Taptica: Ading the Right Users

1.Industry BackdropTaptica International Plc is a small cap stock listed on the Alternative Investment Market on the London Stock Exchange. The company’s business is focused on the global programmatic mobile advertising market. It utilises advertising technology to carry out high-performance marketing campaigns for leading global brands.

Company: Taptica International Plc

Industry: Advertising & Marketing

Stock Ticker: TAP LN Equity

Stock Exchange: London Stock Exchange, AIM

Shares Float: 63.4m

Corporate Registration: Israel

Headquarters: Tel Aviv Jaffa, Israel

The global AdTech industry developed over the last 10 years in response to the explosion in the consumption of digital media on mobile devices. Large global ad agencies repositioned their businesses to focus on reaching consumers through digital channels but they did not look to become first movers with Adtech technology. Historically, media Ad spend was focused on creating awareness through the presentation of new brand information or ideas to a broad audience across specific networks, programs or geographies. In the digital media landscape content is mostly consumed on-the-go and attention spans have shortened considerably. This new paradigm created the need for ad agencies to precisely target and reach specific consumer profiles. Rapid adoption of digital media sources and a growing range of media devices, had the effect of fragmenting audiences across a long tail of websites and content publishers. New approach’s and new technologies were needed to reach digital consumers.

Nimble third-party technology players were quickest to seize the opportunity and develop advanced capabilities in the high-speed programmatic trading of ad inventory and ad impressions. These capabilities centred around using advanced machine learning and artificial intelligence applications to match publisher website space (ad inventory) with ad impressions (internet users who are likely to engage with the ad). The rapid explosion in digital media consumption (apps & mobile internet) provided endless amounts of relevant data and information for marketers, such as consumer preferences and spending habits. This created the ability for advertisers to reach consumers in a highly effective way through targeted advertising. The smaller AdTech operators were fastest to develop advanced proprietary solutions. Today the Ad agencies are satisfied to focus on their core competencies in ad creation and brand management. The trading technologies that are currently in use in the programmatic ad space are very advanced and some of the main players are using technologies that have been in development for more than 10 years. Some of the pioneers of the space include Turn Inc (it’s DMP technology was recently bought by Amobee) and The Trade Desk (NYSE IPO 2016).

While the major Ad agencies control media buying power in the programmatic space, they have found it necessary to pivot their businesses to take account of major strategic initiatives from Google, Facebook and Apple in recent years. Despite the apparent poor strategic positioning of the smaller AdTech players a closer look at their technology offerings and their positioning in the wider digital media landscape shows that several of these companies have strong fundamental value relative to their current market values.

Programmatic trading gives advertisers access to real-time price discovery as technologies like data management platforms (DMP’s), Benefits for

advertisers and publishers

The rapid migration of consumers to mobile created the need for AdTech to navigate the new internet architecture

The programmatic ad industry was born…. (also called the digital marketplace of ideas)

Large tech players are now some of the biggest buyers and spenders in the advertising industry

Ad trading platforms and exchanges show the value of impressions in a marketplace setting. On the other side of the value exchange, publishers can maximise the revenue yield of their online properties. The presence of specialist third parties to undertake programmatic trading allows advertisers to focus on their core competency of creating and managing ad campaigns and allows publishers to focus on content creation. The fact that large social media companies like Facebook, Twitter and Uber avail of the use of third party DMP’s shows their importance in the wider industry ecosystem. While these companies have built-up massive user database’s and gathered huge amount of relevant data they still need to connect with internet architecture that is external to their own platforms. This enables them to understand up to date user activity, such as online purchasing or browsing activities.

Real time bidding (RTB) is the term given to the instantaneous trading and matching of ad impressions. The buyers of impressions can be Ad Agencies on their own platforms or can be specialist third party programmatic traders working on behalf of agencies or directly with brands. Both the brands and the traders will have data on the desired user profiles that they want to target. Complex algorithms are used to calculate the ‘value’ of a user impression to the brand in real time and bid prices are determined accordingly. Similar to high speed trading on stock exchanges, bids and asks are matched off until the cost of the impression exceeds the buyer’s value determination. The buyer of the impression obtains the right to ‘serve’ the ad to the individual user. This process takes place in milliseconds and often happens in the period between when a user clicks on a link displayed in a search engine and when the page loads and displays on the user platform.

Programmatic offerings allow a significant degree of ad campaign customisation. Very high performance offerings such as Taptica’s are becoming a recurring sales channel for large global brands due to their ability to precisely target users and engage them in a desired action or activity. The fact that Taptica’s users are not locked into expensive long-term contracts but are instead able to avail of 24 to 48 hours of cost outflows where the ROI of the outflow activity can be exactly measured and quantified is highly attractive for brands in comparison to marketing spend on other channels. Programmatic ads can be tailored in real time to account for known interests or behaviours, seasonal holidays, birthdays, upcoming events, ect. It is also possible to segment audiences with a high degree of certainty to identify high-value customer segments and target them with specific messages. Campaigns can also be tweaked in real time based on feedback from the programmatic technologies. This ability has allowed marketers to shift their focus from discrete channel and audience segments towards a customer-centric view across all mobile/internet channels.

The AdTech industry grew out of the need for publishers, advertisers and brands to connect across internet architecture. The Adtech industry facilitates a value exchange to take place between these parties. Media publishers have space or ad inventory on their website properties and they seek to maximise the monetisation potential of their websites which (also called increasing inventory yield), on the other hand brands and their advertising agents want to engage with consumers in the places where they are consuming media or engaging

Real time bidding…the stock market for online Ads

Mad men in the middle

in on-line commerce. This dynamic gave rise to real time bidding (similar to high-frequency trading on stock exchanges). The matching of bids or orders ensures an efficient marketplace for programmatic advertising. Brands want to spend less while publishers want brands to spend more. A core dynamic of the AdTech industry is the fact the brands, creators, sellers and publishers of ad media are large global players while the sellers they want to acquire will be situated in a local context. Also, local representative organisations of global brands need to connect with local audiences. AdTech fills this void created by the dispersion of ad media across the internet. As a result, the market has evolved into a plethora of agencies, networks and representatives to optimise campaigns for publishers and brands. Highly advanced algorithmic software lies at the heart of these activities and this allows advertisers to rapidly evaluate and bid on individual impressions.

The flow diagram above shows a typical ad placement process for a mobile Ad on Taptica’s platforms.

Supply side platforms (SSP’s) are used by Internet publishers (website owners) to manage ad space on their website properties. SSP’s are layers of algorithmic software platforms that can be used to automate and optimise the sale of online media space. The SSP’s also act as an interface with ad networks and exchanges which in turn interface with demand side platform’s (DSP’s) on the advertiser side. Large publishers such as Facebook often organise exclusive private exchanges where high-value premium inventory can be traded.

Demand side platform’s (DSP’s) process buy orders on Ad impressions (essentially the right to deliver an Ad to a web page or in-app). They enable the buyers of digital advertising space to engage multiple Ad and data exchanges through a single interface. This facilitates brands to buy Ad space across a range of different platforms. DSP’s use algorithmic software to decide which impressions to bid for based on pre-determined user characteristics.

Operators of DSP’s and SSP’s can collect large amounts of relevant user information. To organise, process, analyse and effectively utilise this information collective layers of advanced algorithmic and machine learning software programmes called data management platforms were developed. Most DMP’s rely on the collection of cookie ID’s as a means of identifying and tagging users. Taptica is one of a small group of operators who have more advanced technology that can gather and synthesise data-points in such a way that user profiles can be built and maintained (using perishable device ID’s that can be periodically recreated) without using any personally identifiable information. Taptica’s DMP creates device ID’s by automatically tagging every device that it comes in contact with. The mobile phone operator controls the device ID’s and regenerates them every few months. After tagging Taptica’s DMP gathers together Non-PPI data points to build a device ID profile. In addition, the increasing prevalence of ad-blocking software does not have an impact of Taptica’s business or the Ad inventory that it accesses. Taptica’s business is focused on in-app ads and not on targeting users on the mobile web. The average conversion rate on mobile web browsers is lower than with in-app ads as mobile web traffic is generally considered to be lower quality traffic. In contrast when a user downloads an App they are much more likely to be an engaged user. Although Taptica was caught up in the stock market sell off that accompanied the Facebook controversy, the company does not collect user information that could be used to personally identify a user.

Similar to the investment industry, programmatic players can engage in sell side or buy side

Data management platforms…the crown jewel...Changes to Apples browser policy should lead to an increase in

Some industry sources maintain that upwards of 40% of all online traffic is not genuine, ie,

2.Taptica’s BusinessTaptica runs short high-volume user acquisition or awareness focused advertising campaigns for globally recognised fortune 500 brands. The company offers its technology services along with dedicated account managers. These account managers can work directly with client’s or their advertising agency partners on focused campaigns that can run in length for one to several days. Taptica is able to differentiate itself from its peers by operating a performance-based model. The strength of its offerings allows it to take on the risk of delivering the result that the client requests. The more efficient that Taptica’s technology is at acquiring the right user, the higher Taptica’s gross margin for that client account will be. In the programmatic industry this is called reducing the cost per mille (cost per ‘000 impressions). Taptica receives a set payment from its client based on a pre-agreed metric; cost per user acquired or cost per install. To achieve a 40% gross margin, Taptica needs to spend no more than $60 on bidding and buying ad inventory for every $100 per acquired user allotted by the agency or brand. The company’s platform has been so effective in the space in recent years that it has been able to pitch itself to clients as a highly effective high-performance sales channel through which clients can quickly reach and engage their customers. This has opened up the platform to lucrative recurring sales contracts. Taptica is a classic example of the ability of a company to scale quickly across every region in the world with minimal capital investment. The fact that companies in the programmatic space don’t carry inventory on their balance sheets frees up a greater degree of cashflow from operations for reinvesting into growing the business around the world. Although the technology capabilities can be incrementally improved over time, capital investment needs are low and growth economics is highly favourable. As such these business models are highly scalable across geographies.

Platforms like Taptica’s offer the most effective means for brands to run large local or regional ad or sales campaigns. Taptica’s ability to precisely target potential customers gives it the ability to achieve very high ad-ROI for its clients. A hypothetical example of a client contract might be an engagement with McDonalds where the company could use existing customer data to target and engage existing customers who already eat at its restaurants in specific regions. The data could show that the customer buys McDonalds once a week usually on a Friday. Taptica will be able to target and inform the customer about a new delivery service available through McDonald’s new restaurant app. Another example might be a large regional bank who wants to target a specific demographic about a new service offering and engage potential clients in taking a desired action, ie, opening a new saving account. Another example could be Uber seeking to acquire new drivers or gain extra passengers within a new region or country. Taptica has also been growing its business in recent years taking

Ability to effectively target and engage users has positioned Taptica as a sales channel

The transition of traditional brick and mortar business models to the app economy is contributing to the growth of the

Most platforms in the market were designed for generic audience campaigns while Taptica’s was

indigenous South Korean, Chinese, and Japanese brands and companies to global audiences through global publishing networks.

Having the ability to deliver a brand globally to highly specific users allows Taptica to access more local advertisers. One of the keys to Taptica’s success so far is its ability to deliver its services at scale, ie, access very large amounts of premium ad inventory across an array of global exchanges and integrate the data that it gathers into a very large and well-designed DMP. This DMP houses very detailed anonymous user profiles of more than 220m users that have been gathered from Ad campaigns over several years.

Taptica’s customer base represents a strong range of global brands from a wide array of industries. The fact that large, global, highly visible consumer brands such as Disney, Starbucks and McDonald’s rely on the services of Taptica’s platform shows both the need that these companies have to find effective ways of engaging their customers and the value proposition that Taptica is able to offer them. Also, the fact that leading global technology companies (Uber, Twitter, Facebook and Just Eat) who have large engaged user-bases avail of Taptica’s services is also highly notable. In many cases these companies would be looking to engage or re-engage their existing customers.

Taptica has been moving quickly in recent years to scale its business around the world in order to serve clients in their local markets. The company now has a presence in 15 countries and is able to provide dedicated client services in the key North American, UK, Japan/South Korea and Greater China markets. The company has also focused its business on in-app mobile advertising which now comprises 90% of its business.

Important operational stats;

50,000 supply and publishing partners worldwide. Ability to handle 15bn ad requests per day. A database of 220m user profiles, with more than 100 data items on

each gathered from more than 10,000 successful campaigns. Ad platform capable of processing more than 22bn impression

requests per day. Over 600 brands and App developers used Taptica’s services in

2017.

Taptica has quickly scaled its business around the world in recent years and bought several businesses which have allowed it to increase its value-add. In 2015 it bought AreaOne a Facebook approved marketing partner and a leading social media integration company (Facebook currently has 212 approved partners). Taptica was very active on the acquisition front in 2016 buying two companies. It acquired a 57% stake in Japanese mobile advertising platform Adinnovation for $5.7m. This company will allow Taptica to tap into the very large Japanese mobile advertising market, which is characterised by cultural idiosyncrasies. Taptica can now offer a combined solution of its mobile user database on the mobile side and the media side on Facebook as many clients buy media on both sides. Taptica also acquired a video technology platform from Tremor Video (the remaining assets stayed with that company which rebranded as Telaria Inc). Tremor Video was one of the first sell side trading platforms to automate the trading of premium video content for publishers. This asset will give Taptica exposure to working with large tier one advertising agencies (leading video volume buyers) on the East Coast of the United States who want to use high quality video technology in conjunction with Taptica’s existing mobile platform. Taptica has been able to bring the profitability levels of the combined business in line with Taptica’s pre-transaction margin profile.

Highly scalable and cash generative at the same time…

3.TechnologyAs mentioned above, digital advertising has reached a state where the pipeline between publishers on the supply side and advertisers on the demand site necessitates a plethora of technology partners to help

publishers and advertisers deal with and optimise real-time decision making on a very large scale. Among the various service providers, DMP’s occupy a prominent role as the hub where data relevant to reaching the audience over different channels is integrated, structured and analysed. Although DMP’s are common across the industry, it is a non-trivial task to build an advanced DMP.

A DMP is a dashboard or central hub that allows users to seamlessly and rapidly collect, integrate, manage, and activate very large volumes of data. Three core activities best describe how a DMP works.

1. Data integration: A DMP is configured to clean and integrate data from multiple platforms or channels with the same schema or layout. This integration process may have to happen at the finest granular level by linking the same audience or users across different platforms. Through this functionality, a deeper and more insightful audience analysis is enabled.

2. Analytics: A DMP allows the user to fully report and analyse campaigns across media channels. Activities that can be undertaken include, aggregation, user behaviour correlation analysis, multi-touch attribution (attributing credit to the channels which contributed to a final action of a user), tag management, and analytical modelling. The DMP software can be delivered through cloud-based SaaS and the end users can potentially plug in their own analytical intelligence.

3. ActivationThe DMP is configured to both ingest data and send data out in real-time. This allows for the generation of real time actionable insights. A DMP can be configured to perform modelling and scoring in real time by integrating online and offline data and sending the data to other platforms to optimize the downstream media and enhance the customer experience. Popular third-party data providers include Oracle, Acxiom, Google, Experian and Neustar.

Several core capabilities underline the potential of a DMP;

At the heart of the DMP is the ability to continuously append event-level data to consumer profiles across more than 4.3 billion unique browser and device IDs.

Determine with a relatively high degree of certainty that a user is or might be in the market for purchasing a good or service.

“AI is a huge set of technologies, each with a specific, fine-tuned purpose.”

Obtain a granular view of user behaviour (digital content engagements) from a single source, and apply very comprehensive customer profiles, with all related data in the one system.

Forecast the number of users, quantity of impressions and daily spend volumes against the audiences and targeting criteria that is selected for customer campaigns. Ensure that campaigns are accurately forecasted for delivery.

Incrementally tailor campaign budget in real time based on analysis undertaken.

Create algorithmic look alike modelling recommendations to expand audience reach across geographies or target specific geographic areas.

Undertake recency targeting where users who have recently browsed a site or viewed a product or service can be targeted. Undertake velocity retargeting where users who have increased or decreased their site visitation by a certain percentage indicating their intent to purchase or their velocity to drive conversion.

Understand recent purchase and browsing activity on leading high traffic transactional e-commerce sites.

Demographic and geographic data can be integrated from leading social media sites.

Higher targeting accuracy at a lower cost of reaching the user.

RTB buying and selling of ads as the campaign in in progress.

Leverage the technology platform and spread campaigns quickly around the world.

Highly deployable across any industry that sells goods or services to consumers and that have the potential to engage their customers through digital channels.

4.Management TeamTaptica’s executive team is a mixture of industry experts and entrepreneurs and most are major shareholders in the stock. The company CEO Hagai Tal is one of the largest shareholders. Some of the other executives are former founders of companies that Taptica merged with after listing on the LSE as Marimedia in 2014. Marimedia listed with a pre-agreed option to purchase Taptica Ltd. Post listing

“Remember: the promise of mobile is to make people’s lives easier, not to occupy their

management were quick to reposition the company to focus on mobile brand advertising.

5.The Market for Programmatic Advertising

The transition of consumers to digital media and the mobile app economy around the world is a global economic mega trend that is showing no signs of slowing down. Markets that are aligned with this have very strong long-term growth potential.

Overall total global digital advertising spend amounted to $205.4bn in 2016 and is expected to grow to $339.9bn by 2020, a CAGR of 13.4%.

Overall digital Ad spend will increase by c.65% by 2020

According to Magna Global, c. $19 billion was transacted in the programmatic advertising spot market via real-time marketplaces in 2016 and this is forecasted to grow to $52.4 billion by 2020. eMarketer estimate that programmatic digital video ad spending will represent 74% of total U.S. digital video ad spending by the end of 2018.

As shown in figure 7 above, most of the advertising spend by mobile App advertisers is related to mobile games and content media.

As figure 8 shows above, North America accounted for 46% of global Ad spend by mobile App advertisers in 2017. Ad spend by Chinese App advertisers is increasingly rapidly although it is not expected to outpace North American spend during the forecast period.

The increase in global Ad spend depicted in the charts above will be driven by the growth in the consumption of digital media on mobile devices. This increase will drive an explosion in mobile data traffic. Overall mobile data traffic is expected to grow to 49 exabytes per month by 2021, a sevenfold increase over 2016 or a CAGR of 47% (Figure 9 below).

The future is mobile and video

By the end of 2017, China’s mobile traffic will reach 1.9 exabyte’s per

month, the United States will reach 1.6 exabyte’s per month.

Smartphone dominance is set to increase further, from 81% of global mobile traffic to 86%.

C. 78% of the world’s mobile data traffic will be video by 2021.

Mobile device connection speeds are set to increase across all regions.

4G connections speeds will be more than sufficient to sustain the underlying growth in mobile data traffic over this period until 5G connections appear on the scene in 2020. Global mobile 4G connections will grow from 2.1 billion in 2016 to 6.1 billion by 2021 at a CAGR of 24%.

6.EconomicsThe most important drivers of business economics in the programmatic space are technology capability and access to inventory (on both buy and sell sides) at scale. The ability to precisely target users and engage them has a direct impact on margin profile. Accounting recognition policies differ among the Adtech peer group but it is important to note (see section 17 below) that only two of the listed peers have been consistently profitable. While some appear to have

high gross profit margins, the high cost of successful user engagement drives negative operating and net profit margins for most of the group. Taptica and The Trade Desk (NASDAQ listing 2016) are the only companies in the group that have been consistently profitable.

When the large number of small privately held Adtech and marketing specialists are considered along with Taptica’s listed peer group the market appears to be very crowded. However, when viewed in relation to the size and growth profile of the overall global programmatic Ad market (expected to reach $69bn by 2022) and the fact that unprofitable players are being driven from the market, industry economics should be favourable for small operators with superior technology.

It is important to note that the programmatic mobile app brand advertising market is less crowded than the mobile app performance Ad market which is heavily served with generic audience focused platforms. Taptica’s business is positioned towards in-app brand advertising. Widely followed industry rankings are not particularly relevant to this business focus. These ranking tend to take account of the global App download market and metrics from the various App stores along with data that the different players elect to disclose. Taptica’s has been growing its business by engaging existing customers and acquiring new ones in specific segments or regions. Companies that are developing Apps and seeking to make it into the top 20 App store rankings can afford to rely on generic audience focused solutions. In addition, the large tech companies (Google/Apple/Facebook) provide their own optimisation services for these developers. 

 

A hypothetical example of the economics of a typical mobile brand Ad campaign for Taptica might be as follows; a London-based private car company used by business travellers has recently launched an app and wants to acquire and engage very specific users. Here the contract value will be relatively large but the ROI of the campaign will be very important for the company. In this example it wouldn’t make business sense for this company to work with a number of programmatic companies and the budget will be focused solely on the operator who can demonstrate the ability to deliver the highest ROI in this specific context. This customer mandates a budget of $3 per customer engaged. Taptica would look to activate and engage customers at the lowest $ cost per user. This cost directly impact’s Taptica’s gross profit margin for this campaign. Other larger contracts would be contracted out to a number of different providers at the same time and the providers would compete to deliver the desired result at the lowest cost. This is where superior technology capability is able to

The Adtech ocean is big enough for more than a handful of

exert itself and less capable players are ineffective and have to absorb profit margin compression in order to engage users and win business.

The technology capability among the providers Is related to both the sophistication of the DMP technology and the ability to access quality inventory at scale. Having access to inventory at scale along with a large database of users allows companies like Taptica to bid for premium inventory that is often only offered in private exchanges by large website publishers like Facebook. These spaces would likely be bigger and more noticeable.

In addition, clients focus more on value-add in the mobile programmatic brand Ad space. Clients will be looking for experienced account managers who can handle bespoke contracts and give the client brand insights and other value-add services. Performance is harder to quantify and each client will have their own estimation of their return on campaign investment. Overall the space has become intensely performance focused and the ability to provide insight into how every ad dollar is spent is prioritised.

The current undervaluation of AdTech stocks is likely related to the lack of understanding among the investment community of how to differentiate and accurately value the various players. Negative perceptions in the mainstream media towards AdTech in general is likely also a factor. Apple CEO Tim Cook recently described the use of user data by the technology industry as the “weaponisation of the data industrial complex”. Complaints about annoying, irrelevant and poorly placed ads in web browsers and mobile apps are commonplace in the media. From the perspective of the Adtech players mentioned in this report and the programmatic sector in general it is important to note two relevant factors.

1) The economics of the industry is such that ineffective players who lack the technology capability to become profitable companies will slowly be driven out of the industry as investors and advertisers will rationalise their investments towards effective providers.

2) It is not often mentioned among detractors that every ad placed on a website or in an app has to be paid for by the programmatic trader placing the ad. This is the case whether the Ad is relevant to the user or whether the user engages with the ad.

These two factors should see Ad quality increase incrementally in the long run. The lack of profitability among the small AdTech peers is a direct consequence of their inability to effectively place ads.

Ability to deliver high quality performance at scale is a defining

Not only has Taptica been able to consistently achieve profitability since listing but it has been able to increase its gross profit margin since engaging in a number of acquisitions. In particular, since undertaking the large Tremor Video acquisition in 2017, Taptica’s gross profit margin has trended higher. Taptica was able to integrate the Tremor Video assets into its existing operations within six months and the higher margin sales coming from that business along with combination synergies have allowed for margins to increase.

Ability to deliver high quality performance at scale is a defining

The long form IRR calculation (Figure 21 below) shows that Taptica paid close to historical value for the Tremor Video assets. Section 8 below shows that Taptica only sacrificed 8% in pre-transaction operating CFROI in the transaction values paid for these two acquisitions.

7.Peer group relative profitabilityThe graph below (figure 17) is a time series of earnings and profitability line items for the listed AdTech peers. Taptica and the Trade Desk are the only two that have shown consistent profitability.

The numbers tell a thousand words

Trade Desk Inc/The 2018 Q2'18 Q1'18 2017 Q4'17 Q3'17 Q2'17 Q1'17 2016 Q4'16 Q3'16 Q2'16 Q1'16IS010 TTD US Equity Revenue 112.333 85.668 308.217 102.648 79.413 72.804 53.352 202.926 72.41 52.956 77.56IS032 TTD US Equity Operating Expenses 86.171 75.738 238.861 73.33 61.005 53.11 51.416 145.408 48.373 37.905 59.13IS033 TTD US Equity Operating Profit 26.162 9.93 69.356 29.318 18.408 19.694 1.936 57.518 24.037 15.051 18.43

TTD US Equity Operating Profit Margin 23.3% 11.6% 22.5% 28.6% 23.2% 27.1% 3.6% 28.3% 33.2% 28.4% 23.8%TTD US Equity YoY Ppts in OP mrgn -3.761 7.963 -5.842 -4.634 -5.242 3.288 -5.019

IS050 TTD US Equity Net Profit 19.343 9.07 50.798 16.811 10.229 18.849 4.909 20.482 10.28 3.644 6.558TTD US Equity Net Profit Margin 17% 11% 16% 16% 13% 26% 9% 10% 14% 7% 8%

Telaria Inc 2018 Q2'18 Q1'18 2017 Q4'17 Q3'17 Q2'17 Q1'17 2016 Q4'16 Q3'16 Q2'16 Q1'16IS010 TLRA US Equity Revenue 12.43 9.601 43.799 15.011 12.715 9.934 6.139 29.121 10.377 7.633 37.107 34.565RR861 TLRA US Equity Gross Profit 11.294 8.573 40.351 14.008 11.951 9.017 5.375 26.91 9.608 7.123 17.2 16.218

TLRA US Equity Gross Profit Margin 90.86% 89.29% 92.13% 93.32% 93.99% 90.77% 87.55% 92.41% 92.59% 93.32% 46.35% 46.92%TLRA US Equity Incremental GP Margin 91.23% 92.37% 91.57% 94.95% 95.00% 30.11% 38.14% 32.93% 31.80% 25.16% 9.04% -0.72%TLRA US Equity YoY Ppts ̂in GP mrgn 0.09 1.74 -0.28 0.73 0.67 44.42 40.63 49.51 48.60 57.60 7.26 4.37

IS032 TLRA US Equity Operating Expenses 15.307 15.4 61.59 15.12 15.904 15.666 14.9 50.344 13.015 11.336 22.831 26.712IS033 TLRA US Equity Operating Profit -4.013 -6.827 -21.239 -1.112 -3.953 -6.649 -9.525 -23.434 -3.407 -4.213 -5.631 -10.494

TLRA US Equity Operating Profit Margin -32.3% -71.1% -48.5% -7.4% -31.1% -66.9% -155.2% -80.5% -32.8% -55.2% -15.2% -30.4%IS050 TLRA US Equity Net Profit -3.121 -6.101 2.227 -0.907 12.294 -2.3 -6.86 -20.947 -0.401 -3.617 -5.855 -11.074

TLRA US Equity Net Profit Margin -25.1% -63.5% 5.1% -6.0% 96.7% -23.2% -111.7% -71.9% -3.9% -47.4% -15.8% -32.0%

Rubicon Project Inc/The 2018 Q2'18 Q1'18 2017 Q4'17 Q3'17 Q2'17 Q1'17 2016 Q4'16 Q3'16 Q2'16 Q1'16IS010 RUBI US Equity Revenue 28.648 24.876 155.545 31.397 35.211 42.922 46.015 278.221 72.667 65.811 70.511 69.232RR861 RUBI US Equity Gross Profit 13.604 10.093 98.709 15.932 22.226 29.224 31.327 204.974 51.541 48.013 52.971 52.449

RUBI US Equity Gross Profit Margin 47.49% 40.57% 63.46% 50.74% 63.12% 68.09% 68.08% 73.67% 70.93% 72.96% 75.12% 75.76%RUBI US Equity Incremental GP Margin 109.43% 100.45% 86.62% 86.28% 84.27% 86.07% 90.98% 50.39% 98.86% 20.28% 79.78% 68.11%RUBI US Equity Yoy Ppts ̂in GP mrgn -20.60 -27.51 -10.21 -20.18 -9.83 -7.04 -7.68 -2.79 -6.34 -1.28 1.534 -6.594

IS032 RUBI US Equity Operating Expenses 32.795 37.761 255.685 40.359 127.978 40.549 46.799 229.871 73.509 50.386 51.65 54.326IS033 RUBI US Equity Operating Profit -19.191 -27.668 -156.976 -24.427 -105.752 -11.325 -15.472 -24.897 -21.968 -2.373 1.321 -1.877

RUBI US Equity Operating Profit Margin -67.0% -111.2% -100.9% -77.8% -300.3% -26.4% -33.6% -8.9% -30.2% -3.6% 1.9% -2.7%IS050 RUBI US Equity Net Profit -17.984 -27.816 -154.783 -23.817 -103.571 -11.555 -15.84 -18.053 -21.19 3.53 -2.677 2.284

RUBI US Equity Net Profit Margin -62.8% -111.8% -99.5% -75.9% -294.1% -26.9% -34.4% -6.5% -29.2% 5.4% -3.8% 3.3%

Rhythmone PLC 2018 S1'18 2017 S1'17 2016 S1'16 2015 S1'15 2014 S1'14 2013 S1'13 2012IS010 RTHM LN Equity Revenue 255.1 114.528 149.0 66.771 166.7 91.388 215.0 106.004 247.2 111.55 198.0 81.971 114.4RR861 RTHM LN Equity Gross Profit 103.8 43.589 50.5 23.035 66.3 36.053 94.5 49.285 126.4 58.354 101.0 40.177 67.8

RTHM LN Equity Gross Profit Margin 40.70% 38.06% 33.92% 34.50% 39.75% 39.45% 43.97% 46.49% 51.14% 52.31% 51.00% 49.01% 59.26%RTHM LN Equity Incremental GP MarginRTHM LN Equity YoY Ppts in GP mrgn 6.777 3.561 -5.835 -4.952 -4.217 -7.043 -7.172 -5.818 0.147 3.298 -8.265 -16.273 -6.026

IS032 RTHM LN Equity Operating Expenses 129.6 54.91 65.8 33.546 160.6 115.279 110.0 52.801 110.3 45.958 85.2 38.208 66.6IS033 RTHM LN Equity Operating Profit -25.8 -11.321 -15.3 -10.511 -94.3 -79.226 -15.5 -3.516 16.1 12.396 15.7 1.969 1.2

RTHM LN Equity Operating Profit Margin-10.1% -9.9% -10.2% -15.7% -56.6% -86.7% -7.2% -3.3% 6.5% 11.1% 8.0% 2.4% 1.0%IS050 RTHM LN Equity Net Profit -13.9 -8.238 -18.8 -10.897 -92.3 -79.517 -20.8 -11.866 12.2 7.814 17.4 2.716 3.9

RTHM LN Equity Net Profit Margin -5.44% -7.19% -12.61% -16.32% -55.34% -87.01% -9.68% -11.19% 4.92% 7.00% 8.77% 3.31% 3.40%

Taptica international Ltd 2018 S1'18 2017 S1'17 2016 S1'16 2015 S1'15 2014 S1'14 2013 2012 2011IS010 TAP LN Equity Revenue 144.027 210.925 65.642 125.861 51.765 75.829 33.877 63.121 30.818 43.315 25.311 20.341RR861 TAP LN Equity Gross Profit 58.501 80.575 25.838 45.981 17.83 21.113 8.957 19.034 9.324 14.126 7.087 6.693

TAP LN Equity Gross Profit Margin 40.62% 38.20% 39.36% 36.53% 34.44% 27.84% 26.44% 30.15% 30.26% 32.61% 28.00% 32.90%TAP LN Equity Incremental GP Margin 41.67% 40.67% 57.71% 49.70% 49.60% 16.36% -12.00% 24.78% 32.35% 28.00% 32.90%TAP LN Equity YoY Ppts in GP mrgn 1.256 1.668 4.918 8.690 8.004 -2.312 -3.815 -2.457 2.255 -0.292 28.000 32.904

IS032 TAP LN Equity Operating Expenses 44.597 62.948 15.494 26.248 10.861 18.19 7.847 10.445 4.402 5.697 3.295 2.871IS033 TAP LN Equity Operating Profit 13.904 17.627 10.344 19.733 6.969 2.923 1.11 8.589 4.922 8.429 3.792 3.822

TAP LN Equity Operating Profit Margin 9.65% 8.36% 15.76% 15.68% 13.46% 3.85% 3.28% 13.61% 15.97% 19.46% 14.98% 18.79%IS050 TAP LN Equity Net Profit 10.802 13.759 8.712 16.469 6.027 2.149 0.922 6.099 4.03 7.102 3.236 2.824

TAP LN Equity Net Profit Margin 7.50% 6.52% 13.27% 13.09% 11.64% 2.83% 2.72% 9.66% 13.08% 16.40% 12.78% 13.88%

Otello Corp ASA 2018 Q2'18 Q1'18 2017 Q4'17 Q3'17 Q2'17 Q1'17 2016 Q4'16 Q3'16 Q2'16 Q1'16IS010 OTELLO NO Equity Revenue 72.2 71.4 419.0 93.4 108.7 109.9 105.9 532.2 139.4 136.0 127.7 129.1RR861 OTELLO NO Equity Gross Profit 29.6 30.6 169.4 34.8 43.6 46.1 43.7 222.1 56.6 56.0 52.9 56.6

OTELLO NO Equity Gross Profit Margin 41.00% 42.86% 40.43% 37.26% 40.11% 41.95% 41.27% 41.73% 40.60% 41.18% 41.43% 43.84%OTELLO NO Equity Incremental GP Margin 46.55% 47.39% 45.42% 38.20% 55.60% 34.78% 51.23% 6.19% 222.16% -1000%OTELLO NO Equity YoY Ppts in GP mrgn -0.950 1.592 -1.303 -3.343 -1.066 0.522 -2.577 -3.974 -1.107 -6.972 -22.870 -19.773

IS032 OTELLO NO Equity Operating Expenses 35.5 215.5 47.2 47.1 62.9 56.4 252.2 71.7 59.3 59.3 62.0IS033 OTELLO NO Equity Operating Profit -7.5 -4.9 -46.1 -12.4 -3.5 -16.8 -12.7 -30.1 -15.1 -3.3 -6.3 -5.4

OTELLO NO Equity Operating Profit Margin -10.39% -6.86% -11.00% -13.28% -3.22% -15.29% -11.99% -5.66% -10.83% -2.43% -4.93% -4.18%IS050 OTELLO NO Equity Net Profit -2.1 3.8 -36.2 0.3 -0.1 -21.4 -14.4 426.4 487.2 -38.5 -5.3 -17.0

OTELLO NO Equity Net Profit Margin -2.9% 5.3% -8.6% 0.3% -0.1% -19.5% -13.6% 80.1% 349.5% -28.3% -4.2% -13.2%

In addition to the profitability time series above it is useful to examine the returns on invested capital generated by the peer group since listing.

The peer group as a whole had $1,336.1m ($1.3bn) in invested capital at FY’17. Of this figure, Otello Corp accounted for 35%, The Trade Desk accounted for 20.4%, Rythmone accounted for 16.5%, The Rubicon Project accounted for 12.3%, Taptica accounted for 9% and Teleria accounted for 6.2%

Figure 19 above shows the annual economic returns for each company. Here the return of each company is measured as the product of the economic spread (market determined cost of capital multiplied by the CFROI or internal rate of return achieved by each company) multiplied by the invested capital of each company. Only Taptica, the Trade Desk and Otello Corp have consistently produced a positive economic return.

The most appropriate approach towards judging the significance of CFROI spreads is to attribute more importance to a consistently stable and relatively high spread over a longer period of time as opposed to a high but unstable spread. A stable spread is a strong indicator of superior underlying business economics. The invested capital graph in Figure. 20 shows that Taptica, with just 9% of the peer group’s invested capital was able to generate 38% of the total positive economic return achieved by the group as a whole (which amounted to a $74.9m in FY’17). Taptica’s spread of 23% is also considerably higher than that of its peers. Staying true to the economics of competition Taptica’s returns should revert to the mean and fall gradually over time. However, judging by the relative early stage growth profile of the industry, it is likely that Taptica will be able to increase its profitability and maintain a high economic spread for a number of years. It is also likely that a relatively new market entrant like the Trade Desk would be able to somewhat increase its economic spread in the future. Industry rationalisation will force the unprofitable players to change their business models or exit the industry. As such their economic spreads should revert from negative over time (as the cannot continue to lose shareholder capital indefinitely).

8.Taptica’s CFROI gives a true picture of its underlying profitability

Figures 21-27 below outline a long-form calculation of Taptica’s CFROI (a Credit Suisse proprietary cashflow return on investment formula). The CFROI calculation is similar to a standard IRR (internal rate of return) calculation and it represents a one year weighted average return on all of the firm’s projects. It aims to show a comprehensive split between the asset life and the returns on depreciating and non-depreciating assets. The formula takes account of the speed at which the asset base will be fully depreciated and the residual value (asset release) of the remaining assets at the end of the asset life period. Commonly used accounting metrics measure current cashflow returns against historical asset values which often creates the appearance that returns are high and increasing over time, when in fact they will often be lower and decreasing over time, as the asset base depreciates. The CFROI calculation also accounts for the impact of acquisitions on the acquirer’s returns. Here a company with an older asset base that adds newer assets through an acquisition, will distort the underlying economic returns of the merged entity when examined through the lens of standard accounting metrics such as return on assets. The four main elements of the CFROI calculation are, 1) gross investment, 2) gross cashflow, 3) asset life and 4) salvage value. The calculation treats the asset base as a series of investment projects. By accounting for the effect of depreciation and the impact of inflation on an aging asset base, the metric allows for an accurate comparison to be made between companies in the same industry.

The first section (Figure. 22) delayers the existing asset base. A six-year average growth rate for the asset base is calculated (result is average growth of 38.7%). The total size of the asset base at FY17 is then delayered (averaged out) over the six-year period and an inflation adjustment is added to each layer to account for the effect of inflation on asset values over the period. The calculation uses 2% as the average inflation rate for Israel over the time period. The second part of section one (Figure. 22) takes the total five-year R&D expense and capitalised it over the time period (Taptica expenses R&D on the income statement).

1) Delayering the existing asset-baseFY 2017 including acquisitions 2017Historical Cost 87.337Carrying Value 63.701Expense 13.499Remaining Life 4.7Useful life 6.5Depreciation & Amoritization rate 15.5%Amoritization rate 17.5%Depreciation Rate 13.5%

Asset Delayering 2011 2012 2013 2014 2015 2016 2017Gross Fixed and Intangibles 0.494 0.834 1.216 10.513 16.590 13.879 30.683

41% 31% 88% 37% -20% 55%Median 6yr nominal growth rate of asset base 38.7%

Yr -5 Yr -4 Yr -3 Yr -2 Yr -1 Yr 0 Yr 0 GPINominal growth rate 38.7% 38.7% 38.7% 38.7% 38.7% 38.7% 38.7%Real growth rate 36.7% 36.7% 36.7% 36.7% 36.7% 36.7% 36.7%Asset layers (capex) 1.940 2.691 3.733 5.177 7.181 9.960 30.683Israel Inflation Adjustment (2%) 2.0% 2.0% 2.0% 2.0% 2.0% 2.0% 2.0%Inflation adjustment 0.202 0.222 0.228 0.209 0.144 0.000 1.005067Inflation adjusted gross Fixed & Intangibles 2.142 2.913 3.961 5.387 7.325 9.960 31.688Inflation adjustment factor 1.033

Asset Delayering 2011 2012 2013 2014 2015 2016 2017Research and Development expense (I/S) (0.795) (2.001) (4.092) (6.127) (16.995) 5yr Total R&D Espense (I/S) (30.010) Tech R&D useful life = 5 yearsIsrael Inflation Adjustment (2%) 2% 2% 2% 2% 2%Inflation adjustment factor 1.080 1.060 1.040 1.020 1.000Inflation adjusted R&D (0.859) (2.121) (4.256) (6.250) (16.995) 5yr total Inflation adjusted Capitalised R&D 30.480

2) Recaptured Gross Fixed & Intangibles from AcquisitionsAsset Delayering 2011 2012 2013 2014 2015 2016 2017Adjusted Fixed & Intangibles Tremor Video acquisitionProvisional fair value purchased assets:

Property, plant and equipment 2.126Intangible assets 27.632

Historical cost purchased assets:Property, plant and equipment 5.208Intangible assets 27.919

Difference between fair & historical valuesProperty, plant and equipment 3.082Intangible assets 0.287

Total difference 3.369Inflation adjustment factor* 1.033Gross Fixed & Intangibles from Tremor Video acquisition 3.479* same as pre-transaction asset base

Adjusted Fixed & Intangibles Addinnovation acquisitionGross Fixed & Intangibles 12.259Inflation adjustment factor* 1.033Gross Fixed & Intangibles from Addinnovation 0.402* same as pre-transaction asset base

Inflation Adjusted Gross Fixed & Intangibles Recaptured 3.881

Section two (Figure 23 above) calculates an inflation adjusted gross value recaptured from the assets Taptica acquired in the Tremor Video and Adinnovation acquisitions. The goal of accounting for the asset recapture is to take account of purchase accounting rules which mandate that purchased assets be booked at fair values, and these will differ from the historic cost of the assets as they were accounted for on the seller’s balance sheet before the transaction. Matching the asset values from Tremor Video’s historical filings against Taptica’s pre and post transaction filings shows that Taptica paid close to historical value for the intangible assets acquired. Only a small recapture value of $3.9m needs to be included in the calculation.

The third section (Figure 24 below) adds the total inflation adjusted depreciating and non-depreciating assets to give a value for the total inflation adjusted gross investment.

3) Total inflation adjusted gross investmentInflation adjusted gross Fixed & Intangibles 31.6885yr total Inflation adjusted Capitalised R&D 30.480Inflation Adjusted Gross Fixed & Intangibles Recaptured 3.881Total inflation adjusted depreciating assets 66.049

2016 2017Current assets minus inventory 50.804 109.370Current non-debt liabilities 31.944 68.285Net monetary assets 18.860 41.085Inventory 0Other tangible assets 2.329Total inflation adjusted non-depreciating assets 38.756

Total inflation adjusted gross investment 104.805

4) Project Life & Gross Cashflow2015 2016 2017

Inflation adjusted gross Fixed & Intangibles 14.403 21.728 31.688Inflation Adjusted Gross Fixed & Intangibles Recaptured 3.881Adjusted gross plant for asset life 14.403 21.728 35.569Depreciation & amoritization expense 3.472 5.098 13.499Gross F&I project life 4.1 4.3 2.6Three year median 4.1

Total project life Asset value Life Implied D&AAdjusted gross plant for asset life 35.569 4.1 8.5745yr total Inflation adjusted Capitalised R&D 30.480 5.0 6.096 Sum of depreciating assets 66.049 14.670Blended asset life using implied depreciation 4.5

Gross CashflowNet income after tax 13.759plus Depreciation & Amoritisation 13.499plus interest expense 0.267plus R&D expense 16.995 Net change monetary assets (liabilities) FY16-FY17 22.225x % change in GDP deflator Israel Q1'16-Q1'17 0.07%Monetary holding gain (loss) -0.016Total gross cashflow 44.504

Section four (Figure 25 above) adds the total inflation adjusted gross fixed and intangibles to the calculated recaptured value to give an adjusted gross plant value. A three-year median gross project life is calculated based on the disclosed depreciation and amortisation expense line items in the historical financial statements. The three-year median gross project life value is then used to calculate an implied D&A expense for the adjusted gross plant value. A five-year asset life is assumed for the capitalised R&D value. Dividing the sum of the asset values by the sum of the implied D&A expense gives a blended asset life of 4.5 years. The second part of section four calculates the total gross cashflow of the asset base using FY’17 results.

5) IRR CalculationInflation adjusted depreciating assets 66.049Inflation adjusted non-depreciating assets (asset release) 38.756Inflation adjusted gross investment 104.805Inflation adjusted gross cash flow 44.504Project life (Blended asset life using implied depreciation) 4.5CFROI Market Implied Discount Rate* 4.96%* Credit Suisse CFROI

Blended Asset Life 0 1 2 3 4 4.5-104.805 44.504 44.504 44.504 44.504 61.008

IRR 33.8%Spread over CFROI Market Implied Discount Rate 28.8%Spread x(times) discount rate 5.8

Section five (Figure. 26 above) sums the inflation adjusted depreciating assets and the inflation adjusted non-depreciating assets (asset release value remaining at the end of the project life). A standard IRR calculation is then used to calculate the IRR of the cash-flows which yields an IRR of 33.8%. The market implied discount rate generated by Credit Suisse Holt Lens is 4.96% which reflects the country risk profile of Israel, size (Taptica’s market cap) and default risk (no debt) for Taptica. Taptica’s economic spread is 5.8x over its implied discount rate.

Finally, section 6 (Figure. 27 above) calculates the operating IRR lost due to the 2017 acquisitions. The transaction IRR ratio is calculated by dividing post transaction goodwill by the sum of the inflation adjusted gross investment and the post transaction goodwill. Post transaction IRR loss was only 8.1% from the pre-transaction IRR of 33.8%. The calculation shows that instead of having to acquire growth to maintain its high growth profile, Taptica was able to acquire valuable intangible assets at close to their historical cost.

9.Current valuation is disconnected from the underlying fundamentals

The current undervaluation and lack of differentiation of companies across the AdTech sector is likely a result of a number of factors. These include; 1) difficulty in assessing the technological capabilities between players, 2) difficulty in differentiating between the players, 3) difficulty in understanding how the smaller AdTech players will fit into future global programmatic market, 3) pessimism towards AdTech in general and the long-term value of companies that trade Ad impressions, 4) concerns about the apparent poor buying power and weak strategic positioning of the smaller players, 5) poor historic economic returns produced by the sector, 6) strategic dominance of the large technology players (Apple, Google, Facebook) and fears around the impact on future market direction and composition.

Despite the current undervaluation across the smaller company stocks only two years ago many of these companies were trading at multiples

6) Pre & Post Transaction IRR AnalysisInflation adjusted gross investment 104.805Goodwill 33.018Transaction IRR ratio 76%Operating IRR 33.8%Transaction IRR 25.7%

Operating IRR lost due to acquisitions 8.1%

Taptica’s economic spread is high and well above the sector

Informed sources estimate that c.40% of all internet traffic

of their current valuations. Taptica has traded at more than 50x P/E in the past. Based on FY’18 revenue guidance the company is trading at a forward P/E of just 6.4x today. The Facebook election hacking scandal and the revelation of security vulnerabilities with its platform brought to public attention pre-existing doubts about the long term sustainability of business models across the industry. As mentioned in the introduction Taptica does not process any personally identifiable user information and neither it or its peers engage in activities that are remotely similar to those that companies implicated in the Facebook scandal were engaging in. Investor confidence in sector valuations was confirmed in August 2017 when AT&T paid $1.6bn for App-nexus a leading cloud-based online advertising platform. In 2018 the US private equity firm KKR invested $400m in the equity of AppLovin (a privately held California based firm focused on the mobile gaming app market). This investment valued that company at $2bn. In September 2016 the Trade Desk listed on the Nasdaq raising $84m. The company had successfully undertaken a number of seed investments and it currently has a market value of $5.3bn. The shares rose 60% from its IPO price on the first day of trading and the stock has since risen in value by over 400%.

A fair appraisal of Taptica’s current valuation and a reasonable estimation of its future prospects reveal that the shares are very undervalued. In fact, there is no need to extrapolate future potential revenue growth and discount a present value on future cash-flows. Management have guided for £326.9m in revenues for FY18. This is achievable based on the recent half year results. Based on a reasonable estimation of the underlying strength of Taptica’s technology and taking account of its industry positioning, the shares could conservatively attract a 15x P/E, which would be conservative when judged against valuations across the wider TMT space. Continued strong revenue growth should attract investors back to the stock and should result in a rerating over time. A strong balance sheet, a large cash position and a high cash generation model leaves the door open for additional acquisitions. Management have communicated that the company has been approached since raising an additional $30mn in equity in early 2018.

Valuation 2014A 2015A 2016A 2017A 2018ERevenues 63.121 75.829 125.861 210.925 326.934 EBIT 8.565 2.923 19.733 17.627 - Adjusted EBIT 9.286 5.688 22.910 30.609 50.675 EBITDA 9.721 6.395 24.831 31.126 - Adjusted EBITDA 9.721 9.160 28.008 44.108 61.737 EPS 0.12 0.07 0.31 0.44 - Adjusted EPS 0.13 0.12 0.35 0.62 0.604

Target Multiple (EV/Revenue) 1.5xTarget Multiple (EV/Adj EBIT) 10.0xTarget Multiple (EV/Adj EBITDA) 8.5xTarget Multiple (Adj P/E) 12.5x

Target EV - (EV/Revenue) 490.401 Target EV - (EV/Adj EBIT) 506.747 Target EV - (EV/Adj EBITDA) 524.763 Target EV - (Adj P/E) 461.796

Cash and cash equivalents 25.146 18.689 21.471 26.985 50.379 Short & Long term Debt - - - 31.015 - Other - - - - -

Market Cap (YE) 123.617 60.769 133.482 384.790 495.927YE/Current $ Share Price $2.14 $0.92 $2.13 $6.29 $3.87

# shares 57.701 65.990 62.682 61.188 61.188

Target Price $ (EV/Revenes) $8.01Target Price $ (EV/Adj EBIT) $8.28Target Price $ (EV/Adj EBITDA) $8.58Target Price $ (Adj P/E) $7.55Blended Avg $ Target Price $8.10

USD/GBP rate 07/09/2018 £0.7751

Target Price £ (EV/Revenes) £6.21107%

Target Price £ (EV/EBITA) £6.42114%

Target Price £ (EV/EBITDA) £6.65122%

Target Price £ (P/E) £5.8595%

Blended Avg Price £ £6.28Upside 209%

Trading Multiples at PX / Implied Multiples at TPEV/Revenue 1.6x 0.6x 0.9x 1.8x 0.6xEV/EBIT 11.5x 14.4x 5.7x 22.1xAdjusted EV/EBIT 10.6x 7.4x 4.9x 12.7x 3.7xEV/EBITDA 10.1x 6.6x 4.5x 12.5xAdjusted EV/EBITDA 10.1x 4.6x 4.0x 8.8x 3.0xEV/EBITDA - Capex 10.6x 7.4x 4.7x 13.5xAdjusted EV/EBITDA - Capex 10.6x 5.0x 4.2x 9.3xFCF EV Yld 7.7% 9.1% 16.7% 10.9%EV/NOPAT 15.1x 16.3x 6.6x 25.0x

P/E 18.1x 12.4x 6.8x 14.4xAdjusted P/E 16.8x 7.9x 6.0x 10.1x 6.4xFCFe Yld 6.1% 6.3% 14.1% 10.9% 6.8%Div Yld 1.0% 4.4% 2.6% 1.2% 2.6%

TP at constant multipleAdj P/E 12.5x

(EV/Adj EBIT) 10.0xEV 445.548Mkt Cap 495.927TP $8.10

InputsAdjusted EBITDA 9.721 9.160 28.008 44.108 61.737 Capex (0.436) (0.718) (1.075) (2.346) (1.456) FCF EV 7.540 3.828 18.747 42.219 34.421 Tax Rate 24% 12% 14% 12% 24%

EPS 0.127 0.117 0.354 0.621 0.604FCFe 7.540 3.836 18.829 42.035 33.652DPS 0.00219 0.00405 0.00545 0.00784 0.0101

Market Cap 123.617 60.769 133.482 384.790 495.927 Cash and cash equivalents 25.146 18.689 21.471 26.985 50.379 Total Debt - - - 31.015 -

EV 98.471 42.080 112.011 388.820 445.548

With strong HY’18 results in September, Taptica’s FY’18 guidance of $326.9m in revenues looks achievable. This would place a forward P/E on the current share price of just 6.4x well below the historical average of 13x P/E. The valuation model above uses adjusted figures to take account of the past amortisation of purchased intangibles. Any variance in asset age not accounted for in these adjusted figures is compensated for In the CFROI calculation. Using blended multiples of 1.5x EV/Revenue, 10.0x EV/Adj EBIT, 8.5x EV/Adj EBITDA, 12.5x Adj P/E yields a market capitalisation valuation of $495.9m or £6.28 per share based on est. FY’18 revenues of $326.9m. By YE’18 Taptica should have cash on the balance sheet in excess of $50m, no debt, an est. FCF yield of 6.8% and an est. dividend yield in excess of 2%. These factors make the current share price very attractive for long term investors.

10. Risk Factors

Short-term high-volume agreements with customers.

Technology blackout or failure, loss or damage to backup databases and the potential for datacentre breaches.

Generalised economic downturn which in turn depresses global advertising spend.

Change in technical standards or industry practises by large technology companies such as Google, Apple and Facebook could have an outsized impact on the AdTech sector.

Regulatory, legislative, or self-regulatory developments relating to e-commerce, Internet advertising, privacy, data collection, data protection, and uncertainties regarding the application or

interpretation of existing laws and regulations, such as the EU General Data Protection Regulation (GDPR), which became effective in May 2018.

The Company’s brand advertising division depends on relationships with data providers to supply it with data sets for it to deliver targeted campaigns and this may involve material upfront guaranteed minimum purchase commitments.

11. Investment Rationale Taptica is creating value for stakeholders in the AdTech

industry and investors can own shares in a company that is highly cash generative and has an underappreciated business moat.

Management are experienced entrepreneurs in the AdTech sector and are major shareholders in the stock.

The sector has matured in recent years and it is now easier for the deep-dive investor to assess the current state of the industry and differentiate among the various players.

Future growth trajectory of digital advertising and programmatic advertising markets has high degree of visibility. Technology companies such as Google, Facebook, Adobe, Microsoft, IBM, Salesforce and Oracle are investing c. $10 billion annually on advertising and marketing.

.

Important: Disclaimer

No aspect of this research piece is intended to be relied on as investment advice. The content is intended to be used and must be used for informational purposes only. It is very important to do your own analysis before making any investment based on your own personal circumstances. You should take independent financial advice from a professional in connection with, or independently research and verify, any information that you have read in this report and wish to rely upon, whether for the purpose of making an investment decision or otherwise.

12. Appendix

Profit & Loss Statement P&L statement 2011A 2012A 2013A 2014A 2015A 2016A 2017A 2018ESales 20.341 25.311 42.535 63.121 75.829 125.861 210.925 326.934

COGS (13.648) (18.224) (29.189) (44.087) (54.716) (79.880) (130.350) (201.064)

Gross Profit 6.693 7.087 13.346 19.034 21.113 45.981 80.575 125.869% sales 32.9% 28.0% 31.4% 30.2% 27.8% 36.5% 38.2% 38.5%

-0.05 0.03 -0.01 -0.02 0.09 0.02 0.00Research & development (.286) (.376) (.795) (2.001) (4.092) (6.127) (16.995) (19.616)

Sales & Marketing (1.608) (1.880) (3.149) (5.507) (8.634) (14.202) (31.460) (35.963)

General & Administrative (.977) (1.039) (1.753) (2.961) (5.464) (5.919) (14.493) (19.616)

Total Operating Expenses (2.871) (3.295) (5.697) (10.469) (18.190) (26.248) (62.948) (75.195)

Reported Operating Profit 3.822 3.792 7.649 8.565 2.923 19.733 17.627 -Operating Profit Margin 18.8% 15.0% 18.0% 13.6% 3.9% 15.7% 8.4% -

Non-GAAP Adjusted Operating Profit 3.822 3.792 7.649 9.286 5.688 22.910 30.609 50.675Adjusted Operating Profit Margin 18.8% 15.0% 18.0% 14.7% 7.5% 18.2% 14.5% 15.5%

Depreciation of tangible & Amoritization of intangible assets (.048) (.096) (.292) (1.156) (3.472) (5.098) (13.499) (11.062)

Hardocded Depreciation (.289)

Hardocded Amoritization (10.773)

Reported EBIT 3.822 3.792 8.429 8.565 2.923 19.733 17.627 50.675EBIT margin 18.8% 15.0% 19.8% 13.6% 3.9% 15.7% 8.4% 15.5%

Amortization of goodwill - - - - - - - -

Non-GAAP Adjusted EBIT 3.822 3.792 8.429 9.286 5.688 22.910 30.609 50.675Transaction amortization & expenses - - - .721 2.765 3.177 12.982

Reported EBIT 3.822 3.792 8.429 8.565 2.923 19.733 17.627 50.675EBIT margin 18.8% 15.0% 19.8% 13.6% 3.9% 15.7% 8.4% 15.5%

Interest income .024 .193 .148 .071 .075 .355 .257 .257

Interest expenses (.159) (.030) (.044) (.410) (.207) (.504) (.564) (1.269)

Other financial items - - - - - - -

Reported EBT (Non-GAAP Adjusted EBT) 3.687 3.955 8.533 8.947 5.556 22.761 30.302 49.663Taxes (.863) (.719) (1.431) (2.127) (.642) (3.115) (3.561) (11.919)

Tax rate 23.4% 18.2% 16.8% 23.8% 11.6% 13.7% 11.8% 24.0%Participations - - - - - - -

Minority interests - - - - - - - (.800)

Reported Net Income (Non-GAAP Adjusted EBT) 2.824 3.236 7.102 6.820 4.914 19.646 26.741 36.944After tax amortization of purchased assets and related expenses - - - 0.521 2.803 2.573 11.256 -

Non-GAAP Adj Net Income 2.824 3.236 7.102 7.341 7.717 22.219 37.997 36.944

Non-GAAP Adj EPS 0.282 0.324 0.142 0.127 0.117 0.354 0.621 0.604Reported EPS 0.282 0.324 0.142 0.118 0.074 0.313 0.437 0.604Reported Diluted EPS 0.282 0.324 0.138 0.114 0.074 0.309 0.420 0.580

Balance Sheet

Cashflow Statement

Industry MapSell-side/buy side Ad trading platforms Data Providers (Credit/auto history/ Global Social media/e-commerce Mobile App CompaniesTrade Desk, Inc. Loyalty programs/private label credit cards) (2) Google Cheetah MobileRocket Fuel, Inc. (acquired by Sizmek for $145m in 2016) Alliance Data Systems (marketing services) (2) Facebook (Instagram, whatsapp) AppOnboard (full fidelity demo videos)Telaria (Tremor Video) Sychrony Financial AmazonRubicon Project, Inc. Citibank Global E-commerceLiveramp (Axciom) Capital One Financial Twitter Tencent Mobile Gaming(7) Inmobi TD Bank Snapchat Alibaba Group Holding Ltd Tencent HoldingsPocketmath Wells Fargo Baidu Inc Sony Corp AppNexus (AT&T Jun '18) Experian Hulu JD.com Inc Activision Blizzard IncOath Equifax Netflix Roku Electronic ArtsLiveramp (Axciom) TransUnion eBay Inc Rakuten Inc NetEase IncAdColony (in app mobile video performance marketing) FICO Spotify Technology SA Yandex NV Bandai NAMCO HoldingsRhythmOne plc (RTHM LN Equity) Mastercard Linkedin Mercadolibre Nexon Co Ltd

Datalogix Pandora Media Inc Walmart Netmarble CorpExelate (Nielson) Shazam Square Enix Holdings Co Ltd

Specialist Ad-media platforms (app attribution, measurement)Neustar Warner BrosKochava (app ROI measurement) IHS Markit Take Two Interactive(4) Quinstreet (QNST US Equity) Catalina (Nielson) Zynga Inc(7) Inmobi Epsilon CRM/Cloud Ubisoft Entertainment SAVerizon Percision Market Insights Relia Adobe CBS interactive Gameloft SEUberMedia Salesforce A+E Networks Mixi IncApplike (in app mobile video performance marketing) Criteo BBC CyberAgent IncLiftOff (in app mobile video performance marketing) Oracle NBC Universal Supercell (Tencent Holdings)AdColony Microsoft (Dynamic CRM, Azure) Turner Broadtcasting System (AT&T Warner Media) GungHo Online Entertainment IncVungle (in app mobile video performance marketing) Amazon (AWS) Comcast Perfect World Co Ltd/ChinaUnity (premium quality in app video ads) Spectrum Media Rovio Entertainment OYTapjoy AT&T Snail GamesApplift (DataLift 360) Viacom Riot GamesTaptica Dish Networks JamcityIronSource Diversified Advertising Agencies PixiteAdAction Interactive Nielsen Holdings PLC** Sling Scoot

Publicis Groupe SA Roku FlowplayOmnicom Group Inc Fox Playrix

Engagement management platform Dentsu Inc Hulu Outfit7(8) Yieldmo WPP PLC** Playgendary

Interpublic Group of Cos Inc Integrated Telecoms VoodooHakuhodo Dy Holdings Vodafone PLC Kongregate

Data Management Platforms Asatsu-DK Inc Altice Europe NVTurn Data Management (bought by Amobee 2016 - $310m) DKSH Holding AG Liberty Global PLC-ARun MDC Partners Inc Proximus SASalesforce DMP (Krux, Einstein) Focus Media Information Technology Co Ltd Telenet Group Holding NVAdobe (Audience Manager) M&C Saatchi PLC Altice USA Inc Direct Marketing/vertical searchThe Trade Desk DMP Simei Media Co Ltd Verizon Communications Inc MastercardTube Mogul Mm2 Asia T-Mobile US Inc Dun & BradstreetNet Mining Sprint Corp Yelp(12) Adform DMP (AudienceBase) Centurylink Inc TivoAmobee (bought Turn DMP) UK listed Niche media/advertising AT&T ClaritasMillennial Media Huntsworth plc America Movil SAB de C.V. Nielson Catalina SolutionsCentro Cello Health PLC Telefonica S.A Kantar Worldpanel

IMImobile PLC (digital messaging and communicaitons services)Gamma Communications PLC The Weather CompanyLotame dotDigital Group plc (dotmailer email markeitng automation)SES SA Pitney BowesQuantcast RhythmOne plc (RTHM LN Equity) 1&1 DRILLISCH AG FoursquareRhythmOne plc (RTHM LN Equity) Next Fifteen Communications Group PLC Millicom International Cellular S.AMediamath (Terminal One) XLMedia Plc Telekom Austria AG Search/Ad management platformsVungle Ebiquity Plc 9Markeitng Analytics) Eutelsat Communications Google AdwordsBluekai (Oracle) Matomy Media Group Ltd Koninklijke KPN N.V Google Doubleclick Search(8) Tapfwd Altitude Group plc Deutsche Telekom AG Marin Software (MRIN US Equity)Taptica International Ltd.* Future Plc (niche media content/magazines) Telenor ASA MediaAlphaDataxu (Oneview) Orange Belgium Jumpshot (can be use din conjunction with DMP of choice)Signal Telefonica Deutschland Holding AGGoogle Audience Centre Telekom Austria AGNielsen DMP Sky PLC(11) Intercom (Export) Rogers Communications, IncEyeReturn Marketing (Audience DMP) Far EasTone Telecommunications Co Ltd Entertainment media (Publishers platforms

Balance Sheet 2011A 2012A 2013A 2014A 2015A 2016A 2017A 2018ELong-term assets .521 .851 1.223 21.516 36.817 33.780 66.030 68.169

Tangible f ixed assets .212 .322 .389 .569 .514 .433 2.141 1.852Intangible f ixed assets .282 .512 .827 20.663 36.123 33.046 61.560 50.787Deferred tax assets .027 .017 .007 .284 .180 .301 2.329 2.798Other - - - - - - - 12.732

Current assets 6.048 8.244 11.487 37.603 39.415 50.804 109.370 136.257Cash and cash equivalents 2.969 4.005 3.753 25.146 18.689 21.471 26.985 50.279Inventories - - - - - - -Trade receivables 2.925 3.746 6.882 11.687 19.168 27.443 78.554 77.927Other receivables .154 .493 .852 .770 1.558 1.890 3.831 3.807Other - - - - - - - 4.245

Total assets 6.569 9.095 12.710 59.119 76.232 84.584 175.400 204.426

Equity .163 .500 .534 42.332 45.279 50.724 64.918 123.316Shareholders equity .163 .500 .534 42.332 45.279 50.724 64.918 122.516Minority Interest - - - - - - - .800

Long-term liabilities .084 .103 .160 1.594 4.831 1.916 36.267 11.151Long-term debt - - - - - - 25.085 -Pensions and provisions .084 .103 .160 .161 .182 .176 .976 .946Deferred tax liabilities - - - 1.433 2.372 1.740 1.587 1.304Other - - - - 2.277 - 8.619 8.901

Short-term liabilities 6.322 8.492 12.016 15.193 26.122 31.944 74.215 69.959Short-term debt - - - - - - 5.930 -Trade payables 3.950 4.694 7.248 12.075 20.366 22.501 46.232 46.823Other payables 2.372 3.798 4.768 3.118 5.756 9.443 22.053 23.136

Total liabilities 6.406 8.595 12.176 16.787 30.953 33.860 110.482 81.110Total equity and liabilities 6.569 9.095 12.710 59.119 76.232 84.584 175.400 204.426

Cash Flow Statement 2011A 2012A 2013A 2014A 2015A 2016A 2017A 2018ENet Income 2.824 3.236 7.102 6.820 4.914 19.646 26.741 36.944

Depreciation and amortization .048 .096 .292 1.156 3.472 5.098 13.499 11.062Cash interest (.007) (.001) - - .009 .095 (.209) (1.012)Cash taxes .001 (.367) (.176) .510 (.477) 3.073 (1.450) (11.919)Changes in receivables (.126) (.995) (3.440) (1.871) (6.017) (9.244) 2.745 .627Changes in payables 2.552 .905 3.434 1.665 6.419 4.004 .647 .591Other .131 (.124) .049 1.056 .627 .790 1.766 -

Free cash flow before capital expenditures 5.423 2.750 7.261 8.615 6.182 20.285 43.739 36.293

Capital expenditures (.441) (.436) (.718) (1.075) (2.346) (1.456) (1.704) (2.641)% sales -2.2% -1.7% -1.7% -1.7% -3.1% -1.2% -0.8% -0.8%

Free cash flow (FCFe) 4.982 2.314 6.543 7.540 3.836 18.829 42.035 33.652

Acquisitions - - - (6.531) (8.099) (5.000) (53.010)Disposals - - .044 - .074 .004 -Short-term debt (.007) (.001) - (3.609) (.655) .527 (.174) (31.012)Long-term debt - - - - - - 30.000Equity transactions - - - 27.343 .047 (7.514) 2.287 29.890Dividends (2.524) (1.283) (6.775) (3.147) (1.527) (3.990) (2.612) (9.236)Foreign exchange dif ferences (.061) (.011) .046 (.148) (.071) (.030) .042 .100Other .007 (1.152) .522 - (8.096) 8.472 (.072)

Change in cash and cash equivalents 2.458 (.122) .334 21.596 (14.420) 11.328 5.472 23.394Cash at beginning of period .572 2.969 2.836 3.216 24.664 10.173 21.471 26.985Cash at end of period 2.969 2.836 3.216 24.664 10.173 21.471 26.985 50.379

Industry Economic Returns

Specialist AdTech

Advertising Agencies

Specialist/ Niche Media

Adtech (CFROI - WACC* FY17) Avg/Mdn Spread % of IC % of Sales IC FY17 Sales FY17 Company Comp Group Comp EVA FY17Otello 10.5% 14.7% 28.2% 21.7% 470.4 419.0 $0.89 0.77x 49.4The Trade Desk 14.7% 14.7% 16.4% 16.0% 272.6 308.2 $1.13 0.98x 40.1RhythmOne Plc 7.8% 14.7% 13.2% 13.2% 220.6 255.1 $1.16 1.00x 17.3F@N Coms. Inc 18.4% 14.7% 10.8% 18.1% 179.9 348.8 $1.94 1.67x 33.2The Rubicon Project 6.8% 14.7% 9.9% 8.1% 164.6 155.5 $0.94 0.82x 11.2Taptica 23.0% 14.7% 7.5% 10.9% 124.4 210.9 $1.70 1.46x 28.6Nasmedia 16.7% 14.7% 7.4% 5.5% 123.5 106.4 $0.86 0.74x 20.6Telaria -26.3% 14.7% 5.0% 2.3% 83.5 43.8 $0.52 0.45x -22.0So-Net Media 22.1% 14.7% 1.6% 4.2% 26.0 81.4 $3.13 2.70x 5.7

100% 100% 1,665.5 1,929.1 $1.16

Advertising Agencies (CFROI - WACC* FY17) Avg/Mdn Spread % of IC % of Sales IC FY17 Sales FY17 Company Comp Peers Total Comp EVA FY17WPP PLC 21.9% 18.4% 26.8% 20.6% 22,467.7 19,615.5 $0.87 1.00x 4,911.4Omnicom Group Inc 39.1% 18.4% 10.8% 16.0% 9,033.1 15,273.6 $1.69 1.93x 3,531.0Hakuhodo Dy Holdings 4.6% 18.4% 3.8% 12.6% 3,163.1 12,049.7 $3.81 4.34x 145.8DKSH Holding AG 6.5% 18.4% 2.0% 11.7% 1,664.6 11,181.7 $6.72 7.66x 107.5Publicis Groupe SA 20.2% 18.4% 13.2% 11.5% 11,010.2 10,947.0 $0.99 1.13x 2,225.2

18.4% 57% 72% 47,338.6 69,067.5 $1.46

Dentsu Inc 8.1% 13.5% 18.4% 8.7% 15,409.3 8,284.3 $0.54 0.61x 1,246.6Interpublic 12.9% 13.5% 4.7% 8.3% 3,903.1 7,882.4 $2.02 2.30x 504.3Nielsen PLC 19.4% 13.5% 17.1% 6.9% 14,289.0 6,572.0 $0.46 0.52x 2,767.8

13.5% 40% 24% 33,601.4 22,738.7 $0.68

Focus Media 28.8% 23.2% 2.2% 1.8% 1,848.7 1,720.8 $0.93 1.06x 532.3MDC Partners Inc 24.0% 23.2% 0.8% 1.6% 684.4 1,513.8 $2.21 2.52x 163.9M&C Saatchi PLC 6.3% 23.2% 0.2% 0.3% 132.7 251.5 $1.90 2.16x 8.4Mm2 Asia 33.6% 23.2% 0.1% 0.1% 83.0 141.6 $1.71 1.95x 27.9

23.2% 3.3% 3.8% 2,748.8 3,627.7 $1.32

Peers Total 83,688.8 95,433.9 $0.88

Specialist/Niche Media (CFROI - WACC* FY17) Avg/Mdn Spread % of IC % of Sales IC FY17 Sales FY17 Company Comp Peers Total Comp EVA FY17Huntsworth Plc 14.3% 19.2% 24.6% 16.7% 269.7 253.8 $0.94 0.68x 38.6XLMedia Plc 44.6% 19.2% 14.3% 9.1% 157.0 137.6 $0.88 0.63x 70.0Next Fifteen Communications Group PLC 19.3% 19.2% 11.4% 16.9% 125.1 256.1 $2.05 1.48x 24.2Cello Health PLC 14.5% 19.2% 11.2% 14.4% 123.2 218.1 $1.77 1.28x 17.9Ebiquity Plc 10.7% 19.2% 10.5% 7.4% 114.8 112.6 $0.98 0.71x 12.2Matomy Media Group Ltd 3.7% 19.2% 8.3% 16.1% 90.9 245.1 $2.70 1.95x 3.4IMImobile Plc 5.3% 19.2% 6.3% 9.7% 69.0 147.8 $2.14 1.55x 3.6dotDigital Group Plc 14.4% 19.2% 3.6% 2.7% 39.2 40.6 $1.04 0.75x 5.6Future Plc 45.8% 19.2% 10.0% 7.0% 109.5 107.0 $0.98 0.71x 50.2

100% 100% 1,098.4 1,518.7 $1.38

Big Data/CRM/E-Commerce/Media/Consumer

Mobile Gaming (incl. Diversified Media)

Big Data/CRM/E-Commerce/Media/Consumer (CFROI - WACC* FY17) Avg/Mdn Spread % of IC % of Sales IC FY17 Sales FY17 Company Comp Peers Total Comp EVA FY17Microsoft 13.6% 16.3% 187,249.0 110,360.0 $0.59 25,409.7Oracle 11.2% 16.3% 111,791.0 39,831.0 $0.36 12,565.3IBM 22.6% 16.3% 62,891.0 79,139.0 $1.26 14,225.9SAP SE 17.7% 16.3% 36,637.0 23,461.0 $0.64 6,473.8

Adobe Systems Inc 20.9% 14.9% 10,694.1 7,301.5 $0.68 2,237.2Salesforce 8.8% 14.9% 9,520.6 8,392.0 $0.88 836.9

LiveRamp Holdings 2.5% 2.5% 1,023.4 880.2 $0.86 25.1Criteo 13.3% 2.5% 909.4 2,296.7 $2.53 121.1comScore Inc -24.4% 2.5% 664.0 403.5 $0.61 -161.7

Alphabet Inc 11.5% 8.9% 157,776.0 110,855.0 $0.70 18,207.4Baidu Inc 11.6% 8.9% 25,651.4 12,564.1 $0.49 2,965.3Naver Corp 3.6% 8.9% 5,300.0 4,139.7 $0.78 191.9

Amazon.com Inc 6.5% 8.0% 72,401.0 177,866.0 $2.46 4,735.0Alibaba Group Holding Ltd 19.5% 8.0% 62,826.1 37,825.0 $0.60 12,263.6JD.com Inc 3.9% 8.0% 11,308.4 53,678.0 $4.75 444.4Yandex NV 3.3% 8.0% 1,733.7 1,612.8 $0.93 57.6Rakuten Inc 7.8% 8.0% 17,916.8 8,423.8 $0.47 1,401.1eBay Inc 7.2% 8.0% 16,587.0 9,567.0 $0.58 1,186.0

182,772.9 288,972.6 $1.58

Facebook 23.5% 9.7% 73,287.0 40,653.0 $0.55 17,215.1Twitter -4.1% 9.7% 6,872.3 2,443.3 $0.36 -281.1Snapchat -34.3% 9.7% 2,992.3 824.9 $0.28 -1,026.1Momo Inc 24.3% 9.7% 1,059.6 1,318.3 $1.24 257.7

Disney 10.5% 11.7% 71,642.0 55,137.0 $0.77 7,486.6Starbucks 12.9% 11.7% 10,415.1 22,386.8 $2.15 1,338.3

Roku Inc -1.4% -12.2% 170.0 512.8 $3.02 -2.3iQIYI, Inc. -33.9% -12.2% 1,116.8 2,574.5 $2.31 -378.9Netflix 4.6% -12.2% 9,603.1 11,692.7 $1.22 444.6Spotify Technology SA -12.2% -12.2% 1,539.0 4,620.6 $3.00 -187.1Pandora Media Inc -25.7% -12.2% 921.9 1,466.8 $1.59 -236.6

Integrated Telecommunications

Mobile Gaming (incl Diversified Media)* (CFROI - WACC* FY17) Avg/Mdn Spread % of IC % of Sales IC FY17 Sales FY17 Company Comp Peers Total Comp EVA FY17Sony Corp 2.8% 11.9% 28.7% 48.2% 43,098.6 77,116.5 $1.79 1.68x 1,224.0Tencent Holdings 19.9% 11.9% 35.3% 22.0% 52,888.1 35,223.2 $0.67 0.62x 10,535.3Nintendo Co., Ltd 5.4% 11.9% 7.2% 6.0% 10,829.7 9,528.4 $0.88 0.82x 582.6NetEase Inc 15.9% 11.9% 5.3% 5.0% 7,957.4 8,015.0 $1.01 0.94x 1,266.8Activision Blizzard Inc 23.1% 11.9% 9.1% 4.4% 13,693.0 7,017.0 $0.51 0.48x 3,159.0Bandai NAMCO Holdings 6.4% 11.9% 2.1% 3.8% 3,102.3 6,122.3 $1.97 1.85x 197.9Electronic Arts Inc 14.7% 11.9% 3.3% 3.2% 4,910.0 5,150.0 $1.05 0.98x 720.3CyberAgent Inc 22.9% 11.9% 0.6% 2.1% 917.9 3,339.1 $3.64 3.41x 209.7Square Enix Holdings Co Ltd 7.0% 11.9% 1.1% 1.4% 1,699.6 2,277.9 $1.34 1.26x 118.1Netmarble Corp 11.2% 11.9% 2.8% 1.3% 4,151.0 2,145.5 $0.52 0.48x 465.7Nexon Co Ltd 8.0% 11.9% 2.9% 1.3% 4,402.2 2,095.3 $0.48 0.45x 353.1Ubisoft Entertainment SA 5.5% 11.9% 1.6% 1.3% 2,386.4 2,027.5 $0.85 0.80x 130.5

150,036.2 160,057.7 $1.07

Take-Two Interactive Software Inc 10.7% 8.6% 10.3% 15.6% 1,358.2 1,792.9 $1.32 1.51x 145.3Mixi Inc 28.5% 8.6% 10.4% 14.9% 1,365.4 1,706.7 $1.25 1.43x 388.5NCSoft Corp 8.6% 8.6% 21.7% 13.5% 2,860.2 1,556.2 $0.54 0.62x 246.8Perfect World Co Ltd/China 16.2% 8.6% 12.6% 10.1% 1,651.7 1,165.3 $0.71 0.81x 268.1Zynga Inc -5.9% 8.6% 12.5% 7.5% 1,647.9 861.4 $0.52 0.60x -96.6Capcom Co Ltd 7.3% 8.6% 6.4% 7.4% 842.8 853.1 $1.01 1.16x 61.9GungHo Online Entertainment Inc 32.7% 8.6% 4.5% 7.2% 589.6 823.3 $1.40 1.60x 193.0NHN Entertainment Corp -5.8% 8.6% 11.9% 7.0% 1,569.0 804.4 $0.51 0.59x -90.4Cheetah Mobile Inc 5.8% 8.6% 6.2% 6.4% 820.1 737.0 $0.90 1.03x 47.3IGG Inc 42.1% 8.6% 1.9% 5.3% 250.8 607.3 $2.42 2.77x 105.6Changyou.com Ltd -1.7% 8.6% 1.5% 5.1% 198.0 580.3 $2.93 3.36x -3.4

13,153.7 11,487.9 $0.87

Kingnet Network Co. Ltd. 38.1% 12.0% 20.2% 16.7% 804.5 459.7 $0.57 0.83x 306.4Com2us Corp 12.0% 12.0% 17.7% 16.3% 702.9 449.5 $0.64 0.92x 84.1Giant Network Group Co., Ltd. 10.9% 12.0% 34.0% 15.5% 1,351.6 425.4 $0.31 0.45x 147.2Rovio Entertainment 14.0% 12.0% 4.2% 12.2% 165.1 335.7 $2.03 2.94x 23.1Glu Mobile Inc -15.5% 12.0% 3.9% 10.4% 154.7 286.8 $1.85 2.68x -24.0Gamania Digital Entertainment Co Ltd -4.5% 12.0% 4.5% 10.1% 179.4 278.6 $1.55 2.24x -8.1Akatsuki Inc 28.6% 12.0% 3.3% 7.2% 130.3 197.9 $1.52 2.19x 37.2Keywords Studios PLC 22.2% 12.0% 6.2% 6.2% 245.0 171.1 $0.70 1.01x 54.4Webzen Inc 5.1% 12.0% 6.0% 5.3% 240.3 147.1 $0.61 0.88x 12.2

3,973.9 2,751.8 $0.69

Paradox Interactive AB 27.2% 28.0% 55.4% 31.5% 773.4 95.4 $0.12 0.57x 210.7Pearl Abyss Corp 12.1% 28.0% 5.2% 26.8% 72.1 81.3 $1.13 5.20x 8.7Frontier Developments PLC 15.2% 28.0% 2.9% 15.8% 40.9 47.8 $1.17 5.38x 6.2Sichuan XunYou Network Technology Co 21.9% 28.0% 31.8% 13.3% 444.7 40.4 $0.09 0.42x 97.3Team17 Group PLC 63.7% 28.0% 4.7% 12.6% 65.5 38.2 $0.58 2.69x 41.7

1,396.6 303.1 $0.22*Left out AT&T (Time Warner Studios)

Integrated Telecommunications (CFROI - WACC* FY17) Avg/Mdn Spread % of IC % of Sales IC FY17 Sales FY17 Company Comp Peers Total Comp EVA FY17AT&T -0.1% -0.6% 32.0% 22.8% 351,454.0 160,546.0 $0.46 0.71x -175.7Verizon Communications Inc 1.5% -0.6% 17.6% 17.9% 193,498.0 126,034.0 $0.65 1.02x 2,941.2China Mobile Ltd 2.8% -0.6% 11.2% 15.6% 122,984.5 109,704.2 $0.89 1.39x 3,468.2Deutsche Telekom AG -1.3% -0.6% 11.0% 12.0% 120,562.0 84,669.6 $0.70 1.10x -1,507.0Telefonica S.A -1.4% -0.6% 7.9% 8.4% 86,291.6 58,754.8 $0.68 1.06x -1,199.5Vodafone PLC -1.2% -0.6% 10.9% 7.8% 119,712.2 54,519.3 $0.46 0.71x -1,436.5China Telecom Corp Ltd -2.0% -0.6% 5.1% 7.7% 55,906.4 54,255.4 $0.97 1.52x -1,112.5America Movil SAB de C.V. 3.5% -0.6% 4.3% 7.7% 46,960.7 54,170.1 $1.15 1.80x 1,648.3

1,097,369.5 702,653.4 $0.64

China Unicom Hong Kong Ltd -2.9% 1.5% 11.4% 17.7% 48,045.9 40,714.8 $0.85 1.55x -1,383.7T-Mobile US Inc -0.6% 1.5% 13.5% 17.6% 57,091.0 40,604.0 $0.71 1.30x -314.0Sprint Corp -1.9% 1.5% 17.8% 14.1% 75,003.0 32,406.0 $0.43 0.79x -1,395.1Altice Europe NV 10.1% 1.5% 15.7% 11.5% 66,190.0 26,548.3 $0.40 0.74x 6,672.0Sky PLC 12.8% 1.5% 4.1% 7.9% 17,156.1 18,298.3 $1.07 1.96x 2,189.1Centurylink Inc -1.5% 1.5% 14.2% 7.7% 59,772.0 17,656.0 $0.30 0.54x -908.5Telenor ASA 4.9% 1.5% 1.0% 6.6% 4,233.2 15,096.3 $3.57 6.54x 208.7Liberty Global plc -0.1% 1.5% 11.1% 6.5% 46,662.3 15,048.9 $0.32 0.59x -60.7Singapore Telecommunications Ltd 3.8% 1.5% 6.9% 5.6% 28,993.0 12,930.7 $0.45 0.82x 1,113.3Rogers Communications, Inc 3.2% 1.5% 4.5% 4.7% 18,968.7 10,903.0 $0.57 1.05x 597.5

422,115.2 230,206.3 $0.55

Altice USA Inc 6.5% 1.6% 38.3% 23.9% 26,332.4 9,326.6 $0.35 0.63x 1,701.1Telefonica Deutschland Holding AG -3.4% 1.6% 17.2% 21.2% 11,844.1 8,242.5 $0.70 1.23x -407.4Chunghwa Telecom Co Ltd 0.3% 1.6% 18.0% 19.2% 12,365.2 7,480.1 $0.60 1.07x 40.8Koninklijke KPN N.V 1.6% 1.6% 17.0% 18.8% 11,690.5 7,339.8 $0.63 1.11x 191.7Proximus SA 2.4% 1.6% 9.5% 16.8% 6,507.0 6,554.7 $1.01 1.78x 156.2

68,739.2 38,943.7 $0.57

Telekom Austria AG -2.4% 4.0% 12.1% 18.1% 6,286.3 4,951.0 $0.79 1.49x -152.8Millicom International Cellular S.A 4.4% 4.0% 15.7% 15.1% 8,169.0 4,133.0 $0.51 0.96x 361.1Taiwan Mobile Co Ltd 5.0% 4.0% 7.9% 14.1% 4,104.2 3,852.3 $0.94 1.78x 206.01&1 DRILLISCH AG 89.4% 4.0% 8.9% 11.6% 4,642.4 3,177.1 $0.68 1.30x 4,151.2Far EasTone Telecommunications Co Ltd 4.0% 4.0% 7.0% 11.1% 3,625.0 3,027.0 $0.84 1.58x 143.2Telenet Group Holding NV 12.1% 4.0% 8.2% 10.4% 4,233.2 2,856.1 $0.67 1.28x 510.5SES SA -0.7% 4.0% 23.4% 8.4% 12,128.4 2,299.0 $0.19 0.36x -84.9Eutelsat Communications 1.4% 4.0% 14.8% 6.1% 7,661.5 1,680.3 $0.22 0.42x 109.6Orange Belgium -1.0% 4.0% 2.0% 5.2% 1,050.5 1,413.5 $1.35 2.55x -10.3

51,900.4 27,389.3 $0.53

Real Estate & Data Centre REIT’sReal Estate & Data Center REITs (CFROI - WACC* FY17) Avg/Mdn Spread % of IC % of Sales IC FY17 Sales FY17 Company Comp Peers Total Comp EVA FY17Capgemini SA 9.9% 3.1% 8.4% 40.6% 11,087.0 14,451.5 $1.30 4.83x 1,094.3Brookfield Property Partners -2.6% 3.1% 44.2% 17.2% 58,376.5 6,135.0 $0.11 0.39x -1,488.6Equinix, Inc 4.8% 3.1% 13.1% 12.3% 17,265.0 4,368.4 $0.25 0.94x 830.4Digital Realty Trust Inc 3.1% 3.1% 14.9% 6.9% 19,752.0 2,457.9 $0.12 0.46x 616.3Iron Mountain Inc 4.3% 3.1% 7.2% 10.8% 9,533.1 3,845.6 $0.40 1.50x 406.1Shanghai East China Computer Co Ltd 8.0% 3.1% 0.2% 2.7% 322.6 975.4 $3.02 11.22x 25.7Wangsu Science & Technology Co Ltd 5.9% 3.1% 0.3% 2.2% 404.1 794.2 $1.97 7.29x 23.6CyrusOne Inc 2.4% 3.1% 2.9% 1.9% 3,813.4 672.0 $0.18 0.65x 90.8QTS Realty Trust Inc-Cl A 2.0% 3.1% 1.7% 1.3% 2,214.6 446.5 $0.20 0.75x 44.1EPR Properties -2.0% 3.1% 4.5% 1.6% 5,956.2 576.0 $0.10 0.36x -117.3Uniti Group Inc 1.6% 3.1% 2.6% 2.6% 3,470.9 916.0 $0.26 0.98x 56.6

132,195.3 35,638.5 $0.27