TIDMMTMY
RNS Number : 5136A
Matomy Media Group Ltd
28 December 2017
For Immediate Release
THIS ANNOUNCEMENT, INCLUDING THE INFORMATION CONTAINED HEREIN,
IS RESTRICTED AND IS NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION
IN WHOLE OR IN PART, DIRECTLY OR INDIRECTLY, IN OR INTO THE UNITED
STATES OR ANY OTHER JURISDICTION WHERE TO DO SO WOULD CONSTITUTE A
VIOLATION OF THE RELEVANT LAWS OR REGULATIONS OF THAT JURISDICTION.
PLEASE SEE THE IMPORTANT NOTICES AT THE OF THIS ANNOUNCEMENT.
THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION. UPON THE
PUBLICATION OF THIS ANNOUNCEMENT, THIS INSIDE INFORMATION IS NOW
CONSIDERED TO BE IN THE PUBLIC DOMAIN.
Unless otherwise defined, the capitalised terms used in this
announcement shall be the same as defined in the circular to
shareholders giving notice of the EGM announced on 15 December 2017
and posted on Matomy's website.
Second and Third Option Exercise for Team Internet AG Shares
Financial update and segmental information
Update on proposed issuance of Bonds
Matomy Media Group Ltd. (LSE: MTMY, TASE: MTMY.TA, "Matomy" or
the "Company"), is pleased to announce that following the
announcement on 15 December 2017 of a proposed EGM and circular to
shareholders of the Company (the "Circular") to approve the
disapplication of preemption rights in connection with a possible
issue of convertible Bonds to finance the second Sale Exit Sale
option of shares in the Munich based company, Team Internet AG
("Team Internet"), which is the entity through which Matomy
conducts its domain monetisation activity, following continued
negotiation, Matomy has entered into an agreement with Rainmaker
Investments GmbH ("Rainmaker") relating to the exercise of the
Second and, in addition, the Third Sale Exit option. Rainmaker is
the minority shareholder in Team Internet and is a vehicle held by
the managing directors of Team Internet, and is therefore a related
party of Matomy. The agreement will result in the sale and transfer
of all of their remaining minority shareholding in Team Internet
(being 20% of the issued share capital of Team Internet in
aggregate) to Matomy or its designated affiliate and also sets out
clear guidelines for succession ensuring a smooth transition,
The agreement is based on the terms set out in the Team Internet
Framework Agreement, as outlined in paragraphs 14.5 and 15.1 of the
Additional Information section of Matomy's IPO prospectus, dated 9
July 2014, but with some amendments designed to provide assurance
and clarity on the sale of the full 100% of the shares in Team
Internet to Matomy and put in place an guidelines for the
transition and full transfer of control of Team Internet to
Matomy.
The key agreements are as follows:
-- In accordance with the calculation set out in the Team
Internet Framework Agreement, the total consideration for the
Second Sale Exit is EUR 18.2 Million, which is due in two
installments: (i) the first in the sum of EUR 10 Million to be paid
no later than 8 February 2018; and (ii) the second in sum of EUR
8.2 Million to be paid no later than 15 March 2018;
-- The consideration for the Third Sale Exit is due no later
than 30 November 2018 according to the formula set out in the Team
Internet Framework Agreement, except that in a deviation from the
Team Internet Framework Agreement, for the purposes of calculating
the Third Sale Exit option, Team Internet's EBITDA will include a
10% premium;
-- The parties also agreed on a full dividend distribution to
the shareholders in Team Internet of all undistributed eligible
profits for FY 2016 (including undistributed retained earnings) of
approximately EUR 5M to support payment of the aggregate
consideration for Second Sale Exit;
-- As from 31 March 2018, Matomy or a nominee of Matomy shall
hold the chair of Team Internet's supervisory board in place of
Rainmaker;
-- In a deviation from the Team Internet Framework Agreement,
Rainmaker will be entitled to an additional consideration of 8% of
the net earnings of Team Internet during the period beginning on 1
September 2018 and ending on 31 December 2018 and in the subsequent
financial year beginning on 1 January and ending on 31 December
2019. In addition, a one-off bonus of US$1M will be paid to
Rainmaker for the extension of the cooperation between the Team
Internet and its unrelated search engine provider beyond 31 July
2019, with a view to ensure their continued and ongoing support and
interest in Team Internet.
Matomy intends to use the sums received from the full
distribution of all undistributed eligible profits in Team Internet
together with net proceeds to be received following the issuance of
the Bonds, if and when completed, to finance the Second Sale
Exit.
Sagi Niri, Matomy's CEO said: "We are delighted to reach this
agreement for the full acquisition of Team Internet. Team Internet
is a market leader in its space and one of our core assets. I am
confident that Team Internet will continue to grow in revenues and
profits, constituting a core part of Matomy's overall growth
strategy."
Financial update and segmental information
As of January 1, 2018, Matomy intends to report its financial
results on a quarterly basis with a focus on its core assets, Team
Internet and Mobfox. In advance of this change, Matomy wishes to
provide further financial information on these business units,
elaborating on the consolidated financial data for the period
ending on June 30, 2017 providing a summary of selected financial
data, please refer to Exhibit I of this announcement. Furthermore,
a copy of the review letter provided by our independent auditors in
connection with the financial review of the Interim results for the
period ending on June 30, 2017 is attached to this
announcement.
Other developments and financial updates are as follows:
-- Increased business opportunities in Team Internet, including large publishers.
-- Mobfox completes integration with Factual, the neutral data
company making location data accessible to everyone. By
implementing Factual's Geopulse Audience targeting capabilities,
MobFox is able to provide DSP partners with advanced mobile
targeting using location-based data ensuring effective audience
targeting for mobile advertisers and publishers.
-- Proposed sale of Matomy's minority equity interest in Adperio
Inc. to an unrelated third party for a total consideration of
approximately US$2M.
-- The Company is in the process of performing internal analysis
and based on indicative testing and internal unaudited results as
of December 2017, the Company currently expects an accretion of
redeemable non-controlling interest of approximately $10M for the
period from 1 July 2017 to 31 December 2017. This amount is
attributable to the "redeemable non-controlling interest", and is
recorded in the Company's financial statements under the mezzanine
equity provision, which is separate from permanent equity, on the
consolidated balance sheets and measured at each reporting period
at the higher of their redemption amount (the value of the purchase
price) or the non-controlling interest book value.
-- The Company is in the process of performing internal analysis
and based on indicative unaudited impairment testing as of December
2017, using the assumptions below and the estimated annual results
of 2017, the Company expects to record an estimate impairment
charge with respect to its goodwill and intangible assets of
approximately $15 million in the second half 2017. The projected
impairment charge is preliminary and could change after the
finalization and approval of the 2017 results and the Company's
cash flow projections.
The Company used the following assumptions in its preliminary
analysis:
Reporting Domain Monetization Mobile Non-core
Unit*
---------------- -------------------- ------- ---------
Terminal
growth rate 3% 3% 3%
---------------- -------------------- ------- ---------
Discount
rate (post
tax) - (WACC) 15% 15% 15%
---------------- -------------------- ------- ---------
*For goodwill impairment test, the Company utilizes cash flow
projections for a five-year period based on management forecasts,
with a terminal value which represents the value of the reporting
unit beyond the five-year projection period.
Discount rates used consider the Company's estimated weighted
average cost of capital associated with cash flow projections to
approximate the weighted average cost of capital of a comparable
market participant. Due to the above factors, actual cash flows and
values could vary from forecasted future cash flows and related
values derived using discounting techniques.
Update on proposed issuance of Bonds
Matomy currently expects to publish the Bond Offering Documents
in respect to of the issuance of Bonds, of up to US$25 million,
during January 2018 and to complete the Bond offering in February
2018.
AS PREVIOUSLY STATED, THE NEGOTIATIONS RELATING TO THE TERMS OF
THE CONTEMPLATED ISSUANCE OF BONDS ARE STILL NOT FINALIZED AND
THERE IS NO CERTAINTY THAT THE ISSUANCE OF THE BONDS WILL BE
INITIATED AT ALL OR CONSUMMATED. FURTHERMORE THE AMOUNT TO BE
RAISED AND THE DEFINITIVE TERMS OF THE BOND ISSUANCE REFERRED TO
HEREIN WILL BE ONLY THOSE DESCRIBED IN THE FINAL VERSION OF THE
BOND OFFERING DOCUMENTS. FURTHERMORE, THE AFORESAID IS NOT AN OFFER
OR INVITATION OR SOLICITATION OF ANY OFFER TO PURCHASE OR SUBSCRIBE
FOR PURCHASE OF THE BONDS IN ANY JURISDICTION. FULL DETAILS
REGARDING THE CONTEMPLATED ISSUANCE OF THE BONDS WILL BE INCLUDED
IN THE BOND OFFERING DOCUMENTS.
This announcement and the information contained in it is
restricted and is not for publication, release or distribution, in
whole or in part, directly or indirectly, in, into or from the
United States, Australia, Canada, South Africa or Japan or any
other state or jurisdiction in which publication, release or
distribution would be unlawful, restricted or unauthorised (each a
"Restricted Territory"). This announcement is for information
purposes only and does not constitute an offer to sell or issue, or
the solicitation of an offer to buy, acquire or subscribe for the
Bonds in any Restricted Territory or any other state or
jurisdiction in which such offer or solicitation is not authorised
or to any person to whom it is unlawful to make such offer or
solicitation. Any failure to comply with these restrictions may
constitute a violation of the securities laws of such
jurisdictions. Subject to certain exemptions, the securities
referred to in this announcement may not be offered or sold in any
Restricted Territory or for the account or benefit of any national
resident or citizen of any Restricted Territory. The Bonds have not
been and will not be registered under the United States Securities
Act of 1933, as amended (the "Securities Act"), or with any
securities regulatory authority of any state or other jurisdiction
of the United States and may not be offered, sold, taken up,
resold, transferred or delivered, directly or indirectly, in, into
or within the United States.
The Bonds, may be offered and sold only in Israel pursuant to a
prospectus, once the publication thereof has been approved by the
Israel Securities Authority ("ISA") and subject to Tel Aviv Stock
Exchange ("TASE") approval of the registration of the Bonds for
trade. This announcement is for information purposes only and does
not constitute an offer to sell or issue, or the solicitation of an
offer to buy, acquire or subscribe for the Bonds in Israel, or any
other jurisdiction.
No offering of the Bonds referred to in this announcement will
be made in the United States, the European Economic Area, any
Restricted Territory or elsewhere outside Israel.
The Bonds have not been and will not be approved or disapproved
by the US Securities and Exchange Commission, any state securities
commission or any other regulatory authority in the United States
or elsewhere other than in Israel, nor have any of the foregoing
authorities passed upon or endorsed the merits of the Bonds or the
accuracy or adequacy of this announcement. Any representation to
the contrary is unlawful.
This announcement includes forward-looking statements, which
include all statements other than statements of historic facts,
including, without limitation, those regarding Matomy's and/or its
subsidiaries' (the "Group") financial position, business strategy,
plans and objectives of management for future operations, or any
statements preceded by, followed by or that include the words
"targets", "believes", "expects", "aims", "intends", "will", "may",
"anticipates", "would", "could" or similar expressions or negatives
thereof. Such forward-looking statements involve known and unknown
risks, uncertainties and other important factors beyond the Group's
control that could cause the actual results, performance or
achievements of the Group to be materially different from future
results, performance or achievements expressed or implied by such
forward-looking statements. Such forward-looking statements are
based on numerous assumptions regarding the Group's present and
future business strategies and the environment in which the Group
will operate in the future. These forward-looking statements speak
only as at the date of this announcement. The Company, its
directors and its or their advisers expressly disclaim any
obligation or undertaking to disseminate any updates or revisions
to any forward-looking statements contained herein to reflect any
change in the Group's expectations with regard thereto or any
change in events, conditions or circumstances on which any such
statements are based unless required to do so by applicable law or
the Rules of the High Growth Segment.
Neither the content of the Company's website nor any website
accessible by hyperlinks on the Company's website is incorporated
in, or forms part of, this announcement.
http://www.rns-pdf.londonstockexchange.com/rns/5136A_-2017-12-28.pdf
Exhibit I
Selected Mobile Financial Data (U.S. dollars in thousands)
Mobfox selected
financial data
----------------- -------- -------- -------- -------- --------
H1 2017 H2 2016 H1 2016 H2 2015 H1 2015
----------------- -------- -------- -------- -------- --------
Revenue 25,030 27,833 14,308 12,879 5,029
----------------- -------- -------- -------- -------- --------
Adjusted gross
profit 6,804 7,193 3,259 2,832 991
----------------- -------- -------- -------- -------- --------
Adjusted gross
margin 27.2% 25.8% 22.8% 22.0% 19.7%
----------------- -------- -------- -------- -------- --------
Adjusted EBITDA 1,638 2,587 (567) 589 160
----------------- -------- -------- -------- -------- --------
Selected Financial Data for Team Internet
Summary Team Internet financial Data (U.S. dollars in
thousands)
Six months Year
period ended
ended December
June 30, 31,
2017
2016
ASSETS
CURRENT ASSETS:
Cash and cash equivalents 12,408 5,048
Trade receivables 9,147 6,068
Domains - 9,965
Other receivables
and prepaid expenses 1,073 1,288
Total current assets 22,628 22,369
LONG-TERM ASSETS:
Property and equipment,
net 592 590
Other long-term assets 65 36
Domains 10,931 -
Investment in affiliated
companies 1,883 1,887
Other intangible assets,
net 1,770 2,281
Total long-term assets 15,241 4,794
Total assets 37,869 27,163
CURRENT LIABILITIES:
Short-term bank credit
and current maturities
of bank loan 909 840
Trade payables 8,732 5,492
Accrued expenses and
other liabilities 5,105 2,669
Total current liabilities 14,746 9,001
LONG-TERM LIABILITIES:
Deferred tax liability 277 275
Accrued expenses and
other liabilities 661 288
Bank loan 2,476 2,707
Total long-term liabilities 3,414 3,270
SHAREHOLDERS EQUITY 19,709 14,892
Total liabilities
and equity 37,869 27,163
Revenues 51,674 63,306
Adjusted gross profit 15,216 19,319
EBITDA 11,633 14,115
Net Profit 6,832 8,407
Team Internet liquidity and cash flows:
Six months Year ended
period December
ended 31,
June 30,
2017
2016
Cash flows from
operating activities:
Net income 6,832 8,407
Increase in domains
held for sale - (4,151)
Other adjustments
to reconcile net
income to net cash
provided by operating
activities 4,138 (396)
Net cash provided
by (used in) operating
activities 10,970 3,860
Cash flows from
investing activities:
Purchase of property
and equipment (5) (425)
Capitalization of
research and development
costs (246) (547)
Sale of Domains 114
-
Purchase of domains (1,002)
-
Net cash used in
investing activities (1,139) (972)
Cash flows from
financing activities:
Receipt of bank
loans - 3,021
Repayment of bank
loans (455) (513)
Dividend paid (2,016) (5,702)
Net cash provided
by (used in) financing
activities (2,471) (3,194)
Increase (decrease)
in cash and cash
equivalents 7,360 (306)
Cash and cash equivalents
at beginning of
period 5,048 5,354
Cash and cash equivalents
at end of period 12,408 5,048
Team Internet
- P&L information
-------------------- ---------- ---------
6 months period 12 months period
ended ended
-------------------- --------------------- --------------------
December December
31, 31,
June June 30,
30, 2017 2016 2016 2015
-------------------- ---------- --------- --------- ---------
Revenue 51,673 30,636 63,280 54,265
-------------------- ---------- --------- --------- ---------
Change
% 68.6% 20.3% 16.6% 23.1%
-------------------- ---------- --------- --------- ---------
Adjusted
gross profit 15,215 9,502 19,296 14,700
-------------------- ---------- --------- --------- ---------
Adjusted
gross margin 29.4% 31.0% 30.5% 27.1%
-------------------- ---------- --------- --------- ---------
EBITDA 11,539 7,149 14,162 10,293
-------------------- ---------- --------- --------- ---------
% of Income 22.3% 23.3% 22.4% 19.0%
-------------------- ---------- --------- --------- ---------
Net profit
(GAAP) 6,832 4,155 8,407 6,344
-------------------- ---------- --------- --------- ---------
This information is provided by RNS
The company news service from the London Stock Exchange
END
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