent
company, or returns adequate for our audit have not been received from
branches not visited by us; or
· the parent company financial statements are not in agreement with
the accounting records and returns; or
· certain disclosures of directors' remuneration specified by law
are not made; or
· we have not received all the information and explanations we
require for our audit.
Responsibilities of directors
As explained more fully in the directors' responsibilities statement, the
directors are responsible for the preparation of the financial statements and
for being satisfied that they give a true and fair view, and for such internal
control as the directors determine is necessary to enable the preparation of
financial statements that are free from material misstatement, whether due to
fraud or error.
In preparing the financial statements, the directors are responsible for
assessing the group's and the parent company's ability to continue as a going
concern, disclosing, as applicable, matters related to going concern and using
the going concern basis of accounting unless the directors either intend to
liquidate the group or the parent company or to cease operations, or have no
realistic alternative but to do so.
Auditor's responsibilities for the audit of the financial statements
Our objectives are to obtain reasonable assurance about whether the financial
statements as a whole are free from material misstatement, whether due to
fraud or error, and to issue an auditor's report that includes our opinion.
Reasonable assurance is a high level of assurance but is not a guarantee that
an audit conducted in accordance with ISAs (UK) will always detect a material
misstatement when it exists. Misstatements can arise from fraud or error and
are considered material if, individually or in the aggregate, they could
reasonably be expected to influence the economic decisions of users taken on
the basis of these financial statements.
Irregularities, including fraud, are instances of non-compliance with laws and
regulations. We design procedures in line with our responsibilities, outlined
above, to detect material misstatements in respect of irregularities,
including fraud. The extent to which our procedures are capable of detecting
irregularities, including fraud is detailed below. However, the primary
responsibility for the prevention and detection of fraud rests with both those
charged with governance of the Company and management:
Explanation as to what extent the audit was considered capable of detecting
irregularities, including fraud
Based on our understanding of the company and industry, we identified that the
principal risks of non-compliance with laws and regulations related to
compliance with Companies Law and Listing Rules. We considered the extent to
which non-compliance might have a material effect on the financial statements.
We also considered those laws and regulations that have a direct impact on the
preparation of the financial statements such as tax laws.
We evaluated management's incentives and opportunities for fraudulent
manipulation of the financial statements (including the risk of override of
controls) and determined that the principal risks were related to
inappropriate revenue recognition and the risk of management bias in
accounting estimates. Audit procedures performed by the engagement team
included:
· Discussions with management including consideration of known or
suspected instances of non-compliance with laws and regulation and fraud;
· The evaluation of management's controls designed to prevent and
detect irregularities;
· The identification and review of manual journals, in particular
journal entries which shared key risk characteristics; and
· The review and challenge of assumptions, estimates and judgements
made by management in their recognition of accounting estimates.
Because of the inherent limitations of an audit, there is a risk that we will
not detect all irregularities, including those leading to a material
misstatement in the financial statements or non-compliance with regulation.
This risk increases the more that compliance with a law or regulation is
removed from the events and transactions reflected in the financial
statements, as we will be less likely to become aware of instances of
non-compliance. The risk is also greater regarding irregularities occurring
due to fraud rather than error, as fraud involves intentional concealment,
forgery, collusion, omission or misrepresentation.
A further description of our responsibilities for the audit of the financial
statements is located on the Financial Reporting Council's website at: www.frc
(http://www.frc) .org.uk/auditorsresponsibilities. This description forms part
of our auditor's report.
Other matters we are required to address
Following the recommendation of the Audit Committee, we were appointed by the
Board in January 2024 to audit the financial statements for the year ending 31
December 2023. The period of total uninterrupted engagement is therefore less
than 1 year.
The non-audit services prohibited by the FRC's Ethical Standard were not
provided to the Company and we remain independent of the group in conducting
our audit. No other services in addition to the audit were provided by the
firm to the group.
Our audit opinion is consistent with the additional report to the Audit
Committee.
Use of our report
This report is made solely to the company's members, as a body, in accordance
with Chapter 3 of Part 16 of the Companies Act 2006. Our audit work has been
undertaken so that we might state to the company's members those matters we
are required to state to them in an Auditor's report and for no other purpose.
To the fullest extent permitted by law, we do not accept or assume
responsibility to anyone other than the company and the company's members as a
body, for our audit work, for this report, or for the opinions we have formed.
Tom Stock FCA (Senior Statutory Auditor)
For and on behalf of Haysmacintyre LLP, Statutory Auditors
10 Queen Street Place
London EC4R 1AG
30 April 2024
SIVOTA PLC
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
U.S. dollars in thousands
For the year ended
31 December
Note 2023 2022
Revenues 5 5,622 5,918
Cost of revenues (4,370) (4,361)
Gross Profit 1,252 1,557
Operating expenses:
Research and development expenses 6 (1,576) (1,553)
Sales and marketing expenses 7 (1,169) (1,309)
General and administrative expenses 8 (3,413) (3,513)
Total operating expenses (6,158) (6,375)
Operating loss before impairment (4,906) (4,818)
Impairment loss 14 (7,123) -
Operating loss (12,029) (4,818)
Financial income - -
Financial expenses (292) (295)
Financial expenses, net 9 (292) (295)
Loss before taxes (12,321) (5,113)
Taxes on income 12 (3) ) (1)
Net loss (12,324) (5,114)
Net loss attributable to the owners (8,323) (3,199)
Net loss attributable to non-controlling interest (4,001) (1,915)
Net loss (12,324) (5,114)
Total comprehensive loss (12,324) (5,114)
Total comprehensive loss attributable to the owners
(8,323) (3,199)
Total comprehensive loss attributable to non-controlling interest
(4,001) (1,915)
Total comprehensive loss (12,324) (5,114)
Loss per share: 13
Basic loss per ordinary share in U.S. dollars (0.66) (0.38)
Diluted loss per ordinary share in U.S. dollars (0.66) (0.38)
The accompanying notes are an integral part of the financial statements.
SIVOTA PLC
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
U.S. dollars in thousands
As at
Note 31 December
2023 2022
ASSETS
Non-current assets
Intangible assets, net 4; 14 5,200 13,950
Property and equipment, net 15 34
Total non-current assets 5,215 13,984
Current assets
Trade receivables 16 1,084 2,467
Other receivables 17 249 399
Cash and cash equivalents 969 4,439
Total current assets 2,302 7,305
Total assets 7,517 21,289
EQUITY AND LIABILITIES
Equity
Ordinary share capital 18 157 157
Deferred shares 18 65 65
Capital reserve from transactions with non-controlling interests
19(b) (426) (413)
Share premium 15,139 15,139
Accumulated losses (12,020) (3,697)
Total equity attributable to the owners 2,915 11,251
Non-controlling interests 4; 19(b) 1,203 5,141
Total equity 4,118 16,392
Current liabilities
Trade payables 20 796 2,042
Other payables 21 1,047 1,449
Long term loan - current portion 4(e) 727 -
Total current liabilities 2,570 3,491
Non-current liabilities
Long term loan 4(e) 829 1,394
Employee benefits - 12
Total non-current liabilities 829 1,406
Total equity and liabilities 7,517 21,289
The accompanying notes are an integral part of the financial statements.
The accompanying notes are an integral part of the financial statements.
The financial statements on page 40 to 78 were authorised for issue by the
board of directors on 30 April 2024 and were signed on its behalf by Ziv
Ben-Barouch.
Ziv Ben-Barouch, CEO
30 April 2024
Company Registration Number: 12897590
SIVOTA PLC
PARENT STATEMENT OF FINANCIAL POSITION
U.S. dollars in thousands
Note As at 31 December
2023 2022
ASSETS
Non-current assets
Investment in subsidiaries 15 1,035 11,904
Loan to subsidiary 4(d) 841 1,420
Total non-current assets 1,876 13,324
Current assets
Other receivables 17 111 52
Loan to subsidiary - current portion 4(d) 750 -
Cash and cash equivalents 474 1,076
Total current assets 1,335 1,128
Total assets 3,211 14,452
EQUITY AND LIABILITIES
Equity
Ordinary share capital 18 157 157
Deferred shares 18 65 65
Share premium 15,139 15,139
Accumulated losses (12,504) (1,245)
Total equity 2,857 14,116
Current liabilities
Trade payables 20 35 3
Other payables 21 319 333
Total current liabilities 354 336
Total equity and liabilities 3,211 14,452
The Company has taken advantage of the exemption allowed under section 408 of
the Companies Act 2006 and has not presented its own Statement of
Comprehensive Income in these financial statements. The net loss of the Parent
Company for the year was $11,259 thousand ($747 thousand for the year ended 31
December 2022).
The accompanying notes are an integral part of the financial statements.
The financial statements on page 40 to 78 were authorised for issue by the
board of directors on 30 April 2024 and were signed on its behalf by Ziv
Ben-Barouch.
Ziv Ben-Barouch, CEO
30 April 2024
Company Registration Number: 12897590
SIVOTA PLC
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
U.S. dollars in thousands
Capital reserve from transactions with non-controlling interests
Total equity attributable to the owners
Ordinary share capital Non-controlling interests
Deferred Share premium Accumulated losses Total equity
shares
For the year ended 31 December 2023:
Balance as at 31 December 2022 157 65 15,139 (413) (3,697) 11,251 5,141 16,392
Comprehensive expense for the year
Net loss - - - - (8,323) (8,323) (4,001) (12,324)
Total comprehensive loss for the year - - - (8,323) (8,323) (4,001) (12,324)
Transactions with owners:
Transactions with non-controlling interests - see Note 19(b)(2)
- - - (13) - (13) 19 6
Share-based compensation by subsidiary - see Note 19(b)
- - - - - - 44 44
Total transactions with the owners - - - (13) - (13) 63 50
Balance as at 31 December 2023 157 65 15,139 (426) (12,020) 2,915 1,203 4,118
Comprehensive expense for the year
Net loss
-
-
-
-
(8,323)
(8,323)
(4,001)
(12,324)
Total comprehensive loss for the year
-
-
-
(8,323)
(8,323)
(4,001)
(12,324)
Transactions with owners:
Transactions with non-controlling interests - see Note 19(b)(2)
-
-
-
(13)
-
(13)
19
6
Share-based compensation by subsidiary - see Note 19(b)
-
-
-
-
-
-
44
44
Total transactions with the owners
-
-
-
(13)
-
(13)
63
50
Balance as at 31 December 2023
157
65
15,139
(426)
(12,020)
2,915
1,203
4,118
The accompanying notes are an integral part of the financial statements.
SIVOTA PLC
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
U.S. dollars in thousands
Capital reserve from transactions with non-controlling interests
Total equity attributable to the owners
Ordinary share capital Non-controlling interests
Deferred Share premium Accumulated losses Total equity
shares
For the year ended 31 December 2022:
Balance as at 31 December 2021 15 65 1,251 - (498) 833 - 833
Comprehensive expense for the year
Net loss - - - - (3,199) (3,199) (1,915) (5,114)
Total comprehensive loss for the year - - - (3,199) (3,199) (1,915) (5,114)
Transactions with owners:
Share capital issuance - see Note 18 142 - 14,054 - - 14,196 - 14,196
Share issue cost - - (166) - - (166) - (166)
Non-controlling interests on acquisition of subsidiary - see Note 4
- - - - - - 6,355 6,355
Transactions with non-controlling interests - see Note 19(b)(1)
- - - (413) - (413) 428 15
Share-based compensation by subsidiary - see Note 19(b)
- - - - - - 273 273
Total transactions with the owners 142 - 13,888 (413) - 13,617 7,056 20,673
Balance as at 31 December 2022 157 65 15,139 (413) (3,697) 11,251 5,141 16,392
Net loss
-
-
-
-
(3,199)
(3,199)
(1,915)
(5,114)
Total comprehensive loss for the year
-
-
-
(3,199)
(3,199)
(1,915)
(5,114)
Transactions with owners:
Share capital issuance - see Note 18
142
-
14,054
-
-
14,196
-
14,196
Share issue cost
-
-
(166)
-
-
(166)
-
(166)
Non-controlling interests on acquisition of subsidiary - see Note 4
-
-
-
-
-
-
6,355
6,355
Transactions with non-controlling interests - see Note 19(b)(1)
-
-
-
(413)
-
(413)
428
15
Share-based compensation by subsidiary - see Note 19(b)
-
-
-
-
-
-
273
273
Total transactions with the owners
142
-
13,888
(413)
-
13,617
7,056
20,673
Balance as at 31 December 2022
157
65
15,139
(413)
(3,697)
11,251
5,141
16,392
Comprehensive expense for the year
Net loss
-
-
-
-
(8,323)
(8,323)
(4,001)
(12,324)
Total comprehensive loss for the year
-
-
-
(8,323)
(8,323)
(4,001)
(12,324)
Transactions with owners:
Transactions with non-controlling interests - see Note 19(b)(2)
-
-
-
(13)
-
(13)
19
6
Share-based compensation by subsidiary - see Note 19(b)
-
-
-
-
-
-
44
44
Total transactions with the owners
-
-
-
(13)
-
(13)
63
50
Balance as at 31 December 2023
157
65
15,139
(426)
(12,020)
2,915
1,203
4,118
The accompanying notes are an integral part of the financial statements.
SIVOTA PLC
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
U.S. dollars in thousands
Ordinary share capital
Deferred
shares
Share premium
Capital reserve from transactions with non-controlling interests
Accumulated losses
Total equity attributable to the owners
Non-controlling interests
Total equity
For the year ended 31 December 2022:
Balance as at 31 December 2021 15 65 1,251 - (498) 833 - 833
Comprehensive expense for the year
Net loss - - - - (3,199) (3,199) (1,915) (5,114)
Total comprehensive loss for the year - - - (3,199) (3,199) (1,915) (5,114)
Transactions with owners:
Share capital issuance - see Note 18 142 - 14,054 - - 14,196 - 14,196
Share issue cost - - (166) - - (166) - (166)
Non-controlling interests on acquisition of subsidiary - see Note 4
- - - - - - 6,355 6,355
Transactions with non-controlling interests - see Note 19(b)(1)
- - - (413) - (413) 428 15
Share-based compensation by subsidiary - see Note 19(b)
- - - - - - 273 273
Total transactions with the owners 142 - 13,888 (413) - 13,617 7,056 20,673
Balance as at 31 December 2022 157 65 15,139 (413) (3,697) 11,251 5,141 16,392
Net loss
-
-
-
-
(3,199)
(3,199)
(1,915)
(5,114)
Total comprehensive loss for the year
-
-
-
(3,199)
(3,199)
(1,915)
(5,114)
Transactions with owners:
Share capital issuance - see Note 18
142
-
14,054
-
-
14,196
-
14,196
Share issue cost
-
-
(166)
-
-
(166)
-
(166)
Non-controlling interests on acquisition of subsidiary - see Note 4
-
-
-
-
-
-
6,355
6,355
Transactions with non-controlling interests - see Note 19(b)(1)
-
-
-
(413)
-
(413)
428
15
Share-based compensation by subsidiary - see Note 19(b)
-
-
-
-
-
-
273
273
Total transactions with the owners
142
-
13,888
(413)
-
13,617
7,056
20,673
Balance as at 31 December 2022
157
65
15,139
(413)
(3,697)
11,251
5,141
16,392
The accompanying notes are an integral part of the financial statements.
SIVOTA PLC
PARENT STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY
U.S. dollars in thousands
Ordinary share capital
Deferred Share premium Accumulated losses
shares Total equity
For the year ended 31 December 2023
Balance as at 31 December 2022 157 65 15,139 (1,245) 14,116
Comprehensive expense for the year
Net loss - - - (11,259) (11,259)
Total comprehensive loss for the year - - - (11,259) (11,259)
Transactions with owners: - - - - -
Balance as at 31 December 2023 157 65 15,139 (12,504) 2,857
Net loss - - - (11,259) (11,259)
Total comprehensive loss for the year - - - (11,259) (11,259)
Transactions with owners: - - - - -
Balance as at 31 December 2023 157 65 15,139 (12,504) 2,857
The accompanying notes are an integral part of the financial statements.
SIVOTA PLC
PARENT STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY
U.S. dollars in thousands
Ordinary share capital
Deferred Share premium Accumulated losses
shares Total equity
For the year ended 31 December 2022
Balance as at 31 December 2021 15 65 1,251 (498) 833
Comprehensive expense for the year
Net loss - - - (747) (747)
Total comprehensive loss for the year - - - (747) (747)
Transactions with owners:
Share capital issuance - see Note 18 142 - 14,054 - 14,196
Share issue cost - - (166) - (166)
Total transactions with the owners 142 - 13,888 (1,245) 14,030
Balance as at 31 December 2022 157 65 15,139 (1,245) 14,116
Comprehensive expense for the year
Net loss - - - (747) (747)
Total comprehensive loss for the year - - - (747) (747)
Transactions with owners:
Share capital issuance - see Note 18 142 - 14,054 - 14,196
Share issue cost - - (166) - (166)
Total transactions with the owners 142 - 13,888 (1,245) 14,030
Balance as at 31 December 2022 157 65 15,139 (1,245) 14,116
The accompanying notes are an integral part of the financial statements.
SIVOTA PLC
CONSOLIDATED STATEMENT OF CASH FLOWS
U.S. dollars in thousands
For the year ended
31 December
2023 2022
Cash flows from operating activities
Net loss (12,324) (5,114)
Adjustments for:
Depreciation and amortisation 1,646 1,076
Impairment loss 7,123 -
Subsidiary share-based payment expense 44 273
Financial expenses, net 241 83
Working capital adjustments:
Decrease (increase) in trade receivables 1,383 (762)
Decrease (increase) in other receivables 150 (55)
Decrease in trade and other payables (1,648) (816)
Decrease in long term employee benefits (12) (46)
Net cash used by operating activities (3,397) (5,361)
Cash flows from investing activities
Decrease in short-term deposit - 7
Net cash acquired on acquisition of subsidiary - see Note 4
- 337
Convertible loan acquisition - see Note 4(d) - (1,654)
Net cash used by investing activities - (1,310)
Cash flows from financing activities
Proceeds from the issue of ordinary shares, net of issuance costs
- 11,848
Repayment of lease liability - (9)
Exercise of subsidiary's options 6 8
Loan repayments - (1,512)
Net cash flow provided by financing activities 6 10,335
Net (decrease)/increase in cash and cash equivalents (3,391) 3,664
Effect of foreign exchange rate changes (79) (237)
Cash and cash equivalents at beginning of year 4,439 1,012
Cash and cash equivalents at end of year 969 4,439
The accompanying notes are an integral part of the financial statements.
SIVOTA PLC
CONSOLIDATED STATEMENT OF CASH FLOWS
U.S. dollars in thousands
(a) Financing non-cash transactions
For the year ended 31 December
2023 2022
Debt offset against the payment for share capital of the Company
- 2,182
Receivables from exercise of subsidiary's options
- 7
The accompanying notes are an integral part of the financial statements.
SIVOTA PLC
PARENT STATEMENT OF CASH FLOWS
U.S. dollars in thousands
For the year ended 31 December
2023 2022
Cash flows from operating activities
Net loss (11,259) (747)
Impairment loss 10,869 -
Financial expenses (income), net (171) 52
Working capital adjustments:
Increase (decrease) in other receivables (59) 3
Increase in trade and other payables 18 102
Net cash used by operating activities (602) (590)
Cash flows from investing activities
Investment in subsidiary - (9,398)
Convertible loan acquisition - (1,654)
Net cash used by investing activities - (11,052)
Cash flows from financing activities
Proceeds from the issue of ordinary shares, net of issuance costs
- 11,848
Net cash flow provided by financing activities - 11,848
Net (decrease)/increase in cash and cash equivalents (602) 206
Effect of foreign exchange rate changes - (142)
Cash and cash equivalents at beginning of year 1,076 1,012
Cash and cash equivalents at end of year 474 1,076
The accompanying notes are an integral part of the financial statements.
SIVOTA PLC
PARENT STATEMENT OF CASH FLOWS
U.S. dollars in thousands
(a) Financing non-cash transactions
For the year ended
31 December
2023 2022
Debt offset against the payment for share capital of the Company
- 2,182
The accompanying notes are an integral part of the financial statements.
SIVOTA PLC
NOTES TO THE FINANCIAL STATEMENTS
U.S. dollars in thousands
Note 1 - General information
The Company is a public limited company incorporated and registered in England
and Wales on 22 September 2020 with registered company number 12897590 and its
registered office situated in England and Wales with its registered office at
New London House, 172 Drury Lane, London WC2B 5QR.
On 22 July 2021 the company completed a placing and listed on the Main Market
(Standard Segment) of the London Stock Exchange ("LSE").
In December 2021, the Company announced that it had entered into non-binding
term sheet with Apester. As a result, the Company's shares were suspended
pending the completion of the transaction and the publication of
the prospectus in relation to its enlarged group. On 12 May 2022, the Company
completed the acquisition and in September 2022, published the prospectus and
completed its readmission to the LSE.
The cash consideration for the Acquisition was funded through a $14.2 million
(gross) placing and direct subscription of 11,500,000 new ordinary shares of
Sivota of one pence each.
Note 2 - Definitions
In these financial statements:
The Company - Sivota PLC
The Group - The Company and its consolidated subsidiaries
Subsidiaries - Entities that are controlled (as defined in IFRS 10) by the Company and whose
accounts are consolidated with those of the Company
Related parties - as defined in IAS 24
Dollar/USD - U.S. dollar/"$"
Note 3 - Significant accounting policies
The following accounting policies have been applied consistently in the
financial statements for all periods presented, unless otherwise stated.
a. Basis of accounting
The Group Financial Statements have been prepared in accordance with UK
adopted International Accounting Standards.
The financial statements have been prepared on the historical cost basis.
Historical cost is generally based on the fair value of the consideration
given in exchange for goods and services.
The financial information of the Group is presented in U.S. dollars ("$"),
which is the Group's functional currency of the principal operations following
the acquisition of Group's principal subsidiary, Apester Ltd, in May 2022.
Following the Acquisition in May 2022, the Company has changed its
presentation accounting policy in order to align its functional and
presentation
SIVOTA PLC
NOTES TO THE FINANCIAL STATEMENTS
U.S. dollars in thousands
currency to be U.S. dollars. As this is a change in accounting policy, it has
been applied retrospectively as required by IAS 8. The rates applied for the
purpose of the translating the
assets and liabilities was the current exchange rate as at the date of each
statement of financial position. Income and expenses for each statement of
comprehensive income were translated at exchange rate at the dates of the
transactions.
Going concern
The Group has raised finance in 2022, to fund the acquisition of Apester and
the Group's working capital management. The Group projects that it will need
to raise further debt or equity finance to fund the planned business
development. The Group is expected to further generate losses from operations
during 2024 which will be expressed in negative cash flows from operating
activity. Hence the continuation of the Group's operations depends on raising
the required financing resources or reaching profitability, which are not
guaranteed at this point. Whilst the directors are confident they will be
able to realise the additional finance required, this is not guaranteed and
hence there is a material uncertainty in respect of going concern. However,
the directors have, at the time of approving the financial statements, a
reasonable expectation that the Group will have adequate resources to continue
in operational existence for the foreseeable future, which is defined as
twelve months from the signing of this report. For this reason, the directors
continue to adopt the going-concern basis of accounting in preparing the
financial statements.
b. Basis of consolidation
The consolidated financial statements incorporate the financial statements of
the Company and entities controlled by the Company and its Subsidiaries made
up to 31 December each year. Control is achieved when the Company:
- has the power over the investee;
- is exposed, or has rights, to variable returns from its involvement
with the investee; and
- has the ability to use its power to affects its returns.
The Company reassesses whether or not it controls an investee if facts and
circumstances indicate that there are changes to one or more of the three
elements of control listed above.
Consolidation of a subsidiary begins when the Company obtains control over the
subsidiary and ceases when the Company loses control of the subsidiary.
Specifically, the results of subsidiaries acquired or disposed of during the
year are included in profit
or loss from the date the Company gains control until the date when the
Company ceases to control the subsidiary.
Where necessary, adjustments are made to the financial statements of
subsidiaries to bring the accounting policies used into line with the Group's
accounting policies.
All intragroup assets and liabilities, equity, income, expenses and cash flows
relating to transactions between the members of the Group are eliminated on
consolidation.
Non-controlling interests in subsidiaries are identified separately from the
Group's equity therein. Those interests of non-controlling shareholders that
are present ownership interests entitling their holders to a proportionate
share of net assets upon liquidation may initially be measured at fair value
or at the non-controlling interests' proportionate share of the fair value of
SIVOTA PLC
NOTES TO THE FINANCIAL STATEMENTS
U.S. dollars in thousands
the acquiree's identifiable net assets. The choice of measurement is made on
an acquisition-by-acquisition basis. Other non-controlling interests are
initially measured at fair value.
Subsequent to acquisition, the carrying amount of non-controlling interests is
the amount of those interests at initial recognition plus the non-controlling
interests' share of subsequent changes in equity.
Profit or loss and each component of other comprehensive income are attributed
to the owners of the Company and to the non-controlling interests. Total
comprehensive income of the
subsidiaries is attributed to the owners of the Company and to the
non-controlling interests even if this results in the non-controlling
interests having a deficit balance.
Changes in the Group's interests in subsidiaries that do not result in a loss
of control are accounted for as equity transactions. The carrying amount of
the Group's interests and the non-controlling interests are adjusted to
reflect the changes in their relative interests in the subsidiaries. Any
difference between the amount by which the non-controlling interests are
adjusted and the fair value of the consideration paid or received is
recognised directly in equity and attributed to the owners of the Company.
c. Business combinations
Business combinations are accounted for by applying the acquisition method.
The cost of the acquisition is measured at the fair value of the consideration
transferred on the date of acquisition with the addition of non-controlling
interests in the acquiree. In each business combination, the Company chooses
whether to measure the non-controlling interests in the acquiree based on
their fair value on the date of acquisition or at their proportionate share in
the fair value of the acquiree's net identifiable assets.
Direct acquisition costs are expensed as incurred.
Goodwill is initially measured at cost, which represents the excess of the
acquisition consideration and the amount of non-controlling interests over the
net identifiable assets acquired and liabilities assumed. After initial
recognition, goodwill is measured at cost less any accumulated impairment
losses.
Intangible assets acquired in a business combination are measured at fair
value at the acquisition date. Intangible assets with a finite useful life are
amortised over their useful life and reviewed for impairment whenever there is
an indication that the asset may be impaired. The amortisations period and the
amortisation method for an intangible asset are reviewed at least at each year
end.
d. Cash and cash equivalents
Cash equivalents are considered as highly liquid investments, including
unrestricted short-term bank deposits with an original maturity of three
months or less from the date of acquisition or with a maturity of more than
three months, but which are redeemable on demand without penalty and which
form part of the Group's cash management.
SIVOTA PLC
NOTES TO THE FINANCIAL STATEMENTS
U.S. dollars in thousands
e. Intangible assets
Separately acquired intangible assets are measured on initial recognition at
cost including directly attributable costs. Expenditures relating to
internally generated intangible assets, excluding capitalised research and
development expenditures, are recognised in profit or loss when incurred.
Intangible assets with a finite useful life are amortised over their useful
life and reviewed for impairment whenever there is an indication that the
asset may be impaired. The amortisations period and the amortisation method
for an intangible asset are reviewed at least at each year end.
Amortisation is calculated on a straight-line basis over the useful life of
the assets at annual rates as follows:
Number of years
Developed technology 6.6
Customer relationships 9.6
Research and development expenditures
Research expenditures are recognised in profit or loss when incurred.
An intangible asset arising from a development project or from the development
phase of an internal project is recognised if the Group can demonstrate: the
technical feasibility of completing the intangible asset so that it will be
available for use or sale; the Group's intention to complete the intangible
asset and use or sell it; the Group's ability to use or sell the intangible
asset; how the intangible asset will generate future economic benefits; the
availability of adequate technical, financial and other resources to complete
the intangible asset; and the Group's ability to measure reliably the
expenditure attributable to the intangible asset during its development.
The asset is measured at cost less any accumulated amortisation and any
accumulated
impairment losses. Amortisation of the asset begins when development is
completed, and the asset is available for use. The asset is amortised over its
useful life. Testing of impairment is performed annually over the period of
the development project.
SIVOTA PLC
NOTES TO THE FINANCIAL STATEMENTS
U.S. dollars in thousands
f. Impairment policy
The Group evaluates the need to record an impairment of the carrying amount of
non-financial assets whenever events or changes in circumstances indicate that
the carrying amount is not recoverable.
If the carrying amount of non-financial assets exceeds their recoverable
amount, the assets are reduced to their recoverable amount. The recoverable
amount is the higher of fair value less costs of sale and value in use. In
measuring value in use, the expected future cash flows are discounted using a
pre-tax discount rate that reflects the risks specific to the asset. The
recoverable amount of an asset that does not generate independent cash flows
is determined for the cash-generating unit to which the asset belongs.
Impairment losses are recognised in profit or loss.
The impairment test is performed annually, on 31 December, or more frequently
if events or changes in circumstances indicate that there is an impairment.
g. Earnings per share
Earnings per share are calculated by dividing the net income (loss)
attributable to equity holders of the Company by the weighted average number
of Ordinary Shares outstanding during the period. The Company's share of
earnings of investees is included based on the earnings per share of the
investees multiplied by the number of shares held by the Company.
If the number of Ordinary Shares outstanding increases as a result of a
capitalisation, bonus issue, or share split, the calculation of earnings per
share for all periods presented are adjusted retrospectively.
Potential Ordinary shares are included in the computation of diluted earnings
per share when their conversion decreases earnings per share from continuing
operations. Potential Ordinary shares that are converted during the period are
included in diluted
Earnings per share only until the conversion date and from that date in basic
earnings per share.
h. Revenue recognition
Revenue from contracts with customers is recognised when the control over the
services is transferred to the customer and the group has performed its
obligations to the customer. The transaction price is the amount of the
consideration that is expected to be received based on the contract terms.
Revenue from rendering of services is recognised over time, during the period
the customer simultaneously receives and consumes the benefits provided by the
Group's performance. The Group charges its customers based on payment terms
agreed upon in specific agreements, most of them are 60-75 days.
The Group generates revenues mainly from revenue share business model
(hereafter: "rev-share model"). Revenues from rev-share model are based on the
Group's installed software platform at Publisher's site. When an end-customer
is using the Group's platform, the Group generates revenue from the rev-share
model, with whom it has contracted, and split the revenues with the
Publishers, such 50% to 80% of the revenues collected are passed through to
the Publisher.
SIVOTA PLC
NOTES TO THE FINANCIAL STATEMENTS
U.S. dollars in thousands
The Group has no obligation for discounts, incentives or refunds subsequent to
revenue generation.
In determining the amount of revenue from contracts with customers, the Group
evaluates whether it is a principal or an agent in the arrangement. The Group
is principal when the Group controls the promised services before transferring
them to the customer. In these circumstances, the Group recognises revenue for
the gross amount of the consideration. Revenues from rev-share model are
presented on a gross basis as the Group acts as a principal and is exposed to
the risks associated with the transaction.
i. Leases
The Group as a lessee assesses whether a contract is or contains a lease, at
inception of the contract. The Group recognises a right-of-use asset and a
corresponding lease liability with respect to all lease arrangements in which
it is the lessee, except for short-term leases, that defined as leases with a
lease term of 12 months or less.
j. Foreign currencies
The functional currency of the Group is U.S. dollar ("$"), as the dollar is
the primary currency of the economic environment in which the Group has
operated and expects to continue to operate in the foreseeable future.
In preparing the financial statements of the Group entities, transactions in
currencies other than the entity's functional currency (foreign currencies)
are recognised at the rates of exchange prevailing on the dates of the
transactions. At each reporting date, monetary assets and liabilities that are
denominated in foreign currencies are retranslated at the rates prevailing at
that date. Non-monetary items carried at fair value that are denominated in
foreign currencies are translated at the rates prevailing at the date when the
fair value was determined. Non-monetary items that are measured in terms of
historical cost in a foreign currency are not retranslated. Exchange
differences are recognised in profit or loss in the period in which they
arise.
k. Retirement and termination benefit costs
Payments to defined contribution retirement benefit
plans are recognised as an expense when employees have rendered service
entitling them to the contributions. Payments made to state-managed retirement
benefit plans are accounted for as payments to defined contribution plans
where the Group's obligations under the plans are equivalent to those arising
in a defined contribution retirement benefit plan.
All of the Group's employees that are employed by the Company's Israeli
subsidiaries have subscribed to Section 14 of Israel's Severance Pay Law,
5723-1963 ("Section 14"). Pursuant to Section 14, the Group's employees,
covered by this section, are entitled only to monthly deposits, at a rate of
8.33% of their monthly salary, made on their behalf by the subsidiaries.
Payments in accordance with Section 14 release the Group from any future
severance liabilities in respect of those employees. Neither severance pay
liabilities nor severance pay funds under Article 14 for such employees are
recorded in the Group's balance sheet. In 2023 and 2022 the Group recognised
related to defined contribution retirement benefit plans in the amount of $164
and $146 thousand respectively.
SIVOTA PLC
NOTES TO THE FINANCIAL STATEMENTS
U.S. dollars in thousands
l. Short-term and other long-term employee benefits
A liability is recognised for benefits accruing to
employees in respect of wages and salaries, annual leave and sick leave in the
period the related service is rendered at the undiscounted amount of the
benefits expected to be paid in exchange for that service.
Liabilities recognised in respect of short-term employee benefits are measured
at the undiscounted amount of the benefits expected to be paid in exchange for
the related service.
m. Taxation
The tax currently payable is based on the taxable profit for the year. Taxable
profit differs from net profit as reported in the income statement because it
excludes items of income or expense that are taxable or deductible in other
periods and it further excludes items that are never taxable
or deductible. The Group's liability for current tax is calculated using tax
rates that have been enacted or substantively enacted by the reporting date.
Deferred income tax is provided for using the liability method on temporary
differences at the reporting date between the tax basis of assets and
liabilities and their carrying amounts for financial reporting purposes.
Deferred income tax liabilities are recognised in full for all temporary
differences. Deferred income tax assets are recognised for all deductible
temporary differences carried forward of unused tax credits and unused tax
losses to the extent that it is probable that taxable profits will be
available against which the deductible temporary differences, and
carry-forward of unused tax credits and unused losses can be utilised.
Unrecognised deferred income tax assets are reassessed at each reporting date
and are recognised to the extent that is probable that future taxable profits
will allow the deferred income tax asset to be recovered.
As at 31 December 2023 the management believed that the deferred tax assets
are not likely to be realisable in the foreseeable future and therefore no
deferred income tax was recognised.
n. Property, plant and equipment
Property and equipment are measured at cost, including directly attributable
costs, less
accumulated depreciation.
Depreciation is calculated on a straight-line basis over the useful life of
the assets at annual rates as follows:
Number of years
Computer and electronic equipment 3-7
Office furniture and equipment 15
Leasehold improvements 10
The useful life, depreciation method and residual value of an asset are
reviewed at least each year-end and any changes are accounted for
prospectively as a change in accounting estimate.
Depreciation of an asset ceases at the earlier of the date that the asset is
classified as held for sale and the date that the asset is derecognised. An
asset is derecognised on disposal or when no further economic benefits are
expected from its use.
SIVOTA PLC
NOTES TO THE FINANCIAL STATEMENTS
U.S. dollars in thousands
o. Financial instruments
Financial assets and financial liabilities are recognised in the Group's
statement of financial position when the Group becomes a party to the
contractual provisions of the instrument.
Financial assets and financial liabilities are initially measured at fair
value, except for trade receivables that do not have a significant financing
component which are measured at transaction price. Transaction costs that are
directly attributable to the acquisition or issue of financial assets and
financial liabilities (other than financial assets and financial liabilities
at fair value through profit or loss) are added to or deducted from the fair
value of the financial assets or financial liabilities, as appropriate, on
initial recognition. Transaction costs directly attributable
to the acquisition of financial assets or financial liabilities at fair value
through profit or loss are recognised immediately in profit or loss.
Financial assets
All financial assets are recognised and derecognised on a trade date where the
purchase or sale of a financial asset is under a contract whose terms require
delivery within the timeframe established by the market concerned, and are
initially measured at fair value, plus transaction costs, except for those
financial assets classified as at fair value through profit or loss, which are
initially measured at fair value.
The Group derecognises a financial asset only when the contractual rights to
cash flows from the asset expire, or when it transfers the financial asset and
substantially all the risks and rewards of ownership of the asset to another
entity.
Financial assets are classified into the following specified categories:
financial assets "at fair value through profit or loss", or FVTPL, "at fair
value through other comprehensive income" or at amortised cost on the basis of
the Group's business model for managing financial assets and the contractual
cash flow characteristics of the financial asset.
Income is recognised on an effective interest basis for debt instruments other
than those financial assets classified as at FVTPL.
As at the reporting date the Group holds no financial assets or investments
other than cash and trade receivables.
Financial liabilities and equity
Financial liabilities are initially measured at fair value when the Group
becomes a party to their contractual arrangements. Transaction costs are
included in the initial measurement of financial liabilities, with the
exception of financial liabilities classified at fair value through profit or
loss. The subsequent measurement of financial liabilities is discussed below.
A financial liability is derecognised when the obligation under the liability
is discharged, cancelled or expires.
Debt and equity instruments are classified as either financial liabilities or
as equity in accordance with the substance of the contractual arrangements and
the definitions of a financial liability and an equity instrument.
Equity instruments
An equity instrument is any contract that evidences a residual interest in the
assets of an entity after deducting all of its liabilities. Equity instruments
issued by the Group are recognised at the proceeds received, net of direct
issue costs.
SIVOTA PLC
NOTES TO THE FINANCIAL STATEMENTS
U.S. dollars in thousands
Financial liabilities
All financial liabilities are measured subsequently at amortised cost using
the effective interest method or at FVTPL.
Financial liabilities are classified as at fair value through profit or loss
if the financial liability is either held for trading or it is designated as
such upon initial recognition.
Financial liabilities at FVTPL are measured at fair value, with any gains or
losses arising on changes in fair value recognised in profit or loss to the
extent that they are not part of a designated hedging relationship. Warrants
issued by the Group that have cashless or net share settlement mechanism is
classified as derivative and measured at fair value, with any gains or losses
arising on changes in fair value recognised in profit or loss.
Other financial liabilities
Trade and other payables are initially measured at fair value, net of
transaction costs, and are subsequently measured at amortised cost, where
applicable, using the effective interest method, with interest expense
recognised on an effective yield basis.
p. Share-based payments
Share-based payment transactions of the Group's equity-settled share-based
payments to employees and others providing similar services are measured at
the fair value of the equity instruments at the grant date. The fair value
excludes the effect of non-market-based vesting conditions. Details regarding
the determination of the fair value of equity-settled share-based transactions
are set out in Note 19.
The fair value determined at the grant date of the equity-settled share-based
payments is expensed on a straight-line basis over the vesting period, based
on the Group's estimate of the number of equity instruments that will
eventually vest. At each reporting date, the Group revises its estimate of the
number of equity instruments expected to vest as a result of the effect of
non-market-based vesting conditions. The impact of the revision of the
original estimates, if any, is recognised in profit or loss such that the
cumulative expense reflects the revised estimate, with a corresponding
adjustment to reserves.
Equity-settled share-based payment transactions with parties other than
employees are measured at the fair value of the goods or services received,
except where that fair value cannot be estimated reliably, in which case they
are measured at the fair value of the equity instruments granted, measured at
the date the entity obtains the goods or the counterparty renders the service.
q. Critical accounting judgements and key sources of
estimation uncertainty
In applying the Group's accounting policies, which are described in Note 3,
the directors are required to make judgements (other than those involving
estimations) that have a significant impact on the amounts recognised and to
make estimates and assumptions about the carrying amounts of assets and
liabilities that are not readily apparent from other sources. The estimates
and associated assumptions are based on historical experience and other
factors that are considered to be relevant. Actual results may differ from
these estimates.
The estimates and underlying assumptions are reviewed on an ongoing basis.
Revisions to accounting estimates are recognised in the period in which the
estimate is revised if the revision
affects only that period, or in the period of the revision and future periods
if the revision affects both current and future periods.
SIVOTA PLC
NOTES TO THE FINANCIAL STATEMENTS
U.S. dollars in thousands
- Business combinations
The Group is required to allocate the acquisition cost of the subsidiary and
activities through business combinations on the basis of the fair value of the
acquired assets and assumed liabilities. The Group used external valuations to
determine the fair value. The valuations include management estimates and
assumptions as for future cash flow projections from the acquired business and
selection of models to compute the fair value of the acquired components and
their depreciation period.
- Impairment of intangible assets
The Group reviews its intangible assets at least once a year. This requires
management to make an estimate of the projected future revenues and cash flows
from the continuing use of the cash generating units to which the assets are
allocated, to choose a suitable discount rate for those cash flows, and other
parameters used in measuring value in use of the tested intangible assets.
- Research and development expenses
According to the accounting treatment, as described above, the Group's
management examined whether the conditions for recognising development costs
as intangible assets are met. The Group conclude that, development costs
relating to the group software platform did not meet the conditions for
recognition of as an intangible asset.
- Share-based payment.
The fair value of share-based payment transactions is calculated using the
fair value of Group company's ordinary shares at the date of granting the
options, this fair value is estimated by using valuation techniques that are
based on actual purchasing price when applicable and measurement of the
share's price by valuation technique of discounting future cash flows or other
valuation techniques. For more information, see Note 19.
r. Adoption of new and revised standards and
interpretations.
New standards, interpretations and amendments effective from 1 January 2023.
There were no new standards or interpretations
effective for the first time for periods beginning on or after 1 January 2023
that had a significant effect on the Group's Financial Statements.
New standards, interpretations and amendments not yet effective
At the date of authorisation of these Financial Statements, a number of
amendments to existing standards and interpretations, which have not been
applied in these Financial Statements, were in issue but not yet effective for
the year presented. The Directors do not expect that the adoption of these
standards will have a material impact on the financial information of the
Group in future periods.
At the date of authorisation of the Group financial information, the Directors
have reviewed the standards in issue by the International Accounting Standards
Board and the International Financial Reporting Interpretations Committee,
which are effective for the accounting periods ending on or after the stated
effective date. These are:
· Amendments to IAS 1 - Classification of Liabilities as
Current or Non-current
SIVOTA PLC
NOTES TO THE FINANCIAL STATEMENTS
U.S. dollars in thousands
· Amendments to IAS 1 - Non-current Liabilities with
Covenants
· Amendments to IAS 7 and IFRS 7 - Supplier Finance
Arrangements
In the Directors view, none of these standards would have a material impact on
the financial reporting of the Group.
Note 4 - Business combination
a. On 24 January 2022 the Company entered into a Share Purchase Agreement
("Acquisition") with Apester Ltd, a digital marketing engagement platform,
that was completed on 12 May 2022. Under the terms of Acquisition Apester
issued to the Company 14,947,409 Preferred Seed Shares for an aggregate
consideration of $12.0 million of which $6.0 million was paid on 13 May 2022
and the further $6.0 million was paid on 12 August 2022. The Preferred Seed
Shares provide the Company with 57.5% of Apester's share capital.
The acquisition costs in amount of $0.3 million and $0.2 million were recorded
in general and administrative expenses in 2022 and 2021 respectively.
According to the Share Purchase Agreement Apester paid to Sivota $0.4 million
as part of the transaction costs.
b. Pursuant to the articles of association of Apester, that were exercised
following Acquisition completion, the Company also has certain veto and
consent rights, including the right to appoint a majority of directors to the
Apester's Board.
c. In addition, amongst other customary provisions, the Share Purchase
Agreement contains various warranties typical in a transaction of this nature
from Apester in favour of the Company, regarding the operations, employees and
the business and assets of Apester.
d. Following the Acquisition, the Company entered into two convertible
loan assignment agreements with lenders to Apester, pursuant to which $1.654
million in convertible loans, including accrued interest, were assigned to the
Company (the "loan"). The convertible loan bears interest at a rate of 6% per
annum and will be capable of conversion by the Company into Preferred Seed
Shares in Apester, par value NIS 0.01 each, at a conversion price per share of
$0.8028147 dollars. If converted in full, the Preferred Seed Shares would
represent approximately 6.6% of Apester's share capital as at 31 December
2023. If the convertible loan is not so converted, Apester will be required
to repay all outstanding principal and interest on the loan in full in 24
monthly instalments starting February 2024. In March 2024 the Company signed
an amendment to the loan agreement to defer the loan repayment by one
year.
e. Following the Acquisition and pursuant to the agreement with the
Apester's shareholder ("the Shareholder"), the Shareholder's loan in amount of
$2.182 million, including accrued interest, was fully settled by offset
against the payment for share capital of the Company.
f. The remaining Shareholder's loan in amount of $1.5 million shall bear
interest at the rate of 6% per annum, accrued from the actual funding date,
will be capable of conversion by the Shareholder into Preferred Seed Shares in
Apester, par value NIS 0.01 each, at a conversion price per share of
$0.8028147 dollars. If converted in full, the Preferred Seed Shares would
represent approximately 6.3% of Apester's share capital as at 31 December
2023. If the convertible loan is not converted, Apester will be required to
repay all outstanding principal and interest on the loan in full in 24 monthly
instalments starting February 2024. In March 2024 the Shareholder signed an
amendment to the loan agreement to defer the loan repayment by one year.
SIVOTA PLC
NOTES TO THE FINANCIAL STATEMENTS
U.S. dollars in thousands
Note 5 - Operating Segments
a. General
The operating segments are identified on the basis of information that is
reviewed by the chief operating decision maker ("CODM") to make decisions
about resources to be allocated and assess its performance.
The Group has one operating segment - digital media
b. Geographic information:
Revenues classified by geographical areas based on client location:
For the year ended 31 December
2023 2022
Group
European countries 1,446 1,904
North America 2,037 2,076
UK and Ireland 1,436 1,338
Other countries 703 600
5,622 5,918
a. Additional information on revenues:
Revenues from major customers, which each account for 10% or more of total
revenues reported in the financial statements:
For the year ended
31 December
2023 2022
Group
Customer A 1,087 798
Customer B 416 568
Customer C 581 323
Note 6 - Research and development expenses
For the year ended
31 December
2023 2022
Group
Payroll and related expenses (*) 960 955
Share-based compensation by subsidiary
(7) 13
Other 623 585
1,576 1,553
(*) the average monthly number of
employees is 9 compared to 11 in 2022
SIVOTA PLC
NOTES TO THE FINANCIAL STATEMENTS
U.S. dollars in thousands
Note 7 - Sales and marketing expenses
For the year ended
31 December
2023 2022
Group
Payroll and related expenses (*) 755 981
Share-based compensation by subsidiary (23) 19
Other 437 309
1,169 1,309
(*) the average monthly number of
employees is 6 compared to 8 in 2022.
Note 8 - General and administrative expenses
For the year ended
31 December
2023 2022
Group
Payroll and related expenses (*) 760 976
Share-based compensation by subsidiary 74 241
Amortisation of intangible assets 1,627 1,039
Professional services 462 937
Directors' remuneration - see Note 10 207 130
Other 283 190
3,413 3,513
(*) - key management remuneration is
disclosed in Note 11.
- the average monthly number of
employees is 6 compared to 11 in 2022.
Note 9 - Financial expenses, net
For the year ended
31 December
2023 2022
Group
Financial income:
Exchange rate differences - -
Financial expenses:
Exchange rate differences 130 191
Interest on loans (*) 162 104
292 295
(*) including interest on the
convertible loan from Apester's Shareholder measured at amortised cost in the
amount of $162 and $74 thousand in 2023 and 2022 respectively, see Note
4(e).
SIVOTA PLC
NOTES TO THE FINANCIAL STATEMENTS
U.S. dollars in thousands
Note 10 - Directors' remuneration
The directors' remuneration in the reporting period was as follows:
For the year ended
31 December
2023 2022
Group
Base fees 207 130
There was no other component of remuneration.
The directors' fee payable as at 31 December 2023 and 2022 were $183 thousand
and $143 thousand respectively.
In January 2024, the Directors and the Company entered into agreement to defer
the payments of the director fees, including the director fees payable as at
31 December 2023, until the earlier of 31 December 2024 or the date of the
next fundraising.
Note 11 - Key management personnel
The number of key management (excluding members the Board) employees
throughout the reporting period was as follows:
For the year ended
31 December
2023 2022
By the Company 1 1
By the Group 2 2
The transactions with the key management (excluding member the Board)
employees in the reporting period were as follows:
For the year ended
31 December
2023 2022
Group
Salaries 294 131
Social security 17 5
Pension and other costs 50 28
Share-based compensation by subsidiary(*) 59 88
420 252
(*) In August 2023, Apester's CEO was granted 1,395,013 options to Apester's
shares. For more
information see Note 19(4).
In October 2022, Apester's former CEO was granted 1,395,013 options
to Apester's shares.
For more information see Note 19(3). As a result of the resignation
of the former CEO all
options were forfeited.
The short-benefits payable as at 31 December 2023 and 2022 were $24 and $29
thousand respectively.
SIVOTA PLC
NOTES TO THE FINANCIAL STATEMENTS
U.S. dollars in thousands
Note 12 - Taxes on Income
a. In 2023, the Group used 23.50% (2022: 19.00%) as the corporate
effective tax rate.
The Group has made no provision for taxation as it has not yet generated any
taxable income. A reconciliation of income tax expense, applicable to the loss
before taxation at the statutory tax rate to the income tax expense at the
effective tax rate of the Group, is as follows:
For the year ended
31 December
2023 2022
Group
Loss before tax (12,321) (5,113)
U.K. corporation tax credit at rate (2,895) (971)
of 23.50%
Effect of non-deductible expenses 2,081 313
Differences in overseas tax rates (22) (174)
Effect of tax benefit of losses 839 833
Current tax 3 1
b. Carryforward net operating losses:
As of 31 December 2023, the Company has an estimated accumulated net operating
losses, amounting to $0.75 million which may be carried forward and offset
against taxable income in the future for an indefinite period.
As of 31 December 2023, Apester has an estimated accumulated net operating
losses, amounting to $50 million which may be carried forward and offset
against taxable income in the future for an indefinite period.
As of 31 December 2023, the U.K. subsidiary of Apester has an estimated net
operating loss carry forward for income tax purposes of $48 thousand, which
may be carried forward and offset against taxable income in the future for an
indefinite period.
As of 31 December 2023, the U.S. subsidiary has an estimated net operating
loss carry forward for income tax purposes of $2.2 million, which may be
carried forward and offset against taxable income in the future for an
indefinite period.
SIVOTA PLC
NOTES TO THE FINANCIAL STATEMENTS
U.S. dollars in thousands
c. Tax rates:
(1) The U.K. corporate income tax rate is 25%.
The principal tax rates applicable to the subsidiaries whose place of
incorporation is outside U.K. are:
Israel
The Israeli corporate income tax is 23%.
Amendment 73 to the law for the Encouragement of Capital Investments, 1959
also prescribes special tax tracks for technological enterprises, which became
effective in 2017, as follows:
- Technological preferred enterprise - an enterprise for which total
consolidated revenues of its parent company and all subsidiaries are less than
NIS 10 billion. A preferred technological enterprise, as defined in the law,
which is located in the center of Israel, will be subject to tax at a rate of
12% on profits deriving from intellectual property.
- Any dividends distributed to "foreign companies", as defined in the
law, deriving from income from the technological enterprises will be subject
to a withholding tax at a rate of 4%.
U.S.
The U.S. federal corporate income tax rate is approximately 21%.
d. Tax assessments:
The Company has not received final tax assessments since its incorporation.
Apester has tax assessments considered as final up to and including the year
2016. Other subsidiaries of the Company have not received final tax
assessments since their incorporation.
SIVOTA PLC
NOTES TO THE FINANCIAL STATEMENTS
U.S. dollars in thousands
Note 13 - Loss per share
The calculation of the basic and diluted loss per share is based on the
following data:
For the year ended
31 December
2023 2022
Loss for the period attributable to the equity holders of the Company - U.S.
dollars
(8,323,000) (3,199,000)
Weighted average number of ordinary shares for the purpose of basic and
diluted earnings per share
12,585,000 8,426,096
Basic and diluted loss per share - U.S. dollars (0.66) (0.38)
Diluted earnings per share have not been disclosed on the basis the company
was loss making and therefore the impact of any potentially dilutive ordinary
shares would be anti-dilutive.
Note 14 - Intangible assets, net of amortisation and impairment
Developed technology Customer relationships
Goodwill Total
Group
Cost:
Balance as at 31 December 2022 8,655 3,033 3,301 14,989
Balance as at 31 December 2023 8,655 3,033 3,301 14,989
Accumulated amortisation and impairment:
Balance as at 31 December 2022 (837) (202) - (1,039)
Amortisation for the year (1,311) (316) - (1,627)
Impairment loss (*) (1,307) (2,515) (3,301) (7,123)
Balance as at 31 December 2023 (3,455) (3,033) (3,301) (9,789)
Amortised cost as at 31 December 2023 5,200 - - 5,200
Amortised cost as at 31 December 2022 7,818 2,831 3,301 13,950
(*) Additional information on impairment loss
In 2023, due to Apester's losses and Apester's change in strategy which led to
terminating customer accounts that did not meet minimal profitability
conditions the Group impaired goodwill and customer relationships to nil.
SIVOTA PLC
NOTES TO THE FINANCIAL STATEMENTS
U.S. dollars in thousands
In addition, the Group reviewed the carrying amount of the developed
technology. The impairment test involved comparing the carrying amount of the
developed technology with its recoverable amount, calculated using the relief
from royalty method. The relief from royalty method determines the value of
the asset by calculating how much the Group would save by owning the asset
instead of licensing it from a third party.
The key assumptions used in calculating the value of the developed technology:
- forecast revenue growth rate of 30% in the years 2024-2026, followed by
growth rate of 6%
thereafter.
- royalty rate of 12%.
- pre-tax discount rate applied to the cash flow projection is 18.93%.
As a result, in 2023, the Group recorded a total impairment loss for the
amount of $7,123 thousand, which was included in the consolidated statement of
comprehensive income.
Sensitivity analyses of changes in assumptions:
With respect to the assumptions used in determining the value in use,
management believes that a change in key assumptions, in particular, the
growth rate in the forecasted revenues, would result in an additional
impairment of the developed technology.
If the forecasted revenue growth rate in the years 2024-2026 is 10% lower than
the management's estimates, the Group would have to recognise an additional
impairment in the amount of $1.0 million.
If the royalty rate used in the calculation had been 2% lower than the
management's estimates the Group would have had to recognise an additional
impairment in the amount of $0.9 million.
If the pre-tax discount rate applied to the cash flow projection is 2% higher
than the management's estimates, the Group would have to recognise an
additional impairment in the amount of $0.3 million.
Note 15 - Investment in subsidiary
As at 31 December
2023 2022
Company
Investment in Apester in May 2022-- see Note 4
11,904 11,904
Impairment (10,869) -
Balance as at 31 December 2023 1,035 11,904
SIVOTA PLC
NOTES TO THE FINANCIAL STATEMENTS
U.S. dollars in thousands
Details of the Company's subsidiaries at 31 December 2023 are as follows:
Portion of ordinary shares held
Place of incorporation Registered address
Principal activity
Apester Ltd. Israel 53.95% digital marketing engagement platform Itzhak Sade 8,
Tel Aviv
Apester UK Ltd. U.K. 53.95% digital marketing engagement platform 201 Haverstock Hill, London, NW3 4QG
Apester Inc. U.S.A. 53.95% digital marketing engagement platform Rockville ,MD 20852 ,11300 Rockville pike
Sivota IL Ltd Israel 100% finance and administrative services for the parent company Tuval 5,
Tel-Aviv
Note 16 - Trade receivable
As at
31
Decemb
er
2023 20
22
Group Company Group Company
Trade receivables from contracts with 1,084 2,456 -
customers -
Less - provision for expected credit losses - - - -
Trade receivables, net 1,084 - 2,456 -
As of at December 2023, the Group has no material amounts that are past due
and not impaired.
Additional information of trade receivables
Balances of major Customers, which each account for 10% or more of the total
balance of trade receivables:
As at
31
Decemb
er
2023 20
22
Group Company Group Company
Customer A 163 - 241 -
SIVOTA PLC
NOTES TO THE FINANCIAL STATEMENTS
U.S. dollars in thousands
Note 17 - Other receivables
As at 31 December
2023 20
22
Group Company Group Company
Government authorities 157 9 263 5
Prepaid expenses 49 24 65 24
Subsidiaries - 78 - 23
Security deposits 43 - 53
Other - - 18 -
Total 249 111 399 52
Note 18 - Share capital
a. Composition of share capital:
Issued and outstanding number of shares
Class of shares
Ordinary shares of £0.01 par value 12,585,000
Deferred shares of £0.01 par value 4,950,000
- The company has no authorised share capital limit.
- All shares are fully paid.
- The deferred shares carry no voting rights, no rights to dividends
and on a return of capital are only entitled to a return once a sum of
£1,000,000 has been paid on each ordinary share. The entire class of deferred
share can be acquired by the Company at any time for no consideration.
Note 19 - Share-based compensation by subsidiary
a. As at the reporting date the Company does not have a share incentive
plan and has not granted any options.
b. Share-based compensation by subsidiary
Under Apester's 2015 Global Share Incentive Plan (the "Plan"), Apester may
grant options to its own shares to directors, employees and consultants of
Apester or its subsidiaries. Each option granted under the Plan is exercisable
to Apester's shares until the earlier of ten years from the date of the grant
of the option or the expiration date of the Plan. The options vest primarily
over four years. Any options, which are forfeited before expiration, become
available for future grants.
SIVOTA PLC
NOTES TO THE FINANCIAL STATEMENTS
U.S. dollars in thousands
The movements in Apester's share options are as follows:
Weighted average exercise price
Number of options
U.S. dollars
Apester's share options outstanding at the date of the Acquisition on 12 May
2022
2,742,116 0.34
The changes in the period from 12 May 2022 to 31 December 2022:
Share options exercised (1) (1,656,537) 0.01
Share options forfeited (590,499) 0.34
Share options granted (3) 1,395,091 0.80
Apester's share options outstanding as at 31 December 2022 1,890,171 0.84
The changes in 2023:
Share options exercised (2) (23,950) 0.23
Share options forfeited (2,169,520) 0.83
Share options granted (4) 2,945,241 0.80
Apester's share options outstanding as at 31 December 2023 2,641,942 0.80
Apester's share options exercisable as at 31 December 2023 625,538 0.81
The weighted average remaining contractual life for the options outstanding as
of 31 December 2023 was 7.7 years.
(1) During the period from the Acquisition date to 31 December 2022 Apester
issued 1,656,537 ordinary shares upon the exercise of options by former
employees for the consideration of $15 thousand. As a result, the Company's
share in Apester share capital was reduced from 57.5% to 54.1%. The difference
of $413 thousand between the amount by which the non-controlling interests are
adjusted and the consideration paid was recognised directly in equity and
attributed to the owners of the Company.
(2) In 2023 Apester issued 23,950 ordinary shares upon the exercise of
options by former employees for the consideration of $6 thousand. As a result,
the Company's share in Apester share capital was reduced from 54.1% to 53.9%.
The difference of $13 thousand between the amount by which the non-controlling
interests are adjusted and the consideration paid was recognised directly in
equity and attributed to the owners of the Company.
(3) In October 2022, Apester granted 1,395,091 options to its former CEO
exercisable to 1,395,091 its ordinary shares at an exercise price of $0.803
dollars. 174,386 options were to vest in 6 months from the grant date and
1,220,705 options were to vest over a period of 42 months in in equal
quarterly installments with each installment vesting at the end of the 3
months period thereafter. The options were exercisable for a period of up to
10 years. The total fair value of the options granted was $527 thousand at the
grant date, calculated using the Black-Scholes option pricing model.
SIVOTA PLC
NOTES TO THE FINANCIAL STATEMENTS
U.S. dollars in thousands
The following table specifies the inputs used for the fair value measurement
of the grant:
Exercised price in U.S dollars 0.803
Dividend
yield
0%
Expected volatility of the share price 56.91%
Risk- free interest rate
3.56%
Expected life if share option in yeas 4
Share price in U.S dollars
0.803
Following the resignation of the former CEO, the options were fully forfeited.
(4) In August 2023 Apester granted 1,395,091 options to its CEO exercisable
to 1,395,091 its ordinary shares at an exercise price of $0.803 dollars.
174,386 options will vest in 6 months from the grant date and 1,220,705
options will vest over a period of 42 months in in equal quarterly
installments with each installment vesting at the end of the 3 months period
thereafter. The options are exercisable for a period of up to 10 years. The
total fair value of the options granted was $179 thousand at the grant date,
calculated using the Black-Scholes option pricing model.
The following table specifies the inputs used for the fair value measurement
of the grant:
Exercised price in U.S dollars 0.803
Dividend yield
0%
Expected volatility of the share price 56.91%
Risk- free interest
rate 4.53%
Expected life if share option in yeas 10
Share price in U.S dollars
0.26
(5) In 2023 Apester granted 1,550,150 options to its employees exercisable
to 1,550,150 its ordinary shares at an exercise price of $0.803 dollars,
906,224 of which were forfeited during 2023 as a result of the resignation of
part of the employees. The remaining 643,926 options will vest over 4 years
when 160,982 options will vest in 12 months from the grant date and 482,944
options will vest over a period of 36 months in equal quarterly installments
with each installment vesting at the end of the 3 months period thereafter.
The options are exercisable for a period of up to 10 years. The total fair
value of the options granted was $82 thousand at the grant date, calculated
using the Black-Scholes option pricing model.
The following table specifies the inputs used for the fair value measurement
of the grant:
Exercised price in U.S dollars 0.803
Dividend
yield
0%
Expected volatility of the share price 56.91%
Risk- free interest rate
3.65%-4.57%
Expected life if share option in yeas 10
Share price in U.S dollars
0.23-0.31
SIVOTA PLC
NOTES TO THE FINANCIAL STATEMENTS
U.S. dollars in thousands
c. The share-based compensation costs recognised in the financial
statements for services received:
For the year ended
31 December
2023 2022
Group
Share-based compensation by subsidiary 44 273
The share-based compensation costs recognised against an increase in equity
attributable to non-controlling interests.
Note 20 - Trade payables
Balances of major vendors, which each account for 10% or more of the total
balance of trade payables:
As at 31 December
2023 20
22
Group Company Group Company
Vendor A 153 - 604 -
Vendor B 120 - 260 -
Vendor C 104 - 73 -
Non major balances 419 - 1,105 -
796 - 2,042 -
Note 21 - Other payables
As at 31 December
2023 20
22
Group Company Group Company
Employees and payroll accruals 340 - 676 36
Warrants 23 - 23 -
Accrued expenses and other liabilities 684 319 750 297
Total 1,047 319 1,449 333
SIVOTA PLC
NOTES TO THE FINANCIAL STATEMENTS
U.S. dollars in thousands
Note 22 - Financial instruments
a. Classification of financial assets and liabilities:
The financial assets and financial liabilities in the statement of financial
position are
classified by groups of financial instruments as follows:
Financial assets:
As at
31
Decemb
er
2023 20
22
Group Company Group Company
Financial assets measured at amortised cost:
Loan to subsidiary - 1,591 - 1,420
Trade receivables 1,084 - 2,467 -
Cash and cash equivalents 969 474 4,439 1,076
Total financial assets measured at amortised cost
2,053 2,065 6,906 2,496
Total current 2,053 1,224 6,909 1,076
Total non-current - 841 - 1,420
Financial liabilities:
As at
31
Decemb
er
2023 20
22
Group Company Group Company
Financial liabilities measured at amortised cost:
Trade payables 796 35 2,042 3
Other payables 1,024 319 1,426 247
Long term loan 1,556 - 1,394 -
Total financial liabilities measured at amortised cost
3,376 354 4,862 250
FVTPL - warrants (see note (c) below) 23 - 23 -
Total financial liabilities 3,399 354 4,885 250
Total current 2,570 354 3,491 250
Total non-current 829 - 1,394 -
SIVOTA PLC
NOTES TO THE FINANCIAL STATEMENTS
U.S. dollars in thousands
b. Financial risks factors
The Group's activities expose it to various financial risks.
Market risk - foreign exchange risk
A significant portion of the Group's revenues is received in USD. The Group
also has
revenues that are received in GBP, EURO and New Israeli Shekels ("NIS"). A
significant
portion of the Croup's expenses is paid in NIS and GBP. Therefore, the Group
is exposed
to fluctuations in the foreign exchange rates in USD against GBP, EURO and
NIS.
Credit risk
The Group usually extends 30-60-day term to its customers. The Group regularly
monitors
the credit extended to its customers and their general financial condition but
does not
require collateral as security for these receivables.
The Group always recognises lifetime expected credit losses (ECL) for trade
receivables.
The expected credit losses on these financial assets are estimated based on
the Group's
historical credit loss experience, adjusted for factors that are specific to
the debtors, general
economic conditions and an assessment of both the current as well as the
forecast direction
of conditions at the reporting date, including time value of money where
appropriate.
The Group considers the following as constituting an event of default for
internal credit risk
management purposes if information developed internally or obtained from
external
sources indicates that the debtor is unlikely to pay its creditors, including
the Group, in full
(without taking into account any collateral held by the Group).
Irrespective of the above analysis, the Group considers that default has
occurred when a
financial asset is more than 90 days past due unless the Group has reasonable
and
supportable information to demonstrate that a more lagging default criterion
is more
appropriate.
Given the payment history of the Company's customers, the ECL provision
amounted, if
any, to immaterial amounts.
The Group maintains cash and cash equivalents in various financial
institutions. These
financial institutions are located in the UK, Israel, and US.
SIVOTA PLC
NOTES TO THE FINANCIAL STATEMENTS
U.S. dollars in thousands
Liquidity risk
The table below summarises the maturity profile of the Group's financial
liabilities based on
contractual undiscounted payments (including interest payments):
As of 31 December 2023:
From one to three years
Less than one year
Group Company Group Company
Trade payables 796 35 - -
Other payables 1,024 319 - -
Warrants 23 - - -
Long term loan - - 1,955 -
Total financial liabilities 1,843 354 1,955 -
As of 31 December 2022:
From one to three years
Less than one year
Group Company Group Company
Trade payables 2,042 3 - -
Other payables 1,426 247 - -
Warrants 23 - - -
Long term loan - - 1,844 -
Total financial liabilities 3,491 250 1,844 -
c. Fair value
The carrying amounts of the Group's financial assets and liabilities
approximate their fair
value, except of warrants derivative financial liability that are measured in
fair value through
profit and loss category (FVTPL).
d. Sensitivity tests relating to changes in market factors
A change as at 31 December 2023 in the exchange rates of the following
currencies against
the U.S. Dollar, as indicated below would have affected the measurement of
financial
instruments denominated in a foreign currency and would have increased
(decreased)
profit or loss and equity by the amounts shown below (before tax). This
analysis is based
on foreign currency exchange rate that the Group considered to be reasonably
possible at
the end of the reporting period. The analysis assumes that all other
variables, in particular
interest rates, remain constant and ignores any impact of forecasted sales and
purchases.
SIVOTA PLC
NOTES TO THE FINANCIAL STATEMENTS
U.S. dollars in thousands
As at
31 December 2023
Group Company
Sensitivity test to changes in GBP to Dollar exchange rate:
Gain (loss) from the change:
Increase of 10% in exchange rate (43) (24)
Decrease of 10% in exchange rate 43 24
Sensitivity test to changes in Euro to Dollar exchange rate:
Gain (loss) from the change:
Increase of 10% in exchange rate (9) -
Decrease of 10% in exchange rate 9 -
Sensitivity test to changes in NIS to Dollar exchange rate:
Gain (loss) from the change:
Increase of 10% in exchange rate 43 -
Decrease of 10% in exchange rate (43) -
Note 23 - Balances and transactions with related parties
Details of directors' remuneration and key management personnel are disclosed
in Note 10 and 11.
The details of convertible loan from Apester's shareholder are disclosed in
Note 4(e).
For the year ended at 31 December
2023 2022
Convertible loan interest expenses 162 74
SIVOTA PLC
NOTES TO THE FINANCIAL STATEMENTS
U.S. dollars in thousands
Note 25 - Auditors remuneration
The Company auditors' remuneration for the reported period was as follows:
For the year ended
31 December
2023 2022
Audit fees 227 143
Non-audit fees for readmission reports - 64
Note 26 - Subsequent events
In January 2024, Sivota entered into a non-binding term sheet with a leading
online technology platform operating across the travel sector (the "Target").
Sivota intends to raise up to $3.2 million through the issue of new ordinary
shares in order to provide the Target with a convertible loan to fund its
working capital commitments for the short term. Pursuant to the term sheet,
Sivota also has the ability to acquire up to 51% of the share capital of the
Target for a consideration of $15 million, subject to the satisfaction of
certain conditions.
In March 2024 the Company and the additional Apester's shareholder, that lent
Apester convertible loans, signed an amendment to the convertible loan
agreements to defer the loan repayments by one year. For more information
see Note 4(d) and (f).
i (#_ftnref1)
https://www.wipo.int/edocs/pubdocs/en/wipo-pub-2000-2023-en-main-report-global-innovation-index-2023-16th-edition.pdf
(( ii (#_ftnref2) ))
https://www.ivc-online.com/LinkClick.aspx?fileticket=d0tSSB_wMH8%3d&portalid=0×tamp=1705398553249
iii (#_ftnref3)
https://www.grandviewresearch.com/industry-analysis/digital-content-creation-market-report#:~:text=Report%20Overview,13.5%25%20from%202023%20to%202030
(https://www.grandviewresearch.com/industry-analysis/digital-content-creation-market-report#:~:text=Report%20Overview,13.5%25%20from%202023%20to%202030)
.
iv (#_ftnref4)
https://www.statista.com/outlook/dmo/digital-advertising/worldwide#ad-spending
(https://www.statista.com/outlook/dmo/digital-advertising/worldwide#ad-spending)
v (#_ftnref5) https://www.iab.com/insights/2024-state-of-data-report/
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