RNS Number : 1944K
Keywords Studios PLC
09 April 2018

9 April 2018
Keywords Studios plc ("Keywords", "the Group")
Full year results for the year to 31 December 2017

Another excellent performance reflecting strong organic and acquisitive
growthKeywords Studios, the international technical services provider to the global video
games industry, today provides its full year results for the year to 31 December
2017.
Financial overview:· Group revenue (including effect of acquisitions) increased by 57% to €151.4m(2016: €96.6m)· Adjusted EBITDA* up 57% to €26.3m (2016: €16.7m), representing a margin of
17.4% (2016: 17.3%)· Adjusted profit before tax* increased by 55% to €23.0m (2016: €14.9m)· Adjusted basic earnings per share* up by 52% to 31.18c (2016: 20.59c)· Adjusted operating cash generation** increase of 48% to €21.9m (2016:€14.8m)· Net cash*** of €11.1m (2016: €8.7m)· Final dividend of 0.98p (2016: 0.89p); 10% increase in total dividend to 1.46p
per share (2016: 1.33p)
Operational overview:· 15.1% increase in like for like**** revenue· 11 acquisitions completed to expand our existing services lines (including a newengineering service line) and extend our geographical reach, including our twolargest acquisitions to date:o Acquisition of VMC in October for $66.4m giving the Group leadership infunctional testing in North America, significantly increased our presence inplayer support services, added new service delivery models including
Embedded Technical Services and the Global Beta Test Networko Acquisition of Sperasoft in December for $27m brought strength in codevelopment, extended our Engineering and Art capabilities, and provided
entry points into Eastern Europe· Good progress made with integrating acquisitions, with multiple operations
being integrated together in Paris, Mexico City, Seattle and Madrid· Invested in adding capacity for organic growth across multiple studios
o Continued success in cross-selling our extended services with a 45% increase
in clients using three or more services from 64 to 93*before acquisition and integration expenses of €3.0m (2016: €1.3m), share option charges of €1.4m (2016:€0.7m), amortisation of intangibles of €3.0m (2016: €1.6m), and foreign currency exchange loss of €3.6m (2016:
loss of €1.7m)**cash ﬂow from operations plus acquisition related expenses of €3.0 (2016: €1.3m), plus exceptional working
capital costs related to the VMC acquisition of €3.0m (2016: nil), plus €2.3m in VMC receipts held by a third party
on behalf of the Group and passed to the Group post year end. In the comparative year, multimedia tax credits(MMTC) of €1.6m were received in respect of claims prior to 2015***after payment of €87.0m net cash consideration for acquisitions (2016: €21.1m), €3.0m of acquisition costs
and integration expenses (2016: €1.3m), and £75.0m raised (before expenses) via an equity placing (2016: nil).
**** calculated on the basis of revenues being included for 2017 acquisitions from the date of acquisition and forthe equivalent period in the prior year.

Current trading and outlook:· Acquisitions announced separately today:
o Cord Worldwide Limited and Laced Music Limited for a total consideration of£4.5m
o Maximal Studio for an initial cash consideration of €0.3m and €0.2m
deferred subject to performance····

The typically quieter first quarter has seen activity levels in line with our
expectations and the positive momentum in the business gives us confidence inthe outcome for the full year
Encouraging early wins for new co-development services
Agreed heads of terms for a revolving credit facility of up to €105m
Acquisition pipeline remains healthy

Andrew Day, Chief Executive of Keywords Studios, commented:"The Group has delivered another strong performance with good organic growth
supplemented by a number of acquisitions including two of our largest acquisitions
to date.
"Our organic investment and acquisitions have added signiﬁcant scale to ourexisting service lines and extended both our service range and geographical reach,establishing a new Engineering service line, bringing additional capabilities in codevelopment, content management, and delivering services from within clients'
premises, and providing us with a presence in Eastern Europe.
"We entered 2018 with pro forma revenues of €225m, across seven service lines
and 42 studios in four continents, compared to just over €16m derived from four
service lines and five studios in 2013 - the year of our IPO.
"We expect to make continued strong progress as we realise the full beneﬁts of ourenhanced services platform and with the ﬁnancing in place to support further
organic and acquisitive growth in 2018."

A presentation of the full year results will be made to analysts at 9.30am today at
MHP's oﬃces. There will also be a live, listen only webcast of the presentation and arecording will be made available via www.keywordsstudios.com. To register foraccess, please contact Charles Hirst at MHP Communications on +44 20 3128 8193
or email keywords@mhpc.com.
For further information, please contact:
Keywords
Studios(www.keywordsstudios.com)
Andrew Day, Chief Executive Officer
David Broderick, Chief Financial Officer+353 190 22 730

Numis (Financial Adviser)
StuartSkinner/
Kevin
Cruickshank(Nominated Adviser)
James Black / Tom Ballard (Corporate
Broker)+ 44 20 7260 1000

MHP Communications (Financial PR)
Katie Hunt / Ollie Hoare / Nessyah Hart /Charles Hirst+ 44 20 3128 8100
Keywords@mhpc.com

Certain information contained in this announcement would have constituted inside
information (as deﬁned by Article 7 of Regulation (EU) No 596/2014) prior to its
release as part of this announcement.

Notes to Editors
Keywords Studios is an international technical services provider to the global video
games industry. Established in 1998, and now with over 40 facilities in 20 countries
strategically located in Asia, the Americas and Europe, it provides integrated art
creation, software engineering, testing, localisation, audio and customer careservices across more than 50 languages and 16 games platforms to a blue-chipclient base in more than 15 countries. It has a strong market position, providing
services to 23 of the top 25 most prominent games companies, including Activision
Blizzard, Bandai Namco, Bethesda, Electronic Arts, Konami, Riot Games, Sony,
Square Enix, Supercell, TakeTwo, and Ubisoft. Recent titles worked on include
Uncharted 4: A Thief's End, Call of Duty: Inﬁnite Warfare, Mortal Combat X,
Assassin's Creed Syndicate, Battleﬁeld 1, Overwatch, World of Warcraft: Legion,
Hearthstone, Clash Royale, and Mobile Strike. Keywords Studios is listed on AIM, theLondon Stock Exchange regulated market (KWS.L).
www.keywordsstudios.com
Chairman's Statement
Significant growth globally
I am delighted to report another excellent performance, with the Group having
delivered signiﬁcant revenue growth, whilst maintaining margins, to achieve a 55%
increase in Adjusted profit before tax to €23.0m in the year (2016: €14.9m).
The Group's strong performance reﬂects the continuation of our proven strategy tosupplement strong organic growth with acquisitions that further extend the Group's
services and geographical reach to position us as the leading creative and technicalservices provider to the global video games industry. We made eleven acquisitions
during the year, including two of our largest to date, VMC and Sperasoft. These
acquisitions have enabled us to form a new Engineering service line of scale, add
co-development expertise, expand the capacity of and capabilities within our
existing service lines considerably and extend our geographical reach into Eastern
Europe.
In addition, we have invested in expanding capacity at many of our studios
including Montreal, Zhengzhou, Manila, Dublin, Madrid and Tokyo during the yearwith further investments in expansion planned for 2018.
Managing and Funding GrowthPart of the success of the Group can be attributed to the ability of the management
team to source, execute and integrate acquisitions eﬀectively across the globe andacross our service lines whilst retaining the Keywords culture, which is a particularcompetency the team has built since IPO. That this has been accomplished acrossall of our service lines, now embracing over 40 studios in 20 countries, during 2017is a notable achievement.
During the year, we raised £75m via a placing (before expenses), which was very
well subscribed and we would like to thank our shareholders for their continued
support. Since the year end, we have agreed terms for a new bank facility, initiallyfor €75m over a three year term with the option to extend the facility to €105m andby a further two years. The new facility replaces the existing €35m facility and is on
improved terms. Together with our strong cash generation (the Group ﬁnished 2017with €11.1m of net cash) this gives us further headroom to make acquisitions.
We are very comfortable with this level of debt, given that a high proportion of theGroup's revenues can be predicted with some certainty, and seek to maintain a mix
of funding for our growth strategy which both gives us the ﬂexibility to act on ourinvestment decisions and enhances shareholder value.

People and Board
The Group's progress is a great credit to every single Keywords person who has
helped make it happen. During the year our CEO, Andrew Day, was accorded thehonour of being voted as CEO of the year at the Grant Thornton Quoted Company
Awards 2018, a much-deserved tribute for someone who has been the very essenceof Keywords - its dynamism, client focus and culture - but the award is also a tributeto the whole Keywords team.
I would like to thank my fellow directors, whose complement has been strengthenedby the appointments of Charlotta Ginman and Georges Fornay during the year. Bothhave added their own strengths to the Board, which beneﬁts from a diversity ofviews in its highly constructive discussions which I believe ensures the Board
operates eﬀectively, to the beneﬁt of the Group as it grows. Charlotta brings withher extensive investment banking, technology and mobile industry and PLC
experience whilst Georges brings with him strong video games industry expertise.
I would also like to thank the senior management team and all the hard working
employees within the Group. There is a tremendous spirit within the businesses
which makes Keywords a success, with a culture of continuous improvement which
encourages everyone to make their own contributions towards consistently
ensuring we provide the best service possible to our clients.
Dividend
In line with our progressive dividend policy, and allowing for the need to retain
resources to fund future growth of the Group's business and its strategic aims, theBoard is pleased to recommend a ﬁnal dividend of 0.98p per share which, following
the interim dividend payment of 0.48p per share, will make the total dividend forthe year ending 31 December 2017 1.46p per share, an increase of 10% compared
to 2016.
Summary and Outlook
Following a highly successful 2017, we entered 2018 with pro forma revenues of€225m derived from a more diversiﬁed, better balanced business with an expanded
range of services and locations that will support our aim to increasingly become akey strategic partner to the major games companies.
It is a pleasure to Chair a Group which has a strong business model that supports
proﬁtable growth and high cash conversion, where the strategic aims are clearlydeﬁned, and that serves an industry which is growing fast in which we can increase
our share by offering an expanding array of services.
The Keywords team remains highly focussed on delivering the high standard of work
we have come to be known for and maintaining the trust and conﬁdence of ourclients as we grow both organically and by acquisition. I am, therefore, conﬁdent
that the Group will make further progress as it continues to build upon its
strengthened services platform with considerable for further growth.
Ross Graham
Chairman
9 April 2018
Strategic Report and Chief Executive's Review
An excellent performance and a strengthened services platform
The Group has delivered another strong performance, with good like for like growthfrom the existing businesses combined with successfully securing and integrating
acquisitions that have signiﬁcantly enhanced our services platform in line with ourstrategy.
Delivering on Our Strategy
We continue to execute well in pursuit of our strategy to build the world's leading
creative and technical services platform focused on the most complex of interactive
content - video games.
We operate in a service provision industry which remains highly fragmented despite
the scale and global nature of the major video games publishers and developers,
and the trend towards those clients outsourcing a greater proportion of their games
development and in-game support to manage the demands for increasingly
sophisticated content whilst limiting their fixed costs.
The key pillars of our strategy are, therefore, to grow organically and by acquisition
to extend the Group's service capacity, capabilities and geographical reach - where
we seek to gain access to markets for the best talent or to be close to our clients.
By generating synergies across our expanding multi-service global platform, we are
increasingly becoming a key strategic partner to our customers.
2017 Acquisitions
2017 saw Keywords successfully execute 11 acquisitions as we continue toselectively consolidate our market. These businesses are spread across multiple
geographies and added to all seven of our service lines demonstrating the strengthof our leadership team which comprises both regional and service line
management. All of the acquisitions in 2017 have been or are being integrated.
In particular, the addition of Engineering Services as our seventh service line during
2017 has ﬁlled an important gap in our palette of services and we look forward tocontinuing to build this business in 2018 and beyond. This was initially formed by
our acquisition of GameSim in May and expanded through our acquisitions of d3t in
October and Sperasoft in December, providing the Group with game development,
game porting and live operations support talent totalling some 400 people.
We have also successfully extended our geographic reach adding operations in
Eastern Europe for the ﬁrst time through our acquisition of Sperasoft, giving us
access to talent in a market known for strong technical skills, particularly insoftware development. Sperasoft brought with it scale and expertise in Engineeringand Art services, with a particular strength in co-development in which signiﬁcantparts of or even full games are developed on behalf of game developers or
publishers. This further enhances our positioning as a strategic partner to gamedevelopers and publishers who are increasingly relying upon co-development
arrangements to provide them with broader development support for their games
that are increasingly bigger and higher deﬁnition, whilst we continue to ensure weare not directly exposed to the commercial performance of individual titles. We
expect to be able to grow this way of working with our clients, combining
Sperasoft's strength in co-development with our broader service range for a more
integrated service delivery.
Sperasoft's 370 talented engineers, game designers, artists and project managers
are based in St Petersburg, Krakow and Volgograd and we are now looking at
seeding some of our other services into these locations.
VMC, acquired in October for $66.4mm, brought the Group leadership and scale infunctional testing and signiﬁcantly increased our presence in player support
services. It also brought to the Group specialist expertise in managing 'Embedded
Technical Services', through which VMC provides Testing, Customer Support andother services in-situ at clients' facilities. VMC was a carve out from the publicly

quoted Volt Information Sciences Inc. Its operations are in the US and Canada andits integration, which is nearly complete, includes consolidation of facilities and ofmanagement teams and the migration of the business to Keywords' core operating
IT platforms. The integration is being led by Nicolas Liorzou, our Regional Managing
Director for the Americas who has led the successful integration of two previous
acquisitions, Babel Media (acquired in 2014) and Enzyme (acquired in 2016).
Our simultaneous acquisitions of the Paris based audio and localisation businessesof La Marque Rose, Around the Word, Dune Sound and asrec in August are being
integrated with our existing audio and localisation business there, which we
acquired with the acquisition of Synthesis in 2016. Led by Michel Golgevit, CEO of
Around the Word, these businesses are planning to move to custom built, state of
the art audio recording studios in 2018. Also in the Audio service line, Lola in
Mexico City was acquired just before the end of the year and they are working withthe management of Kite Team in Mexico, which joined the Group in 2015, to
integrate the two businesses.
In our Art Service line, which saw a change of leadership at the end of the year withthe retirement of Fred Stockton and the appointment of Ashley Liu as Service Line
Director, the acquisitions of SPOV in London, and Red Hot with its facilities inShanghai, Dalian, Zhengzhou, Chengdu and Yogyakarta have performed to
expectations and are integrating well.
XLoc, a technology company with a proprietary content management solution thathelps clients manage and automate the complex process of localising games
content across multiple languages and platforms, was acquired in May. There havealready been some successes in cross selling this platform alongside our localisation
services which we believe will further embed us in to the localisation processes ofgames developers.
Organic Growth and Investment
We have continued to drive organic growth across the business, having achieved a
15.1% increase in like for like revenue in 2017 (which is calculated on the basis ofrevenues being included for 2017 acquisitions from the date of acquisition and forthe equivalent period in the prior year in order to provide a clearer measure of theorganic growth of all of the businesses now within the Group). Audio had aparticularly tough comparator with Synthesis having produced an exceptional
performance in 2016 while all other service lines posted strong like for like growth.
Functional Testing and Customer Support produced particularly strong growth. We
have seen some beneﬁcial impact from the burgeoning eSports market as we
respond to demands for translation services, marketing materials and customer
support related to the events being staged and we are seeing demand for ourservices from outside the games industry as other industries seek out the skills andtechnology to make their content interactive.
Our organic growth was driven in part by further strong progress with extending ourclient relationships, as evidenced by a 45% increase in clients using three or more
services from 64 in 2016 to 93 in 2017.
As announced at the half year, we also launched an ambitious programme ofinvestments in many of our studios to add capacity in locations including Montreal,
Zhengzhou, Manila, Dublin, Madrid and Tokyo, with new recording studios plannedfor London and Paris in 2018.
A combination of our organic and acquisitive investment meant we ﬁnished the yearwith 42 operating locations in 20 countries compared to 27 locations in 17 countries
in 2016.
The acquisitions of VMC and Sperasoft will result in the Group's share of revenue
denominated in USD growing from 46% in 2017. Recent weakness in the USD

compared to a number of other currencies in which the Group trades such as the
Canadian Dollar, Euro, Yen, Renminbi and Rupee is being monitored and some USD
denominated pricing may be adjusted accordingly.
Service Line review

Art Creation (17% of Group revenues in the year)
Art Creation services revenue grew 58% to €26.2m (2016: €16.6m). On a like-forlike basis, Art grew by 14% year on year, reﬂecting a year in which Lakshya Digitalconsolidated the very strong growth of 2015 and 2016 and the remaining studios
made good progress including Red Hot which we acquired in May. Including
Sperasoft, we concluded the year with over 1,000 artists on our payroll of which the
majority are in India and China. Through Liquid Development and Volta we manage
further pools of freelance artists numbering about 200 in total. This talent basemakes Keywords one of the largest art services businesses in the highly fragmented
global video games art services market.
Our Art studios are increasingly working with each other to leverage their respective
capacities, and capabilities, to deliver top quality work to their global client base.
Likewise, with our recent investments in Engineering services, these two service
lines are working together in a co-development model to produce complete gamedevelopment services for game developers and publishers.
Under the leadership of Ashley Liu (previously CEO of Mindwalk), the objective for
our Art Creation services line is to continue to grow capacity to meet demand(including internal demand from our co-development activities), whilst maintaining
our reputation for quality and reliability of delivery to our customers' timescales. In
addition, we aim to extend our capabilities in areas such as visual special eﬀects,
user interface design, cinematics and motion graphics, which we have started to dowith the acquisition of Spov early in 2017.

Engineering (2% of Group revenue for the year)
With Sperasoft only being included since December, d3t from October and
GameSim from May, our Engineering service line is being built through acquisitionin much the same as we have built our Art Creation service line which started in
October 2014 with the acquisition of Lakshya Digital. We have had some very early
successes with cross selling our engineering capabilities into clients who use other
Keywords services and we look forward to continuing to build our Engineering
service line in 2018 and beyond.
Audio (14% of Group revenue for the year)
Our Audio service line increased revenues by 20% to €20.7m (2016: €17.3m)
including contributions from La Marque Rose, Around the Word, Dune Sound andasrec, all of which were acquired in August and Lola which was acquired in
December. On a like-for-like basis, revenues in our Audio service line declined byapproximately 10%, in part reﬂecting the exceptionally strong performance ofSynthesis in the prior year. Also, the video games voice actors' strike which eﬀected
the video games voice recording market in Los Angeles was resolved in September
2017 and we look forward to more buoyant conditions there in 2018.
We opened an audio studio in Tokyo, strengthened our management of the
combined Kite Team, Synthesis and Sonox operations in Madrid and also that of our
Los Angeles studio. In 2018, we plan to invest in state of the art audio recording
facilities in Paris and London.

Functional Testing (20% of Group revenue for the year)
Our Functional Testing services grew by 248% to €30.0m (2016: €8.6m), including aten-week contribution from VMC which was acquired in October 2017, and grew by
an impressive 52% on a like-for-like basis.
Some 50% of VMC's €47m annual revenues fall into the Functional Testing Service

line and the service line management team have been instrumental in integrating
the functional testing businesses in Seattle and Montreal, slimming down the
combined management team, standardising tools and processes and making
eﬃcient use of oﬃce space. As a result, we anticipate improved margins from the
VMC business as signalled at the time of acquisition.
The organic growth of Functional Testing has driven demand for increased capacity
in Montreal and New Delhi and we have invested during the year in additional spacein both locations and are evaluating options for expansion in other locations.
During the year we also invested in Player Research, the play testing business weacquired in October 2016, with the opening of a purpose-built play test laboratory in
our Montreal building.

Localisation (28% of Group revenue in the year)
Our Localisation activities, including contributions from XLoc acquired in May, La
Marque Rose, Around the Word, Dune Sound, asrec and VMC which were acquired inAugust, increased revenues by 30%, to €42.0m (2016: €32.4m), and continued its
excellent record of growth with a like-for-like increase of 20%.
The business produced around 250 million translated words during the year as our
Localisation service line continued to beneﬁt from the trend towards 'games as aservice' which necessitates fresh content being added to the game on a frequentbasis to expand the game worlds and keep players engaged. Another driver ofgrowth has been eSports where our localisation expertise has been called upon forthe production of marketing content, customer support materials and "livetranslation" of event content. We are the leading localisation provider for video
games and enjoy a strong position in the fast-growing mobile games segment of themarket, where content additions to the many leading games that we support result
in continuous localisation work for the Group in as many as 30 languages.
During the year we completed the internal rollout of our proprietary localisation
project management system, BPS, and we continue to invest in enhancements tothe software to improve the efficiency of our localisation teams.

Localisation Testing (13% of Group revenue in the year)
Our Localisation Testing operations grew by 22% on an absolute basis to €19.9m(2016: €16.2m) helped by the addition of revenues from VMC and full year
contributions from Synthesis and Enzyme which were acquired in April 2016 andNovember 2016 respectively. On a like for like basis, growth was a more modest
3%. The integration of VMC's Localisation Testing business is progressing well.
With secure localisation testing studios in Montreal, Dublin, Milan, Singapore andTokyo we believe this service line is the largest provider of localisation testing in thevideo games market. We look forward to continuing to serve our clients around theworld while optimising our production eﬃciency, assisted by our increased scale,and developing our talent pool of games passionate professionals of over 30
different nationalities.

Customer Support (6% of Group revenue for the year)
Revenues for this service line beneﬁtted from a signiﬁcant contribution from VMC
and grew by 64% to €9.2m (2016: €5.6m). On a like-for-like basis, the businessgrew by 16% thanks to new client wins and successful cross selling efforts.
Our Customer Support business which includes live operations support functions like
community management, fraud prevention, bot hunting and VIP services, continues
to perform strongly and is achieving strong organic growth.
Among the highlights for this business line has been the growth of the Manila based
customer support operation spun out from our client, Ankama in March 2016 fromthe then 23 staﬀ to over 350 today. We've also been pleased with the success ofour customer support teams based in our studio in Tokyo, where they service both
Japanese and non-Japanese clients. During the year we opened a multi lingual
customer support studio in Madrid alongside our audio and localisation businesses
there and in 2018 we are considering establishing a support centre in Eastern
Europe as we leverage our presence there following the Sperasoft acquisition.
Whilst our Customer Support service line remains a relatively small part of theGroup, we believe our specialist teams oﬀer an attractive alternative to traditionallarge customer support call centres. Our customers are highly focussed on keeping
gamers in their games for longer. We believe our model of using teams ofpassionate gamers with deep knowledge of the games they are supporting provides
improved user satisfaction and will enable us to increase our share of this growing
market over time.
PeopleThe Group employed an average 3,167 people in 2017 (2016: 1,818). Well balanced
across our three regions, we employed 1,142 in The Americas, 609 in Europe and1,416 in Asia. As the growing games industry continues to produce more content forindustries as diverse as retail, urban planning, advertising, education, architecture
and automotive which adopt the use of game engines to make their content moreinteractive and engaging, so we see the demand for human capital increase. Our
broad and deep pool of highly experienced and games passionate co-workers
provide an outsourced resource for our clients to tap into as and when they need inorder to get their content to market in a flexible and cost-efficient manner.
Our culture acts as the glue that binds our staﬀ around the world together. Relaxed,
professional and humble with a focus on doing the very best we can for each project
entrusted to us, this culture creates an environment in which games passionate
individuals can work together with likeminded colleagues while enjoying theopportunity to work on most of the world's leading games ahead of their release.
Working on around 150 games at any time in the year and more than 500 in total
throughout the year, Keywords provides an excellent and sustainable variety ofwork, good career advancement and opportunities to work in many diﬀerent
locations. We are proud to serve as a stepping stone for those that go on to maketheir careers in games production and publishing and we are fortunate to have an
excellent alumnus of Keywordians employed by many of our client companies.
Our acquisition programme also brings fresh talent to the Group at all levels and wecontinue to be successful at integrating our businesses including providing
opportunities for staﬀ to move between our various studios. This year we haveadded game programmers, game designers and engineers to our ever-growing
Keywords family. This is reﬂected in our senior leadership team, which comprises
four people from the original Keywords business, seven people from acquired
entities as well as four externally hired employees.
Current Market Trends
Following the refreshes of the PlayStation® and Xbox consoles with the launch of
the PS4 Pro and the Xbox One S in 2016, the success of the Nintendo Switch in 2017
was a highlight of the console market in the period beneﬁtting Keywords as we
provide services for games made for this platform and assist developers inrepurposing existing games for the Switch.
The astounding success achieved by battle arena games led by Fortnite and Player
Unknown Battleground seem set to continue and we are fortunate to be providing
services for those games too. The mobile games sector continues to grow fasterthan the other platform types, with much of this growth originating in Asia where we
continue to expand and build upon our relationships with the major games
publishers in China, Japan and Korea.

The evolution of the console gaming sector from packaged product, throughdigitally delivered content and into the monetisation models of free to play andmicro transactions that were previously the preserve of PC and mobile gaming isinteresting to see and brings with it a requirement on the part of our gamedeveloper and clients to continually feed their games with new content, thechallenges of which we have mastered over time with our clients in PC, social andmobile gaming.
Augmented reality has received a lot of attention but, as with virtual reality in 2016,
we feel this technology is still early stage and the mass adoption of both content
formats is probably a few years oﬀ. However, virtual and augmented reality games
and applications continue to generate additional demand for our services.
The eSports market is developing strongly and, while we do beneﬁt to some extent
from this through the provision of our existing services to support the games being
played and through supporting the marketing and communications management of
the events themselves, we continue to seek out ways in which we could participate
in this segment in a more meaningful manner.
OutlookAs we did in 2016, in 2017 we had a strong ﬁnish to the year particularly in our
audio and testing businesses. The typically quieter ﬁrst quarter has seen activity
levels in line with our expectations and the positive momentum in the businessgives us confidence in the outcome for the full year.
Early wins of co-development projects in 2018 are encouraging signs of the demand
from game developers and publishers for integrated delivery of Engineering and Art
in the form of game remastering and game development. We anticipate thatdemand for co-development services will continue to increase as the size andcomplexity of games makes it harder for any one development studio to undertake
all the development themselves. We look forward to being able to package more of
our services into co-development style engagements, including audio, localisationand testing, to add further value to our clients.
As a more diversiﬁed, better balanced business with an expanded range of services
and locations to oﬀer our clients, and the support of a global sales and marketing
function, we see many opportunities to extend our existing relationships andbecome a strategic partner to major games companies, both through providing
more integrated services and through the provision of dedicated outsourced orembedded services.
Each service line is pursuing a growth strategy formulated for its own market
opportunity, with some including a larger acquisition component than others to add
scale or capabilities that we do not currently have within the Group, with the aim ofa good balance between all seven service lines over time.
We have entered 2018 with a considerably enhanced platform and a healthyacquisition pipeline and we fully expect to grow our business organically as well as
through selectively acquiring complementary businesses as we continue toconsolidate the highly fragmented market for video games services in 2018.

Andrew Day
Group Chief Executive Officer
9 April 2018
Financial and Operating Review

Group performance2017 has seen the Group deliver another year of signiﬁcant increases in revenue,
proﬁt and underlying cash generation driven by good organic growth, substantiallycomplemented by acquisitions which have further extended its service oﬀering,market penetration and geographic reach.
Revenue mix
Revenues increased across all lines of business in 2017, resulting in our sevenservice lines accounting for the following proportion of Group Sales in the year:
Pro
Pro
forma*
forma*
YearYear
for thefor theended 31 ended 31
year
year
Dec '17 Dec '16
ended 31 ended 31
Dec '17 Dec '17
%
%
%
€'m
Functional Testing

19.8

8.9

23.3

52.2

Localisation Testing

13.1

16.8

10.0

22.5

Localisation

27.7

33.5

19.5

43.9

Audio

13.6

17.9

11.7

26.3

Customer Support

6.1

5.8

11.7

26.3

Art Creation

17.3

17.1

14.1

31.6

Engineering

2.4

-

9.7

21.7

Total

100

100

100

224.5

* Pro forma includes the annualised sales of all acquisitions made in 2017 in orderto give a better overview of the balance of the business at the start of 2018.
Revenue
Revenue for 2017 was up 57% at €151.4m (2016: €96.6m). This growth was
generated across all seven service lines of the business through a combination bothorganic and acquisitive growth. The like-for-like revenue growth rate, which provides
a 2016 comparative as if all of the 2017 and 2016 acquisitions had been owned forthe same period in 2016 as they have been in 2017, was 15% for the year which
was down from 24% in 2016 due to the tough comparative as a result of the
exceptional 2016 performance of Synthesis while all other service lines grew, with
Functional Testing, Customer Support and Localisation being particularly strong.
Excluding Synthesis from both periods the like for like growth was 18.1% which was
in line with our expectations and a strong growth rate from a larger base.
Gross margin
Gross proﬁt for the year was €55.1 (2016: €36.7m). As expected the gross margin
percentage declined slightly to 36.4% (2016: 38.0%) as the Group absorbed thelower margin VMC business with its strengths in Embedded Technical Services
where the services are hosted by the client with correspondingly lower operating
costs.
Adjusted EBITDA

Adjusted EBITDA is a measure of operating proﬁt used by the Board, which excludes
depreciation, amortisation, share option expenses and one-time costs related toacquisitions. For 2017, Adjusted EBITDA increased 57% to €26.3m compared with
€16.7m for 2016. As a percentage of revenue, Adjusted EBITDA has been
maintained at 17.4% compared to 17.3% for 2016.
Operating expenses, excluding depreciation, increased by €8.6m to €28.4m (2016:€19.8m) mainly as a result of the new acquisitions made during the year. The
continued additional investment in strengthening Keywords' management tosuccessfully manage the growth of the Group also contributed. However, thecontinued drive on achieving synergies across the Group helped these costs
decrease from 20.5% to 18.8% of revenue, with teams increasingly combining theGroup's services and resources effectively to meet clients' needs.
Adjusted profit before tax and Adjusted EBITDA for year ended 31 December 2017
Year Ended
2017€'000sYear Ended
2016€'000sStatutory profit before tax
Add back costs excluded from Adjusted profit
before tax*
Add back loss attributable to non-controllinginterest
Adjusted profit before tax

11,994

9,435

11,049

5,368

0

61

23,043

14,864

Add back Depreciation and Interest

3,282

1,861

26,325

16,725Adjusted earnings before
Interest, tax, depreciation andamortisation* Before acquisition and integration expenses of €3.0m (2016: €1.3m), shareoption charges of €1.4m (2016: €0.7m), amortisation of intangibles of €3.0m(2016: €1.6m), and foreign currency exchange loss of €3.6m (2016: loss of€1.7m).
Net finance costs
During 2017 , there was a net ﬁnance cost of €4.4m compared to a cost of €2.0m in
2016 primarily due to the impact of foreign exchange losses. Foreign exchange
losses of €3.6m (2016: loss of €1.7m) were in large part due to the eﬀect oftranslating net current assets held in foreign currencies. The increase in interest
expense to €0.6m (2016: €0.2m) is largely due to a secured credit facility with
Barclays of up to €35m over a ﬁve-year period of which €18.25m was drawn downat the year end.
Adjusted Profit before Tax
Adjusted proﬁt before tax is used by the Board to measure the more meaningfulunderlying proﬁt generation of the Group. This measure adds back one-time
expenses, such as acquisition and integration expenses, share option charges,
foreign currency exchange gains or losses and amortisation of intangibles to thestatutory proﬁt before tax. Adjusted proﬁt before tax for 2017 increased by 55% to€23.0m compared with €14.9m in 2016.
Taxation

The Group's eﬀective tax rate has decreased again in 2017. The reduction in thefederal income tax rate for businesses in the US will further help the Group manage
its eﬀective tax rate not withstanding some eﬀective tax planning we were able toachieve through the acquisition of VMC. We continue to make steady progress inmaking better use of our Ireland based operational headquarters in contracting andtreasury management such that we expect our eﬀective tax rate to continue toreduce despite our exposure to higher tax jurisdictions in most of the territories we
operate in. The Group's eﬀective tax rate, based on the Adjusted measure of proﬁt
before taxation in the period (as set out in the ﬁnancial overview above), was 20.5%(2016: 21.7%).
Basic earnings per share
Basic earnings per share for the year, before one-time costs of acquisitions andintegration, share option charges, amortisation of intangibles, and foreign exchange
movements, increased by 52% to 31.18c compared with 20.59c for 2016. Basicearnings per share based on the statutory proﬁt after tax was 12.37c (2016:11.22c).
Cash flow and debt
The Group generated operating cash ﬂow of €13.6m for the year, down from€15.0m in 2016. A better measure of underlying cash ﬂow is Adjusted operating
cash generation, which was €21.9m in 2017, up from €14.8m in the prior year. Thisﬁgure is cash ﬂow from operations plus acquisition related expenses of (2016:€1.3m), plus exceptional working capital costs related to the VMC acquisition of€3.0m (2016: nil), plus €2.3m in VMC receipts held by a third party on behalf of theGroup and passed to the Group post year end. In the comparative year, multimedia
tax credits (MMTC) of €1.6m were received in respect of claims prior to 2015.
During the year the Group also received MMTCs in Quebec of €3.4m (2016: €2.8m).
Previous delays in receiving the multimedia tax credits were not encountered in2017 and the total multimedia tax credit accrual amounted to €10m as at 31
December 2017 (2016: €3m). The VMC acquisition accounted for €6.6m of theclosing accrual.
The Group made eleven acquisitions to strengthen the business during the yearwith a net cash outﬂow on consideration payments of €87m, and an additional€3.0m in acquisition and integration expenses.
Investment in ﬁxed assets amounted to €3.8m (2016: €2.3m) reﬂecting the cost ofincreasing the capacity of the Montreal studio, improvements to both the Dublin andTokyo studios. Additionally, there were ongoing purchases of games testing
equipment.
Following the investment of €87.0m net cash consideration for acquisitions in 2017,and a successful £75.0m equity placing in October 2017, cash and cash equivalents
increased to €30.4m from €17.0m excluding accrued multimedia tax credits of€10.0m (2016: €3.0m). The loans and borrowings were €19.3m at 31 December
2017 (2016: €8.4m) having utilised €18.3m of its €35m revolving credit facility,
giving a net cash position of €11.1m.
Foreign exchange
Keywords does not hedge foreign currency profit and loss translation exposures.
The effect on the Group's results of movements in exchange rates and the foreign
gains and losses incurred during the year, which mainly relate to the effect oftranslating net current assets held in foreign currencies
Dividend

The Group has a progressive dividend policy, subject to the retention of funds
needed to fund future growth of the Group's business and its strategic aims.
Following the interim dividend payment of 0.48p per share in September 2017, theBoard has recommended a ﬁnal dividend of 0.98p per share, which will make thetotal dividend for the year ending 31 December 2017 1.46p per share, a 10%
increase over 2016. Subject to shareholder approval at the Annual General meeting,the ﬁnal dividend will be paid on 22 June 2018 to all shareholders on the register at
1 June 2018 and the shares will trade ex-dividend on 31 May 2018. The cash cost of
the ﬁnal proposed dividend will be an estimated €0.7m, subject to currency
fluctuations.
Events after the reporting period
The Group has agreed heads of terms on a revolving credit facility with Barclays
Bank plc, HSBC Bank plc and Lloyds Banking Group plc for an initial €75m over athree-year term, with the option to extend the facility to €105m and by a further
two years. The new facility replaces the existing €35m facility and is on improved
terms. This increased facility is in keeping with the growth of the Group and its
ﬁnancial performance and provides support for the Group's ongoing acquisition
strategy.
On 9 April 2018, we announced that the Group acquired Cord Worldwide Limited
and Laced Music Limited from the Cutting Edge Group for a total consideration of£4.5m comprised of an initial cash consideration of £3.375m on completion and
73,744 in shares to be issued two years after the acquisition. Cord and Laced
generated combined revenue of £6.5m and EBITDA of £675,000 in the year ended
30 June 2017.
On 22 March 2018, Keywords acquired Maximal Studio for an initial cash
consideration of €0.3m, with up to €0.2m of deferred consideration due over thefollowing two years, subject to its performance.
Key performance indicators
We monitor our financial performance against a number of different benchmarks.
These are set in agreement with the Board and used to evaluate progress against
our strategy.
Financial performance is measured by:
Revenue growth
Revenue growth is measured by line of business and overall against the Board's
strategic goal to grow organically and by acquisition.
Gross profit
Gross proﬁt is a key measure of the Group's pricing strategies, use of resources andits ability to optimise resource utilisation while allowing for changes in the mix ofbusiness and services delivered on client premises, where the Group's gross margin
typically reduces but our operating costs are also significantly reduced.
Operating costs
The Board monitors the overheads to ensure the operating costs of the Group are inline with the level of business being generated.
Adjusted EBITDA margin

The Board uses an Adjusted measure of EBITDA to monitor the performance of theGroup. This measure excludes foreign exchange gains or losses, any one-time
expenses and the cost of employee share option awards.
Adjusted operating profit margin
The Board also uses an Adjusted measure of operating proﬁt to monitor the
performance of the Group. This measure similarly excludes foreign exchange gains
or losses, any one time expenses, and the cost of employee share option awards.
Non-financial performance is measured by:
Resource deployment
The Board reviews the eﬃciency at which the Group is utilising its staﬀ resources toensure optimum staffing strategies are deployed and to maximise utilisation rates.
Business won/lost
The Board reviews the levels of new business won and lost, and monitors thereasons for both, to ensure that the services being offered to the market areappropriately priced and relevant.
Customer satisfaction and quality of service delivery
The Board monitors the quality and timeliness of service delivery on an ongoingbasis and reviews the level of repeat revenue from existing customers, as a key
measure of customer satisfaction.

David Broderick
Chief Financial Officer
9 April 2018

Consolidated Statement of comprehensive income
Years ended 31 December
Note

2017
€'000

2016
€'000

Revenues

4

151,430

96,585

Cost of Sales
Gross profit

5(96,345)
55,085(59,907)
36,678

Share option expense
Costs of acquisition and integration
Amortisation of intangible assets
Total of items excluded from Adjusted profit
measures
Other administration expenses

17(1,426)(3,016)(3,038)(686)(1,316)(1,629)(7,480)(31,170)(3,631)(21,588)(38,650)
16,435(25,219)
11,45926(4,467)
11,99494(2,118)9,435

Administrative expenses
Operating profit
Financing income
Financing cost
Profit before taxation

66

Tax expense
Profit7

Other comprehensive income:Items that will not be reclassified subsequently to
profit of loss
Exchange gains / (loss) on capital investments
Actuarial loss on defined benefit
19
Items that may be reclassified subsequently
to profit of loss
Exchange gains / (loss) on translation offoreign operations
Total comprehensive income:
Profit for the period attributable to:
Owners of the parent
Non-controlling interest
Total comprehensive income attributable to:
Owners of the parent
Non-controlling interest
Earnings per share
Basic earnings per ordinary share (€ cent)Diluted earnings per ordinary share (€ cent)8
8(4,731)
7,263(3,223)
6,212

(893)
(25)

(63)

(3,598)
2,747

489
6,638

7,263
7,263

6,273
(61)
6,212

2,747
2,747
€ cent
12.37
11.87

6,699
(61)
6,638
€ cent11.22
10.87

The notes set from page 20 onwards form an integral part of these consolidated financial statements.

On Behalf of the Board
Andrew Day, Director

David Broderick, Director

Date:

Consolidated Statement of financial position
2017
€'000

2016
€'000

13
11
12
26

10,111109,007
23,5481,206
143,872

5,498
46,7998,696
880
61,87314
15

27,473
22,33530,37480,182224,054

13,8797,778
17,02038,677
100,550

16

737
11,739102,054
28,878(3,504)(1,997)
2,545

654
8,792
19,983
22,109987(1,434)
1,305

Note
Non-current assets
Property, plant and equipment
Goodwill
Intangible assets
Deferred tax assets
Current assets
Trade receivables
Other receivables
Cash and cash equivalents
Total assets
EquityShare capital
Share capital - To Be Issued
Share premium
Merger reserve
Foreign exchange reserve
Treasury shares held in EBTShare option reserve

Retained earnings
Non-controlling interest
Total equity
Current Liabilities
Trade payables
Other payables
Loans and Borrowings
Corporation tax liabilities

18
20

Non-current liabilities
Other payables
Employee Defined Benefit
Loans and Borrowings
Deferred tax liabilities

18
19
20
26

Total equity and liabilities

20,679161,131
161,131

14,30866,70466,704

7,310
23,005
18,943
3,245
52,503

4,822
12,431
8,025
2,552
27,830

1,233
1,055
337
7,795
10,420224,054

1,592
826
345
3,253
6,016
100,550

The notes on set on page 20 onwards form an integral part of these consolidated ﬁnancial statements. The
financial statements were approved and authorised for issue by the Board on 9 April 2018.
On Behalf of the Board

Andrew Day
Director

David Broderick
Director

Date:

Consolidated Statement of Changes in Equity
Foreign
Sharesto beissuedShare

Mergerexchange

optionRetainedpremium

reserve

reservein EBT

reserveearnings

to equity
holders ofparentControlling

capital

€'000

€'000

€'000

€'000

€'000

€'000

€'000

€'000

€'000

€'000

€'000

18,542

22,109

498

(804)

619

10,29351,903(1,309)50,594

6,273

6,273

(61)

6,212

Share

Balance at 1 January
2016

Total
attributable

Treasuryshares
held

646

Share

Profit for the period
Other comprehensive
income

489

(63)

426

Total
comprehensive
income for theperiod

489

6,210

6,699

Contributions by
and contributions
to the owners:
Share option expense
Share Options
Exercised
Dividends paid
Treasury shares
ringfenced for EBT
Shares issued for cash
Shares issued uponacquisition - Volta
Creation Inc
Shares to be issued(Synthesis
Acquisition)
Shares to be issued(Mindwalk Acquisition)
Elimination of Minority
Interest in Kite Team
Shares Issued on
settlement with Kite
Team
Keywords France
Incorporation
Shares issued uponacquisition - Player
Research Ltd
Shares issued uponacquisition - Sonox

686
(632)
(825)
2

Non

Total
equityInterest

426

(61)

6,638

686

686

(632)
(825)

(632)
(825)

4

643

2
647

2
647

1

169

170

170

6,906

6,906

6,906

1,886

1,886

1,886

(1,370)(1,370)

1,370

1

149

150

150

1

331

332

332

Audio Solutions SL
Contributions by
and contributions
to the owners

Balance at 31
December 2016

149

7

8,792

1,441

653

8,792

19,983

149

22,109

987

149

(630)

686

(2,195)

8,102

1,370

9,472

(1,434)

1,305

14,30866,70466,704

7,263

7,263

7,263

Profit for the period
Other comprehensive
income(4,491)(25)(4,516)(4,516)

Total
comprehensive
income for the year

(4,491)

7,238

2,747

2,747

82,32282,322

1,240

1,240

51

51

(867)

(867)

184

184

184

1,392

1,394

1,394

168

168

168

686

686

686

101

101

101

1,468

1,468

1,468

4,133

4,133

4,133

800

800

800

Contributions by
and contributions
to the owners:
Shares issued for
cash
Share Option
ExpenseShare Options
Exercised
Dividends paid (note9)
Shares issued uponacquisition - Xloc Inc
Shares issued uponacquisition - GameSim
Inc
Shares issued uponacquisition - Lola
Shares issued uponacquisition - D3T
Shares issued uponacquisition - asrec
Shares Issued ondeferred settlementwith Synthesis Group
Shares to be issued(Red Hot Acquisition)
Shares to be issued(Sperasoft Acquisition)
Shares to be issued(Around The Word &Dune Sound
Acquisition)
Reclassification ofshare premium on
acquisitions to merger
reserve

61

82,261
1,240

6

608

(563)
(867)

2

14

(3,454)

3,440

(798)

798

Contributions by
and contributions
to the owners

83

2,947

82,071

6,769(4,491)

(563)

1,240

6,371

94,427

94,427

Balance at 31
December 2017

737

11,739102,054

28,878(3,504)(1,997)

2,545

20,679161,131

161,131

Consolidated statement of cash flows

Note

Cash flows from operating activities
Profit/(loss) after tax
Income and expenses not affecting operating cash
flows
Depreciation
13
Intangibles amortisation
12
Income tax expense
7
Share option expense
17
Loss on disposal of fixed assets

Years ended 31
December
2017
2016
€'000
€'000

7,263

6,212

2,730
3,038
4,731
1,426
103

1,803
1,629
3,223
686
-

Fair Value Adjustment on deferred consideration
Interest receivable
Employee Benefit Costs
Interest expense
Unrealised Foreign Exchange Losses
Changes in operating assets and liabilities
Decrease/ (Increase) in trade receivables(Increase)/ Decrease in other receivables(Decrease)/ Increase in trade and other payables
Income taxes paid
Net cash provided by operating activities
Cash flows from investing activities
Acquisition of subsidiaries net of cash acquired
Acquisition of remaining 50% of Kite
Settlement of deferred liabilities on acquisitions(Acquisition)/disposal of short term investments
Acquisition/disposal of property, plant andequipmentInterest received
EBT share purchase
Net cash used in investing activities
Cash flows from financing activities
Loan to finance Multi Media Tax Credits
Repayment of loans
Loan to finance acquisitions
Dividends paid
Financing EBT for share options exercised
Shares issued
Share issuance expenses
Interest paid
Net cash used in financing activities
Increase / (Decrease) in cash and cash
equivalents
Exchange (loss)/gain on cash and cash
equivalents
Cash and cash equivalents at beginning of theperiodCash and cash equivalents at end of period

13

30
30
9

6

190
(26)
209
388
2,033
14,822

264
(94)
63
152
55
7,781

2,506
(5,413)(82)(2,989)(5,454)
13,642(3,788)
3,245
3,718
3,175
(2,129)15,039(86,776)(298)-(19,109)(1,000)(995)
27(3,803)
26(90,851)(2,306)94
2(23,287)(23)
10,250(867)(563)
82,936(279)
91,454(1,157)
(625)
8,000
(825)
(632)
643
(152)
5,252

14,245(2,996)

(891)

998

17,02030,37419,01817,020Notes Forming part of the Consolidated Financial Statements
1 Basis of preparation
Keywords Studios plc (the "Company") is a company incorporated in the UK. The consolidated
ﬁnancial statements in this announcement include the ﬁnancial statements of the Company andits subsidiaries (the "Group") made up to 31 December 2017. The Group was formed on 8 July
2013 when Keywords Studios Plc (formerly Keywords Studios Limited) acquired the entire sharecapital of Keywords International Limited through the issue of 31,901,332 ordinary shares.
The parent company ﬁnancial statements present information about the Company as a separate
entity and not about its Group.
The consolidated and Company ﬁnancial statements have been prepared in accordance with
International Financial Reporting Standards, International Accounting Standards andinterpretations (collectively IFRS) issued by the International Accounting Standards Board (IASB)
as adopted by the European Union ("adopted IFRSs").
The ﬁnancial statements have been prepared in thousands (€'000) and the ﬁnancial statements
are presented in Euro (€) which is the functional currency of the Group.

New Standards, Interpretations and Amendments Effective from 1 January 2017

The group has applied the requirements of IAS7, Disclosure Initiative, eﬀective from 1 January
2017. The disclosures are included within Note 30.
None of the amendments to Standards that are eﬀective from 1 January 2017 had a signiﬁcanteffect on the Group's financial statements.

New Standards, Interpretations and Amendments not yet Effective
Impact of IFRS 9IFRS 9, Financial Instruments, is mandatorily eﬀective for periods beginning on or after 1 January
2018, with early adoption permitted. The group has not adopted IFRS 9 early, however iscurrently assessing the impact of its implementation.
IFRS 9 establishes the measurement principles for both ﬁnancial assets and ﬁnancial liabilities, atboth initial recognition and subsequent re-measurement.

Financial Assets
The majority of the group's financial assets include;-

Cash,
Short term receivables including trade receivables, accrued income, and multimedia tax
credits.
Intragroup balances and receivables (parent company only)

These assets are considered to be part of the "hold to collect" model, and therefore measured atamortised cost.
Our ﬁnancial assets are short term in their nature, and no receivables have signiﬁcant credit
terms or interest charged accordingly.
The group is expecting to apply the simpliﬁed approach to applying lifetime expected credit
losses on certain ﬁnancial assets, and while our assessment is ongoing, we are not expecting amaterial diﬀerence to the carrying value of our ﬁnancial assets as a result of the implementationof the new standard.

From the Company Statement of Financial Position perspective, we are assessing the impact
which the standard will have on the valuation of our receivables due from intergroup entities.

Financial Liabilities
The most significant of the group's financial liabilities include;-

Bank loans and borrowings,
Trade payables, andContingent consideration arising as part of business combinations.

The group expects to continue to value bank loans and borrowings at amortised cost, and tovalue contingent consideration at fair value through profit and loss model ("FVTPL").
When valuing the ﬁnancial liabilities under the FVTPL model, the group will need to assess any
changes in its own credit status, however this is not expected to result in any signiﬁcant changes
to the valuation of such financial liabilities.

Impact of IFRS 15
On review of IFRS 15, Revenue from Contracts with Customers, the five key points to recogniserevenue have been assessed;
Step 1: Identify the contract(s) with a customer
Step 2: Identify the performance obligations in the contract
Step 3: Determine the transaction price
Step 4: Allocate the transaction price to the performance obligations in the contract
Step 5: Recognise revenue when (or as) the entity satisfies a performance obligation
On the basis of the contracts in place, the group do not envision a material impact on theﬁnancial statements once IFRS 15 is implemented. However, given the acquisitive nature of thegroup, and the new revenue streams, this process of assessment will be ongoing.

Impact of IFRS 16
There are a number of operating leases across the group. In accordance with IFRS 16 Leases,
their change in treatment in the ﬁnancial statements from 1 January 2019 will impact theStatement of Financial Position, increasing both long-term assets and liabilities.
On the adoption of IFRS 16 on Leases on 1 January 2019, the Group will recognise right-of-use
assets and related liabilities for all material lease arrangements over 12 months in duration.
Material lease arrangements in the group relate primarily to leases on premises. The main
impact on the financial statements will be to increase both assets and liabilities on the Statementof Financial Position in relation to leases currently considered as operating leases at present
value. In the Statement of Changes in Equity, leases will be recognised in the future as capital
expenditure on the purchasing side and will no longer be recorded as operating expenses. As aresult the operating expenses under otherwise identical circumstances will decrease, while
depreciation and amortisation and the interest expense increase. This will lead to an
improvement in EBITDA. Based on leases outstanding at the end of 2017, the group's initialassessment of the impact is that the comparable additional Asset and Liability will be in theorder of €17m. The Group Cash Flow statement will include additional detail on the Cash Flow
Statement to separate Interest repayments and Capital repayments on leases.
2

Significant accounting policies

Basis of Consolidation
Where the company has control over an investee, it is classiﬁed as a subsidiary. The company
controls an investee if all three of the following elements are present; power over the investee,
exposure to variable returns from the investee, and the ability of the investor to use its power toaﬀect those variable returns. Control is reassessed whenever facts and circumstances indicatethat there may be a change in any of these elements of control.
De-facto control exists in situations where the company has the practical ability to direct therelevant activities of the investee without holding the majority of the voting rights. In
determining whether de-facto control exists the company considers all relevant facts andcircumstances, including:·
The size of the company's voting rights relative to both the size and dispersion of otherparties who hold voting rights;·
Substantive potential voting rights held by the company and by other parties;·
Other contractual arrangements; and·Historic patterns in voting attendance.
The consolidated ﬁnancial statements present the results of the company and its subsidiaries("the Group") as if they formed a single entity. Intercompany transactions and balances between
Group companies are eliminated in full.
The acquisition of Keywords International Limited was deemed to be a 'combination undercommon control' as ultimate control before and after the acquisition was the same. As a result,these transactions were outside the scope of IFRS 3 "Business combinations" and have beenaccounted for under the principles of merger accounting as set out under UK GAAP from the dateon which control is obtained until the date on which control ceases.
As part of the Group reconstruction in 2013, the Company issued 31,901,332 shares at a value of£1.23 each, being the ﬂotation price, as part of a share for share exchange with the shareholders
of Keywords International Limited. The £0.01 nominal value of the shares issues was accounted
for in Issued Share Capital. On the 2013 consolidated balance sheet, the diﬀerence between thenominal value of shares issued by the company as consideration for the shares in Keywords
International Limited, and the nominal value of the shares in Keywords International Limited wastreated as a merger reserve arising on group reconstruction. On the Company balance sheet, theexcess of net book value of the assets held by Keywords International Limited, at the date of theshare for share exchange, over the nominal value of the shares issued was treated as a merger
reserve.
Business Combinations
The consolidated ﬁnancial statements incorporate the results of business combinations using thepurchase method. In the Consolidated Statement of Financial Position, the acquiree's identiﬁable
assets, liabilities and contingent liabilities are initially recognised at their fair values at theacquisition date. The results of acquired operations are included in the consolidated income
statement from the date on which control is obtained. They are deconsolidated until the date on
which control ceases.
Any contingent consideration payable is recognised at fair value at the acquisition date and issplit between current liabilities and long-term liabilities depending on when it is due. At eachbalance sheet date the fair value of the contingent consideration will be revalued and anychange will be recognised in the statements of comprehensive income.
For deferred consideration which is to be provided for by the issue of a ﬁxed number of shares at
a future deﬁned date, where there is no obligation on Keywords to oﬀer a variable number ofshares, the deferred consideration is to be classiﬁed as an Equity Arrangement and the value ofthe shares is fixed at the date of the acquisition.
Goodwill
Goodwill represents the excess of the cost of a business combination over, in the case ofbusiness combinations completed prior to 1 January 2010, the Group's interest in the fair value ofidentiﬁable assets, liabilities and contingent liabilities acquired and, in the case of businesscombinations completed on or after 1 January 2010, the total acquisition date fair value of theidentifiable assets, liabilities and contingent liabilities acquired.
For business combinations completed prior to 1 January 2010, cost comprised the fair value of
assets given, liabilities assumed and equity instruments issued, plus any direct costs ofacquisition. Changes in the estimated value of contingent consideration arising on businesscombinations completed by this date were treated as an adjustment to cost and, in consequence,
resulted in a change in the carrying value of goodwill.
For business combinations completed on or after 1 January 2010, cost comprises the fair value of
assets given, liabilities assumed and equity instruments issued, plus the amount of any noncontrolling interests in the acquiree plus, if the business combination is achieved in stages, thefair value of the existing equity interest in the acquiree. Contingent consideration is included incost at its acquisition date fair value and, in the case of contingent consideration classiﬁed as aﬁnancial liability, re-measured subsequently through proﬁt or loss. For business combinations
completed on or after 1 January 2010, direct costs of acquisition are recognised immediately as
an expense.
Goodwill is capitalised as an intangible asset with any impairment in carrying value being
charged to the consolidated statement of comprehensive income.
Intangible Assets
Intangible assets, separately identiﬁed from goodwill acquired as part of a business combination,
are initially stated at fair value. The fair value attributed is determined by discounting the
expected future cashﬂows to be generated from net margin on the business from the main
customers taken on at acquisition. The assets are amortised over their useful economic lives,
which is deemed to be 5 years.
There are no intangible assets with indefinite useful lives.
Impairment
Impairment tests on goodwill and other intangible assets with indeﬁnite useful economic lives
are undertaken annually at the ﬁnancial year end. Other non-ﬁnancial assets are subject toimpairment tests whenever events or changes in circumstances indicate that their carrying
amount may not be recoverable. Where the carrying value of an asset exceeds its recoverable
amount (i.e. the higher of value in use and fair value less costs to sell), the asset is written
down accordingly.
Where it is not possible to estimate the recoverable amount of an individual asset, theimpairment test is carried out on the smallest group of assets to which it belongs for which there
are separately identiﬁable cash ﬂows; its cash generating units ('CGU's). Goodwill is allocated on
initial recognition to each of the group's CGUs that are expected to beneﬁt from a businesscombination that gives rise to the goodwill.
The Group has one CGU. This CGU represents the lowest level at which goodwill is monitored by
the Group and the lowest level at which management captures information for internalmanagement reporting purposes about the beneﬁts of the goodwill. Impairment charges areincluded in proﬁt or loss, except to the extent they reverse gains previously recognised in othercomprehensive income. An impairment loss recognised for goodwill is not reversed.
Cash & Cash Equivalents
For the purpose of presentation in the Statement of Financial Position and on the Statement of
Cash Flows, cash & cash equivalents include cash on hand, on call deposits with ﬁnancial
institutions.
Foreign Currency
Transactions entered into by Group entities in a currency other than the currency of the primaryeconomic environment in which they operate (their "functional currency") are recorded at therates ruling when the transactions occur. The Functional currency for the Company is euro.
Foreign currency monetary assets and liabilities are translated at the rates ruling at the reporting
date. Exchange diﬀerences arising on the retranslation of unsettled monetary assets andliabilities are recognised immediately in profit or loss.
On consolidation, the results of overseas operations are translated into euro at rates
approximating to this ruling when the transactions took place. All assets and liabilities ofoverseas operations, including goodwill arising on the acquisition of those operations, aretranslated at the rate ruling at the reporting date. Exchange differences arising on translating the
opening net assets at opening rate and the results of overseas operations at actual rate arerecognised in other comprehensive income and accumulated in the foreign exchange reserve.

Notes Forming part of the Consolidated Financial Statements continued
2 Significant accounting policies continued
Exchange diﬀerences recognised in proﬁt or loss in Group entities' separate ﬁnancial statementson the translation of long-term items forming part of the Group's net investment in the overseas
operation concerned are classiﬁed to other comprehensive income and accumulated in theforeign exchange reserve on consolidation.
Exchange differences on capital loans are recorded as other comprehensive income.
On disposal of a foreign operation, the cumulative exchange diﬀerences recognised in theforeign exchange reserve relating to that operation up to the date of disposal are transferred tothe consolidated statement of comprehensive income as part of the profit or loss on disposal.
Revenue Recognition
Revenue recognised represents the consideration received or receivable for the rendering ofservices, net of sales taxes, rebates discounts and after eliminating intercompany sales. Services
are provided based on agreed client instructions and when projects are in progress at the period
end, revenue is recognised to the extent that services have been provided net of any provisions.
Revenue on services provided is recognised on the basis of words translated, studio timecompleted, testing hours or player support hours ﬁnished, or milestones reached in art creationor engineering as a proportion of the estimate total to complete the projects, by the expected
revenue accruing on completion.
This revenue recognition policy is unchanged at the full adoption of IFRS 15 from 1 January 2018,as the performance obligations on services provided are considered as Performance obligations
satisﬁed over time, in accordance with S 35 of IFRS 15, Revenue from Contracts with
Customers.
Revenue in relation to software licence sales is recognised over the period of the use by theclient of the licence.
Where there are separate performance obligations inherent in a contract, the related revenue
streams are considered separately for performance measurement.
MMTC Grants
The Multimedia tax credits received in Montreal on testing services are a credit against staﬀ
costs. Accordingly they are treated as a deduction against direct costs. The nature of the grants
are such that they are not dependent on taxable profits.

Share Based Payments
The Company issues equity settled share-based payments to certain employees and Directors
under a share options plan and a long-term incentive plan ("LTIP").
The fair value determined at the grant date is expensed on a straight line basis over the vesting
period, based on the Company's estimate of shares that will eventually vest and adjusted for theeﬀect of non-market-based vesting conditions. At each reporting date, the Company revises its
estimate of the number of equity instruments expected to vest as a result of the eﬀect of nonmarket based vesting conditions. The impact of the revision of the original estimates, if any, isrecognised in proﬁt or loss such that the cumulative expense reﬂects the revised estimate, witha corresponding adjustment to equity reserves. The Company has no legal or constructive
obligation to repurchase or settle the options in cash.
Where share-based payments are issued to employees of subsidiary companies, the annual costof the option is expensed in the holding company, and recharged to the subsidiary company
through intercompany charge.
Share Option Plan
These are measured at fair value, taking into account market vesting conditions but not nonmarket vesting conditions on the grant date using a Black-Scholes option pricing model whichcalculates the fair value of an option by using the vesting period, the expected volatility of theshare price, the current share price, the exercise price and the risk free interest rate. The fairvalue of the option is amortised over the vesting period, with one third of the options vesting
after two years, one third after three years, and the balance vest after four years. The only
vesting condition is continuous service. There is no requirement to revalue the option at any
subsequent date. The charge that is recognised is adjusted to reﬂect failure to vest due to nonachievement of a non-market vesting condition but not failure to vest due to the nonachievement of a market vesting condition.
LTIP
An alternative share plan was introduced to give awards to Directors and staﬀ, subject tooutperforming the Numis Small Cap Index (excluding Investment Trusts) in terms of shareholder
return over a three year period. For the awards up to 2015, there were three award levels; onethird of the share options vest if the company shall exceed the Total Shareholder Returns of the
Numis Small Cap Index by not less than 10%, two thirds if the shareholder return exceeds byover 20% and 100% if the shareholder return exceeds by over 30%. This was amended for the2016 and 2017 awards to 100% if the shareholder return exceeds by over 45%, and a pro-rated
return between 10% and 100% if the shareholder return exceeds by between 0% and 45%.
These are measured at fair value, taking into account market vesting conditions but not nonmarket vesting conditions, at the date of grant, measured by using the Monte Carlo binomial
model. The charge that is recognised is adjusted to reﬂect failure to vest due to nonachievement of a non-market vesting condition but not failure to vest due to the nonachievement of a market vesting condition.
Dividend Distribution
Final dividends are recorded in the Group's ﬁnancial statements in the period in which they areapproved by the Group's shareholders. Interim dividends are recognised when paid.
Income Taxes and Deferred Taxation
Provision for income taxes is calculated in accordance with the tax legislations and applicabletax rates in force at the reporting date in the countries in which the Group companies have been
incorporated.
Deferred tax assets and liabilities are recognised where the carrying amount of an asset or
liability in the consolidated statement of ﬁnancial position diﬀers from its tax base, except fordifferences arising on:·
the initial recognition of goodwill;·
the initial recognition of an asset or liability in a transaction which is not a businesscombination and at the time of the transaction aﬀects neither accounting or taxable proﬁt;
and·investments in subsidiaries and jointly controlled entities where the Group is able to control
the timing of the reversal of the diﬀerence and it is probable that the diﬀerence will notreverse in the foreseeable future.

The amount of the asset or liability is determined using tax rates that have been enacted or
substantively enacted by the reporting date and are expected to apply when the deferred tax
liabilities/(assets) are settled/(recovered).
Deferred tax assets and liabilities are oﬀset when the Group has a legally enforceable right tooﬀset current tax assets and liabilities and the deferred tax assets and liabilities relate to taxes
levied by the same tax authority on either:·
The same taxable Group company; or·Diﬀerent Group entities which intend either to settle current tax assets and liabilities on a
net basis, or to realise the assets and settle the liabilities simultaneously, in each future
period in which signiﬁcant amounts of deferred tax assets or liabilities are expected to besettled or recovered.
Property, Plant and Equipment
Property, plant and equipment comprise computers, leasehold improvements, and oﬃce
furniture and equipment, and are stated at cost less accumulated depreciation. Carrying
amounts are reviewed for impairment whenever events or changes in circumstances indicatethat their carrying amount may not be recoverable. Where the carrying amount of an asset isgreater than its estimated recoverable amount, it is written down immediately to its recoverable
amount.
Property, plant and equipment acquired through business combinations are valued at fair valueon the date of acquisition.
Depreciation is calculated to write oﬀ the cost of ﬁxed assets on a straight line basis over the
expected useful lives of the assets concerned. The principal annual rates used for this purpose
are:%Computers and Software

33.33

Office furniture and equipment

10.00

Building and leasehold improvements

over the length ofthe lease

Gains and losses on disposals are determined by comparing proceeds with carrying amount andare included in the consolidated statement of comprehensive income.

Notes Forming part of the Consolidated Financial Statements continued
2 Significant accounting policies continued
Financial Assets
Loans and Receivables
These assets are non-derivative financial assets with fixed or determinable payments that are notquoted in an active market. They arise principally through the provision of services to customers(e.g. trade receivables), but also incorporate other types of contractual monetary asset. They are
initially recognised at fair value plus transaction costs that are directly attributable to theiracquisition or issue and are subsequently carried at amortised cost using the eﬀective interest
rate method, less provision for impairment.
The Group's receivables comprise trade and other receivables and cash and cash equivalents inthe statement of financial position.
Trade receivables, which principally represent amounts due from customers, are initiallyrecognised, thereafter, are recognised at amortised cost. An estimate for doubtful debts is madewhen there is objective evidence that the Group will not be able to collect amounts due
according to the original terms of receivables. Bad debts are written off when identified.
Cash and cash equivalents are necessary for the working capital requirements of the group. They
include cash in hand, deposits held at call with banks and other short term highly liquid
investments. Where cash is on deposit with maturity dates greater than three months, it isdisclosed as short-term investments.

Share Capital
Financial instruments issued by the Group are treated as equity only to the extent that they do
not meet the deﬁnition of a ﬁnancial liability. The Group's ordinary shares are classiﬁed as equity
instruments.
Financial Liabilities
Trade payables and other short-term monetary liabilities are initially recognised at fair value andsubsequently carried at amortised cost using the effective interest method.
Leased Assets
Where substantially all of the risks and rewards of ownership are not transferred to the Group("operating lease"), the total rental payables are charged to the consolidated statement ofcomprehensive income on a straight-line basis over the term of the lease.
Finance Leases
Where substantially all of the risks and rewards incidental to ownership of a leased asset havebeen transferred to the Group (a "ﬁnance lease"), the asset is treated as if it had been purchased
outright. The amount initially recognised as an asset is the lower of the fair value of the leased
property and the present value of the minimum lease payments payable over the term of thelease. The corresponding lease commitment is shown as a liability. Lease payments are analysed
between capital and interest. The interest element is charged to the consolidated statement ofcomprehensive income over the period of the lease and is calculated so that it represents a
constant proportion of the lease liability. The capital element reduces the balance owed to thelessor.
Employee Benefit Trust
Ordinary Shares purchased by the Employee Beneﬁt Trust on behalf of the Parent Company
under the Terms of the Share Option Plan are deducted from equity on the face of theConsolidated Statement of Financial Income. No gain or loss is recognised in relation to thepurchase, sale, issue or cancellation of the Parent Company's Ordinary Shares
3

Critical accounting estimates and judgements

The preparation of consolidated ﬁnancial statements under IFRS requires the Directors to makeestimates and judgements that effect the application of policies and reported amounts.
The areas requiring the use of estimates and critical judgements that may signiﬁcantly impact
the Group's earnings and ﬁnancial position the computation of income taxes, the value of
goodwill and intangible assets arising on acquisitions, the valuation of multi media tax credits
and the valuation of the deﬁned retirement beneﬁts for employees in italy. Estimates andjudgements are continually evaluated and are based on historic experience and other factors
including expectations of future events that are believed to be reasonable. Actual results may
differ from these estimates and assumptions.
Income Taxes
The Group is subject to income tax in several jurisdictions and judgement may be required indetermining the provision for income taxes. During the ordinary course of business, there aretransactions and calculations for which the ultimate tax determination may be uncertain. As aresult, the company recognises tax liabilities based on an understanding of taxation legislation inparticular jurisdictions and any related estimates of whether taxes and/or interest will be due.
This assessment relies on estimates and assumptions and may involve a series of complex
judgments about future events. To the extent that the ﬁnal tax outcome of these matters is
diﬀerent than the amounts recorded, such diﬀerences will impact income tax expense in the
period in which such determination is made.
Goodwill and Intangible Assets Arising on Acquisition
The value of goodwill and intangible assets recognised on the Group's acquisitions during 2017,at €67m and €19m respectively, were derived from the projected cashﬂows for those businesses
at the time of acquisition, the balance sheet information provided and on management forecasts.
The accuracy of the valuation would therefore be compromised by any diﬀerences between theforecasts and the levels of business activity that the entity may be able to generate.
On an annual basis, the full value of intangibles is assessed through an impairment review.
Multi Media Tax Credits

The submissions for the repayment of Multi-Media Tax Credits in Montreal are made on an annual
basis to Investment Quebec and Revenue Quebec. Both the costs and basis of the claim aresubject to audit by the authorities prior to approval and payment of the claim. While the groupcomplete a detailed exercise in relation to the claim and to the accrual there may be occasions
where the actuals amounts may be more or less than accrued which will lead to a change in theamounts recognised within the financial statements.
Employee Defined Retirement Benefit
In line with statutory requirements in Italy, the subsidiaries in Milan maintain Employee Deﬁned
Beneﬁt schemes. On leaving the company, each employee is entitled to 1/13.5 of their ﬁnal
salary for each year of service.
At year end, the Group commissioned an actuarial valuation of the related liability, based onsalaries, length of service and variables including employee turnover, estimated salary increases
and cost of capital.
The liabilities at year end are recorded as long term. The actuarial loss is recorded separately asother comprehensive income.
4

Segmental analysis

Management considers that the Group's activity as a single source supplier of Services to thegaming industry constitutes one operating and reporting segment, as defined under IFRS 8.
Management review the performance of the Group by reference to Group-wide proﬁt measuresand the revenues derived from seven main service groupings:·
Localisation Services- Localisation services relate to translation and cultural adaptation of ingame text and audio scripts across multiple game platforms and genres.
·
Localisation Testing - Localisation Testing involves testing the linguistic correctness andcultural acceptability of computer games.
·
Audio/Voiceover Services - Audio Services relate to the audio production process forcomputer games and includes script translation, actor selection and talent management
through pre-production, audio direction, recording, and post-production, including native
language Quality Assurance of the recordings.
·
Functional Testing - Functional Testing relates to quality assurance services provided togame producers to ensure games function as required.
·
Art Creation Services - Art creation services relate to the production of graphical art assets
for inclusion in the video game including concept art creation along with 2D and 3D art asset
production and animation.
·
Player Support - Player support relates to the live operations support services such ascommunity management, player support and associated services provided to producers ofgames to ensure that consumers have a positive user experience.
·
Engineering - Engineering relates to software engineering services which are integrated withclient processes to develop video games.
There is no allocation of operating expenses, proﬁt measures, assets and liabilities to individual
product groupings. Accordingly the disclosures below are provided on a group-wide basis.
Activities are reported in a manner consistent with the internal reporting provided to the chief
operating decision-maker. The chief operating decision maker has been identified as theexecutive management team made up of the Chief Executive Officer and the Finance Director.

Revenue by line of business

Years ended 31
December

Revenue by line of businessArt creation
Audio
Localisation

2017
€'000

2016
€'000

26,193
20,657
41,95916,55917,26332,360Functional testing
Localisation testing
Customer support
Engineering

30,033
19,848
9,168
3,572
151,430

8,619
16,204
5,580
96,585No single customer (2016: None) accounted for more than 10% of the Group's revenue during
the year.

Geographical Analysis of Revenues by Jurisdiction
Analysis by geographical regions is made according to the Group's operational jurisdictions. For
many contracts, operations are completed in multiple sites. Revenue is associated with thejurisdiction from which the final invoice to the client is raised. This does not reflect the region of
the Group's customers, whose locations are worldwide.

31 Dec 17€'000

31 Dec 16€'000

CanadaIreland
Switzerland
Italy
India
United States
Japan
United Kingdom
Spain
China
Singapore
Germany
BrazilMexicoFranceRussia45,64834,277
19,565
10,029
5,177
12,199
6,352
2,467
2,194
3,685
4,451
928
520
180
3,758
-

22,05325,57017,838
7,269
4,591
5,250
4,886
1,276
2,167
24
4,787
163
619
92
-

PolandPhilippines
TaiwanTotal revenues

151,430

96,585

Geographical Analysis of Non - Current Assets from Continuing Businesses
Segmental analysis

Geographical Analysis of Non-current Assets from Continuing Businesses

CanadaIreland
Switzerland
Italy
India
United States
Japan
United Kingdom
Spain

31 Dec 17€'000

31 Dec 16
€'000

8,889
1,064
11,158
11,723
2,588
77,177565
10,011
1,520

8,937
4,779
12,657
12,188
2,991
8,657
43
6,874
1,475

ChinaSingapore
Germany
BrazilMexicoFranceRussiaPolandPhilippines
Taiwan

5

7,707
42
1,168
231
892
6,531
866
58
472
4
142,666

287
60
1,241
259
121
424
60,993

Cost of Sales & Operating Profit

Cost of Sales
Staff Costs
Multi-Media Tax Grant income
Other Direct Costs

Operating profit is stated after charging:

Depreciation
Amortisation of Intangible Assets
Costs of Acquisitions & Integration
Operating lease repayments

2017
€'000

2016
€'000

98,850(4,408)
1,903

61,232(2,289)964

96,34559,907

Years ended 31 December
2017
2016
€'000
€'000
2,730
1,803
3,038
1,630
3,016
1,316
2,369
2,371

One-time costs of €3,016k (2016 €1,316k) were incurred in acquiring and integrating the newentities into the group. The most signiﬁcant costs within the integration costs are for internal
resource who have led the activities to integrate the new acquisitions into the Group, and legal
costs in relation to acquisitions.
Of the €3,016k incurred, €2,342k were incurred directly on the costs of acquisitions. The costs
per acquisition are set out on note 31.

Auditors' remuneration
Audit services
Parent company and Group audit
Subsidiary companies audit

2017
€'000

2016
€'000

164
99

115
111

242
73

52

578

278

Non-audit services
Acquisition related due diligence services
Taxation compliance

6

Financing income and costs

2017
€'000

2016
€'000

26

94

26

94

(320)
(578)
(3,569)(4,467)

(229)
(152)
(1,737)(2,118)(4,441)(2,024)

Finance income
Interest received

Finance cost
Bank charges
Interest expense
Foreign exchange losses

Net financing (cost)/income
7

Taxation

Current income tax
Income tax on profits of parent company
Income tax on profits of subsidiaries
Deferred tax (Note 26)

2017
€'000

2016
€'000

5,762
(1,031)
4,731

4
3,928
(709)
3,223

The tax charge for the year can be reconciled to accounting profit as follows:

Profit before tax
Expected tax charge based on the standard rate oftaxation in the UK at 19.25% (2016: 20%)
Higher rates of current income tax in overseas
jurisdictions
Lower rates of current income tax in overseas
jurisdictions
Losses incurred
Effects of other timing differences
Total tax charge

Years ended 31 December
2017
2016
€'000
€'000
11,994
9,435
2,309

1,887

3,759

1,331

(257)
(162)
(918)
4,731

(555)
998
(438)
3,223

The Group's subsidiaries are located in different jurisdictions and are taxed on their residual
profit in those jurisdictions.
As there are minimal taxable profits in the UK, the impact of the drop in the corporation tax % isless than €10k for 2017.

Tax effects relating to each component on other comprehensive
incomeExchange loss on capital investments
Tax (expense) / benefit

2017
€'000
(893)
(893)

2016
€'000
-

Actuarial loss on defined benefit plans
Tax benefit
Net of Tax Amount
Exchange (loss) / gain on translation of foreign operations
Tax benefit / (expense)
Net of Tax Amount

8

(25)
7
(18)

(63)
18
(45)

(3,598)(3,598)489
489

Earnings per share2017€ cent2016€ cent

12.37
11.87

11.22
10.87

€'000

€'000

7,263

6,273

Basic

Number
58,720,884

Number
55,918,481

Diluted61,198,672

57,716,435

Basic
DilutedProfit for the period from continuing
operations
Denominator (weighted average numberof equity shares)

The basic and diluted weighted average denominators include the impact of the 2,188,608
shares to be issued relating to consideration on acquisitions.
The dilutive impact of share options has been considered in calculating diluted earnings per
share. Details of the number of share options outstanding at the year-end are set out in note 17.

9

Dividends

2017

Final Dividends Paid
Interim Dividends Paid
Dividends paid toshareholders

Per
share
€ Cent

2016

Total
€'000

Per
share
€ Cent

Total
€'000

1.01
0.54

563
304

1.03
0.49

561
264

1.55

867

1.52

825

In May 2016, Keywords Studios plc approved a dividend in respect of the ﬁnancial
year ended 31 December 2015 of 0.81p/ 1.034 cent per Ordinary share, or €561k in
total, as a final dividend for 2015. The dividend was paid in June 2016.
In September 2016, Keywords Studios plc approved a dividend of 0.44p/0.49 centper share, based on the shares in issue at that time, or €264k in total, as an interim
dividend for 2016. The dividend was paid in October 2016.

In April 2017, Keywords Studios plc approved a dividend in respect of the ﬁnancial
year ended 31 December 2016 of 0.89p/1.01 cent per Ordinary share, or €563k intotal, as a final dividend for 2016. The dividend was paid in June 2017.
In September 2017, Keywords Studios plc approved a dividend of 0.48p/0.54 centper share, based on the shares in issue at that time, or €304k in total, as an interim
dividend for 2017. The dividend was paid in October 2017.
The Directors' recommend a ﬁnal dividend in respect of the ﬁnancial year ended 31
December 2017 of 0.98p per Ordinary share, to be paid on 22 June 2018 toshareholders who are on the register at 1 June 2018. This dividend is not reﬂectedin these ﬁnancial statements as it does not represent a liability at 31 December
2017. The ﬁnal proposed dividend will reduce shareholders' funds by an estimated€680,000.
There are no income tax consequences for the company in respect of the dividends
proposed prior to issuance of the Consolidated Financial Statements and for which a
liability has not been recognised.
10

Staff Costs

Total staff costs (including Directors) comprise the following:

Group

2017
€'000

2016
€'000

Salaries & Related Costs
Share Based Payment Costs

81,563 41,643
1,426
686
82,989 42,329

Key management compensation:

Salaries & Related Costs
Social Welfare Cost
Pension Cost
Share Based Payment Costs

2017
€'000

2016
€'000

690
79
4
141
914

769
97
29
42
937

The key management compensation includes compensation to seven Directors of Keywords
Studios plc during the year. (2016: six).

Group
Average Number of
Employees
Operations
General & Administration

11

Goodwill

2017

2016

2,921 1,688
246
130
3,167 1,818€'00023,89323,055(149)
46,79966,853(4,645)
109,007

At 1 January 2016
Recognition on acquisition of subsidiaries
Revaluation on Exchange Rate Movement
At 31 December 2016
Recognition on acquisition of subsidiaries
Revaluation on Exchange Rate Movement
At 31 December 2017

During the period, goodwill arose on the acquisitions of Spov, XLOC, GameSim, Red Hot, Around
the Word, asrec, Le Marque Rose, d3t, VMC, Sperasoft and Lola.
The group assesses the carrying value of goodwill each year on the basis of budget projections,assumptions on revenue growth rates, current gross margins, operating expense growth andeﬀective tax rates. The discount rates used at 12.5% are consistent with the latest valuation of
WACC which is based on external measures.
The carrying value at €109m compares to the calculated value in use amount of €371m.
Key assumptions for the value in use calculations are as follows:
1-5 YearGross
GrowthRate
MarginExperience in 2017
Assumptions Used
Change in each assumption that would
bring the recoverable amount to thecarrying amountOperatingExpense Effective
Growth Tax Rate

15%
10%

36.4%
36.4%

6%

20.5%
20%

(12%)

(12%)

16%

51%

Note; Each change noted, which is a reduction or increase on the assumption used, wascalculated keeping all other assumptions stable.
As part of the value in use calculation, management prepared an initial cash ﬂow forecast,approved by the Board of Directors, covering the period to 31 December and the following ﬁve
years. The long-term growth rate of 2% has been used to determine a terminal value for the
CGU.

The result of the value in use calculations was that no impairment is required in this period.
12

Intangible Assets - Customer Relationships

Cost
At 1 January 2016
Additions

€'000
5,132
6,509

Revaluation on Exchange Rate Movement
At 31 December 2016
Recognition on acquisition of subsidiaries
Exchange Rate Movement
At 31 December 2017(11)
11,63018,962(1,310)29,282

Amortisation & Impairment
At 1 January 2016
Amortisation Charge
Revaluation on Exchange Rate Movement
At 31 December 2016

1,350
1,629
(45)
2,934

Amortisation
ChargeExchange Rate
Movement
At 31 December 2017

3,038
(238)
5,734

Net Book ValueAt 31 December 2016
At 31 December 2017

8,696
23,548Customer relationships are amortised over 5 years from the point of acquisition on a straight line
basis.

13

Property, plant and equipment€'000

Office,furnitureandequipment
€'000

6,253

2,319

Computers
and software

Leaseholdimprovements

Total

€'000

€'000

855

9,427

Cost
At 1 January 2016
Currency revaluation

131

99

80

310

1,370

597

376

2,342

Acquisitions through businesscombinations at fair value

798

145

416

1,359

Disposals

(67)

(2)

(3)

(73)

At 31 December 2016

8,485

3,158

1,724

13,367

Currency revaluation

(685)

(216)

(222)

(1,123)

Additions

2,514

772

601

3,887

Acquisitions through businesscombinations at fair value

2,214

603

1,350

4,167

(54)

(1)

(29)

(84)

12,474

4,316

3,424

20,214

Additions

Disposals
At 31 December 2017

Accumulated depreciation
Cost
At 1 January 2016

4,669

1,136

136

5,941

Currency revaluation

(73)

225

18

170

Depreciation charge

1,205

429

169

1,803

Disposals

(45)

(45)

At 31 December 2016

5,756

1,790

323

7,869

Currency revaluation

(293)

(111)

(72)

(476)

Depreciation charge

1,795

543

Disposals(6)

At 31 December 2017

392

2,730

(14)

(20)

7,252

2,222

629

10,103As at 31 December 2016

2,729

1,368

1,401

5,498

At 31 December 2017

5,222

2,094

2,795

10,111

Net book value

14

Trade Receivables

Group

2017
€'000

2016
€'000

Customers
Provision for Bad Debts

27,891(418)

14,347(468)

27,473

13,87915 Other Receivables
As of 31 December
Group

2017
€'000

2016
€'000

Accrued Income
Prepayments
Other receivablesMulti Media Tax Credits, Canada
Other Tax and Social Security

5,140
3,255
3,958
10,016

1,661
1,769
994
3,008
346

16

(34)
22,335

7,778

Shareholder's Equity
Share Capital

As at 1 January 2016

53,837,697

646

55,5081

45,192

1

400,324

4

65,2801

Ordinary Shares of £0.01 issued on acquisition ofremaining 50% of Kite Team shares
Ordinary Shares of £0.01 issued on acquisition of
Volta
Exercise of Numis Warrants
Ordinary Shares of £0.01 issued on acquisition ofPlayer Research
Ordinary Shares of £0.01 issued on acquisition ofSonox
As at 31 December 2016

24,881

1

54,428,882

654

Ordinary Shares of £0.01 each issued on the firstanniversary of the acquisition of Synthesis

1,188,253

14

Ordinary Shares of £0.01 issued on acquisition of
Xloc

19,134-

Ordinary Shares of £0.01 issued on acquisition of
GameSim

151,725

2

Ordinary Shares of £0.01 issued on acquisition of
asrec

9,534

-

42,368-

10,106-

5,357,143

61

501,060

6

61,708,205

737

Ordinary Shares of £0.01 issued on acquisition of d3t
Ordinary Shares of £0.01 issued on acquisition of
Lola
Placing of ordinary Shares of £0.01 on the market
Issue of shares on exercise of share options
As at December 2017

On 13 April 2017 the Group issued 1,188,253 of 1p shares at a value of 798p (€9.40) as part ofthe consideration for Synthesis.
On 10 May 2017, the Group issued 19,134 of 1p shares at a value of 796p (€9.47) which formed
the part of the consideration for the acquisition of Xloc.
On 17 May 2017, the Group issued 151,725 of 1p shares at a value of 792p (€9.20) which formed

the part of the consideration for the acquisition of GameSim.
On 4 August 2017, the Group issued 9,534 of 1p shares at a value of 1185p (€13.12) which
formed the part of the consideration for the acquisition of the three French acquisitions.
On 19 October 2017, the Group issued 42,368 of 1p shares at a value of 1416p (€15.89) which
formed the part of the consideration for the acquisition of d3t.
On 15 December 2017, the Group issued 10,106 of 1p shares at a value of 1461p (€16.56) which
formed the part of the consideration for the acquisition of Lola.
On 24 October 2017, a total of 5,357,143 new ordinary 1p shares were successfully placed on
the market at a value of 1400p (€15.62), raising proceeds of over €83 million before charges.
On 1 September 2017 made a block admission in respect of 1,112,561 of 1p shares, to be issued
pursuant to exercises of options under the Company's employee share incentive and option
plans. During the year 501,060 of 1p shares were issued on the exercise of options by
employees.
There is no limit to the number of shares which the company can issue.

Shares held by the Employee Benefit Trust (EBT)

Ordinary Shares held by the EBT

Number335,425

2017
€'000
1,997

Number399,026

2016
€'000
1,434

Reserves
The following describes the nature and purpose of each reserve within owner's equity:

Reserve

Description and purpose

Retained earnings

Cumulative net gains and losses recognised in the consolidated statement ofcomprehensive income.

Foreign Exchange Reserve Gains or losses arising on retranslation of the net assets of the overseas operations
into euro.
Share premium

The Share Premium account is the amount received for shares issued in excess of theirnominal value, net of share issuance costs.

Share option reserve

The Share option reserve is the credit arising on share based payment charges inrelation to the Company's share option schemes.

Shares to be issued

For deferred consideration which is to be provided for by the issue of a ﬁxed number ofshares at a future deﬁned date, where there is no obligation on Keywords to oﬀer avariable number of shares, the deferred consideration is to be classiﬁed as an Equity
Arrangement and the value of the shares is fixed at the date of the acquisition.

Merger reserve

The merger reserve was initially created following the Group reconstruction, when
Keywords Studios plc acquired the Keywords International Limited Group of companies.

When the Group uses Keywords Studios plc shares as the 100% consideration for theacquisition of an entity, the value of the shares in excess of the nominal value, net ofshare issuance costs are also recorded within this reserve, in line with S612 of the2006 UK Companies Act.
Non-ControllingReserve

17

InterestThe non-controlling interest reserve represents the share of net assets/(liabilities) at
the reporting date which is attributable to the holders of the non-controlling interest.

Share Options

In July 2013, at the time of the IPO, the Company put in place a Share Option Scheme and a LongTerm Incentive Plan ("LTIP"). The charge in relation to these arrangements is shown below, withfurther details of the schemes following:

2017

2016

€'000

€'000

178

208

Share Option Scheme
ExpenseShare Option Scheme - LTIP
Expense

1,248

478

1,426

686

Of the total share option charge, €141k relates to Directors of the Company as at 31 December, 2017,(2016: €45k).

Share Option Scheme
Share options are granted to Executive Directors and to permanent employees. The exercise
price of the granted options is equal to the market price of the shares at the time of the award of
the options. The Company has no legal or constructive obligation to repurchase or settle theoptions in cash.
Movements in the number of share options outstanding and their related weighted average
exercise prices are as follows:

2017
Average
exercise
price in £per share
Outstanding at the beginning of the period
Granted
LapsedExercised

2016

Numberof options

Average
exercise
price in £per share

Number ofoptions

1.58

1,672,056

1.20

1,642,242

7.76

282,000

2.45

223,200

3.56(30,000)

1.67(44,547)

1.35(548,855)

1.31(148,839)

Outstanding at the end of the period

2.79

1,375,201

1.58

1,672,056

Exercisable at the end of the period
Weighted Average Share Price at date of
exercise

1.30

515,296

1.38

522,035

12.32

3.27

Summary by share option arrangement

Date of Option
Exercise Price
Outstanding at the beginning of the period

12-Jul-13

01-Jun1510-May-16

15-May17

£1.20

£1.58

£2.54

£7.76

465,396

1,016,260

190,400

Granted
Lapsed(3,438)(7,236)(176,647)(372,208)

Outstanding at the end of the period

285,311

636,816

Exercisable at 31 Dec 2017285,311229,985

Exercised in the year

(10,326)

Total

1,672,056
282,000

282,000(9,000)(30,000)(548,855)

180,074

273,000

1,375,201
515,296

Exercisable 2018353,41560,025

Exercisable 201953,41660,025

413,440
91,000204,441

Exercisable 2020

60,024

Exercisable 2021

91,000151,024

91,00091,000The inputs into the Black-Scholes model, used to value the options are as follows:

12-Jul13£1.23

Date of Option
Weighted Average Share Price (£)
Weighted Average Exercise Price (£)

01-Jun-15£1.64

10-May-16£2.54

15-May17
£7.74

£1.20

£1.58

£2.54

£7.76

Average Expected Life
Expected Volatility

3 Years
36.12%

3 Years
28.03%

3 Years
27.17%

3 Years
24.79%

Risk Free Rates

0.50%

0.90%

0.55%

0.16%

Average Expected Dividends Yield

1.00%

0.75%

0.58%

0.21%

-

5

19

32

Weighted Average Remaining Life of
Options in Months

Total

11

Expected volatility was determined by reference to KWS volatility. The expected life used in themodel has been adjusted based on management's best estimate, for the eﬀects of nontransferability, exercise restrictions and behavioural considerations.

Long-term incentive plan scheme
An alternative share plan was introduced to give awards to Directors and staﬀ subject tooutperforming the Numis Small Cap (excluding Investment Trusts) index in terms of shareholder
return over a three year period.
Movements in the number of share options outstanding and their related weighted average
exercise prices are as follows:

2017
Average
exercise
price in £per share
Outstanding at the beginning of the period

0.01

Granted
LapsedExercised

2016

Numberof options

Average
exercise
price in £per share

Number ofoptions

1,443,691

0.01

860,206

0.01

696,000

0.01

720,000

0.01(47,621)0.01(105,654)-(115,654)

0.01(30,861)

Outstanding at the end of the period

0.01

1,976,416

0.01

1,443,691

Exercisable at the end of the period
Weighted Average Share Price at date of
exercise

0.01

222,2380.01

295,365

13.09

2.72

Summary by LTIP arrangement
Date of Option

08-Jul-13

06-Jan1501-Jun1510-May1620-Nov16

15-May17

Total

Exercise Price
Outstanding at the
beginning of theperiod

£0.01

£0.01

£0.01

£0.01

£0.01

£0.01

£0.01

345,365

81,526356,800

630,000

30,000-1,443,691

Adjustments(7,473)

19,534(12,061)

-

-

-

-

-

-

-

-

-

696,000

696,000

Granted
LapsedExercised
Outstanding at theend of the period--(27,621)(20,000)--(47,621)(115,654)

-

-

-

-

-

(115,654)

222,238

101,060

317,118

610,000

30,000696,000

1,976,416

Exercisable at 31 Dec
2017
Exercisable 2018

222,238

222,238
101,060

317,118

Exercisable 2019

418,178
610,000

610,000

Exercisable 2020
Date of Option
Weighted Average
Share Price (£)
Weighted Average
Exercise Price (£)

08-Jul13

06-Jan1501-Jun1510-May1610-May16

696,000
15-May17

£1.23

£1.43

£1.64

£2.54

£4.15

£7.74

696,000

£0.01

£0.01

£0.01

£0.01

£0.01

£0.01

Average Expected Life

3 Years

3 Years

3 Years

3 Years

3 Years

3 Years

Expected Volatility

36.12%

31.20%

28.03%

27.17%

23.31%

24.79%

Risk Free Rates

0.50%

0.58%

0.90%

0.55%

0.08%

0.16%

Weighted Average
Remaining Life of
Options in Months

08-Jul13

06-Jan1501-Jun1510-May1610-May1615-May17

Total

-

-

5

16

23

28

16

LTIP's vest on the third anniversary of the grant, if the performance criteria are met.
LTIP's must be exercised before the seventh anniversary of the grant.
'Adjustments' relate to out of cycle changes and updates.

The options were valued using a Monte Carlo binomial model using the following inputs:
Expected volatility was determined by reference to KWS volatility. The expected life used in themodel has been adjusted based on management's best estimate, for the effects of nontransferability, exercise restrictions and behavioural considerations.
As any dividends earned are to be re-invested into the business the impact of dividends has
been ignored in the calculation of the LTIP share option charge.

18

Other payables

2017

2016

€'000

€'000

Accrued expenses

15,229

7,702

Payroll Taxes

1,530

542

Other payables

2,986

3,927

Contingent Consideration

3,251

251

9

9

Group
Current

Related party payable (Note 22)

23,005 12,431
Non-current
Other payables
Contingent Consideration

19

16

113

1,217

1479

1,233

1,592

Employee Defined Benefit Plan

In line with statutory requirements in Italy, the subsidiaries in Milan maintain Employee Defined
Benefit schemes. On leaving the company, each employee is entitled to 1/13.5 of their final
salary for each year of service.

At year end, the Group commissioned an actuarial valuation of the related liability, based onsalaries, length of service and variables including employee turnover, estimated salary increases
and cost of capital.
The liabilities at year end are recorded as long term. The actuarial loss is recorded separately asother comprehensive income. The movements through the year are detailed:

2017
€'000
826
198
11
(5)
25
1,055

Group
Opening liability position as at 1 JanuaryService cost
Interest cost
Benefits paid
Branch transfer
Actuarial loss recorded
Closing liability position as at 31 December

2016
€'000
590
193
10
(30)
63
826

The Directors have considered the key speciﬁc risk factors which the Group faces due to theemployee deﬁned beneﬁt plan which is in place. Having fully considered all speciﬁc elements ofthese plans the directors believe that the key issues faced are as follows:·

The plan is currently 100% unfunded, there are no specific assets to meet the future
liabilities as they fall due. As such there will be a significant cash flow impact as the liabilities
must be met with current working capital as they fall due.

The Group has taken no speciﬁc actions to mitigate against these factors as due to the long-term
nature of the plans it is expected that there will be no sudden ﬁnancial impact on the Groups
results caused by any of these factors.

In 2017, the group expects the costs of the employee beneﬁt plan to be in line with current year
levels, as staff levels in the Italian operations stay stable.

The actuarial valuation is based on the Projected Unit Credit Method, in line with IAS 19.

Actuarial valuations
Defined benefit obligations
Current concern provision
Current concern provision surplus /(deficit)
Value of accrued benefits
Future service liability
Cost for year
Service cost
Interest cost
Actuarial loss

Actuarial losses
Change due to experience
Change due to demographicalassumptions
Change due to financial assumptions

2017
€'000
1,055
842

2016
€'000
826
654

(213)
4,033
2,977

(172)
3,318
2,492

199
11
25
235

193
10
63
266

17

30

30
(22)
25

5
28
63

Assumptions underlying the Actuarial Valuations and Sensitivities of the Assumptions
For the actuarial valuations the following demographic and economic & ﬁnancial assumptions
were applied:

Demographic Assumptions
·
·

·
·

·

The probabilities of death were derived from the bill of the Italian population by age and sex,
as recorded by the Government Statistics Office in 2000 and reduced by 25%.
The probabilities of elimination for absolute and permanent disability of the employee aretaken from the disability tables currently used in practice separate reinsurance for age andsex.
The probabilities of employees leaving due to resignations and dismissals in accordance withcompany management have been placed at 4.25% per annum.
The probabilities of requesting an advance have been estimated on the basis of company
history 2010 to 2017, and placed equal to 2.19% per annum with an average rate of advanceequal to 61.99%.
For retirement for the general working population, it is assumed that the first of the pension
requirements is valid for the mandatory general insurance.

Economic & Financial Assumptions

2017

2016

Salary Increase
Inflation
Discount rate

2.76%
1.70%
1.54%

2.50%
1.73%
1.29%

Key Statistics
Staff Number
Average Age
Average Service
Average Defined Benefit per staff
Average Salary for Defined Benefit

98
39.28
4.50
8,595
34,438

97
38.2
3.6
6,745
31,723

Actuarial Losses
Change due to Experience
Change due to Demographical assumption
Change due to Financial assumption
Actuarial Losses

2017
€'000
17
30
(22)
25

2016
€'000
30
5
28
63

Interest Rate Sensitivities-0.50%
0.50%

1,136
983

882
776

Mortality Rate Sensitivities-0.025%0.025%

1,056
1,055

827
782

Staff Turn Over Rate Sensitivities-0.50%
0.50%

1,067
1,045

835
818

Staff Salary Increases Rate Sensitivities-0.50%
0.50%

1,029
1,084

808
845

20

Loans and borrowings

GroupExpiry within 1 Year
Expiry between 1 and 2 years
Expiry over 2 years

2017
€'000

2016
€'000

18,94331
306
19,280

8,025
55
290
8,370

The company entered into a loan agreement with Barclay's Bank. The agreement allows
financing up to €25m. At year end, €18.3m was drawn down.
The group also took on loans on the acquisition of Enzyme of CAD $0.5m / €0.4m (2016 $0.5m /€0.4m) and Sperasoft US $0.7m/ €0.6m.

The currencies of these loans are as follows;

Group

Euro
Canadian Dollars
US Dollars

2017
€'000

2016
€'000

18,301
347
632
19,280

8,000
370
8,370

21 Investment in Subsidiaries
The results and financial position of all the subsidiaries are included in the consolidated
statements.
Details of the Company and Group's subsidiaries as at 31 December 2017 are set out below:

Name
Keywords
International Limited
Keywords
International Co.
LimitedKeywords
International
Corporation inc
Keywords
International Inc
KW Studios Limited
Liquid Violet Limited
Babel Media Limited
Babel Games
Services Inc

Babel Media India
Private limited
Babel Media USA Inc
Keywords

Country ofincorporation
IrelandJapan

Date ofincorporation/ acquisition
13/05/1998

30/11/2010

Proportion of
voting rights
and ordinary
share capital
held
100%

100%

Canada22/12/2010100%

United States
UnitedKingdom
UnitedKingdom
UnitedKingdom

26/09/2012

100%

29/05/2013

100%

15/01/2014

100%

17/02/2014

100%

Canada17/02/2014

100%

India

17/02/2014

100%

United States

17/02/2014

100%

Registered Office
Whelan House, South County
Business Park, Dublin 18
2F Toshin Building, 4-33-10 Yoyogi,
Shibuya-ku, Tokyo 151-0053, Japan
1751 Richardson,
suite 8400,Montréal, Québec,Canada H3K1G6
18300 Redmond Way, Suite 120,
Redmond, WA 98052
8 Clifford Street London W1S 2LQ
Flr 2, 59 Lansdowne Place Hove,
East Sussex, BN3 1FL,London, UK
Fifth Floor, 6 St. Andrew Street,
London, EC4A 3AE, UK
1751 Richardson, suite 8400,
Montréal, Québec, Canada H3K1G6
3rd floor, Vardhman Orchard Plaza,
Plot No 4, LSC, West Enclave,
Pitampura, New Delhi, 110034,
India
1751 Richardson Office 8400,
Montreal, Canada, H3K 1G6
20 Kallang Avenue, #06-6A, Lobby

International Pte.
LimitedSingapore

24/04/2014

100%

Binari Sonori SRL

Italy

08/05/2014

100%

Binari Sonori Inc
Binari Sonori Audio
Productions LLC

United States

08/05/2014

100%

United States

08/05/2014

100%

India

10/10/2014

100%

Singapore

10/10/2014

100%

India

10/10/2014

100%

Alchemic Dream Inc
Keywords
International
Barcelona SL
Reverb Localizacao Prearacao deDocumentos Ltda
Keywords (Shanghai)
Information
Technology

Canada06/01/2015

100%

Spain

09/01/2015

100%

Brazil18/01/2015

100%

China

02/04/2015

100%

Kite Team SL

Spain

16/07/2015

100%

Mexico16/07/2015

100%

United States

20/08/2015

100%

Philippines

22/03/2016

100%

Switzerland

12/04/2016

100%

Germany

12/04/2016

100%

Italy

12/04/2016

100%

France08/06/2016

100%

CanadaUnitedKingdom

29/07/2016

100%

26/10/2016

100%

Canada16/11/2016

100%

FranceUnitedKingdom

16/11/2016

100%

17/02/2017

100%

XLOC Inc

USA

10/05/2017

100%

GameSim Inc.

USA

17/05/2017

100%

Strongbox Ltd

Seychelles

17/05/2017

100%

Hong Kong

17/05/2017

100%

China

17/05/2017

100%

Lakshya Digital
Private Limited
Lakshya Digital
Singapore Pte Ltd
Edugames Solutions
Private Limites

Kite Team Mex S. de
R.L. de. CV
Liquid Development
LLC
Ankama Asia Pte. Ltd
Synthesis Global
Solutions
Synthesis
Deutschland
Sillabit S.R.L
Keywords
International SAS
Volta Creation Inc
Player Research
Global Video-Games
Services Inc., trading
as Enzyme TestingLabs
Global Video Game
Service Europe SARL
Spov Ltd

Eastern New Media
LimitedRed Hot Software(Shanghai) Ltd.
Red Hot Software(Zhengzhou) Ltd.
PT Limitless
Indonesia

China

17/05/2017

100%

Indonesia

17/05/2017100%

asrec SAS

France28/07/2017

100%

Le Marque Rose SARLFrance04/08/2018

100%

Dune Sound SAS

France28/07/2017

100%

B, Pico Creative Centre, Singapore
339411
Viale G.Frua 24, Milano, MI 20146,
Italy
350 N. Glenoaks Blvd., suite 305,
Burbank, CA 91502, USA
350 N. Glenoaks Blvd., suite 305,
Burbank, CA 91502, USA
3rd floor, Vardhman Orchard Plaza,
Plot No 4,LSC, West Enclave,
Pitampura, New Delhi, 110034
20 Kallang Avenue, #06-6A, Lobby
B, Pico Creative Centre, Singapore
339411
D - 3/C, Munirka Flats, New Delhi 110067
1751 Richardson, suite 8400,
Montréal, Québec, Canada H3K1G6
Passeig de Gràcia 49, 1er2a,
08007 Barcelona, Catalonia, Spain
Av. Churchill, 109 - sala 204 Centro, Rio de Janeiro-RJ, Brazil
CEP: 20020-050
142 Room, Building 7, No.311 Jin
Gao Road, Pudong New District,
ShanghaiJulián Camarillo 6A, 3B, 28037
Madrid, Spain
Av. Insurgentes Sur 1853,
Guadalupe Inn, 01020 Ciudad de
México, CDMX Mexico
411 SW 2nd Ave #300, Portland,
OR 97204, USA
12F JMT Corporate Condominium,
ADB Ave., Ortigas CBD, Pasig City
Via Landriani 7, 6900 Lugano,Ticino, Switzerland
Holstenkamp 46 A, Bahrenfeld,
22525 Hamburg, Germany
Corso Martiri 31, 23900 Lecco,
Lombardia, Italy
15 rue de la Baume - 75008 Paris,
France410 Charest Est, Suite 410,
Quebec QC, Canada G1K 8G3
Claremont House, 95 Queens Road,
BN1 3XE, Brighton, UK

2031 boul. du Curé-Labelle, SaintJérôme (Québec) J7Y1S5, Canada
166, boulevard du Montparnasse,
75014 Paris , FranceStudio 11 The Premises, 205-209
Hackney Rd, London E2 8JL, UK
712 Presnell Court, Raleigh, NC
27615-1240, USA
12000 Research Parkway, Suite
436, Orlando, FL 32826, USA
Suites 103, 106 and 107 Premier
Building, Victoria, Mahe,
Seychelles
Flat/Rm 4304, 43F, China
Resources Building, 26 Harbour
Road, Wanchai, Hong Kong
Dong Tu Yu Hiu Road #860,
Building 5, 4th Floor, Shanghai
Room 207, 11th Floor, Building No.
3, No. 57 Ke Xue Da Dao, Zheng
Zhou, He Nan, China
JI. Timoho II, No. 32, Yogyakarta,
20, rue de la Folie-Méricourt,
75011 Paris11, rue Torricelli, 75017 Paris
59 boulevard Exelmans, 75016
Paris

France

28/07/2017

100%

59 boulevard Exelmans, 75016
Paris

Germany

28/07/2017

100%

CanadaUnitedKingdom

28/07/2017100%

19/10/2017

100%

Keywords US
Holdings Ltd

USA

27/10/2017

100%

VMC Consulting
Corporation

USA

27/10/2017

100%

Canada27/10/2017

100%

Canada27/10/2017

100%

Rosenstrasse 2, D-10178 Berlin
338 Saint-Antoine, bureau 207,
Montréal, Canada
Drake House, Gadbrook Park,
Northwich, Cheshire, CW9 7RA
1209 Orange Street, Wilmington,
New Castle County, Delaware
19801, USA.
11611 Willows Road NE, Redmond,
WA 98052, United States ofAmerica
1751 Richardson Street Suite 8400
Montreal QC H3K 1G6 Canada
1700-1075 West Georgia Street,
Vancouver, BC, V6E 3C92033 Gateway Place Suite 500 San
Jose, CA 95110
ul. Na Kozłówce 27, 30-664
Kraków, Poland
5 Kievskaya Str., bld. 4, St.
Petersburg, 196084

Around the Word SAS
Around the WordGmbH
Around the Word
Canada Ltd
d3t Ltd

Volt Canada Inc.
VMC Volt Information
Sciences BC, Inc.
Sperasoft Inc.
Sperasoft Poland
Spólka z.o.o.

USA

13/12/2017

100%

Poland

13/12/2017

100%

Sperasoft Studio LLC

Russia13/12/2017

100%

22

Related parties and shareholders

Italicatessen Limited, a company registered in Ireland is related by virtue of a common
signiﬁcant shareholder. P.E.Q. Holdings Limited is 100% owner of Italicatessen Limited. At 31
December 2017, P.E.Q Holdings Limited owned 6.5% (2016: 14.6%) of the Company. In addition,
Mr. Giorgio Guastalla is a Director of Italicatessen Limited, P.E.Q. Holdings Limited and theCompany, and owns, or controls, 90% of the share capital of P.E.Q Holdings Limited.
The following transactions arose with Italicatessen Limited, which provides canteen services to
Keywords International Limited

Operating Expenses
Canteen Charges

2017
€'000

2016
€'000

57
57

53
53

2017
€'000

2016
€'000

10
10

9
9

The following are year-end balances:

Italicatessen Limited

The Company paid the following amounts to Mr. Giorgio Guastalla, Director of the Company, andshareholder of P.E.Q Holdings Limited, in respect of rent on premises occupied by the employeesof the Group in Dublin.

Operating Expenses
Rental Payment

2017
€'000

2016
€'000

22
22

22
22

The details of key management compensation (being the remuneration of the Directors) are set

out in note 10.
As at 31 December 2017 and 2016, the Company had amounts receivable from its subsidiaries,
amounting to €14,624k (2016: €13,519k) relating to intergroup trading activities.
As at 31 December 2017 and 2016, the Company had amounts receivable from its subsidiaries,
amounting to €117,732k (2016: €12,122k) relating to investments in relation to acquisitions.

23

Financial instruments and risk management

Interest rate risk
Interest rate risk is the risk that the value of ﬁnancial instruments will ﬂuctuate due to changes
in market interest rates. The Group's income and operating cash ﬂows are substantiallyindependent of changes in market interest changes. The management monitors interest rate
fluctuations on a continuous basis and acts accordingly.
Where the Group has a signiﬁcant amount of surplus cash, it will invest in higher earning interest
deposit accounts.
Due to interest rate conditions, the interest rates for short term deposits are at similar levels to
those achieved for longer terms. The Group is not unduly exposed to market interest rate
fluctuations, and no interest rate sensitivity analysis has been presented as a result.
Credit Risk
Credit risk arises when a failure by counterparties to discharge their obligations could reduce theamount of future cash inflows from financial assets on hand at the reporting date.
The Group closely monitors the activities of its counterparties and maintains regular contact
which enables it to ensure the prompt collection of customers' balances.
The Group's main ﬁnancial assets are cash and cash equivalents as well as trade and otherreceivables and represent the Group's maximum exposure to credit risk in connection with its
ﬁnancial assets. Trade and other receivables are carried on the statement of ﬁnancial position
net of bad debt provisions estimated by the Directors based on prior year experience and anevaluation of prevailing economic circumstances.
Whenever possible and commercially practical the Group invests cash with major ﬁnancial
institutions in each jurisdiction where it operates. The Group periodically monitors the credit
rating and stability of these institutions.
The ageing of trade receivables that are past due but not impaired can be analysed as follows:

Group

€'000

€'000

€'000

More
than 2months
past
due
€'000

27,473

16,713

9,126

1,634

13,87912,877

907

95

Total

As at 31 December 2017
As at 31 December 2016

Not pastdue

1-2
monthsoverdue

The above balances relate to customers with no default history.

A provision for doubtful debtors is included within trade receivables that can be reconciled asfollows:

Provision at the beginning of the year
Charged to income statement
Utilised
Provision at end of the year

2017
€'000

2016
€'000

468
3
(53)

306
188
(26)

418

468

Related party receivables of €nil were past due at 31 December 2017 (2016: nil).

Company
Intercompany trade receivables of €14,624k were not past due at 31 December 2017 (2016:€13,519k).
Currency Risk
Currency risk is the risk that the value of ﬁnancial instruments will ﬂuctuate due to changes inforeign exchange rates.
The foreign exchange risk arises for the Group where assets and liabilities arise and are held inoverseas subsidiaries in a currency other than the euro and to a lesser extent where individualGroup entities enter into transactions denominated in currency other that their functional
currency.
The Group's policy, where possible, is for Group entities to manage foreign exchange risk at a
local level by matching the currency in which revenue is generated and the expenses incurredand by settling liabilities denominated in their functional currency with cash generated from theirown operations in that currency. Where Group entities have liabilities denominated in a currency
other than their functional currency (and have insuﬃcient reserves of that currency to settlethem), cash already denominated in that currency will, where possible, be transferred from
elsewhere within the Group.
Over the course of the year the Group's currency has increased and diversiﬁed due to theaddition of the newly acquired subsidiaries. The Group is predominantly exposed to currency riskon the balances held within working capital within the Group and the exposure is concentrated in
the movement of the Canadian Dollar, US dollar and Sterling against the Euro. The eﬀect of astrengthening and weakening of 10% of these currencies against the euro at the reporting dateon the working capital balances held at this date would, all other variable held constant, haveresulted in the following pre-tax profit/(loss) impact for the year as follows:

United States Dollar to Euro
Canadian Dollar to Euro
Sterling to Euro

10%
Strengthening
€'000

10%
Weakening
€'000

2,363
1,267
620

(2,363)(1,267)(620)

Total financial assets and liabilities
Total financial assets and liabilities
The carrying amount of the ﬁnancial assets and liabilities shown in the Group statements offinancial position are stated at fair value.
Liquidity Risk
Liquidity risk arises from the Group's management of working capital and the ﬁnancial charges
on its debt instruments.

The Group's policy is to ensure that it will have suﬃcient cash to allow it to meet its liabilities
when they become due.
The following are the contractual maturities (representing undiscounted contractual cash flows)of the Group's financial liabilities:

Group

€'000

Within 1
year
€'000

1-2
years
€'000

2-5
years
€'000

7,310
3,251
19,754
18,943

1,217
16
31

-

Contingent Consideration
Other accounts payable
Loans & Borrowings

7,310
4,468
19,77019,280306Year ended 31 December 2016

Total
€'000

Within 1
year
€'000

1-2
years
€'000

2-5
years
€'000

Trade payables
Contingent Consideration

4,822
1,730

4,822
251

1,479

-

Other accounts payable
Loans & Borrowings

12,293
8,370

12,238
8,025

55
55

290

Year ended 31 December 2017

Trade payables

Total

Contingent considerations at 31 December 2017 have arisen on business combinations. They arebased on set amounts to be paid in the future to sellers under the purchase agreements.
24

Operating Lease Commitments

The Group maintains a portfolio of leased properties. The terms of property leases vary fromcountry to country, although they all tend to be tenant repairing with rent reviews every 2 to 5
years and some have break clauses.
The total future value of the minimum lease payments is due as follows:Group

Not later than one year
Later than one year and not later than five years
Later than five years

25

2017
€'000

2016
€'000

4,561
10,708
4,793
20,062

2,318
6,031
903
9,252

Finance Lease Commitments

The Group has leased computer equipment and oﬃce telephone systems. Such assets are
generally classiﬁed as ﬁnance leases as the rental period amounts to the estimated useful
economic life of the assets concerned and often the Group has the right to purchase the assets
outright at the end of the minimum lease term by paying a nominal amount.

The total future value of the minimum lease payments is due as follows:Group

Minimum
Present
Lease Interest
Value
Payments2017
Not later than one year
Later than one year and not later than
five years
Later than five years

€'000

2016
Not later than one year
Later than one year and not later than
five years
Later than five years

26

25

1

24

20
45

4
5

16
40

31

2

29

18
49

1
3

17
46

Deferred Tax

Details of the deferred tax assets and liabilities, and amounts recognised in the proﬁt or loss are
as follows:

Accelerated capital allowances
Personal severance indemnity
Available losses
Rent - free inducement
Fixed asset excess of tax overaccounting
Deferred tax related to Multi MediaTax Credits
Other temporary and deductible
differences
Deferred Tax arising on intangibles
Net tax assets / (liabilities)(Charged)/ creditedNet
to profit or
loss
2017
2017
€'000
€'000

Asset

Liability

2017
€'000

2017
€'000

32
237
17

1
-

(1)
32
237
17

1
(2)
(162)
13

258

139

119

(33)

-

2,284

(2,284)

132

581

112

469

(225)

81

5,259

(5,178)

(700)

1,206

7,795

(6,589)(976)

Change in Tax Rate
Prior year over / (under) provision
Total deferred tax asset /(liability)

Accelerated capital allowances
Personal severance indemnity
Available losses
Rent - free inducement

(149)
94
(1,031)Asset

Liability

2016
€'000

2016
€'000

109
44
-

9
116

(Charged) /credited to
profit or loss
2016
2016
€'000
€'000
Net

(9)
109
44
(116)

4
100
(243)
(66)

Fixed asset excess of tax overaccounting
Deferred tax related to Multi MediaTax Credits
Other temporary and deductible
differences
Deferred Tax arising on intangibles

173

3

170

42

5

796

(791)

501

300

19

281

(88)

249

2,310

(2,061)459

Net tax assets / (liabilities)

880

3,253

(2,373)

709

27

Non-Controlling Interest

Opening Balance
Liabilities of Kite Team attributable to shareholder at theacquisition date
Loss of Kite team attributable to the shareholders of thegroup
Contingent Consideration for the purchase of the remaining
50% of Kite Team
Settlement of Non-Controlling Interest

2017
€'000

2016
€'000

-

(1,309)

-

-

-

(61)

-

1,370

-

-

Keywords International Limited acquired 50% of the issued share capital of Kite Team in 2015, a
company registered in Spain.
In March 2016, Keywords International Limited acquired the remaining 50% of shares in Kite
Team. The settlement value was €1,370,000; comprising the settlement of the put and call
option of €1,150,000 through €1,000,000 in cash and €150,000 in KWS shares, plus €220,000
transfer of losses from Minority Interest.

28 Acquisitions completed in the current year

Acquisition of Spov Ltd
On 17 February 2017 the Group acquired the entire issued share capital of Spov Ltd("Spov") a company registered in the UK, which specialises in providing creative
development, cinematics, UI, visual eﬀects and motion graphics services to thevideo game and ﬁlm markets. The acquisition will further complement Keywords
range of customer service offerings to customers with online and mobile games.
The amounts recognised in respect of the identiﬁable assets acquired and liabilities
assumed are set out below:
Spov Ltd.

Financial Assets

Book
Value
€'000

Fair Value
Adjustment
€'000

Fair
Value
€'000

Property, plant and equipment
Trade and other receivable
Trade and other Payables
Total identifiable assets
Goodwill

30

-

30

16
(139)
(93)

-

16
(139)
(93)
491

Total consideration

398

Satisfied by:
Cash

351

Deferred consideration

47
398

Net cash outflow arising on
acquisition
Cash

351

The main factors leading to recognition of goodwill on the acquisition of Spov are
the presence of intangible assets in the acquired entity which do not value forseparate recognition such as the expertise in Art Services and reputation within theindustry, and an unidentiﬁed proportion representing the balance contributing to
profit generation.
The deferred considerations is a guaranteed amount.
In the opening set up period, Spov contributed €207,920 revenue and €203,313 loss
before tax to the Group between the date of acquisition and the balance sheet date.
If the acquisition had been completed on the ﬁrst day of the ﬁnancial year, total
revenue for the six months of €212,258 would have been contributed to the Group,
and a corresponding loss before tax of €213,419.
Acquisition costs of €9k
Comprehensive Income.

have

been

chargedthroughtheStatementof

Acquisition of XLOC
On 10 May 2017 the Group acquired the entire issued share capital of XLOC Inc,("XLOC") a company registered in Raleigh, North Carolina, USA. XLOC hasdeveloped the leading web-based integrated globalization content management
system for videogames (XLOC), supported by consulting and customisation services.
The acquisition of XLOC is in line with Keywords Studios' strategy to extend its
services, with the objective of providing end to end services to its global client basecovering all aspects of game production and live operations support.
The amounts recognised in respect of the identiﬁable assets acquired and liabilities
assumed are set out in the table below:
XLOC

Financial Assets
Property, plant and equipment
Identifiable intangible assets - IP
Trade and other receivables
Cash and cash equivalents
Trade and other Payables
Deferred tax liabilities

Book
Value
€'000

Fair Value
Adjustment
€'000

Fair
Value
€'000

7

-

7

33
120
(73)
-

147
(59)

147
33
120
(73)
(59)

Total identifiable assets
Goodwill
Total consideration

87

88

175
652
827

Satisfied by:
Cash

643

Equity Instruments (19,134 shares ofthe parent company)

184

Total consideration

827

Net cash outflow arising on acquisitionCash
Less: cash and cash equivalentbalances transferred

643
(120)
523

The main factors leading to the recognition of goodwill on the acquisition of XLOC
are the presence of certain intangible assets in the acquired entity, which are notvalued for separate recognition, such as the expertise in localisation processes andreputation within the industry.

XLOC contributed €236,376 revenue and €114,475 loss before tax to the Groupbetween the date of acquisition and the balance sheet date. If the acquisition had
been completed on the first day of the financial year, revenue for the year to 31 Dec
2017 of €479,446 would have been contributed to the Group and €32,312 loss
before tax.
Acquisition costs of €9k have been charged through to the Statement ofComprehensive Income.
Acquisition of GameSim
On 17 May 2017 the Group acquired the entire issued share capital of GameSim Inc,("GameSim") a company registered in Orlando, Florida, USA. GameSim specialise inoutsourced engineering services and technology platforms for the video games
industry and other virtual simulation applications. The acquisition is in line with its
strategy of growing both organically and by acquisition to extend the Group's client
base, market penetration or service lines, where the Group can leverage its existing
expertise, multi-service platform, scale and global reach to generate synergies.
The amounts recognised in respect of the identiﬁable assets acquired and liabilities
assumed are set out in the table below:
GameSim

Financial Assets
Property, plant and equipment
Identifiable intangible assets - customer
relationships
Trade and other receivables
Cash and cash equivalents
Trade and other Payables
Total identifiable assets

Book
Value
€'000

Fair Value
Adjustment
€'000

Fair
Value
€'000

13

-

13

768
26
(353)

-

768
26
(353)

454

-

454

Goodwill
Total consideration

3,828
4,282

Satisfied by:Cash
Equity Instruments (151,725 shares of theparent company)

2,888

Total consideration transferred

4,282

1,394

Net cash outflow arising on acquisitionCash
Less: cash and cash equivalent balancestransferred

2,888
(26)
2,862

The main factors leading to recognition of goodwill on the acquisition of GameSim
are the presence of certain intangible assets in the acquired entity, which are notvalued for separate recognition, such as the expertise in simulation technology for
the Games Industry and reputation.
GameSim contributed €2,266,180 revenue and €397,213 proﬁt before tax to theGroup between the date of acquisition and the balance sheet date. If the acquisition
had been completed on the first day of the financial year, revenue for the year to 31
December 2017 of €3,798,549 would have been contributed to the Group and€461,541 profit before tax.
Acquisition costs of €3k have been charged through to the Comprehensive Income
Statement.
Acquisition of Red Hot
On 22 May 2017 the Group acquired the entire issued share capital of Strongbox
Ltd, a holding company with subsidiaries in China and Indonesia trading under the
Red Hot CG ("Red Hot") . Red Hot are specialists in the production of graphical art
assets for video games.
The acquisition of Red Hot is in line with Keywords' strategy of growing bothorganically and by acquisition. It will increase the capacity of Keywords' fast
growing and higher margin Art Service Line, as well as bringing a number of
attractive new clients to the art business at Keywords.
The amounts recognised in respect of the identiﬁable assets acquired and liabilities
assumed are set out in the table below:

Red Hot

Financial Assets
Property, Plant & Equipment
Identifiable intangible assets - customer
relationships
Trade and other receivable

Book
Value
€'000

Fair Value
Adjustment
€'000

Fair
Value
€'000

230

-

230

-

1,465

1,465

975

-

975

Cash and cash equivalents
Trade and other Payables

584
(356)

-

584
(356)

Corporation Tax
Deferred tax liabilities
Total identifiable assets

(64)
1,369

(366)
1,099

(64)
(366)
2,468

Goodwill

2,513

Total consideration

4,981

Satisfied by:
Cash

3,514

Shares to Be Issued

1,468
4,981

Net cash outflow arising on acquisitionCash
Less: cash and cash equivalent balancestransferred

3,514
(584)
2,930

The main factors leading to recognition of goodwill on the acquisition of Red Hot are
the presence of certain intangible assets in the acquired entity, broader access to
the Chinese pool of video game art talent, which is the largest in the world, andexpertise in Art service for the Games Industry and reputation.
A ﬁxed amount of 160,842 shares in Keywords Studio Plc will be issued as part ofthe deferred consideration. The shares have been valued at the share price at thedate of acquisition, €9.12, and €1,467,580 has been recorded as Shares to be
Issued within Equity, in accordance with IAS 32.16.
Red Hot contributed €3,979,753 revenue and €848,152 proﬁt before tax to theGroup between the date of acquisition and the balance sheet date. If the acquisition
had been completed on the first day of the financial year, revenue for the year to 31
December 2017 of €6,245,933 would have been contributed to the Group and€1,152,760 profit before tax.
Acquisition costs of €70k have been charged through to the Comprehensive Income
Statement.
Acquisitions of asrec, Le Marque Rose and Around the Word
Between 28 July and on 4 August, the company acquired the entire issued sharecapital of La Marque Rose SARL, asrec SAS and the subsidiary companies of holding
company, Dune Media SAS, trading as Dune Sound and Around the Word, which are
all based in Paris and provide audio recording and localisation services to the video
games industry internationally.
The acquisitions are in line with the Keywords' strategy of consolidating our leading
position in the highly fragmented video games services industry and generatingsynergies through scale in certain services and geographies.
The amounts recognised in respect of the identiﬁable assets acquired and liabilities,
for each of the acquisitions, are set out in the table below:

asrec

Book

Fair Value

FairValue€'000

Adjustment
€'000

Value
€'000

123

-

123

49
76
(115)
133

-

49
76
(115)
133
577
710

Financial Assets
Property, Plant & Equipment
Identifiable intangible assets - customer relationships
Trade and other receivable
Cash and cash equivalents
Trade and other Payables
Deferred tax liabilities
Total identifiable assets
Goodwill
Total consideration
Satisfied by:Cash
Equity Instruments (9,534 shares of the parent
company)

610
100
710

Net cash outflow arising on acquisition
Cash

610

Less: cash and cash equivalent balances transferred

(76)
534

Le Marque Rose

Financial Assets
Property, Plant & Equipment
Identifiable intangible assets customer relationships
Trade and other receivable
Cash and cash equivalents
Trade and other Payables
Deferred tax liabilities
Total identifiable assets
Goodwill

Book
Value
€'000

Fair Value
Adjustment
€'000

Fair
Value
€'000

148

-

148

598
494
(504)

-

598
494
(504)

736

-

736
1,293

Total consideration

2,029

Satisfied by:
Cash

2,029

Net cash outflow arising on
acquisitionCash
Less: cash and cash equivalentbalances transferred

2,029
(494)
1,535

Around the Word

Book
Value
€'000

Fair Value
Adjustment
€'000

Fair
Value
€'000

Financial Assets
Property, Plant & Equipment
Identifiable intangible assets customer relationships
Trade and other receivable
Cash and cash equivalents
Trade and other Payables
Deferred tax liabilities
Total identifiable assets
Goodwill
Total consideration

342

-

342

2,142
497
(2,067)

651
-

651
2,142
497
(2,067)

914

(217)
434

(217)
1,348
3,495
4,843

Satisfied by:
Cash
Deferred CashShares to Be Issued (66,262
shares of the parent company)

2,500
1,543
800
4,843

Net cash outflow arising on
acquisitionCash
Less: cash and cash equivalentbalances transferred

2,500
(497)
2,003

The main factors leading to recognition of goodwill on the acquisition of the French
entities are the presence of certain intangible assets in the acquired entity,
including and expertise in Audio service for the Games Industry and reputation.
These acquisitions will allow Keywords to consolidate the leading providers of audio
and localisation services in French which, together with German, remain the mostimportant localised languages for games.
The deferred cash consideration elements of the Around The Word consideration arepayable over three tranches. The ﬁrst tranche is a payable on satisfaction of aworking capital requirement at 31 December 2017, which has been met. The second
and third tranches are payable on set EBITDA percentage requirements on set
revenue targets. Based on trading to date, and on current projections, it is expectedthat this consideration will be paid in full.
A ﬁxed amount of 66,262 shares in Keywords Studio Plc will be issued as part of thedeferred consideration. The shares have been valued at the share price at the dateof acquisition, €12.07, and €800,000 has been recorded as Shares to be Issued
within Equity, in accordance with IAS 32.16.
These French Acquisitions contributed €3,773,273 revenue and €644,655 proﬁt
before tax to the Group between the dates of acquisition and the balance sheet
date. If the acquisitions had been completed on the ﬁrst day of the ﬁnancial year,
revenue for the year to 31 December 2017 of €9,532,853 would have been
contributed to the Group and €148,936 profit before tax.
Acquisition costs of €435k have been charged through to the Comprehensive
Income Statement.
Acquisition of d3t
On 19 October 2017 the Group acquired the entire issued share capital of d3t, a UK
company. d3t delivers premium quality outsourced software development services
for video game developers and publishers internationally.
The acquisition of d3t is in line with Keywords Studios' strategy to grow organicallyand by acquisition as it selectively consolidates the highly fragmented market forvideo game services.
d3t brings additional skills, client relationships andgeographic reach to Keywords, extending the strength and scale of its recently
established Engineering service line.
The amounts recognised in respect of the identiﬁable assets acquired and liabilities
assumed are set out in the table below:
d3t

Financial Assets
Property, Plant & Equipment
Identifiable intangible assets customer relationships
Trade and other receivable
Cash and cash equivalents
Trade and other Payables
Deferred tax liabilities
Total identifiable assets
Goodwill
Total consideration

Book
Value
€'000

Fair Value
Adjustment
€'000

Fair
Value
€'000

188

-

188

602
802
(678)

-

602
802
(678)

914

-

914
2,886
3,800

Satisfied by:Cash
Equity Instruments (42,368
shares of the parent company)

3,127
673
3,800

Net cash outflow arising on
acquisitionCash
Less: cash and cash equivalentbalances transferred

3,127
(802)
2,325

The main factors leading to recognition of goodwill on the acquisition of d3t are thepresence of certain intangible assets in the acquired entity, including a softwaredevelopment team with capabilities including HD re-mastering, porting,
optimisation, rendering and game systems and reputation within the industry.
d3t contributed €560,231 revenue and €6,938 loss before tax to the Group between
the date of acquisition and the balance sheet date. If the acquisition had been
completed on the ﬁrst day of the ﬁnancial year, revenue for the year to 31
December 2017 of €3,010,726 would have been contributed to the Group and€113,541 profit before tax.
Acquisition costs of €36k have been charged through to the Comprehensive Income
Statement.
Acquisition of VMC
On 27 October 2017 the Group acquired the entire issued share capital of VMCConsulting Corporation, a leading provider of Functional Testing and Customer

Support in North America, and its aﬃliates VMC Volt Information Sciences BC andVolt Canada Inc.
The acquisition of VMC is in line with Keywords Studios' strategy to grow organicallyand by acquisition as it selectively consolidates the highly fragmented market forvideo game services.
The amounts recognised in respect of the identiﬁable assets acquired and liabilities
assumed are set out in the table below:
VMC

Book
Value
€'000

Fair Value
Adjustment
€'000

Fair
Value
€'000

Financial Assets
Property, Plant & Equipment
Identifiable intangible assets - customer
relationships
Trade and other receivable
Cash and cash equivalents
Trade and other Payables

1,834

-

1,834

18,255(3,192)

13,245-

13,245
18,255(3,192)

Corporation Tax
Deferred tax liabilities
Total identifiable assets(150)(1,408)15,339(2,781)
10,464(150)(4,189)25,803

Goodwill

32,128

Total consideration

57,931

Satisfied by:Cash
Net cash outflow arising on
acquisition

57,931Cash
Less: cash and cash equivalent balancestransferred

57,931-

57,931

VMC contributed €7,768,858 revenue and €824,189 proﬁt before tax to the Groupbetween the date of acquisition and the balance sheet date. If the acquisition had
been completed on the ﬁrst day of the ﬁnancial year, revenue for the year to 31
December 2017 of €50,345,062 would have been contributed to the Group. The
acquisition was a carve-out from a group of existing companies, so the comparable
pre-acquisition proﬁt is not easily measurable. It is expected that the comparable
profit before tax would have been in the order of 10% of revenues.
Acquisition costs of €1,690k have been charged through to the Comprehensive
Income Statement.
Acquisition of Sperasoft
On 13 December 2017 the Group acquired the entire issued share capital of
Sperasoft Inc. and Sperasoft LLC. Headquartered in Santa Clara, California,
Sperasoft provides game development, art creation and software engineering
services to video game developers and publishers around the world from its
production studios in St Petersburg and Volgograd, Russia and Krakow, Poland.

The acquisition of Sperasoft is in line with Keywords Studios' strategy to groworganically and by acquisition as it selectively consolidates the highly fragmented
market for video game services. Sperasoft adds considerable expertise and scale to
Keywords new and growing Engineering Services business and adds additional scale
to the Art creation business.
The amounts recognised in respect of the identiﬁable assets acquired and liabilities
assumed are set out in the table below:
Sperasoft

Financial Assets
Property, Plant & Equipment
Identifiable intangible assets - customer
relationships
Trade and other receivable
Cash and cash equivalents
Trade and other Payables
Corporation Tax
Loan
Deferred tax liabilities
Total identifiable assets
Goodwill
Total consideration

Book
Value
€'000

Fair Value
Adjustment
€'000

Fair
Value
€'000

1,053

-

1,053

2,946
587
(2,710)(86)(1,022)
(46)
722

3,454
(691)
2,763

3,454
2,946
587
(2,710)(86)(1,022)(737)
3,485
18,206
21,691

Satisfied by:
Cash
Deferred CashShares to Be Issued (252,248 shares of theparent company)

16,733826
4,132
21,691

Net cash outflow arising on acquisitionCash
Less: cash and cash equivalent balancestransferred

16,733(587)
16,146The main factors leading to recognition of goodwill on the acquisition of Sperasoft
are the presence of certain intangible assets in the acquired entity, including andexpertise in Art and Engineering services for the Games Industry and reputation.
The deferred consideration is payable on the ﬁrst anniversary of trading. This is notcontingent on performance of the company.
A ﬁxed amount of 252,248 shares in Keywords Studio Plc will be issued as part ofthe deferred consideration. The shares have been valued at the share price at thedate of acquisition, €14.26, and €4,132,584 has been recorded as Shares to be
Issued within Equity, in accordance with IAS 32.16.
Sperasoft contributed €797,608 revenue and €34,180 loss before tax to the Groupbetween the dates of acquisition and the balance sheet date. If the acquisitions had
been completed on the ﬁrst day of the ﬁnancial year, revenue for the year to 31
December 2017 of €18,077,846 would have been contributed to the Group and€1,040,698 loss before tax.

Acquisition costs of €82k have been charged through to the Comprehensive Income
Statement.
Acquisition of Lola
On 15 December 2017 the Group acquired the assets and business of Localizadora
Latam SC ("LOLA") , a Mexican company and a leading provider of Latin American
Spanish dubbing, localisation and sound design services for the video game, ﬁlm
and television markets.
The acquisition of Lola is in line with Keywords Studios' strategy to grow organicallyand by acquisition as it selectively consolidates the highly fragmented market forvideo game services.
The amounts recognised in respect of the identiﬁable assets acquired and liabilities
assumed are set out in the table below:

Lola

Financial Assets
Property, Plant & Equipment
Identifiable intangible assets customer relationships
Trade and other receivable
Cash and cash equivalents
Trade and other Payables
Deferred tax liabilities
Total identifiable assets
Goodwill
Total consideration

Book
Value
€'000

Fair Value
Adjustment
€'000

Fair
Value
€'000

13

-

13

147
43
(118)

-

147
43
(118)

85

-

85
784
869

Satisfied by:
Cash

405

Deferred CashShares to Be Issued (10,106 sharesof the parent company)

295
169
869

Net cash outflow arising on
acquisitionCash
Less: cash and cash equivalentbalances transferred

405
(43)
362

The main factors leading to recognition of goodwill on the acquisition of Lola are thepresence of certain intangible assets in the acquired entity, including expertise in
Latin American Spanish dubbing and sound expertise.
The deferred consideration on Lola is payable based on sales targets. At thereporting date, there is no reason to believe that these targets will not be met.

As the acquisition happened so close to year end, Lola contributed minimal revenue
and proﬁt before tax to the Group between the date of acquisition and the balance
sheet date. If the acquisition had been completed on the ﬁrst day of the ﬁnancial
year, revenue for the year to 31 December 2017 of €997,366 would have been
contributed to the Group, and €68,136 profit before tax.
Acquisition costs of €2k have been charged through to the Comprehensive Income
Statement.
29 Business Combinations completed in 2016

Acquisition of Ankama Asia Pte Ltd.
On 22 March 2016 the Group acquired the entire issued share capital of Ankama
Asia Pte Ltd ("Ankama"), a company registered in Singapore, which specialises inproviding services to support the live operations of the games of Ankama France.
The company has a four year agreement for the continued provision to service toAnkama and also plans to signiﬁcantly increase the scale of the Studio, which isbased in Manila, to service new and existing clients of Keywords. The acquisition
will strengthen Keywords range of customer service oﬀerings to customers with
online and mobile games.
The amounts recognised in respect of the identiﬁable assets acquired and liabilities
assumed are set out below:
Ankama Asia Pte

Book Fair Value
ValueAdjustment
€'000
€'000

Fair
Value
€'000

Financial Assets
Identifiable intangible assets - customer relationships

-

44

44

Trade and other receivable

6

-

6

Cash and cash equivalents

120

-

120

Trade and other Payables

(81)

-

(81)

Deferred tax liabilities

-

(7)

(7)

Total identifiable assets

45

37

82

Goodwill

214

Total consideration

296

Satisfied by:
Cash
Less: cash and cash equivalent balances transferred

296
(120)
176

The intangible assets are to be amortised over their estimated useful lives of 5
years.
The main factors leading to recognition of goodwill on the acquisition of Ankama
Asia Pte Ltd are the presence of intangible assets in the acquired entity which do notvalue for separate recognition such as the expertise in customer service and an
unidentified proportion representing the balance contributing to profit generation.

Ankama Asia Pte Ltd contributed €527,856 revenue and €17,288 loss before tax to
the Group between the date of acquisition and the balance sheet date. If theacquisition had been completed on the ﬁrst day of the ﬁnancial year, revenue for2016 of €540,693 would have been contributed to the Group and loss before tax of€18,022.
Acquisition costs of €39,140 have been charged through the Statement ofComprehensive Income.
Acquisition of Synthesis GroupThe Group acquired the business of the Synthesis Group of Companies on 12 April
2016, including:···

100% of the share capital of Sillabit SRL, a company registered in Italy;
100% of the share capital of Synthesis Deutschland GmBH, a company
registered in Germany; and100% of the share capital of Synthesis Global Solutions SA, (SGSS) a company
registered in Switzerland.

The Synthesis Group provide localization and audio services to some of the leadinggames publishers, and was acquired to extend the Group's client base and global
reach.
The amounts recognised in respect of the identiﬁable assets acquired and liabilities
assumed are set out in the table below:
Synthesis GroupBook Fair Value
ValueAdjustment
€'000
€'000

Fair
Value
€'000

Financial Assets
Property, plant and equipment

236

-

236

-

2,774

2,774

Trade and other receivables

1,716

(92)

1,624

Cash and cash equivalents

992

-

992

Trade and other payables(1,856)-(1,856)

Deferred tax asset

-

-

-

Deferred tax liabilities

-

(538)

(538)

1,088

2,144

3,232

Identifiable intangible assets - customer relationships

Total identifiable assets
Goodwill

14,664

Total consideration

17,896

Satisfied by:
Cash

10,200Shares to be Issued

6,906

Deferred consideration
Total consideration transferred

790
17,896

Net cash outflow arising on acquisitionCash
Less: cash and cash equivalent balances transferred

10,200(992)
9,208

Deferred Cash Consideration of €1,000,000 is due for payment on 12 April 2018 inaccordance
with
the
share
purchaseagreement.
Thedeferredconsideration recorded within as contingent consideration within non-current otherpayables on the 2016 balance sheet represented the fair value amount at thebalance due.
The main factors leading to the recognition of goodwill on the acquisition of theSynthesis Group are the presence of certain intangible assets in the acquired entity,
which are not valued for separate recognition, such as the expertise in soundrecording and localisation and reputation of the staff within the industry.
A ﬁxed amount of 2,376,518 Keywords Studios Plc shares will be issued as part ofthe deferred consideration. The shares have been valued at the share price at thedate of acquisition, £2.32 (€2.91). €6,906,000 has been recorded as Shares to be
Issued within equity.
The Synthesis Group of companies contributed €18,012,547 revenue and€3,494,458 proﬁt before tax to the Group between the date of acquisition and thebalance sheet date.
If the acquisition had been completed on the ﬁrst day of the ﬁnancial year, total
revenue for 2016 of €20,662,464 would have been contributed to the Group, and acorresponding profit before tax of €3,887,462.
Acquisition costs of €254,698 have been charged through the Statement ofComprehensive Income.
Acquisition of Mindwalk Studios Inc. and Mindwalk Studios Ltd.
On 31 May 2016 the Group acquired 100% of the assets, the business and thecustomer contracts of Mindwalk Studios Inc., a company registered in China, and
Mindwalk Studios Ltd, a company registered in the British Virgin Islands. The
companies trade as one business entity and specialise in the provision of art
creation services for the video games industry. The acquisition is in line with theGroup's strategy to further strengthen art services and to extend the Group's clientbase in this service.
The amounts recognised in respect of the identiﬁable assets acquired and liabilities
assumed are set out in the table below:
MindwalkBook Fair Value
ValueAdjustment
€'000
€'000

Fair
Value
€'000

Financial Assets
Property, plant and equipment

465

(333)

132

-

1,100

1,100

Trade and other receivables

581

(39)

542

Cash and cash equivalents

442

(30)

412

Deferred tax asset

-

83

83

Deferred tax liabilities

-

(137)

(137)

Identifiable intangible assets - customer relationships

Total identifiable assets

1,488

644

2,132

Goodwill

3,117

Total consideration

5,249

Satisfied by:
Cash
Deferred Cash Consideration

3,048
315

Shares to be Issued

1,886

Total consideration transferred

5,249

Net cash outflow arising on acquisition
Cash

3,048

Less: cash and cash equivalent balances transferred

(412)
2,636

The main factors leading to recognition of goodwill on the acquisition of Mindwalk
are the presence of certain intangible assets in the acquired entity, which are notvalued for separate recognition, such as the expertise in art creation service andreputation of the staﬀ within the industry. The fair value of the shares to be issued
as part of the acquisition has been determined as being the share price on the dateof the transaction.
A ﬁxed amount of 513,189 shares will be issued as part of the deferredconsideration. The shares have been valued at the share price at the date ofacquisition, £2.80 (€3.67) and €1,886,000 has been recorded as Shares to be Issued
in reserves.
Deferred Cash Consideration of USD$500,000 is due for payment on 5 April 2019 inaccordance with the purchase agreement. The deferred consideration recorded
within as contingent consideration within non-current other payables on the 2016
balance sheet represented the fair value amount at the balance due.
Mindwalk contributed €3,166,196 revenue and €227,528 proﬁt before tax to theGroup between the date of acquisition and the balance sheet date. If the acquisition
had been completed on the ﬁrst day of the ﬁnancial year, revenue for 2016 of€4,825,497 would have been contributed to the Group and €301,165 proﬁt before
tax.
Acquisition costs of €199,312 have been charged through to the Comprehensive
Income Statement.
Acquisition of Volta Création Inc.
On 28 July 2016, the Group acquired 100% of the issued share capital of Volta
Création Inc., a company registered in Canada, which specialises in Art Creation for
the Games industry. Volta was acquired to increase the capabilities and capacity of
the art creation service and in particular to strength to the Groups oﬀering inconcept art.
The amounts recognised in respect of the identiﬁable assets acquired and liabilities
assumed are set out in the table below:

VoltaBook Fair Value
ValueAdjustment
€'000
€'000

Fair
Value
€'000

Financial Assets
Fixtures, Fittings & Equipment

74

-

74

-

761

761

Trade and other receivable

513

-

513

Cash and cash equivalents

(31)

-

(31)

Trade and other Payables

(322)

-

(322)

-

(202)

(202)

234

559

793

Identifiable intangible assets - customer relationships

Deferred tax liabilities
Total identifiable assets
Goodwill

2,701

Total consideration

3,494

Satisfied by:Cash
Equity Instruments (45,192 shares of the parent
company)

3,324
170
3,494

Net cash outflow arising on acquisitionCash
Less: cash and cash equivalent balances transferred

3,324
31
3,355

The main factors leading to the recognition of goodwill on the acquisition of Volta
Création Inc. are the presence of certain intangible assets in the acquired entity,
which are not valued for separate recognition, such as the expertise in Art and Art
Services and reputation of the staff within the industry.
Volta Création Inc. contributed €1,181,050 revenue and €209,305 proﬁt before tax
to the Group between the date of acquisition and the balance sheet date. If theacquisition had been completed on the ﬁrst day of the ﬁnancial year, revenue for2016 of €2,406,878 would have been contributed to the Group and proﬁt before taxof €277,687.
Acquisition costs of €19,298 have been charged through the Statement ofComprehensive Income.
Acquisition of Player Research Ltd
On 26 October 2016, the Group acquired 100% of the issued share capital of Player
Research Ltd., a company registered in the United Kingdom, which is an industryleading user research and playtesting specialist. The acquisition is in line with theGroup's strategy to extend its services, with the objective of providing end to end
services to its global client base covering all aspects of game production and live
operations support.
The amounts recognised in respect of the identiﬁable assets acquired and liabilities
assumed are set out in the table below:
Player Research

Book Fair Value
ValueAdjustment
€'000
€'000

Fair
Value
€'000

Financial Assets
Fixtures, Fittings & Equipment

45

-

45

-

158

158

Trade and other receivable

169

-

169

Cash and cash equivalents

489

-

489

Trade and other Payables

(133)

-

(133)

-

(32)

(32)

570

126

696

Identifiable intangible assets - customer relationships

Deferred tax liabilities
Total identifiable assets
Goodwill

1,014

Total consideration

1,710

Satisfied by:
Cash

1,128

Deferred Cash265

Equity Instruments (65,280 shares of the parent
company)

317
1,710

Net cash outflow arising on acquisition
Cash

1,128

Less: cash and cash equivalent balances transferred

(489)
639

Deferred Cash Consideration of £300,000 is due for payment on 26 October 2018 inaccordance with the share purchase agreement. The deferred consideration
recorded within as contingent consideration within non-current other payables on
the 2016 balance sheet represented the fair value amount at the balance due.
The main factors leading to the recognition of goodwill on the acquisition of Player
Research Ltd. are the presence of certain intangible assets in the acquired entity,
which are not valued for separate recognition, such as the expertise in user
research and playtesting and reputation within the industry.
Player Research contributed €182,820 revenue and €64,525 proﬁt before tax to theGroup between the date of acquisition and the balance sheet date. If the acquisition
had been completed on the ﬁrst day of the ﬁnancial year, revenue for 2016 of€921,339 would have been contributed to the Group and proﬁt before tax of€307,592.
Acquisition costs of €40,785 have been charged through the Statement ofComprehensive Income.
Acquisition of Global Video-Games Services Inc., trading as Enzyme
Testing Labs
On 16 November 2016, the Group acquired 100% of the issued share capital of
Global Video-Games Services Inc., trading as Enzyme Testing Labs, a company
incorporated under the laws of Quebec. Enzyme's strengths are in functional QA andlocalisation testing of video games for leading game publishers and developers. In
addition, it provides localisation services and focus group testing, all of which will
signiﬁcantly strengthen Keywords' service oﬀerings to the global video gamesmarket.
The amounts recognised in respect of the identiﬁable assets acquired and liabilities
assumed are set out in the table below:
EnzymeBook Fair Value
ValueAdjustment
€'000
€'000

Fair
Value
€'000

Financial Assets
Fixtures, Fittings & Equipment

929

(13)

916

-

1,669

1,669

Trade and other receivable

2,546

-

2,546

Cash and cash equivalents

695

-

695

Trade and other Payables(2,334)-(2,334)

Deferred Tax Assets

-

3

3

Deferred tax liabilities

-

(761)

(761)

1,837

899

2,735

Identifiable intangible assets - customer relationships

Total identifiable assets
Goodwill
Total consideration

731
3,466

Satisfied by:
Cash

3,466

Net cash outflow arising on acquisition
Cash

3,466

Less: cash and cash equivalent balances transferred

(695)
2,771

The main factors leading to the recognition of goodwill on the acquisition of Enzyme
are the presence of certain intangible assets in the acquired entity, which are notvalued for separate recognition, such as the expertise in functional QA andlocalisation testing.
Enzyme contributed €1,094,913 revenue and €59,820 proﬁt before tax to the Groupbetween the date of acquisition and the balance sheet date. If the acquisition had
been completed on the ﬁrst day of the ﬁnancial year, revenue for 2016 of€8,632,254 would have been contributed to the Group and proﬁt before tax of€954,332.
Acquisition costs of €243,774 have been charged through the Statement ofComprehensive Income.
Acquisition of Sonox Audio Solutions S.L.U.
On 22 December 2016, the Group acquired 100% of the issued share capital of
Sonox Audio Solutions S.L.U. ("Sonox"), a company incorporated under the laws of
Spain. Sonox provides Audio and Localisation for Spain and Mexico. Sonox alreadyprovides certain services to the Group and its acquisition will enable the Group to
capture the margins on those services.

The amounts recognised in respect of the identiﬁable assets acquired and liabilities
assumed are set out in the table below:
Sonox

Book Fair Value
ValueAdjustment
€'000
€'000

Fair
Value
€'000

Financial Assets
Fixtures, Fittings & Equipment

2

-

2

Identifiable intangible assets - customer relationships

-

-

-

Trade and other receivable

268

-

268

Cash and cash equivalents

177

-

177

Trade and other Payables

(411)

-

(411)

Deferred tax liabilities

-

-

-

Total identifiable assets

36

-

36

Goodwill

614

Total consideration

650

Satisfied by:
Cash

500

Equity Instruments (24,881 shares of the parent
company)

150
650

Net cash outflow arising on acquisition
Cash

500

Less: cash and cash equivalent balances transferred

(177)
323

The main factors leading to the recognition of goodwill on the acquisition of Sonox
are the presence of certain intangible assets in the acquired entity, which are notvalued for separate recognition, such as the expertise in audio and localisation.
Sonox contributed €52,032 revenue and €87,969 additional proﬁt before tax to theGroup between the date of acquisition and the balance sheet date. If the acquisition
had been completed on the ﬁrst day of the ﬁnancial year, revenue for 2016 of€1,308,004 would have been contributed to the Group and proﬁt before tax of€454,827.
Acquisition costs of €21,687 have been charged through the Statement ofComprehensive Income.
30 Supplementary Information to the Statement of Cash Flows
Group Movement on Loans

Opening loans and borrowings 1.1.2017
Cash Flows
Cash Received via Additional Loans taken in

Current€'000

Non
Current
€'000

Total
€'000

8,025

345

8,370

the current year
Repaymentof Loans
Non Cash Flows
Amounts recognised on Business
Combinations
Non Current at 1.1.2017 transferred tocurrent 31.12.2017
Closing Loans and borrowings
31.12.2017

10,250(23)-

10,250
(23)

632

51

683

59

(59)

-

18,943337

19,28031 Events after the reporting date
Acquisition of Maximal
On 22 March 2018 the group completed the acquisition of Maximal, an audio
business based in Sao Paulo. Maximal does voice over recording for the video
games and learning industries. Maximal will add to our audio capabilities in theSouth American market, providing Keywords its first recording studio in Brazil,
which will complement our localisation operation in Rio. Under the terms of theacquisition Keywords will pay cash consideration of up to €500k; €300k initiallyplus up to €200k over 2 years, contingent on results.
At the date of authorisation of these ﬁnancial statements, no further validated
information was available.
Acquisitions of Cord Worldwide Limited and Laced Music Limited
On 6 April 2018 the Group announced that it had acquired Cord Worldwide
Limited ("Cord") and Laced Music Limited ("Laced") for a total consideration of£4.5m / €5.2m from the Cutting Edge Group ("Cutting Edge"). Based in London,
Cord provides a range of music focused branding and strategic consulting
services to large businesses including Shell, Lego and BT. Laced is a music
services company and record label specialising within the video games
industry. The companies will bring additional talent, expertise and musicindustry experience to Keywords' client base. Being able to oﬀer music services
to our clients will further enhance our reputation as the leading provider ofservices to the global video games industry.
Under the terms of the acquisition, which is anticipated to be earnings
enhancing, the total consideration will be £4.5m / €5.2m. This will be satisﬁedby cash of £3.4m / €3.9m, and the remainder will be issued in shares to thesellers two years after the acquisition. At the date of authorisation of thesefinancial statements, no further validated information was available.
Annual report and accounts
The annual report and accounts will be posted to shareholders shortly and will
be available to members of the public at the Company's registered oﬃce at 8
Cliﬀord Street London W1S 2LQ and on the Company's website
http://www.keywordsstudios.com/en/investors.
Annual General Meeting
The Annual General Meeting of Keywords Studios plc will be held on 25 May
2018.

This information is provided by RNS
The company news service from the London Stock Exchange

END
FR SSFSSUFASEEL