Annual Report • Apr 12, 2018
Annual Report
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TradeDoubler AB (publ), 556575-7423, is a Swedish public limited liability company with its registered office in Stockholm. The company is subject to Swedish laws and as a listed company is obliged to comply with NASDAQ Stockholm's rules and regulations which govern information disclosure to the market.
All values are stated in Swedish kronor. Kronor expressed in millions is abbreviated to SEK M and kronor expressed in thousands is abbreviated to SEK '000. Numerical data in brackets refers to 2016 unless otherwise stated. Information about markets and the competitive situation is Tradedoubler's own assessment, unless a specific source is provided. You can subscribe to press releases and financial reports on Tradedoubler's website.
The Annual Report is prepared in Swedish and translated into English. Should differences occur between the Swedish Annual Report and the English translation, the Swedish version shall prevail.
| BOARD OF DIRECTORS' REPORT | 4 |
|---|---|
| SUSTAINABILITY REPORT | 7 |
| RISKS AND UNCERTAINTY FACTORS | 7 |
| CORPORATE GOVERNANCE | 8 |
| FINANCIAL INFORMATION CONSOLIDATED ACCOUNTS |
14 |
| NOTES TO THE CONSOLIDATED ACCOUNTS | 18 |
| PARENT COMPANY ACCOUNTS | 34 |
| NOTES TO THE CONSOLIDATED ACCOUNTS | 37 |
| BOARD AND CEO'S SIGNATURES | 43 |
| AUDITOR´S REPORT | 44 |
| BOARD OF DIRECTORS | 47 |
| COMPANY MANAGEMENT | 48 |
| ALTERNATIVE PERFORMANCE MEASUREMENTS | 49 |
| SEK M | 2017 | 2016 | 2015 | 2014 | 2013 |
|---|---|---|---|---|---|
| Net sales1 | 1,173 | 1,339 | 1,629 | 1,743 | 2,001 |
| Gross profit1 | 260 | 297 | 336 | 379 | 455 |
| Gross margin, %1 | 22.2 | 22.2 | 20.7 | 21.7 | 22.7 |
| Operating costs, excl. depreciation1 |
-239 | -286 | -348 | -339 | -380 |
| EBITDA adjusted for change related items |
22 | 11 | -11 | 39 | 75 |
| Change related items | 2 | -17 | -25 | -20 | -22 |
| EBITDA incl. change related items |
23 | -6 | -36 | 20 | 53 |
Adjusted for change related items
| Annual General Meeting | 3 May 2018 |
|---|---|
| Interim report January-March 2018 | 23 May 2018 |
| Interim report January-June 2018 | 30 August 2018 |
| Interim report January-September 2018 | 8 November 2018 |
| Year-end report 2018 | 7 February 2019 |
The financial information disclosed in the first three paragraphs below are adjusted for change related items. For more information regarding change related items, see page 6.
Net sales during 2017 amounted to SEK 1,173 M (1,339). This was a decrease of 12 per cent or 12 per cent adjusted for changes in exchange rates.
Gross profit amounted to SEK 260 M (297), which was a decrease of 12 per cent or 13 per cent adjusted for changes in exchange rates.
EBITDA amounted to SEK 22 M (11).
Investments, mainly related to capitalised development expenses, amounted to SEK 18 M (36).
Operating profit (EBIT) amounted to SEK -4 M (-51).
The sum of cash and interest-bearing financial assets at the end of 2017 amounted to SEK 69 M (210). Net cash was SEK -64 M (16).
Earnings per share, before and after dilution, amounted to SEK -0.23 (-1.18).
The Board proposes that no dividend should be declared for 2017 (SEK 0 per share).
The board of directors and the chief executive officer of TradeDoubler AB (publ), corporate registration number 556575-7423, hereby submit the annual accounts for the operations in the parent company and the group for the financial year 2017.
Tradedoubler is an international performance marketing company, creating smarter results for its clients through traffic, technology and expertise. It works with around 2,000 advertisers through its network of around 140,000 publishers in over 70 countries. In 2017 it generated SEK 13bn incremental revenue for its clients through e-commerce and m-commerce.
Tradedoubler operates within the dynamic environment of digital and mobile commerce, which is characterised by positive trends in both consumer and advertising expenditure. The digital marketing sector in Europe and worldwide is very dynamic. Channels such as social media, video and mobile continue to expand their market share and advertising is increasingly traded on an automated basis. This dynamic is influencing our business and, together with advances in technology, opens a range of new opportunities for our clients and us.
Tradedoubler exists to help digital marketers succeed. We use a combination of technology and expertise to simplify this complex landscape and deliver performance-based solutions that create smarter results for our clients. Our integrated technology platform tracks online customer journeys. It creates data-driven insight that helps us deliver targeted performance advertising across multiple, highquality digital channels:
TD CONVERT, our successful affiliate marketing solution creates online sales for our clients who pay only for results.
TD CONNECT, our unique white-label global partner platform allows clients to manage their digital marketing activities all by themselves.
TD ENGAGE, our innovative programmatic display, mobile and video solution drives new customers to our clients' websites.
TD ADAPT, our industry-leading business intelligence tool visualises channel data and provides insights into the user journey of our clients' customers.
Tradedoubler intends to become the leader in delivering superior performance marketing results through a blend of high quality traffic, technology and expertise. We will extend our core performance marketing expertise and technology to encompass all digital marketing channels and using technology, we will take a central position within the evolving digital ecosystem. We are developing a platform that is agnostic which means that it will be open to new sources of traffic including meta-search, comparison and social media; we will be able to track consumer behaviour across all devices; and will be able to deliver and report on different creative formats.
In February and May Tradedoubler repurchased own bonds for SEK 47 M which nominal value amounted to a total of SEK 62 M.
In July Tradedoubler acquired the Swedish technology company Metapic Sweden AB, that provides a popular platform for product recommendations within premium lifestyle media.
In November François Pacot was appointed Chief Technology Officer. Pacot joined Tradedoubler in December 2016 when the group acquired R-Advertising.
Tradedoubler made significant progress during 2017. The company has made important changes in organisation and working methods. Among other things, the closure of Tradedoublers service office in Telford has been completed in 2017, which significantly has reduced costs. A new strategic acquisition was made which will increase Tradedoubler's competitiveness in the future.
If not explicitly stated, the disclosed financial information refers to reported numbers not adjusted for change related items nor changes in exchange rates. For comparability reasons and to indicate the underlying performance, Tradedoubler adjust for change related items. For more information, see page 6.
Consolidated net sales during 2017 were SEK 1,173 M (1,344). Adjusted for change related items net sales amounted to SEK 1,173 M (1,339), which was a decline of 12 per cent or 12 per cent adjusted for changes in exchange rates.
Gross profit during 2017 was SEK 260 M (302). Adjusted for change related items, gross profit amounted to SEK 260 M (297). This was a decline of 12 per cent or 13 per cent adjusted for changes in exchange rates. The decline is mainly related to the loss of some larger customers during 2016.
Gross margin, adjusted for change related items, was 22.2 per cent (22.2) during 2017.
Operating costs, excluding depreciation, amounted to SEK 237 M (308) in 2017. Change related costs were SEK -2 M (22). For more information, see Note C25. Excluding change related items and depreciation, operating costs were SEK 239 M (286). This was a decrease of 17 per cent or 16 per cent adjusted for changes in exchange rates. The reduced cost can mainly be explained by a reduction in the number of employees and various efficiency projects that have been put in place.
Operating profit before depreciation and amortisation (EBITDA) during 2017 was SEK 23 M (-6). Adjusted for change related items, EBITDA was SEK 22 M (11).
Depreciation and amortisation was SEK 28 M (45) during 2017. During the fourth quarter a write-down of other intangible assets related to capitalised development was made of SEK 4 M (24), as a consequence of a different technical delivery strategy for TD ENGAGE. For further information, see paragraph Risks and uncertainty factors, Note C2 and Note C13.
Operating profit (EBIT) amounted to SEK -4 M (-51) during 2017. Net financial items were SEK 1.2 M (9). Financial income and expenses amounted to SEK 4 M (10). Financial income and expenses were mainly affected by interest income, revaluations of the short term investments and interest expense related to the bond issue. During 2016 Tradedoubler repurchased own bonds with a nominal value totalling SEK 54 M which increased the finance net with SEK 26 M and during 2017 further repurchases with nominal value of SEK 62 M were done which increased the finance net with SEK 15 M. Exchange rate effects in 2017 were SEK -2.4 M (-1.4). Corporate income tax amounted to SEK -7 M (-7). Profit after tax was SEK -10 M (-50).
Cash flow from operating activities before changes in working capital was SEK -11 M (-19) in 2017 and related to EBITDA reduced with paid taxes, paid interest and non-cash items.
Changes in working capital were SEK -63 M (-45). The negative working capital was mainly explained by reduced prepayment amounts from customers when changing to other payment terms. Working capital at year-end 2017 was SEK -93 M (-162). Cash flow from operating activities was SEK -74 M (-64).
Tradedoubler has previously invested part of the proceeds from the bond issue finalised in December 2013 in interest bearing financial instruments. At the end of 2017, a total of SEK 0 M (41) was placed in interest bearing financial instruments.
Excluding change related items
Net investments in non-financial assets during 2017 amounted to SEK -18 M (-36) and were mainly related to product development.
Cash flow from short term financial investments was SEK 40 M (52). Paid dividends during 2017 were SEK 0 M (0) and cash flow amounted to SEK -100 M (-83).
Cash at the end of 2017 amounted to SEK 69 M (169) and were affected by translation differences of SEK -0.7 M (-0.5). In addition, SEK 0 M (41) was invested in interest-bearing financial instruments. The sum of cash and cash equivalents and interest-bearing financial instruments was therefore SEK 69 M (210). Interest-bearing liabilities amounted to SEK 133 M (194) and related in full to the five-year unsecured bond issue raised in the fourth quarter in 2013, which decreased by a repurchase of own bonds of SEK 54 M during 2016 and then decreased further by repurchase during 2017 of SEK 62 M. Net cash hence amounted to SEK -64 M (16) at the end of 2017.
The company's bond loan, which amounts to SEK 134 M at 31 December 2017, will mature on 20 December 2018. Based on liquidity forecasts for 2018, this bond will partly need to be re-financed. Work is underway to determine and ensure the best forms of re-financing of the company, but no new funding has yet been contracted.
Based on the work on new financing that has been done so far, the company's management and the board of directors conclude that new funding to ensure the implementation of the company's business plan in the coming years is possible during 2018.
Consolidated shareholders' equity amounted to SEK 206 M (207) at the end of 2017. The return on equity during 2017 and 2016 was negative and the equity/asset ratio was 28.7 per cent (23.7).
At year-end 2017, Tradedoubler's staff corresponded to 284 (344) full-time equivalents and included permanent and temporary employees as well as consultants.
EBITDA/Gross profit (%),
Excluding change related items
For comparability reasons and to indicate the underlying performance, Tradedoubler adjusts for change related items.
During 2017 change related items amounted to SEK 1.5 M which related to costs for the long-term incentive programme of SEK -0.7 M (Group management), cost for renovation of old office of SEK -0.5 M (France & Benelux), severance payments of SEK -2 M (UK & Ireland), SEK -2.5 M (France & Benelux), SEK -1.5 M (DACH) and SEK -0.5 M (Group management) and a revaluation of contingent additional purchase price regarding R-Advertising acquisition of SEK 9.2 M.
During 2016 change related items amounted to SEK -17 M and included change related revenue of SEK 5 M related to a reverse of the prepayment accrual made in year-end 2014. Change related costs amounted to SEK -22 M and were related to severance payments of SEK -6 M, costs for the long-term incentive program of SEK -1 M (Group Management) and restructuring costs of SEK -15 M, which mainly was related to the closing of the office in Telford.
For more information, see Note C25.
In a recently completed tax audit by the Spanish subsidiary, Tradedoubler has received and paid a claim for outstanding tax debt amounting to SEK 11.8 M, as the Spanish tax authority does not agree to Tradedoubler's transfer pricing agreement. Tradedoubler completely opposes the tax authorities' claim and has appealed to the next instance.
On 26 March 2018 Tradedoubler announced a tender offer of its outstanding bonds due 2018. The offer entails that Tradedoubler invited all bondholders to tender their bonds for purchase by Tradedoubler at a price equal to 75 per cent of the nominal amount of the bonds together with any accrued and unpaid interest until and including settlement of the tender offer. The tender offer commenced at 26 March 2018 and will expire on 19 April 2018.
In connection with the tender offer Tradedoubler has also summoned a procedure in writing among the bondholders where Tradedoubler proposes that amendments are made to the terms and conditions of the bonds in order to include a possibility for Tradedoubler to, at any day up to and including the final maturity date of the bonds, redeem the bonds at a price of 75 per cent of the nominal amount and allow the incurrence of secured or unsecured additional debt in a total amount of maximum SEK 100 M. All holders voting in favour of the request will receive a consent fee in an amount equal to 10 per cent of the nominal amount per bond which such holder has used to vote in favour of the request.
In addition to the tender offer price, holders tendering their bonds before 5 April 2018, and holders or beneficial owners of bonds who before to the same time have entered into an irrevocable undertaking to participate in the tender offer and to vote in favour of the request, will also receive a so-called early bird fee equal to 2 per cent of the nominal amount of the bonds.
The tender offer, the consent fee and the early bird fee are conditional upon that requisite quorum and majority is obtained in the written procedure in order to approve the request.
The parent company's net sales amounted to SEK 68 M (70) during 2017. Revenue primarily consisted of licensing revenue and remuneration from subsidiaries for centrally performed services. Licensing revenues are based on the underlying profitability of the subsidiary, in accordance with the group's agreement to transfer pricing.
Operating profit (EBIT) amounted to SEK -29 M (-66) during 2016 and financial income and expenses were SEK 13 M (23). Dividends from group companies were SEK 10 M (15) and changes in exchange rates have impacted pre-tax profit in 2017 with SEK -0.9 M ( -1.2). Profit after tax amounted to SEK -16 M (-43) during 2017.
The parent company's receivables from group companies amounted to SEK 78 M (71) at end of 2017, of which none (0) were non-current. The parent company's liabilities to group companies were SEK 58 M (109), of which none (0) were noncurrent. Cash and cash equivalents amounted to SEK 34 M (124) at the end of 2017.
During the fourth quarter 2013 the parent company issued a bond loan with a nominal value of SEK 250 M. Part of the proceeds from the bond loan have previously been invested in short term investments, which at the end of 2017 amounted to SEK 0 M (41). In 2016 and 2017 Tradedoubler repurchased own bonds making the outstanding nominal value totalling SEK 134 M in the end of 2017.
Deferred tax assets amounted to SEK 14 M (14) at the end of 2017. No capitalisation of deferred tax on loss has been made since the assessment of the possibility of using deferred tax on loss carry forwards is unchanged compared to previous periods. As per December 31 2017, deferred tax assets of SEK 14 M mainly related to previous Group loans. For more information, see Note M10.
Tradedoubler's share is listed on NASDAQ Stockholm since 2005 and is traded on the list for Small Cap companies. The share is classified as Information Technology. The share capital on 31 December 2017 amounted to SEK 18.4 M (18.4) distributed among 45,927,449 (45,927,449) shares, each with a quota value of SEK 0.40. All shares carry equal rights to share in the company's assets and profits. Each share carries one vote. At the general meeting, each shareholder is entitled to vote for all shares he/she holds and represents without restriction as to the number of votes cast. Tradedoubler has 2,010,473 (2,855,554) shares in its own custody after use of own shares in the acquisition of R-Advertising.
Tradedoubler's share price decreased during 2017 by 35.1 per cent from SEK 4.85 to SEK 3.15 on 31 December 2017. The highest price recorded during 2017 was SEK 5.45 and the lowest price was SEK 2.75. The market capitalisation on 31 December 2017 amounted to SEK 138 M.
At year-end 2017 Tradedoubler had 1,910 (2,031) shareholders. The company's largest shareholder was Reworld Media S.A with 29.95 (29.95) per cent of the capital and votes. The five largest shareholders jointly owned 48.9 (52.4) per cent of the shares. Swedish financial and institutional players owned 11.7 per cent (10.2) of the shares and Swedish private individuals owned 18.5 per cent (17.7) of the shares. Other and non-categorised legal entities have decreased to 9.7 per cent from 12.2 per cent last year. Foreign ownership amounted
to 60.2 per cent (60.0). The board of directors and group management jointly owned approximately 1.5 per cent (0.2) of the votes and capital at the end of 2017.
For more information regarding the share, see Tradedoubler's investor site: www.tradedoubler.com/en/about/ investors/investor-relations/shareholders-and-ownership/
The guidelines for remuneration to the company management is provided in Note C5. The Board will propose to AGM to adopt these guidelines in 2018.
Tradedoubler's long term financial targets are to grow net sales in excess of 5 per cent annually in local currency and deliver an EBITDA/Gross profit-ratio in excess of 20 per cent over a business cycle.
At the disposal of the Annual General Meeting of the parent company:
| SEK | |
|---|---|
| Share premium reserve | 352,540,285 |
| Retained earnings | -301,737,772 |
| Net profit for the year | -16,128,600 |
| Total non-restricted equity to be carried forward | 34,673,913 |
In addition to the non-restricted equity, the Parent company had SEK 47,709,294 in restricted equity as per end of 31 December 2017.
The Board of Directors proposes to declare no dividend for 2017. No dividend was declared for 2016. Tradedoubler has a policy of distributing at least 50 per cent of its profit after tax provided that a suitable capital structure is maintained. The distribution may occur through share dividends, share redemption and share buybacks. For more information, see bond conditions regarding dividends in note C18.
The legal requirements for sustainability reporting require companies to disclose the consequences of the company's operations within the five areas of Environment, Social conditions, Personnel, Human rights and Anti-corruption.
Since the company's business model only involves the sale of services environmental impact is very limited and therefore not considered a significant risk.
Tradedoubler's employees are the key to Tradedoubler's success. Tradedoubler strives to attract, develop and retain qualified and motivated people in a professional, safe and healthy work environment. Tradedoubler complies with all local laws relating to working hours, vacation laws and occupational health laws including the psychosocial work environment. Regular team activities as well as physical activity are encouraged. Own initiatives and ideas are
encouraged, among other things through access to a special e-mail address to share ideas and improvements, as well as the opportunity for recruitment prize for employee tips for employment. Tradedoubler also performs an annual employee survey to gain insight into and measurability in the employees' experienced work and social conditions. Key figures used are work and development, organization and information, corporate culture, psychosocial work environment and leadership.
Tradedoubler has established a Group Code of Ethics and Conduct and all directors, officers and employees are expected to be familiar with this Code of Ethics and Conduct and to adhere to the principles and procedures set forth in the Code.
Tradedoubler has a history of success as a result of fair and ethical business practices. We interact with a variety of stakeholders; advertisers, publishers, suppliers, colleagues, shareholders and regulatory bodies. Our relationships and communication shall be honest, fact-based and transparent within the bounds of commercial confidentiality. We value interaction and therefore encourages a constructive dialogue with all our stakeholders. In our business relations, we expect our partners to adhere to business principles consistent with our own. Tradedoubler's Ethics and Conduct Code contains guidelines for how to act in different situations when representing Tradedoubler in a business context, towards colleagues, in conflict of interests as well as compliance and whistle-blowing.
The code also states zero tolerance to discrimination or harassment because of gender, ethnicity, nationality, religion, sexual orientation, age, disability, marital status or political opinion. All employees should be treated fairly and equally and all abilities and contributions are valued and honoured equally and in accordance with the Code and fundamental human rights.
No cases of discrimination have been found.
Tradedoubler has established an Anti-Bribery and Corruption Policy with the purpose of establishing main principles and approaches to fraud, incentives and incorrect payments which are considered as major risks for a company like Tradedoubler as it handles a large amount of transactions. This to prevent illegal and unethical business behaviour. Tradedoubler has zero tolerance to such behaviour and where any employee found to violate this policy will be subject to disciplinary action, which may include termination of employment. No such case has occurred.
Identifying and managing risks is a central component in the governance and control of Tradedoubler's business and is incorporated in all parts of the operations.
Risks are continuously reported to the board by management. Through clear processes and routines, the company aim to take advantage of the opportunities presented in a dynamic market, while minimising the risk for damage and losses. Tradedoubler distinguishes between market-related risks, operational risks, financial risks and legal risks.
As with all businesses, Tradedoubler has market-related risks, which are primarily related to the surrounding environment such as macroeconomic conditions, competition and technical development. Within the market Tradedoubler operates the technical and commercial rate of change is high. This means great opportunities, but also significant risks for Tradedoubler. The group management is primarily responsible for monitoring and finding opportunities in this changing environment.
Tradedoubler's operative risks is mainly related to its ITinfrastructure which is essential to deliver the services provided. As for the risks of the IT-infrastructure Tradedoubler has a CISO, Chief Internet Security Officer, who leads the risk management of the IT infrastructure together with a board of internal and external resources.
The treatment of financial risks is centralised to the finance function of Tradedoubler and is conducted in accordance with the assumed finance policy accepted by the Board of Tradedoubler. For more information regarding the financial risks see Note C21.
As a multinational company Tradedoubler is subject to local regulations. Legal risks could be tax related, intellectual property rights or privacy legislation. Tradedoubler monitors and mitigates legal risks through internal and external resources as well as through trade associations.
Tradedoubler has a significant goodwill item and other immaterial assets such as activated development expenses, which are tested for impairment on an annual basis. In conjunction with the preparation of the year-end report 2017, impairment tests relating to intangible assets were performed. The outcome of these tests was a write-down of other immaterial assets of SEK 4 M (24). In connection with the impairment testing of goodwill for 2017 no impairment was deemed to exist and at the end of 2017 goodwill amounted to SEK 280 M (273). The write-down of other immaterial assets regarding capitalised development costs highlights the market-related and operative risks the company is facing. It cannot be ruled out that a future impairment test would lead to further write-downs of immaterial assets in the consolidated results and/or the parent company. For further information, see Note C13.
In May 2018, the EU Data Protection Ordinance (GDPR) enters into force, which places even greater demands on how the company handles personal data and otherwise deals with data protection issues. During 2017, the company has worked actively to be able to meet the requirements under the new regulation.
Tradedoubler is a Swedish public limited liability company with its registered office in Stockholm. Tradedoubler's share has been quoted on NASDAQ Stockholm since 2005. This section describes Tradedoubler's corporate governance, management and administration as well as the internal control.
The governance of Tradedoubler is divided among the shareholders at the annual general meeting (AGM), the board of directors, the CEO and the group management in accordance with the Swedish Companies Act, the articles of association and the Swedish Code of Corporate Governance (the Code). The board of directors has chosen to jointly handle the duties pertaining to the audit committee according to the Code and the Swedish Companies Act, but which also may be handled by the board as a whole – see more information under "Audit Committee". In other respects, Tradedoubler has applied the Code without deviation during 2017.
Tradedoubler's articles of association and other information regarding corporate governance in the company is available on Tradedoubler's website: www.tradedoubler.com/en/ about/investors/corporate-governance/
The annual general meeting is Tradedoubler's highest decision-making body in which shareholders exercise their rights to decide on the affairs of the company and where each share carries one vote. Shareholders are informed via Tradedoubler's website of their entitlement to have an item addressed at the AGM. Shareholders who are registered in the share register on the record day, (five weekdays prior to the date of the AGM) and who have provided notification of their intention to attend in accordance with what is stated in the convening notice, are entitled to participate in the AGM, either in person or by proxy.
Minutes from the annual general meeting 2017 and previous general meetings of shareholders are available on Tradedoubler's website: www.tradedoubler.com/en/about/ investors/corporate-governance/annual-general-meeting/
The AGM was held on 4 May 2017 in Stockholm. 32.8 per cent of the shares were represented at the AGM. The AGM passed resolutions on election of board members.
The annual general meeting resolved to authorise the board of directors, until the next annual general meeting, on one or several occasions, with or without deviation from the shareholders' preferential rights, to resolve on new issues of shares, warrants and/or convertibles corresponding to a maximum fifty (50) per cent of the total number of outstanding shares in the company per the date of the annual general meeting.
Tha annual general meeting resolved in accordance with the Board's proposal for guidelines for remuneration and other terms of employment for company management including changes to the terms of the long-term incentive programme.
The annual general meeting resolved to authorise the board of directors, until the next annual general meeting, on one or several occasions, to resolve on the acquisition of a maximum number of own shares so that, after the purchase, the company holds no more than ten per cent of the total number of shares in the company.
The annual general meeting resolved to authorise the board of directors, until the next annual general meeting, on one or several occasions, to resolve on the transfer of shares in the company.
The annual general meeting resolved in accordance with the Board of Director's proposal to reduce the statutory reserve to SEK 0 and that the reduction amount shall be transferred to retained earnings. The reduction cannot be carried out without an authorisation from the Swedish Companies
Registration Office or, in disputed cases, a court of general jurisdiction.
The annual general meeting resolved in accordance with the Nomination Committee's proposal for a decision on election committee for the 2018 annual general meeting.
Tradedoubler's AGM passes resolutions regarding a nomination committee before the next AGM. According to the resolution the nomination committee shall be composed of the Chairman of the Board and representatives of the three largest shareholders, as of the last banking day in August, according to the share register kept by Euroclear Sweden AB.
The Chairman of the Board shall convene the first meeting of the Nomination Committee. The representative representing the largest shareholder shall be appointed chairman of the nomination committee. If one or more shareholders do not wish to appoint a representative to the nomination committee the next shareholder should be contacted. If the shareholder who is next do not wish to appoint a representative the Chairman must only contact the eight largest shareholder to obtain a nomination committee of at least three representatives including the Chairman of the Board. If a nomination committee is not obtained on three representatives (including Chairman) after contact with the eight largest shareholders, the Chairman of the board will continue to contact shareholders until a nomination committee of three representatives (including Chairman of the board) has been reached.
The composition of the nomination committee consists of the following members; Cédric Vincent, appointed by Reworld Media S.A (chairman), Yi Shi and Pascal Chevalier, chairman of the Board. The nomination committee's proposals to the AGM 2018 regarding board members, fees and other remuneration etc. are planned to be presented in the notice convening for the AGM 2018 and will also be available on the company's website.
The members of the nomination committee receive no remuneration from Tradedoubler. However, the chairman of the board receives remuneration from Tradedoubler in the form of ordinary directors' fees.
According to Tradedoubler's articles of association, the board shall be composed of between five and nine members.
The CEO is not a member of the board, but attends boardmeetings. Other employees in Tradedoubler participate in board meetings when required, for instance to present reports. The company's chief financial officer has during 2017 served as the secretary to the board.
During 2017, Tradedoubler's board of directors was composed until the annual general meeting on 4 May 2017 of Pascal Chevalier (chairman), Gautier Normand, Jérémy Parola, Erik Siekmann and Nils Carlsson.
At the AGM on 4 May 2017 all board members were re-elected. The current board is presented on page 47.
The nomination committee for AGM 2017 considered Pascal Chevalier and Gautier Normand in their capacity as founder and senior executives of Reworld Media S.A dependent in relation to the company's major owners, but independent in relation to the company and the company management. It also considered Jérémy Parola dependent in relation to the company's major shareholders, but independent in relation to the company and the executive management.
Other board members who held positions during 2017 were independent during their term of office in relation to the company and the company management and in relation to the company's major owners. The composition of board members during 2017 has therefore met the requirements imposed in relation to independence.
Under the Code, the board, having regard to the company's operations, development stage and circumstances, must have an appropriate composition characterised by versatility and breadth regarding the competence, experience and background of the members, and that an even distribution of gender in the board should be pursued. Tradedoubler's board of directors during 2017 was entirely composed of men. The nomination committee aims for a uniform gender distribution and had this balance in consideration in its work on a proposal for a new board of directors.
The work of the board is guided by Rules of procedure for the board that is adopted each year, usually at the statutory board meeting. These rules set out the responsibilities of the board and CEO and regulates the board, its committees and its members' internal division of work, the decision-making order within the board, notifications of board meetings, agendas and minutes, and the board's work on internal control, risk management and the financial reporting. The current rules of procedure were approved by the board of directors on 4 May 2017.
According to the current rules of procedure, the chairman of the board shall ensure that the board work is conducted effectively and that the board fulfils its duties. In particular, the chairman shall:
The board held 12 recorded board meetings during 2017, of which six took place by telephone. The individual members' attendance at board and committee meetings is shown in the table on page 12.
During the year, the board's work mainly focused on the execution of the strategy balancing expenditures towards necessary investments, budget and business plan for 2017- 2018 and other analysis of the business and trends in the industry. In addition, the board, together with management, has evaluated options in the financial market to ensure longterm financing.
The Code and the Swedish Companies Act (2005:551) contain provisions regarding the establishment of an audit committee. The entire board of directors may fulfil the committee's duties in accordance with what is prescribed in Chapter 8 Sections 49 a-b second paragraph of the Companies Act. Since autumn 2013 the duties of the audit committee have been handled by the entire board. In 2017, the auditor in charge have, at two separate meetings, informed the board about planned audit, estimated costs for audit and the results from completed audit.
The committee's work focused on assessment of immaterial assets and internal control. For more information about the internal control and risk management, see page 11.
The board has appointed a remuneration committee, which during the year was composed of two board members, one of whom was chairman. The remuneration committee shall hold meetings when necessary. When considered appropriate, the remuneration committee may invite the CEO, the company's CFO, the company's auditor or others to participate in the committee's meetings. Minutes are taken of the remuneration committee's meetings and a copy of the minutes is distributed to all board members.
During 2017 the remuneration committee was composed of Pascal Chevalier and Erik Siekmann.
The remuneration committee has not had any recorded meetings during 2017. The board has delegated certain terms of remuneration to the chairman of the board, including approvals of changes in remuneration to senior executives in addition to the CEO.
The AGM 2017 approved annual remuneration to the board of directors amounting to SEK 763,000 to the chairman of the board and Gautier Normand, and SEK 180,000 to each of the other board members elected by the AGM who are not employed by Tradedoubler. The AGM resolved on no remuneration for committee work. No board member was employed by any company in the group during 2017.
Remuneration to each board member is shown in the table "Composition, independence and remuneration of the Board 2017" on page 12.
The President and CEO leads the day-to-day operations and is assisted by a company management team. The company management during 2017 was composed of:
| Matthias Stadelmeyer | CEO |
|---|---|
| Viktor Wågström | Chief Financial Officer |
| Marcel Chaudron | Chief Operation Office (until 30 June 2017) |
| James Milne | VP Business Development (until 16 November 2017) |
| François Pacot | CTO (from 16 November 2017) |
The AGM resolves on guidelines for remuneration and other terms of employment to senior executives, in other words, the chief executive officer and other members of the company management.
The annual general meeting 2017 resolved on the following guidelines for remuneration to senior executives, which refers to the chief executive officer and other members of the company management. The total remuneration shall be competitive in the local market in which the employee is based in order to attract, motivate and retain skilled employees. The individual remuneration shall be based on the employee's experience, skills, responsibilities and performance. The total remuneration should be based on four main components; fixed salary, variable remuneration, pension benefits and long-term incentive program.
Fixed salary: The fixed salary shall be commercially competi- tive and shall be based on experience, skills, responsibilities and performance.
Pension benefits: Pension benefits may be offered to certain members of the company management depending on local market conditions. Swedish-based employees are offered a solution which largely corresponds with the ITP plan.
Notice and termination benefits: A mutual period of notice of 3–9 months shall apply for the company management. In the event of termination by the company, termination benefits, in applicable cases, should not exceed an amount equivalent to 12 fixed monthly salaries. In the event of termination by the employee, he/she shall not normally be entitled to any termination benefits.
Long-term incentive program: In addition to variable remuneration, which rewards growth and operating profit during the financial year, the board considers that long-term incentive programmes are an important part of the longterm compensation strategy. The board intends to propose that the company shall continue to invite the company management and other key people to participate in a long-term share-price-related incentive programme.
The board considers that such a programme should imply continued employment in the group. Share-related and share-price-related incentive programmes must be approved by the general meeting of shareholders.
Other benefits: Other benefits, such as car benefit, shall have a limited value in relation to the total remuneration package.
Questions regarding terms of employment for the chief executive officer are determined by the board. The chief executive officer determines terms of employment for other members of the company management after approval by the remuneration committee.
The board of directors or the remuneration committee may depart from these guidelines if special grounds exist in a particular case.
As chief executive officer Matthias Stadelmeyer received remuneration for 2017, amounting to SEK 3,118,000 including other benefits, SEK 312,000 as remuneration in longterm incentive programme and SEK 69,000 as remuneration for payment into private pension insurance.
Company management apart from the chief executive officer received a total of SEK 3,446,000 in remuneration including other benefits, SEK 129,000 as remuneration for long-term incentive programme and SEK 364,000 as remuneration for payment into private pension insurance.
EY was elected as auditor at the AGM 2017 for the period until the AGM 2018, with the authorised public accountant Erik Sandström as auditor-in-charge.
During 2017, the auditor reviewed the annual accounts, the consolidated accounts and accounting records as well as the administration of the board of directors and the CEO. In addition, the auditor reviewed the corporate governance report and the sustainability report. The auditor has also reviewed the interim report for the period January-June 2017 and has been retained for certain advice, most of which pertained to audit-related consultations regarding accounting and tax matters.
Total remuneration of SEK 4,302,000 was paid during 2017, of which SEK 4,191,000 was paid to EY and SEK 111,000 to other auditing companies.
The AGM 2015 resolved to adopt a share-price-related incentive programme for senior executive and other key employees within the Tradedoubler group.
The objective of the proposed programme is to create conditions for recruiting and retaining competent employees in the group.
The programme has been designed based on the view that it is desirable that senior executives and other key employees within the group are shareholders in the company. By linking the employee's remuneration to Tradedoubler's share price development continued loyalty will be promoted and thereby long-term growth in the company. In the light of this, the board of directors is of the opinion that the adoption of the programme will have a positive effect on Tradedoubler's future development and thus be beneficial for both the company and its shareholders. Participants in the programme waives variable remuneration.
The annual general meeting 2017 resolved, according to the proposal from the board, on change of the terms of the longterm incentive programme 2015 in order for the Board to be able to resolve upon allocation if the share price by the end of the Performance period is within the interval SEK 10-15.
For the participants the proposal will result in more favourable terms than the terms adopted by the AGM 2015 being that allocation would require that the share price during the Performance period increases to at least SEK 15.
More details regarding the incentive programme can be found at www.tradedoubler.com/en/about/investors/corporate-governance/annual-general-meeting/ and in Note C6.
The group also operates an annual performance- and results-based variable remuneration programme for all other employees within the group. In the 2017 programme, various quantitative and qualitative performance- and earnings targets were set for different occupational categories, based on company-wide, and regional targets for employees.
The board's responsibility for internal control and risk management is governed by the Companies Act and by the Code. Internal control and risk management in respect of the financial reporting constitute a part of the total internal control and risk management within Tradedoubler, which is based on the COSO framework1 and represents an essential part of Tradedoubler's corporate governance.
COSO describes the internal control as divided into five components as follows; control environment, risk management, control activities, information and communication, monitoring.
The area of internal control and risk management in respect of the financial reporting is part of the board's and group management's overall work on identifying and managing risks. This work aims to identify and evaluate the most critical risks affecting the internal control and the financial reporting in the group's companies, as a basis for how to handle risks through different control structures. The most significant risks for the group are described under "Risks and uncertainty factors" on page 7. See also Note C2 and C21 in Notes to the consolidated accounts.
The board has the overall responsibility for the internal control and risk management in respect of the financial reporting. The board has adopted Rules of procedure. This is an internal control instrument setting out the responsibilities of the board, CEO and company management regulating the board, its committees and members' internal division of work. The board also works with the duties that under the Code shall be handled by the audit committee. This is primarily control of the financial reporting and monitoring the effectiveness of the company's internal control and risk management in respect of the financial reporting. Furthermore, the board in 2017 decided on revisions to the company's Finance policy, Insider policy and External information and investor relations policy.
In addition, the CEO and company management control the day-to-day work through a variety of policies and internal control documents. The most important of these include the company's Authorisation manual, Payment policy and IT Security policy. The CEO in conjunction with the rest of
1. Published by the Committee of Sponsoring Organizations of the Treadway Commission (COSO), (www.coso.org)
the group management is responsible for ensuring that the above-mentioned internal control instruments are complied with and updated if necessary.
Control structures are concerned with what controls are chosen to manage identified risks in the group's companies. The controls may be general or detailed, preventative or discovery-based and automated or manual in character.
The internal control instruments are available for the relevant employees on Tradedoubler's Intranet.
The CEO and the company's CFO report the on-going work on develop and monitor the company's internal control and risk management to the board.
Follow up in order to ensure the effectiveness of the internal control and risk management in respect of the financial reporting is conducted by the board, the CEO and the rest of the group management, including the company's CFO.
Follow up includes review of monthly income statements and cash flow statements against the budget and latest financial forecast and current controls that exceptions to policies has been approved by authorised personnel. This means, inter alia exemption from the credit policy and the policy of publishers only getting paid after the customer has paid its invoice to Tradedoubler.
The IT security work is continually ongoing with follow up meetings with the CISO (Chief Internet Security Officer) and group managers for development and operations in attendance. Any IT security-related incidents are reported at these meetings and follow up takes place of IT security-related projects and activities. When required, the CISO reports to the CEO and other members of the group management including the company's CFO. The company have agreements with external security experts in order to receive advice and support regarding implementation, assessments, and priorities on IT security-related issues.
At present, the company does not have any special audit function. The question of formally establishing a special audit function is reviewed continually.
| Name | Born | Nationality | Elected | The Board of directors |
The Remuneration Committee |
Independent in relation to the company, the company management and the company´s major shareholders* |
Fee in SEK (incl. commit tee work)** |
Own or related party share holdings*** |
|---|---|---|---|---|---|---|---|---|
| Pascal Chevalier | 1967 | French | 2015 | Chairman | Chairman | No* | 763,000 | 0 |
| Gautier Normand | 1978 | French | 2015 | Member | – | No* | 763,000 | 0 |
| Jérémy Parola | 1987 | French | 2016 | Member | – | No* | 180,000 | 0 |
| Nils Carlsson | 1969 | Swedish | 2016 | Member | – | Yes | 180,000 | 0 |
| Erik Siekmann | 1971 | German | 2016 | Member | Member | Yes | 180,000 | 0 |
| SUM | 2,066,000 |
* Pascal Chevalier, Gautier Normand and Jérémy Parola are independent to the company and company management but dependent in relation to the company´s major owners, since they are all active in Reworld Media, Tradedoubler's major owner. The arm's length principle has been applied in all transactions between Tradedoubler and Reworld Media, for more information see Note C23.
** The annual general meeting 2017 approved the nomination committee's proposal for the compensation to the Chairman of the board and Gautier Normand corresponding to SEK 763,000 and to the other Board members corresponding to SEK 180,000. No compensation is payable for committee work. Compensation relates to the annual payable amount.
*** Holdings of shares or other equal financial instruments by private or related persons or legal entities in Tradedoubler according to the latest available information to Tradedoubler.
| Name | Board of directors | Attendance, board meetings* |
The remuneration committee |
Attendance Remuneration committee |
|---|---|---|---|---|
| Pascal Chevalier | Chairman | 12/12 | Chairman | – |
| Gautier Normand | Member | 12/12 | – | – |
| Jérémy Parola | Member | 12/12 | – | – |
| Nils Carlsson | Member | 10/12 | – | – |
| Erik Siekmann | Member | 12/12 | Member | – |
* Out of the meetings that took place during the person's terms of office in 2017.
| FINANCIAL INFORMATION | |
|---|---|
| CONSOLIDATED ACCOUNTS | 14 |
| NOTES TO THE CONSOLIDATED ACCOUNTS | 18 |
| PARENT COMPANY ACCOUNTS | 34 |
| NOTES TO THE PARENT COMPANY ACCOUNTS |
37 |
| BOARD AND CEO'S SIGNATURES | 43 |
| AUDITOR´S REPORT | 44 |
| BOARD OF DIRECTORS | 47 |
| COMPANY MANAGEMENT | 48 |
| ALTERNATIVE PERFORMANCE MEASUREMENTS |
49 |
| SEK '000 | Note | 2017 | 2016 |
|---|---|---|---|
| Net sales | C3, C4 | 1,173,025 | 1,343,994 |
| Cost of goods sold | C8 | -912,738 | -1,041,753 |
| Gross profit | 260,287 | 302,241 | |
| Selling expenses | -180,923 | -210,397 | |
| Administrative expenses | -59,813 | -86,379 | |
| Research & development expenses | -33,466 | -56,736 | |
| Other income and expenses | 9,481 | – | |
| Operating profit | C4, C5, C6, C7, C8, C9 | -4,434 | -51,271 |
| Financial income | 15,362 | 26,636 | |
| Financial expenses | -14,193 | -18,022 | |
| Net financial items | C10 | 1,169 | 8,614 |
| Profit before tax | -3,265 | -42,657 | |
| Tax | C11 | -6,571 | -7,434 |
| Net profit for the year | -9,836 | -50,091 |
| Profit for the year | -9,836 | -50,091 | |
|---|---|---|---|
| Other comprehensive income | |||
| Other comprehensive income to be reclassified to profit or loss in subsequent periods |
|||
| Translation differences, net after tax | 4,117 | 3,965 | |
| Total other comprehensive income to be reclassified to profit or loss in subsequent periods |
4,117 | 3,965 | |
| Total comprehensive income for the year | -5,719 | -46,126 | |
| Total comprehensive income for the year attributable to: The parent company's shareholders |
-9,836 | -50,091 | |
| Comprehensive income attributable to: | |||
| The parent company's shareholders | -5,719 | -46,126 | |
| Earnings per share | C17 | ||
| Earnings per share before and after dilution | -0.23 | -1.18 |
| SEK '000 | Note | Dec 31, 2017 | Dec 31, 2016 |
|---|---|---|---|
| Assets | |||
| Non-current assets | |||
| Goodwill | C13 | 280,388 | 273,073 |
| Other intangible assets | C13 | 45,805 | 52,226 |
| Equipment, tools, fixtures and fittings | C14 | 3,184 | 6,185 |
| Other non-current receivables | 4,693 | 4,882 | |
| Shares and participation in other companies | C27 | 11,128 | 11,128 |
| Deferred tax receivables | C11 | 18,177 | 19,143 |
| Total non-current assets | 363,375 | 366,636 | |
| Current assets | C12 | ||
| Trade receivables | C21 | 250,703 | 260,902 |
| Tax receivables | 7,821 | 7,733 | |
| Other receivables | 10,763 | 16,240 | |
| Prepaid expenses and accrued income | C15 | 16,747 | 8,975 |
| Short term investments | C21 | – | 40,622 |
| Cash and cash equivalents | C21 | 68,662 | 169,198 |
| Total current assets | 354,695 | 503,671 | |
| Total assets | 718,070 | 870,306 | |
| Equity and liabilities | |||
| Shareholders' equity | C16 | ||
| Share capital | 18,371 | 18,371 | |
| Share premium | 441,600 | 441,600 | |
| Translation reserve | 34,765 | 30,648 | |
| Retained earnings including net profit for the year | -289,215 | -284,090 | |
| Total equity | 205,521 | 206,529 | |
| Non-current liabilities | C12, C21 | ||
| Deferred tax liabilities | C11 | 1,383 | 711 |
| Provisions: non-current | 1,290 | 930 | |
| Bond loan | C18 | – | 193,856 |
| Contingent additional purchase price long term | C26 | 1,600 | 12,437 |
| Total non-current liabilities | 4,272 | 207,934 | |
| Current liabilities | C12, C21 | ||
| Trade payables | 12,696 | 22,638 | |
| Current liabilities to publishers | C12 | 257,942 | 250,318 |
| Bond loan | C18 | 132,946 | – |
| Tax liabilities | 2,581 | 4,606 | |
| Other liabilities | C19 | 66,843 | 119,600 |
| Contingent additional purchase price short term | 2,033 | 2,914 | |
| Accrued expenses and deferred income | C20 | 33,236 | 55,768 |
| Total current liabilities | 508,277 | 455,843 | |
| Total equity and liabilities | 718,070 | 870,306 |
For information regarding Pledged assets and contingent liabilities, see Note C22.
| Share | Share | Translation | Retained earnings incl. Net |
Total | |
|---|---|---|---|---|---|
| SEK '000 | capital | premium | reserve | profit for the year | equity |
| Opening balance at January 1, 2016 | 18,371 | 441,600 | 26,683 | -238,723 | 247,931 |
| Comprehensive income | |||||
| Net profit for the year | -50,091 | -50,091 | |||
| Other comprehensive income | |||||
| Translation differences, net after tax | – | – | 3,965 | – | 3,965 |
| Total other comprehensive income | – | – | 3,965 | – | 3,965 |
| Total comprehensive income | – | – | 3,965 | -50,091 | -46,126 |
| Transactions with shareholders | |||||
| Use of shares in own custody | – | – | – | 4,078 | 4,078 |
| Equity-settled share-based payments | – | – | – | 645 | 645 |
| Total transactions with shareholders | – | – | – | 4,723 | 4,723 |
| Closing balance at December 31, 2016 | 18,371 | 441,600 | 30,648 | -284,090 | 206,529 |
| Opening balance at January 1, 2017 | 18,371 | 441,600 | 30,648 | -284,090 | 206,529 |
| Comprehensive income | |||||
| Net profit for the year | -9,836 | -9,836 | |||
| Other comprehensive income | |||||
| Translation differences, net after tax | – | – | 4,117 | – | 4 ,117 |
| Total other comprehensive income | – | – | 4,117 | – | 4,117 |
| Total comprehensive income | – | – | 4,117 | -9,836 | -5,719 |
| Transactions with shareholders | |||||
| Use of shares in own custody | – | – | – | 4,147 | 4,147 |
| Equity-settled share-based payments | – | – | – | 564 | 564 |
| Total transactions with shareholders | – | – | – | 4,711 | 4,711 |
| Closing balance at December 31, 2017 | 18,371 | 441,600 | 34,765 | -289,215 | 205,521 |
All equity is tributed to the shareholders of the Parent Company.
| SEK '000 | Note | 2017 | 2016 |
|---|---|---|---|
| Operating activities | C24 | ||
| Profit before tax | -3,265 | -42,657 | |
| Adjustment for items not included in the cash flow | -1,097 | 22,060 | |
| Taxes paid | -6,696 | 1,710 | |
| Cash flow from operating activities before changes in working capital | -11,058 | -18,887 | |
| Cash flow from changes in working capital | |||
| Increase (-)/Decrease (+) in operating receivables | 20,772 | 94,121 | |
| Increase (-)/Decrease (+) in operating liabilities | -83,391 | -138,976 | |
| Cash flow from operating activities | -73,677 | -63,742 | |
| Investing activities | |||
| Investments in intangible assets | -17,632 | -33,613 | |
| Investments in property, plant and equipment | -729 | -2,132 | |
| Investments in financial assets | 248 | -10,799 | |
| Investments in stocks and subsidiaries | C26 | -1,423 | 3,750 |
| Short-term investments | – | – | |
| Sale of short-term investments | 40,468 | 51,935 | |
| Cash flow from investing activities | 20,932 | 9,141 | |
| Financing activities | |||
| Repurchase of own bond | -47,098 | -28,552 | |
| Cash flow from financing activities | -47,098 | -28,552 | |
| Cash flow for the year | -99,844 | -83,153 | |
| Cash flow for the year | -99,844 | -83,153 | |
| Cash and cash equivalents at the beginning of the year | 169,198 | 252,886 | |
| Exchange difference in cash and cash equivalents | -692 | -536 | |
| Cash and cash equivalents at the end of the year | 68,662 | 169,198 |
Tradedoubler AB (the parent company) and its subsidiaries together make up the Tradedoubler group.
TradeDoubler AB (publ), corporate registration number 556575- 7423, is a Swedish registered limited liability company with its registered office in Stockholm. The address of the head office is Birger Jarlsgatan 57A, 113 56 Stockholm. The parent company's shares are listed on NASDAQ Stockholm. The board of directors approved these annual accounts for publication on 5 April 2018. The annual accounts will be considered for adoption by the annual general meeting.
The consolidated accounts were prepared in accordance with the International Financial Reporting Standards (IFRS) issued by the International Accounting Standards Board (IASB) as well as interpretations from the International Financial Reporting Interpretations Committee (IFRIC), as adopted by the European Commission for application within the EU. In addition, the Swedish Financial Reporting Board's recommendation RFR 1, Supplementary Accounting Rules for Groups is applied.
The parent company applies the same accounting policies as the group except in the instances described below in the section "Parent Company's accounting policies". Discrepancies between the principles applied by the parent company and the group arise due to restrictions on the ability to apply IFRS within the parent company imposed by the Swedish Annual Accounts Act, the Pension Obligations Vesting Act ("tryggandelagen") and, in some cases, by tax considerations.
Assets and liabilities are recognised at historical cost unless otherwise stated below.
The parent company's functional currency is the Swedish krona (SEK), which is also the presentation currency for the parent company and the group. This means that the financial statements are presented in SEK. All amounts are rounded off to the nearest thousand, unless otherwise stated.
Preparing the financial statements in conformity with IFRS requires the group management to make judgements and estimates as well as assumptions that affect the application of the accounting policies and the recognised amounts of assets, liabilities, revenue and expenses. The actual outcome may deviate from these estimates and judgements.
Estimates and assumptions are reviewed regularly. Changes in estimates are recognised in the period in which they arise if the change affects that period alone or, alternatively, in the period in which they arise and during future periods if the change affects both the period in question and future periods.
Judgements made by the group management in the application of IFRS, which have a material impact on the financial statements and estimates made, which may give rise to significant adjustments in future financial statements are described in more detail in the notes to the consolidated accounts C2, Critical estimates and judgements.
The Group and parent company applies in this Annual report for the first time the new and amended standards and interpretations applicable for fiscal years beginning 1 January 2017 or later. None of the amended policies and disclosure requirements to existing standards that are applicable from the financial year that began on January 2017 has any material impact on the Group or parent company's financial statements. No new or amended policies have been applied in advance.
A number of new and revised IFRS has not yet entered into force and have not been applied in preparing the consolidated and parent company financial statements. Described below are the IFRS that may affect the Group's or parent company's financial statements.
Other new or amended standards or interpretations the IASB has published is not expected to have any impact on the Group's or parent company's financial statements.
IFRS 9 includes recognition of financial assets and liabilities and will replace IAS 39 Financial instruments: Recognition and measurement. As with IAS 39, Financial assets are classified in different categories; some of which are measured at amortised cost and fair value. IFRS 9 introduces other categories than those contained in IAS 39. In order to assess how financial instruments should be reported according to IFRS 9 a company has to ensure the contractual cash flows and the business model under which the instrument is held. IFRS 9 also introduces a new model for the impairment of financial assets. The purpose of the new model includes that losses should be recognised earlier than under IAS 39. For financial liabilities IFRS 9 mainly is consistent with IAS 39. However, for liabilities carried at fair value the portion of the fair value change that is attributable to own credit risk should be recognised in other comprehensive income rather than in the results, unless this causes inconsistencies in the accounts. Revised criteria for hedge accounting can lead to that more economic hedging strategies qualify for hedge accounting under IFRS 9 than IAS 39. IFRS 9 Financial instruments shall enter into force on 1 January 2018. The standard will be applied by the Group and parent company from 1 January 2018. The Group has during 2017 evaluated the impact of the standard and the assessment is that it will not have any significant impact on the Group.
IFRS 15 replaces all previously issued standards and interpretations which manages revenue with a comprehensive model for revenue recognition. The standard is based on the principle that revenue should be recognised when a promised goods or service has been transferred to the customer, that is, when the customer received the control over this, which may occur over time or at an exact time. The revenue should be the amount which the company expects to be reimbursed in exchange for goods or services.
IFRS 15 Revenue from contracts with customers shall enter into force on 1 January 2018. The Group and the parent company intends to apply the standard from 1 January 2018. During 2017, the Group has analysed the effects of the transition to IFRS 15 and overall, the assessment is that IFRS will not entail any change in how the company reports revenue.
IFRS 16 replaces IAS 17 from January 1, 2019. According to the new standard, the lessee must report the obligation to pay leasing fees as a lease liability in the balance sheet. The right to use the underlying asset during the lease period is reported as an asset. Depreciation of the asset is reported in the income statement as well as interest on the lease liability. Remaining leasing fees are reported partly as payment of interest and partly as amortization of leasing debt. The standard excludes leases with a lease term of less than 12 months. In the coming year, an investigation will begin to investigate how IFRS 16 will affect the financial reports for the Group.
Non-current assets and non-current liabilities in the parent company and the group largely consist of amounts that are expected to be recovered or paid after more than twelve months, calculated from the end of the reporting period. Current assets and current liabilities in the parent company and the group largely consist of amounts that are expected to be recovered or paid within twelve months, calculated from the end of the reporting period.
Identification of segments is made based on the internal reporting to the chief operating decision-maker, which as far as Tradedoubler is concerned is deemed to be the CEO.
From January 1, 2017 Tradedoubler reports the geographical segments DACH (Germany, Switzerland and Austria), France & Benelux (France, Belgium and Netherlands), Nordics (Sweden, Norway, Denmark, Finland and Poland), South (Italy, Brazil and Spain) and UK & Ireland (UK and Ireland).
The consolidated financial statements include the parent company and its subsidiaries. The financial statements of the parent and its subsidiaries included in the consolidated accounts cover the same period and are prepared according to the accounting principles applicable to the Group.
All intercompany receivables and liabilities, income and expenses, gains or losses arising from transactions between companies included in the consolidated accounts are eliminated in full.
A subsidiary is included in the consolidated financial statements from the acquisition date, which is the date when the parent company obtains control, and are included in the consolidated financial statements until the date that control ceases. Normally, controlling influence over a subsidiary by the holding of more than 50 per cent of voting shares, but can also be obtained in other ways, for example through contracts.
Subsidiaries acquired are reported in the consolidated financial statements using the purchase method. This applies to businesses acquired directly. The purchase method means that the acquisition value of shares, or of the directly acquired business, is allocated to the acquired assets, assumed commitments and liabilities at the date of acquisition on the basis of their fair values at the time. Possible additional consideration is valued at fair value. If the cost exceeds the fair value of the acquired company's net assets, the difference is recognised as goodwill. If the cost is less than the fair value of the acquired company's net assets, the difference is recognised directly in the income statement. Transaction costs related to the acquisition is recognised directly in the income statement as other operating expenses. In cases where a revaluation at fair value of the contingent consideration its recognised in operating income.
Non-controlling interest is the part of the profit and net assets of a jointly owned company that is attributed to the other owners. Noncontrolling interests' share of income is included in the consolidated profit after tax. The share of net assets is included in equity in the consolidated balance sheet but disclosed separately from equity attributable to parent company shareholders.
Transactions in foreign currencies are translated to the functional currency at the exchange rate prevailing on the transaction date. The functional currency is the currency which applies in the primary economic environments in which the companies conduct their operations. Monetary assets and liabilities denominated in foreign currencies are translated to the functional currency at the prevailing year-end exchange rate. Exchange differences arising on translation are recognised in the income statement, as financial income and expenses, with the exception of exchange differences in respect of intra-group loans which are treated as a net investment in a foreign operation (increased/reduced net investment) where exchange differences are recognised in other comprehensive income in the same way as translation differences.
The group's presentation currency is the Swedish krona (SEK). Assets and liabilities in foreign operations, including goodwill and other goodwill/negative goodwill arising on consolidation, are translated from the foreign operation's functional currency to the group's presentation currency, Swedish krona, at the exchange rate prevailing at the end of the reporting period. Income and expenses in a foreign operation are translated to Swedish kronor at an average rate that represents an approximation of the prevailing exchange rates on the date of each transaction. Translation differences arising on such translation are recognised in other comprehensive income.
The exchange rates used in translation of the financial statements for consolidation purposes are as follows:
| Closing day rate | Average rate | ||||
|---|---|---|---|---|---|
| 2017 | 2016 | 2017 | 2016 | ||
| EUR | 9.85 | 9.57 | 9.63 | 9.47 | |
| GBP | 11.10 | 11.18 | 10.99 | 11.57 | |
| NOK | 1.00 | 1.05 | 1.03 | 1.02 | |
| DKK | 1.32 | 1.29 | 1.29 | 1.27 | |
| PLN | 2.36 | 2.17 | 2.26 | 2.17 | |
| CHF | 8.43 | 8.91 | 8.67 | 8.69 | |
| BRL | 2.49 | 2.80 | 2.68 | 2.48 | |
| SGD | 6.16 | 6.29 | 6.18 | 6.20 |
The company does not currently hedge foreign exchange exposure. In connection with the disposal of a foreign operation, the accumulated translation differences attributable to the operation are recognised in the consolidated income statement.
Sales revenue, which is synonymous with net sales, is recognised at the fair value of the consideration received, or which shall be received, taking into account any discounts and rebates. Revenue recognition takes place in the income statement when it is probable that the future economic benefits will accrue to the group and these benefits can be measured in a reliable manner. Revenue includes only the gross inflow of economic benefits that the company receives or can receive for its own benefit. Revenue from rendering services is recognised when the economic benefits for the services performed can be measured reliably and the economic benefits accrue to the group.
Group revenue consists of payments from the companies and organisations that advertise and market their products and services via the group. Revenue consists of variable transaction and consulting revenue (called Transaction revenue) and of fixed start-up and monthly fees (called Other revenue).
For the parent company, revenue mainly consists of licensing fees charged to subsidiaries. The parent company's license fees are based on the current rules for transfer pricing and calculated so that a market margin remains in the subsidiary with respect to the services the subsidiary perform and the risks that the business causes.
Most of the company's revenue consists of transaction revenues. These are mainly variable and may be compared with the economic benefit from rendering a service without any specific time constraints. Within the terms of rendering a service, revenue is continuously calculated based on transaction volume and price per transaction. The criteria for recognition of this revenue are applied to each individual transaction or summation of transactions.
Most of the company's other revenue consists of fixed start-up and monthly fees. These revenues are connected to rendering services in which the company gives the customer the right to use the company's technology, among other things. The right of use is mainly governed via a rendering of services. The criteria for recognition of these revenues are applied to each rendering of a service.
Cost of goods sold consists of payments to publishers and is recognised as revenue when recognition takes place. In the agreement that Tradedoubler has with publishers there are clauses that prevent payment until certain minimum levels has been reached. Furthermore, there are cases where Tradedoubler lack the ability to regulate the liabilities incurred. This means that Tradedoubler periodically make estimates regarding whether and when the debts will have to be regulated. The valuation of the liabilities to publishers is based on IAS 39 VT8. In accordance with IAS 39 estimates of expected payments and when they take place in time are made and the liability is adjusted periodically to reflect the revised estimated future cash flows.
Interest income is primarily interest on bank deposits and is recognised in the income statement as it arises by application of the effective interest method. Dividend income is recognised in the income statement when the group secures the right to receive payments. Financial expenses consist of interest costs on borrowings, the effect of dissolution of present value computation of provisions, loss on changes in value of financial assets measured at fair value via the income statement, impairment of financial assets and such losses on hedging instruments that are recognised in the income statement. Exchange gains and exchange losses are recognised net.
Financial instruments on the asset side that are recognised in the balance sheet include cash and cash equivalents, short-term investments, trade and financial receivables. Liabilities include trade payables, liabilities to publishers, bond loan, liabilities to credit institutions and contingent additional purchase price.
A financial asset or financial liability is carried in the balance sheet when the company or one of its subsidiaries becomes a party under the commercial terms of the instrument. Trade receivables are carried in the balance sheet when the invoice has been sent. Liabilities are carried when the counterparty has performed and there is a contractual obligation to pay, even if the invoice has not yet been received. Trade payables are recognised upon receipt of invoice.
A financial asset is derecognised when the contractual rights to the asset are realised, extinguished or the company loses control over them. The same rule applies for part of a financial asset. A financial liability is derecognised when the contractual obligation has been discharged or in some other manner has been extinguished. The same rule applies for part of a financial liability.
Acquisition and disposal of financial assets are recognised on the transaction date, which represents the day when the company committed to acquire or dispose of the asset.
The fair value of investments in securities and derivative instruments is determined using official market quotations at the end of the reporting period. In cases where these are not available, measurement occurs using generally accepted methods such as discounting of future cash flows at quoted market rates of interest for each maturity. Translation to Swedish kronor takes place using the Riksbank's rates at the end of the reporting period.
Financial instruments that are not derivatives are initially recognised at the cost of acquisition corresponding to the fair value of the instrument plus transaction costs for all financial instruments, apart from those classified as financial assets recognised at fair value via the income statement, which are recognised at fair value excluding transaction costs. A financial instrument is classified on initial recognition based on the purpose for which the instrument was acquired. The classification determines how the financial instrument is measured after the initial reporting date, as described below.
Loans and receivables are financial assets that are not derivative instruments, which have fixed or determinable payments and which are not quoted on an active market. These assets are measured at amortised cost according to the effective interest method.
Trade receivables are recognised at the amount that is expected to be received less doubtful debts, which are assessed individually. Trade receivables have short expected maturities, which is why the value of each receivable is carried at its nominal amount without discounting. Impairment losses on trade receivables are recognised in operating expenses.
Receivables with expected maturities of more than one year are classified as non-current receivables and those with shorter maturities are classified as other receivables.
Financial assets measured at fair value through profit or loss Financial assets measured at fair value through profit or loss are divided into two subcategories: Financial assets held for trading as well as financial assets identified at initial recognition as belonging to this category. Financial assets held for trading are defined as financial assets acquired principally for the purpose of selling or
repurchasing in the short-term. The group's investments in corporate bonds and related derivatives for hedging of foreign currency bonds have been classified in the category of financial assets held for trading.
Assets in this category are measured initially and in subsequent financial statements at fair value. All changes in value arising are recognised in profit or loss.
Financial assets available for sale are assets that are either designated in this category or not classified in any of the other categories. They are included in current assets unless management intends to dispose the investment within 12 months after the balance sheet date. Financial assets available for sale are subsequently carried at fair value. Unrealised gains and losses arising from changes in fair value of non-monetary instruments classified as assets recognised in other comprehensive income. When instruments classified as available for sale are sold or when impairment exists for these, the accumulated fair value adjustments is attributed to the income statement.
Financial liabilities are measured at amortised cost. Accrued cost is determined on the basis of the effective interest rate measured when the liability was carried. This means that surplus and deficit values, as well as direct issue expenses, are allocated over the term of the liability.
Repurchases of own bonds below nominal value are recognised in other revenue.
Trade payables have short expected maturities and are measured at their nominal value without discounting.
Cash and cash equivalents consist of cash in hand and directly accessible balances at banks and similar institutions as well as shortterm highly liquid investments with original maturities of less than three months which are only subject to an insignificant risk of fluctuation in value.
Property, plant and equipment is recognised as an asset in the balance sheet if it is probable that the future economic benefits will accrue to Tradedoubler and the cost of the asset can be reliably measured. The cost of acquisition is defined as the purchase price and the costs of putting the asset in place.
Property, plant and equipment is recognised in the group at cost less accumulated depreciation and any impairment losses. Additional expenditure is added at cost only if it is probable that the future economic benefit associated with the asset will increase. All other expenditure is expensed.
Property, plant and equipment consisting of units with different useful lives are treated as separate items of property, plant and equipment.
The carrying amount of an item of property, plant and equipment is derecognised on retirement or disposal or when no future economic benefits can be expected from its use. Gains or losses arising from disposal or retirement of an asset consist of the difference between the selling price and the asset's carrying amount less directly related selling expenses. Gains and losses are recognised as other operating income/expenses.
The leases in the group have been classified as operating leases, which means that the lessor retains the absolute majority of the risks and the benefits of ownership of an asset. Operating leases mean that leasing fees are expensed on a straight-line basis over the term of the lease, which may differ in practice from the amount of leasing fees paid during the year.
Depreciation takes place on a straight-line basis over the estimated useful life of the asset.
Equipment Three to five years
An assessment is made of an asset's residual value and useful life every year.
Goodwill is measured at cost less any accumulated impairment losses. Goodwill is distributed to cash-generating units and is tested at least once annually for any impairment need. Impairment testing is carried out more frequently if there are indications that the unit may need to be impaired. If the recoverable amount of the cash-generating unit is less than the unit's carrying amount, the impairment loss is allocated first to reduce any goodwill carrying amount allocated to the unit and is then allocated proportionately to the unit's other assets based on the carrying amount of each asset in the unit.
In business combinations where the cost of acquisition is less than the net value of acquired assets, and liabilities and contingent liabilities assumed, the difference is recognised directly in net profit.
Expenses for new or substantially improved products or processes are carried as assets in the balance sheet only if the product or process is technologically or commercially viable, the group has sufficient resources to complete development and that it is possible to estimate future revenues in a reliable manner. Capitalisation may occur when a new platform or functionality is developed and includes costs of materials, direct work and a reasonable share of the indirect costs. System maintenance costs are expensed as they arise. Capitalised development expenses are recognised at cost less accumulated depreciation and impairment losses.
This category includes system tools for customer management and finance among other things. These intangible assets are deemed to have a longer useful life than those within the Development category, mainly due to a longer product lifecycle in the market. In this category, capitalised expenditure is also recognised at cost less accumulated amortisation and impairment losses.
Additional costs for capitalised intangible assets are recognised as an asset in the balance sheet only when they increase the future economic benefits of the specific asset to which they relate to. All other costs are expensed as they arise.
Amortisation is recognised in the income statement on a straightline basis over the estimated useful lives of the intangible assets, provided such useful lives are determinable. Goodwill and intangible assets with an indeterminable useful life are tested for impairment on an annual basis and as soon as there are indications suggesting that the asset in question has decreased in value. Intangible assets that may be amortised are amortised from the date from which they are available for use. The estimated useful lives are:
| Development | Three years |
|---|---|
| Administration and support | Five years |
The carrying amounts of the group's assets are tested on each balance sheet date in order to determine if there is any indication of an impairment need. IAS 36 is applied for testing impairment needs of assets other than financial assets, which are tested in accordance with IAS 39, assets for sale and disposal groups, which are tested in line with IFRS 5, and deferred tax receivables. For exempted assets, as above, the carrying amount is tested in accordance with each standard.
If there is an indication for impairment on goodwill, intangible or tangible assets with indeterminate period of use and intangible assets not in use, the asset's recoverable amount is calculated using IAS 36. If it is impossible to determine significant independent cash flows to a single asset, the assets should be grouped, in conjunction with impairment testing, at the lowest level at which it is possible to identify significant independent cash flows – a so-called cashgenerating unit.
An impairment loss is recognised when the carrying amount of an asset or cash-generating unit (group of units) exceeds its recoverable amount. An impairment loss is charged to the income statement.
The recoverable amount is the higher of the fair value less selling expenses and value in use. In calculating value in use, future cash flows are discounted using a discounting factor that takes into account the risk-free rate of interest and the risk relating to the specific asset.
Goodwill consists of the amount by which the acquisition cost exceeds the fair value of the net assets acquired by the group in conjunction with a company acquisition or acquisition of assets and liabilities Goodwill arising from the acquisition of an associated company is included in the carrying amount for the associated company. Goodwill is allocated to cash-generating units upon acquisition and is not amortised, but is tested annually to identify any impairment needs. Goodwill is measured at acquisition cost less any accumulated impairment losses. Impairments of goodwill are not reversed. The recognised revenue from the disposal of a group company includes the remaining carrying amount of the goodwill attributable to the divested unit.
In connection with quarterly financial reporting, Tradedoubler assesses whether there is objective evidence that a financial asset or group of assets requires impairment. Objective evidence consists partly of observable circumstances that occurred and which have a negative impact on the possibility to recover the cost of acquisition.
The recoverable amount of assets belonging to the categories of loan receivables and trade receivables, which are recognised at amortised cost, is measured as the present value of future cash flows discounted by the effective rate that applied upon initial recognition of the asset. Assets with short maturities are not discounted. An impairment loss is charged to the income statement.
An impairment loss is reversed if there is an indication that an impairment need no longer exists and a change has occurred in the assumptions that provided the basis for the measurement of the recoverable amount. A reversal is only made to the extent that the carrying amount of the asset after reversal does not exceed the carrying amount that would have been recognised, less amortisation where appropriate, if no impairment had been made. Impairment of goodwill is never reversed.
Impairments of loan receivables and trade receivables recognised at amortised cost are reversed if a later increase in the recoverable amount can be objectively attributed to an event that occurred after the impairment was made.
The calculation of earnings per share is based on the group's net profit for the year attributable to the parent company's shareholders and on the weighted average number of shares in issue during the year. In the calculation of earnings per share after dilution, the profit and the average number of shares are adjusted to take account of the effects of dilutive potential ordinary shares, which consisted of options issued to employees during the presented periods.
The group mainly operates defined contribution pension plans. In defined contribution plans, Tradedoubler pays fixed fees to an insurance company and has no obligation to pay further amounts. Obligations in respect of charges for defined contribution plans
Compensation on termination of employment A provision is recognised in conjunction with the termination of employment only if it is evident that Tradedoubler is obligated, without any realistic possibility of withdrawal, by a formal detailed plan to terminate employment before the normal retirement date. When remuneration is offered to encourage voluntary retirement, it is recognised as a cost if it is likely that the offer will be accepted and the number of employees accepting the offer can be reliably estimated.
The company's share programme allows selected persons to acquire shares in the parent company. The fair value of the shares is recognised as a personnel cost in the profit and loss account. The fair value of the shares is estimated based on generally accepted valuation models taking into consideration the terms and conditions prevailing on the allotment date, including the closing price, statistics on the volatility of the share price and estimated future dividends. The costs will be allocated during the vesting period.
During every year-end closing, an assessment is made as to whether, and to what degree, the vesting conditions will be fulfilled. If this assessment results in an estimate of a lower number of shares being earned during the vesting period, previously expensed amounts are reversed in the income statement. This means that in those cases where the vesting requirements are not fulfilled, no costs will be recognised in the income statement, as viewed over the entire vesting period.
Social security contributions attributable to the share programme are recognised as a personnel cost and a personnel-related liability, respectively. Provisions for social security contributions are calculated using the best estimate at each closing date of the group's future liability for social security contributions. The provision for social security contributions is allocated over the vesting period. The calculations are based on the fair value of the shares on each closing date. The provision for social security contributions also includes social security contributions for equity instruments.
Provisions are recognised in the balance sheet when the group has an existing legal or informal obligation as a result of past events, and it is probable that an outflow of financial resources will be required to settle the obligation and that the amount can be reliably estimated. Provisions include leases where the outlay exceeds the economic benefits. In cases where the effect of payment timing is significant, provisions are calculated by discounting the expected future cash flow at an interest rate before tax that reflects current market assessments of the time value of money, and if applicable, the risks specific to the liability.
Income taxes in the income statement include both current tax and deferred tax. Taxes are recognised in the income statement except where the underlying transaction is recognised in other comprehensive income or directly against equity.
Current tax is tax that shall be paid or received in respect of the current year, using the tax rates which, have been enacted or which in practice were enacted on the balance sheet date. This also includes adjustments of current tax relating to previous periods.
Deferred taxes are estimated in accordance with the liability method, based on temporary differences between the tax bases of assets and liabilities and their carrying amounts. The following temporary differences not taken into consideration; temporary differences arising on the initial recognition of goodwill, the initial recognition of assets and liabilities that are not business combinations and, which on the transaction date did not affect the recognised or taxable result. Furthermore, temporary differences are not taken into consideration that are attributable to investments in subsidiaries and associated companies and, which are not expected to be reversed within the foreseeable future. The measurement of deferred tax is based on how the carrying amounts of assets or liabilities are expected to be realised or settled. Deferred tax is measured using the tax rates and tax regulations which, have been enacted or which in practice were enacted on the balance sheet date.
Deferred tax assets in respect of deductible temporary differences and loss carry-forwards are only recognised to the extent that it is probable that they can be utilised. The value of deferred tax assets is reduced when it is no longer considered probable that they can be utilised.
Any additional income tax arising on dividends is recognised at the same time as the dividend is recognised as a liability.
A contingent liability is recognised when there is a possible obligation arising from past events and whose occurrence can only be confirmed by one or more uncertain future events or when an obligation
arises which cannot be recognised as a liability or provision as it is not probable that an outflow of resources will be required or the size of the obligation cannot be estimated with sufficient reliability.
The preparation of accounts and the application of accounting policies is often based on the management's judgements and on estimates and assumptions that are deemed to be reasonable at the time the judgement was made. However, the result may be different using different judgements, assumptions and estimates and events can occur which can require a significant adjustment of the carrying amount of the asset or liability in question. The accounting policies whose application is based on such judgements are described below and the most important sources of uncertainty in the estimates that the company believes may have the most important impact on the group's reported results and financial position. The information in this note refers to those areas, where risk of future adjustments of carrying amounts is greatest.
Testing of goodwill is based on estimates and assumptions regarding the future. As the company conducts operations in a relatively young industry, which is characterised by development and constant changes, these assumptions are an uncertainty factor. The basis for Tradedoubler's goodwill impairment test was, as previous year's, a 10-year discounted cash flow analysis per cash generating unit (segment), which are Nordics DACH, South, France & Benelux and UK & Ireland. In order to determine expected future cash flows as the basis for calculations, assumptions are med on important parameters such as sales growth and gross margins for the company's various business flows and future cost levels. The present value calculation is further based on a so-called WACC which is based on specific valuation technical assumptions. Neither 2017 impairment nor 2016 resulted in any write-downs. Further information on the impairment test is provided in Note C13.
Development expenses are capitalised in the balance sheet when certain criteria are met. These criteria include, among other things, to assess the the development is technically and commercially viable and that it is possible to estimate future revenues in a reliable manner. In Note C1 a more detailed description of these criteria can be found. Capitalised development are expensed on a straight-line basis. In order to determine the depreciation period assumptions are made about the activated development market longevity. Impairment is performed annually. The impairment is performed in the same way as described for goodwill above, based on the present value of expected future cash flows for each enabled development project. Impairment test in 2017 resulted in a write-down of SEK 4 M (24). See Note C13 for more information.
A basic accounting principle is the so-called the principle of going concern where the parent company and the group's financial statements are prepared based on the assumption of continued operations.
Since the company has no new contracted financing to cover the financing need arising in 2018 in connection with the payment of the current bond loan of SEK 134 M, the company has made assessments regarding the company's ability to subscribe for such funding in 2018 when it adopts its continued operation. Based on the financing work undertaken, the management and the board of directors believe that new funding to ensure the implementation of the company's business plan in the coming years will be possible in 2018. Important parameters in this assessment have been assessed financing needs based on the 2018 liquidity forecasts, ongoing exploration of the capital market as well as the company's current and expected earnings performance during the year.
| SEK '000 | 2017 | 2016 |
|---|---|---|
| Transaction revenue | 1,129,069 | 1,295,471 |
| Other revenue | 43,955 | 48,523 |
| Net sales | 1,173,025 | 1,343,994 |
Tradedoubler had five segments during 2017. These segments consisted of DACH, France & Benelux, Nordics, South, and UK & Ireland. 2016 comperative period has been recalculated according to the new segment structure.
The group's chief operating decision-maker continually monitored Net Sales and EBITDA per segment.
Intra-group transfer prices between different segments are set based on the "arm's length" principle, in other words, between parties that are independent of each other, well informed and with an interest in completing the transactions.
Operating profit for the parent company, central functions and eliminations are allocated to the segments.
The same accounting policies as for the group are applied in the segment reporting.
Tradedoubler has no customers which account for revenues of more than 10 per cent of the company's total revenues for the years 2017 or 2016.
| Net Sales* | EBITDA** | |||
|---|---|---|---|---|
| SEK '000 | 2017 | 2016 | 2017 | 2016 |
| Segment DACH | 165,280 | 202,412 | 14,404 | 14,804 |
| Segment France & Benelux |
300,720 | 301,237 | 15,588 | 11,432 |
| Segment Nordics | 303,566 | 318,231 | 23,408 | 29,561 |
| Segment South | 149,889 | 158,241 | 19,140 | 18,430 |
| Segment UK & Ireland | 253,569 | 363,874 | 6,108 | 12,455 |
| Total | 1,173,025 | 1,343,994 | 78,648 | 86,683 |
| Group management and support functions |
– | – | -55,454 | -92,851 |
| Total | 1,173,025 | 1,343,994 | 23,194 | -6,168 |
*Net sales in 2016 includes a correction of SEK 5 M related to a reverse of the prepayment accrual made in year-end 2014. For more information see Note C25.
**EBITDA has been affected by change related items, see Note C25 for further information. The variance between EBITDA above of SEK 23,194,000 (-6,168,000) and group EBIT according to the Consolidated financial statements is attributed to depreciation and amortization of SEK 27,629,000 (45,102,000).
| Net Sales | |||
|---|---|---|---|
| SEK '000 | 2017 | 2016 | |
| Sweden | 126,785 | 139,533 | |
| Great Britain | 251,770 | 355,673 | |
| France | 241,372 | 242,336 | |
| Germany | 134,670 | 152,545 | |
| Italy | 75,214 | 83,038 | |
| Spain | 74,186 | 78,186 | |
| Poland | 103,594 | 93,266 | |
| Netherlands | 59,238 | 56,726 | |
| Other | 106,194 | 142,691 | |
| Total | 1,173,025 | 1,343,994 |
Revenue from external customers is recognised per geographical area in which the revenue was generated.
For geographical information regarding goodwill, see Note C13.
In addition to goodwill Tradedoubler's other intangible assets are mainly accounted for in the parent company, for more information see Note P12 Intangible assets in notes to the Parent company accounts.
| Average number | 2017 | 2016 | ||
|---|---|---|---|---|
| of employees* | men (%) | men (%) | ||
| Parent company | ||||
| Sweden | 42 | 56 | 56 | 53 |
| Subsidiaries | ||||
| Belgium | 0 | 0 | 0 | 0 |
| Brazil | 0 | 0 | 0 | 0 |
| Denmark | 0 | 0 | 0 | 0 |
| Finland | 0 | 0 | 0 | 0 |
| France | 31 | 44 | 32 | 42 |
| Ireland | 0 | 0 | 0 | 0 |
| Italy | 22 | 43 | 16 | 44 |
| Netherlands | 13 | 67 | 13 | 65 |
| Norway | 0 | 0 | 0 | 0 |
| Poland | 32 | 54 | 30 | 47 |
| Portugal | 0 | 0 | 0 | 0 |
| Switzerland | 6 | 80 | 9 | 50 |
| Spain | 24 | 46 | 20 | 49 |
| UK | 70 | 60 | 139 | 48 |
| Sweden | 22 | 44 | 15 | 73 |
| Germany | 27 | 49 | 30 | 50 |
| Austria | 0 | 0 | 0 | 0 |
| Singapore | 5 | 75 | 1 | 100 |
| Total subsidiaries | 252 | 53 | 305 | 50 |
| Total group | 294 | 53 | 361 | 50 |
*Including permanent and temporary employees
| Share women (%) | 2017 | 2016 |
|---|---|---|
| The board of directors | 0.0 | 17.0 |
| President and other senior executives | 0.0 | 0.0 |
| Salaries and other remuneration |
Social fees (of which pension) |
Salaries and other remuneration |
Social fees (of which pension) |
|
|---|---|---|---|---|
| SEK '000 | 2017 | 2016 | ||
| Parent company | 28,210 | 11,494 | 37,678 | 15,643 |
| (2,732) | (3,680) | |||
| Subsidiaries | 120,470 | 26,717 | 149,052 | 26,732 |
| (3,522) | (4,265) | |||
| Total | 148,680 | 38,211 | 186,730 | 42,376 |
Activated personell-related development costs in 2017 amounted to SEK 14 M (22).
| 2017 | 2016 | |||||||||
|---|---|---|---|---|---|---|---|---|---|---|
| Remuneration and other benefits, (SEK '000) |
Basic salary, other remuneration, directors' fees1 |
Variable remunera tion |
Long-term incentive programs |
Pension obliga tions |
Total | Basic salary, other remuneration, directors' fees1 |
Variable remunera tion |
Long-term incentive programs |
Pension obliga tions |
Total |
| The Board of Directors | ||||||||||
| Pascal Chevalier | 763 | – | – | – | 763 | 591 | – | – | – | 591 |
| Gautier Normand | 763 | – | – | – | 763 | 591 | – | – | – | 591 |
| Jérémy Parola | 180 | – | – | – | 180 | 176 | – | – | – | 176 |
| Erik Siekmann | 180 | – | – | – | 180 | 176 | – | – | – | 176 |
| Nils Carlsson | 180 | – | – | – | 180 | 176 | – | – | – | 176 |
| Mikael Nachemson | – | – | – | – | – | 28 | – | – | – | 28 |
| Mernosh Saatchi | – | – | – | – | – | 28 | – | – | – | 28 |
| Henrik Kvick | – | – | – | – | – | 28 | – | – | – | 28 |
| Peter Åström | – | – | – | – | – | 28 | – | – | – | 28 |
| Matthias Stadelmeyer (CEO) | 3,118 | – | 312 | 69 | 3,499 | 3,020 | – | 313 | 46 | 3,379 |
| Other Group management | 3,446 | – | 129 | 364 | 3,939 | 5,611 | – | 86 | 423 | 6,120 |
| Total | 8,630 | – | 441 | 433 | 9,504 | 10,453 | – | 399 | 469 | 11 321 |
1 Directors' fees are periodised based on the calendar year.
Remuneration to the Board and group management Fees to board members and members of the board's committees The annual general meeting 2017 approved the following remuneration to the board of directors:
SEK 763,000 to the chairman of the board and Gautier Normand. SEK 180,000 to each of the other board members elected by the annual general meeting who are not employed in Tradedoubler.
The annual general meeting 2017 resolved on the following guidelines for remuneration to senior executives, which refers to the chief executive officer and other members of the group management (the company management).
The total remuneration shall be competitive in the local market in which the employee is based in order to attract, motivate and retain skilled employees. The individual remuneration should be based on the employee's experience, skills, responsibilities and performance.
The total remuneration should be based on four main components; fixed salary, variable remuneration, pension benefits and long-term incentive programme. The fixed salary shall be commercially competitive and based on experience, skills, responsibilities and performance. Variable remuneration should be commercially competitive and reward growth, operating profit and should be applied consistently throughout the group. It should be based on predetermined measurable targets, both quantitative and qualitative, and agreed in writing with the employee.
The outcome of the variable remuneration programme should have an upper ceiling, which normally should not exceed 50 per cent of the fixed salary.
Pension benefits may be offered to certain members of the company management depending on local market conditions. Swedish-based employees are offered a solution which largely corresponds with the ITP plan.
A mutual period of notice of 3-9 months shall apply for the company management. In the event of termination by the Company, termination benefits, in applicable cases, should not exceed an amount equivalent to 12 fixed monthly salaries. In the event of termination by the employee, he/she should not normally be entitled to any termination benefits.
In addition to variable remuneration, which rewards growth and operating profit during the financial year, the board considers that long-term incentive programmes are an important part of the longterm compensation strategy. The board has decided that the Company shall continue to invite the company management and other key people to participate in a long-term share-related or share-pricerelated incentive programme. The board considers that such a programme should, among other things, imply continued employment in the group. Share-related and share-price-related incentive programmes must be approved by the general meeting of shareholders. Other benefits, such as car benefit, should have a limited value in relation to the total remuneration package.
Questions regarding terms of employment for the chief executive officer are determined by the board. The chief executive officer determines terms of employment for other members of the company management after approval by the remuneration committee. The board of directors or the remuneration committee may depart from these guidelines if special grounds exist in a particular case.
| SEK '000 | 2017 | 2016 |
|---|---|---|
| Salaries and remuneration | 148,680 | 186,730 |
| Share-based payments | 564 | 645 |
| 149,244 | 187,375 | |
| Pension expenses | 6,254 | 7,944 |
| Social security contributions | 31,957 | 34,432 |
| Social security contributions attributable to share-based payments |
144 | 324 |
| 38,354 | 42,700 | |
| Total | 187,598 | 230,075 |
The aim of Tradedoubler's remuneration policy is to offer fair, competitive, market-based remuneration that promotes recruitment and retention of skilled employees.
Tradedoubler offers pension plans in some markets that are adapted to local market conditions. The pension plans are mainly defined contribution plans, i.e. Tradedoubler pays fixed fees to an insurance company and has no further obligations subsequently. Obligations regarding fees for defined contribution pension plans are recognised as a cost in the income statement when they arise. The retirement age for all senior executives is 65. No right to early retirement exists.
Tradedoubler operates a performance- and results-based annual programme for variable remuneration for employees within the group. Various quantitative and qualitative performance- and results-based targets are set for different occupational categories, based on company-wide, and regional targets for the employees. The company management receives variable remuneration which is mainly linked to the group's financial performance. The variable remuneration has a ceiling. The ceiling lies in the range of between 10 and 50 per cent of the fixed salary for the majority of employees. For the group management, the variable remuneration may amount to a maximum of 50 per cent of the fixed salary.
Variable remuneration is paid annually in arrears, however, portions of the variable salary are determined and disbursed on a quarterly basis for employees within the occupational categories ― sales and customer service.
During 2017, SEK 3 M (6.8) including social security contributions was expensed for the performance- and results-based programme for variable remuneration. Since 2015 the long-term incentive programme has replaced the variable salary for the group management.
For the CEO a mutual period of notice of 6 months shall apply. In the event of termination by the Company, the CEO is entitled to 6 months fixed salary and pension benefits. Pension benefits are based upon German praxis and do not exceed 25 per cent of the base salary. If the employment is terminated by the Company, the CEO does not have to perform any work during the last 3 months of the notice period and the CEO is, in this case, also entitled to severance payment of three months base salary. The latter shall be reduced with other income that the CEO has during this period. The CEO participate in the long-term incentive programme appproved in 2015 by the Annual General Meeting and therefore has no possibility to receive variable remuneration.
During the first six months of 2017 other group management included CFO, COO and Vice President Business Development. During the second half of 2017 until mid-November other group management included CFO and Vice President Business Development. From mid-November other group management included CFO and CTO. Within group management normally a mutual period of notice of 6 months. If an employee in group management initiates the termination notice period is never shorter than 6 months. If termination is initiated by the Company, the notice period is never shorter than 12 months. Pension benefits does not exceed 25 per cent of the basic salary for someone in the group management.
In the current group management CEO and CFO participate in the long-term incentive programme approved in 2015 by the Annual General Meeting. No member of present group management has a company car or any other material benefits.
Long-term incentive programmes
The group had one outstanding long-term incentive programme during 2017.
Supply of shares to the participants of the Performance-related share programme has been secured through previous purchases of own shares in TradeDoubler AB (publ). In year-end Tradedoubler had 2,010,473 shares in its own custody. It is the view of the board that existing shares in own custody will in all materiality cover the outcome of the Performance-related share programmes.
| SEK '000 | 2017 | 2016 |
|---|---|---|
| Personnel expense (including social security contributions) arising from share-based remuneration |
707 | 969 |
| Total personnel expense arising from share-based remuneration |
707 | 969 |
The annual general meeting 2015 resolved on performance-related share programme for key people in the group. The programme aim to boost the group's attractiveness as an employer and to encourage key personnel to continued loyalty and continued good performance.
The programme 2015 included 24 key employees including the CEO. Participants in the programme must waive their right to short term variable remuneration during the three year term of the programme. Allocation in the programme is contingent upon that the share price, including dividends, in Tradedoubler increases with more than 100 per cent during the performance period starting on 1 June 2015 and ending 31 May 2018 (the "Performance Period"). If the goal is met the shares will be allotted, if not there will be no allotment. An even greater increase in share price will not result in any increased allocation. The calculation shall be based on a comparison of the average price paid for the share on Nasdaq Stockholm during the three months period immediately before 1 June 2015 and the three months period immediately before 31 May 2018. For allotment of shares it is further required, with certain exceptions, that the employment within the Tradedoubler group has remained during the entire Performance Period.
The annual general meeting 2017 resolved on change of the terms of the long term incentive programme 2015 in order for the Board to be able to revolve upon allocation if the share price by the end of the Performance period is within the interval SEK 10-15. For the participants the proposal will result in more favourable terms than the terms adopted by the AGM 2015 being that allocation would require that the share price during the Performance period increases to at least SEK 15.
In the event of a change of control in Tradedoubler during the Performance Period it is not required that the share price has increased with 100 per cent in order for allotment to take place. Consideration shall be taken to the proportion of the Performance Period elapsed before the change of control occurs. This means for example that if a change of control occurs on 31 December 2016 and the share price at that time has increased with more than 50 per cent (the calculation shall be based on an average price paid for the share on Nasdaq Stockholm during the three months period immediately before 1 June 2015 and the three months period immediately before the occurrence of the change of control) the participants shall be entitled to full allotment under the programme. In case there is no reasonable liquidity in the share the participants shall be compensated with cash remuneration equivalent to the value of the shares the participant would be entitled to.
| No of remaining participants |
Total no of outstand ing share rights |
||
|---|---|---|---|
| Share programme 2015 | 9 | 1,324,000 |
| SEK '000 | 2017 | 2016 |
|---|---|---|
| EY | ||
| Audit assignments | 3,441 | 3,722 |
| Tax services | 312 | 161 |
| Other assignments | 438 | 543 |
| Other auditors | ||
| Audit assignments | 86 | 164 |
| Tax services | – | 2 |
| Other assignments | 25 | – |
| Total | 4,302 | 4,592 |
Audit assignments refers to the examination of the annual accounts, the consolidated accounts and accounting records as well as the administration of the board of directors and the CEO, other duties that the Company´s auditors are obliged to perform as well as advice or other assistance arising from observations during such examination and implementation of such duties. In addition, the auditor reviewed the corporate governance report and the sustainability report. The auditor has also reviewed the interim report for the period January-June 2017 and has been retained for certain advice, most of which pertained to audit-related consultations regarding accounting and tax matters.
| SEK '000 | 2017 | 2016 |
|---|---|---|
| Remuneration cost to publishers | 912,738 | 1,041,753 |
| Employee costs | 166,813 | 209,311 |
| Depreciation and amortisation | 27,629 | 45,102 |
| Other operating costs | 70,280 | 99,099 |
| Total | 1,177,459 | 1,395,266 |
The decrease in employee costs and other operating costs can mainly be explained by a reduction in number of employees and various efficiency projects that has been put in place.
Non-terminable lease payments amount to:
| SEK '000 | 2017 | 2016 |
|---|---|---|
| Within one year | 15,799 | 15,869 |
| Between one and five years | 38,733 | 20,910 |
| Longer than five years | 8,807 | 16,694 |
| 63,338 | 53,473 |
The operating leases in the group are mainly related to rent for premises.
Costs for operating leases amounted to SEK 17,398,000 (19,861,000) for the group in 2017.
| SEK '000 | 2017 | 2016 |
|---|---|---|
| Interest income on bank balances & short-term investments |
319 | 1,289 |
| Interest income, other | 101 | 117 |
| Unrealised result from short-term investments | – | 419 |
| Result on sales short-term investments | 40 | – |
| Other financial income | 14,902 | 24,811 |
| Financial income | 15,362 | 26,636 |
| Interest expenses on financial liabilities measured at amortised cost |
-11,341 | -16,461 |
| Interest expense, other | -329 | -27 |
| Unrealised result from short-term investments | -131 | – |
| Result on sales short-term investments | – | -155 |
| Changes in foreign exchange rates | -2,392 | -1,379 |
| Financial expenses | -14,193 | -18,022 |
| Net financial items | 1,169 | 8,614 |
Other financial income relates to the repurchase of own bond below nominal value.
The company's tax expense is divided into the following components:
| SEK '000 | 2017 | 2016 |
|---|---|---|
| Current tax expense | ||
| Tax expense for the period | -3,387 | -2,207 |
| Tax expense related to previous periods | -1,325 | -3,352 |
| Total current tax expense | -4,712 | -5,558 |
| Deferred tax expense | ||
| Deferred tax in respect of temporary differences | -1,894 | -333 |
| Deferred tax expense due to utilisation of previous capitalised loss carryforwards for tax |
||
| purposes | 35 | -1,542 |
| Total deferred tax expense | -1,859 | -1,875 |
| Total | -6,571 | -7,434 |
The tax expense for the year can be reconciled to profit before tax according to the following:
| 2017 | 2016 | |||
|---|---|---|---|---|
| % | SEK '000 | % | SEK '000 | |
| Profit before tax | -3 265 | -42,657 | ||
| Tax according to applicable tax rate for parent company |
22.0 | 718 | 22.0 | 9,385 |
| Effect of other tax rates for foreign subsidiaries |
-9.8 | 320 | -2.8 | -1,210 |
| Adjusted estimates for previous year's loss |
||||
| carryforwards | -40.6 | -1,325 | -5.3 | -2,278 |
| Non-deductible expenses | -73.5 | -2,401 | -2.5 | -1,079 |
| Non-taxable income | 112.9 | 3,688 | 1.7 | 708 |
| Increase of loss carry forwards for tax purposes without corresponding capitalisation of deferred tax expense |
-187.5 | -6,123 | -31.2 | -13,317 |
| Utilisation of previously not capitalised loss carryforwards |
1.9 | 62 | – | – |
| Other | -26.7 | -871 | 0.8 | 357 |
| Effective tax/tax rate | -201.2 | -6,571 | -17.4 | -7,434 |
Deferred tax assets and tax liabilities are attributable to the following:
| Deferred tax assets | Deferred tax liabilities | Net | ||||
|---|---|---|---|---|---|---|
| SEK '000 | 2017 | 2016 | 2017 | 2016 | 2017 | 2016 |
| Loss carryforwards | 428 | 497 | 428 | 497 | ||
| Other receivables | 139 | 389 | 139 | 389 | ||
| Other liabilities | 3,152 | 3,498 | -1,383 | -711 | 1,769 | 2,787 |
| Other non-current assets | 458 | 759 | 458 | 759 | ||
| Other unused tax deductions1 | 14,000 | 14,000 | 14,000 | 14,000 | ||
| Deferred tax assets and tax liabilities | 18,177 | 19,143 | -1,383 | -711 | 16,794 | 18,432 |
1 In 2007 Tradedoubler Ltd. completed the acquisition of all shares in IMW with proceeds related to a loan from Tradedoubler AB. HMRC (English tax authority) has retrospectively refused deduction of interest in Tradedoubler Ltd's tax declaration due to UK thin capitalization rules. Tradedoubler AB has at the same time declared interest income and, thus, a double taxation arise. Tradedoubler AB has in an application requested that the Swedish tax authority should initiate proceedings with HMRC in order to eliminate the double taxation that has arisen. The total book value amounts to SEK 14 M, and Tradedoubler estimates that this amount will be collectable.
Deductible temporary differences and loss carryforwards for tax purposes for which deferred tax assets have not been recognised in the income statement and balance sheet:
| SEK '000 | 2017 | 2016 |
|---|---|---|
| Tax on loss carryforwards | 66,352 | 55,737 |
| Total | 66,352 | 55,737 |
The value for tax purposes of capital loss carryforwards of SEK 428,000 and non-capital loss carryforwards of SEK 66,352,000 (of which SEK 59,269,000 is related to the parent company), have a perpetual term.
| SEK '000 | Capitalisation of loss carryforwards |
Other receivables |
Other liabilities |
Other non current assets |
Other unused tax deductions |
Deferred tax assets and tax liabilities |
|---|---|---|---|---|---|---|
| Balance at Jan 1, 2016 | 929 | 769 | 3,799 | 780 | 14,000 | 20,277 |
| Recognised via income statement | -1,542 | 24 | -843 | 486 | – | -1,875 |
| Reclassification | 1,164 | -426 | -221 | -517 | – | 0 |
| Translation difference | -54 | 22 | 52 | 10 | – | 30 |
| Balance at Dec 31, 2016 | 497 | 389 | 2,787 | 759 | 14,000 | 18,432 |
| Balance at Jan 1, 2017 | 497 | 389 | 2,787 | 759 | 14,000 | 18,432 |
| Recognised via income statement | 57 | -240 | -1,364 | -312 | – | -1,859 |
| Reclassification | -137 | – | 92 | – | – | -45 |
| Translation difference | 11 | -10 | 254 | 11 | – | 266 |
| Balance at Dec 31, 2017 | 428 | 139 | 1,769 | 458 | 14,000 | 16,794 |
| 2017 | 2016 | |||||||||
|---|---|---|---|---|---|---|---|---|---|---|
| SEK '000 | Assets available for sale |
Loans and receivables |
At fair value via the Profit & Loss |
Other financial liabilities |
Total carrying amount |
Assets available for sale |
Loans and receivables |
At fair value via the Profit & Loss |
Other financial liabilities |
Total carrying amount |
| Shares and participation in other companies |
11 128 | 11 128 | 11 128 | 11 128 | ||||||
| Trade receivables | 250 703 | 250 703 | 260 902 | 260 902 | ||||||
| Short term investments | – | 40 622 | 40 622 | |||||||
| Cash and bank balances | 68 662 | 68 662 | 169 198 | 169 198 | ||||||
| Total financial assets | 11 128 | 319 365 | 330 493 | 11 128 | 430 100 | 40 622 | 481 850 | |||
| Bond loan | 132 946 | 132 946 | 193 856 | 193 856 | ||||||
| Trade payables | 12 696 | 12 696 | 22 638 | 22 638 | ||||||
| Contingent additional purchase price |
3 633 | 3 633 | 15 351 | 15 351 | ||||||
| Liabilities to publishers | 257 942 | 257 942 | 250 318 | 250 318 | ||||||
| Total financial liabilities | 407 217 | 407 217 | 482 163 | 482 163 |
Determination of fair value is as a valuation hierarchy consisting of three levels. The levels reflect the extent to which fair value is based on observable market data or assumptions.
Level 1 fair value is determined based on the observed (unadjusted) quoted prices in active markets for identical assets and liabilities.
Level 2 fair value is determined using valuation models based on observable for the asset or liability other than quoted prices included in Level 1.
Level 3 fair value is determined using valuation models where
All Tradedoubler's assets, valued at fair value through profit and loss, are valued at Level 1. Tradedoubler currently has no liabilities valued at fair value through the Profit & Loss. The bond loan fair value, valued according to level 2, amounted to SEK 106,000,00 (based on liquid trading price), compared to the carrying amount of SEK 132,946,000. Shares and participation in other companies and contingent additional purchase price is valued according to level 3.
| SEK '000 | Development expenses |
Administration & Support |
Goodwill | Other | Total |
|---|---|---|---|---|---|
| Accumulated acquisition costs | |||||
| Opening balance at Jan 1, 2016 | 98'314 | 46,548 | 534,050 | 299 | 679,211 |
| Investments for the year | 33'699 | – | – | -86 | 33,613 |
| Acquisitions | – | – | 23,252 | – | 23,252 |
| Sales/disposals | – | – | – | – | – |
| Translation difference | – | – | -5,285 | 128 | -5,157 |
| Closing balance at Dec 31, 2016 | 132,013 | 46,548 | 552,017 | 341 | 730,919 |
| Opening balance at Jan 1, 2017 | 132,013 | 46,548 | 552,017 | 341 | 730,919 |
| Investments for the year | 16,929 | – | – | 703 | 17,632 |
| Acquisitions | – | – | 3,350 | – | 3,350 |
| Sales/disposals | – | – | – | – | – |
| Translation difference | – | – | 7,063 | 135 | 7,198 |
| Closing balance at Dec 31, 2017 | 148,942 | 46,548 | 562,430 | 1,179 | 759,099 |
| Accumulated amortisation and impairment losses | |||||
| Opening balance at Jan 1, 2016 | -53,886 | -29,806 | -287,910 | -299 | -371,902 |
| Amortisation | -35,178 | -7,365 | – | 23 | -42,519 |
| Sales/disposals | – | – | – | – | – |
| Translation difference | – | – | 8,966 | -166 | 8,800 |
| Closing balance Dec 31, 2016 | -89,063 | -37,171 | -278,944 | -442 | -405,621 |
| Opening balance at Jan 1, 2017 | -89,063 | -37,171 | -278,944 | -442 | -405,621 |
| Amortisation | -17,123 | -6,849 | – | -77 | -42,519 |
| Sales/disposals | – | – | – | – | – |
| Translation difference | – | – | -3,099 | -138 | 8,800 |
| Closing balance Dec 31, 2017 | -106,186 | -44,020 | -282,042 | -657 | -439,341 |
| Carrying amounts | |||||
| At Jan 1, 2016 | 44,429 | 16,741 | 246,140 | 0 | 307,310 |
| At Dec 31, 2016 | 42,950 | 9,377 | 273,073 | -101 | 307,310 |
| At Dec 31, 2017 | 42,756 | 2,528 | 280,388 | 522 | 326,193 |
Amortisation of intangible assets is included in administrative expenses. All intangible assets, aside from goodwill, are amortised. For further information about depreciation methods, see Note C1 Accounting Policies.
Goodwill is tested annually for impairment or as soon as there are indications of a decline in value. The impairment for 2017 has, as previous years, been performed in connection with the preparation of the year-end report and based on a 10-year discounted cash flow analysis per cash generating unit (segment). Impairment in 2017 did not result in any writedown. The future cash flows on which the valuation is based on is based primarly on assumptions of sales growth and gross margin development for the company's various business flows and future cost levels. Estimated cash flows has been discounted with WACC based on a risk-free rate of interest plus a stock market premium. WACC before tax in the estimates for the six cash-generating units on 31 December 2017 was 16.4 (15.6) per cent. WACC after tax was 13.5 (13.0) per cent.
A sensitivity analysis shows that an increase in WACC after tax of 2 percentage units combined with a decreased growth rate after the forecast period of a half percentage unit, each of which is reasonably likely, indicates that there is margin for all segments.
For estimation of future revenue and growth both external and internal assumptions are used, which may differ from market to market. The short-term forecasts and market position have a major impact on the estimated future growth in the segments. Tradedoubler's forecast period extends until 2027. The growth rate in the forecast period is in line with the outlook for the increased addressable market the company plans to address in accordance with the new strategy and the adoption of market changes. The growth rate after the forecast period is set at 1.5 (1.5) per cent per year. It is an assessment of the then addressable markets estimated growth. The forecast period exceeds five years since the market for internet marketing is a relatively new market and we expect strong growth over the next ten years.
Goodwill allocated per cash generating unit
| SEK '000 | 2017 | 2016 |
|---|---|---|
| Nordics | 74,497 | 69,957 |
| UK & Ireland | 46,582 | 46,590 |
| France & Benelux | 47,109 | 45,732 |
| DACH | 62,339 | 62,384 |
| South | 26,285 | 25,511 |
| R-Advertising | 23,576 | 22,899 |
| Total | 280,388 | 273,073 |
Goodwill has increased in 2017 with SEK 7 M, SEK 3 M is related to the acquisition of Metapic which is reported in segment Nordics. The rest is attributed to currency translation. In 2017, R-Advertising was reclassified as its own cash-generating unit.
In addition to goodwill, Tradedoubler's other intangible assets are mainly recorded in the parent company. See Note M12 Intangible assets in the notes to the parent company's financial statements.
| Equipment, tools, | |
|---|---|
| SEK '000 | fixtures and fittings |
| Accumulated cost | |
| Opening balance Jan 1, 2016 | 29,481 |
| Investments | 2,132 |
| Acquisitions | 2,871 |
| Sales/Disposals | -2,241 |
| Translation difference | 3 |
| Closing balance Dec 31, 2016 | 32,245 |
| Opening balance Jan 1, 2017 | 32,245 |
| Investments | 729 |
| Acquisitions | – |
| Sales/Disposals | -1,761 |
| Translation difference | 413 |
| Closing balance Dec 31, 2017 | 31,627 |
| Accumulated depreciation | |
| Opening balance Jan 1, 2016 | -23,249 |
| Depreciation | -2,583 |
| Deprecation on acquisitions | -2,301 |
| Sales/Disposals | 2,241 |
| Translation difference | -168 |
| Closing balance Dec 31, 2016 | -26,061 |
| Opening balance Jan 1, 2017 | -26,061 |
| Depreciation | -3,579 |
| Depreciation on acquisitions | – |
| Sales/Disposals | 1,579 |
| Translation difference | -382 |
| Closing balance Dec 31, 2017 | -28,443 |
| Carrying amounts | |
| At Jan 1, 2016 | 6,231 |
| At Dec 31, 2016 | 6,185 |
At Dec 31, 2017 3,184
| SEK '000 | 2017 | 2016 |
|---|---|---|
| Rent of promises | 2,906 | 2,783 |
| Accrued income | 10,274 | 1,089 |
| Accrued interest income | – | 139 |
| Other | 3,567 | 4,964 |
| Total | 16,747 | 8,975 |
Share capital refers to the parent company's share capital. Each share carries one vote and those entitled to vote may vote for the full number of shares represented and owned without any restriction in voting rights. All shares carry equal rights to share in the company's assets and profits and in any surplus on liquidation.
At December 31, 2017, Tradedoubler AB had a share capital of SEK 18.4 M distributed among 45,927,449 shares, each share with a par value of SEK 0.40.
| Reconciliation of number of shares | Number of shares issued |
Issued share capital |
|---|---|---|
| Number of shares issued January 1, 2017* |
45,927,449 | 18,370,978 |
| Number of shares issued December 31, 2017** |
45,927,449 | 18,370,978 |
*of which 2,855,554 shares are in own custody
**of which 2,010,473 shares are in own custody
The translation reserve included all exchange differences that arise on translation of financial statements from foreign operations that have prepared their financial statements in another currency than the currency which the group's financial statements are presented in. The parent company and group present their financial statements in Swedish kronor (SEK).
Retained earnings including net profit for the year includes profits earned in the parent company and its subsidiaries. Previous allocations to the statutory reserve, excluding transferred share premium reserves, are included in this equity item.
The board and CEO will propose to Tradedoubler's Annual General Meeting 2018 that no dividend should be declared for 2017 in accordance with Tradedoubler's guidelines.
Tradedoubler has a policy of distributing at least 50 per cent of the profit after tax, provided that a suitable capital structure is maintained. Distribution may occur through share dividends, share redemption and share buyback.
Group capital under management is composed of shareholders' equity, which at the end of 2017 amounted to SEK 205.5 M (206.5) in total and loan capital, which at the end of 2017 amounted to SEK 134 (196). The measures of the company's capital structure used for control purposes are the interest coverage ratio, defined as profit before tax, plus interest expense, divided by interest expense; and the debt/ equity ratio, defined as the total of interest-bearing liabilities and pension provisions less cash and cash equivalents and interest-bearing receivables, divided by shareholders' equity. The Group's goal in managing capital is to safeguard its survival and freedom of action and to ensure that shareholders receive a return on their investment. The distribution between shareholders' equity and loan capital should be such that a good balance is achieved between risk and
return. If necessary, the capital structure is adapted to changing economic conditions and other markets factors. To maintain and adapt its capital structure, the Group can distribute funds, raise shareholder's equity by issuing new shares or capital contributions, or reduce or increase liabilities.
Total holdings of own shares at the end of 2017 amounted to 2,010,473 ordinary shares.
No outcome occurred during 2017 in ongoing programme. For more information regarding long-term incentive programme, see notes to the consolidated accounts, C6 Share-based remuneration.
| 2017 | 2016 | |
|---|---|---|
| Profit for the year attributable to the parent company's shareholders (SEK '000) |
-9,836 | -50,091 |
| Weighted average number of outstanding ordinary shares before and after dilution |
||
| (thousands) | 43,565 | 42,373 |
| Earnings per share, before and after dilution | -0.23 | -1.18 |
Performance-related share programme adopted at the annual general meeting 2015 can give rise to a future dilution, the maximum outcome of the programme amounts to 2,400,000 shares and it is the view of the board that existing shares in own custody will in all materiality cover the outcome of the programme. For further informations see Note C6 Share-based remuneration.
In December 2013 Tradedoubler issued a five-year unsecured bond loan of SEK 250 M, maturing on December 20, 2018 . The bond has a fixed coupon of 6.75 percent and a total limit of SEK 375 M. The bond was listed on NASDAQ Stockholm in January 2014. Received payment was SEK 244.6 M after transaction costs.
During 2016 Tradedoubler repurchased its own bond with a nominal value of total SEK 54 M, and in 2017 additional bonds were repurchased with a nominal value totaling SEK 62 M, which has reduced the outstanding bond to SEK 134 M per 31 December 2017.
Under the terms of the bond dividends can be paid provided that the ratio of consolidated net debt and EBITDA does not exceeds 2.00 and the Group's interest coverage ratio exceeds 3.00 . Dividends are also limited to the right of (A) the consolidated net income in the latest audited financial statements and (B) an amount equal to the Group's net cash position minus SEK 100 M. The complete terms of the bond 's prospectus is available on the Company's website and at the Swedish Financial Supervisory Authority.
The above terms indicates that no dividend can be paid for 2017.
| SEK '000 | 2017 | 2016 |
|---|---|---|
| Prepayments from clients | 46,658 | 97,935 |
| VAT | 9,128 | 10,229 |
| Withholding tax and social security contributions | 10,364 | 10,983 |
| Other | 692 | 454 |
| Total | 66,843 | 119,600 |
| SEK '000 | 2017 | 2016 |
|---|---|---|
| Holiday pay | 5,974 | 7,258 |
| Other payroll expenses | 2,503 | 6,003 |
| Provision for rent, redundant premises | 2,050 | 4,029 |
| Provision for restruct | 802 | 13,632 |
| Provision for consultancy | 4,268 | 3,583 |
| Provision for audit | 3,464 | 2,633 |
| Provision for closing of legal entities | 339 | 2,423 |
| Other | 13,835 | 16,206 |
| Total | 33,236 | 55,768 |
Tradedoubler's Finance policy has been drawn up for the purpose of balancing the group's financial risks. The policy is continually reviewed and is adopted by the board. Responsibility for the group's financial transactions and risks is tasked to the group's central financial department.
Cash and cash equivalents are mainly invested in bank accounts held with Tradedoubler's two main banks at the best possible bank interest. Previously Tradedoubler has also invested its excess liquidity and the unutilised portion of the bond loan in corporate bonds but all of these have now been sold.
| SEK '000 | AA | A | Total |
|---|---|---|---|
| Cash and cash equivalents | 55,568 | 13,094 | 68,662 |
| Sum | 55,568 | 13,094 | 68,662 |
The group and the company are exposed to credit risk, which arises primarily in connection with trade receivables. Trade receivables at year-end amounted to SEK 277 M (289). New clients are subjected to credit rating reports, which provides the basis for setting credit and payment terms and conditions for each client. The credit controls provide an assessment of clients' financial position based on information obtained from various credit information companies.
The group has established a credit policy that determines how clients are managed, with decision-making levels set for various credit limits. Tradedoubler strives for advance payment from clients. When deviations from advance payment are made, the company's credit policy serves as the basis for decision.
Tradedoubler has not noticed increased bad debt losses in any geographical area. However, the group management is actively monitoring the situation. No specific risk concentration exists for any customer category.
Incurred bad debt losses during the year amounted to SEK 6,906,000 (2,515,000) in the group, net after reversal of liabilities to publishers.
Provision for anticipated bad debt losses in the balance sheet amounted to SEK 26,106,000 (27,919,000).
Since a publisher in most cases only gets paid when the customer has paid the invoice, the company's customer credit risk is reduced in this way.
| 2017 | 2016 | |
|---|---|---|
| SEK '000 | Carrying amount |
Carrying amount |
| Trade receivables not due | 163,097 | 184,381 |
| Trade receivables, due 0-30 days | 64,833 | 51,759 |
| Trade receivables, due 31-90 days | 17,402 | 20,925 |
| Trade receivables, due >90+ days | 31,477 | 31,757 |
| 276,810 | 288,822 |
| 2017 | 2016 | |
|---|---|---|
| SEK '000 | Carrying amount |
Carrying amount |
| Trade receivables, due 0-30 days | -830 | -1,723 |
| Trade receivables, due 31-90 days | -1,982 | -1,214 |
| Trade receivables, due >90+ days | -23,294 | -24,983 |
| -26,106 | -27,919 |
Foreign exchange risk refers to the risk that changes in exchange rates may affect the consolidated income statement, balance sheet and cash flow statement. Foreign exchange risk exists in the form of transaction risk and translation risk. Tradedoubler is exposed to foreign exchange risk in 17 countries involving nine different currencies, with Euro (EUR) and British pounds (GBP) representing the majority share.
In 2017, approximately 51 (48) per cent of group sales were made in EUR and approximately 22 (27) per cent in GBP. In 2017, approximately 42 (31) per cent of the group's costs were in EUR and approximately 16 (28) per cent in GBP.
Exposure attributable to exchange rate fluctuations in client and supplier invoices is limited since invoicing to customers and from suppliers largely occurs in local currency for all companies in the group.
Tradedoubler is also exposed to foreign exchange risk in the parent company's intra-group lending to subsidiaries which takes place in the subsidiary's currency, as well as deposits from subsidiaries of excess liquidity. Exchange rate differences due to deposits and lending from subsidiaries are recognised in the income statement.
Intra-group lending and deposits are currently not hedged.
In the event of a change of the group's underlying currencies of 1 per cent, this would affect the company's net sales by approx. SEK 10 M, of which SEK 6 M relates to subsidiaries in euro zone countries, SEK 2 M relates to the UK subsidiary and SEK 2 M to other foreign companies in the group.
Changes in foreign exchange rates impact the group's earnings on translation of the income statements of foreign subsidiaries to the group's presentation currency, SEK.
Translation exposure also arises in connection with translation of the group's investments in foreign subsidiaries to the group's presentation currency, SEK, which is recognised as a component of "other comprehensive income" (outside the income statement).
In the event of a weakening of the group's underlying currencies of 10 per cent, this would affect the company's profit before tax negatively by approx. SEK 1.5 M, of which SEK 1 M relates to subsidiaries in euro zone countries, SEK 0.2 M relates to the UK subsidiary and
SEK 0.3 to other foreign companies in the group. If the company's underlying currencies weakened by 10 per cent at the end of the reporting period, it would weaken consolidated equity by approx. SEK 2 M, of which SEK 1 M relates to the subsidiaries in euro zone countries, SEK 0.5 M relates to the UK subsidiary and SEK 0.5 M to other foreign companies in the group.
The group's net investments in foreign currency primarily involve EUR and GBP. Net investments in foreign currency are not currently hedged.
Interest risk refers to the risk that changes in market interest rates may affect the consolidated income statement and cash flow or the fair value of financial assets and liabilities. A significant factor affecting the interest risk is the interest rate refixing period. The group's interest rate exposure is managed centrally, which means that the finance function is responsible for identifying and managing this exposure.
On 31 December 2017, interest-bearing assets in the form of bank balances amounted to SEK 69 M and investments in securities SEK 0 M. Bank balances run according to variable rates of interest, mainly linked to market rates for each currency that the asset relates to. Commercial paper has fixed rates of interest during the term while investments in securities run according to both fixed and variable interest. A change in the variable interest rate of + / - 1 percent on the closing date affect the Group's net financial items by SEK 0 M.
During 2013, Tradedoubler issued a bond loan for a nominal amount of SEK 250 M, and the loan runs according to fixed interest of 6.75%. In 2016 and 2017 Tradedoubler repurchased a part of its own bond which reduced the nominal value of the bond loan to SEK 134 M per 31 December 2017.
Tradedoubler works actively to minimise the group's liquidity risk by not taking risks in the cash flow. A publisher in most cases is only paid when the customer has paid the invoice to Tradedoubler. Tradedoubler limits its liquidity risk in this way. Credit ratings are performed on new clients and Tradedoubler normally requires advance payments from clients for which adequate financial information is not available.
Tradedoubler also has counterparty risk related to liquidity risks, which are principally related to banks in existing markets. During 2017, Tradedoubler has continued the work to limit counterparty risk by reducing the number of banks that the group works with and by centralising liquidity to the parent company.
At the balance sheet date, the company has no other external interest-bearing borrowing in addition to the outstanding bond loan of SEK 134 M.
As shown in the Board of director's report under the section cash flow and financial position and in note C2 Critical estimates and judgements, the company's bond loan matures during the fourth quarter 2018. Based on liquidity forecasts for 2018, this bond will partly need to be re-financed. Work is underway to determine and ensure the best forms of re-financing of the company, but no new funding has yet been contracted. Although the management and the board estimate that a re-financing will be secured in 2018, new funding has not yet been contracted. Impaired conditions on the capital market or adverse events in the company's operations can make it difficult for the company to secure the financing requirement for 2018. A failure to secure sufficient funding can lead to significant doubts about the company's ability to continue its business.
| 2017 | 2016 | |||||||
|---|---|---|---|---|---|---|---|---|
| SEK '000 | Total | Within 1 month |
Within 1-3 months |
Over 4 months |
Total | Within 1 month |
Within 1-3 months |
Over 4 months |
| Bond loan1 | 134,000 | – | – | 134,000 | 196,000 | – | – | 196,000 |
| Interest bond loan1 | 7, 279 | – | 2,261 | 5,018 | 26,088 | – | 3,308 | 22,780 |
| Trade payables | 12,696 | 10,264 | 1,708 | 724 | 22,638 | 20,893 | 1,433 | 313 |
| Short-term liabilities to publishers | 257,942 | 111,470 | 131,582 | 14,890 | 250,318 | 122,331 | 121,092 | 6,895 |
| Total | 411,917 | 121,734 | 135,551 | 154,632 | 495,044 | 143,224 | 125,833 | 225,988 |
1 Tradedoubler bond in whole maturity on 2018-12-20.
| SEK '000 | 2017 | 2016 |
|---|---|---|
| Pledged assets | ||
| Rental deposits | 4,692 | 4,882 |
| Total pledged assets | 4,692 | 4,882 |
| Contingent liabilities | 11,810 | None |
Contingent liabilities refer to amount assessed as outstanding tax liability in a recent tax audit of Tradedoubler's Spanish subsidiary for the years 2011-2012, where the Spanish tax authority does not agree to Tradedoubler's transfer pricing agreement. Tradedoubler completely opposes the tax authorities' claim and has appealed to the next instance.
Transactions with related parties and companies are priced on commercial terms. The group has during the year had transactions between the parent company and its subsidiaries. The transactions consist primarily of license invoices from the parent company to the subsidiaries. See further description in Notes to the Parent company's financial statements, M15 Investments and M23 Transactions with related parties.
Transactions with key people in executive positions Aside from transactions in the normal course of business, to board and senior executives specified in Notes to the Consolidated Financial Statements, Note C5 Remuneration to employees, group management and board of directors and Note C6 Share-based remuneration, the following third party transactions have occurred. During 2017 Reworld Media has, as a publisher in France, been paid a total of EUR 14 K. Since January 2016, Reworld Media is providing HR-support to the French subsidiary at the current cost of EUR 4 K per month. Reworld Media has during 2017 been invoiced for purchased services from Tradedoubler France of 165 KEUR in total and from R-Advertising of 665 KEUR in total. Since mid-September 2017 the French Tradedoubler subsidiary is based in the Reworld Media office. The arm lengths principle has been applied in all of these transactions.
| SEK '000 | 2017 | 2016 |
|---|---|---|
| The following sub-components are included in cash and cash equivalents: |
||
| Cash and bank balances | 68,662 | 169,198 |
| Total according to the balance sheet | 68,662 | 169,198 |
| Total according to the cash flow statement | 68,662 | 169,198 |
| SEK '000 | 2017 | 2016 |
| Interest received | 559 | 1,697 |
| Interest paid | -11,746 | -16,732 |
| Adjustment for items not included in the cash flow |
| SEK '000 | 2017 | 2016 |
|---|---|---|
| Depreciation and amortisation | 27,629 | 45,102 |
| Provisions for severance payments | 3,718 | 12,426 |
| Unrealised exchange rate differences | 1,240 | 3,387 |
| Other | -33,683 | -38,855 |
| -1,097 | 22,060 |
Change related items refer to items of non-recurring nature and the purpose of disclosing these separately is to make it easier for the reader to understand the underlying year-on-year developments. In the table below the items adjusted for in 2017 and 2016 are listed.
| SEK '000 | 2017 | 2016 |
|---|---|---|
| Revenue | ||
| Correction prepayment | – | 5,325 |
| Sum change related revenue | – | 5,325 |
| Costs | ||
| Severance | -6,458 | -6,458 |
| Office moving costs | -452 | – |
| Restruct costs | – | -15,894 |
| Long-term incentive programme | -707 | -969 |
| Revaluation contingent additional purchase price |
9,204 | – |
| Other | -201 | -201 |
| Sum change related costs | 1,533 | -22,276 |
| Sum change related items | 1,533 | -16,951 |
| SEK '000 | 2017 | 2016 |
|---|---|---|
| Nordics | – | 1,145 |
| UK & Ireland | -1,983 | -14,414 |
| France & Benelux | -2,873 | -1,035 |
| DACH | -1,499 | -2,898 |
| South | -115 | 1,608 |
| Group Management & support functions | 8,003 | -1,356 |
| Sum | 1,533 | -16,951 |
On 6 July 2017 Tradedoubler acquired all shares in the Swedish Technology company Metapic Sweden AB. Acquisition investments and expenditures were limited.
| SEK '000 | |
|---|---|
| Account receivables and other current receivables | 126 |
| Cash and cash equivalent | 77 |
| Trade payables and other current liabilities | -143 |
| Fair value of identifiable assets and liabilities | 60 |
| Goodwill | 3,350 |
| Total purchase price | 3,410 |
| Of which assessed contingent addtional purchase price | -1,910 |
| Cashflow effect | |
| Paid on acquisition date | -1,500 |
| Cash and cash equivalent in aquired company | 77 |
| Total cashflow effect | -1,423 |
In December 2017, a revaluation of the short-term contingent purchase price resulted in a decrease of SEK 277,000 hence the outstanding contingent addtional purchase price totaled SEK 1,633,000 per 31 December 2017 (of which SEK 1,600,000 was classified as long-term).
The item refers to 7 per cent of the shares in DynAdmic. The shares are classified as financial assets available for sale. The shares are valued at fair value and value adjustments are recognised in other comprehensive income.
| SEK '000 | 2017 | 2016 |
|---|---|---|
| Opening balance 1 January 2017 | 11,128 | – |
| Acquisitions during the year | – | 11,128 |
| Change in value | 0 | 0 |
| Closing balance 31 December 2017 | 11,128 | 11,128 |
In a recently completed tax audit by the Spanish subsidiary, Tradedoubler has received a claim for outstanding tax debt amounting to SEK 11.8 M, as the Spanish tax authority does not agree to Tradedoubler's transfer pricing agreement. Tradedoubler completely opposes the tax authorities' claim and has appealed to the next instance.
On 26 March 2018 Tradedoubler announced a tender offer of its outstanding bonds due 2018. The offer entails that Tradedoubler invited all bondholders to tender their bonds for purchase by Tradedoubler at a price equal to 75 per cent of the nominal amount of the bonds together with any accrued and unpaid interest until and including settlement of the tender offer. The tender offer commenced at 26 March 2018 and will expire on 19 April 2018.
In connection with the tender offer Tradedoubler has also summoned a procedure in writing among the bondholders where Tradedoubler proposes that amendments are made to the terms and conditions of the bonds in order to include a possibility for Tradedoubler to, at any day up to and including the final maturity date of the bonds, redeem the bonds at a price of 75 per cent of the nominal amount and allow the incurrence of secured or unsecured additional debt in a total amount of maximum SEK 100 M. All holders voting in favour of the request will receive a consent fee in an amount equal to 10 per cent of the nominal amount per bond which such holder has used to vote in favour of the request.
In addition to the tender offer price, holders tendering their bonds before 5 April 2018, and holders or beneficial owners of bonds who before to the same time have entered into an irrevocable undertaking to participate in the tender offer and to vote in favour of the request, will also receive a so-called early bird fee equal to 2 per cent of the nominal amount of the bonds.
The tender offer, the consent fee and the early bird fee are conditional upon that requisite quorum and majority is obtained in the written procedure in order to approve the request.
| SEK '000 | Note | 2017 | 2016 |
|---|---|---|---|
| Net sales | P3 | 67,568 | 69,762 |
| Cost of goods sold | -8,709 | -7,144 | |
| Gross profit | 58,859 | 62,618 | |
| Selling expenses | -283 | -421 | |
| Administrative expenses | -60,170 | -80,928 | |
| Research & development expenses | -27,322 | -46,970 | |
| Operating profit | P4, P5, P6, P7, P8 | -28,918 | -65,702 |
| Profit from financial items | |||
| Profit from participations in group companies | 10,063 | 14,632 | |
| Other interest income and similar income statement items | 15,334 | 26,486 | |
| Interest expenses and similar income statement items | -12,578 | -17,891 | |
| Net financial items | P9 | 12,818 | 23,227 |
| Profit before tax | -16,099 | -42,475 | |
| Tax | P10 | -29 | -190 |
| Net profit for the year | -16,129 | -42,664 |
| Profit for the year | -16,129 | -42,664 |
|---|---|---|
| Other comprehensive income | ||
| Exchange difference on increased net investment, net after tax | – | – |
| Reversal of exchange difference on increased net investment, net after tax | – | – |
| Total other comprehensive income | – | – |
| Total comprehensive income for the year | -16,129 | -42,664 |
| SEK '000 | Note | Dec 31, 2017 | Dec 31, 2016 |
|---|---|---|---|
| Assets | P11 | ||
| Non-current assets | |||
| Intangible assets | P12 | 45,283 | 52,327 |
| Equipments, tools, fixtures and fittings | P13 | 1,398 | 2,251 |
| Financial assets | |||
| Participations in group companies | P14, P15 | 172,011 | 178,135 |
| Shares and participations in other companies | P14, P15, P25 | 11,128 | 11,128 |
| Deferred tax asset | P10 | 14,004 | 14,033 |
| Other financial assets | 25 | – | |
| Total non-current assets | 243,848 | 257,874 | |
| Current assets | |||
| Trade receivables | 498 | 3,230 | |
| Receivables from group companies | 78,342 | 71,476 | |
| Tax receivables | 1,014 | 1,014 | |
| Other receivables | 1,256 | 2,075 | |
| Prepaid expenses and accrued income | P16 | 3,346 | 4,817 |
| Short-term investments | – | 40,622 | |
| Cash and cash equivalents | 34,381 | 123,676 | |
| Total current assets | 118,838 | 246,910 | |
| Total assets | 362,686 | 504,783 | |
| Equity and liabilities | |||
| Shareholders' equity | P17 | ||
| Restricted equity | |||
| Share capital | 18,371 | 18,371 | |
| Statutory reserve | – | 89,022 | |
| Fund for development expenses | 29,338 | 24,477 | |
| Total restricted equity | 47,709 | 131,870 | |
| Non-restricted equity | |||
| Share premium reserve | 352,540 | 352,540 | |
| Retained earnings | -301,738 | -347,944 | |
| Net profit for the year | -16,129 | -42,664 | |
| Total non-restricted equity | 34,674 | -38,068 | |
| Total equity | 82,383 | 93,802 | |
| Long-term liabilities | P11 | ||
| Bond loan | – | 193,856 | |
| Contingent additional purchase price long term | 1,600 | 12,437 | |
| Total long-term liabilities | 1,600 | 206,293 | |
| Current liabilities | P11 | ||
| Trade payables | 3,687 | 12,744 | |
| Liabilities to group companies | 57,620 | 108,546 | |
| Bond loan | P18 | 132,946 | – |
| Contingent additional purchase price short term | 2,033 | 2,914 | |
| Other liabilities | P19 | 72,453 | 66,063 |
| Accrued expenses and deferred income | P20 | 9,963 | 14,421 |
| Total current liabilities | 278,702 | 204,688 | |
| Total equity and liabilities | 362,686 | 504,783 |
For more information about pledged assets and contingent liabilities, see Note P22.
| Restricted | Non-restricted | |||||
|---|---|---|---|---|---|---|
| SEK '000 | Share capital |
Statutory reserve |
Fund devel opment expenses |
Share premium reserve |
Retained earnings incl. net profit for the year |
Total equity |
| Opening balance at January 1, 2016 | 18,371 | 89,022 | – | 352,540 | -328,190 | 131,744 |
| Comprehensive income | ||||||
| Net profit for the year | -42,664 | -42,664 | ||||
| Fund development expenses | 24,477 | -24,477 | – | |||
| Transactions with shareholders | ||||||
| Use of shares in own custody | 4,078 | 4,078 | ||||
| Equity-settled share-based payments | 645 | 645 | ||||
| Closing balance at December 31, 2016 | 18,371 | 89,022 | 24,477 | 352,540 | -390,608 | 93,802 |
| Opening balance at January 1, 2017 | 18,371 | 89,022 | 24,477 | 352,540 | -390,608 | 93,802 |
| Comprehensive income | ||||||
| Net profit for the year | -16,129 | -16,129 | ||||
| Fund development expenses | 4,861 | -4,861 | – | |||
| Decrease of statutory reserve | -89,022 | 89,022 | – | |||
| Transactions with shareholders | ||||||
| Decrease of shares in own custody | 4,147 | 4,147 | ||||
| Equity-settled share-based payments | 564 | 564 | ||||
| Closing balance at December 31, 2017 | 18,371 | – | 29,338 | 352,540 | -317,865 | 82,383 |
| SEK '000 | Note | 2017 | 2016 |
|---|---|---|---|
| Operating activities | P24 | ||
| Profit before tax | -16,099 | -42,475 | |
| Adjustment for items not included in the cash flow | 11,123 | 20,089 | |
| Cash flow from operating activities before changes in working capital | -4,976 | -22,385 | |
| Cash flow from changes in working capital | |||
| Increase (-)/Decrease (+) in operating receivables | -50,401 | -8,811 | |
| Increase (-)/Decrease (+) in operating liabilities | -8,911 | -3,851 | |
| Cash flow from operating activities | -64,288 | -35,047 | |
| Investing activities | |||
| Investments in intangible assets | -16,929 | -33,699 | |
| Investments in property, plant and equipment | – | -2,091 | |
| Investments in financial assets | -25 | -11,128 | |
| Acquisitions and divestment of subsidiaries | -1,423 | – | |
| Sale of short-term investments | 40,468 | 51,935 | |
| Cash flow from investing activities | 22,091 | 5,017 | |
| Financing activities | |||
| Repurchase of own bonds | -47,098 | -28,552 | |
| Cash flow from financing activities | -47,098 | -28,552 | |
| Cash flow for the year | -89,295 | -58,583 | |
| Cash and cash equivalents at the beginning of the year | 123,676 | 182,258 | |
| Cash and cash equivalents at the end of the year | 34,381 | 123,676 |
The parent company has prepared its annual accounts and consolidated accounts according to the Swedish Annual Accounts Act (1995:1554).
The differences between the accounting policies applied by the group and the parent company are shown below. The accounting policies set out for the parent company below have been applied consistently for all periods presented in the parent company's financial statements.
The parent company's income statement and balance sheet are prepared according to the Swedish Annual Accounts Act's layout. The difference in relation to IAS 1: Presentation of financial statements that was applied in the presentation of the consolidated financial statements is mainly in recognition of financial income and expenses, non-current assets and shareholders' equity, discontinued operations and the presence of provisions as a separate heading in the balance sheet.
Participations in subsidiaries are recognised in accordance with the cost method.
The parent company reports group contributions and shareholders' contributions in accordance with RFR2. The company has chosen to account for group contributions paid and received in the income statement.
Shareholders' contributions are carried directly against equity in the case of the receiver and capitalised as shares and participations by the grantor, to the extent that impairment is not required.
In accordance with the amendments to the Swedish Annual Accounts Act and RFR2 that is applicable from 1 January 2016, the parent company has applied the rule on allocation to a development expenses fund. The change means that after 1 January 2016 companies that activate self-developed intangible assets has to bring about an amount equal to the capitalised development expenditures from unrestricted equity to a fund for development expenses in restricted equity. In the event of amortisation of the capitalised development expenditures, the corresponding amount will be returned to unrestricted equity.
Shares in subsidiaries are recognised in the parent company at cost less any impairment losses. When an indication of impairment occurs, an impairment test is performed, using the same method as described for goodwill in Note C2. Impairment test has been carried out in 2017 in conjunction with the impairment testing of the Group's goodwill. Important assumptions and estimates in connection with this are shown in the section about the goodwill impairment testing in Note C1 in notes to the consolidated statements.
The parent company is affected by estimates and judgements regarding intangible assets and going concern assumptions, for more information see note to the Consolidated accounts, C2 Critical estimates and judgements.
| SEK '000 | 2017 | 2016 |
|---|---|---|
| Other revenue | 11,480 | 7,089 |
| License fees | 56,088 | 62,673 |
| Total revenue | 67,568 | 69,762 |
| Average number | |||||
|---|---|---|---|---|---|
| of employees | 2017 | 2016 | |||
| men (%) | men (%) | ||||
| Sweden | 42 | 56 | 56 | 53 | |
| Remunerations and social security contributions |
Salaries and other remuneration |
||||
| SEK '000 | 2017 | 2016 | |||
| Salaries and remuneration | 28,210 | 37,678 | |||
| of which share-based payments | (564) | (645) | |||
| Social security contributions | 11,494 | 15,643 | |||
| of which pensions | (2,732) | (3,680) | |||
| Total | 39,704 | 53,321 |
For further information regarding remuneration to the board and company management and the remuneration policies within the group, see notes to the consolidated statements, Note C5 Remuneration to employees, group management and board of directors.
Performance-Based Share Programme 2015 The parent company has in 2017 reported a cost of SEK 707,000 (969,000) for the long-term incentive programme that was decided at the Annual general meeting 2015. For more information regarding the share-based remunerations in the group, see notes to the consolidated statements, Note C6 Share-based remuneration.
| SEK '000 | 2017 | 2016 |
|---|---|---|
| EY | ||
| Audit assignments | 2,407 | 2,752 |
| Other assignments | 253 | 506 |
| Total | 2,660 | 3,258 |
Audit assignments refers to the examination of the annual accounts, the consolidated accounts and accounting records as well as the administration of the board of directors and the CEO, other duties that the Company´s auditors are obliged to perform as well as advice or other assistance arising from observations during such examination and implementation of such duties. In addition, the auditor reviewed the corporate governance report and the sustainability report. The auditor has also reviewed the interim report for the period January-June 2017 and has been retained for certain advice, most of which pertained to audit-related consultations regarding accounting.
| SEK '000 | 2017 | 2016 |
|---|---|---|
| Remuneration cost to publishers | 8,709 | 7,144 |
| Employee costs | 26,637 | 30,178 |
| Depreciation and amortisation | 24,826 | 42,850 |
| Other operating costs | 36,314 | 55,292 |
| Total | 96,485 | 135,463 |
Non-terminable lease payments amount to:
| SEK '000 | 2017 | 2016 |
|---|---|---|
| Within one year | 4,649 | 4,501 |
| Between one and five years | 13,082 | 4,242 |
| Longer than five years | – | – |
| 17,731 | 8,743 |
The operating leases in the group are mainly related to rent for premises.
Costs for operating leases 2017 amounted to SEK 4,771,000 (4,344,000).
| SEK '000 | 2017 | 2016 |
|---|---|---|
| Dividends from group companies | 10,172 | 14,557 |
| Group contributions received | 872 | 75 |
| Result from sales of shares in subsidiaries | 231 | – |
| Write-down of investments in subsidiary | -1,211 | – |
| Profit from participations in group companies | 10,063 | 14,632 |
| Interest income, group companies | 154 | 48 |
| Interest income, other | 237 | 1,207 |
| Unrealised result at fair valutaion of short term investments |
– | 419 |
| Result on sales short term investments | 40 | – |
| Other financial income | 14,902 | 24,811 |
| Financial income | 15,334 | 26,486 |
| Interest expense, group companies | -123 | -127 |
| Interest expense, other | -11,367 | -16,454 |
| Unrealised result at fair valuation of short term investments |
-131 | – |
| Result on sales short term investments | – | -155 |
| Change in foreign exchange rates | -895 | -1,154 |
| Other financial expenses | -62 | -1 |
| Financial expenses | -12,578 | -17,891 |
| Net financial items | 12,818 | 23,227 |
Other financial income relates to repurchase of own bond below nominal value.
The company's tax expense is divided into the following components: SEK '000 2017 2016
| Current tax expense | ||
|---|---|---|
| Tax expense for the period | – | – |
| Total current tax expense | – | – |
| Deferred tax | ||
| Deferred tax related to temporary differences | -29 | -190 |
| Total deferred tax | -29 | -190 |
| Total | -29 | -190 |
The tax expense for the year can be reconciled to profit before tax according to the following:
| 2016 | |||
|---|---|---|---|
| % SEK '000 | |||
| -16,099 | -42,475 | ||
| 22.0 | 3,542 | 22.0 | 9,344 |
| -0.2 | -326 | -0.3 | -114 |
| 14.2 | 2,289 | 7.5 | 3,203 |
| -12,623 | |||
| -190 | |||
| -34.4 1.6 |
2017 % SEK '000 -5,534 -29 |
-29.7 -0.4 |
Deferred tax assets are attributable to the following:
| SEK '000 | Capitalisation of loss carryforwards |
Other receivables | Other liabilities | Other non current assets |
Other unused tax deductions |
Deferred tax assets and tax liabilities |
|---|---|---|---|---|---|---|
| Balance at Jan 1, 2016 | 0 | 10 | 0 | 213 | 14,000 | 14,223 |
| Recognised via income statement | – | -92 | – | -98 | – | -190 |
| Reclassification | – | – | – | – | – | – |
| Balance at Dec 31, 2016 | 0 | -82 | 0 | 115 | 14,000 | 14,033 |
| Balance at Jan 1, 2017 | 0 | -82 | 0 | 115 | 14,000 | 14,033 |
| Recognised via income statement | – | 29 | – | -58 | – | -29 |
| Reclassification | – | – | – | – | – | – |
| Balance at Dec 31, 2017 | 0 | -53 | 0 | 57 | 14,000 | 14,004 |
| Parent Company | 2017 | 2016 | ||||||||
|---|---|---|---|---|---|---|---|---|---|---|
| SEK '000 | Assets available for sale |
Loans and receivables |
At fair value via the Profit & Loss |
Other financial liabilities |
Total carrying amount |
Assets available for sale |
Loans and receivables |
At fair value via the Profit & Loss |
Other financial liabilities |
Total carrying amount |
| Shares and participations in other companies |
11,128 | 11,128 | 11,128 | 11,128 | ||||||
| Trade receivables | 498 | 498 | 3,230 | 3,230 | ||||||
| Receivables from group companies |
78,342 | 78,342 | 71,476 | 71,476 | ||||||
| Short term investments | 0 | 40,622 | 40,622 | |||||||
| Cash and bank balances | 34,381 | 34,381 | 123,676 | 123,676 | ||||||
| Total financial assets | 11,128 | 113,221 | 124,349 | 11,128 | 198,381 | 40,622 | 250,131 | |||
| Liabilities to group companies | 132,946 | 132,946 | 193,856 | 193,856 | ||||||
| Debt to group companies | 57,620 | 57,620 | 108,546 | 108,546 | ||||||
| Trade payables | 3,687 | 3,687 | 12,744 | 12,744 | ||||||
| Contingent additional purchase price |
3,633 | 3,633 | 15,351 | 15,351 | ||||||
| Total financial liabilities | 197,886 | 197,886 | 330,497 | 330,497 |
Trade receivables, trade payables, other current receivables and liabilities that are measured at cost have short terms and thus fair value corresponds with the carrying amount. Fair value for the bond loan issued in December 2013, was amounted to SEK 106,000,0000 (based on liquid trading price) in comparison to the carrying amount of SEK
132,946,000. Fair value for assets available for sale and contingent additional purchase price have been determined using valuation models where significant inputs are based on unobservable market data.
| SEK '000 | Development expenses |
Administration and support |
|---|---|---|
| Accumulated acquisition costs | ||
| Opening balance at Jan 1, 2016 | 98,314 | 46,548 |
| Investments for the year | 33,699 | – |
| Sales/disposals | – | – |
| Closing balance at Dec 31, 2016 | 132,013 | 46,548 |
| Opening balance at Jan 1, 2017 | 132,013 | 46,548 |
| Investments for the year | 16,929 | – |
| Sales/disposals | – | – |
| Closing balance at Dec 31, 2017 | 148,942 | 46,548 |
| Accumulated amortisation Opening balance at Jan 1, 2016 |
-53,886 | -29,806 |
| Amortisation for the year | -35,178 | -7,365 |
| Sales/disposals | – | – |
| Closing balance Dec 31, 2016 | -89,063 | -37,170 |
| Opening balance at Jan 1, 2017 | -89,063 | -37,170 |
| Amortisation for the year | -17,123 | -6,849 |
| Sales/disposals | – | – |
| Closing balance Dec 31, 2017 | -106,187 | -44,020 |
| Carrying amounts | ||
| At Jan 1, 2016 | 44,428 | 16,742 |
| At Dec 31, 2016 | 42,950 | 9,377 |
| At Dec 31, 2017 | 42,755 | 2,528 |
| Equipment, tools, | |
|---|---|
| SEK '000 | fixtures and fittings |
| Accumulated acquisition | |
| Opening balance Jan 1, 2016 | 9,168 |
| Investments | 2,091 |
| Sales/Disposals | – |
| Closing balance Dec 31, 2016 | 11,259 |
| Opening balance Jan 1, 2017 | 11,259 |
| Investments | – |
| Sales/Disposals | – |
| Closing balance Dec 31, 2017 | 11,259 |
| Accumulated depreciation | |
| Opening balance Jan 1, 2016 | -8,701 |
| Depreciation for the year | -307 |
| Sales/Disposals | – |
| Closing balance Dec 31, 2016 | -9,008 |
| Opening balance Jan 1, 2017 | -9,008 |
| Depreciation for the year | -853 |
| Sales/Disposals | – |
| Closing balance Dec 31, 2017 | -9,861 |
| Carrying amounts | |
| At Jan 1, 2016 | 467 |
| At Dec 31, 2016 | 2,251 |
| At Dec 31, 2017 | 1,398 |
| SEK '000 | Dec 31, 2017 Dec 31, 2016 | |
|---|---|---|
| Accumulated acquisition costs | ||
| Opening balance | 189,263 | 158,700 |
| Acquisitions and stock issues in subsidiaries | 3,410 | 19,435 |
| Acquisitions and stock issues in other companies |
– | 11,128 |
| Divestment group companies | -53 | – |
| Revaluation of contingent additional purchase price |
-9,481 | – |
| Closing balance Dec 31, 2017 | 183,138 | 189,263 |
| Book value | ||||||
|---|---|---|---|---|---|---|
| Subsidiary | Corporate identity number | Registered office | Number of shares | Participation as % | Dec 31, 2017 | Dec 31, 2016 |
| TradeDoubler Ireland Ltd | 442593 | Dublin | 1 | 100 | 0 | 7 |
| TradeDoubler OY | 777468 | Helsingfors | 100 | 100 | 70 | 70 |
| TradeDoubler A/S | 25137884 | Köpenhamn | 125 | 100 | 5,772 | 5,772 |
| TradeDoubler LDA | 507810007 | Lissabon | 1 | 100 | 0 | 46 |
| TradeDoubler Ltd | 3921985 | London | 5,000 | 100 | 140,000 | 140,000 |
| TradeDoubler Espana SL | B82666892 | Madrid | 100 | 100 | 62 | 62 |
| TradeDoubler BVBA | 874694629 | Mechelen | 371 | 100 | 172 | 172 |
| TradeDoubler Srl | 210954 (rep)/26762 (Rac) | Milano | 1 | 100 | 2,683 | 2,683 |
| TradeDoubler GmbH | 76167/URNo R181/2001 | München | 1 | 100 | 250 | 250 |
| TradeDoubler AS | 982006635 | Oslo | 1,000 | 100 | 6,011 | 6,011 |
| TradeDoubler SARL | B431573716 (2000B08629) | Paris | 500 | 100 | 119 | 119 |
| TradeDoubler BV | 20100140 | Rotterdam | 40 | 100 | 188 | 188 |
| TradeDoubler International AB | 556833-1200 | Stockholm | 500 | 100 | 268 | 268 |
| TradeDoubler Sweden AB | 556592-4007 | Stockholm | 1,000 | 100 | 2,003 | 2,003 |
| TradeDoubler Sp zoo | 015792506 | Warszawa | 1,000 | 100 | 115 | 115 |
| TradeDoubler Austria Gmbh | FN296915 | Wien | 1 | 100 | 324 | 324 |
| TradeDoubler AG | CH020.3.3.028.851-0 | Zürich | 997 | 100 | 609 | 609 |
| TradeDoubler Performance Marketing LTDA |
14.273.556/0001-66 | Sao Paolo | 297,923 | 100 | 0 | 0 |
| Adnologies GmbH | HRB200226 | Hamburg | 107,912 | 100 | 0 | 0 |
| Tradedoubler Singapore PTE LTD | 201615663C | Singapore | 1,000 | 100 | 6 | 6 |
| R-Advertising | B502207079 | Mougins | 1,375,953 | 100 | 10,224 | 19,429 |
| Metapic Sweden AB | 556965-7868 | Stockholm | 10,000 | 100 | 3,133 | – |
| DynAdmic SAS | 753502582 | Mougins | 346,180 | 7 | 11,128 | 11,128 |
| 183,138 | 189,263 |
| SEK '000 | 2017 | 2016 |
|---|---|---|
| Rent of premises | 1,062 | 1,035 |
| Accrued interest on short term investments | – | 139 |
| Other | 2,284 | 3,644 |
| Total | 3,346 | 4,817 |
Share capital refers to the parent company's share capital. Each share carries one vote and those entitled to vote may vote for the full number of shares represented and owned without any restriction in voting rights. All shares carry equal rights to share in the Company's assets and profits and in any surplus on liquidation.
At December 31, 2017, Tradedoubler AB had a share capital of SEK 18.4 M distributed among 45,927,449 shares, each share with a par value of SEK 0.40.
In accordance with decision at the AGM 2017, and following permission from the Swedish Companies Registration Office, the reserve fund has in 2017 been reduced to 0 and the reduction amount transferred to retained earnings.
| Number of shares issued |
Issued share capital |
|---|---|
| 45,927,449 | 18,370,978 |
| 45,927,449 | 18,370,978 |
*of which 2,855,554 shares are in own custody **of which 2,010,473 shares are in own custody
The Parent Company has during December 2013 issued a bond loan. For more information regarding the bond issue, see Note to Consolidated Financial Statements, C18 Bond loan.
| SEK '000 | 2017 | 2016 |
|---|---|---|
| Current liabilities to publishers | 69,422 | 62,710 |
| Withholding tax and social security contributions | 3,032 | 3,353 |
| Total | 72,453 | 66,063 |
| SEK '000 | 2017 | 2016 |
|---|---|---|
| Holiday pay | 1,285 | 1,773 |
| Other payroll expenses | 392 | 462 |
| Accrued interest expense from bond loan | 171 | 309 |
| Provision restruct | 339 | 3,269 |
| Provision consultancy expenses | 1,400 | 1,749 |
| Provision audit | 1,906 | 1,650 |
| Other | 4,470 | 5,209 |
| Total | 9,963 | 14,421 |
Tradedoubler's financial risk management is handled and monitored at Group level. For more information regarding the financial risks, see notes to the Consolidated statements, Note C21 Financial risks.
| SEK ´000 | 2017 | 2016 | |
|---|---|---|---|
| Pledged assets | |||
| Rental deposits | 25 | – | |
| Total pledged assets | 25 | – | |
| Contingent liabilities | 4,449 | 4,133 |
Contingent liabilities consists of performance guarantees to subsidiaries.
Transactions with related parties are priced on commercial terms. Transactions with related parties for Tradedoubler AB mainly consists of licensing fees corresponding to SEK 56 M (62,7), invoiced by the parent company to subsidiaries and other revenue of SEK 11,5 M (7). The parent company's receivables from subsidiaries amounted to SEK 78 M (71). The parent company´s liabilities to subsidiaries amount to SEK 58 M (109). Receivables and liabilities from subsidiaries have been netted off in the balance sheet.
Transactions with key people in executive positions No transactions with key people in executive positions have taken place during the year except the ones specified in the notes to the Consolidated statements, Note C5 Remuneration to employees, group management and board of directors, Note C6 Share-based remuneration and Note C23 Transactions with related parties.
| SEK '000 | 2017 | 2016 |
|---|---|---|
| Cash and bank balances | 34,381 | 123,676 |
| Total according to the balance sheet | 34,381 | 123,676 |
| Total according to the cash flow statement | 34,381 | 123,676 |
| SEK '000 | 2017 | 2016 |
| Interest received | 376 | 1,498 |
| Interest paid | -11,629 | -16,827 |
| Adjustment for items not included in the cash flow | ||
| SEK '000 | 2017 | 2016 |
| Depreciation and amortisation | 24,826 | 42,850 |
| Other provisions | 1,090 | 1,090 |
| Unrealised exchange rate differences | -431 | 914 |
Other -14,362 -24,765
11,123 20,089
The item refers to 7 per cent of the shares in DynAdmic.
| SEK '000 | 2017 | 2016 |
|---|---|---|
| Opening balance 1 January 2017 | 11,128 | – |
| Acquisitions during the year | – | 11,128 |
| Closing balance 31 December 2017 | 11,128 | 11,128 |
On 26 March 2018 Tradedoubler announced a tender offer of its outstanding bonds due 2018. The offer entails that Tradedoubler invited all bondholders to tender their bonds for purchase by Tradedoubler at a price equal to 75 per cent of the nominal amount of the bonds together with any accrued and unpaid interest until and including settlement of the tender offer. The tender offer commenced at 26 March 2018 and will expire on 19 April 2018.
In connection with the tender offer Tradedoubler has also summoned a procedure in writing among the bondholders where Tradedoubler proposes that amendments are made to the terms and conditions of the bonds in order to include a possibility for Tradedoubler to, at any day up to and including the final maturity date of the bonds, redeem the bonds at a price of 75 per cent of the nominal amount and allow the incurrence of secured or unsecured additional debt in a total amount of maximum SEK 100 M. All holders voting in favour of the request will receive a consent fee in an amount equal to 10 per cent of the nominal amount per bond which such holder has used to vote in favour of the request.
In addition to the tender offer price, holders tendering their bonds before 5 April 2018, and holders or beneficial owners of bonds who before to the same time have entered into an irrevocable undertaking to participate in the tender offer and to vote in favour of the request, will also receive a so-called early bird fee equal to 2 per cent of the nominal amount of the bonds.
The tender offer, the consent fee and the early bird fee are conditional upon that requisite quorum and majority is obtained in the written procedure in order to approve the request.
For more information see Note to Consolidated Financial Statements, C28 Events after the balance sheet date.
The undersigned assure that the consolidated accounts and annual report have been prepared in accordance with international accounting standards, IFRS, as adopted by the EU, and pursuant to generally accepted accounting standards and provide a true and fair view of the group's and parent company's operations, financial position and results of operations and describe significant risks and uncertainties facing the group. The consolidated income statement and statement of financial position and the parent company's income statement and balance sheet are subject to approval by the annual general meeting to be held on 3 May 2018.
Stockholm, 5 April 2018
Pascal Chevalier
Chairman
Gautier Normand Board member
Jérémy Parola
Board member
Erik Siekmann
Board member
Nils Carlsson Board member
Matthias Stadelmeyer
President and CEO
Our Audit report was submitted on 10 April 2018
Authorised Public Accountant
To the general meeting of the shareholders of TradeDoubler AB (publ), corporate identity number 556575-7423
We have audited the annual accounts and consolidated accounts of TradeDoubler AB (publ) except for the corporate governance statement on pages 8-12 and the statutory sustainability report on page 7 for the year 2017. The annual accounts and consolidated accounts of the company are included on pages 13-43 in this document.
In our opinion, the annual accounts have been prepared in accordance with the Annual Accounts Act and present fairly, in all material respects, the financial position of the parent company as of 31 December 2017 and its financial performance and cash flow for the year then ended in accordance with the Annual Accounts Act. The consolidated accounts have been prepared in accordance with the Annual Accounts Act and present fairly, in all material respects, the financial position of the group as of 31 December 2017 and their financial performance and cash flow for the year then ended in accordance with International Financial Reporting Standards (IFRS), as adopted by the EU, and the Annual Accounts Act. Our opinions do not cover the corporate governance statement on pages 8-12 and the statutory sustainability report on page 7. The statutory administration report is consistent with the other parts of the annual accounts and consolidated accounts.
We therefore recommend that the general meeting of shareholders adopts the income statement and balance sheet for the parent company and the group.
Our opinions in this report on the annual accounts and consolidated accounts are consistent with the content of the additional report that has been submitted to the parent company's audit committee in accordance with the Audit Regulation (537/2014) Article 11.
We conducted our audit in accordance with International Standards on Auditing (ISA) and generally accepted auditing standards in Sweden. Our responsibilities under those standards are further described in the Auditor's Responsibilities section. We are independent of the parent company and the group in accordance with professional ethics for accountants in Sweden and have otherwise fulfilled our ethical responsibilities in accordance with these requirements. This includes that, based on the best of our knowledge and belief, no prohibited services referred to in the Audit Regulation (537/2014) Article 5.1 have been provided to the audited company or, where applicable, its parent company or its controlled companies within the EU.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinions.
Considerable uncertainty relating to the going concern assumption Without modifying our opinion above we want to draw attention to the board's information in the directors' report on page 5 and notes K2 and K21 concerning the re-financing of the company's outstanding bond loan in the amount of SEK 134 M which matures at the end of 2018. Based on liquidity forecasts, the board estimates that part of the bond loan needs to be re-financed during 2018. Work to ensure such re-financing is ongoing but financing has still not been contracted. Based on the financing work performed so far the board is of the opinion that new funding will be obtained in 2018. These conditions indicate that there is significant uncertainty that can lead to considerable doubt regarding the company´s ability to continue its operations. We have not modified our opinion because of this.
Key audit matters of the audit are those matters that, in our professional judgment, were of most significance in our audit of the annual accounts and consolidated accounts of the current period in addition to the disclosure made regarding significant uncertainties about the going concern assumption. These matters were addressed in the context of our audit of, and in forming our opinion thereon, the
annual accounts and consolidated accounts as a whole, but we do not provide a separate opinion on these matters. For each matter below, our description of how our audit addressed the matter is provided in that context.
We have fulfilled the responsibilities described in the Auditor's responsibilities for the audit of the financial statements section of our report, including in relation to these matters. Accordingly, our audit included the performance of procedures designed to respond to our assessment of the risks of material misstatement of the financial statements. The results of our audit procedures, including the procedures performed to address the matters below, provide the basis for our audit opinion on the accompanying financial statements.
Capitalized development expenditure is recognized in the statement of financial position of the group and the parent company at December 31, 2017 to SEK 43 million. The company's accounting policies for development expenditure is described in note K1. Capitalized development expenditures are amortized over the estimated useful live in accordance with the amortization periods described in note K1. Note K2 describes that significant estimates and judgments are required by the company to assess the conditions for capitalization of development expenditures. Furthermore, the company needs to make assumptions about the useful life of capitalized development expenditures in order to determine the amortization period. The company continuously evaluates whether there are indications of impairment for capitalized development expenditures. In the case impairment triggers are identified a so-called impairment test is prepared to determine if the value in use is below book value. As described in note K2, based on the prepared impairment test in 2017, SEK 4 million of capitalized development expenditures have been written down in the group and the parent company during the year.
As a result of the estimates and assumptions that needs to be made to determine whether development expenditure should be capitalized or not, the period of use and whether indications of impairment exist, we have assessed the accounting of development expenditures as a key audit matter.
In our audit, we evaluated the company's process for handling and accounting of development expenditures. We have further assessed the estimates and assumptions made by the company relating to ongoing development projects through monitoring and analyzing the business decisions on which the development projects are based.
We also evaluated the applied amortization periods against the underlying business decisions and we have checked that amortization has been recorded in accordance with these. We have also assessed the company's assumptions made when assessing whether impairment exists or not.
We have also reviewed the disclosures in the annual report.
Goodwill is recorded in the consolidated statement of financial position as of 31 December 2017 to SEK 280 million. Shares in subsidiaries are recorded in the statement of financial position for the parent company as of December 31, 2017 to SEK 172 million. Goodwill in the group is defined as an asset with indefinite useful live for which no amortization is recorded. Shares in subsidiaries are recognized at cost less any impairment write-offs. The company's accounting principles for goodwill and shares in subsidiaries are described in note K1 and note M1.
The company performs an impairment test at least annually and when an indication of impairment is identified to make sure that the carrying value of goodwill does not exceed the recoverable amount. For shares in subsidiaries, such a test is performed when there are indications that the carrying value exceeds the recoverable value. The impairment test performed during the year for goodwill has also included the parent company's carrying value of shares in subsidiaries. Principles for the impairment test are described in note K1. Significant judgments and estimates of the valuation and other significant information about the performed impairment test are described in Note K2 and K13. The impairment test that the company performed during 2017 has not resulted in any impairment write-off.
As a result of the judgments and significant assumptions required when calculating the value in use, we have assessed the valuation of goodwill and shares in subsidiaries as a key audit matter.
In our audit, we evaluated the company's process for determining if an indication of impairment exists, and the preparation of the impairment test.
We have examined how cash-generating units are identified and determined. We have with support from our valuation experts evaluated the company's valuation and calculation methods, we have assessed the reasonableness of the assumptions and sensitivity analysis of changes in assumptions made. We have made comparisons against historical results and assessed the accuracy in previous forecasts. We have evaluated the reasonableness of the used discount rate and long-term growth by comparing with other companies in the same industry.
We have also reviewed the disclosures in the annual report.
This document also contains other information than the annual accounts and consolidated accounts and is found on pages 4-7. The Board of Directors and the Managing Director are responsible for this other information.
Our opinion on the annual accounts and consolidated accounts does not cover this other information and we do not express any form of assurance conclusion regarding this other information.
In connection with our audit of the annual accounts and consolidated accounts, our responsibility is to read the information identified above and consider whether the information is materially inconsistent with the annual accounts and consolidated accounts. In this procedure we also take into account our knowledge otherwise obtained in the audit and assess whether the information otherwise appears to be materially misstated.
If we, based on the work performed concerning this information, 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.
Responsibilities of the Board of Directors and the Managing Director The Board of Directors and the Managing Director are responsible for the preparation of the annual accounts and consolidated accounts and that they give a fair presentation in accordance with the Annual Accounts Act and, concerning the consolidated accounts, in accordance with IFRS as adopted by the EU. The Board of Directors and the Managing Director are also responsible for such internal control as they determine is necessary to enable the preparation of annual accounts and consolidated accounts that are free from material misstatement, whether due to fraud or error.
In preparing the annual accounts and consolidated accounts, The Board of Directors and the Managing Director are responsible for the assessment of the company's and the group's ability to continue as a going concern. They disclose, as applicable, matters related to going concern and using the going concern basis of accounting. The going concern basis of accounting is however not applied if the Board of Directors and the Managing Director intends to liquidate the company, to cease operations, or has no realistic alternative but to do so.
The Audit Committee shall, without prejudice to the Board of
Director's responsibilities and tasks in general, among other things oversee the company's financial reporting process.
Our objectives are to obtain reasonable assurance about whether the annual accounts and consolidated accounts as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinions. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs and generally accepted auditing standards in Sweden 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 annual accounts and consolidated accounts.
As part of an audit in accordance with ISAs, we exercise professional judgment and maintain professional scepticism throughout the audit. We also:
We must also provide the Board of Directors with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and
other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards.
From the matters communicated with the Board of Directors, we determine those matters that were of most significance in the audit of the annual accounts and consolidated accounts, including the most important assessed risks for material misstatement, and are therefore the key audit matters. We describe these matters in the auditor's report unless law or regulation precludes disclosure about the matter.
In addition to our audit of the annual accounts and consolidated accounts, we have also audited the administration of the Board of Directors and the Managing Director of Tradedoubler AB (publ) for the year 2017 and the proposed appropriations of the company's profit or loss.
We recommend to the general meeting of shareholders that the profit be appropriated (loss be dealt with) in accordance with the proposal in the statutory administration report and that the members of the Board of Directors and the Managing Director be discharged from liability for the financial year.
We conducted the audit in accordance with generally accepted auditing standards in Sweden. Our responsibilities under those standards are further described in the Auditor's Responsibilities section. We are independent of the parent company and the group in accordance with professional ethics for accountants in Sweden and have otherwise fulfilled our 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 opinions.
Responsibilities of the Board of Directors and the Managing Director
The Board of Directors is responsible for the proposal for appropriations of the company's profit or loss. At the proposal of a dividend, this includes an assessment of whether the dividend is justifiable considering the requirements which the company's and the group's type of operations, size and risks place on the size of the parent company's and the group's equity, consolidation requirements, liquidity and position in general.
The Board of Directors is responsible for the company's organization and the administration of the company's affairs. This includes among other things continuous assessment of the company's and the group's financial situation and ensuring that the company's organization is designed so that the accounting, management of assets and the company's financial affairs otherwise are controlled in a reassuring manner. The Managing Director shall manage the ongoing administration according to the Board of Directors' guidelines and instructions and among other matters take measures that are necessary to fulfill the company's accounting in accordance with law and handle the management of assets in a reassuring manner.
Our objective concerning the audit of the administration, and thereby our opinion about discharge from liability, is to obtain audit evidence to assess with a reasonable degree of assurance whether any member of the Board of Directors or the Managing Director in any material respect:
Our objective concerning the audit of the proposed appropriations of the company's profit or loss, and thereby our opinion about this, is to assess with reasonable degree of assurance whether the proposal is in accordance with the Companies Act.
Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with generally accepted auditing standards in Sweden will always detect actions or omissions that can give rise to liability to the company, or that the proposed appropriations of the company's profit or loss are not in accordance with the Companies Act.
As part of an audit in accordance with generally accepted auditing standards in Sweden, we exercise professional judgment and maintain professional scepticism throughout the audit. The examination of the administration and the proposed appropriations of the company's profit or loss is based primarily on the audit of the accounts. Additional audit procedures performed are based on our professional judgment with starting point in risk and materiality. This means that we focus the examination on such actions, areas and relationships that are material for the operations and where deviations and violations would have particular importance for the company's situation. We examine and test decisions undertaken, support for decisions, actions taken and other circumstances that are relevant to our opinion concerning discharge from liability. As a basis for our opinion on the Board of Directors' proposed appropriations of the company's profit or loss we examined the Board of Directors' reasoned statement and a selection of supporting evidence in order to be able to assess whether the proposal is in accordance with the Companies Act.
The auditor's examination of the corporate governance statement The Board of Directors is responsible for that the corporate governance statement on pages 8-12 has been prepared in accordance with the Annual Accounts Act.
Our examination of the corporate governance statement is conducted in accordance with FAR´s auditing standard RevU 16 The auditor´s examination of the corporate governance statement. This means that our examination of the corporate governance statement is different and substantially less in scope than an audit conducted in accordance with International Standards on Auditing and generally accepted auditing standards in Sweden. We believe that the examination has provided us with sufficient basis for our opinions.
A corporate governance statement has been prepared. Disclosures in accordance with chapter 6 section 6 the second paragraph points 2-6 of the Annual Accounts Act and chapter 7 section 31 the second paragraph the same law are consistent with the other parts of the annual accounts and consolidated accounts and are in accordance with the Annual Accounts Act.
The auditor´s opinion regarding the statutory sustainability report The Board of Directors is responsible for the statutory sustainability report on page 7, and that it is prepared in accordance with the Annual Accounts Act.
Our examination has been conducted in accordance with FAR's auditing standard RevR 12 The auditor´s opinion regarding the statutory sustainability report. This means that our examination of the statutory sustainability report is different and substantially less in scope than an audit conducted in accordance with International Standards on Auditing and generally accepted auditing standards in Sweden. We believe that the examination has provided us with sufficient basis for our opinion.
A statutory sustainability report has been prepared.
Ernst & Young AB, and Erik Sandström as auditor in charge, Box 7850, 103 99 Stockholm were appointed auditors of Tradedoubler AB (publ) by the general meeting of the shareholders on 4 May 2017 and has been the company's auditors since the financial year 2009.
Stockholm, 10 April 2018 Ernst & Young AB
Erik Sandström Authorized Public Accountant
Member and Chairman of the Board of Directors since 2015.
Independent in relation to the company and the executive management. Dependent in relation to the company's major shareholders.
Education: MBA from IAE Paris, IT engineering graduate of EPITDA
Co-founder and CEO of Reworld Media S.A., Board Member and CEO of Sporever, Board Member of 50 Partners, Nextedia, Planet.fr, Leadmedia Group and Mobile Network Group.
Pascal was the Chairman of the board of Netbooster (Alternext Paris ALNBT), Director of Prosodie in London (now Cap Gemini), Chairman of the board of CPI Venture.
Shareholding: 0 shares.
Member of the Board of Directors since 2015.
Independent in relation to the company and the executive management. Dependent in relation to the company's major shareholders.
Born: 1978 Education: Business
school in Paris. Other assignments: Co-founder and COO of Reworld Media S.A., Board Member and
deputy CEO of Sporever.
Former assignments: CEO of La Tribune, Head of Projects at NextRadio TV. Development Director at Axel Springer France and Media Sector Director at Deloitte.
Shareholding: 0 shares.
Member of the Board of Directors since 2016.
Independent in relation to the company and the executive management. Dependent in relation to the company's major shareholders.
Born: 1987
Education: Bachelor degree in Marketing from EDHEC Business School and Master's degree in Communication, Marketing and Media Management at Celsa/ La Sorbonne.
Other assignments: Web marketing director at Reworld Media S.A..
Former assignments: Business Development Manager at La Tribune (financial Newspaper).
Shareholding: 0 shares.
Member of the Board of Directors since 2016.
Independent in relation to the company, the executive management and the company's major shareholders.
Born: 1971
Education: Studies in Economics at the Technical University of Berlin (TU Berlin).
Other assignments: Founder and CEO of Digital Forward GmbH and founder and CEO of Daytona Ventures GmbH as well as cofounder and CEO of ESP – eSales Performance Marketing GmbH.
Former assignments: CEO Blume 2000 new media AG and CEO and co-founder of Valentins GmbH.
Shareholding: 0 shares.
Member of the Board of Directors since 2016.
Independent in relation to the company, the executive management and the company's major shareholders.
Born: 1969
Education: MBA, Finance Management, Edinburgh 2011; School of Economics & Management Stockholm, Handelshögskolan 2004; School of Economics Växjö, University degree, Economics, 1994.
Other assignments: CEO Eniro Sweden AB, Member of the board of Netbooster, Electrolux, EHL , Vitvaruåtervinning and Eniro.
Former assignments: CEO Electrolux Sweden AB; Group COO Netbooster Group; CEO Guava (UK); VP Product & Sales Telenor AB; Director Business Development Vodafone Group; Director Product development Europolitan AB.
Shareholding: 0 shares.
Chief Executive Officer (CEO) since April 2014.
Born: 1976
Education: Studied Industrial Management and Engineering at the University of Applied Sciences in Munich.
Previous assignments: Matthias Stadelmeyer has held several leading positions within Tradedoubler such as Sales Director and Head of TD Technology in Germany, Regional Director for market unit DACH and Vice President Sales. Matthias started his career as Team leader for Online Marketing at CANCOM IT Systeme AG, Munich.
Based: Munich.
Holdings: 100,000 shares.
Education: Degree in Finance from Stockholm University.
Previous assignments: Viktor joined Tradedoubler in March 2015 as Head of Group Accounting, was appointed Interim CFO in May 2016 and took on the position permanently in October 2016. Prior to that Viktor worked for Cision, an international PR software company and held a number of roles including Group Treasurer and Business Controller.
Based: Stockholm. Holdings: 20,000 shares.
Chief Technical Officer (CTO) since November 2017.
Born: 1985
Previous assignments: François joined Tradedoubler in December 2016 when the group acquired R-Advertising, an email marketing company in which he held the position of the CEO. Prior to that François founded RoyalCactus, a leading social & mobile gaming company.
Based: Aix-en-Provence, France.
Holdings: 528,176 shares.
Tradedoubler uses the key ratios of capital employed and solidity to enable the reader to assess the possibility of dividend, implementation of strategic investments and the group's ability to meet financial commitments. Further, Tradedoubler use the key ratio EBITDA excluding change related items for investors to be able to understand the underlying business performance.
Total assets less current and long-term noninterest-bearing liabilities, including deferred tax liabilities.
Change related items refer to items of nonrecurring nature and the purpose of disclosing these separately is to make it easier for the reader to understand the underlying year-on-year developments.
EBITDA is revenue before tax, net financial items and depreciation/amortisation and impairment.
EBITDA as a percentage of revenue.
Profit after tax as a percentage of sales.
Operating profit as a percentage of revenue.
Price of the share divided by shareholders' equity per share.
Share price divided by revenue for the year per share.
Operating profit plus interest income as a percentage of average capital employed, calculated as opening and closing capital employed divided by two.
Revenue for the period as a percentage of the average shareholders' equity, calculated as open and closing shareholders' equity divided by two.
Revenue of the year divided by the average number of shares after full dilution.
Total equity as a percentage of total assets.
Total current assets less cash and cash equivalents, short term investments and total current liabilities.
Tradedoubler AB E-mail: [email protected]
Birger Jarlsgatan 57A SE-113 56 Stockholm Tel. +46 8 40 50 800
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