The following information is being disclosed pursuant to AIM Rule 26

Business Description

Taptica International Ltd (AIM: TAP) offers data-focused marketing solutions that drive execution and powerful brand insight in mobile, leveraging video, native, and display to reach the most valuable users for every app, service, and brand. Our proprietary technology is based on artificial intelligence and machine learning at big data scale, which enables data-driven mobile targeting and user acquisition, resulting in maximum ROI. We work with more than 450 advertisers including Amazon, Disney, Facebook, Twitter, OpenTable, Expedia, and Zynga, and more than 50,000 supply and publishing partners worldwide.

Taptica was incorporated (as ‘Marimedia Ltd’) in Israel in 2007 and adopted the name Taptica International Ltd in 2015. It is headquartered in Tel Aviv, Israel and its operations are global in nature, with significant revenues received from 40 countries. Currently, the business has approximately 100 employees.

Corporate Governance

Chairman’s Introduction

The Directors of Taptica International Ltd recognise the importance of high standards of corporate governance and have chosen to adopt the Quoted Companies Alliance Corporate Governance Code (the “QCA Code”), in line with the London Stock Exchange’s recent changes to the AIM Rules requiring all AIM-listed companies to adopt and comply with a recognised corporate governance code, as the basis of the company’s governance framework.

The Board believes that good corporate governance reduces risks within the business, promotes confidence and trust amongst its stakeholders and is an important part of the effectiveness and efficiency of the company’s management framework. As Chairman, I take seriously the responsibility of monitoring the performance of the Board, its committees and that of the individual directors, while providing overall leadership to the Board and acting as a liaison between the Board and senior management as well as representing the interests of shareholders. This is particularly important as we continue to rapidly expand our operations and implement our strategy to maintain a leadership position in the fast-changing ad-tech industry.

The QCA Code includes ten broad principles that Taptica strives to implement in order to deliver growth to its shareholders in the medium and long-term. The table below references how the Board complies with the principles of the QCA Code at this point in time. Further updates on the company’s compliance will be provided on an annual basis and in our next annual report. The QCA Code can be found on the QCA’s website: www.theqca.com.

Tim Weller, Non-executive Chairman

This disclosure was last reviewed and updated on 27 September 2018

DELIVER GROWTH

QCA Code PrincipleQCA Code ExplanationTaptica Application
1. Establish a strategy and business model which promote long-term value for shareholdersThe board must be able to express a shared view of the company’s purpose, business model and strategy. It should go beyond the simple description of products and corporate structures and set out how the company intends to deliver shareholder value in the medium to long-term. It should demonstrate that the delivery of long-term growth is underpinned by a clear set of values aimed at protecting the company from unnecessary risk and securing its long-term future.Taptica has reiterated its strategy in its announcements and presentations to investors, particularly at the time of its financial results, which is to grow the business via geographic expansion, particularly in the Asia-Pacific region, and via acquisition of complementary technologies or to gain a presence in new markets. The company is also focused on the continual improvement of its technology to increase efficiency and implementing operational efficiencies in its acquired units to enable profitable growth.

The key challenges to the business and how these are mitigated is detailed on pages 18 and 19 of the company’s Annual Report and Accounts for the year ended 31 December 2017, with further explanation of potential industry threats contained in a Q&A published in May 2018.

Taptica also provided investors with an in-depth review of its strategy and how it manages risks at its Capital Markets Day, held in London in June 2018.

2. Seek to understand and meet shareholder needs and expectationsDirectors must develop a good understanding of the needs and expectations of all elements of the company’s shareholder base.

The board must manage shareholders’ expectations and should seek to understand the motivations behind shareholder voting decisions.

Taptica encourages participation of both institutional and private investors, and responds quickly to all queries received. The company provides the contact details for its IR advisers and CFO under ‘IR Contact’ on its website. Taptica also engages with investors via its brokers.

The CFO, Yaniv Carmi, meets regularly with institutional investors, usually in regard to the issuance of financial results, and endeavour to accommodate all meeting requests from investors.

The Board recognises the AGM as an important opportunity to meet private shareholders. The Directors – Non-executive and Executive – are also available to listen to the views of shareholders informally immediately following the AGM.

Three out of Taptica’s four Non-executive Directors are UK-based and available to meet with shareholders as requested. This includes the Chairman, who meets regularly with shareholders (independent of management) and seeks to understand voting decisions/intentions where appropriate. The Chairman either directly or indirectly through Taptica’s brokers regularly solicits feedback from its investors. The Chairman also receives questions from shareholders and looks to address them in a timely manner.

Regular reports are provided to the Board on meetings with shareholders and any concerns are communicated.

Taptica also seeks to meet the needs of shareholders on an ad hoc basis where necessary, such as with the recent publication of a detailed Q&A document to address common queries/concerns that were being raised by individual shareholders. Members of the management team also conduct interviews with Proactive Investors and seek to address any matters that have been commonly raised by shareholders.

Taptica maintains a consistent dividend policy of distributing 25% of net profit to shareholders.

3. Take into account wider stakeholder and social responsibilities and their implications for long-term successLong-term success relies upon good relations with a range of different stakeholder groups both internal (workforce) and external (suppliers, customers, regulators and others). The board needs to identify the company’s stakeholders and understand their needs, interests and expectations.

Where matters that relate to the company’s impact on society, the communities within which it operates or the environment have the potential to affect the company’s ability to deliver shareholder value over the medium to long-term, then those matters must be integrated into the company’s strategy and business model.

Feedback is an essential part of all control mechanisms. Systems need to be in place to solicit, consider and act on feedback from all stakeholder groups.

The Taptica management team encourages employees to share their feedback, ideas and thoughts by promoting a transparent organisational culture and an “open door” policy. Employees share their feedback with their managers on a regular basis one-on-one. Those participating in the leadership programs are asked to share in group discussion their thoughts and feelings, and any feedback they might have in regard to management, culture and the company’s actions. The company also recently introduced internal surveys to garner employee feedback and satisfaction and to receive suggestions. The company shares its list of core values with all employees, which are the foundation of its culture: “everything is possible” (referring to endless and equal opportunities for personal and professional growth) and “work hard – play hard” (which refers to the importance of diligence and collaboration).

Staff retention rate is a key consideration and is a factor in determining the bonus payment of the Executive Directors. Retention is also a matter reported on to the Board. Each year, at least one Board meeting is held at the company’s headquarters in Israel, and the Non-executive Directors will interact with the employees and present to them.

The company communicates and builds a relationship with external stakeholders via its marketing efforts, including social media, events, PR, direct marketing, online advertising and more. The company offers to meet with stakeholders at regular events globally, and also sometimes directly contacts investors to offer meetings.

Taptica has a ‘People & Culture’ program, which includes providing employees with opportunities for volunteering in the community – with a particular focus on education, such as tutoring youth at risk and collaborating with schools that care for underprivileged children. Taptica also regularly donates to voluntary associations.

4. Embed effective risk management, considering both opportunities and threats, throughout the organizationThe board needs to ensure that the company’s risk management framework identifies and addresses all relevant risks in order to execute and deliver strategy; companies need to consider their extended business, including the company’s supply chain, from key suppliers to end-customer.

Setting strategy includes determining the extent of exposure to the identified risks that the company is able to bear and willing to take (risk tolerance and risk appetite).

Taptica’s Annual Report 2017 details risks to the business and how these are mitigated on pages 18-19 and its internal control measures on page 15.

Both the Executive Directors and senior managers are responsible for reviewing and evaluating risk on an ongoing basis and the Board considers risks to the business at every Board meeting. The Board also allocates certain meetings to have a more in-depth review of strategy and risk, such as in the June 2018 meeting where Mr Tal Mor, the Chief Technology Officer, provided a detailed presentation for Board members on the state of ad-tech industry and the actions the company takes to address the risks of operating in a constantly evolving industry.

The Audit Committee of the Board consults with external advisers as/when needed to support execution on strategy and risk mitigation, such as holding executive sessions with KPMG to discuss the audit process and the manner in which the company’s finance team is expanding to address the significant international growth of the business.

MAINTAIN A DYNAMIC MANAGEMENT FRAMEWORK

QCA Code PrincipleQCA Code ExplanationTaptica Application
5. Maintain the board as a well-functioning, balanced team led by the chairThe board members have a collective responsibility and legal obligation to promote the interests of the company, and are collectively responsible for defining corporate governance arrangements. Ultimate responsibility for the quality of, and approach to, corporate governance lies with the chair of the board.

The board (and any committees) should be provided with high quality information in a timely manner to facilitate proper assessment of the matters requiring a decision or insight.

The board should have an appropriate balance between executive and non-executive directors and should have at least two independent non-executive directors. Independence is a board judgement.

The board should be supported by committees (e.g. audit, remuneration, nomination) that have the necessary skills and knowledge to discharge their duties and responsibilities effectively.

Directors must commit the time necessary to fulfill their roles.

The composition, roles and responsibilities of the Board and its committees are set out on pages 12-14 of the Annual Report 2017. The number of meetings of the Board and the committees are also detailed.

High level and in-depth analytic materials, including the minutes from the prior meeting, are sent in a timely manner ahead of each committee or Board meeting allowing the Board members adequate time to review the materials. After each meeting, the minutes are sent to the chair for review and approval. All directors have direct access to the advice and services of the Company Secretary and are able to take independent professional advice in the furtherance of the duties, if necessary, at the company’s expense.

The composition of the Board is outlined on pages 10-11 of the Annual Report 2017. The Board considers all of the Non-executive Directors to be independent.

The time devoted by directors to their duties varies depending on the activities of the company. In 2017, the company held 11 meetings plus numerous phone calls. Each year, the Board holds at least one 3-day meeting to review strategy and interact with senior managers. The Executive Directors work full-time for Taptica. The Non-executive Chairman spends a minimum of three to four days per month on Taptica business. This primarily via in-person meetings or phone calls with management, brokers and shareholders. The other Non-executive Directors spend a minimum of two days per month on their duties, primarily through formal face-to-face meetings and phone calls with management and other Board members.

6. Ensure that between them the directors have the necessary up-to-date experience, skills and capabilitiesThe board must have an appropriate balance of sector, financial and public markets skills and experience, as well as an appropriate balance of personal qualities and capabilities. The board should understand and challenge its own diversity, including gender balance, as part of its composition.

The board should not be dominated by one person or a group of people. Strong personal bonds can be important but can also divide a board.

As companies evolve, the mix of skills and experience required on the board will change, and board composition will need to evolve to reflect this change.

The composition of the Board and the credentials of the individual directors are outlined on pages 10-11 of the Annual Report and Accounts 2017. All of the directors remain active in the media and marketing industry – working for public and private companies – which ensures that their skillsets remain up-to-date.

The Nomination Committee of the Board oversees the process and makes recommendations to the Board on new Board appointments as well as re-election of existing directors. Where new Board appointments are considered the search for candidates is conducted, and appointments are made, on merit, against objective criteria and with due regard for the benefits of diversity on the Board, including gender. The Nomination Committee also considers succession planning.

7. Evaluate board performance based on clear and relevant objectives, seeking continuous improvementThe board should regularly review the effectiveness of its performance as a unit, as well as that of its committees and the individual directors.

The board performance review may be carried out internally or, ideally, externally facilitated from time to time. The review should identify development or mentoring needs of individual directors or the wider senior management team.

It is healthy for membership of the board to be periodically refreshed. Succession planning is a vital task for boards. No member of the board should become indispensable.

The Board currently runs a self-evaluation process on Board effectiveness, and encourages open and transparent communication.

All directors are subject to re-election by the shareholders each year (excluding the External Non-executive Directors, which are subject to re-election every three years, in accordance with Israeli law).

The Executive Directors are subject to an annual performance review with they are measured against pre-set criteria.

The Board is constantly looking at ensuring the executive management of the company evolves. The company conducts a leadership program to ensure talent can be promoted within the business. If there are skill gaps, we look to fill those externally. At present, the directors are confident there is sufficient talent within the company to be able to appoint new leadership from within.

The directors – Executive and Non-executive – are, however, required to give three months’ notice under their employment contracts if they wish to leave the company.

8. Promote a corporate culture that is based on ethical values and behavioursThe board should embody and promote a corporate culture that is based on sound ethical values and behaviours and use it as an asset and a source of competitive advantage.

The policy set by the board should be visible in the actions and decisions of the chief executive and the rest of the management team. Corporate values should guide the objectives and strategy of the company.

The culture should be visible in every aspect of the business, including recruitment, nominations, training and engagement. The performance and reward system should endorse the desired ethical behaviours across all levels of the company.

The corporate culture should be recognisable throughout the disclosures in the annual report, website and any other statements issued by the company.

Taptica’s ‘People & Culture’ program is designed to preserve the culture of the company. It includes “lecture of the month” to present different private and public social initiatives that aim to encourage employee volunteering and social awareness. Taptica also offers volunteering opportunities directly to employees.

The company has a ‘Leadership Program’ that is designed to facilitate career progression while promoting leadership based on Taptica’s core values and ethical behaviour. Similarly, the company’s recruiting efforts and methods are based on the notion of being the culture’s gate keepers: aiming to recruit people who are a cultural fit and share a common ground of ethical values and behaviours.

The company’s senior management team observes the culture of the company in operation at the local business units (throughout its geographies) through visits and maintaining company culture is a matter discussed by the Board. The Board also maintains regular dialogue with company management outside of the Executive Directors to monitor the disposition of the broader employee-base and ensure the continuation of a healthy, growth-oriented culture.

9. Maintain governance structures and processes that are fit for purpose and support good decision-making by the boardThe company should maintain governance structures and processes in line with its corporate culture and appropriate to its:

  • size and complexity; and
  • capacity, appetite and tolerance for risk.

The governance structures should evolve over time in parallel with its objectives, strategy and business model to reflect the development of the company.

The Corporate Governance Statement on pages 12-15 of the Annual Report and Accounts 2017 details the corporate governance structures and processes for the company.

BUILD TRUST

QCA Code PrincipleQCA Code ExplanationTaptica Application
10. Communicate how the company is governed and is performing by maintaining a dialogue with shareholders and other relevant stakeholdersA healthy dialogue should exist between the board and all of its stakeholders, including shareholders, to enable all interested parties to come to informed decisions about the company.

In particular, appropriate communication and reporting structures should exist between the board and all constituent parts of its shareholder base. This will assist:

  • the communication of shareholders’ views to the board; and
  • the shareholders’ understanding of the unique circumstances and constraints faced by the company.

It should be clear where these communication practices are described (annual report or website).

The CFO, Yaniv Carmi, meets regularly with institutional investors, usually in regards to the issuance of financial results.

The Chairman meets regularly with shareholders (independent of management) and either directly or indirectly through Taptica’s brokers regularly solicits feedback from its investors.

The Board recognizes the AGM as an important opportunity to meet private shareholders. The Directors – Non-executive and Executive – are also available to listen to the views of shareholders informally immediately following the AGM.

Taptica also seeks to meet the needs of shareholders on an ad hoc basis where necessary, such as with the recent publication of a detailed Q&A document to address common queries/concerns that were being raised by individual shareholders.

Taptica describes it communication practices in its annual report under ‘Relationship with Shareholders’ (page 15 of the Annual Report and Accounts 2017).

The company communicates and builds a relationship with external stakeholders via its marketing efforts, including social media, events, PR, direct marketing, online advertising and more. As noted above, Taptica Board and management have established practices for communicating with employees and for receiving their feedback.

Board Committees

Audit Committee

The Audit Committee is comprised of Neil Jones, Joanna Parnell and Ronni Zehavi and chaired by Neil Jones. The Audit Committee is expected to meet at least four times a year and otherwise as required. It has responsibility for ensuring that the financial performance of the Company is properly reported on and reviewed, and its role includes monitoring the integrity of the financial statements of the Company (including annual and interim accounts and results announcements), reviewing internal control and risk management systems, reviewing any changes to accounting policies, reviewing and monitoring the extent of the non-audit services undertaken by external auditors and advising on the appointment of external auditors. In addition, under the Companies Law, the Audit Committee is required to monitor deficiencies in the administration of the Company, including by consulting with the internal auditor and independent accountants, to review, classify and approve related party transactions and extraordinary transactions, to review the internal auditor’s audit plan and to establish and monitor whistle-blower procedures. The Audit Committee has unrestricted access to the Company’s external auditors.

Remuneration Committee

The Remuneration Committee is comprised of Neil Jones, Joanna Parnell and Ronni Zehavi and chaired by Joanna Parnell. It is expected to meet not less than twice a year and at such other times as required. The Remuneration Committee has responsibility for determining, within the agreed terms of reference, the Company’s policy on the remuneration packages of the Company’s chief executive, the chairman, the executive and non-executive directors, the Company secretary and other senior executives. The Remuneration Committee also has responsibility for: (i) recommending to the Board a compensation policy for directors and executives and monitoring its implementation; (ii) approving and recommending to the Board and the Company’s shareholders, the total individual remuneration package of the chairman, each executive and non-executive director and the chief executive officer (including bonuses, incentive payments and share options or other share awards); and (iii) approving and recommending to the Board the total individual remuneration package of the Company secretary and all other senior executives (including bonuses, incentive payments and share options or other share awards), in each case within the terms of the Company’s remuneration policy and in consultation with the chairman of the Board and/or the chief executive officer. No Director or manager may be involved in any discussions as to their own remuneration.

Nomination Committee

The Nomination Committee is comprised of Neil Jones and Joanna Parnell and chaired by Ronni Zehavi. It is expected to meet not less than once a year and at such other times as required. The Nomination Committee has responsibility for reviewing the structure, size and composition (including the skills, knowledge and experience) of the Board and giving full consideration to succession planning. The Nomination Committee also has responsibility for recommending new appointments to the Board and to the other Board committees. It is responsible for identifying suitable candidates for board membership and monitor the performance and suitability of the current Board on an on-going basis.

Takeover Regulations

Taptica is not subject to the UK City Code on Takeovers and Mergers (the “City Code”) because its registered office and its place of central management and control are outside the UK, the Channel Islands and the Isle of Man. As a result, certain of the protections that are afforded to shareholders under the City Code, for example in relation to a takeover of a company or certain stakebuilding activities by shareholders, do not apply to Marimedia. However, the Company’s articles of association contain certain provisions in relation to major acquisitions of shares. In addition, the Company is subject to Israeli law, which regulates acquisitions of shares through tender offers and mergers and regulates other matters that may be relevant to these types of transactions. Further information is contained in paragraph 17 of Part IV of the Company’s admission document.

Israeli Law

Taptica is incorporated under Israeli law. The rights and responsibilities of holders of Ordinary Shares are governed by the Articles and by Israeli law. These rights and responsibilities differ in some respects from the rights and responsibilities of shareholders in typical English incorporated companies.

In particular, a shareholder of an Israeli company has a duty to act in good faith toward the company and other shareholders and to refrain from abusing his power in the company, including, among other things, in voting at a general meeting of shareholders on certain matters. Israeli law provides that these duties are applicable in shareholder votes on, among other things, amendments to a company’s articles of association, increases in a company’s authorised share capital, mergers and interested party transactions requiring shareholder approval. In addition, a controlling shareholder, a shareholder who knows that it possesses the power to determine the outcome of a shareholder vote, and a shareholder that possesses the power to appoint or prevent the appointment of a director or executive officer of a company, has a general duty of fairness toward the company.

Further, the Companies Law requires Israeli public companies to have at least two Outside Directors who shall be appointed for a term of three years (which can be extended for two additional three year terms) and can be removed from office (including by shareholder vote) only under very limited circumstances. See paragraph 19.4 of Part I of the Company’s Admission Document for further information.

Country of Incorporation and Main Country of Operation

Taptica is incorporated under the laws of the State of Israel, and its principal offices and research and development facilities are located in Israel. Registered Office: Hashmonaim, 121, Tel Aviv 6713328, Israel.

Current Constitutional Documents

Articles of Association

Number of Securities in Issue

Taptica International Ltd (formerly ‘Marimedia Ltd’) was admitted to the Alternative Investment Market (AIM) of the London Stock Exchange on 28 May 2014. The Company’s shares are not traded on any other stock exchange. Taptica’s issued share capital consists of  68,463,497. Ordinary Shares with a nominal value of NIS 0.01 each, along with 8,088,337 shares reclassified as dormant shares under the Israeli Companies Law (without any rights attached thereto). The total number of shares not in public hands is 18,399,116 representing 27% of the total issued share capital. There are no restrictions on the transfer of the company’s shares.

Major Shareholders

The total issued and outstanding number of shares is 68,463,497. The following hold 3% or more of the ordinary share capital of Taptica:

ShareholderNumber of Ordinary SharesPercentage of Issued Ordinary Share Capital
Schroder Investment Management 10,777,47815.7
Eitan Epstein and Shirley Dahan Trust on Behalf of MTD PTE Ltd.* 8,903,12513.0
Ibex Investors LLC 5,317,5007.8
River & Mercantile Asset Management 4,810,0007.0
Smart and Simple Ltd. 4,800,0097.0
GLG Partners LP 2,641,5383.9
Santander Asset Management UK 2,358,7773.4
Renta 4 Gestora 2,270,8833.3

Last update: 13 December 2018
*The shares are held in trust on behalf of Mr Hagai Tal. Mr Tal, through his direct and indirect holdings, is the beneficial owner of 9,501,259 ordinary shares representing 13.9% of the issued share capital of the Company.

Company Announcements

Advisers

Nominated Adviser and Joint Broker

finnCap Ltd
60 New Broad Street
London EC2M 1JJ

Joint Broker
Berenberg
60 Threadneedle Street
London EC2R 8HP


Legal Advisers as to English law

Charles Russell Speechlys LLP
5 Fleet Place
London EC4M 7RD

Legal Advisers as to Israeli law

Naschitz, Brandes, Amir & Co, Advocates
5 Tuval Street
Tel Aviv 6789717, Israel

Reporting Accountants and Auditors

KPMG Somekh Chaikin
KPMG Millennium Tower
17 Ha’arba’a Street
P.O.B. 609
Tel Aviv 61006, Israel

KPMG UK
15 Canada Square
Canary Wharf
London E14 5GL

Financial PR

Luther Pendragon
48 Gracechurch Street
London EC3V 0EJ

Registrar

Link Market Services (Guernsey) Limited
Mont Crevelt House
Bulwer Avenue
St Sampson
Guernsey GY2 4LH

Depositary

Link Market Trustees Limited
The Registry
34 Beckenham Road
Beckenham
Kent BR3 4TU