RNS Number : 2612H
Keywords Studios PLC
31 July 201931 July 2019
Keywords Studios plc ("Keywords Studios" or "the Group")
Half year trading update and new €140m revolving credit
facility

Excellent Like for Like revenue growth and significant organic
investment
Keywords Studios, the international technical and creative services
provider to the global video games industry, today provides anupdate on trading for the six months ended 30 June 2019 andannounces that it has agreed terms for a new €140m revolving credit
facility.
Trading Update
The Group has grown very strongly during the ﬁrst half, withunaudited revenues for the period expected to be up by c.39% toapproximately €153.1m (H1 2018: €110.0m). On a constant currency,
like for like** basis, Group revenues were up 17.3% to €146.4m (H12018: €124.8m).
This performance was driven by particularly strong growth in ourFunctional Testing and Game Development (formerly Engineering)
service lines, which are now the largest and second largest of ourservice lines, representing 20% and 19% of proforma revenues
respectively. All seven of our service lines grew in the period with LFL** revenue growth rates ranging from 5% to 33%.
Adjusted PBT* is expected to increase by 15% to approximately€18.4m (H1 2018: €16.0m), which reflects the strong revenue growth,which was partly oﬀset by our investment in and rapid expansion of
capacity to meet that strong growth and the costs of the investment
phase in some of the earlier stage businesses we acquired in 2018,
which are now moving closer to breakeven or commercial launch.
During the first half, the particularly strong demand for certain service
lines required us to bring forward the expansion of facilities and incur
extra costs in areas such as recruitment, training, IT and HR. Inaddition, the Group invested in establishing Functional Testing
operations in Katowice, Mexico City and Tokyo, Localization Testing inKatowice and Player Support in Mexico City, leveraging the existing
locations and support infrastructure already established in thoselocations. As a result, we expect the greater ﬁrst half weighting to
our investment in capacity and cost base to result in stronger margins
in the second half than in the first half.

Keywords has made four acquisitions in the period that areintegrating well and we continue to review a strong pipeline ofacquisition opportunities. Cash invested in acquisitions has totalled€7.0m, which comprised of €5.2m in respect of those companies
acquired during the year and €1.8m in settlement of deferredconsideration payments that became due. Net debt at 30 June 2019was €9.0m (€0.1m at 31 December 2018).
New Financing Facility
The Group today announces that it has agreed terms for a new
revolving credit facility, subject to ﬁnal contract. The new facility isbeing provided by Barclays Bank plc, Citibank N.A., HSBC and Silicon
Valley Bank for an initial €100m over a three-year term, with theoption to extend the facility up to €140m and by a further two years.
It replaces the existing €105m facility, on the same terms.
Andrew Day, Chief Executive of Keywords, commented:"We were pleased by the strong performance of the Group in the ﬁrst
half, incorporating as it does the anticipated lower growth VMCbusiness acquired in October 2017. Particularly steep increases inactivity of some of our service lines in the ﬁrst half required us toinvest rapidly in expanding capacity to meet that demand. As wemove into the second half, we expect to be able to leverage thatinvestment to the benefit of margins in the second half.
"Demand from new game streaming services has continued to drive
volume increases for us, and we continue to beneﬁt from clients
increasing the number of services acquired from Keywords with 113
clients now taking 3 or more services (99 as at 31 December 2018).
I'm particularly pleased with the progress in building our Game
Development services which we ﬁrst entered only two years ago and,with further acquisitions still to come, is well set to become ourlargest service line by revenue.
"We continue to review a healthy pipeline of acquisition candidates inline with our strategy to build our business both organically andthrough acquisition. The new, enlarged banking facility will give us
the ﬂexibility and headroom to deliver that strategy and further
enhance shareholder value."
Keywords Studios will provide a further update on trading with its halfyear results which it expects to announce on 18 September. To
register your interest, please contact keywords@mhpc.com.

* the Group reports adjusted Proﬁt Before Tax (PBT) before acquisition and integration
expenses, share option charges, amortisation of intangibles and foreign currency gains.

**like for like (LFL) revenue at constant exchange rates is calculated by adjusting theprior year revenues comparison by adding pre-acquisition revenues for the period
equivalent to the period of ownership in the current year results, and applying
consistent foreign exchange rates in both years.

For further information, please contact:
Keywords
Studios (www.keywordsstudios.com)+353 190 22 730

Andrew Day, Chief Executive Officer
David Broderick, Chief Financial Officer
Numis (Financial Adviser)
StuartSkinner/Kevin
Cruickshank (Nominated Adviser)
James Black / Tom Ballard (CorporateBroker)

020 7260 1000

MHP Communications (Financial PR)
Katie Hunt /Ollie Hoare020 3128 8193

Certain information contained in this announcement would haveconstituted inside information (as deﬁned by Article 7 of Regulation(EU) No 596/2014) prior to its release as part of this announcement.
About Keywords Studios (www.keywordsstudios.com)
Keywords Studios is an international technical services provider to theglobal video games industry. Established in 1998, and now with over
50 facilities in 21 countries strategically located in Asia, the Americas
and Europe, it provides integrated art creation, software engineering,testing, localisation, audio and customer care services across morethan 50 languages and 16 games platforms to a blue-chip client baseof approximately 950 clients across the globe.
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, Epic Games and Ubisoft. Recenttitles worked on include Uncharted 4: A Thief's End, Call of Duty:
WWII, Mortal Combat X, Assassin's Creed Origins, Battleﬁeld 1,
League of Legends, Fortnite, Clash Royale and Rainbow Six Siege.
Keywords Studios is listed on AIM, the London Stock Exchange
regulated market (KWS.L).

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