UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 6-K
REPORT OF FOREIGN PRIVATE ISSUER PURSUANT TO RULE 13a-16 OR 15d-16 OF
THE SECURITIES EXCHANGE ACT OF 1934
For the Month of June 2024
Commission File Number 001-40504
Nexxen International Ltd.
(Translation of registrant’s name into English)
82 Yigal Alon Street, Tel Aviv 6789124, Israel
(Address of principal executive office)
Indicate by check mark whether the registrant files or will file annual reports under cover Form 20-F or Form 40-F.
Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1): ☐
Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7): ☐
Explanatory Note
On June 28, 2024, the Company issued an announcement titled “Posting of Annual Report and Accounts” while also issuing the “Nexxen International Ltd. Annual Report 2023” on its investor relations
website. Pursuant to the AIM Market Rules, copies of both are attached as Exhibit 99.1 and 99.2 to this Form 6-K.
The information in this report of foreign private issuer on Form 6-K is hereby incorporated by reference into the Company’s registration statement on Form S-8 (Registration No. 333-258731), to be a
part thereof from the date on which this report is submitted, to the extent not superseded by documents or reports subsequently filed or furnished.
Exhibit 99.1
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Company announcement dated June 28, 2024, “Posting of Annual Report and Accounts”.
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Exhibit 99.2
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Company announcement dated June 28, 2024, “Nexxen International Ltd. Annual Report 2023”.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized.
Nexxen International Ltd.
By: |
/S/ Sagi Niri |
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Name: |
Sagi Niri
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Title: |
Chief Financial Officer
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Exhibit 99.1
28 June 2024
Nexxen International Ltd
("Nexxen" or the "Company")
Posting of Annual Report and Accounts
Nexxen International Ltd. (AIM/NASDAQ: NEXN) (“Nexxen” or the “Company”), a global,
unified advertising technology platform with deep expertise in video and Connected TV (“CTV”), confirms that its Annual Report and Accounts for the year ended 31 December 2023 have been posted to shareholders and are now
available on the Company's investor relations website at https://investors.nexxen.com/.
For further information please contact:
Nexxen International Ltd.
Billy Eckert, Vice President of Investor Relations
ir@nexxen.com
Caroline Smith, Vice President of Communications
csmith@nexxen.com
KCSA (U.S. Investor Relations)
David Hanover, Investor Relations
nexxenir@kcsa.com
Vigo Consulting (U.K. Financial PR &
Investor Relations)
Jeremy Garcia / Peter Jacob / Aisling Fitzgerald
Tel: +44 20 7390 0230 or nexxen@vigoconsulting.com
Cavendish Capital Markets Limited
Jonny Franklin-Adams / Charlie Beeson / George Dollemore (Corporate Finance)
Tim Redfern / Jamie Anderson (ECM)
Tel: +44 20 7220 0500
About Nexxen International
Nexxen International empowers advertisers, agencies, publishers and broadcasters around the world to
utilize video and Connected TV in the ways that are most meaningful to them. Comprised of a demand-side platform (DSP), supply-side platform (SSP), ad server and data management platform (DMP), Nexxen delivers a flexible and unified technology
stack with advanced and exclusive data at its core. Our robust capabilities span discovery, planning, activation, measurement, and optimization - available individually or in combination - all designed to enable our partners to reach their goals,
no matter how far-reaching or hyper niche they may be. For more information, visit nexxen.com.
Nexxen is headquartered in Israel and maintains offices throughout the United States, Canada, Europe, and
Asia-Pacific, and is traded on the London Stock Exchange (AIM: NEXN) and NASDAQ (NEXN).
Exhibit
99.2
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One
platform. Endless opportunities. Nexxen International Ltd Annual Report 2023
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Our
Mission Our brands bring together an end-to-end platform to enable powerful partnerships and deliver results across the advertising
ecosystem. Nexxen operates in the rapidlygrowing digital advertising industry with significant exposure to video advertising;
one of the most engaging and fastest-growing formats STRATEGIC REPORT 01 Nexxen Today 02 Chairperson’s Statement 04 Our
Markets 06 Chief Executive Officer’s Review 10 Successful Integration – Amobee 11 Growing Opportunities – Investment
in VIDAA 12 Chief Financial Officer’s Review GOVERNANCE 16 Board of Directors 18 Corporate Governance Report 21 The Board
and the Committees 26 Takeovers & Mergers 28 Directors’ Report 33 Compensation Report FINANCIAL STATEMENTS 36 Financial
Statements 39 Auditors’ Report to the Shareholders of Nexxen International Ltd. 40 Consolidated Statements of Financial
Position 41 Consolidated Statements of Operation and Other Comprehensive Income (Loss) 42 Consolidated Statements of Changes in
Equity 43 Consolidated Statements of Cash Flows 44 Notes to Consolidated Financial Statements 66 Directors, Secretary & Advisers
Nexxen International Ltd Annual Report 2023
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Nexxen
Today HIGHLIGHTS $314.2m Contribution ex-TAC $299.0m Programmatic Revenue $207.5m Video Revenue $85.5m CTV Revenue $83.2m Adjusted
EBITDA 26% Adjusted EBITDA margin as a % of Contribution ex-TAC 29% CTV revenue as % of programmatic revenue 69% Video revenue
as % programmatic revenue 334 New actively-spending first-time advertisers customers added 372 New supply partners added NEXXEN’S
SIGNIFICANT DATA SCALE & CUSTOMER FOOTPRINT POSITIONS THE COMPANY FOR LONG-TERM MARKET SHARE GAINS >199 Billion Daily ad
requests ~50m US households for TV viewership data ~225,000 Active sites or apps where ads can be shown >85% of campaigns data-enabled
>1,000 Advertiser & agency customers >1,600 Publishers >65 Third-Party data partners ~39% of all campaigns using
proprietary Nexxen data In-house data platform Significant audience segment data Substantial customer footprint and access to
1st party data Strong third-party data provider relationships Nexxen Discovery Robust retargeting capabilities ADVERTISERS We
enable advertisers and agencies to leverage significant and powerful data to plan and activate video advertising campaigns programmatically
PUBLISHERS And we enable digital publishers to maximize ad inventory revenue programmatically Nexxen International Ltd Annual
Report 2023 01 STRATEGIC REPORT FINANCIAL GOVERNANCE STATEMENTS
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Chairperson’s
Statement “ 2023 was a transformational year for the business in which we have created a strong platform for future growth,
underpinned by the integration of Amobee and our subsequent rebranding from Tremor International to Nexxen.” KEY STRENGTHS
& DIFFERENTIATORS Flexible unified end-to-end platform maximizes revenue and profitability opportunities First-mover advantage
for enabling linear TV and CTV cross-planning for advertisers, agencies, and broadcasters “One-stop-shop” for customers
fueled by robust, scaled, and unique data Significant Video and CTV revenue footprint with strong growth runway Significant Programmatic
revenue footprint Global ACR data exclusivity and ad monetization exclusivity (in U.S., U.K., Canada, and Australia) through investment
in VIDAA Veteran leadership team and Board Proven track record of acquiring and successfully integrating companies History of
returning value to shareholders through share repurchase programs CHRISTOPHER STIBBS Non-Executive Chairperson STRATEGIC REPORT
02 Nexxen International Ltd Annual Report 2023
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Nexxen
International Ltd Annual Report 2023 03 Our business made considerable progress, both in evolving our product stack and in enhancing
our global talent base through the recruitment of key personnel into the Group. Against a backdrop of geopolitical and macroeconomic
pressures and a complex integration of Amobee, the business delivered Contribution ex-TAC of $314.2 million and Adjusted EBITDA
of $83.2 million, whilst maintaining a healthy balance sheet. This resulted in a net cash position of $134.3 million at the period’s
end. Our focus in 2023 was on making Nexxen a more adaptable business, preparing for the changing landscape we expect to see over
the coming years. Customers are being forced to navigate changes in privacy and identity, as well as becoming more sophisticated
in leveraging data. They are therefore seeking partners who can provide simplicity, expertise and flexibility, all of which we
believe Nexxen can now deliver. The acquisition and integration of Amobee was the latest step in creating a flexible, unified,
data-driven platform and product suite focused on CTV and video. The completed integration made our tech ecosystem’s value
proposition even stronger, and we now operate a self-service platform that can plan holistic TV campaigns, find and reach audiences
wherever they consume media, have direct access to premium supply and exclusive data (including VIDAA’s global ACR data),
and provide cost advantages for customers buying end-to-end. This functionality strongly differentiates us for major advertisers,
agencies, and publishers, and we believe that our technology positions us well to attract new customers and increase spending
and product adoption over time with our existing customers. In conjunction with this major integration, and as a broader strategic
transition, we undertook a rebrand from Tremor International to Nexxen. This rebranding has enabled the business to create one
complete and cohesive package for customers, united under a shared name. It has allowed us to unite our disparate brands, simplify
the Company’s story and our product offering, and better highlight our unified data-driven end-to-end platform to customers.
We believe that this move has better positioned Nexxen as a leader in the video, data, and CTV advertising ecosystems, and will
ideally position the business to increase market share in the coming years through the ability to seamlessly package multiple
solutions critical to helping customers meet and exceed their advertising goals. In December 2023, Nexxen launched a new $20 million
Ordinary share repurchase programme as part of our ongoing commitment to create long-term shareholder value and maintaining an
efficient balance sheet. The Company recently received authorization to repurchase up to an additional $50 million of its Ordinary
Shares. Nexxen is now a truly global business, operating from several strategic locations around the world and employing roughly
900 staff. I would like to thank our global teams for all their hard work and commitment whilst we integrated Amobee, rebranded
and navigated a challenging backdrop. While results throughout 2023 were impacted by difficult market conditions, we have created
a solid foundation for the future of our business, and are strongly positioned for long-term growth and market share gains, and
to emerge as true, future leaders in the video and TV ad tech arenas. CHRISTOPHER STIBBS Non-Executive Chair STRATEGIC REPORT
FINANCIAL GOVERNANCE STATEMENTS
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NEXXEN
IS POSITIONED AT THE CENTER OF INDUSTRY GROWTH TRENDS Our Markets STRATEGIC REPORT 04 Nexxen International Ltd Annual Report 2023
Data for audience finding, targeting, measurement, and returns maximization Industry and customer spend consolidation End-to-end
platforms Continued growth within CTV / video / programmatic / AVOD Linear converging with CTV Supply path optimization Content
and data exclusivity creating differentiation Nexxen operates in the rapidlygrowing digital advertising industry with significant
exposure to video advertising; one of the most engaging and fastest-growing formats
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Video
is Driving and Outpacing Digital Advertising Growth DIGITAL AD SPENDING – WORLDWIDE $ billions VIDEO AD SPENDING –
US $ billions ~66% of Nexxen’s contribution ex-TAC derived from video* Within Video Advertising, CTV is Growing at the Fastest
Rate, Fueled by Linear TV Budgets Shifting Towards, and Converging with, Digital Nexxen’s TV-focused tech and data stack
positions it for accelerated future CTV growth Industry stats come from eMarketer data as of March 2024 **Nexxen’s CTV percentage
reflects full year 2023 figure *Nexxen’s video revenue percentage reflects full year 2023 figure DESKTOP / LAPTOP AD SPENDING
– US $ billions MOBILE AD SPENDING – US $ billions CTV AD SPENDING – US $ billions ~27% of Nexxen’s Contribution
ex-TAC** is from CTV ~39% of total US TV ad spending is projected to be allocated to CTV 4 YR. CAGR 14% ~48% of total US TV ad
spending is projected to be allocated to CTV by 2027 Nexxen International Ltd Annual Report 2023 05 STRATEGIC REPORT FINANCIAL
GOVERNANCE STATEMENTS DIGITAL AD SPENDING – US $ billions 2027 410 372 338 303 269 2026 2025 2024 2023 2027 911 833 754
677 603 2026 2025 2024 2023 2027 157 139 123 108 90 2026 2025 2024 2023 2027 95 88 81 75 69 2026 2025 2024 2023 2027 275 248 224
199 176 2026 2025 2024 2023 4 YR. CAGR 12% 4 YR. CAGR 8% 4 YR. CAGR 11% 4 YR. CAGR 11% 4 YR. CAGR 15% 2027 41 37 33 29 24 2026
2025 2024 2023 45 86 50 87 51 84 59 88 59 83 2027 41 37 33 29 24 2026 2025 2024 2023 ~29% of total US TV ad spending is allocated
to CTV
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“
Now that the foundations have been firmly laid, we remain confident that we are very wellplaced to generate Contribution ex-TAC
growth, significantly improve profitability, achieve outsized long-term market share gains, and position ourselves as true leaders
in the video and TV ad tech space.” OFER DRUKER Chief Executive Officer STRATEGIC REPORT 06 Nexxen International Ltd Annual
Report 2023 NEXXEN WELL-POSITIONED FOR LEADERSHIP AND MARKET SHARE GAINS IN THE VIDEO AND CTV ADVERTISING ECOSYSTEMS ~66% of Contribution
ex-TAC from Video* ~27% of Contribution ex-TAC from CTV* ~90% of Revenue from Programmatic Activities* First-to-Market Cross-Platform
Planner (Linear TV & CTV) Significant data including exclusive global access to VIDAA’s ACR data End-to-end platform
benefits and robust CTV OEM relationships attractive to TV advertising customers Chief Executive Officer’s Review *Data
as of full year 2023
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INTRODUCTION
2023 was a transformative year, characterised by significantly advancing and enhancing our technology and product stack, as well
as rebranding the Company to Nexxen. The tech and product enhancements were achieved mainly by successfully completing the integration
of our largest acquisition to date, along with bolstering our talent base with industry veterans and Ad Tech experts. All of these
critical operational successes were achieved despite the challenging macroeconomic backdrop, highlighting the resiliency and advantages
of our diverse operating model. In the year-ended 31 December 2023, the Company generated Contribution ex-TAC of $314.2 million,
reflecting a 1% increase compared to the prior year (2022: $309.7 million), whilst our programmatic revenue grew by 9% to $299.0
million (2022: $274.4 million). Adjusted EBITDA stood at $83.2 million for the year ended 31 December 2023 (2022: $144.9 million).
The Company attributes this year-on-year decrease in Adjusted EBITDA to the dual challenges of strategically integrating Amobee
– a business that initially generated significant losses and whose business lines operate at a lower profitability profile
than the standalone preacquisition Nexxen business – and navigating an advertising market impacted by industry headwinds.
With these hurdles overcome, we expect to be able to shift our primary investment focus towards innovation and our share repurchase
program to generate long-term value for our customers and shareholders. Despite these challenges, significant progress was made
in executing our strategic vision to combine Nexxen’s and Amobee’s data-driven and highly synergistic platforms, successfully
rebranding to Nexxen to simplify and enhance the holistic value proposition of the Company’s advanced technology offering,
and expanding our CTV partnership roster. Much of 2023’s focus had been on installing the engines for future growth. Now
that the foundations have been firmly laid, we remain confident that we are very well-placed to generate Contribution ex-TAC growth,
significantly improve profitability, achieve outsized long-term market share gains, and position ourselves as true leaders in
the video and TV ad tech space. OPERATIONAL REVIEW Successfully Completed the Integration of Amobee 2023 saw Nexxen fully integrate
Amobee, the largest acquisition in the Company’s history, into its service offering. This integration, which was completed
in mid-2023, resulted in one of the most comprehensive, unified data-driven CTV and video-focused AdTech platforms on the open
internet, purpose-built to help customers on both sides of the ecosystem exceed their digital advertising goals and KPIs. We already
see positive upside following this successful integration. In Q1 2023, we made the strategic decision to migrate Tremor Video’s
CTV and video algorithms and capabilities to the Amobee DSP, now referred to as Nexxen DSP, which greatly enhanced our self-service
capabilities and positions us strongly to grow our client share amongst the world’s largest advertisers and agencies. The
Nexxen Discovery Platform, gained through the Amobee acquisition and integration, has become an important component in our ‘cookie
deprecation strategy’ while serving as a data-fueled B.I. tool that leverages content consumption data from across the internet,
social media, and TV, significantly enhancing audience knowledge for better targeting and reach extension. This product is already
generating considerable interest amongst political advertisers and agencies ahead of the 2024 U.S. election cycle. Looking ahead,
we believe our unified technology offering leaves us wellplaced to showcase a strong competitive advantage and serves as a key
differentiator for our business with major advertisers, agencies, CTV players, and broadcasters, while giving us enhanced confidence
in our ability to accelerate Contribution ex-TAC growth, CTV market share gains, and profitability in the coming year and beyond.
Rebranded to Nexxen The momentum generated from the integration of Amobee was further bolstered by the strategic rebranding of
the Company’s major products and platforms to Nexxen. The new unified brand name and identity encompass all the Company’s
key strategic growth pillars, namely our DSP, SSP and data management platforms. Nexxen embodies our vision for a robust and flexible
end-to-end platform that can be tailored specifically to meet our partners’ diverse needs by enabling effective data-driven
video campaigns across all screens, with a specialization in CTV. We were pleased to achieve this milestone in tandem with the
integration of Amobee. This consolidation of the brand portfolio better positions the Company, with significantly added scale
and a simplified value proposition, to hold a leadership position in the future CTV advertising arena. Looking ahead, we believe
that our cohesive video and CTV-focused platform will stand us in good stead to drive superior ROI outcomes through advanced audience
discovery and planning tools with cross-platform capabilities that ensure incremental reach in converged linear and CTV, unique
and exclusive data sets including ACR, and powerful, dynamic data-driven creative. >1,000 Active corporate & agency customers*
>1,600 Active publishers* Nexxen International Ltd Annual Report 2023 07 STRATEGIC REPORT FINANCIAL GOVERNANCE STATEMENTS *As
of 12/31/2023
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Expanded
CTV Partnerships and Offerings Despite Challenging Year for CTV Advertising Nexxen’s CTV revenue was $85.5 million in 2023,
reflecting a 12% decrease from the previous year (2022: $97.2 million). CTV revenue was impacted by a combination of factors,
including the SAG-AFTRA strike, reduced budgets and CTV spending from some of the Company’s largest small- and mid-sized
agency customers. The Company’s largest small- and mid-sized agency customers encouragingly continued to spend within Nexxen’s
broad suite of platform offerings despite challenging market conditions, but opted for lower-cost solutions such as mobile video,
audio, and display to maximize audience reach at a lower price point. In spite of these conditions, the Company retained the overwhelming
majority of its major customer base and actively scaled and expanded its CTV partnership roster, and in doing so, established
relationships with more of the world’s major smart TV OEMs. In May, we partnered with TCL FFALCON (“TCL”). The
partnership granted customers direct access to TCL’s innovative ad units on premium CTV/OTT inventory in the TCL Channel,
providing them with the opportunity to deliver highly impactful ads to receptive audiences across the globe. We have since expanded
this partnership (in 2024) to also exclusively sell TCL’s native display inventory as a preferred supply partner, enabling
Nexxen to offer customers expanded reach across a significant number of TV screens with flexibility across formats to enhance
advertising outcomes. In addition, in May, Nexxen created a first-to-market Green Media Product for CTV via a global partnership
with Scope3. The partnership enables Scope3’s carbon emission measurement methodology to be applied to CTV inventory with
buyers able to access GMP curated deals through the Nexxen SSP to achieve performance goals while mapping and measuring carbon
emissions of their media spend within CTV. This has generated significant interest from, and adoption by, agencies, as sustainability
has become an increasingly core focus for agencies and their customers. The company built on the momentum gained by the partnerships
in May and, in August, we partnered with Lumen and TVision to deliver the first omnichannel Attention Measurement solution for
advertisers across CTV, online video, and display. This partnership augments the launch of Nexxen’s full Attention Measurement
offering, which spans the lifecycle of an advertiser’s campaign, from creative testing to media curation to real-time measurement
and optimization, all through Nexxen’s end-to-end platform. By leveraging all elements of the offering, advertisers can
plan against, activate on, and optimize for consumer attention across screens, including CTV. In November, we expanded the Company’s
international CTV growth opportunity through the launch of TV Viewership Audiences across the United Kingdom, as well as the expansion
of its broader TV Intelligence offering in the United States – a suite of targeting, planning and measurement capabilities
rooted in contextual and exclusive automatic content recognition data. Both the launch and expansion are the result of the consolidation
and integration of TV targeting and measurement solutions into the Company’s Data platform and DSP. We saw notable and increased
adoption during Q4 2023, and we anticipate further growth in both markets in 2024. As we look ahead, Nexxen maintains its belief
that CTV will be a crucial component in helping the Company capture a greater portion of market share in the years ahead, especially
when considering the Company’s exposure to CTV and its differentiators for customers. We believe that we will achieve CTV
revenue growth in 2024 amidst optimism that macroeconomic conditions will improve, our larger customers’ budgets and spending
will increase, and that customers will seek our premium, differentiated suite of CTV solutions. Cross-Platform Planner and ACR
Adoption In August, we announced a partnership with H/L, a renowned multiservice and independent agency that’s been making
momentum for local, regional and national marketers for nearly 40 years. As the digital and linear worlds converge, we look forward
to continuing to work with H/L, and in turn, unleash a consolidated, cross-channel approach that drives superior outcomes for
advertisers on a local level. 2024 PRODUCT FOCUSES & STRATEGY SELF-SERVICE ENTERPRISE Enhancing and expanding self-service
enterprise capabilities INNOVATION Leveraging A.I. and machine learning to speed up development times and enhance audience and
activation tools PRODUCTS / TECH / DATA Continuous focus on enhancing products, tech capabilities, and data footprint to improve
our customers’ results ACR DATA MONETIZATION Enhancing ACR data capabilities to expand ACR data monetization STRATEGIC REPORT
08 Nexxen International Ltd Annual Report 2023 Chief Executive Officer’s Review continued
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NEXXEN
STRONGLY POSITIONED FOR ACCELERATED GROWTH IN 2024 AND BEYOND Achievements in 2023 strongly position Company to “land and
expand” with customers, grow Contribution ex-TAC and market share, expand profitability, and fuel investment in innovation
and share repurchases in 2024 Completed integration of Amobee — enhancing platform’s self-service DSP and TV planning
capabilities while growing U.S. and international customer base Rebranded to Nexxen — better positioning Company with customers
and investors Created and unified one of the most advanced and data rich platforms in ad tech — a byproduct of ~$1 billion
in total R&D investment Expanded and enhanced CTV and data partnership roster — partnering with the major CTV OEMs Diversified
into new data licensing and other revenue streams — expected to further scale in 2024 Nexxen International Ltd Annual Report
2023 09 VIDAA and Hisense Following our $25 million investment in VIDAA in 2022, we were also pleased to report that VIDAA –
whose global ACR data can be monetized and distributed exclusively by Nexxen through at least the end of 2026 – grew its
reach to over 25 million Connected TVs during 2023, expanding and enhancing Nexxen’s TV viewership data footprint. We believe
that we have created a powerful partnership with the fastest growing global CTV operating system, and one of the largest and fastest
growing smart TV OEM brands. We look forward to reviewing the platform’s ongoing development in due course. Share Repurchase
Program On December 20, 2023, Nexxen launched a new $20 million Ordinary share repurchase program, following approval from the
Israeli Court and the Company’s Board of Directors. During Q4, the Company repurchased 221,506 shares at an average price
of 201.01 pence, reflecting a total investment of £446,139, or $565,714. In March 2024, we also announced a further share
repurchase program to purchase an additional $50 million Ordinary shares, which launched in May 2024. We are committed to maintaining
an efficient balance sheet and therefore seek to return excess capital, not required for other business priorities, to our shareholders,
particularly whilst shares trade at what we believe to be a considerable discount to fair market value. Business Wins We were
delighted to report that the Company maintained its strong business momentum throughout 2023 following the integration of Amobee,
despite broader market challenges. We added a significant number of new customers on the buy- and sell-sides of the ecosystem,
while retaining the vast majority of the Company’s highestspending customers throughout 2023. Across the year, Nexxen DSP
generated a significant level of customer adoption. We were delighted to report that 334 new actively-spending first-time advertiser
customers selected Nexxen’s DSP platform for finding audiences, targeting, and measurement, as well as planning and activating
campaigns across the digital advertising ecosystem. Pleasingly, our DSP solution has been shown to have cross-sector appeal, with
uptake ranging across a diverse mix of industries, such as entertainment, food and beverage, automotive, and financial industries,
demonstrating our cross-sector appeal. Simultaneously, Nexxen SSP added 372 new supply partners during 2023. Looking forward,
we are focused on continuing to diversify our customer base while enhancing our product offering to ensure we remain the go-to
name for advertisers, agencies, CTV media companies, and broadcasters in the digital advertising industry Growth Strategy Nexxen’s
robust performance across 2023 was reinforced by our ability to withstand macroeconomic headwinds which stifled budgets and reduced
advertising spending across the industry, particularly in managed service campaigns. Nevertheless, we continue to have confidence
in our long-term strategic vision and remain cautiously optimistic that macroeconomic conditions will improve in 2024 and, as
a result, drive greater demand for CTV advertising. To meet this demand, Nexxen will continue to focus on enhancing and expanding
our technological capabilities mainly around self-service enterprise capabilities to increase the attractiveness of our platform
and therefore enhance the experience for our customers. We already believe we possess a strong offering in the marketplace, which
can provide robust solutions to the major industry trends, and in some cases we offer a unique and advanced solution that differentiate
us in the market, mainly around TV data capabilities. As we close the chapter on the Amobee integration, we can now direct more
resources to R&D and product innovation to help cement our position as a household name in a rapidly expanding market. In
parallel, we are confident that our sales teams are poised to help drive new business development opportunities and, in turn,
expand our operational footprint. We are confident that our technology and data stack now offer the necessary components to enable
market share gains within the digital advertising realm without the need for additional M&A anytime soon. Summary and Outlook
In closing, 2023 proved to be a year of intense operational activity for Nexxen, culminating in the dual milestones of integrating
Amobee and successfully consolidating our brand portfolio under one name. With these milestones achieved, we believe that the
Company will now be entering an exciting phase of growth which will help reinforce Nexxen’s status at the forefront of the
digital advertising arena. Looking ahead to 2024, we will continue to focus on expanding our base of end-to-end customers, leveraging
us for multiple enterprise tech and data solutions, growing our data licensing revenue, and expanding our major streaming, TV,
and agency partnerships to drive growth and increased profitability. We continue to view the macroeconomic backdrop in which we
operate with cautious optimism, hoping that the signs of improvement continue and reverse headwinds into tailwinds. On behalf
of Nexxen management, I would like to thank everyone at the Company for their hard work and unrelenting commitment during 2023,
which, as previously stated, was a year not without challenges. The significant operational progress that was achieved during
2023 has provided Nexxen with a solid foundation to further strengthen its position across the digital advertising market in 2024
and beyond. OFER DRUKER Chief Executive Officer STRATEGIC REPORT FINANCIAL GOVERNANCE STATEMENTS
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10
Nexxen International Ltd Annual Report 2023 Successful integration Nexxen / Amobee COMPLETED AMOBEE INTEGRATION MADE OUR PLATFORM’S
ALREADY POWERFUL VALUE PROPOSITION EVEN STRONGER • Closed Acquisition in September 2022 • Largest Acquisition in Company’s
History • Completed Integration in Mid-2023 • ~$65 Million Annualized Operating Cost Synergies Achieved Created one
of the most tech-advanced and data rich platforms in Ad Tech Significantly increased scale, demand, and customer base Substantially
enhanced enterprise self-service DSP capabilities and data assets Added linear TV planning capabilities, enabling creation of
cross-platform planning tech (linear & CTV) Added Nexxen Discovery (data-fueled audience insights B.I. tool) Opened major
cross selling opportunities Amobee’s DSP capabilities strengthened Nexxen DSP’s self-service capabilities and brought
lower funnel performance tools necessary to bring performancerelated CTV products to market DSP CROSS-PLATFORM PLANNER NEXXEN
DISCOVERY Amobee acquisition brought linear planning capabilities to combine with Nexxen’s pre-existing CTV planning capabilities
to create a first-to-market solution to holistically plan across linear TV and digital Combines first-party audience data with
web, social media and TV data to identify and target the right users at the right time while serving as an important component
for Nexxen’s cookie deprecation preparedness strategy DSP Video / CTV Capabilities STRATEGIC REPORT
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Nexxen
International Ltd Annual Report 2023 11 Growing opportunities $25 Million Investment in VIDAA In 2022, Nexxen invested $25 Million
in VIDAA, a CTV Operating System / Streaming Platform, and Subsidiary of Hisense Through the investment, Nexxen gained: •
Equity Stake in VIDAA • Exclusive Global Access to VIDAA’s ACR Data for CTV Targeting and Measurement for Several Years
• Ad Monetization Exclusivity on VIDAA Media in the U.S., U.K., Canada and Australia for Several Years VIDAA INVESTMENT ENABLING
DIVERSIFICATION INTO DATA LICENSING REVENUE STREAMS, REFLECTING AN EXCITING GROWTH OPPORTUNITY Major DSPs for Segment Targeting
License to Measurement Companies Major DSPs for Enterprise & Managed Sales License to Industry Research Companies TARGETING
RESEARCH & MEASUREMENT Pre-existing DSP and SSP revenue more vulnerable to shocks in advertising demand New data licensing
revenue less vulnerable to advertising demand shocks STRATEGIC REPORT FINANCIAL GOVERNANCE STATEMENTS
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“
We were able to achieve these key milestones while significantly enhancing our technology and data assets, launching critical
new products and partnerships, and taking advantage of a discounted valuation opportunity in the market, repurchasing approximately
2% of shares outstanding to generate what we believe will be added long-term value for our shareholders.” SAGI NIRI Chief
Financial Officer 12 Nexxen International Ltd Annual Report 2023 Chief Financial Officer’s Review STRATEGIC REPORT HISTORY
OF SIGNIFICANT ADJUSTED EBITDA MARGINS AND STRONG ADJUSTED EBITDA MARGINS ADJUSTED EBITDA $ millions 2023 83.2 144.9 161.2 60.5
60.4 2022 2021 2020 2019 ADJUSTED EBITDA MARGIN As a % of contribution ex-TAC 2023 26 47 53 33 37 2022 2021 2020 2019 Company
historically possessed one of the highest Adjusted EBITDA margins in Ad Tech and expects to expand margins after realizing benefits
from completed Amobee integration and as macro conditions improve.
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With
the combination of the successfully completed integration of Amobee and our rebranding to Nexxen, we are proud to report that
2023 has been a transformational year for the business, and one which has laid a strong foundation for future growth. The joint
effect of these two major steps for the company strongly positions us to capture a larger share of video and TV advertising opportunities
with the world’s largest advertisers, agencies, CTV companies, and broadcasters. We were able to achieve these key milestones
while significantly enhancing our technology and data assets, launching critical new products and partnerships, and taking advantage
of a discounted valuation opportunity in the market, repurchasing approximately 2% of shares outstanding to generate what we believe
will be added long-term value for our shareholders. Impressively, the Company generated these successes while strengthening its
balance sheet and remaining highly profitable and cash generative, despite a difficult market environment that continued to negatively
impact advertising budgets and demand throughout the year. To this point, in 2024, the Company has continued significantly strengthening
its balance sheet through substantial debt repayment, and further increased its share repurchase authorisation. Adjusted EBITDA
decreased by $61.7 million from $144.9 million for the year ended 31 December 2022 to $83.2 million for the year ended 31 December
2023. The decrease was attributable to a combination of factors, including challenging macroeconomic conditions that disproportionately
impacted budgets and spending for our highest-spending small- and mid-sized agency customers, to whom we are heavily-indexed,
as well as a shift by those customers and others towards our lower-cost programmatic solutions. Adjusted EBITDA for the year ended
31 December 2023 was also challenged by the complex combination of Amobee’s and Nexxen’s talent bases, which required
a significant amount of management and sales team focus, negatively impacting revenue, as well as the integration of Amobee’s
business lines, which operate at a lower profitability profile than the pre-acquisition standalone Nexxen business Revenue decreased
by $3.3 million, or 1.0%, to $332.0 million for the year ended 31 December 2023, from $335.3 million for the year ended 31 December
2022. The decrease was largely driven by continued weakness in the macroeconomic environment related to a combination of factors
including rising interest rates, rising inflation, geopolitical conflicts, and recession concerns, which caused uncertainty amongst
advertisers, resulting in reduced budgets, spending, and demand. The Company experienced a $27.9 million reduction in revenue
related to the Company’s non-core, non-programmatic business lines, which was partially offset by a $24.6 million increase
in revenue related to the Company’s core business focused on programmatic activities. Cost of revenues (exclusive of depreciation
and amortization) increased by $1.5 million, or 2.5%, to $62.3 million for the year ended 31 December 2023, from $60.7 million
for the year ended 31 December 2022. The increase was primarily driven by a $9.4 million increase in costs associated with increased
revenue from programmatic activities and offset by a $7.9 million decrease in costs associated with reduced revenue related to
the Company’s non-core, non-programmatic business lines. Gross profit margin decreased slightly to 81% for the year ended
31 December 2023 (2022: 82%). This decrease was attributable to a combination of lower revenue and increased costs of revenues
(exclusive of depreciation and amortization) year-over-year from 2022. Research and development expenses increased by $16.0 million,
or 47.6%, to $49.7 million for the year ended 31 December 2023, from $33.7 million for the year ended 31 December 2022. The increase
in research and development costs was driven mainly by a $24.5 million increase in salaries and wages attributable to increased
headcount, to maintain and support further development of our platform, and a $1.6 million increase in expenses related to investment
in research and development and engineering tools and services, offset by a $5.5 million increase related to investment in technology
and product innovation capitalization and a $4.7 million decrease in share-based compensation expense. Nexxen International Ltd
Annual Report 2023 13 STRATEGIC REPORT FINANCIAL GOVERNANCE STATEMENTS
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Nexxen International Ltd Annual Report 2023 Selling and marketing expenses increased by $16.0 million, or 17.7%, to $105.9 million
for the year ended 31 December 2023, from $90.0 million for the year ended 31 December 2022. The increase was largely attributable
to a $21.5 million increase in salaries and wages related to increased headcount, and a $1.3 million increase in sales and marketing
tools, sponsorship and events, and client-related expenses. This increase was partially offset by a $6.8 million decrease in share-based
compensation expense. General and administrative expenses decreased by $17.0 million, or 24.9%, to $51.1 million for the year
ended 31 December 2023, from $68.0 million for the year ended 31 December 2022. The decrease in general and administrative expenses
was driven mainly by a $19.8 million decrease in share-based compensation expense, a $5.8 million decrease in costs associated
with the acquisition of Amobee in 2022, and a $4.5 million decrease in professional service fees and expenses mainly due to director
and officer liability insurance and legal expenses, which decreased largely due to legal reimbursement received during the year
from Alphonso. This decrease was partially offset by a $7.5 million increase in allowance for expected credit losses; a $2.3 million
increase in rent-associated expenses such as utilities, parking, insurance, and maintenance; a $2.9 million increase in salaries
and wages associated with increased headcount; and a $0.4 million increase in general and administrative tools. Depreciation and
amortization expenses increased by $35.6 million, or 83.3%, to $78.3 million for the year ended 31 December 2023, from $42.7 million
for the year ended 31 December 2022. The increase was primarily attributable to a combination of a $12.5 million increase in intellectual
property amortization, an $8.7 million increase in amortization of old trademarks related to obtaining new trademarks in association
with the Company’s rebranding to Nexxen, an $8.5 million increase in depreciation on servers and computers, a $4.7 million
increase in depreciation on lease assets, a $3.1 million increase in customer relationship amortization and a $0.4 million increase
in depreciation related to fixtures, leasehold improvements. This increase was partially offset by a $2.0 million decrease related
to amortization on unfavorable contracts associated with the acquisition of Amobee and a $0.3 million decrease in amortization
of internally developed software. As of 31 December 2023, our net cash* increased by 16%, from $115.5 million for the year ended
31 December 2022 to $134.3 million for the year ended 31 December 2023. The increase was Chief Financial Officer’s Review
continued STRATEGIC REPORT Adjusted EBITDA Year Ended December 31 2022 $’000 2023 $’000 Total comprehensive income
(loss) for the year 16,238 (18,127) Foreign currency translation differences for foreign operation 6,499 (2,126) Foreign currency
translation for subsidiary sold reclassified to profit and loss – (1,234) Taxes on income 19,688 2,503 Financial expense
(income), net 2,327 2,008 Depreciation and amortization 42,700 78,285 Stock-based compensation 50,505 19,169 Other expenses 540
1,765 Restructuring 307 796 Acquisition-related cost 6,085 171 Adjusted EBITDA 144,889 83,210 Profit (loss) from operations Year
Ended December 31 2022 2023 As reported $’000 As a percentage of revenue As reported $ ’000 As a percentage of revenue
Revenues 335,250 100.0% 331,993 100.0% Cost of revenues (exclusive of depreciation and amortization shown separately below) 60,745
18.1 62,270 18.8 Research and development 33,659 10.0 49,684 15.0 Selling and marketing 89,953 26.8 105,914 31.9 General and administrative
68,005 20.3 51,051 15.4 Depreciation and amortization 42,700 12.7 78,285 23.6 Other expenses (income), net (4,564) (1.4) 1,765
0.5 Profit (loss) from operations 44,752 13.3 (16,976) (5.1)
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Nexxen
International Ltd Annual Report 2023 15 primarily driven by the $60.7 million net cash provided by operating activities. Net cash
provided by operating activities was derived from our $21.5 million total comprehensive loss for the year, adjusted for non-cash
adjustments of $103.5 million, including depreciation and amortization of $78.3 million, sharebased compensation of $19.2 million,
net finance expense of $1.7 million, loss on the sale of a business unit of $1.8 million, loss on leases of $0.1 million, and
tax expense of $2.5 million. In addition, there was $21.3 million in cash used in operating activities, which included a $30.6
million decrease in accounts receivable, a $43.1 million decrease in accounts payable, $8.4 million paid in net income taxes and
$0.5 million in net interest paid, including $8.5 million in interest paid, offset by $8.0 million in interest received. The overall
increase in net cash was partially offset by net cash used in financing and investing activities. Net cash used in financing activities
was $26.5 million for the year ended 31 December 2023, which was derived from $17.3 million related to lease repayment and $9.5
million related to the acquisition of the Company’s own shares, partially offset by $0.2 million related to proceeds from
the exercise of share options. Net cash used in investing activities was $17.0 million for the year ended 31 December 2023, which
was derived from $15.1 million related to the acquisition and capitalization of intangible assets, $4.5 million related to the
acquisition of fixed assets, partially offset by $1.5 million in pledged deposits, $1.1 million in lease payment receipts, and
$0.05 million in repayments from a loan to a third party. In addition to the $134.3 million net cash balance as of 31 December
2023, the Company also had $80 million undrawn on its Revolving Credit Facility which can be utilized for general corporate purposes,
or other purposes not prohibited under the Company’s Credit Agreement, including potential future strategic investments
and initiatives. On 9 April 2024, the Company repaid its outstanding indebtedness under the secured Term Loan A, and the outstanding
amount under the Revolving Credit Facility (together the “Credit Agreement”), entered on 12 September 2022. The Company’s
payment to the Lenders under the Credit Agreement was approximately $100 million, which satisfied all of the Company’s debt
obligations under the Term A Secured Loan, in the amount of $90 million, and the previously drawn down amount of approximately
$10 million under the Revolving Credit Facility. The Company did not incur any early termination penalties as a result of the
repayment of indebtedness. Following the Company’s repayment, it now has $0 long-term debt and $90 million undrawn on its
Revolving Credit Facility, which remains available for use. SAGI NIRI Chief Financial Officer . * Net cash is defined as cash
and cash equivalents less short and long-term interest-bearing debt including capital leases Full year 2023 results include the
combined financial performance of Nexxen and Amobee while full year 2022 results include Amobee only from 12 September 2022 through
31 December 2022 STRATEGIC REPORT FINANCIAL GOVERNANCE STATEMENTS
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Nexxen International Ltd Annual Report 2023 CHRISTOPHER STIBBS Non-Executive Chairperson Christopher Stibbs has served as a member
of our board of directors since May 2019 and as our Non-Executive Chairperson since September 2020. Mr. Stibbs has over 25 years
of experience as an executive in the media industry. From July 2013 to August 2019, he served as Chief Executive of The Economist
Group Ltd. (the “Economist Group”), a media company. Previously, he held a number of roles within the group including
head of the Economist Intelligence Unit (the group’s B2B arm) and Chief Financial Officer. He is credited with overseeing
the Economist Group’s resilience and transition through the unprecedented disruption experienced by the publishing industry
over the last 15 years. Prior to this, he held positions with Pearson (NYSE:PSO), a publishing company and Incisive Media, a B2B
information and events company. Mr. Stibbs is a fellow of the Associations of Chartered Accountants and Corporate Treasurers and
currently serves as a nonexecutive director at Oxford University Press and serves as a Chairperson of Times Higher Education,
IWSR Topco Limited and Sagacity Solutions Ltd. OFER DRUKER Chief Executive Officer Ofer Druker has served as our Chief Executive
Officer and as a member of our board of directors since April 2019 following the completion of the merger with RhythmOne, a digital
advertising technology company. From November 2017 to April 2019, Mr. Druker served as our Executive Chairperson of the Tremor
Video division and was instrumental in our successful integration of Tremor Video after its acquisition in August 2017. Previously,
Mr. Druker was the founder and Chief Executive Officer of Matomy Media Group Ltd. (LSA:MTMY), a data-driven advertising company
(“Matomy”) until April 2017, having built Matomy from its inception in 2007 into a digital media company. Mr. Druker
was responsible for leading and integrating Matomy’s most important strategic transactions, including the acquisitions of
Team Internet, Media Whiz, Mobfox and Optimatic. SAGI NIRI Chief Financial Officer Sagi Niri has served as our Chief Financial
Officer since March 2020 and as a member of our board of directors since June 2020. Mr. Niri has over 20 years of experience in
finance and leadership roles in the technology and real estate sectors. Mr. Niri previously served as Chief Executive Officer
of Labs (“Labs”), and Chief Financial Officer of LabTech Investments Ltd., Labs’ parent company, which owns
and manages office, retail and residential real estate in London. In addition, Mr. Niri spent over nine years at Matomy, initially
as Chief Operating Officer/ Chief Financial Officer and more recently as Chief Executive Officer. Mr. Niri is a member of the
Institute of Certified Public Accountants in Israel and holds an M.B.A. in Finance from Manchester University and a B.A. in Corporate
Finance from the College of Management in Israel. YANIV CARMI Chief Operating Officer Yaniv Carmi has served as our Chief Operating
Officer since March 2020 and as a member of our board of directors since 2014. Mr. Carmi previously served as our Chief Financial
Officer from January 2010 to March 2020. He is currently responsible for the delivery of our business plan and driving our growth
ambitions. Mr. Carmi was instrumental in our initial public offering of our ordinary shares on AIM in 2014 and in the subsequent
global expansion in operations, including significant M&A activity. He is an experienced finance professional, whose previous
roles include tax and audit senior at KPMG Israel. Mr. Carmi is also a Certified Public Accountant and holds a B.A. in Economics
and Accounting from Ben-Gurion University and an M.B.A. in Financial Management from Tel Aviv University. Board of Directors GOVERNANCE
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Nexxen
International Ltd Annual Report 2023 17 NEIL JONES Senior Non-Executive Director Neil Jones has served as a member of our board
of directors since 2014. Mr. Jones has spent most of his career in the media sector leading the Finance and M&A functions
of UK listed businesses. He is currently Corporate Development Director of Inizio Group Limited, the international life science
services company created from the merger of UDG Healthcare plc and Huntsworth plc (“Huntsworth”) in August 2021. Prior
to that he was Chief Operating Officer and Chief Financial Officer at Huntsworth plc from February 2016. He joined Huntsworth
plc from ITE Group plc, the international exhibitions group, where he held the position of Chief Financial Officer from 2008.
Between 2003 and 2008, Mr. Jones was Chief Financial Officer at Tarsus Group plc, an international media company. Mr. Jones has
a B.A. in Economics from the University of Manchester and completed his ACA in July 1990 with PricewaterhouseCoopers. Mr. Jones
is also a non-executive Director of Sivota plc a UK listed special opportunities vehicle that invests in under-valued technology
business. REBEKAH BROOKS Non-Executive Director Rebekah Brooks has served as a member of our board of directors since June 2020.
Since 2015, Ms. Brooks has been Chief Executive of British newspaper publisher News Corp UK & Ireland Limited, part of New
News Corporation (NASDAQ:NWSA), a mass media and publishing company (“News Corp”), having first joined News Corp in
1989. Starting as a feature writer for the News of the World, Ms. Brooks became Editor of the Sun in 2003, a position she held
until July 2009. From 2009 to 2011, she served as Chief Executive of News International, overseeing a period of significant growth
in newspaper operating profit and paid-for digital subscriptions at The Times. Following her appointment as Chief Executive of
News Corp UK and Ireland, Ms. Brooks restructured the Sun’s online strategy, driving significant audience growth. In 2016,
she also oversaw the strategic acquisition of Wireless, the owner of national radio brands talkSPORT, talkRADIO and Virgin Radio.
Ms. Brooks is a Director of News Group Newspapers and Times Newspapers, and a Non- Executive Director of PA Group, the parent
company of the Press Association. JOANNA PARNELL Non-Executive Director Joanna Parnell has served as a member of our board of
directors since 2014. Ms. Parnell is the Co-Founder of strategic marketing consultancy Project50, designing commercial growth
strategies for C-suite business leaders in the United Kingdom and the United States. Previously, Ms. Parnell was Managing Partner
at Wavemaker (formerly MEC), one of the world’s leading media agency networks and owned by WPP plc, where she led the paid
digital and data team, overseeing the agency’s focus on data driven campaigns. Prior to moving to Wavemaker in March 2016,
Ms. Parnell was Director of Strategy and sat on the management team at Unique Digital, a digital marketing agency (now a WPP plc
company), with responsibility for setting product and business strategy, including leading the multichannel planning strategy
(cross-device and crossplatform), managing product heads and driving key initiatives across data buying, attribution modelling
and biddable media adaptation. Ms. Parnell has a Masters in German and Business from the University of Edinburgh and studied at
the London School of Marketing between 2005 and 2006. NORM JOHNSTON Non-Executive Director Norm Johnston has served as a member
of our board of directors since June 2020. Mr. Johnston is a veteran employee of News Corp. Until recently, he was the Chief Executive
Officer of Unruly, the digital advertising business we acquired in January 2020, a position he held from April 2018. Mr. Johnston
has been involved in digital marketing since joining the marketing industry’s first digital agency, Modem Media in 1995.
In 1997, Mr. Johnston launched Modem Media UK (“Modem”), one of Britain’s first and most successful digital
agencies. After Modem was acquired by Publicis in 2007, Mr. Johnston joined WPP plc and GroupM’s media service company,
Mindshare Media UK Limited, where he held a number of senior roles between 2007 and 2018, including Global Chief Digital Officer
and Global Chief Executive Officer of its FAST business unit, a team of over 2,000 specialists in 115 cities working for global
clients such as Unilever plc, Nestle S.A. and American Express Company. Mr. Johnston holds a B.A. in Economics and Political Science
from Northwestern University and an M.B.A. in Marketing from Duke University’s Fuqua School of Business. LISA KLINGER Non-Executive
Director Lisa Klinger has served as a member of our Board of Directors since April 2021. Ms. Klinger has nearly 30 years of experience
in international finance. Most recently, between 2018 and 2019, Ms. Klinger served as Chief Financial Officer at Ideal Image Development
Corp, an L Catterton portfolio company and the largest U.S. retail provider of nonsurgical cosmetic and aesthetic procedures.
Prior to that, between 2016 and 2017, she held the role of Chief Financial and Administrative Officer at Peloton Interactive Inc.,
(NASDAQ:PTON), the leading connected fitness platform. Ms. Klinger’s previous Chief Financial Officer roles include Vince
Holding Corp. (NYSE:VNCE), a fashion apparel company and The Fresh Market, Inc., a specialty food retailer. At both companies,
Ms. Klinger led go-public processes and subsequently served on the Executive Leadership team of the public entities. Ms. Klinger
also held senior finance roles at Limited Brands and at Michael’s Stores, Inc. where she was Senior Vice President, Finance
and Treasurer, and Acting Chief Financial Officer. She currently serves on the Board of Directors and as Audit Committee Chair
of Emerald Holdings, Inc. (NYSE: EEX), a leading U.S. business-tobusiness platform producer of trade shows, events, conferences,
marketing, and B2B software solutions, since 2018, and also serves on the Board of Directors and both the Audit Committee and
Compensation Committee of The Container Store Group, Inc. (NYSE:TCS), the leading specialty retailer of storage, organization
products, custom closets and in-home services in North America. Ms. Klinger also served on the Board of Directors and Audit Committee
of Party City Holdco, Inc. (NYSE: PRTY), a vertically integrated party goods supplier and retailer from 2015 to 2021. Ms. Klinger
holds a B.S.B.A. in Finance from Bowling Green State University. DANIEL KERSTEIN Non-Executive Director Daniel Kerstein has served
as a member of our board of directors since December 2023. Currently, Mr. Kerstein holds the position of Managing Director, M&A,
Head of Structuring Solutions and Shareholder Advisory at TD Securities. From 2011 through 2023, Mr. Kerstein held the position
of Managing Director, M&A and Global Head of Activist Defense and ESG Advisory at Barclays, where he managed a global team
of bankers focused on activistshareholder defense and ESG advisory. From 2007 through 2011, Mr. Kerstein held the position of
Managing Director, Global Finance at Barclays and Lehman Brothers where he led a team of structuring experts, lawyers and accountants,
applying accounting, tax, regulatory and general financial expertise to address changing market and regulatory environments to
create innovative financial products and strategic alternatives focused on maximizing corporate and shareholder value and improving
company returns. Mr. Kerstein joined Lehman Brothers in 2003 from Merrill Lynch. From 1997 through 2003, Mr. Kerstein held the
position Vice President, Corporate Finance Investment Banking at Merrill Lynch. Mr. Kerstein holds a B.A. from CUNY, Queens College
and a J.D. from Harvard Law School. RHYS SUMMERTON Non-Executive Director Rhys Summerton has served as a member of our board of
directors since December 2023. From 2014 through the present, Mr. Summerton holds the position of Fund Manager and Investor at
Milkwood Capital, a long-term, value-oriented, global investment company. During this time, Mr. Summerton has successfully promoted
the value realization of a number of investments through efficient capital allocation and decision making. From 2009 to 2013,
Mr. Summerton held the position of Managing Director and Global Head of Emerging Market Equity Research at Citigroup, managing
the number 1 ranked research franchise. Prior to that, Mr. Summerton was a telecoms and media analyst at Citigroup and Cazenove.
Mr. Summerton is a Chartered Accountant, through Ernst & Young. STRATEGIC REPORT FINANCIAL GOVERNANCE STATEMENTS
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Nexxen International Ltd Annual Report 2023 Corporate Governance Report GOVERNANCE The Board is responsible to shareholders for
the effective direction and control of the Company, with the aim of generating long-term success for Nexxen. This report describes
the framework for corporate governance and internal controls that the directors have established to enable them to carry out this
responsibility. The directors recognise the importance of high standards of corporate governance and have chosen to adopt the
Quoted Companies Alliance Corporate Governance Code (the “QCA Code”) as the basis of the Company’s governance
framework. This is in line with the London Stock Exchange’s AIM Rules requiring all AIM-listed companies to adopt and comply
with a recognised corporate governance code. As an Israeli company, the Company also complies with the corporate governance provisions
of Israel’s Companies Law, 5759-1999 (the “Companies Law”), and the City Code on Takeovers and Mergers does
not apply to the Company. In addition, the Company is subject to the corporate governance rules of the U.S. Securities and Exchange
Commission (the “SEC”) and Nasdaq as described in the Company’s filings with the SEC. The Board believes that
good corporate governance reduces risks within the business, promotes confidence and trust amongst its stakeholders and is an
important part of the effectiveness and efficiency of the Company’s management framework. The QCA Code includes ten broad
principles that the Board strives to implement in order to deliver on its responsibilities to the Company’s shareholders.
The table below references how the Board complies with the principles of the QCA Code. The QCA Code can be found on the QCA’s
website: www.theqca.com. DELIVER GROWTH 1. Establish a purpose, strategy and business model which promotes long-term value for
shareholders Nexxen consistently reiterates its growth strategy in both its communications, which include RNS, filings with the
SEC, presentations to stakeholders, and its financial results statements. We believe that programmatic advertising is still an
under penetrated market that will experience robust growth over the next decade as ad budgets continue to shift to digital and
as digital continues to shift towards programmatic execution. Our corporate purpose and intent is to capitalize on these secular
trends by pursuing growth opportunities that include: • Focus on Core Areas of Growth in Video and CTV CTV is one of the
fastest growth formats within digital advertising, and this trend is expected to continue over the next several years according
to eMarketer. In the United States, CTV ad spend is expected to grow at a CAGR of approximately 15% from 2023 to 2027, and Video
is expected to grow at a CAGR of approximately 16%, reaching roughly $156.9 billion by 2027. Digital video and CTV comprise approximately
69% of our revenue without performance activity for the year ended December 31, 2023, and are core focuses for us. We plan to
leverage our existing expertise in Video and CTV to increase our market share and introduce new technologies and solutions. •
Introduce New Products and Invest in our Technology Stack As we grow our market share and add new customers, we continue to invest
in our technology stack and develop new innovative products. We are continuously trying to introduce new innovative solutions
and products to the rapidly evolving digital advertising market. Some potential areas of growth and investment include enhancing
our proprietary data sets, enhancing our CTV solution capabilities and marketplace, enhancing our audience targeting capabilities,
expanding our alternative identifier solutions and enhancing our global platform coverage capabilities. We are providing customers
with creative alternatives to plan and execute their campaigns, giving them complimentary scale and opportunities to enhance current
audience targeting strategies. For example, we offer, and will continue to enhance, contextual targeting solutions from content
data collected via our publisher partnerships as well as third-party solutions integrated into our ecosystem. There is market
movement away from cookie-based tracking which has created an increase in demand for alternative solutions. We have partnerships,
and are integrating, with major alternative identifier solutions such as Identity Link and Unified ID 2.0. We are committed to
helping define and support new privacy requirements and identifier mechanisms as industry standards evolve. We believe that not
everyone in the industry will adopt a single solution alternative to cookie-based tracking and we are building our platform to
support various identifier solutions. • Strengthen Our Relationship with Existing Customers We are constantly improving functionality
on our platform to attract new customers and encourage our existing customer base to allocate more of their ad spend and ad inventory
to our platform. We believe as programmatic gains more widespread adoption and as brands and publishers continue to focus on Video
and CTV, we are well-positioned to increase our customer base and generate additional revenue from existing customers. •
Expand Our International Footprint and United States Market Share We continue to acquire new publishers and advertisers globally
and invest in expanding our global footprint, providing significant global demand and supply of digital ad impressions across
all channels and formats. We will continue to invest in third-party integrations, maintaining and enhancing our platform’s
flexibility. We are leveraging our existing technology stack to provide innovative solutions to new and existing customers regardless
of location or platform. We consistently innovate and develop new tools and products that enable our customers to maximize their
benefit from using our platform and services. • Continue to Bolster our Data Capabilities We leverage real-time data, artificial
intelligence and machine learning capabilities to synthesize, aggregate and contextualize vast amounts of data sets to help our
advertisers and publishers optimize their digital ad spend/ inventory. Our DMP solution was architected to be flexible, which
allows us to deliver impactful and unique insights that are agnostic to format or device type. By owning our own proprietary DMP
solution, we are able to provide robust analytics, insights, and better segmentation on a global basis. We believe this gives
us a large competitive advantage and enables higher ROI to our advertisers and optimal yield on digital inventory to our publishers.
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Nexxen International
Ltd Annual Report 2023 19 STRATEGIC REPORT FINANCIAL GOVERNANCE STATEMENTS • Leverage our Industry Expertise and Target Select
Acquisitions We have been successful in past acquisitions and may direct our industry experience and focus to identify future
complementary acquisitions to further broaden our scale and technology solutions. To the extent we identify attractive acquisition
opportunities, we have the experience, leadership and track record to successfully execute strategic transactions and integrate
acquired businesses into our platform. 2. Promote a corporate culture that is based on ethical values and behaviours Nexxen’s
‘People & Culture’ programme is designed to preserve the culture of the Company. It includes “lecture of
the month” which is used to present different private and public social initiatives that aim to encourage employee volunteering
and social awareness. Nexxen also offers volunteering opportunities directly to its employees. The Company has a ‘Leadership
Programme’ that is designed to facilitate career progression while promoting leadership based on Nexxen’s core values
and ethical behaviour. Similarly, the Company’s recruiting efforts and methods are based on the notion of being the culture’s
gate keepers: aiming to recruit people who are a cultural fit and share a common ground of ethical values and behaviours. The
Company’s senior management team observes the culture of the Company in operation at the local business units (throughout
its geographies) through visits and maintaining company culture is a matter discussed by the Board. The Board also maintains regular
dialogue with company management outside of the executive directors to monitor the disposition of the broader employee-base and
ensure the continuation of a healthy, growth-oriented culture. 3. Seek to understand and meet shareholder needs and expectations
Nexxen encourages dialogue with both its institutional and private retail shareholders, responding quickly and with transparency
to all queries received. The Company provides the contact details for its IR advisers on its website. Nexxen also engages with
investors via its UK broker Cavendish. Ofer Druker, Nexxen’s CEO, Sagi Niri, Nexxen’s CFO, and William Eckert, Nexxen’s
Vice President of IR, meet regularly with institutional investors, usually in relation to the issuance of financial results, and
endeavour to accommodate all meeting requests from investors. The Board recognises the AGM as an important opportunity to meet
private shareholders. The directors – both nonexecutive and executive – are typically also available to speak to shareholders
informally immediately following the AGM. The Company’s executive directors hosted an investor presentation in November
2022 specifically to engage with the private investor community. Five of Nexxen’s eight non-executive directors are UK-based
and available to meet with shareholders as requested. This includes the Non-Executive Chairman, who liaises regularly with shareholders
(independent of management) and seeks to understand voting decisions/intentions where appropriate. The Chairman either directly,
or indirectly through Nexxen’s brokers, regularly solicits feedback from the Company’s investors. The Chairman also
receives questions from shareholders and looks to address them in a timely manner. Regular reports are provided to the Board on
meetings with shareholders and any concerns are communicated. Leading up to our 2023 annual meeting of shareholders, members of
our Board of Directors, including our Chairman, met frequently with shareholders about a variety of topics and took into account
their feedback in determining the recommended slate of directors, including two new directors, nominated by the Borad for election
at the annual meeting. Nexxen also seeks to meet the needs of shareholders on an ad hoc basis where necessary, such as with webcasts
and separate presentations attended by analysts and private investors. 4. Take into account wider stakeholder interests, including
social and environmental responsibilities, and their implications for long-term success Nexxen’s management team encourages
employees to share their feedback, ideas, and thoughts by promoting a transparent organisational culture and an “open door”
policy. Employees share their feedback with their managers on a regular basis one-on-one. Those participating in the leadership
programmes are asked to share their thoughts in group discussions and provide any feedback they might have in regard to management,
culture and the Company’s actions. The Company also introduced internal surveys to garner employee feedback and satisfaction
and to receive suggestions. The Company shares its list of core values with all employees, which are the foundation of its culture:
“I C.A.N.” (Each day, we strive to be as Innovative, Committed + Collaborative and Authentic as possible, with No
Ego). Staff retention rate is a key consideration and is a factor in determining the bonus payment of the executive directors.
Retention is also a matter reported on to the Board. The Company communicates and builds relationships with external stakeholders
via its marketing efforts, including social media, events, PR, direct marketing and online advertising. The Company offers to
meet with stakeholders at regular events globally, and occasionally directly contacts investors to offer meetings. Nexxen has
a ‘People & Culture’ programme, which includes providing employees with opportunities for volunteering in the
community – with a particular focus on education – such as tutoring young people and collaborating with schools that
care for underprivileged children. Nexxen also regularly donates to charitable organisations. 5. Embed effective risk management,
internal controls and assurance activities, considering both opportunities and threats, throughout the organisation The risks
to the business and how these are mitigated are detailed on pages 28 to 31 and its internal control measures on pages 24 and 25
of this report. Both the executive directors and senior managers are responsible for reviewing and evaluating risk on an ongoing
basis and the Board considers risks to the business at its meetings. The Board also allocates certain meetings to have a more
in-depth review of strategy and risk. The Audit Committee of the Board consults with external advisers, including the internal
auditor, Fahn Kanne Control Management Ltd., Grant Thornton Israel, as/when needed to support execution on strategy and risk mitigation,
and holding executive sessions with external auditor, KPMG, to discuss the audit process and the manner in which the Company’s
finance team is expanding to address the significant international growth of the business.
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20 Nexxen International
Ltd Annual Report 2023 Corporate Governance Report continued GOVERNANCE MAINTAIN A DYNAMIC MANAGEMENT FRAMEWORK 6. Establish and
maintain the Board as a well-functioning, balanced team led by the chair The composition, roles, and responsibilities of the Board
and its committees are set out on pages 21 to 24 of this report. The number of meetings of the Board and the committees are also
detailed. High level and in-depth analytic materials, including the minutes from the prior meeting, are sent in a timely manner
ahead of each committee or board meeting allowing Board members adequate time to review them. After each meeting, the minutes
are sent to the chair for review and approval. All directors have direct access to the advice and services of the Company Secretary
and the General Counsel and are able to take independent professional advice in the furtherance of the duties, if necessary, at
the Company’s expense. The time devoted by directors to their duties varies depending on the activities of the company.
In 2023, the board held 10 meetings. The Board typically holds at least one meeting annually to review strategy and interact with
senior managers. All executive directors work full-time for Nexxen and the non-executive Chairman spends a minimum of three to
four days per month on Nexxen business. This is primarily typically via in-person or virtual meetings, or phone calls with management,
brokers and shareholders. The other non-executive directors spend a minimum of two days per month on their duties, primarily through
in-person or virtual meetings, and phone calls with management and other board members. The Board conducts, with the assistance
of outside legal counsel, an annual self-assessment to, among other things, evaluate the effectiveness of its operations and the
operations of each of its committees. 7. Maintain appropriate governance structures and ensure that, individually and collectively,
directors have the necessary up-to-date experience, skills and capabilities The composition of the Board and the credentials of
the individual directors are outlined on pages 16 to 17 of this report. All of the directors remain active in their respective
business lines, many in the media and marketing industry – working for public and private companies – which ensures
that their skillsets remain highly complementary to the Nexxen business. The Sustainability, Nominating and Governance Committee
of the Board oversees the hiring process and makes recommendations to the Board on new board appointments as well as re-election
of existing directors. Prior to any new member joining the Board, a search for candidates is conducted, with any subsequent appointment
made on merit, against objective criteria, and with due regard for the benefits of diversity on the Board, including gender. A
Board diversity matrix is maintained on the Company’s website. The Sustainability, Nominating and Governance Committee also
considers succession planning. 8. Evaluate Board performance based on clear and relevant objectives, seeking continuous improvement
The Board conducts annually, with the assistance of outside legal counsel, a self evaluation process on its effectiveness and
encourages open and transparent communication. All directors are subject to re-election by the shareholders each year. The executive
directors are subject to an annual performance review during which they are measured against pre-set criteria. The Board constantly
looks to ensure that the executive management of the Company evolves. The Company conducts a leadership programme to ensure talent
can be promoted within the business. If there are skills gaps, the Company looks to fill those externally. At present, the directors
are confident there is sufficient talent within the Company to be able to appoint new leadership from within. 9. Establish a remuneration
policy which is supportive of long-term value creation and the Company’s purposes, strategy and culture.’ The Compensation
Committee report on pages 22 to 24 of this Annual Report details the Company’s compensation policy and philosophy. BUILD
TRUST 10. Communicate how the company is governed and is performing by maintaining a dialogue with shareholders and other relevant
stakeholders Nexxen describes its communication practices in its annual report under ‘Relationship with Shareholders’
(page 24 of this report).
![](https://www.sec.gov/Archives/edgar/data/1849396/000117891324002095/ex99-2img123.jpg)
Nexxen International
Ltd Annual Report 2023 21 The Board and the Committees STRATEGIC REPORT FINANCIAL GOVERNANCE STATEMENTS BOARD OF DIRECTORS Under
the Companies Law and our amended and restated articles of association, our business and affairs are managed under the direction
of our board of directors. Our board of directors may exercise all powers and may take all actions that are not specifically granted
to our shareholders or to executive management. Our Chief Executive Officer (referred to as a “general manager” under
the Companies Law) is responsible for our day-to-day management. Our Chief Executive Officer is appointed by, and serves at the
discretion of, our board of directors, subject to the employment agreement that we have entered into with him. All other executive
officers are appointed by the Chief Executive Officer, subject to applicable corporate approvals, and are subject to the terms
of any applicable employment or consulting agreements that we may enter into with them. Under our amended and restated articles
of association, the number of directors on our board of directors will be no less than four and no more than eleven directors.
At each annual general meeting of our shareholders, the election or reelection of directors following the expiration of the term
of office of the directors will be for a term of office that expires on next annual general meeting following such election or
re-election. Our directors are appointed by a simple majority vote of holders of our ordinary shares, participating and voting
at an annual general meeting of our shareholders, provided that (i) in the event of a contested election, the method of calculation
of the votes and the manner in which the resolutions will be presented to our shareholders at the general meeting shall be determined
by our board of directors in its discretion, and (ii) in the event that our board of directors does not or is unable to make a
determination on such matter, then the directors will be elected by a majority of the voting power represented at the general
meeting in person or by proxy and voting on the election of directors provided that if the number of nominees so elected exceeds
the number of directors that are proposed by the board of directors to be elected, then as among such elected nominees the election
shall be by a plurality of the votes cast. Each director holds office until the annual general meeting of our shareholders for
the year in which such director’s term expires, unless the tenure of such director expires earlier pursuant to the Companies
Law or unless such director is removed from office as described below. Under our amended and restated articles of association,
the approval of the holders of at least 65% of the total voting power of our shareholders is generally required to remove any
of our directors from office or amend the provision requiring the approval of at least 65% of the total voting power of our shareholders
to remove any of our directors from office. In addition, vacancies on our board of directors may only be filled by a vote of a
simple majority of the directors then in office. A director so appointed will hold office until the next annual general meeting
of our shareholders for the election of the class of directors in respect of which the vacancy was created, or in the case of
a vacancy due to the number of directors being less than the maximum number of directors stated in our amended and restated articles
of association, until the next annual general meeting of our shareholders for the election of the class of directors to which
such director was assigned by our board of directors. Board Composition The Board is currently comprised of three executive directors,
Ofer Druker, Yaniv Carmi and Sagi Niri, and eight non-executive directors, Christopher Stibbs (Chairperson of the Board), Neil
Jones, Joanna Parnell, Lisa Klinger, Rebekah Brooks, Norman Johnston, Daniel Kerstein, and Rhys Summerton. The balance between
executive and non-executive directors does not allow any group to dominate the Board’s decision making. Collectively, the
non-executive directors bring a valuable range of expertise in assisting the Company to achieve its strategic aims. The effectiveness
of the Board benefits from the following skills and experience which the current Board members possess: advertising, media, finance
and accounting, governance, research and development and technology expertise. Operation of the Board The Company Secretary, Yaniv
Carmi, and Chief Financial Officer, Sagi Niri, and the Chief Legal Officer, Amy Rothstein, are responsible for ensuring that the
Company complies with the statutory and regulatory requirements and maintains high standards of corporate governance. They support
and work closely with the Chairperson of the Board, the Chief Executive Officer and the Board committee chairs in setting agendas
for meetings of the Board and its committees and support the transfer of timely and accurate information flow from and to the
Board and the management of the Company. The Board holds its meetings in accordance with its scheduled calendar. The Board also
holds regular virtual meetings to update the members on operational and other business, and the Board convenes occasionally for
additional updates and conversations on ad-hoc emerging matters that arise in-between the scheduled Board meetings. A majority
of the Board members, which constitutes the legal quorum for a board meeting, attend each of the board meetings. Each board meeting
is preceded by a clear agenda and any relevant information is provided to directors in advance of the meeting. An agreed procedure
exists for directors in the furtherance of their duties to take independent professional advice. Newly appointed directors are
to be made aware of their responsibilities through the Company Secretary and Chief Legal Officer. The Company provides the directors
with training sessions via internal meetings, presentations and conversations which are being conducted by Company advisors, management
and other relevant persons during the year in order to enable greater awareness and understanding of the Company’s business
and the environment in which it operates. The Board has established properly constituted Audit, Compensation and Sustainability,
Nominating and Governance committees of the Board with formally delegated duties and responsibilities.
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22 Nexxen International
Ltd Annual Report 2023 The Board and the Committees continued GOVERNANCE AUDIT COMMITTEE Companies Law Requirements Under the
Companies Law, the board of directors of a public company must appoint an audit committee consisting of at least three directors.
Listing Requirements Under the corporate governance rules of Nasdaq, we are required to maintain an audit committee consisting
of at least three independent directors, each of whom is financially literate and one of whom has accounting or related financial
management expertise. Our audit committee consists of Neil Jones, Joanna Parnell and Lisa Klinger. Lisa Klinger serves as the
chairperson of the audit committee. All members of our audit committee meet the requirements for financial literacy under the
applicable rules and regulations of the SEC and the corporate governance rules of Nasdaq. Our board of directors has determined
that Neil Jones is an audit committee financial expert as defined by the SEC rules and has the requisite financial experience
as defined by the corporate governance rules of Nasdaq. Our board of directors has determined that each member of our audit committee
is “independent” as such term is defined in Rule 10A-3(b)(1) under the Exchange Act, which is different from the general
test for independence of board and committee members. Audit Committee Role Our board of directors has adopted an audit committee
charter setting forth the responsibilities of the audit committee, which are consistent with the Companies Law, the SEC rules
and the corporate governance rules of Nasdaq and include: • Retaining and terminating our independent auditors, subject to
ratification by the board of directors, and in the case of retention, to ratification by the shareholders; • Pre-approving
audit and non-audit services to be provided by the independent auditors and related fees and terms; • Overseeing the accounting
and financial reporting processes of our company and audits of our financial statements, the effectiveness of our internal •
Control over financial reporting and making such reports as may be required of an audit committee under the rules and regulations
promulgated under the Exchange Act; • Reviewing with management and our independent auditor our annual and quarterly financial
statements prior to publication or filing (or submission, as the case may be) to the SEC; • Recommending to the board of
directors the retention and termination of the internal auditor, and the internal auditor’s engagement fees and terms, in
accordance with the Companies Law as well as approving the yearly or periodic work plan proposed by the internal auditor; •
Reviewing with our general counsel and/or external counsel, as deemed necessary, legal and regulatory matters that could have
a material impact on the financial statements; • Identifying irregularities in our business administration by among other
things, consulting with the internal auditor or with the independent auditor, and suggesting corrective measures to the board
of directors; • Reviewing policies and procedures with respect to transactions between the Company and officers and directors
(other than transactions related to the compensation or terms of service of officers and directors), or affiliates of officers
or directors, or transactions that are not in the ordinary course of the • Company’s business and deciding whether
to approve such acts and transactions if so required under the Companies Law; and • Establishing procedures for the handling
of employees’ complaints as to the management of our business and the protection to be provided to such employees. A copy
of the audit committee charter is available to investors and others on our website at investors.nexxen.com/ governance/governance-overview.
COMPENSATION COMMITTEE Companies Law Requirements Under the Companies Law, the board of directors of a public company must appoint
a compensation committee consisting of at least three directors. Listing Requirements Under the corporate governance rules of
Nasdaq, we are required to maintain a compensation committee consisting of at least two independent directors. Our compensation
committee consists of Neil Jones, Joanna Parnell, Lisa Klinger and Daniel Kerstein. Neil Jones serves as chairperson of the committee.
Our board of directors has determined that each member of our compensation committee is independent under the corporate governance
rules of Nasdaq, including the additional independence requirements applicable to the members of a compensation committee.
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Nexxen International
Ltd Annual Report 2023 23 STRATEGIC REPORT FINANCIAL GOVERNANCE STATEMENTS Compensation Committee Role In accordance with the
Companies Law, the roles of the compensation committee are, among others, as follows: • Making recommendations to the board
of directors with respect to the approval of the compensation policy for office holders; • Reviewing the implementation of
the compensation policy and periodically making recommendations to the board of directors with respect to any amendments or updates
of the compensation policy; • Resolving whether or not to approve arrangements with respect to the terms of office and employment
of office holders; and • Exempting, under certain circumstances, transactions with our Chief Executive Officer from the approval
of our shareholders. Our board of directors has adopted a compensation committee charter setting forth the responsibilities of
the committee, which are consistent with the corporate governance rules of Nasdaq and include among others: • Recommending
to our board of directors for its approval a compensation policy in accordance with the requirements of the Companies Law as well
as other compensation policies, incentive-based compensation plans and equitybased compensation plans, and overseeing the development
and implementation of such policies and recommending to our board of directors any amendments or modifications the committee deems
appropriate, including as required under the Companies Law; • Reviewing and approving the granting of options and other incentive
awards to our Chief Executive Officer and other executive officers, including reviewing and approving corporate goals and objectives
relevant to the compensation of our Chief Executive Officer and other executive officers, including evaluating their performance
in light of such goals and objectives; • Approving and exempting certain transactions regarding office holders’ compensation
pursuant to the Companies Law; and • Administering our equity-based compensation plans, including without limitation, approving
the adoption of such plans, amending and interpreting such plans and the awards and agreements issued pursuant thereto, and making
awards to eligible persons under the plans and determining the terms of such awards. A copy of the compensation committee charter
is available to investors and others on our website at investors.nexxen. com/governance/governance-overview. Compensation Policy
under the Companies Law In general, under the Companies Law, a public company must have a compensation policy approved by its
board of directors after receiving and considering the recommendations of the compensation committee. The compensation policy
must be based on certain considerations, include certain provisions and reference certain matters as set forth in the Companies
Law. The compensation policy must serve as the basis for decisions concerning the financial terms of employment or engagement
of office holders, including exculpation, insurance, indemnification or any monetary payment or obligation of payment in respect
of employment or engagement. The compensation policy must be determined and later reevaluated according to certain factors, including:
the advancement of the company’s objectives, business plan and long-term strategy; the creation of appropriate incentives
for office holders, while considering, among other things, the company’s risk management policy; the size and the nature
of the company’s operations; and with respect to variable compensation, the contribution of the office holder towards the
achievement of the company’s long-term goals and the maximization of its profits, all with a long-term objective and according
to the position of the office holder. The compensation policy must furthermore consider the following additional factors: •
The education, skills, experience, expertise and accomplishments of the relevant office holder; • The office holder’s
position and responsibilities; • Prior compensation agreements with the office holder; • The ratio between the cost
of the terms of employment of an office holder and the cost of the employment of other employees of the company, including employees
employed through contractors who provide services to the company, in particular the ratio between such cost to the average and
median salary of such employees of the company, as well as the impact of disparities between them on the work relationships in
the company; • If the terms of employment include variable components — the possibility of reducing variable components
at the discretion of the board of directors and the possibility of setting a limit on the value of non-cash variable equitybased
components; and • If the terms of employment include severance compensation — the term of employment or office of the
office holder, the terms of the office holder’s compensation during such period, the company’s performance during
such period, the office holder’s individual contribution to the achievement of the company goals and the maximization of
its profits and the circumstances under which he or she is leaving the company.
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24 Nexxen International
Ltd Annual Report 2023 The Board and the Committees continued GOVERNANCE The compensation policy must also include, among other
things: • With regards to variable components: • With the exception of office holders who report to the chief executive
officer, a means of determining the variable components on the basis of long-term performance and measurable criteria; provided
that the company may determine that an immaterial part of the variable components of the compensation package of an office holder
shall be awarded based on non-measurable criteria, if such amount is not higher than three months’ salary per annum, taking
into account such office holder’s contribution to the company; • The ratio between variable and fixed components, as
well as the limit of the values of variable components at the time of their payment, or in the case of equity-based compensation,
at the time of grant; • A condition under which the office holder will return to the company, according to conditions to
be set forth in the compensation policy, any amounts paid as part of the office holder’s terms of employment, if such amounts
were paid based on information later to be discovered to be wrong, and such information was restated in the company’s financial
statements; • The minimum holding or vesting period of variable equitybased components to be set in the terms of office or
employment, as applicable, while taking into consideration long-term incentives; and • A limit to retirement grants. Our
compensation policy was last adopted by our compensation committee, board of directors and shareholders on December 27, 2023 and
is filed as an exhibit to this Annual Report. SUSTAINABILITY, NOMINATING AND GOVERNANCE COMMITTEE Our sustainability, nominating
and governance committee consists of Neil Jones, Joana Parnell and Christopher Stibbs. Christopher Stibbs serves as chairperson
of the committee. Our board of directors has adopted a sustainability, nominating and governance committee charter setting forth
the responsibilities of the committee, which include: • Overseeing and assisting our board in reviewing and recommending
nominees for election as directors; • Assessing the performance of the members of our board; and • Establishing and
maintaining effective corporate governance policies and practices, including, but not limited to, developing and recommending
to our board a set of corporate governance guidelines applicable to our business; and • To oversee our policies, programs
and strategies related to environmental, social and governance. A copy of the sustainability, nominating and governance committee
charter is available to investors and others on our website at investors.nexxen.com/governance/governanceoverview. CONFLICTS OF
INTEREST Subject to the provisions of the Companies Law, no Director shall be disqualified by virtue of his office from holding
any office or place of profit in the Company or in any company in which the Company shall be a shareholder or otherwise interested,
or from contracting with the Company as vendor, purchaser or otherwise, nor shall any such contract, or any contract or arrangement
entered into by or on behalf of the Company in which any Director shall be in any way interested, be voided, nor, other than as
required under the Companies Law, shall any Director be liable to account to the Company for any profit arising from any such
office or place of profit or realized by any such contract or arrangement by reason only of such Director’s holding that
office or of the fiduciary relations thereby established, but the nature of his interest, as well as any material fact or document,
must be disclosed by him at the meeting of the Board at which the contract or arrangement is first considered, if his interest
then exists, or, in any other case, at no later than the first meeting of the Board after the acquisition of his interest. The
Board shall be entitled to delegate its approval power under Section 271 of the Companies Law to a committee of the Board or to
such person it deems appropriate, whether generally, with respect to a certain contract or transaction or with respect to certain
types of contracts or transactions, and the power of such committee or person shall be regarded as another method of approval
within the meaning of Section 271 of the Companies Law. RELATIONSHIP WITH SHAREHOLDERS The Company encourages the participation
of both institutional and private investors. The Chief Executive Officer, Chief Financial Officer and Head of Investor Relations
meet regularly with institutional investors, usually in regard to the issuance of quarterly and full year results. Communication
with private individuals is maintained through the Annual General Meeting and the Company’s annual and interim reports.
In addition, further details on the strategy and performance of the Company can be found on its website (www.nexxen.com), which
includes copies of the Company’s press releases. Regular updates are provided to the Board on meetings with shareholders
and analysts, and brokers’ opinions. Non-executive directors are available to meet major shareholders, if required. Investors
are also encouraged to contact the Company’s Investor Relations advisors, Vigo Consulting in the UK, and KCSA in the US.
INTERNAL CONTROLS Evaluation of Disclosure Controls and Procedures We maintain disclosure controls and procedures (as defined
in Rules 13a-15(e) and 15d-15(e) under the Exchange Act that are designed to ensure that information required to be disclosed
in the Company’s reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within
the time periods specified in the SEC’s rules and forms and that such information is accumulated and communicated to our
management, including our Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding
required disclosures. Any controls and procedures can provide only reasonable assurance of achieving the desired objectives of
the disclosure controls and procedures. Our management, with the participation of our Chief Executive Officer and Chief Financial
Officer, has evaluated the effectiveness of the design and operation of our disclosure controls and procedures as of December
31, 2023. Based upon that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that, as of December 31,
2023, our disclosure controls and procedures were effective.
![](https://www.sec.gov/Archives/edgar/data/1849396/000117891324002095/ex99-2img127.jpg)
Nexxen International
Ltd Annual Report 2023 25 STRATEGIC REPORT FINANCIAL GOVERNANCE STATEMENTS Management’s Annual Report on Internal Control
over Financial Reporting Our management is responsible for establishing and maintaining effective internal control over financial
reporting and for its assessment of the effectiveness of internal control over financial reporting. Internal control over financial
reporting is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act as a process designed to provide reasonable assurance
regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance
with generally accepted accounting principles, and includes those policies and procedures that (1) pertain to the maintenance
of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the Company;
(2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in
accordance with generally accepted accounting principles, and that receipts and expenditures of the Company are being made only
in accordance with authorizations of management and directors of the Company; and (3) provide reasonable assurance regarding prevention
or timely detection of unauthorized acquisition, use, or disposition of the Company’s assets that could have a material
effect on the audited consolidated financial statements. Because of its inherent limitations, internal control over financial
reporting may not prevent or detect material misstatements. Also, projections of any evaluation of effectiveness to future periods
are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance
with the policies or procedures may deteriorate. Our management conducted an assessment of the effectiveness of our internal control
over financial reporting based on the criteria set forth in “Internal Control – Integrated Framework (2013)”
issued by the Committee of Sponsoring Organizations of the Treadway Commission. Based on this assessment, our management concluded
that, as of December 31, 2023, our internal control over financial reporting was effective. This Annual Report does not include
an attestation report of our registered public accounting regarding internal control over financial reporting firm because we
are currently an emerging growth company in accordance with the Exchange Act. Changes in Internal Control over Financial Reporting
There were no changes in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the
Exchange Act) that occurred during the period covered by this Annual Report that have materially affected, or are reasonably likely
to materially affect, our internal control over financial reporting. AUDIT AND AUDITOR INDEPENDENCE An additional responsibility
of the Audit Committee is to keep under review the scope and cost effectiveness of the external audit. This includes recommending
to the Board the appointment of the external auditors and reviewing the scope of the audit, approving the audit fee and, on an
annual basis, the Committee being satisfied that the auditors are independent. Somekh Chaikin, member firm of KPMG International,
is retained to perform audit and audit-related work on the Company and its subsidiaries. The Audit Committee monitors the nature
and extent of non-audit work undertaken by the auditors. It is satisfied that there are adequate controls in place to ensure auditor
independence and objectivity. Periodically, the Audit Committee monitors the cost of non-audit work undertaken by the auditors.
The Audit Committee considers that it is in a position to take action if at any time it believes that there is a risk of the auditors’
independence being undermined through the award of this work.
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26 Nexxen International
Ltd Annual Report 2023 Takeovers & Mergers GOVERNANCE MERGERS The Companies Law permits merger transactions if approved by
each party’s board of directors and, unless certain conditions described under the Companies Law are met, a simple majority
of the outstanding shares of each party to the merger that are represented and voting on the merger. The board of directors of
a merging company is required pursuant to the Companies Law to discuss and determine whether in its opinion there exists a reasonable
concern that as a result of a proposed merger, the surviving company will not be able to satisfy its obligations towards its creditors,
such determination taking into account the financial status of the merging companies. If the board of directors determines that
such a concern exists, it may not approve a proposed merger. Following the approval of the board of directors of each of the merging
companies, the boards of directors must jointly prepare a merger proposal for submission to the Israeli Registrar of Companies.
For purposes of the shareholder vote of a merging company whose shares are held by the other merging company, or by a person or
entity holding 25% or more of the voting rights at the general meeting of shareholders of the other merging company, or by a person
or entity holding the right to appoint 25% or more of the directors of the other merging company, unless a court rules otherwise,
the merger will not be deemed approved if a majority of the shares voted on the matter at the general meeting of shareholders
(excluding abstentions) that are held by shareholders other than the other party to the merger, or by any person or entity who
holds 25% or more of the voting rights of the other party or the right to appoint 25% or more of the directors of the other party,
or any one on their behalf including their relatives or corporations controlled by any of them, vote against the merger. In addition,
if the nonsurviving entity of the merger has more than one class of shares, the merger must be approved by each class of shareholders.
If the transaction would have been approved but for the separate approval of each class or the exclusion of the votes of certain
shareholders as provided above, a court may still approve the merger upon the request of holders of at least 25% of the voting
rights of a company, if the court holds that the merger is fair and reasonable, taking into account the valuation of the merging
companies and the consideration offered to the shareholders. If a merger is with a company’s controlling shareholder or
if the controlling shareholder has a personal interest in the merger, then the merger is instead subject to the same special majority
approval that governs all extraordinary transactions with controlling shareholders. Under the Companies Law, each merging company
must deliver to its secured creditors the merger proposal and inform its unsecured creditors of the merger proposal and its content.
Upon the request of a creditor of either party to the proposed merger, the court may delay or prevent the merger if it concludes
that there exists a reasonable concern that, as a result of the merger, the surviving company will be unable to satisfy the obligations
of the merging company, and may further give instructions to secure the rights of creditors. In addition, a merger may not be
completed unless at least 50 days have passed from the date that a proposal for approval of the merger is filed with the Israeli
Registrar of Companies and 30 days from the date that shareholder approval of both merging companies is obtained. Special Tender
Offer The Companies Law provides that an acquisition of shares of an Israeli public company must be made by means of a special
tender offer if as a result of the acquisition the purchaser would become a holder of 25% or more of the voting rights in the
company. This requirement does not apply if there is already another holder of 25% or more of the voting rights in the company.
Similarly, the Companies Law provides that an acquisition of shares of an Israeli public company must be made by means of a special
tender offer if as a result of the acquisition the purchaser would become a holder of more than 45% of the voting rights in the
company, if there is no other shareholder of the company who holds more than 45% of the voting rights in the company. These requirements
do not apply if (i) the acquisition occurs in the context of a private placement by the company that received shareholder approval
as a private placement whose purpose is to give the purchaser 25% or more of the voting rights in the company, if there is no
person who holds 25% or more of the voting rights in the company or as a private placement whose purpose is to give the purchaser
45% of the voting rights in the company, if there is no person who holds 45% of the voting rights in the company, (ii) the acquisition
was from a shareholder holding 25% or more of the voting rights in the company and resulted in the purchaser becoming a holder
of 25% or more of the voting rights in the company, or (iii) the acquisition was from a shareholder holding more than 45% of the
voting rights in the company and resulted in the purchaser becoming a holder of more than 45% of the voting rights in the company.
A special tender offer must be extended to all shareholders of a company. A special tender offer may be consummated only if (i)
at least 5% of the voting power attached to the company’s outstanding shares will be acquired by the offeror and (ii) the
number of shares tendered in the offer exceeds the number of shares whose holders objected to the offer (excluding the purchaser,
its controlling shareholders, holders of 25% or more of the voting rights in the company and any person having a personal interest
in the acceptance of the tender offer, or anyone on their behalf, including any such person’s relatives and entities under
their control). In the event that a special tender offer is made, a company’s board of directors is required to express
its opinion on the advisability of the offer, or shall abstain from expressing any opinion if it is unable to do so, provided
that it gives the reasons for its abstention. The board of directors shall also disclose any personal interest that any of the
directors has with respect to the special tender offer or in connection therewith. An office holder in a target company who, in
his or her capacity as an office holder, performs an action the purpose of which is to cause the failure of an existing or foreseeable
special tender offer or is to impair the chances of its acceptance, is liable to the potential purchaser and shareholders for
damages, unless such office holder acted in good faith and had reasonable grounds to believe he or she was acting for the benefit
of the company. However, office holders of the target company may negotiate with the potential purchaser in order to improve the
terms of the special tender offer, and may further negotiate with thirdparties in order to obtain a competing offer.
![](https://www.sec.gov/Archives/edgar/data/1849396/000117891324002095/ex99-2img129.jpg)
Nexxen International
Ltd Annual Report 2023 27 STRATEGIC REPORT FINANCIAL GOVERNANCE STATEMENTS If a special tender offer is accepted, then shareholders
who did not respond to or that had objected the offer may accept the offer within four days of the last day set for the acceptance
of the offer and they will be considered to have accepted the offer from the first day it was made. In the event that a special
tender offer is accepted, then the purchaser or any person or entity controlling it or under common control with the purchaser
or such controlling person or entity at the time of the offer may not make a subsequent tender offer for the purchase of shares
of the target company and may not enter into a merger with the target company for a period of one year from the date of the offer,
unless the purchaser or such person or entity undertook to effect such an offer or merger in the initial special tender offer.
Shares purchased in contradiction to the special tender offer rules under the Companies Law will have no rights and will become
dormant shares. FULL TENDER OFFER A person wishing to acquire shares of a public Israeli company who would, as a result, hold
over 90% of the target company’s voting rights or the target company’s issued and outstanding share capital (or of
a class thereof), is required by the Companies Law to make a tender offer to all of the company’s shareholders for the purchase
of all of the issued and outstanding shares of the company (or the applicable class). If (a) the shareholders who do not accept
the offer hold less than 5% of the issued and outstanding share capital of the company (or the applicable class) and the shareholders
who accept the offer constitute a majority of the offerees that do not have a personal interest in the acceptance of the tender
offer or (b) the shareholders who did not accept the tender offer hold less than 2% of the issued and outstanding share capital
of the company (or of the applicable class), all of the shares that the acquirer offered to purchase will be transferred to the
acquirer by operation of law. A shareholder who had its shares so transferred may petition an Israeli court within six months
from the date of acceptance of the full tender offer, regardless of whether such shareholder agreed to the offer, to determine
whether the tender offer was for less than fair value and whether the fair value should be paid as determined by the court. However,
an offeror may provide in the offer that a shareholder who accepted the offer will not be entitled to petition the court for appraisal
rights as described in the preceding sentence, as long as the offeror and the company disclosed the information required by law
in connection with the full tender offer. If the full tender offer was not accepted in accordance with any of the above alternatives,
the acquirer may not acquire shares of the company that will increase its holdings to more than 90% of the company’s voting
rights or the company’s issued and outstanding share capital (or of the applicable class) from shareholders who accepted
the tender offer. Shares purchased in contradiction to the full tender offer rules under the Companies Law will have no rights
and will become dormant shares.
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28 Nexxen International
Ltd Annual Report 2023 Directors’ Report GOVERNANCE PRINCIPAL ACTIVITIES Nexxen is a flexible unified platform that helps
empower durable growth across the media supply chain. Our end-toend, video-first platform facilitates and optimizes engaging advertising
campaigns for brands, media groups and content creators worldwide—enabling powerful partnerships and delivering meaningful
results. A leader in CTV, data, and Video, Nexxen’s footprint is expanding across some of the industry’s fastest-growing
activities, driven by a global team of seasoned technologists and digital natives. BUSINESS REVIEW The information that fulfils
the requirements of the business review, including details of the 2023 results, principal risks and uncertainties and the outlook
for future years, are set out in the Chairman’s, Chief Executive Officer’s and Chief Financial Officer’s statements
on pages 2 to 15, and in this Directors’ Report. DIRECTORS The following Directors held office as indicated below for the
year ended 31 December 2023 and up to the date of signing the consolidated financial statements except where otherwise shown.
Christopher Stibbs - Non-Executive Chairperson (Throughout 2023-present) Ofer Druker - Chief Executive Officer and Director (Throughout
2023-present) Sagi Niri - Chief Financial Officer and Director (Throughout 2023-present) Yaniv Carmi - Chief Operating Officer
and Director (Throughout 2023-present) Rebekah Brooks - Non-Executive Director (Throughout 2023-present) Norm Johnston - Non-Executive
Director (Throughout 2023-present) Neil Jones - Senior Non-Executive Director (Throughout 2023-present) Joanna Parnell - Non-Executive
Director (Throughout 2023-present) Lisa Klinger - Non-Executive Director (Throughout 2023-present) Daniel Kerstein - Non-Executive
Director (December 2023-present) Rhys Summerton - Non-Executive Director (December 2023-present) DIRECTORS’ COMPENSATION
AND INTERESTS The Compensation Report is set out on pages 33 to 35. It includes details of Directors’ compensation, interests
in the Ordinary Shares of the Company and share options. CORPORATE GOVERNANCE The Board’s Corporate Governance Report is
set out on pages 18 to 20. DIRECTORS’ RESPONSIBILITIES The Companies Law requires the Directors to prepare financial statements
for each financial year which give a true and fair view of the state of affairs of the Company as at the end of the relevant financial
year pursuant to applicable accounting standards. The Directors, after considering the risks and uncertainties and after reviewing
the Company’s operating budgets, investment plans and financing arrangements, consider that the Company has sufficient resources
at their disposal to continue their operations for the foreseeable future. Accordingly, the financial statements have been prepared
on a going concern basis. PRINCIPLE RISKS AND UNCERTAINTIES The Directors assess and monitor the key risks of the business on
an ongoing basis. Following are the principal risks and uncertainties that could have a material effect on the Company’s
performance. A full detailed list of principle risks and uncertainties is disclosed within in the Company’s latest Form
20-f located here: https://investors.nexxen.com/static-files/adbbaca7- 60d4-41d0-ae3c-0a509cc6fd28 An abbreviated list is detailed
below: Risks Relating to Our Business • Our success and revenue growth are dependent on adding new advertisers and publishers,
effectively educating and training our existing advertisers and publishers on how to make full use of our platform and increasing
usage of our platform by advertisers and publishers. • Our business depends on our ability to maintain and expand access
to advertising spend, including spend from a limited number of DSPs, agencies, and advertisers. • Our business depends on
our ability to maintain and expand access to valuable inventory from publishers, including our largest publishers. • If we
fail to make the right investment decisions in our platform, or if we fail to innovate and develop new solutions that are adopted
by advertisers and publishers, we may not attract and retain advertisers and publishers, which could have an adverse effect on
our business, results of operations and financial condition. • Significant parts of our business depend on relationships
with data providers for data sets used to deliver targeted campaigns. • Our business depends on our ability to collect, use
and disclose certain data, including CTV data, to deliver advertisements. Any limitation imposed on our collection, use or disclosure
of this data could significantly diminish the value of our platform and cause us to lose publishers, advertisers and revenue.
Consumer tools, regulatory restrictions, and technological limitations all threaten our ability to use and disclose data. •
If the use of third-party “cookies,” mobile device IDs, CTV data collection or other tracking technologies is restricted
without similar or better alternatives (and adoption of such alternatives), our platform’s effectiveness could be diminished
and our business, results of operations and financial condition could be adversely affected.
![](https://www.sec.gov/Archives/edgar/data/1849396/000117891324002095/ex99-2img131.jpg)
Nexxen International
Ltd Annual Report 2023 29 STRATEGIC REPORT FINANCIAL GOVERNANCE STATEMENTS • Our failure to meet content and inventory standards
and provide services that our advertisers and publishers trust could harm our brand and reputation and negatively impact our business,
operating results, and financial condition. • We must grow rapidly to become a market leader and to accomplish our strategic
objectives. If we fail to grow, or fail to manage our growth effectively, the value of our company may decline. • The market
for programmatic buying for advertising campaigns is evolving. If this market develops slower or differently than we expect, our
business, operating results and financial condition could be adversely affected. • If we fail to detect or prevent fraud
on our platform, or malware intrusion into the systems or devices of our publishers and their consumers, publishers could lose
confidence in our platform and we could face legal claims and other liability that could adversely affect our business, results
of operations and financial condition. • If the use of digital advertising is rejected by consumers, through opt-in, opt-out
or ad-blocking technologies or other means, it could have an adverse effect on our business, results of operations and financial
condition. • We must scale our platform infrastructure to support anticipated growth and transaction volume. If we fail to
do so, we may limit our ability to process inventory and we may lose revenue. • Disruptions to service from our third-party
data center hosting facilities and cloud computing and hosting providers could impair the delivery of our services and harm our
business. • We face potential liability and harm to our business based on the human factor of inputting information into
our platform. • We are subject to cybersecurity risks to operational systems, security systems, infrastructure and personal
data processed by us or third-party vendors or suppliers and any material failure, weakness, interruption, cyber event, incident
or breach of security could prevent us from effectively operating our business. • Any failure to protect our intellectual
property rights could negatively impact our business. Risks Relating to the Market in Which We Operate • If the non-proprietary
technology, software, products and services that we use are unavailable, have future terms we cannot agree to or do not perform
as we expect, our business, operating results and financial condition could be harmed. • Our revenue and results of operations
are highly dependent on the overall demand for advertising. Factors that affect the amount of advertising spending, such as economic
downturns, inflation, supply constraints, geopolitical issues, and pandemics, can make it difficult to predict our revenue and
could adversely affect our business, results of operations and financial condition. • Our global operations subject us to
certain risks beyond our control and may adversely affect our financial results. • Our business and operations have been,
and may in the future be, adversely affected by health epidemics, pandemics and other outbreaks of infectious disease, such as
the global pandemic caused by COVID-19. • Any decrease in the use of the advertising or publishing channels that we primarily
depend on, or failure to expand into emerging channels, could adversely affect our business, results of operations and financial
condition. • If CTV develops in ways that prevent advertisements from being delivered to consumers, our business, results
of operations and financial condition may be adversely affected. • The market in which we participate is intensely competitive,
and we may not be able to compete successfully with our current or future competitors. • Seasonal fluctuations or market
changes in advertising activity could have a material impact on our revenue, cash flow and operating results. • If we do
not effectively grow and train our sales and support teams, we may be unable to add new customers or increase usage of our platform
by our existing customers and our business will be adversely affected. • The United Kingdom’s withdrawal from the European
Union may have a negative effect on global economic conditions, financial markets and our business. Risks Relating to Global Operations
Including Location in Israel and Our Employees • Our long-term success depends on our ability to operate internationally
making us susceptible to risks associated with cross-border sales and operations. • We depend on our executive officers and
other key employees, and the loss of one or more of these employees could harm our business. • Inability to attract and retain
other highly skilled employees could harm our business. • The impact of political, economic and military conditions in Israel,
including the ongoing Israel-Hamas war and other conditions in Israel, and surrounding regions, could materially and adversely
affect our business. • Your rights and responsibilities as our shareholder will be governed by Israeli law, which may differ
in some respects from the rights and responsibilities of shareholders of U.S. corporations. • Provisions of Israeli law and
our amended and restated articles of association may delay, prevent, or make undesirable an acquisition of all or a significant
portion of our ADSs or assets. • Our amended and restated articles of association provide that unless we consent to an alternate
forum, the federal district courts of the United States shall be the exclusive forum for the resolution of any claims arising
under the Securities Act of 1933, as amended (the “Securities Act”), which may limit the ability of our shareholders
to initiate litigation against us or increase the cost thereof. • It may be difficult to enforce a U.S. judgment against
us, our officers and directors in Israel or the United States, or to assert U.S. securities laws claims in Israel or serve process
on our officers and directors.
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30 Nexxen International
Ltd Annual Report 2023 Directors’ Report continued GOVERNANCE Risks Relating to Our Financial Position • Our operating
history makes it difficult to evaluate our business and prospects and may increase the risk associated with your investment. •
We often have long sales cycles, which can result in significant time and investment between initial contact with a prospect and
execution of an agreement with an advertiser or publisher, making it difficult to project when, if at all, we will obtain new
advertisers or publishers, and when we will generate revenue from them. • We are subject to payment-related risks and, if
our advertisers do not pay or dispute their invoices, our business, financial condition and operating results may be adversely
affected. • Any future acquisitions or strategic investments could be difficult to integrate, divert the attention of management,
and could disrupt our business, dilute shareholder value and adversely affect our business, results of operations and financial
condition. • We are a party to a credit agreement which contains a number of covenants that may restrict our current and
future operations and could adversely affect our ability to execute business needs. Risks Relating to Legal or Regulatory Constraints
• We are subject to regulation with respect to political advertising, which lacks clarity and uniformity. • We are subject
to laws and regulations related to data privacy, data protection and information security and consumer protection across different
markets where we conduct our business, including in the United States, the European Economic Area (“EEA”) and the
United Kingdom and industry requirements and such laws, regulations and industry requirements are constantly evolving and changing.
• If publishers, buyers, and data providers do not obtain necessary and requisite consents from consumers for us to process
their personal data, we could be subject to fines and liability. • We generally do not have a direct relationship with consumers
who view advertisements placed through our platform, so we may not be able to disclaim liabilities from such consumers through
terms of use on our platform. • We face potential liability and harm to our business based on the nature of our business
and the content on our platform and we are, and may be in the future, involved in commercial disputes with counterparties with
whom we do business. • We are subject to anti-bribery, anti-corruption and similar laws and non-compliance with such laws
can subject us to criminal penalties or significant fines and harm our business and reputation. Risks Relating to Our ADSs •
The price of our ADSs and the trading volume of our ADSs may be volatile, and you may lose all or part of your investment. •
There was no public market for our ADSs prior to the listing of our ADSs on the Nasdaq Global Market effective in June 2021 (the
“IPO”), and an active trading market may not develop at the rate and volume expected which may impact investors’
ability to sell our ADSs. • If we do not meet the expectations of equity research analysts, if they do not publish research
or reports about our business or if they issue unfavorable commentary or downgrade our ADSs, the price of our ADSs and trading
volume could decline. • The dual listing of our ordinary shares and our ADSs may adversely affect the liquidity and value
of our ordinary shares and ADSs. • We qualify as an emerging growth company, as defined in the Securities Act, and we cannot
be certain if the reduced disclosure requirements applicable to emerging growth companies will make our ADSs less attractive to
investors because we may rely on these reduced disclosure requirements. • We are foreign private issuer and, as a result,
we will not be subject to U.S. proxy rules and will be subject to Exchange Act reporting obligations that, to some extent, are
more lenient and less frequent than those of a U.S. domestic public company. • We may lose our “foreign private issuer”
status in the future, which could result in significant additional costs and expenses. • The market price of our ADSs could
be negatively affected by future issuances and sales of our ADSs or ordinary shares. • We cannot guarantee that we will repurchase
any of our ordinary shares pursuant to our announced repurchase plan or that our repurchase plan will enhance long-term shareholder
value. • There can be no assurance that we will not be classified as a passive foreign investment company, which could result
in adverse U.S. federal income tax consequences to United States Holders of our ADSs.
![](https://www.sec.gov/Archives/edgar/data/1849396/000117891324002095/ex99-2img133.jpg)
Nexxen International
Ltd Annual Report 2023 31 STRATEGIC REPORT FINANCIAL GOVERNANCE STATEMENTS • If a United States person is treated as owning
at least 10% of our shares (by vote or value), such holder may be subject to adverse U.S. federal income tax consequences. •
We have broad discretion over the use of proceeds we received in our IPO and may not apply the proceeds in ways that increase
the value of your investment. • We incur increased costs as a result of operating as a U.S. listed public company, and our
management is required to devote substantial time to new compliance initiatives and corporate governance practices. • Because
we may not pay any cash dividends on our ADSs in the future, capital appreciation, if any, may be holders of ADSs sole source
of gains and they may never receive a return on their investment. • Securities traded on AIM may carry a higher risk than
securities traded on other exchanges, which may impact the value of your investment. • You may not be able to exercise your
right to vote the ordinary shares underlying your ADSs. • Holders of the ADSs are not able to exercise the preemptive subscription
rights related to the ordinary shares that they represent and may suffer dilution of their equity holding in the event of future
issuances of our ordinary shares. • Holders of ADSs may not receive distributions on our ordinary shares in the form of ADSs
or any value for them if it is illegal or impractical to make them available to holders of ADSs. • ADS holders may not be
entitled to a jury trial with respect to claims arising under the deposit agreement, which could result in less favorable outcomes
to the plaintiff(s) in any such action. • Holders of our ADSs or ordinary shares have limited choice of forum, which could
limit your ability to obtain a favorable judicial forum for complaints against us, the depositary or our respective directors,
officers or employees. • Holders of ADSs may be subject to limitations on transfer of their ADSs. • Exposure to foreign
currency exchange rate fluctuations could negatively impact our results of operations. • A small number of significant beneficial
owners of our shares have significant influence over matters requiring shareholder approval, which could delay or prevent a change
of control. RESEARCH AND DEVELOPMENT Our business model enables us to invest into our research and development efforts, which
have helped grow our business. Our platform is extremely efficient at managing large amounts of complex data and is leveraged
by both our advertisers and publishers in real time. We are committed to innovative technologies and rapid introduction of enhanced
functionalities to support the dynamic needs of our advertisers and publishers. We therefore expect technology and development
expense to increase as we continue to invest in our platform to support increased volume of advertising spend and our international
expansion. Our technology and development team is mainly based in the United States and Israel and is comprised of 252 employees.
Research and development expenses were $49.7 million, $33.7 million and $18.4 million in 2023, 2022 and 2021, respectively, and
accounted for17.3%, 14.7%, and 9.4% of our operating expenses in 2023, 2022 and 2021 respectively. Our success depends, in part,
on our ability to protect the proprietary methods and technologies that we develop or otherwise acquire. We rely on a combination
of patent, trademark, copyright, trade secret laws, confidentiality procedures and contractual provisions to protect our proprietary
methods and technologies and own more than 50 patents. We recently rebranded our Company’s various businesses under the
name “nexxen” and associated Nexxen logo, in order to further promote our unified service and product offerings. The
Company has been working on this rebranding in its public facing assets. The Company has already obtained international trademark
registration for these trademarks. The Company has also received Notices of Publication from the United States and Australian
Trademark Offices for our U.S. and Australian Trademark Applications on “nexxen” and the nexxen logo. The Company
is actively prosecuting similar trademark applications in Canada, China, the European Union, Israel, Japan, Mexico, Singapore,
and the United Kingdom. The Company also uses and actively protects other trademarks in various jurisdictions and holds trademark
registrations for the Perk mark in the United States and the Perk logo in Australia, New Zealand, United Kingdom, and WIPO. We
generally enter into confidentiality and/or license agreements with our employees, consultants, vendors and advertisers, and we
generally limit access to, and distribution of, our proprietary information. We intend to pursue additional intellectual property
protection to the extent we believe it would be beneficial and cost effective.
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32 Nexxen International
Ltd Annual Report 2023 Directors’ Report continued GOVERNANCE SHARE CAPITAL AND SUBSTANTIAL SHAREHOLDINGS Details of the
share capital of the Company as at 31 December 2023 are set out in Note 15 to the consolidated financial statements. At May 14,
2024, the total issued and outstanding number of Ordinary Shares were 139,111,318 and 56,231,353 Ordinary Shares were held in
treasury as dormant shares. The following held 3% or more of the ordinary share capital of Nexxen: Shareholder % Mithaq Capital
25.8% Toscafund Asset Management 13.8% Schroder Investment Management 10.3% News Corp 6.1% Lombard Odier Asset Management (Europe)
Limited 5.0% JB Capital Partners 4.0% Hargreaves Lansdown Asset Management 3.7% Interactive Investor 3.5% River & Mercantile
Asset Management 3.5% INDEPENDENT AUDITORS Somekh Chaikin, a member firm of KPMG International (“KPMG”), located in
Tel Aviv, Israel (PCAOB ID No. 1057), has served as our independent registered public accounting firm for the fiscal years ended
December 31, 2023 and 2022. The following are KPMG fees for professional services in each of the respective years: Year ending
December 31 2023 $’000 2022 $’000 Audit Fees(1) 826 842 Audit-related fees(2) – 130 Tax fees 281 288 Total 1,107
1,260 (1) “Audit fees” are the aggregate fees billed for professional services rendered for the audit of our annual
financial statements or services that are normally provided by the accountant in connection with statutory and regulatory filings
or engagements. (2) “Audit-related fees” are the aggregate fees billed for assurance and related services that are
reasonably related to the performance of the audit and are not reported under audit fees. These fees primarily consist of accounting
consultations regarding the accounting treatment of matters that occur in the regular course of business, implications of new
accounting pronouncements and other accounting issues that occur from time to time. Pre-Approval Policies and Procedures The advance
approval of our audit committee or members thereof, to whom approval authority has been delegated, is required for all audit and
non-audit services provided by our auditors. Our audit committee has adopted a pre-approval policy for the engagement of our independent
accountant to perform certain audit and non-audit services. Pursuant to this policy, which is designed to assure that such engagements
do not impair the independence of our auditors, the audit committee pre-approves annually a catalog of specific audit and non-audit
services in the categories of audit service, audit-related service and tax services that may be performed by our independent accountants.
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Nexxen International
Ltd Annual Report 2023 33 STRATEGIC REPORT FINANCIAL GOVERNANCE STATEMENTS Compensation Report DIRECTORS’ COMPENSATION The
Board recognises that Directors’ Compensation is of legitimate interest to the shareholders. The Company operates within
a competitive environment, performance depends on the individual contributions of the Directors and employees and it believes
in rewarding vision and innovation. As an Israeli company listed on the AIM market of the London Stock Exchange and the NASDAQ,
the Company is not required to comply with the requirements of Schedule 8 to the Large and Medium-sized Companies and Groups (Accounts
and Reports) Regulations 2008. POLICY ON DIRECTORS’ COMPENSATION The policy of the Board is to provide executive compensation
packages designed to attract, motivate and retain Directors of the caliber necessary to maintain the Company’s position.
It aims to provide sufficient levels of compensation to do this, but to avoid paying more than is necessary. The compensation
will also reflect the Director’s responsibilities. COMPENSATION OF EXECUTIVES AND OTHER MANAGERS Aggregate Compensation
of Office Holders The aggregate compensation, including share-based compensation, paid by us and our subsidiaries to our executive
officers and directors for the year ended December 31, 2023 was approximately $13.5 million. This amount includes approximately
$0.2 million set aside or accrued to provide pension, severance, retirement or similar benefits or expenses, but does not include
business travel, relocation, professional and business association dues and expenses reimbursed to office holders, and other benefits
commonly reimbursed or paid by companies in Israel. As of December 31, 2023, 1,602,500 RSUs and PSUs granted to our executive
officers and directors were outstanding under our equity incentive plans. Compensation Disclosure in Accordance with Israeli Law
The table below is required under applicable Israeli Law and sets forth the compensation earned by our five most highly compensated
office holders during or with respect to the year ended December 31, 2023. We refer to the five individuals for whom disclosure
is provided herein as our “Covered Executives.” For purposes of the table and the summary below, “compensation”
includes base salary, bonuses, equity-based compensation, retirement or termination payments, and any benefits or perquisites
such as car, phone and social benefits, as well as any undertaking to provide such compensation in the future. Summary Compensation
Table Information Regarding Covered Executives(1) Name and Principal Position(2) Based Salary Benefits and Prerequisites(3) Variable
Compensation(4) Equity-Based Compensation(5) Total Ofer Druker Chief Executive Officer 720,000 76,291 468,000 5,908,292 7,173,213
Yaniv Carmi Chief Operating Officer 600,000 73,491 312,000 2,612,659 3,598,150 Sagi Niri Chief Financial Officer 324,367 91,613
195,000 2,088,681 2,699,661 Chance Lee Johnson Chief Commercial Officer 350,000 62,129 328,186 489,491 1,229,806 Tal Mor Chief
Technology Officer 256,250 54,228 227,500 629,715 1,167,693 (1) In accordance with Israeli law, all amounts reported in the table
are in terms of cost to the Company, as recorded in our audited consolidated financial statements for the year ended December
31, 2023. (2) All current officers listed in the table are full-time employees. Cash compensation amounts denominated in currencies
other than the U.S. dollar were converted into U.S. dollars at the average conversion rate for the year ended December 31, 2023.
(3) Amounts reported in this column include benefits and perquisites, including those mandated by applicable law. Such benefits
and perquisites may include, to the extent applicable to each executive, payments, contributions and/or allocations for savings
funds, pension, severance, vacation, car or car allowance, medical insurances and benefits, risk insurances (such as life, disability
and accident insurances), convalescence pay, payments for Medicare and social security, tax gross-up payments and other benefits
and perquisites consistent with our guidelines, regardless of whether such amounts have actually been paid to the executive (4)
Amounts reported in this column refer to variable compensation such as earned commissions, incentives and earned or paid bonuses
as recorded in our audited consolidated financial statements for the year ended December 31, 2023. (5) Amounts reported in this
column represent the expense recorded in our audited consolidated financial statements for the year ended December 31, 2023 with
respect to equity-based compensation, reflecting also equity awards made in previous years which have vested during the current
year. Assumptions and key variables used in the calculation of such amounts are described in Note 17 to our audited consolidated
financial statements, which are included in this Annual Report.
![](https://www.sec.gov/Archives/edgar/data/1849396/000117891324002095/ex99-2img136.jpg)
34 Nexxen International
Ltd Annual Report 2023 GOVERNANCE Executive Officers Chief Executive Officer and Executive Director. Ofer Druker, our Chief Executive
Officer and executive director, currently receives an annual base salary of $720,000, and he is eligible to an annual bonus equal
to up to 100% of his annual base salary (or $720,000), subject to compliance with annual performance criteria to be determined
by the compensation committee each year. In 2021, our compensation committee, board of directors and shareholders approved to
grant to Mr. Druker, effective upon completion of the IPO, 2,625,000 RSUs and 1,125,000 PSUs pursuant to our 2017 Equity Incentive
Plan (the “2017 Plan”). The RSUs vest gradually over a period of three years, with 8.33% of the grant vesting each
quarter, subject to Mr. Druker continuing to be employed by the group on the applicable vesting date. The PSUs vest gradually
over a period of three years, with 33.33% of each grant vesting each year, subject to (i) Mr. Druker continuing to be employed
by the group on the applicable vesting date, and (ii) compliance with performance-based metrics as determined by the compensation
committee. The vesting of the RSUs and PSUs shall accelerate in full automatically upon the consummation of a change in control
of the Company. Mr. Druker was not granted any equity awards in 2022 or 2023. Chief Operating Officer and Executive Director.
Yaniv Carmi, our Chief Operating Officer and executive director, has a current annual base salary of $600,000, and he is eligible
to an annual bonus equal to up to 80% of his annual base salary (or $480,000), subject to compliance with annual performance criteria
to be determined by the compensation committee each year. Mr. Carmi is entitled to a special bonus of £300,000 (or $381,939)
in the event of a company sale (or a pro rata portion in the case of a partial sale). In 2021, our compensation committee, board
of directors and shareholders approved to grant to Mr. Carmi, effective upon the IPO, 1,155,000 RSUs and 495,000 PSUs pursuant
to our 2017 Plan. The RSUs vest gradually over a period of three years, with 8.33% of the grant vesting each quarter, subject
to Mr. Carmi continuing to be employed by the group on the applicable vesting date. The PSUs vest gradually over a period of three
years, with 33.33% of each grant vesting each year, subject to (i) Mr. Carmi continuing to be employed by the group on the applicable
vesting date, and (ii) compliance with performance-based metrics as determined by the compensation committee. The vesting of the
RSUs and PSUs shall accelerate in full automatically upon the consummation of a change in control of the Company. Mr. Carmi was
not granted any equity awards in 2022 or 2023. Chief Financial Officer and Executive Director. Sagi Niri, our Chief Financial
Officer and executive director, has a current annual base salary of NIS 1,200,000 (approximately $324,367), and he is eligible
to an annual bonus equal to up to 92% of his annual base salary (or $300,000), subject to compliance with annual performance criteria
to be determined by the compensation committee each year. In 2021, our compensation committee, board of directors and shareholders
approved to grant to Mr. Niri, effective upon the completion of the IPO, 945,000 RSUs and 405,000 PSUs pursuant to our Global
Share Incentive Plan (2011), as amended (the “2011 Plan”). The RSUs vest gradually over a period of three years, with
8.33% of the grant vesting each quarter, subject to Mr. Niri continuing to be employed by the group on the applicable vesting
date. The PSUs vest gradually over a period of three years, with 33.33% of each grant vesting each year, subject to (i) Mr. Niri
continuing to be employed by the group on the applicable vesting date, and (ii) compliance with performance-based metrics as determined
by the compensation committee. The vesting of the RSUs and PSUs shall accelerate in full automatically upon the consummation of
a change in control of the Company. Mr. Niri was not granted any equity awards in 2022 or 2023. Non-Executive Directors We currently
pay the chairman of our board of directors an annual cash retainer of £150,000 (approximately $187,080) and each of our
other nonexecutive directors an annual cash retainer of £43,000 (approximately $53,629). In addition, we pay the chair of
our audit committee an annual cash retainer of $18,000 and the chair of our compensation committee an annual cash retainer of
£7,000 (approximately $8,730), and we pay our senior non-executive director, Neil Jones, an additional annual cash retainer
of £5,000 (approximately $6,236). EQUITY INCENTIVE PLANS 2011 Equity Incentive Plan We maintain the 2011 Plan, under which
we may grant equity-based incentive awards to attract, motivate and retain the talent for which we compete. The 2011 Plan is administered
by our board of directors with the assistance of the compensation committee, and provides for the grant of options, restricted
shares and restricted share units. The 2011 Plan provides for granting awards under various tax regimes, including, without limitation,
in compliance with Section 102 of the Israeli Income Tax Ordinance (New Version), 5721-1961 (the “Ordinance”). Section
102 of the Ordinance allows employees, directors and officers who are not controlling shareholders and are considered Israeli
residents to receive favorable tax treatment for compensation in the form of shares, restricted share units or options, subject
to the terms and conditions set forth in the Ordinance. Our non-employee service providers and controlling shareholders may only
be granted awards under section 3(i) of the Ordinance, which does not provide for similar tax benefits. Compensation Report continued
![](https://www.sec.gov/Archives/edgar/data/1849396/000117891324002095/ex99-2img137.jpg)
Nexxen International
Ltd Annual Report 2023 35 STRATEGIC REPORT FINANCIAL GOVERNANCE STATEMENTS 2017 Equity Incentive Plan We maintain the 2017 Plan
under which we may grant equity-based incentive awards to attract, motivate and retain the talent for which we compete. The 2017
Plan is administered by our board of directors with the assistance of the compensation committee. The 2017 Plan provides for granting
awards under various tax regimes, including, without limitation, awards granted to our United States employees or service providers,
including those who are deemed to be residents of the United States for tax purposes, Section 422 of the Internal Revenue Code
(the “IRC”) and Section 409A of the IRC. The 2017 Plan provides for the grant of stock options (including incentive
stock options and nonqualified stock options), restricted shares, restricted share units, performance bonus awards, performance
units and performance shares. Options granted under the 2017 Plan to our employees who are U.S. residents may qualify as “incentive
stock options” within the meaning of Section 422 of the IRC, or may be non-qualified stock options. On December 27, 2023,
our shareholders approved (i) an increase of 1,250,000 ordinary shares to the share reserve of the 2011 Plan, and (ii) an increase
of 3,750,000 ordinary shares to the share reserve of the 2017 Plan. As of December 31, 2023, a total of 3,705,228 options to purchase
ordinary shares, with a weighted average exercise price of £6.21 ($7.91) per share and 2,973,572 RSUs and PSUs were outstanding
under the 2011 Plan and 2017 Plan, collectively. As of December 31, 2023, 6,202,712 ordinary shares were available for future
issuance under the 2011 Plan and 2017 Plan, collectively. In connection with the SpearAd acquisition in October 2021, we issued
the sellers 370,000 restricted share awards subject to time and performance vesting criteria. As of December 31, 2023, 69,999
of such restricted share awards were outstanding. The restricted share awards were not issued as part of the Company’s equity
incentive plans. NEW GRANTS DURING THE PERIOD During 2023, the Group granted 0 thousand share options and 497 thousand Restricted
Share Units (RSUs) and Performance Stock Units (PSUs) to its executive officers and employees from outstanding awards under Nexxen’s
equity incentive plans. Director Number of RSU/ PSU granted Total number of RSU/PSU held as of May 14 2024 Ofer Druker* 0 593,750
Yaniv Carmi** 0 261,250 Sagi Niri*** 0 283,750 * Ofer Druker: 1,250,000 RSU/PSU vested during 2023 ** Yaniv Carmi: 550,000 RSU/PSU
vested during 2023 *** Sagi Niri: 520,000 RSU/PSU vested during 2023 DIRECTORS’ AND RELATED PARTIES INTERESTS As of May
14 2024: Number of ordinary shares Number of ordinary shares under option, RSUs and PSUs Percentage holding of Total Voting Rights
Percentage holding on a fully diluted basis Ofer Druker 4,416,379 593,750 3.17% 3.37% Yaniv Carmi 2,050,787 261,250 1.47% 1.56%
Sagi Niri 1,443,900 283,750 1.04% 1.16% Joanna Parnell Nil Nil Nil Nil Neil Jones 8,000 Nil 0.01% 0.01% Christopher Stibbs Nil
Nil Nil Nil Rebekah Brooks Nil Nil Nil Nil Norman Johnston Nil Nil Nil Nil Lisa Klinger Nil Nil Nil Nil Daniel Kerstein Nil Nil
Nil Nil Rhys Summerton Nil Nil Nil Nil
![](https://www.sec.gov/Archives/edgar/data/1849396/000117891324002095/ex99-2img138.jpg)
36 Nexxen International
Ltd Annual Report 2023 Financial Statements FINANCIAL STATEMENTS USE OF NON-IFRS FINANCIAL INFORMATION In addition to our IFRS
results, we review certain non-IFRS financial measures to help us evaluate our business, measure our performance, identify trends
affecting our business, establish budgets, measure the effectiveness of investments in our technology and development and sales
and marketing, and assess our operational efficiencies. These non-IFRS measures include Contribution ex-TAC, Adjusted EBITDA,
Adjusted EBITDA Margin, Non-IFRS Net Income, and Non-IFRS Earnings per share, each of which is discussed below. These non-IFRS
financial measures are not intended to be considered in isolation from, as substitutes for, or as superior to, the corresponding
financial measures prepared in accordance with IFRS. You are encouraged to evaluate these adjustments and review the reconciliation
of these non-IFRS financial measures to their most comparable IFRS measures, and the reasons we consider them appropriate. It
is important to note that the particular items we exclude from, or include in, our non-IFRS financial measures may differ from
the items excluded from, or included in, similar non-IFRS financial measures used by other companies. See “Reconciliation
of Revenue to Contribution ex-TAC,” “Reconciliation of Total Comprehensive Income (Loss) to Adjusted EBITDA,”
and “Reconciliation of Net Income (Loss) to Non-IFRS Net Income,” included as part of this press release. • Contribution
ex-TAC: Contribution ex-TAC for Nexxen is defined as gross profit plus depreciation and amortization attributable to cost of revenues
and cost of revenues (exclusive of depreciation and amortization) minus the Performance media cost (“traffic acquisition
costs” or “TAC”). Performance media cost represents the costs of purchases of impressions from publishers on
a cost-per-thousand impression basis in our non-core Performance activities. Contribution ex-TAC is a supplemental measure of
our financial performance that is not required by, or presented in accordance with, IFRS. Contribution ex-TAC should not be considered
as an alternative to gross profit as a measure of financial performance. Contribution ex-TAC is a non-IFRS financial measure and
should not be viewed in isolation. We believe Contribution ex-TAC is a useful measure in assessing the performance of Nexxen,
because it facilitates a consistent comparison against our core business without considering the impact of traffic acquisition
costs related to revenue reported on a gross basis. • Adjusted EBITDA: We define Adjusted EBITDA for Nexxen as total comprehensive
income (loss) for the period adjusted for foreign currency translation differences for foreign operations, foreign currency translation
for subsidiary sold reclassified to profit and loss, financing expenses (income), net, tax expenses, depreciation and amortization,
stock-based compensation, restructuring, acquisition-related costs and other expenses, net. Adjusted EBITDA is included in the
press release because it is a key metric used by management and our board of directors to assess our financial performance. Adjusted
EBITDA is frequently used by analysts, investors, and other interested parties to evaluate companies in our industry. Management
believes that Adjusted EBITDA is an appropriate measure of operating performance because it eliminates the impact of expenses
that do not relate directly to the performance of the underlying business. • Adjusted EBITDA Margin: We define Adjusted EBITDA
Margin as Adjusted EBITDA on a Contribution ex-TAC basis. • Non-IFRS Income (Loss) and Non-IFRS Earnings (Loss) per Share:
We define non-IFRS earnings (loss) per share as non-IFRS income (loss) divided by non-IFRS weighted-average shares outstanding.
Non-IFRS income (loss) is equal to net income (loss) excluding stock-based compensation, and cash- and non-cash-based acquisition
and related expenses, including amortization of acquired intangible assets, merger-related severance costs, and transaction expenses.
In periods in which we have non-IFRS income, non-IFRS weighted-average shares outstanding used to calculate non-IFRS earnings
per share includes the impact of potentially dilutive shares. Potentially dilutive shares consist of stock options, restricted
stock awards, restricted stock units, and performance stock units, each computed using the treasury stock method. We believe non-IFRS
earnings (loss) per share is useful to investors in evaluating our ongoing operational performance and our trends on a per share
basis, and also facilitates comparison of our financial results on a per share basis with other companies, many of which present
a similar non-IFRS measure. However, a potential limitation of our use of non-IFRS earnings (loss) per share is that other companies
may define non-IFRS earnings per share differently, which may make comparison difficult. This measure may also exclude expenses
that may have a material impact on our reported financial results. Non-IFRS earnings (loss) per share is a performance measure
and should not be used as a measure of liquidity. Because of these limitations, we also consider the comparable IFRS measure of
net income. We do not provide a reconciliation of forward-looking non-IFRS financial metrics, because reconciling information
is not available without an unreasonable effort, such as attempting to make assumptions that cannot reasonably be made on a forward-looking
basis to determine the corresponding IFRS metric. The information contained within this announcement is deemed by the Company
to constitute inside information as stipulated under the Market Abuse
![](https://www.sec.gov/Archives/edgar/data/1849396/000117891324002095/ex99-2img139.jpg)
Nexxen International
Ltd Annual Report 2023 37 STRATEGIC REPORT FINANCIAL GOVERNANCE STATEMENTS FORWARD LOOKING STATEMENTS This annual report contains
forward-looking statements, including forward-looking statements within the meaning of Section 27A of the United States Securities
Act of 1933, as amended, and Section 21E of the United States Securities and Exchange Act of 1934, as amended. Forward-looking
statements are identified by words such as “anticipates,” “believes,” “expects,” “intends,”
“may,” “can,” “will,” “estimates,” and other similar expressions. However, these
words are not the only way Nexxen identifies forwardlooking statements. All statements contained in this annual report that do
not relate to matters of historical fact should be considered forward-looking statements, including without limitation statements
regarding anticipated financial results for full year 2024 and beyond; anticipated benefits of Nexxen’s strategic transactions
and commercial partnerships; anticipated features and benefits of Nexxen’s products and service offerings; Nexxen’s
positioning for accelerated growth and continued future growth in both the US and international markets in 2024 and beyond; Nexxen’s
medium- to long-term prospects; management’s belief that Nexxen is well-positioned to benefit from future industry growth
trends and Company-specific catalysts; the Company’s expectations with respect to Video revenue; the potential negative
impact of ongoing macroeconomic headwinds and uncertainty that have limited advertising activity and the anticipation that these
challenges could continue to have an impact for the remainder of 2024 and beyond; the Company’s plans with respect to its
cash reserves and its intent to not undertake any major acquisitions in the near-term; its continued focus in 2024 on expanding
its base of end-to-end customers, growing data licensing revenue and expanding its streaming, TV, and agency partnerships to drive
growth and increased profitability; the expectation of launching its TV Intelligence solution in additional major international
markets in 2024, enhancing and expanding the Company’s international CTV growth opportunity; the anticipated benefits from
the Company’s investment in VIDAA and its enhanced strategic relationship with Hisense; the anticipated benefits of the
rebranding of the Tremor group to Nexxen, and the Company’s plans with respect thereto, as well as any other statements
related to Nexxen’s future financial results and operating performance. These statements are neither promises nor guarantees
but involve known and unknown risks, uncertainties and other important factors that may cause Nexxen’s actual results, performance
or achievements to be materially different from its expectations expressed or implied by the forward-looking statements, including,
but not limited to, the following: negative global economic conditions; global conflicts and war, including the current terrorist
attacks by Hamas, and the war and hostilities between Israel and Hamas and Israel and Hezbollah, and how those conditions may
adversely impact Nexxen’s business, customers, and the markets in which Nexxen competes; changes in industry trends; the
risk that Nexxen will not realize the anticipated benefits of its acquisition of Amobee and strategic investment in VIDAA; and,
other negative developments in Nexxen’s business or unfavourable legislative or regulatory developments. Nexxen cautions
you not to place undue reliance on these forward-looking statements. For a more detailed discussion of these factors, and other
factors that could cause actual results to vary materially, interested parties should review the risk factors listed in the Company’s
most recent Annual Report on Form 20-F, filed with the U.S. Securities and Exchange Commission (www.sec.gov) on March 6, 2024.
Any forward-looking statements made by Nexxen in this annual report speak only as of the date of this annual report, and Nexxen
does not intend to update these forward-looking statements after the date of this annual report, except as required by law. Nexxen,
and the Nexxen logo are trademarks of Nexxen International Ltd. in the United States and other countries. All other trademarks
are the property of their respective owners. The use of the word “partner” or “partnership” in this annual
report does not mean a legal partner or legal partnership.
![](https://www.sec.gov/Archives/edgar/data/1849396/000117891324002095/ex99-2img140.jpg)
38 Nexxen International
Ltd Annual Report 2023 Financial Statements continued FINANCIAL STATEMENTS Reconciliation of Total Comprehensive Income (Loss)
to Adjusted EBITDA 2023 $’000 2022 $’000 % 2023 $’000 2022 $’000 % Total comprehensive income (loss) 5,341
9,796 (45%) (18,127) 16,238 (212%) Foreign currency translation differences for foreign operation (2,114) (4,735) (2,126) 6,499
Foreign currency translation for subsidiary sold reclassified to profit and loss – – (1,234) – Tax expenses
6,487 5,040 2,503 19,688 Financial expense (income), net (105) 717 2,008 2,327 Depreciation and amortization 21,047 17,184 78,285
42,700 Stock-based compensation 1,386 7,986 19,169 50,505 Acquisition related costs – 93 171 6,085 Restructuring –
307 796 307 Other expense – 540 1,765 540 Adjusted EBITDA 32,042 36,928 (13%) 83,210 144,889 (43%) Reconciliation of Revenue
to Contribution ex-TAC 2023 $’000 2022 $’000 % 2023 $’000 2022 $’000 % Revenues 95,916 107,697 (11%) 331,993
335,250 (1%) Cost of revenues (exclusive of depreciation and amortization) (17,886) (17,265) (62,270) (60,745) Depreciation and
amortization attributable to Cost of Revenues (13,682) (11,810) (50,825) (25,367) Gross profit (IFRS) 64,348 78,622 (18%) 218,898
249,138 (12%) Depreciation and amortization attributable to Cost of Revenues 13,682 11,810 50,825 25,367 Cost of revenues (exclusive
of depreciation and amortization) 17,886 17,265 62,270 60,745 Performance media cost (5,392) (4,695) (17,810) (25,524) Contribution
ex-TAC (Non-IFRS) 90,524 103,002 (12%) 314,183 309,726 1% Reconciliation of Net Income (Loss) to Non-IFRS Net Income 2023 $’000
2022 $’000 % 2023 $’000 2022 $’000 % Net Income (loss) 3,227 5,061 (36%) (21,487) 22,737 (195%) Acquisition
related costs – 93 171 6,085 Amortization of acquired intangibles 14,931 8,496 42,952 20,768 Restructuring – 307 796
307 Stock-based compensation expense 1,386 7,986 19,169 50,505 Other expense – 540 1,765 540 Tax effect of Non-IFRS adjustments(1)
(5,086) (262) (11,153) (9,130) Non-IFRS Income 14,458 22,221 (35%) 32,213 91,812 (65%) Weighted average shares outstanding—diluted
(in millions)(2) 147.5 147.6 145.2 153.1 Non-IFRS diluted Earnings Per Share (in USD) 0.10 0.15 (35%) 0.22 0.60 (63%) (1) Non-IFRS
income includes the estimated tax impact from the expense items reconciling between net income (loss) and non-IFRS income (2)
Non-IFRS earnings per share is computed using the same weighted-average number of shares that are used to compute IFRS earnings
per share
![](https://www.sec.gov/Archives/edgar/data/1849396/000117891324002095/ex99-2img141.jpg)
Nexxen International
Ltd Annual Report 2023 39 STRATEGIC REPORT FINANCIAL GOVERNANCE STATEMENTS Auditors’ Report to the Shareholders of Nexxen
International Ltd. (Formerly -Tremor International Ltd.) Somekh Chaikin 17 Ha’arba’a Street, PO Box 609 KPMG Millennium
Tower Tel Aviv 6100601, Israel +972 3 684 8000 We have audited the accompanying consolidated statements of financial position
of Nexxen International Ltd. and its subsidiaries (formerly Tremor International and hereinafter – “the Company”)
as of December 31, 2023 and 2022 and the related consolidated statements of operation and other comprehensive income, statements
of changes in equity and statements of cash flows, for each of the three years in the period ended December 31, 2023. These financial
statements are the responsibility of the Company’s Board of Director and of its Management. Our responsibility is to express
an opinion on these financial statements based on our audit. We conducted our audit in accordance with generally accepted auditing
standards in Israel, including standards prescribed by the Auditors Regulations (Manner of Auditor’s Performance) –
1973. Such standards require that we plan and perform the audit to obtain reasonable assurance that the financial statements are
free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by Management,
as well as evaluating the overall financial statements presentation. We believe that our audit provides a reasonable basis for
our opinion. In our opinion, the consolidated financial statements referred to above present fairly, in all material respects,
the consolidated financial position of the Company and its subsidiaries as of December 31, 2023 and 2022 and their results of
operations, changes in equity and cash flows for each of the three years in the period ended December 31, 2023, in accordance
with International Financial Reporting Standards (IFRS). Somekh Chaikin Member Firm of KPMG International March 6, 2024 KPMG Somekh
Chaikin, an Israeli partnership and a member firm of the KPMG global organization of independent member firms affiliated with
KPMG International Limited, a private English company limited by guarantee
![](https://www.sec.gov/Archives/edgar/data/1849396/000117891324002095/ex99-2img142.jpg)
40 Nexxen International
Ltd Annual Report 2023 Consolidated Statements of Financial Position as at 31 December 2023 FINANCIAL STATEMENTS Note 2003 $’000
2022 $’000 Assets Assets: Cash and cash equivalents 10 234,308 217,500 Trade receivables, net 8 201,973 219,837 Other receivables
8 8,293 23,415 Current tax assets 7,010 750 Total current assets 451,584 461,502 Fixed assets, net 5 21,401 29,874 Right-of-use
assets 6 31,900 23,122 Intangible assets, net 7 362,000 398,096 Deferred tax assets 4 12,393 18,161 Investment in shares 18 25,000
25,000 Other long-term assets 525 406 Total non-current assets 453,219 494,659 Total assets 904,803 956,161 Liabilities and shareholders’
equity Liabilities: Current maturities of lease liabilities 6 12,106 14,104 Trade payables 9 183,296 212,690 Other payables 9
29,098 44,355 Current tax liabilities 4,937 9,417 Total current liabilities 229,437 280,566 Employee benefits 237 238 Long-term
lease liabilities 6 24,955 15,234 Long-term debt 11 99,072 98,544 Other long-term liabilities 6,800 8,802 Deferred tax liabilities
4 754 1,162 Total non-current liabilities 131,818 123,980 Total liabilities 361,255 404,546 Shareholders’ equity: 15 Share
capital 417 413 Share premium 410,563 400,507 Other comprehensive loss (2,441) (5,801) Retained earnings 135,009 156,496 Total
shareholders’ equity 543,548 551,615 Total liabilities and shareholders’ equity 904,803 956,161 Date of approval of
the financial statements: March 6, 2024. The accompanying notes are an integral part of these consolidated financial statements.
![](https://www.sec.gov/Archives/edgar/data/1849396/000117891324002095/ex99-2img143.jpg)
Nexxen International
Ltd Annual Report 2023 41 STRATEGIC REPORT FINANCIAL GOVERNANCE STATEMENTS Consolidated Statements of Operation and Other Comprehensive
Income (Loss) as at 31 December 2023 Note 2023 $’000 2022 $’000 2021 $’000 Revenues 12 331,993 335,250 341,945
Cost of Revenues (Exclusive of depreciation and amortization shown separately below) 13 62,270 60,745 71,651 Research and development
expenses 49,684 33,659 18,422 Selling and marketing expenses 105,914 89,953 74,611 General and administrative expenses 14 51,051
68,005 63,499 Depreciation and amortization 78,285 42,700 40,259 Other expenses (income), net 1,765 (4,564) (959) Total operating
costs 286,699 229,753 195,832 Operating Profit (loss) (16,976) 44,752 74,462 Financing income (8,192) (2,284) (483) Financing
expenses 10,200 4,611 2,670 Financing expenses, net 2,008 2,327 2,187 Profit (loss) before taxes on income (18,984) 42,425 72,275
Tax benefit (expenses) 4 (2,503) (19,688) 948 Profit (loss) for the year (21,487) 22,737 73,223 Other comprehensive income (loss)
items: Foreign currency translation differences for foreign operations 2,126 (6,499) (2,632) Foreign currency translation for
subsidiary sold reclassified to profit and loss 1,234 – – Total other comprehensive income (loss) for the year 3,360
(6,499) (2,632) Total comprehensive income (loss) for the year (18,127) 16,238 70,591 Earnings per share Basic earnings (loss)
per share (in USD) 16 (0.15) 0.15 0.51 Diluted earnings (loss) per share (in USD) 16 (0.15) 0.15 0.48 The accompanying notes are
an integral part of these consolidated financial statements.
![](https://www.sec.gov/Archives/edgar/data/1849396/000117891324002095/ex99-2img144.jpg)
42 Nexxen International
Ltd Annual Report 2023 Consolidated Statements of Changes in Equity as at 31 December 2023 FINANCIAL STATEMENTS Share capital
$’000 Share premium $’000 Other comprehensive income (loss) $’000 Retained Earnings $’000 Total $’000
Balance as of January 1, 2021 380 264,831 3,330 60,472 329,013 Total Comprehensive income (loss) for the year Profit for the year
– – – 73,223 73,223 Other comprehensive loss: Foreign currency translation – – (2,632) – (2,632)
Total comprehensive income (loss) for the year – – (2,632) 73,223 70,591 Transactions with owners, recognized directly
in equity Revaluation of liability for put option on non-controlling interests – – – 64 64 Own shares acquired
(3) (6,640) – – (6,643) Share based compensation – 41,822 – – 41,822 Exercise of share options 17
1,353 – – 1,370 Issuance of shares 47 136,111 – – 136,158 Issuance of Restricted shares 1 (1) –
– – Balance as of December 31, 2021 442 437,476 698 133,759 572,375 Total Comprehensive Income (loss) for the year
Profit for the year – – – 22,737 22,737 Other comprehensive loss: Foreign Currency Translation – –
(6,499) – (6,499) Total comprehensive Income (loss) for the year – – (6,499) 22,737 16,238 Transactions with
owners, recognized directly in equity Own shares acquired (50) (86,202) – – (86,252) Share based compensation –
47,049 – – 47,049 Exercise of share options 21 2,184 – – 2,205 Balance as of December 31, 2022 413 400,507
(5,801) 156,496 551,615 Total Comprehensive Income (loss) for the year Loss for the year – – – (21,487) (21,487)
Other comprehensive income: Foreign Currency Translation – – 2,126 – 2,126 Foreign Currency Translation for
subsidiary sold – – 1,234 – 1,234 Total comprehensive Income (loss) for the year – – 3,360 (21,487)
(18,127) Transactions with owners, recognized directly in equity Own shares acquired (8) (9,306) – – (9,314) Share
based compensation – 19,141 – – 19,141 Exercise of share options 12 221 – – 233 Balance as of December
31, 2023 417 410,563 (2,441) 135,009 543,548 The accompanying notes are an integral part of these consolidated financial statements.
![](https://www.sec.gov/Archives/edgar/data/1849396/000117891324002095/ex99-2img145.jpg)
Nexxen International
Ltd Annual Report 2023 43 STRATEGIC REPORT FINANCIAL GOVERNANCE STATEMENTS Consolidated Statements of Cash Flows as at 31 December
2023 2023 $’000 2022 $’000 2021 $’000 Cash flows from operating activities: Profit (loss) for the year (21,487)
22,737 73,223 Adjustments for: Depreciation and amortization 78,285 42,700 40,259 Net financing expense 1,699 2,147 2,023 Loss
from disposals of fixed and intangible assets 2 542 – Loss (gain) on leases modification 119 56 (377) Loss (gain) on sale
of business unit 1,765 – (982) Share-based compensation and restricted shares 19,169 50,505 42,818 Tax (benefit) expense
2,503 19,688 (948) Change in trade and other receivables 30,603 57,050 (11,676) Change in trade and other payables (43,077) (100,145)
26,845 Change in employee benefits (1) (179) (69) Income taxes received 352 1,175 2,231 Income taxes paid (8,721) (14,784) (3,185)
Interest received 8,016 2,103 496 Interest paid (8,486) (587) (570) Net cash provided by operating activities 60,741 83,008 170,088
Cash flows from investing activities Change in pledged deposits, net 1,498 (213) (11) Payments on finance lease receivable 1,112
1,306 2,454 Repayment of long-term loans 51 – – Acquisition of fixed assets (4,495) (6,433) (3,378) Acquisition and
capitalization of intangible assets (15,126) (8,750) (4,966) Proceeds from sale of business unit – 1,180 415 Investment
in shares – (25,000) – Acquisition of subsidiaries, net of cash acquired – (195,084) (11,001) Net cash used
in investing activities (16,960) (232,994) (16,487) Cash flows from financing activities Acquisition of own shares (9,518) (86,048)
(6,643) Proceeds from exercise of share options 233 2,205 1,370 Leases repayment (17,262) (12,018) (10,009) Issuance of shares,
net of issuance cost – – 134,558 Receipt of long-term debt, net of transaction cost – 98,917 – Payment
of financial liability – – (2,414) Net cash provided by (used in) financing activities (26,547) 3,056 116,862 Net
increase (decrease) in cash and cash equivalents 17,234 (146,930) 270,463 Cash and cash equivalents as of the beginning of year
217,500 367,717 97,463 Effect of exchange rate fluctuations on cash and cash equivalents (426) (3,287) (209) Cash and cash equivalents
as of the end of year 234,308 217,500 367,717 The accompanying notes are an integral part of these consolidated financial statements.
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44 Nexxen International
Ltd Annual Report 2023 Notes to Consolidated Financial Statements as at 31 December 2023 FINANCIAL STATEMENTS 1. GENERAL a. Reporting
entity: Nexxen International Ltd. (the “Company” or “Nexxen International”), formerly known as Tremor
International Ltd., was incorporated in Israel under the laws of the State of Israel on March 20, 2007. The ordinary shares of
the Company are listed on the AIM Market of the London Stock Exchange and the American Depositary Shares (“ADSs”),
each of which represents two ordinary shares of the Company, represented by the American Depositary Receipts (“ADR”)
are listed on the Nasdaq Capital Market. The address of the registered office is 82 Yigal Alon Street Tel-Aviv, 6789124, Israel.
Nexxen International is a global Company offering a unified data-driven end-to-end software platform that supports a wide range
of media types (e.g., video, display, etc.) and devices (e.g., mobile, Connected TVs, streaming devices, desktop, etc.), creating
an efficient marketplace where advertisers (buyers) are able to purchase high quality advertising inventory from publishers (sellers)
in real-time and at scale. Nexxen International’s technology stack is comprised of a Demand Side Platform (“DSP”),
Supply-Side Platform (“SSP”), Ad Server, and Data Management Platform (“DMP”), empowering customers on
both the buy- and sell-sides of the ecosystem to leverage a full suite of data-driven planning and technology solutions to achieve
greater efficiency, effectiveness, and outcomes in their advertising efforts. The Company’s DSP solution is delivered through
wholly owned subsidiary Nexxen Inc. (formerly known as Amobee Inc. and which also includes Tremor Video Inc.’s activity
that was transferred to Nexxen Inc. in 2023) and is designed to assist customers in a self-managed or full-service capacity to
plan and execute digital marketing campaigns in real-time across various ad formats. The Company’s SSP solution (delivered
through Nexxen Group LLC, formerly known as Unruly Group, LLC) is designed to monetize digital inventory for publishers by enabling
their content to have the necessary code and requirements for programmatic advertising integration, and provides access to significant
amounts of data and unique demand to drive more effective inventory management and revenue optimization. The Company’s “DMP”
integrates both its DSP and SSP solutions, enabling advertisers and publishers to use data from various sources, including web,
social media, Connected TV and linear TV, and mobile devices, to optimize results of their advertising campaigns. Following the
acquisition of Nexxen Inc., the Company gained a Linear TV Planning feature, enabling sellers at national broadcasters to generate
linear TV plans during and after upfronts. Nexxen International Ltd. is headquartered in Israel and maintains offices throughout
the U.S., Canada, EMEA and Asia-Pacific. On June 12, 2023, the Company initially rebranded all of its core products and platforms
under the unified Nexxen brand. On January 2, 2024, the Company’s name was officially changed to Nexxen International Ltd.
and, in connection with the change, its stock ticker on both the NASDAQ and London Stock Exchange changed from “TRMR”
to “NEXN”. The Company believes rebranding and unifying under Nexxen has enhanced its commercial focus, and has better
conveyed the holistic value proposition of its end-to-end technology stack to the market for its next phase of growth. As part
of the rebranding, the Company changed the expected useful life of its previous brands, which completed by the end of the year.
See Note 7. b. Definitions: In these financial statements – The Company – Nexxen International Ltd. The Group –
Nexxen International Ltd. and its subsidiaries. Subsidiaries – Companies, the financial statements of which are fully consolidated,
directly, or indirectly, with the financial statements of the Company such as Nexxen Group LLC, Unruly Holding Ltd, Tremor Video
Inc, Nexxen Inc. Related party – As defined by IAS 24, “Related Party Disclosures”. 2. BASIS OF PREPARATION
a. Statement of compliance: The consolidated financial statements have been prepared in accordance with International Financial
Reporting Standards (IFRS) as issued by the International Accounting Standards Board (“IASB”). The consolidated financial
statements were authorized for issue by the Company’s Board of Directors on March 5, 2024. b. Functional and presentation
currency: These consolidated financial statements are presented in US Dollars (USD), which is the Company’s functional currency,
and have been rounded to the nearest thousand, except when otherwise indicated. The USD is the currency that represents the principal
economic environment in which the Company operates. c. Basis of measurement: The consolidated financial statements have been prepared
on a historical cost basis except for the following assets and liabilities: • Deferred and current tax assets and liabilities
• Provisions • Derivatives • Investment in shares For further information regarding the measurement of these assets
and liabilities see Note 3 regarding material accounting policies.
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Nexxen International
Ltd Annual Report 2023 45 STRATEGIC REPORT FINANCIAL GOVERNANCE STATEMENTS 2. BASIS OF PREPARATION continued d. Use of estimates
and judgments: The preparation of financial statements in conformity with IFRS requires management of the Group to make judgments,
estimates and assumptions that affect the application of accounting policies and the reported amounts of assets, liabilities,
income and expenses. Actual results may differ from these estimates. The preparation of accounting estimates used in the preparation
of the Group’s financial statements requires management of the Group to make assumptions regarding circumstances and events
that involve considerable uncertainty. Management of the Group prepares estimates on the basis of past experience, various facts,
external circumstances, and reasonable assumptions according to the pertinent circumstances of each estimate. Estimates and underlying
assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognized in the period in which the estimates
are revised and in any future periods affected. Information about assumptions made by the Group with respect to the future and
other reasons for uncertainty with respect to estimates that have a significant risk of resulting in a material adjustment to
carrying amounts of assets and liabilities in the next financial year are included in Note 6, on leases, with respect to determining
the lease term and determining the discount rate of a lease liability, in Note 7, on intangible assets, with respect to the accounting
of software development capitalization and impairment testing for goodwill, in Note 4, on Income Tax, with respect to uncertain
tax position, in Note 18 on investments in shares. e. Change in classification: The Company changed the classification of the
current maturities of the unfavorable contract from other payables to other long-term liabilities. Comparative amounts were reclassified
for consistency in the amount of USD 1,350 thousand. f. Determination of fair value: Preparation of the financial statements requires
the Group to determine the fair value of certain assets and liabilities. When determining the fair value of an asset or liability,
the Group uses observable market data as much as possible. There are three levels of fair value measurements in the fair value
hierarchy that are based on the data used in the measurement, as follows: • Level 1: quoted prices (unadjusted) in active
markets for identical assets or liabilities. • Level 2: inputs other than quoted prices included within Level 1 that are
observable, either directly or indirectly. • Level 3: inputs that are not based on observable market data (unobservable inputs).
Further information about the assumptions that were used to determine fair value is included in the following notes: • Note
17, on share-based compensation; • Note 18, on financial instruments; • Note 18, on investments in shares. 3. MATERIAL
ACCOUNTING POLICIES The accounting policies set out below have been applied consistently for all periods presented in these consolidated
financial statements and have been applied consistently by the Group. a. Financial instruments: 1. Non-derivative financial assets
The Company’s non-derivative financial assets, which are measured at amortized cost, mainly consist of accounts receivable
which are held to collect and deposits. Accounts receivable represent amounts owed by customers resulting from business transactions,
and they are recognized at their original invoiced values, adjusted for expected credit losses. Loss rates are based on historical
collection experience, while taking into consideration current customer information, collection history, and other relevant data
at each reporting period. The Company’s non-derivative financial assets, which are measured at fair value through profit
and loss, consist of investment in shares. Net gains and losses are recognized in profit or loss, finance income/expenses. 2.
Non-derivative financial liabilities The Company’s non-derivative financial liabilities mainly include trade and other payables,
and loan, all measured at amortized cost. 3. Treasury shares: When share capital recognized as equity is repurchased by the Group,
the amount of the consideration paid, which includes directly attributable costs, net of any tax effects, is recognized as a deduction
from equity. Repurchased shares are classified as a deduction in Share Premium.
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46 Nexxen International
Ltd Annual Report 2023 Notes to Consolidated Financial Statements as at 31 December 2023 continued FINANCIAL STATEMENTS 3. MATERIAL
ACCOUNTING POLICIES continued b. Fixed Assets: Fixed assets are measured at cost less accumulated depreciation. The cost of fixed
assets includes expenditure that is directly attributable to the acquisition of the asset. Depreciation is provided on all property
and equipment at rates calculated to write each asset down to its residual value (assumed to be nil), using the straight-line
method, over its expected useful life as follows: Years Computers and servers 3-5 Office furniture and equipment 3-17 Leasehold
improvements The shorter of the lease term and the useful life c. Intangible assets and liabilities: 1. Software development:
Expenditure on research activities, undertaken with the prospect of gaining new scientific or technical knowledge and understanding,
is recognized in profit or loss when incurred. Development activities involve a plan or design for the production of new or substantially
improved products and processes. Development expenditure is capitalized only if development costs can be measured reliably, the
product or process is technically and commercially feasible, future economic benefits are probable, and the Group has the intention
and sufficient resources to complete development and to use or sell the asset. The expenditure capitalized in respect of development
activities includes the cost of direct labor costs that are directly attributable to preparing the asset for its intended use.
Other development expenditure is recognized in profit or loss as incurred. The estimated useful lives of developed software are
three years. 2. Goodwill: The Group has identified its entire operation as a single cash generating unit (CGU). The Company conducts
an annual assessment of goodwill impairment on an annual basis, at year end. According to management assessment as of December
31, 2023, no impairment in respect to goodwill has been recorded. See note 7. 3. Amortization: Internally generated intangible
assets, such as software development costs, are not systematically amortized as long as they are not available for use, i.e.,
they are not yet on site or in working condition for their intended use. Goodwill is not systematically amortized as well but
is tested for impairment at least once a year. Amortization is recognized in the statements of operation and other comprehensive
income (loss) on a straight-line basis over the estimated useful lives of the intangible assets from the date they are available
for use. The estimated useful lives for the current and comparative periods are as follows: years Trademark Fully depreciated,
See note 7 Software (developed and acquired) 3 Customer relationships 3-6 Technology 3-5.25 4. Unfavorable contracts In the business
combinations of Nexxen Inc., the Company recognizes a liability for contracts when their terms are unfavorable compared to market
terms, to represent the off-market element at the acquisition date. As of December 31, 2023, the aggregated liability balance,
in the amount of USD 6.7 million, is entirely classified as long-term.
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Nexxen International
Ltd Annual Report 2023 47 STRATEGIC REPORT FINANCIAL GOVERNANCE STATEMENTS 3. MATERIAL ACCOUNTING POLICIES continued d. Share
Based Compensation: Compensation expense related to stock options, restricted stock units and performance stock units. The Group’s
employee stock purchase plan is measured and recognized in the consolidated financial statements based on the fair value of the
awards granted. The fair value of each option award is estimated on the grant date using the Black-Scholes option-pricing model.
Stock-based compensation expense related to stock options and restricted stock is recognized over the requisite service periods
of the awards. Determining the fair value of stock options awards requires judgment. The Company’s use of the Black-Scholes
option pricing model requires the input of subjective assumptions. The assumptions used in the Company’s option-pricing
model represent management’s best estimates. These estimates involve inherent uncertainties and the application of management’s
judgment. These assumptions and estimates are as follows: Risk-Free Interest Rate. The risk-free interest rate is based on the
yields of U.S. Treasury securities with maturities approximating the expected term of the awards. Expected Term. The expected
term of an award is calculated based on the vesting date and the expiration date of the award. Volatility. The Company determined
the price volatility based on daily price observations over a period equivalent to the expected term of the award. Dividend Yield.
The dividend yield assumption is based on the Company’s history and current expectations of dividend payouts. Fair Value
of Common Stock. The fair value of common stock is based on the closing price of the Company’s common stock on the grant
date. e. Employee benefits: 1. Post-employment benefits: The Group’s main post-employment benefit plan is under section
14 to the Severance Pay Law (“Section 14”) for the Israeli employees and under section 401K for US employees, which
is accounted for as a contribution plan. In addition, for certain employees, the Group has an additional immaterial plan that
is accounted for as a defined benefit plan. These plans are usually financed by deposits with insurance companies or with funds
managed by a trustee. 2. Short-term benefits: Short-term employee benefit obligations are measured on an undiscounted basis and
are expensed as the related service is provided or upon the actual absence of the employee when the benefit is not accumulated
(such as maternity leave). A liability is recognized for the amount expected to be paid under short-term cash bonus or profit-sharing
plans if the Group has a present legal or constructive obligation to pay this amount as a result of past service provided by the
employee and the obligation can be estimated reliably. The employee benefits are classified, for measurement purposes, as short-term
benefits or as other long-term benefits depending on when the Group expects the benefits to be wholly settled. f. Revenue recognition:
The Group generates revenue from transactions where it provides access to a platform for the purchase and sale of digital advertising
inventory. Its customers are both ad buyers, including brands and agencies, and digital publishers. The Group generates revenue
through platform fees that are tailored to fit the customer’s specific utilization of its solutions and include: (i) a percentage
of spend, (ii) flat fees and (iii) fixed costs per mile (“CPM”). CPM refers to a payment option in which customers
pay a price for every 1,000 impressions an advertisement receives. The Company maintains agreements with each publisher and buyer
in the form of written service agreements, which set out the terms of the relationship, including payment terms and access to
the Group’s platforms. Publishers provide digital advertising inventory to the Group’s platform in the form of advertising
requests, or ad request. When the Group receives ad requests from a publisher, it send bid requests to buyers, which enable buyers
to bid on sellers’ digital advertising inventory according to a predefined set of parameters (e.g., demographics, intent,
location, etc.). Winning bids create advertising, or paid impressions, for the publisher to present to the buyers. The Group generates
revenue from its Programmatic and Performance activities. Programmatic revenue is derived from the end-to-end platform of programmatic
advertising, which uses software and algorithms to match buyers and sellers of digital advertising in a technology-driven marketplace.
Performance revenue is derived from non-core activities, consisting of mobile-based activities that help brands reach their users.
The Company concluded that its Programmatic activity (i) does not have manual control over the process, (ii) the Company is not
primarily responsible for fulfillment, (iii) the Company has no inventory risk and (iv) the Company obtains only momentary a title
to the advertising space offered via the end-to-end platform.
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48 Nexxen International
Ltd Annual Report 2023 Notes to Consolidated Financial Statements as at 31 December 2023 continued FINANCIAL STATEMENTS 3. MATERIAL
ACCOUNTING POLICIES continued As a result, the Group reports its Programmatic business, tech stack, features, business models
and activity as an agent and therefore presented revenue from Programmatic on a net basis. For the Performance activity the Company
is the primary obligor to provide the services and, as such, revenue is presented on a gross basis. Management is focused on driving
growth with the Programmatic activity through the end-to-end platform, while the Performance activity is declining over time.
The Group estimates and records reduction to revenue for volume discounts based on expected volume during the incentive term.
The Group generally invoices buyers at the end of each month for the full purchase price of ad impressions monetized in that month.
Accounts receivables are recorded at the amount of gross billings for the amount it is responsible to collect and accounts payable
are recorded at the net amount payable to publishers. Accordingly, both accounts receivable and accounts payable appear large
in relation to revenue reported on a net basis. g. Classification of expenses Cost of revenue Cost of revenues (exclusive of depreciation
and amortization) primarily consists of hosting fees and data costs for both Programmatic and Performance activities, as well
as media costs for Performance activities that are directly attributable to revenue generated by the Company and generally based
on the revenue share arrangements with audience and content partners. See Note 13. Research and development Research and development
expenses consist primarily of compensation and related costs for personnel responsible for the research and development of new
and existing products and services. Where required, development expenditures are capitalized in accordance with the Company’s
standard internal capitalized development policy in accordance with IAS 38 (also see Note 3c(1)). All research costs are expensed
when incurred. Selling and marketing Selling and marketing expenses consist primarily of compensation and related costs for personnel
engaged in customer service, sales, and sales support functions, as well as advertising and promotional expenditures. General
and administrative General and administrative expenses consist primarily of compensation and related costs for personnel, and
include costs related to the Company’s facilities, finance, human resources, information technology, legal organizations
and fees for professional services. Professional services are principally comprised of external legal, and information technology
consulting and outsourcing services that are not directly related to other operational expenses. h. Financing income and expenses:
Generally, foreign currency differences from a monetary item receivable from or payable to a foreign operation, including foreign
operations that are subsidiaries, are recognized in profit or loss in the consolidated financial statements. Foreign exchange
gains and losses arising from a monetary item receivable from or payable to a foreign operation, the settlement of which is neither
planned nor likely in the foreseeable future, are considered to form part of a net investment in a foreign operation and are recognized
in other comprehensive income (loss), and are presented within equity as part of the currency translation reserve. Financing income
mainly comprises foreign currency gains and interest income. Financing expense primarily includes exchange rate differences, interest
and bank fees. Foreign currency gains and losses on financial assets and financial liabilities are reported on a net basis as
either financing income or financing expenses depending on whether foreign currency movements are in a net gain or net loss position.
i. Taxes on income The Company operates in multiple tax jurisdictions. Offset of deferred tax assets and liabilities Deferred
tax assets and liabilities are offset if there is a legally enforceable right to offset current tax liabilities and assets, and
they relate to income taxes levied by the same tax authority. Uncertain tax positions A provision for uncertain tax positions,
including additional tax and interest expenses, is recognized when it is more likely than not that the Group will have to use
its economic resources to pay the obligation.
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Nexxen International
Ltd Annual Report 2023 49 STRATEGIC REPORT FINANCIAL GOVERNANCE STATEMENTS 3. MATERIAL ACCOUNTING POLICIES continued j. Leases:
Leased assets and lease liabilities Contracts that award the Group control over the use of a leased asset for a period of time
in exchange for consideration, are accounted for as leases. Upon initial recognition, the Group recognizes a liability at the
present value of the balance of future lease payments (these payments do not include certain variable lease payments), and concurrently
recognizes a right-of-use asset at the same amount of the lease liability, adjusted for any prepaid or accrued lease payments
or provision for impairment, plus initial direct costs incurred in respect of the lease. Since the interest rate implicit in the
Group’s leases is not readily determinable, the incremental borrowing rate of the lessee is used. Subsequent to initial
recognition, the right-of-use asset is accounted for using the cost model and depreciated over the shorter of the lease term or
useful life of the asset. Variable lease payments Variable lease payments that depend on an index or a rate, are initially measured
using the index or rate existing at the commencement of the lease and are included in the measurement of the lease liability.
When the cash flows of future lease payments change as the result of a change in an index or a rate, the balance of the liability
is adjusted against the right-ofuse asset. Depreciation of right-of-use asset After lease commencement, a right-of-use asset is
measured on a cost basis less accumulated depreciation and accumulated impairment losses and is adjusted for re-measurements of
the lease liability. Depreciation is calculated on a straight-line basis over the useful life or contractual lease period, whichever
earlier, as follows: years Buildings 1-8.5 Data centers 1-5.5 k. Initial application of new standards, amendments to standards
and interpretations Amendment to IAS 1, Presentation of Financial Statements: “Disclosure of Accounting Policies. As a result
of applying the Amendment, the extent of the accounting policy disclosure provided in the financial statements for 2023 was reduced
and adjusted according to the Company’s specific circumstances. l. New standards, amendments to standards and interpretations
not yet adopted: Amendment to IAS 1, Presentation of Financial Statements: Classification of Liabilities as Current or Non-Current
and subsequent amendment: Non-Current Liabilities with Covenants. The Group is examining the effects of the Amendment on the financial
statements with no plans for early adoption. 4. INCOME TAX a. Details regarding the tax environment of the Israeli companies:
1. Corporate tax rate Taxable income of the Israeli companies is subject to the Israeli corporate tax at the rate of 23% in the
years 2023, 2022 and 2021. 2. Benefits under the Law for the Encouragement of Capital Investments (Investment Law) The Investment
Law provides tax benefits for Israeli companies meeting certain requirements and criteria. According to the Investment Law, a
flat rate tax applies to companies eligible for the “Preferred Enterprise” status. In order to be eligible for Preferred
Enterprise status, a company must meet minimum requirements to establish that it contributes to the country’s economic growth
and is a competitive factor for the gross domestic product. The Investment Law also added a new tax benefit tracks effective January
1, 2017 for a “preferred technological enterprise” and a “special preferred technological enterprise”
that awards reduced tax rates to a technological industrial enterprise for the purpose of encouraging activity relating to the
development of qualifying intangible assets. Preferred technological income that meets the conditions required in the law, will
be subject to a reduced corporate tax rate of 12%, and if the preferred technological enterprise is located in Development Area
A to a tax rate of 7.5%. The Investment Law also provides that no tax will apply to a dividend distributed out of preferred income
to a shareholder that is an Israeli resident company. A tax rate of 20% shall apply to a dividend distributed out of preferred
income and preferred technological income, to an individual shareholder or foreign resident, subject to double taxation prevention
treaties. On May 16, 2017, the Knesset Finance Committee approved Encouragement of Capital Investment Regulations (Preferred Technological
Income and Capital Gain of Technological Enterprise) – 2017 (hereinafter: “the Regulations”), which provides
rules for applying the “preferred technological enterprise” and “special preferred technological enterprise”
tax benefit tracks including the Nexus formula that provides the mechanism for allocating the technological income eligible for
the benefits. The Company obtained tax rulings confirming that the Company is eligible for the benefits under the Investment Law.
The tax rulings which were obtained applied for the years 2017-2021. The Company approached the Israeli Tax Authority on December
28, 2023, for the renewal of the tax ruling, regarding industrial enterprise and preferred technological enterprise, for the next
five years beginning in 2022. The tax ruling has not been accepted yet.
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50 Nexxen International
Ltd Annual Report 2023 Notes to Consolidated Financial Statements as at 31 December 2023 continued FINANCIAL STATEMENTS 4. INCOME
TAX continued b. Details regarding the tax environment of the non-Israeli companies: Non-Israeli subsidiaries are taxed according
to the tax laws in their countries of residence as reported in their statutory financial statement prepared under local accounting
regulations. c. Carry forward losses 1. Israel As of December 31, 2023, the net operating loss carryforwards, or NOLs are approximately
USD 20.4 million (2022: nil), and the Capital Loss to carry forward is approximately USD 3 million (2022: USD 0.1 million). The
losses carryforward do not expire under Israeli tax laws. 2. US The Group submit a US federal consolidated tax return. Provisions
enacted in the Tax Cuts and Jobs Act in 2017 related to the capitalization for tax purposes of research and experimental expenditures
(“R&E”) became effective on January 1, 2022. These new R&E provisions require us to capitalize certain research
and experimental expenditures and amortize them on the U.S. tax return over five or fifteen years, depending on where these costs
are conducted. The tax expense in the U.S. would increase as a result, unless these provisions are modified through legislative
processes in the future. The Company applies the new enacted act in the current year tax provision and the deferred tax asset.
The Group has several U.S. federal NOLs, following previous acquisitions: 1. Approximately USD 100.8 million, which will expire
starting 2038. As of December 31, 2023, the NOLs are approximately USD 56.7 million (2022: USD 65.7 million). 2. Approximately
USD 315 million which can be utilized over the next 52 years. As of December 31, 2023, the NOLs are approximately USD 307.2 million
(2022: USD 315 million). In addition, the Group has USD 0.5 million NOLs from previous years. In addition, the Capital Loss to
carry forward is approximately USD 27.7 million (2022: nil). Capital losses can be carried back for three years, and forward for
five years. Additionally, for tax years beginning after December 31, 2017, the Tax Cuts and Jobs Act limits the NOL deduction
to 80% of taxable income, repeals carryback of all NOLs arising in a tax year ending after 2017 and permits indefinite carryforwards
for all such NOLs. NOL’s arising in a tax year ending on or before 2017 can offset 100% of taxable income, are available
for carryback, and expire 20 years after they arise. It should be noted that the Coronavirus Aid, Relief and Economic Security
(“CARES”) Act suspended the 80% limitation for tax years 2018, 2019 and 2020and allowed for a 5-year carryback for
NOLs for tax years beginning after December 31, 2017, and before January 1, 2021. Pursuant to Section 382 of the Internal Revenue
Code, the acquired companies in the US underwent ownership changes for tax purposes (i.e., a change of more than 50% in stock
ownership involving 5% shareholders) on the acquisition date. As a result, the use of the Company’s total US NOL carryforwards
and tax credits generated prior to the ownership change is subject to annual use limitations under Section 382 and potentially
also under section 383 of the Code and comparable state income tax laws. 3. International As of December 31, 2023, the NOLs are
approximately USD 19.2 million (2022: USD 22.3 million). In addition, the Capital Loss to carry forward is approximately USD 0.9
million (2022: nil). The ability to carry losses forward (or backwards) depends on the specific jurisdiction which the Company
operates in.
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Nexxen International
Ltd Annual Report 2023 51 STRATEGIC REPORT FINANCIAL GOVERNANCE STATEMENTS 4. INCOME TAX continued d. Composition of income tax
benefit: 2023 $’000 2022 $’000 2021 $’000 Current tax expense (income) Current year (2,331) 14,378 7,220 Deferred
tax expense (income) Creation and reversal of temporary differences 4,834 5,310 (8,168) Tax expenses (benefit) 2,503 19,688 (948)
The following are the domestic and foreign components of the Group’s income taxes: 2023 $’000 2022 $’000 2021
$’000 Domestic (5,352) 5,766 4,995 US 8,712 11,578 (961) International (857) 2,344 (4,982) Tax expenses (benefit) 2,503
19,688 (948) e. Reconciliation between the theoretical tax on the pre-tax profit and the tax expense: 2023 $’000 2022 $’000
2021 $’000 Profit (Loss) before taxes on income (18,984) 42,425 72,275 Primary tax rate of the Company 23% 23% 23% Tax calculated
according to the Company’s primary tax rate (4,366) 9,758 16,623 Additional tax (tax saving) in respect of: Non-deductible
expenses net of tax exempt income* 3,329 11,642 (3,364) Difference between measurement basis of income/expenses for tax purposes
and measurement basis of income/expenses for financial reporting purposes – (654) – Effect of reduced tax rate on
preferred loss (income) 4,963 (4,625) (7,226) Utilization of tax losses from prior years for which deferred taxes were not created
(90) (2,539) (1,117) Effect on deferred taxes at a rate different from the primary tax rate 892 2,697 (3,329) Recognition of deferred
taxes for tax losses and benefits from previous years for which deferred taxes were not created in the past (4,852) (1,104) (4,586)
Recognition in temporary differences for which deferred taxes are not recognized 656 35 – Foreign tax rate differential
1,971 4,478 2,051 Tax (benefit) expenses 2,503 19,688 (948) Effective income tax rate (13%) 46% (1%) *including non-deductible
share-based compensation expenses.
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52 Nexxen International
Ltd Annual Report 2023 Notes to Consolidated Financial Statements as at 31 December 2023 continued FINANCIAL STATEMENTS 4. INCOME
TAX continued f. Deferred tax assets and liabilities: The tax effects of temporary differences that give rise to significant portions
of the deferred tax assets and liabilities are presented below: Intangible Assets and R&D expenses $’000 Employees Compensation
$’000 Carryforward Losses $’000 Accrued Expenses $’000 Doubtful Debt $’000 Other $’000 Total $’000
Balance of deferred tax asset (liability) as of January 1, 2022 (5,587) 12,074 9,835 2,939 3,099 676 23,036 Business combination
(11,313) 1,502 7,857 1,322 973 2,158 2,499 Changes recognized in profit or Loss 5,019 (2,927) (2,486) (2,590) (1,332) (1,249)
(5,565) Effect of change in tax rate – 14 237 – – 4 255 Changes recognized in equity 187 (3,417) (24) 22 11
(5) (3,226) Balance of deferred tax asset (liability) as of December 31, 2022 (11,694) 7,246 15,419 1,693 2,751 1,584 16,999 Discontinuance
of Consolidation 168 (57) – (532) (99) (1) (521) Changes recognized in profit or Loss (524) (3,837) 411 (960) 643 (597)
(4,864) Effect of change in tax rate – 30 – – – – 30 Changes recognized in equity (79) (34) 102
6 – – (5) Balance of deferred tax asset (liability) as of December 31, 2023 (12,129) 3,348 15,932 207 3,295 986 11,639
As of each reporting date, the Company’s management considers new evidence, both positive and negative, that could impact
management’s view with regard to future realization of deferred tax assets. g. Uncertain tax positions: As of December 31,
2023, and 2022, the Company has gross unrecognized tax benefits of approximately USD 6,383 thousand and USD 7,188 thousand, respectively.
The Company classifies liabilities for unrecognized tax benefits in current tax. h. Tax assessment: The Company considers tax
year 2018 and 2019 for Israel and the US federal group, respectively as closed for tax assessment.
![](https://www.sec.gov/Archives/edgar/data/1849396/000117891324002095/ex99-2img155.jpg)
Nexxen International
Ltd Annual Report 2023 53 STRATEGIC REPORT FINANCIAL GOVERNANCE STATEMENTS 5. FIXED ASSETS, NET Computers and Servers $’000
Office furniture and equipment $’000 Leasehold improvements $’000 Total $’000 Cost Balance as of January 1,
2022 8,839 445 770 10,054 Exchange rate differences 53 41 20 114 Additions* 8,375 5 5 8,385 Business combinations 22,256 351 647
23,254 Disposals (892) (28) (336) (1,256) Balance as of December 31, 2022 38,631 814 1,106 40,551 Exchange rate differences (7)
(13) (23) (43) Additions* 3,783 63 779 4,625 Disposals (482) (114) (94) (690) Balance as of December 31, 2023 41,925 750 1,768
44,443 Accumulated Depreciation Balance as of January 1, 2022 5,698 269 623 6,590 Exchange rate differences 57 41 18 116 Disposals
(890) (28) (336) (1,254) Additions 4,957 61 207 5,225 Balance as of December 31, 2022 9,822 343 512 10,677 Exchange rate differences
(9) (8) (1) (18) Disposals (482) (111) (93) (686) Additions 12,314 210 545 13,069 Balance as of December 31, 2023 21,645 434 963
23,042 Carrying amounts As of December 31, 2023 20,280 316 805 21,401 As of December 31, 2022 28,809 471 594 29,874 *As of December
31, 2023, USD 2,030 thousand additions have not been paid (2022: USD 1,900 thousand).
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54 Nexxen International
Ltd Annual Report 2023 Notes to Consolidated Financial Statements as at 31 December 2023 continued FINANCIAL STATEMENTS 6. LEASES
a. Leases in which the Group is the lessee: The Group applies IFRS 16, Leases. The Group has lease agreements with respect to
the following items: – Offices; – Data center; 1. Information regarding material lease agreements: a. The Group leases
Offices mainly in the United States of America (US), Israel, Canada and UK with contractual original lease periods ends between
the years 2024 and 2028 from several lessors. A lease liability in the amount of USD 21,381 thousand and USD 18,513 thousand as
of December 31, 2023, and December 31, 2022, respectively, and right-of-use asset in the amount of USD 11,027 thousand and USD
7,753 thousand as of December 31, 2023, and December 31, 2022, respectively have been recognized in the statement of financial
position in respect of leases of offices. b. The Group leases data center and related network infrastructure with contractual
original lease periods ends between the years 2024 and 2028. The Group did not assume renewals in determination of the lease term
unless the renewals are deemed to be reasonably assured at lease commencement. A lease liability in the amount of USD 15,680 thousand
and USD 10,825 thousand as of December 31, 2023, and December 31, 2022, respectively, and right-of-use asset in the amount of
USD 14,888 thousand and USD 10,520 thousand as of December 31, 2023, and December 31, 2022, respectively have been recognized
in the statement of financial position in respect of data centers. 2. Lease liability: Maturity analysis of the Group’s
lease liabilities: 2023 $’000 2022 $’000 Less than one year (0-1) 12,106 14,104 One to five years (1-5) 24,955 15,234
Total 37,061 29,338 Current maturities of lease liability 12,106 14,104 Long-term lease liability 24,955 15,234 3) Right-of-use
assets – Composition: Offices $’000 Data center $’000 Total $’000 Balance as of January 1, 2022 5,424
2,849 8,273 Business Combinations 6,103 10,633 16,736 Depreciation and amortization on right-of-use assets (4,533) (4,693) (9,226)
Additions 1,113 1,783 2,896 Lease modifications (74) – (74) Disposals (205) (52) (257) Exchange rate differences (75) –
(75) Balance as of December 31, 2022 7,753 10,520 18,273 Discontinuance of consolidation (64) – (64) Depreciation and amortization
on right-of-use assets (4,422) (10,579) (15,001) Net additions 7,871 14,969 22,840 Lease modifications 20 20 Disposals (119) (22)
(141) Exchange rate differences (12) – (12) Balance as of December 31, 2023 11,027 14,888 25,915
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Nexxen International
Ltd Annual Report 2023 55 STRATEGIC REPORT FINANCIAL GOVERNANCE STATEMENTS 6. LEASES continued 4. Amounts recognized in statement
of operation: 2023 $’000 2022 $’000 2021 $’000 Interest expenses on lease liability (1,885) (587) (570) Depreciation
and amortization of right-of-use assets (15,001) (9,226) (6,334) Gain (loss) recognized in profit or loss (119) (74) 7 Total (17,005)
(9,887) (6,897) 5. Amounts recognized in the statement of cash flows: 2023 $’000 2022 $’000 2021 $’000 Cash
outflow for leases (19,147) (12,605) (10,579) b. Leases in which the Group is a lessor: 1. Information regarding material lease
agreements: The Group subleases offices at the US for periods expiring in 2027. 2. Net investment in the lease: Presented hereunder
is the movement in the net investment in the lease: Offices 2023 $’000 Offices 2022 $’000 Balance as of January 1,
4,849 5,682 Sublease receipts (1,112) (1,306) Additions 2,248 310 Business combinations – 163 Balance as of December 31,
5,985 4,849 3. Maturity analysis of net investment in finance leases: 2023 $’000 2022 $’000 Less than one year (0-1)
1,772 1,084 One to five years (1-5) 4,213 3,765 Total net investment in the lease as of December 31, 5,985 4,849 4. Amounts recognized
in statement of operation: Offices 2023 $’000 Offices 2022 $’000 Offices 2021 $’000 Gain from finance subleases
– – 301 Financing income on the net investment in the lease 221 199 245 Total 221 199 546
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56 Nexxen International
Ltd Annual Report 2023 FINANCIAL STATEMENTS 7. INTANGIBLE ASSETS, NET Software $’000 Trademarks $’000 Customer relationships
$’000 Technology $’000 Goodwill $’000 Total $’000 Cost Balance as of January 1, 2022 24,687 36,367 50,108
53,192 156,712 321,066 Exchange rate differences (50) (1,262) (1,455) (548) (3,216) (6,531) Additions 8,750 – – –
– 8,750 Disposals (1,199) (19,570) (2,393) (4,851) – (28,013) Business combinations – 7,654 29,169 85,684 92,244
214,751 Balance as of December 31, 2022 32,188 23,189 75,429 133,477 245,740 510,023 Exchange rate differences 25 485 455 272
874 2,111 Additions 15,187 – – – – 15,187 Disposals (12) (23,674) (1,845) – (262) (25,793) Balance
as of December 31, 2023 47,388 – 74,039 133,749 246,352 501,528 Amortization Balance as of January 1, 2022 14,876 29,786
28,223 39,961 – 112,846 Exchange rate differences 2 (585) (914) (198) – (1,695) Additions 6,189 2,514 9,289 10,257
– 28,249 Disposals (659) (19,570) (2,393) (4,851) – (27,473) Balance as of December 31, 2022 20,408 12,145 34,205
45,169 – 111,927 Exchange rate differences 15 355 353 157 – 880 Additions 7,172 11,174 12,407 21,499 – 52,252
Disposals (12) (23,674) (1,845) – – (25,531) Balance as of December 31, 2023 27,583 – 45,120 66,825 –
139,528 Carrying amounts As of December 31, 2023 19,805 – 28,919 66,924 246,352 362,000 As of December 31, 2022 11,780 11,044
41,224 88,308 245,740 398,096 Capitalized development costs Development costs capitalized in the period amounted to USD 14,222
thousand (2022: USD 8,743 thousand) and were classified under software. Acceleration of Trademarks As detailed in Note 1, following
the decision to rebrand to Nexxen, the Group accelerated the amortization of its trademark assets, whose useful life ended on
December 31, 2023. Notes to Consolidated Financial Statements as at 31 December 2023 continued
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Nexxen International
Ltd Annual Report 2023 57 STRATEGIC REPORT FINANCIAL GOVERNANCE STATEMENTS 7. INTANGIBLE ASSETS, NET continued Impairment testing
for intangible assets The Company’s qualitative assessment during the years ended December 31, 2023, and December 31, 2022,
did not indicate that it is more likely than not that the recoverable amount of its intangible assets, and other long-lived assets
is less than their aggregate carrying amount. As of December 31, 2023, and as of December 31, 2022, the estimated recoverable
amount based on Company’s market value was lower than the carrying amount, and therefore the recoverable amount was estimated
based on value in use and was determined by discounting the future cash flows. The estimated value in use was higher than the
carrying amount, and therefore there was no need for impairment. Key assumptions used in the calculation of recoverable amounts
are as of December 31, 2023: Post-tax discount rate 14% (WACC) Terminal value growth rate 3% EBITDA growth rate 26%-42% Key assumptions
used in the calculation of recoverable amounts are as of December 31, 2022: Post-tax discount rate 15% (WACC) Terminal value growth
rate 3% EBITDA growth rate 21%-33% The cash flow projections include specific estimates for four years and a terminal value growth
rate thereafter. EBITDA growth rate is expressed as the annual growth rate in the initial five years of the plans used for impairment
testing and has been mainly based on past experience and management expectations. 8. TRADE AND OTHER RECEIVABLES 2023 $’000
2022 $’000 Trade receivables: Trade receivables 219,396 229,975 Allowance for expected credit losses (17,423) (10,138) Trade
receivables, net 201,973 219,837 Other receivables: Prepaid expenses 4,988 14,425 Loan to a third party 104 – Institutions
1,309 1,281 Pledged deposits 1,569 3,036 Acquisition consideration adjustment – 4,673 Other 323 – 8,293 23,415 9:
TRADE AND OTHER PAYABLES 2023 $’000 2022 $’000 Trade payables 183,296 212,690 Other payables: Contract liabilities
8,366 6,540 Wages, salaries and related expenses 13,319 24,539 Provision for vacation 1,922 1,869 Institutions 1,603 1,659 Interest
to pay 1,757 1,504 Pledged deposits 284 362 Others 1,847 7,882 29,098 44,355
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58 Nexxen International
Ltd Annual Report 2023 FINANCIAL STATEMENTS 10. CASH AND CASH EQUIVALENTS 2023 $’000 2022 $’000 Cash 105,997 173,568
Bank deposits 128,311 43,932 Cash and cash equivalents 234,308 217,500 The majority of cash and cash equivalents bear interest
of 3% to 5.5%. The Group’s exposure to credit, and currency risks are disclosed in Note 18 on financial instruments. 11.
LONG-TERM DEBT In September 2022, Nexxen Group US Holdings Inc. (formerly known as Unruly Group US Holding Inc.) entered into
a USD 90 million senior secured term loan facility (the Term Loan Facility) and a USD 90 million senior secured revolving credit
facility (the Revolving Credit Facility and, together with the Term Loan Facility, collectively, the Credit Facilities). The Company
used the net proceeds of the Term Loan Facility and USD 10 million of net proceeds of the Revolving Credit Facility to finance
the acquisition of Nexxen Inc. The loan period is 3 years from the date it was obtained. The Company is obligated to pay a commitment
fee on the undrawn amounts of the Revolving Credit Facility at an annual rate, determined by the Company’s total net leverage
ratio. The Credit Facilities require compliance with various financial and non-financial covenants, including affirmative and
negative covenants. The financial covenants require that the total net leverage ratio not exceed 3x and the interest coverage
ratio not be less than 4x, in each case measured as of the end of each fiscal quarter. As of December 31, 2023, the Company is
in compliance with all related covenants. During the twelve-month periods ended December 31, 2023, the Company recognized interest
expenses in the amounts of USD 6,854 thousand. Total interest paid during the twelve months ended December 31, 2023, was USD 6,601
thousand. 12. REVENUES 2023 $’000 2022 $’000 2021 $’000 Programmatic 299,005 274,355 266,616 Performance 32,988
60,895 75,329 331,993 335,250 341,945 For the year ended December 31, 2023, no individual buyer accounted for more than 10% of
revenue. For the year ended December 31, 2022 one buyer represents 10.7% of revenue. For the year ended December 31, 2021 one
buyer represents 13.6% of revenue. 13. COST OF REVENUE 2023 $’000 2022 $’000 2021 $’000 Programmatic 44,385
35,110 31,572 Performance 17,885 25,635 40,079 Cost of Revenue 62,270 60,745 71,651 14: GENERAL AND ADMINISTRATIVE EXPENSES 2023
$’000 2022 $’000 2021 $’000 Wages, salaries and related expenses 21,835 18,933 17,755 Share base payments 12,121
31,878 32,250 Rent and office maintenance 2,432 319 549 Professional expenses 7,686 12,233 7,136 Doubtful debts 4,337 (3,167)
4,958 Acquisition costs 171 6,012 253 Other expenses 2,469 1,797 598 51,051 68,005 63,499 Notes to Consolidated Financial Statements
as at 31 December 2023 continued
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15.
SHAREHOLDERS’ EQUITY Issued and paid-in share capital: Ordinary Shares 2023 Number of shares 2022 Number of shares Balance
as of January 1 144,477,962 154,501,629 Own shares held by the Group (2,729,597) (16,906,795) Share based compensation 4,413,644
6,883,128 Issued and paid-in share capital as of December 31 146,162,009 144,477,962 Authorized share capital 500,000,000 500,000,000
Rights attached to share: The holders of ordinary shares are entitled to receive dividends as declared from time to time and are
entitled to one vote per share at general meetings of the Company. All shares rank equally with regard to the Company’s
residual assets. Own shares acquisition: During 2022, the Board of Directors approved the share buyback programs of up to USD
95 million of its ordinary shares out of which the Group repurchased 16,906,795 ordinary shares in aggregate amount of USD 86.3
million and during 2023, the Company repurchased 2,505,851 ordinary shares in aggregate amount of USD 8.7 million which was financed
by existing cash resources. On December 18, 2023, the Company has received approval from the Israeli court for its motion to buy
back an additional USD 20 million of its ordinary shares from time-to-time through June 18, 2024. In 2023, the Company repurchased
221,506 ordinary shares in aggregate amount of USD 0.6 million which was financed by existing cash resources. In addition, in
July 2023, the Group repurchased 2,240 restricted ordinary shares that did not vest from one of its employees for no consideration.
16. EARNINGS (LOSS) PER SHARE Basic earnings (loss) per share The calculation of basic earnings (loss) per share as for the year
ending December 31, 2023, 2022 and 2021 was based on the profit (loss) for the year divided by a weighted average number of ordinary
shares outstanding, calculated as follows: Profit (loss) for the year: 2023 $’000 2022 $’000 2021 $’000 Profit
(loss) for the year (21,487) 22,737 73,223 Weighted average number of ordinary shares: 2023 Shares of NIS 0.01 par value 2022
Shares of NIS 0.01 par value 2021 Shares of NIS 0.01 par value Weighted average number of ordinary shares used to calculate basic
earnings (loss) per share as at December 31 143,589,188 149,937,339 144,493,989 Basic earnings (loss) per share (in USD) (0.15)
0.15 0.51 Diluted earnings (loss) per share The calculation of diluted earnings (loss) per share as of December 31, 2023, 2022
and 2021 was based on profit (loss) for the year divided by a weighted average number of shares outstanding after adjustment for
the effects of all dilutive potential ordinary shares, calculated as follows: Nexxen International Ltd Annual Report 2023 59
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FINANCIAL
STATEMENTS Notes to Consolidated Financial Statements as at 31 December 2023 continued 16. EARNINGS (LOSS) PER SHARE continued
Weighted average number of ordinary shares (diluted): 2023 Shares of NIS 0.01 par value 2022 Shares of NIS 0.01 par value 2021
Shares of NIS 0.01 par value Weighted average number of ordinary shares used to calculate basic earnings per share 143,589,188
149,937,339 144,493,989 Effect of share options on issue – 3,120,304 8,212,903 Weighted average number of ordinary shares
used to calculate diluted earnings per share 143,589,188 153,057,643 152,706,892 Diluted earnings per share (in USD) (0.15) 0.15
0.48 At December 31, 2023 6,749 thousand share options, RSUs and PSUs (in 2022 and 2021: 8,851 thousand and 3,061 thousand, respectively)
were excluded from the diluted weighted average number of ordinary shares calculation as their effect would have been anti-dilutive.
17. SHARE-BASED COMPENSATION ARRANGEMENTS a. Share-based compensation plan: The terms and conditions related to the grants of
the share options programs are as follows: • All the share options that were granted are non-marketable. • All options
are to be settled by physical delivery of ordinary shares or ADSs. • Vesting conditions are based on a service period of
between 0.5-4 years. b. Stock Options: The number of share options is as follows: Number of options Weighted average exercise
price 2023 ‘000 2022 ‘000 2023 (USD) 2022 (USD) Outstanding of 1 January 4,772 6,026 7.31 6.54 Forfeited during the
year (721) (828) 6.33 7.61 Exercised during the year (346) (1,046) 0.67 1.96 Granted during the year – 620 – 7.22
Outstanding of December 31 3,705 4,772 7.91 7.31 Exercisable of December 31 2,086 1,814 The total expense recognized in the year
ended December 31, 2023, with respect to the options granted to employees, amounted to approximately USD 2,429 thousand (2022:
USD 5,867 thousand). c. Restricted Share Units: During 2023 and 2022, the Group granted 352,800 and 777,448 Restricted Share Units
(RSUs) to its executive officers and employees, respectively. The number of restricted share units is as follows: Number of RSU’s
Weighted-Average Grant Date Fair Value 2023 ‘000 2022 ‘000 2023 2022 Outstanding at 1 January 5,288 8,146 8.277 8.606
Forfeited during the year (254) (261) 6.275 9.948 Exercised during the year (3,295) (3,374) 8.208 8.091 Granted during the year
353 777 2.160 4.596 Outstanding at December 31 2,092 5,288 7.601 8.277 The total expense recognized in the year ended December
31, 2023, with respect to the RSUs granted to employees, amounted to approximately USD 13,356 thousand (2022: USD 31,923 thousand).
60 Nexxen International Ltd Annual Report 2023
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17.
SHARE-BASED COMPENSATION ARRANGEMENTS continued d. Performance Stock Units: During 2023 and 2022, the Group granted 143,700 and
168,048 Performance Stock Units (PSUs) to its executive officers, respectively. The number of performance stock units is as follows:
Number of PSU’s Weighted-Average Grant Date Fair Value 2023 ‘000 2022 ‘000 2023 2022 Outstanding at January
1 1,992 4,486 8.937 6.796 Forfeited during the year (254) (80) 6.328 9.952 Exercised during the year (930) (2,582) 9.320 4.891
Granted during the year 144 168 2.160 4.453 Outstanding at December 31 952 1,992 8.238 8.937 The vesting of the PSUs is subject
to continuous employment and compliance with the performance criteria determined by the Company’s Remuneration Committee
and the Company’s Board of Directors. The total expense recognized in the year ended December 31, 2023, with respect to
the PSUs granted to employees, amounted to approximately USD 3,384 thousand (2022: USD 12,715 thousand). e. Expense recognized
in the statement of operation and other comprehensive income is as follows: 2023 $’000 2022 $’000 2021 $’000
Selling and marketing 3,740 10,594 7,094 Research and development 3,308 8,034 3,474 General and administrative 12,121 31,877 32,250
19,169 50,505 42,818 18. FINANCIAL INSTRUMENTS a. Overview: The Group has exposure to the following risks from its use of financial
instruments: • Credit risk • Liquidity risk • Market risk This note presents quantitative and qualitative information
about the Group’s exposure to each of the above risks, and the Group’s objectives, policies and processes for measuring
and managing risk. In order to manage these risks and as described hereunder, the Group executes transactions in derivative financial
instruments. Presented hereunder is the composition of the derivatives: 2023 $‘000 2022 $‘000 Derivatives presented
under current assets Forward exchange contracts used for hedging 123 – Derivatives presented under current liability Forward
exchange contracts used for hedging – (209) Total 123 (209) Nexxen International Ltd Annual Report 2023 61
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FINANCIAL
STATEMENTS Notes to Consolidated Financial Statements as at 31 December 2023 continued 18. FINANCIAL INSTRUMENTS continued b.
Risk management framework: The Board of Directors has overall responsibility for the establishment and oversight of the Group’s
risk management framework. The Board is responsible for developing and monitoring the Group’s risk management policies.
The Group’s risk management policies are established to identify and analyze the risks faced by the Group, to set appropriate
risk limits and controls, and to monitor risks and adherence to limits. Risk management policies and systems are reviewed regularly
to reflect changes in market conditions and the Group’s activities. The Group, through its training and management of standards
and procedures, aims to develop a disciplined and constructive control environment in which all employees understand their roles
and obligations. The Group Audit Committee oversees how management monitors compliance with the Group’s risk management
policies and procedures and reviews the adequacy of the risk management framework in relation to the risks faced by the Group.
The Group Audit Committee is assisted in its oversight role by Internal Audit. Internal Audit undertakes both regular and ad hoc
reviews of risk management controls and procedures, the results of which are reported to the Audit Committee. c. Credit risk:
The Group’s credit risk is arise from the risk of financial loss if a customer or counterparty to a financial instrument
fails to meet its contractual obligations. The carrying amount of financial assets represents the maximum credit exposure. The
maximum exposure to credit risk at the reporting date was as follows: 2023 $’000 2022 $’000 Cash and cash equivalents
234,308 217,500 Trade receivables, net (a) 201,973 219,837 Other receivables 1,996 7,709 Long term deposit 525 406 438,802 445,452
(a) At December 31, 2023, the Group included provision for doubtful debts in the amount of USD 17,423 thousand (December 31, 2022:
USD 10,138 thousand) in respect of collective impairment provision and specific debtors that their collectability is in doubt.
As of December 31, 2023, two buyers accounted for 16.2% and 16.5% of trade receivables. As of December 31, 2022, two buyers accounted
for 15.7% and 14.1% of trade receivables. Allowance for Doubtful debts 2023 $’000 2022 $’000 Balance at January 1
10,138 13,870 Allowance for doubtful debts expenses (income) 7,622 (3,167) Discontinuance of consolidation (275) – Write-off
(22) (542) Exchange rate difference (40) (23) Balance at December 31 17,423 10,138 d. Liquidity risk: Liquidity risk is the risk
that the Group will encounter difficulty in meeting the obligations associated with its financial liabilities that are settled
by delivering cash or another financial asset. The Group’s approach to managing liquidity is to ensure, as far as possible,
that it has sufficient liquidity to meet its liabilities when due, under both normal and stressed conditions, without incurring
unacceptable losses or risking damage to the Group’s reputation. As of December 31, 2023, and December 31, 2022, the Group’s
contractual obligation of financial liability is in respect of leases, trade, and other payables in the amount of USD thousand
and USD 332,782 thousand and USD 361,820 thousands, respectively. The contractual maturity of the financial liability that is
less than one year is in the amount of USD 201,955 thousand and USD 239,240 thousand for December 31, 2023, and December 31, 2022,
respectively. e. Market risk: Market risk is the risk that changes in market prices, such as foreign exchange rates, the CPI,
interest rates and equity prices will affect the Group’s income or the value of its holdings of financial instruments. The
objective of market risk management is to manage and control market risk exposures within acceptable parameters, while optimizing
the return. 62 Nexxen International Ltd Annual Report 2023
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18.
FINANCIAL INSTRUMENTS continued At December 31, 2023, USD 14,027 thousand are held in AUD, USD 5,653 thousand are held in NIS,
USD 4,571 thousand are held in EUR, USD 2,981 thousand are held in SGD, USD 2,692 thousand are held in CAD, USD 2,665 thousand
are held in GBP, USD 2,040 thousand are held in JPY, USD 1,493 thousand are held in other currencies and the remainder held in
USD. As of December 31, 2023, no individual vendor accounted for more than 10% of trade payables. As of December 31, 2022, one
vendor accounted for 12.7% of trade payables. f. Sensitivity analysis: A change as of December 31 in the exchange rates of the
following currencies against the USD, as indicated below, would have affected the measurement of financial instruments denominated
in a foreign currency and would have increased (decreased) profit or loss and equity by the amounts shown below (after tax). This
analysis is based on foreign currency exchange rate that the Group considered to be reasonably possible at the end of the reporting
period. The analysis assumes that all other variables, in particular interest rates, remain constant and ignores any impact of
forecasted sales and purchases. 2023 2022 GBP/USD +10% $’000 -10% $’000 +10% $’000 -10% $’000 Profit /
(Loss) (1,832) 1,832 (2,893) 2,893 Increase / (Decrease) in Shareholders’ Equity (9) 9 (94) 94 2023 2022 NIS/USD +10% $’000
-10% $’000 +10% $’000 -10% $’000 Profit / (Loss) 353 (353) (139) 139 Increase / (Decrease) in Shareholders’
Equity 384 (384) (107) 107 2023 2022 SGD/USD +10% $’000 -10% $’000 +10% $’000 -10% $’000 Profit / (Loss)
(2,348) 2,348 (2,615) 2,615 Increase / (Decrease) in Shareholders’ Equity (6) 6 (320) 320 Linkage and foreign currency risks
Currency risk The Group is not exposed to currency risk on sales and purchases that are denominated in a currency other than the
respective functional currency of the Group, the USD. The principal currencies in which these transactions are denominated are
GBP, NIS, EURO, CAD, SGD, MXN, AUD and JPY. At any point in time, the Group aims to match the amounts of its assets and liabilities
in the same currency in order to hedge the exposure to changes in currency. In respect of other monetary assets and liabilities
denominated in foreign currencies, the Group ensures that its net exposure is kept to an acceptable level by buying or selling
foreign currencies at spot rates when necessary to address short-term imbalances. Interest rate risk The Group has a cash flow
risk due to its variable-rate debt instruments. A 5% increase in the interest rate would result in a loss and a decrease in shareholders’
equity of USD 3.7 million. However, it will be offset by a gain and shareholders’ increase of USD 2.8 million due to available
cash and cash equivalents. As a result, there would be a net effect of USD 0.9 million. g. Level 3 financial instruments carried
at fair value On August 18, 2022, the Company completed a USD 25 million investment in VIDAA, a smart TV operating system, streaming
platform, and subsidiary of Hisense. Through its investment, the Company received a 2.5% equity stake in VIDAA, a multi-year extension
to exclusively share of VIDAA’s global ACR data for targeting and measurement across the Company’s platform, and ad
monetization exclusivity on VIDAA media in the U.S., U.K., Canada, and Australia The investment in shares is a financial asset
measured at fair value through profit or loss under level 3. 2023 Level 3 $’000 2022 Level 3 $’000 Financial assets
measured at fair value through profit or loss: Investment in shares 25,000 25,000 Nexxen International Ltd Annual Report 2023
63
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FINANCIAL
STATEMENTS Notes to Consolidated Financial Statements as at 31 December 2023 continued 18. FINANCIAL INSTRUMENTS continued Valuation
processes used by the Company The fair value of non-marketable shares is determined by external valuer on an annual basis. The
principal unobservable inputs are as follows: • The estimated royalties from App share and remote-control button which is
based on the expected increase in market share. • The average operating profit margin which is based on the stage of research
and development. • The discount rate, which is based on the risk-free rate for 10-year debentures issued by the government
in the relevant market, adjusted for a risk premium to reflect both the risk of investing in equities, the systematic risk of
company and entity specific risk to the extent not already reflected in the cash flows. h. Financial instruments measured at fair
value for disclosure purposes only. The fair value of the long term debt is estimated by discounting future principal and interest
cash flows by the market interest rate of 7.064% on the date of measurement which is USD 97,291 thousands. 19: RELATED PARTIES
Compensation and benefits to key management personnel Executive officers also participate in the Company’s share option
programs. For further information see Note 17 regarding share-based compensation. Compensation and benefits to key management
personnel (including directors) that are employed by the Company and its subsidiaries: 2023 $’000 2022 $’000 2021
$’000 Share-based compensation 11,527 30,914 31,283 Other compensation and benefits 3,988 4,433 6,752 Total 15,515 35,347
38,035 20. SUBSIDIARIES Details in respect of subsidiaries: Presented hereunder is a list of the Group’s subsidiary: Principal
location of the Company’s activity The Group’s ownership interest in the subsidiary for the year ended December 31
Name of company 2023 2022 Taptica Inc USA 100% 100% Tremor Video Inc USA 100% 100% Adinnovation Inc Japan – 100% Taptica
UK UK 100% 100% YuMe Inc* USA 100% 100% Perk.com Canada Inc Canada 100% 100% R1Demand LLC* USA 100% 100% Nexxen Group LLC (f/k/a
Unruly Group LLC) USA 100% 100% Nexxen Group US Holdings Inc. (f/k/a Unruly Group US Holding Inc)* USA 100% 100% Nexxen Holdings
Ltd (f/k/a Unruly Holdings Limited)* UK 100% 100% Nexxen Group Ltd (f/k/a Unruly Group Limited)* UK 100% 100% Unruly Media GmbH
Germany 100% 100% Unruly Media Pte Ltd* Singapore 100% 100% Nexxen Pty Ltd (f/k/a Unruly Media Pty Ltd) Australia 100% 100% Unruly
Media KK Japan 100% 100% Unmedia Video Distribution Sdn Bhd Malaysia 100% 100% SpearAd GmbH Germany 100% 100% Nexxen Inc. (f/k/a
Amobee Inc)* USA 100% 100% Amobee EMEA Limited UK 100% 100% Amobee International Inc USA 100% 100% Amobee Ltd Israel 100% 100%
Amobee Asia Pte Ltd* Singapore 100% 100% Amobee ANZ Pty Ltd Australia 100% 100% *Under these companies, there are seventeen (17)
wholly owned subsidiaries that are inactive and in liquidation process. 64 Nexxen International Ltd Annual Report 2023
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21.
OPERATING SEGMENTS The Group has a single reportable segment as a provider of marketing services. Geographical information In
presenting information on the basis of geographical segments, segment revenue is based on the geographical location of consumers.
2023 $’000 2022 $’000 2021 $’000 America 311,780 303,106 304,686 APAC 6,537 20,031 20,931 EMEA 13,676 12,113
16,328 Total 331,993 335,250 341,945 22. CONTINGENT LIABILITY On May 18, 2021, the Company filed a complaint against Alphonso,
Inc. (“Alphonso”) in the Supreme Court of the State of New York, County of New York (the “Court”), asserting
claims for breach of contract, tortious interference with business relations, intentional interference with contractual relations,
unjust enrichment, and conversion. The lawsuit arose out of Alphonso’s breach of a Strategic Partnership Agreement and an
Advance Payment Obligation and Security Agreement (the “Security Agreement”) with us, and LG Electronics Inc.’s
(“LG”) tortious interference with the Company’s contractual relationships and business relations and related
misconduct. On February 23, 2024, the Company entered into a settlement and release agreement with Alphonso and LG and the parties
have agreed to dismiss the Alphonso Lawsuit. In March 2023, Alphonso remitted USD 11.3 million to the Company, comprising USD
7.25 million related to a secured advance repayment and USD 4.1 million related to additional interest, penalties and fees including
reimbursement of certain legal fees. On June 21, 2022, Alphonso filed a complaint against the Company in the United States District
Court for the Northern District of California, asserting claims for misappropriation of trade secrets under federal and state
law. On October 11, 2023, Alphonso dismissed its claims in the lawsuit with prejudice. On October 25, 2023, the Company filed
a bill of costs to recover allowable legal costs from Alphonso. The Company’s request for legal costs is pending with the
Court. Nexxen International Ltd Annual Report 2023 65
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Directors,
Secretary and Advisers DIRECTORS: Christopher John Stibbs Non-Executive Chairperson Ofer Israel Druker Chief Executive Officer
and Executive Director Yaniv Carmi Chief Operating Officer and Executive Director Sagi Niri Chief Financial Officer and Executive
Director Joanna Rachael Parnell Non-Executive Director Neil Garth Jones Non-Executive Director Rebekah Mary Brooks Non-Executive
Director Norman Thomas Johnston Non-Executive Director Lisa Klinger Non-Executive Director Daniel Kerstein Non-Executive Director
Rhys Summerton Non-Executive Director COMPANY SECRETARY Yaniv Carmi ADVISERS: Registered Office: 82 Yigal Alon St, 13th Floor,
Tel Aviv, 6789124, Israel Nominated Adviser and Joint Broker Cavendish Capital Markets Ltd 1 Bartholomew Close, London, UK EC1A
7BL Legal Advisers – English Law Pillsbury Winthrop Shaw Pittman LLP Tower 42, Level 21, 25 Old Broad Street, London, EC2N
1HQ Legal Advisers – Israeli Law Naschitz, Brandes, Amir & Co Advocates 5 Tuval Street Tel Aviv 6789717, Israel Reporting
Accountants and Auditors KPMG Somekh Chaikin KPMG Millennium Tower 17 Ha’arba’a Street P.O.B. 609 Tel Aviv 61006,
Israel KPMG UK 15 Canada Square, Canary Wharf, London E14 5GL US Investor Relations KCSA 420 Fifth Ave, Third Floor, New York,
NY 10018 UK Financial PR and Investor Relations Vigo Consulting 78-79 New Bond Street, London W1S 1RZ Registrar Link Market Services
(Guernsey) Limited Mont Crevelt House, Bulwer Avenue, St Sampson, Guernsey GY2 4LH Depositary Link Market Trustees Limited The
Registry 34 Beckenham Road, Beckenham, Kent BR3 4TU 66 Nexxen International Ltd Annual Report 2023
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Nexxen
International Ltd. 82 Yigal Alon st. (13th floor) Tel-Aviv Israel 6789124 www.nexxen.com
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