The directors present the strategic report for the year ended 31 December 2023.
We aim to present a fair review of the development and performance of our business during the year and its position at the year end.
Our business environment is fast paced and dynamic which inherently brings challenges. Risks are reviewed by the directors and actions taken to mitigate them.
The company’s activities expose it to a number of financial risks including credit risk, cash flow risk and liquidity risk. The principal risks and uncertainties revolve around the economic outlook of the UK. Interest rates are rising, and consumers disposable income is being squeezed this may lead to a reduction in demand. At present this is not the case as demand continues above previous levels.
Interest rate risk
The company currently has no borrowing facility and therefore no direct exposure to interest rates.
Credit risk
The company's principal financial assets are bank balances and cash, and other receivables. The company’s revenue is mainly credit based and therefore considers there to be a credit risk to its trade receivables. Credit checks are performed on all customers.
The credit risk on liquid funds is limited because the counterparties are banks with high credit-ratings assigned by credit-rating agencies. The company has no significant concentration of credit risk.
Liquidity risk
The company actively forecasts, monitors and manages working capital levels and cash on hand to effectively run the business. The company has access to borrowing facilities if required.
Price risk
The company is exposed to price risk. The company manages is exposure to price risk due by continually reviewing its procurement strategy.
The principal activity of the company continued to be advertising campaigns. Our programmatic business with DSPs (Demand Side Platforms) represents 17% of our total revenue in 2023, TAM (Teads Ad Manager) 78% and Managed Services business represents 5%. We have also focused our business on Mobile campaigns. Mobile delivery represented 85% of our total turnover. Our vision and strategies for the future include aiming for a continued growth in the Mobile and TAM Self-Serve business.
The company considers that its key financial performance indicators are those that communicate the financial performance and strength of the company as a whole, the turnover, gross margin and EBIDTA. In the year to 31 December 2023, turnover was £ 58.1 million, compared to £64.1 million in the year ended 2022, a decrease of 10%. This decline is explained by weaker advertising demand in 2023 in comparison to 2022, which is impacted by the uncertain and volatile macroeconomic situation in the UK market and worldwide which we expect to continue to impact 2023 numbers.
The operational Gross Margin increased by 2 points from 2022 (57%) to 2023 (59%), this change was mainly led by better management of margin and minimum guarantees.
Looking ahead to 2024, we project a modest recovery in turnover, reflecting a cautious optimism in the face of persistent macroeconomic challenges. Our focus will be on expanding Programmatic and TAM activities, which we expect to contribute significantly to our revenue mix. While Managed Services revenue is anticipated to decline, our strategic emphasis on efficiency and cost management should help maintain our operational gross margin at around 60%.
Despite ongoing market volatility, we remain confident in our ability to navigate these conditions effectively. Our strategy includes targeted investments in high-growth areas, continued enhancement of our operational efficiencies, and maintaining a flexible approach to market changes. This will position us to capitalize on any opportunities that arise and support our long-term growth objectives.
In performing their duties under S172, the directors of the Company have had regard to the matters set out in S172 as follows:
Teads’ mission is to foster a sustainable advertising and media ecosystem by funding quality journalism and respectfully connecting brands to consumers. Through direct and exclusive integrations with premium publishers, both in the UK and around the world, Teads delivers digital advertising at scale within the heart of editorial content. This guarantees brand safe, fraud free and totally viewable ad experiences that drive business results for advertisers. Teads’ demand-side, sell-side and creative technology delivers effective and engaging advertising experiences for consumers, guaranteed outcomes for brands, and ultimately powers publishers with better monetization solutions to fund quality journalism.
As the business is built around editorial content, data practices are naturally privacy focused and not based around 3rd party cookies. Teads supports the move to greater regulation around data privacy for consumers.
Business results are measured against revenue and EBITDA targets, on a quarterly and annual basis. Since Teads started trading in the UK over 10 years ago, the business has delivered consistent results and outperformed industry benchmarks in terms of overall advertising industry, as well as digital and video markets more specifically.
Teads is a technology business of entrepreneurs, with employees encouraged to innovate and create at a fast pace to solve market challenges and drive excellence for advertisers, media agencies and publishers.
Teads is a board member of the IAB for both the UK and Europe, and is a founding member of the IAB UK’s Gold Standard, currently certified at latest edition - Gold Standard 2.0. Teads has been independently audited and certified to JICWEBS’ DTSG (Digital Trading Standards Group) and TAG Certified Against Fraud standards. Teads is also a founding member of the WFA’s Global Alliance for Responsible Media.
Our people
Teads is a company of entrepreneurs. We ensure all employees share our core values of:
We find a better & faster way
We operate with openness
We aim to do the right thing
We play to win
We encourage all employees to work collaboratively and communicate effectively in order to deliver our shared business goals.
Clients
Teads works with the largest and most well known brands in the UK, alongside the main marketing holding groups in the world (WPP, Omnicom, Dentsu, Publicis, IPG, Havas and various domestic independent agencies) to deliver outstanding media results for advertisers.
Having clients at the heart of Teads’ business means that innovation and progress is made in delivering solutions and over-indexing against industry benchmarks. Teads’ Performance Product, introduced in 2018, guarantees quality business results and visitors to site. Meaning advertisers are no longer paying for accidental clicks or landing pages that don’t load.
Teads’ creative arm, Teads Studio, delivers best-in-class formats that engage rather than enrage consumers when reading editorial content.
Suppliers
Teads’ suppliers are the most recognised publisher brands in the UK and around the world, including The Guardian, Future Publishing, Telegraph, Mediaforce, Global, Condé Nast, Sky and The BBC (internationally). By driving incremental revenue to their sites and supporting best-in-market ad formats, Teads is directly creating a more sustainable future for quality journalism.
In 2021 we signed a partnership with Newsguard whose third party review by trained journalists ensures we are only working with trusted, premium, news sources. This provides assurances for our clients but also ensures we are not supporting sources of misinformation or disinformation.
This is a pillar as part of our wider calling for brands and their agencies to Advertise Responsibly. This is where we call on media buyers to consider not just how their ad-spend will impact their marketing plans, but society as a whole. This includes blocking words or sites that could be prejudiced against certain sections of society, supporting platforms or suppliers who drive misinformation and hate speech or actively supporting diverse and purpose-focused publishers.
Business impact
Teads understands the wider implications of advertising on socio-economic issues including Diversity, Equity and Inclusion, the Environment and the recent impact of COVID-19 on society at large. Teads has recently implemented a global Teads Together Council to work on global Diversity, Equity and Inclusion initiatives, and this has been replicated at a local level in the UK with the Culture Committee driving awareness and action for causes that are most important to the team.
We are conscious of the needs of the environment and currently looking at offsetting our carbon footprint by planting trees for every new starter. We are also undergoing market-leading research into our carbon footprint at a global level - taking into account emissions within Scope 1, Scope 2 and Scope 3 and therefore what measures can be taken to counteract those emissions. Initial findings have shown that ad selection emissions were 99% lower with Teads, than with typical programmatic buying.
We are conscious of the needs of the environment and currently looking at offsetting our carbon footprint by planting trees for every new starter. We are also undergoing market-leading research into our carbon footprint at a global level - taking into account emissions within Scope 1, Scope 2 and Scope 3 and therefore what measures can be taken to counteract those emissions. Initial findings have shown that ad selection emissions were 99% lower with Teads, than with typical programmatic buying.
Going concern
The accounts have been prepared on a going concern basis which is appropriate as the company has enough resources to operate for at least 12 months from the approval of the accounts.
On behalf of the board
The directors present their annual report and financial statements for the year ended 31 December 2023.
The results for the year are set out on page 11.
No ordinary dividends were paid. The directors do not recommend payment of a final dividend.
The directors who held office during the year and up to the date of signature of the financial statements were as follows:
In accordance with the company's articles, a resolution proposing that Shaw Gibbs (Audit) Limited be reappointed as auditor of the company will be put at a General Meeting.
We have followed the 2019 HM Government Environmental Reporting Guidelines. We have also used the GHG Reporting Protocol – Corporate Standard and have used the 2020 UK Government’s Conversion Factors for Company Reporting.
The chosen intensity measurement ratio is total gross emissions in metric tonnes CO2e per employee, the recommended ratio for the sector.
The company has fully embraced video conferencing technology for both internal and external meetings, to help reduce the volume of travel required to the business. All office equipment is maintained to ensure optimum efficiency during use, and new technologies are investigated to determine potential application within the business. All end-of-life equipment is replaced with new energy efficient equipment as appropriate.
Basis for opinion
Conclusions relating to going concern
In auditing the financial statements, we have concluded that the directors' use of the going concern basis of accounting in the preparation of the financial statements is appropriate.
Based on the work we have performed, we have not identified any material uncertainties relating to events or conditions that, individually or collectively, may cast significant doubt on the company's ability to continue as a going concern for a period of at least twelve months from when the financial statements are authorised for issue.
Our responsibilities and the responsibilities of the directors with respect to going concern are described in the relevant sections of this report.
Other information
Opinions on other matters prescribed by the Companies Act 2006
In our opinion, based on the work undertaken in the course of our audit:
the information given in the strategic report and the directors' report for the financial year for which the financial statements are prepared is consistent with the financial statements; and
the strategic report and the directors' report have been prepared in accordance with applicable legal requirements.
As explained more fully in the directors' responsibilities statement, the directors are responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view, and for such internal control as the directors determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error. In preparing the financial statements, the directors are responsible for assessing the company's ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the directors either intend to liquidate the company or to cease operations, or have no realistic alternative but to do so.
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinion. Reasonable assurance is a high level of assurance but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.
Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line with our responsibilities, outlined above, to detect material misstatements in respect of irregularities, including fraud. The extent to which our procedures are capable of detecting irregularities, including fraud, is detailed below.
At the planning stage of the audit we gain an understanding of the laws and regulations which apply to the company and how the management seek to comply with those laws and regulations. This helps us to plan appropriate risk assessments.
During the audit we focus on relevant risk areas and review the compliance with the laws and regulations by making relevant enquiries and undertaking corroboration, for example by reviewing Board Minutes and other documentation.
We assess the risk of material misstatement in the financial statements including as a result of fraud and undertake procedures including:
Reviewing the controls set in place by management;
Making enquiries of management as to whether they consider fraud or other irregularity may have taken place, or where such opportunity might exist;
Challenging management assumptions with regard to accounting estimates; and
Identifying and testing journal entries, particularly those which appear to be unusual by size or nature.
Because of the inherent limitations of an audit, there is a risk that we will not detect all irregularities, including those leading to a material misstatement in the financial statements or non-compliance with regulation. This risk increases the more that compliance with a law or regulation is removed from the events and transactions reflected in the financial statements, as we will be less likely to become aware of instances of non-compliance. The risk is also greater regarding irregularities occurring due to fraud rather than error, as fraud involves intentional concealment, forgery, collusion, omission or misrepresentation.
A further description of our responsibilities is available on the Financial Reporting Council’s website at: https://www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditor's report.
Use of our report
This report is made solely to the company's members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act 2006. Our audit work has been undertaken so that we might state to the company's members those matters we are required to state to them in an auditor's report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the company and the company's members as a body, for our audit work, for this report, or for the opinions we have formed.
There are no recognised gains and losses other than those passing through the statement of comprehensive income.
The statement of comprehensive income has been prepared on the basis that all operations are continuing operations.
Teads Limited is a private company limited by shares incorporated in England and Wales. The registered office is 2nd Floor, 201 Great Portland Street, Marylebone, London, W1W 5AB.
The financial statements are prepared in sterling, which is the functional currency of the company. Monetary amounts in these financial statements are rounded to the nearest £.
This company is a qualifying entity for the purposes of FRS 102, being a member of a group where the parent of that group prepares publicly available consolidated financial statements, including this company, which are intended to give a true and fair view of the assets, liabilities, financial position and profit or loss of the group. The company has therefore taken advantage of exemptions from the following disclosure requirements:
Section 7 ‘Statement of Cash Flows’: Presentation of a statement of cash flow and related notes and disclosures;
Section 11 ‘Basic Financial Instruments’ and Section 12 ‘Other Financial Instrument Issues: Interest income/expense and net gains/losses for financial instruments not measured at fair value; basis of determining fair values; details of collateral, loan defaults or breaches, details of hedges, hedging fair value changes recognised in profit or loss and in other comprehensive income;
Section 33 ‘Related Party Disclosures’: Compensation for key management personnel.
The financial statements of the company are consolidated in the financial statements of Next Alt S.à r.l.. The address from which consolidated financial statements could be obtained is: 5 rue Eugène Ruppert, L-2453 Luxembourg.
The gain or loss arising on the disposal of an asset is determined as the difference between the sale proceeds and the carrying value of the asset, and is credited or charged to profit or loss.
Basic financial assets, which include trade and other #tErm6, amounts owed by group companies and cash and bank balances, are initially measured at transaction price including transaction costs. Financial assets classified as receivable within one year are not amortised.
Financial assets are derecognised only when the contractual rights to the cash flows from the asset expire or are settled, or when the company transfers the financial asset and substantially all the risks and rewards of ownership to another entity, or if some significant risks and rewards of ownership are retained but control of the asset has transferred to another party that is able to sell the asset in its entirety to an unrelated third party.
Financial liabilities and equity instruments are classified according to the substance of the contractual arrangements entered into. An equity instrument is any contract that evidences a residual interest in the assets of the company after deducting all of its liabilities.
Basic financial liabilities, including trade and other creditors, amounts owed to group companies that are classified as debt, are initially recognised at transaction price unless the arrangement constitutes a financing transaction, where the debt instrument is measured at the present value of the future payments discounted at a market rate of interest. Financial liabilities classified as payable within one year are not amortised.
Trade creditors are obligations to pay for goods or services that have been acquired in the ordinary course of business from suppliers. Amounts payable are classified as current liabilities.
Financial liabilities are derecognised when the company’s contractual obligations expire or are discharged or cancelled.
Equity instruments issued by the company are recorded at the proceeds received, net of transaction costs. Dividends payable on equity instruments are recognised as liabilities once they are no longer at the discretion of the company.
In the application of the company’s accounting policies, the directors are required to make judgements, estimates and assumptions about the carrying amount of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience and other factors that are considered to be relevant. Actual results may differ from these estimates.
The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised where the revision affects only that period, or in the period of the revision and future periods where the revision affects both current and future periods.
The estimates and assumptions which have a significant risk of causing a material adjustment to the carrying amount of assets and liabilities are as follows.
The bad debt provision is reviewed at each accounting date and updated in line with the group policy. The provision is calculated by ascertaining the unpaid balances for the three immediate past years. These balances are then used to work out average unpaid percentages which are then applied to the receivable balance at the year end to arrive at expected credit loss (bad debt provision) in line with IFRS.
Accruals - rebates
Included in accruals are rebates to customers. These are calculated based on the applicable percentages that have been agreed with the relevant customers which are applied to the turnover generated by each customer.
Accruals - staff commission
Staff commission is awarded to staff based on meeting different targets, dependent on the department that they work. Commission for those who work in the sales department is based on the level of turnover achieved in a particular period, whereas commission for those in the operations department is based on gross profit margin achieved in a particular period.
Prepayments and accrued income
The company processes customer invoices one month in arrears and so there is always a month's worth of accrued income based on the revenue generated on the platform. As a result, the accrued income as at the year end represents services provided in December which are then invoiced in January.
An analysis of the company's turnover is as follows:
The average monthly number of persons (including directors) employed by the company during the year was:
Their aggregate remuneration comprised:
The actual charge for the year can be reconciled to the expected charge for the year based on the profit or loss and the standard rate of tax as follows:
In the budget on 3 March 2021, the UK Government announced an increase in the main UK Corporation tax rate from 19% to 25% with effect from 1 April 2023. The change in rate was substantivey enacted on 24 May 2021.
The depreciation charge for the year is included within administrative expenses in the Statement of Comprehensive Income.
Included in amounts owed by group undertakings are loans to the parent company which incur interest monthly based on SOFR rate (Secured Overnight Financing Rate published by the Federal Reserve Bank of New York), all other amounts are non-interest bearing.
All balances are repayable on demand.
HSBC Factoring (France) hold a fixed charge over the assets of the company.
Amounts owed to group undertakings are repayable on demand and non-interest bearing.
Deferred tax assets and liabilities are offset where the company has a legally enforceable right to do so. The following is the analysis of the deferred tax balances (after offset) for financial reporting purposes:
The company operates a defined contribution pension scheme for all qualifying employees. The assets of the scheme are held separately from those of the company in an independently administered fund.
The company's ordinary shares, which carry no right to fixed income, have full rights in the company with regard to voting, dividend and capital distribution.
Share capital has been exchanged at €1.24 and €1.36.
At the reporting end date the company had outstanding commitments for future minimum lease payments under non-cancellable operating leases, which fall due as follows:
In accordance with FRS102 paragraph 33.1A, the exemption has been taken from disclosing transactions and balances with group companies.
There were no other related party transactions and balances that require disclosure.