18 September 2019

Keywords Studios PLC (“Keywords Studios”, “the Group”)

Half year results for the six months to 30 June 2019

Excellent revenue growth and significant investment in expanding our service platform

Keywords Studios, the international technical and creative services provider to the global video games industry,
today provides its half year results for the six months to 30 June 2019.

Financial overview:
Strong like for like growth, complemented by acquisitions
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Revenue, including contribution from acquisitions, increased by 39.3% to €153.2m (H1 2018: €110.0m)
o Like-for-like revenue at constant currency exchange rates, increased by 17.3%1 to €146.4m (H1 2018: €124.8m)
Gross profit margin of 36.1% (H1 2018: 37.4%) as a result of rapid recruitment and training, staffing of new
facilities, and the impact of one significant project brought in through an acquisition
Adjusted EBITDA2 was €25.8m, on a pre IFRS 16 basis it was €22.3m (H1 2018: €18.7m)
Adjusted profit before tax3 was up 14.3% to €18.4m, on a pre IFRS 16 basis it was €18.6m (H1 2018: €16.1m)
Adjusted earnings per share4 was 18.36c, on a pre IFRS 16 basis it was 18.71c (H1 2018: 18.30c), resulting fromthe higher tax charge combined with the increase in the tax related to adjusted items offsetting the growth in
Adjusted profit before tax
Annualised return on capital employed (ROCE)5 YE 30 June 2019 of 19.7% (YE 30 June 2018: 17.6%)
Operating cash conversion6 of 53%, on a pre IFRS 16 basis it was 34% (H1 2018: 40%)
Net debt of €9.0m (net cash H1 2018: €0.1m; net debt FY 2018: €0.4m) after €7.0m7 of net cash outlay on
acquisitions and €5.1m capital expenditure on expanding facilities for future growth
10% increase in interim dividend to 0.58p per share (H1 2018: 0.53p)

Operational overview:
Investment in our platform to capture accelerating outsourcing demand in the growing video games market•••

Continued investment for growth:
o Approximately 1,400 new work stations under preparation for 2019, representing approximately 25% ofexisting capacity, of which only c.200 were partially available during H1o The major beneficiaries of expansion investment are our studios in Montreal, Katowice, Manila, Brighton,
Mexico City, Tokyo, Sao Paolo and New Delhio Continued to develop the Group through acquisitions:o Four acquisitions during the half: Sunny Side Up, GetSocial, Wizcorp and Descriptive Video Workso Added scale and diversified Keywords’ Marketing, Audio and Game Development service offerings
Considerable progress in cross-selling services with a 14% increase in clients buying 3 or more services to 113 (FY
2018: 99)
New revolving credit facility agreed for up to €140m with Barclays, HSBC, Citibank and Silicon Valley Bank

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Post period end, current trading and outlook:•••

Trading in the second half has started well. The Board expects:
o Strong organic revenue growth, at slightly slower growth rates than the first half, with particularly strong
growth in Functional Testing, Game Development and Art Creation whilst Audio and Localisation Testing are
not expected to see their typical seasonal peak in activity in the second half due to certain clients’ shift tofocus on new consoles expected in 2020.
o Stronger margins in the second half as we incrementally benefit from first half investments in capacity
expansion partially offset by an underperforming contract and continued commissioning of new facilities.
Announced separately today:o Acquisition of TV Synchron, a Berlin based dubbing and voice-over studio
We continue to selectively review a strong acquisition pipeline with an anticipated emphasis on Game
Development and Marketing services

Andrew Day, Chief Executive of Keywords Studios, commented:"The Group grew very strongly in the first half with increased demand across all of our service lines, and particularly
strong performances from Functional Testing and Game Development, as the market accelerates its use of external
development and service partners.
“We invested in capacity to match this accelerating trend, with significant investments in new and enlarged andimproved facilities which will come on stream incrementally during the second half and into 2020. This investment,
combined with a ramp up in staffing to meet faster and earlier growth than previously expected in our Functional
Testing service line, meant we carried additional direct and indirect operational costs in the first half. However,underlying margins remain in line with historic norms and we,therefore, expect margins to progress in the second
half and through 2020 as we benefit from our first half and ongoing investments.
“Trading in the second half has started well, with continued strong performances from our Game Development,
Functional Testing and Art Creation service lines in particular. Overall, this leaves us well placed to deliver revenues
for the full year at the upper end of current market expectatons with our profit expectations broadly unchanged.
“Our organic investments leave us well positioned to capture the clear opportunity for Keywords to grow ourrelationships with the major games companies through increased capacity, new services and dedicated outsourced
services and to increase margins to normal Group levels as we benefit from these investments during 2020.
“Our acquisition pipeline is very healthy and we are actively reviewing a number of attractive acquisition
opportunities that would add critical mass, capacity, and extend our service offering or geographical penetration.”A presentation of the half year results will be made to analysts later this morning at MHP's offices. There will also bea live, listen only webcast of the presentation and a recording will be made available via www.keywordsstudios.com.
To register for access, please contact Charles Hirst at MHP Communications on +44 20 3128 8193 oremail keywords@mhpc.com.
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)
Stuart Skinner / Kevin Cruickshank (Nominated Adviser)

020 7260 1000

James Black / Tom Ballard (Corporate Broker)
MHP Communications (Financial PR)
Katie Hunt / Ollie Hoare / Nessyah Hart

020 3128 8100

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Notes to Editors
Keywords Studios is an international technical services provider to the global 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, game development, testing, localisation, audio and player support services acrossmore than 50 languages and 16 games platforms to a blue-chip client base of approximately 950 clients across theglobe. 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, Epic Games, Konami, Riot Games, Sony,
Square Enix, Supercell, TakeTwo and Ubisoft. Recent titles 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 andRainbow Six-Siege. Keywords Studios is listed on AIM, the London Stock Exchange regulated market (KWS.L).
The business uses a number of adjusted measures that are not defined or recognised under IFRS. For full definitions and explanations of thesemeasures and a reconciliation to the most directly referenceable IFRS line item, please refer to the Supplementary Information in the 2018 Annual
Report. In addition, the following footnotes apply throughout the announcement where referenced.
1

2

3

4

5

6

7

8

Like-for-like revenue at constant currency exchange rates is calculated by adjusting the prior year revenues, adding pre-acquisition
revenues for the corresponding period of ownership in the current year results, and applying the 2018 foreign exchange rates in both
years
EBITDA comprises profit before taxation, adding back depreciation, amortisation, both interest income and expense, and exchange
gains and losses. Adjusted EBITDA is also before acquisition and integration expenses of €2.8m (H1 2018: €2.0m), share option chargesof €4.0m (H1 2018: €0.8m) and non-controlling interests of €0.1m (H1 2018: €nil)
Being Profit before Tax adjusted for acquisition and integration related expenses of €2.8m (H1 2018: €2.0m), share option charges of€4.0m (H1 2018: €0.8m), amortisation of intangibles of €3.5m (H1 2018: €3.1m), non-controlling interests €0.1m (H1 2018: €nil) andforeign currency exchange loss of €1.2m (H1 2018: gain of €0.8m)
Being Earnings per Share with the calculation adjusted for acquisition and integration expenses of €2.8m (H1 2018: €2.0m), shareoption charges of €4.0m (H1 2018: €0.8m), amortisation of intangibles of €3.5m (H1 2018: €3.1m), foreign currency exchange loss of€1.2m (H1 2018: gain of €0.8m) and non-controlling interests of €0.1m (H1 2018: €nil) and deducting the tax associated with theseadjusting items of €2.9m (H1 2018: €1.3m as restated to take into account the tax impact)
The Annualised ROCE has been calculated for the 12 month period ending 30 June 2019 (as calculated on the same basis as defined in
the 2018 Annual Report)
The operating cash conversion ratio has been calculated as Adjusted Operating Cash Flow expressed as a percentage of the Adjusted
Profit before Tax, formerly referred to as Adjusted Free Cash Flow and defined in the Supplementary Information in the 2018 Annual
ReportAfter payment of €5.2m net cash consideration for acquisitions (H1 2018: €10.6m) and deferred consideration of €1.8m (H1
2018: €1.0m)
Being administrative expenses before non-operating costs including; share option costs, costs of acquisitions and integration,amortisation, depreciation, and including bank charges.

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Chief Executive Officer’s Overview
Excellent growth as we invested in a strengthened and more diversified services platform
The first half of the year has seen excellent growth, with like for like revenue up by 17.3%, on a constant currency
basis, complemented by four acquisitions.
The strongest performances were from Functional Testing and Game Development, which are now our two largest
service lines. Having only entered Game Development through the acquisition of GameSim in May 2017, we havegrown it to become a £30m revenue business, giving us both scale and an international platform from which toincrease our share of this substantial and high growth market.
The increased demand for our services across the board, reflects the continued underlying growth in the video
games industry, the accelerating trend towards video games developers and publishers outsourcing a greater
proportion of their games’ development and support, and our success in gaining an increased share of this outsourced
market as we continue to grow and develop our client relationships.
We have also strengthened our position to continue to benefit from these trends by investing in expanding anddiversifying the Group organically and by acquisition to better serve our global client base and position ourselves forfurther growth.

Delivering on Our Strategy
We continue to make good progress in pursuit of our strategy to build the world’s leading technical and creative
services platform focused on the most complex of interactive content – video games.
The key pillars of our strategy are to grow organically and by acquisition to extend the Group’s service capacity,
capabilities and geographical reach in order to better serve our client base across all platforms, key geographies andlanguages, and a full range of services and solutions.
Positioning the Group as the leader of scale in an otherwise highly fragmented service provision market, despite thescale and global nature of the major video games publishers and developers, will enable us to continue to takeadvantage of the trend towards greater outsourcing as clients seek to manage the demands for increasingly
sophisticated content whilst limiting their fixed costs.
By investing in capacity expansion and generating synergies across our expanding multi-service global platform, we are
increasingly becoming a strategically important partner to our clients who require a service provider of our scale andflexibility.

Organic Growth and Investment
We saw strong demand across all of our service lines, which grew revenues by between 5% to 33% in the period (ona like for like, constant current basis1), with particularly strong growth across our Game Development. Functional
Testing, and Art Creation service lines,
We also continued to expand our client relationships by making good progress with cross selling our services
reflected in a 14% increase in clients buying 3 or more services to 113 (FY 2018: 99).
As a result of strong demand for certain service lines, we incurred extra costs in areas such as recruitment, training,
IT and HR in the first half as we brought forward our capacity expansion. In particular, as a result of our Functional
Testing service line growing faster, earlier in the year than expected, we incurred additional costs due to the steep
ramp up in staffing in the first half, which we do not expect to repeat in the second half.
We have also continued to support the costs of the investment phase in our early stage technology businesses,
Yokozuna Data and GetSocial, and our fledgling services in sound design, subtitling and dubbing for film and TV.
We continue to work on an under-performing, fixed price contract, that was entered into prior to the acquisition of
one of our Game Development businesses and we expect to exit this contract by the end of the year. This isincrementally freeing up resource for more profitable work in the second half and into 2020.
In addition, we invested in both expanding our operational capacity and enhancing the Group’s infrastructure toscale up our business to support growth in future periods. In addition to the c.1400 work stations being created, this-4-has included investment in people, systems and marketing as we develop our IT and finance functions and enhance
our global branding. The first half of 2019 also saw us invest substantially in the expansion of the Group's facilities in
Mexico City, Katowice, and Tokyo, following substantial investments in Montreal, Sao Paolo, Brighton, New Delhi,
Manila in the second half of 2018. We incurred additional start-up costs at the newly opened facilities in Katowice
and Mexico City, particularly as we had duplicated sites during a transition period, which weighed on our margins in
the first half. However, as those work stations come on stream we would expect to see those operations return tobreak even in the second half and generate normal operating margins thereafter.
As we continue to bring on stream this additional capacity, our investment in new work stations will enable us totake advantage of the higher levels of activity that we are experiencing in a more cost efficient manner, whilst also
allowing us to continue to increase our market share of the growing outsourced services market, positioning us wellfor both now and over the longer term.

Acquisitions
In line with our strategy, we continued to grow the business in the first half through four acquisitions, of Sunny Side
Up, Get Social, Wizcorp and Descriptive Video Works. These have further diversified our service offering to the video
games industry, adding the production of high-quality marketing assets in Canada; the development of cloud-based
solutions for games developers to manage social interactions with their games; mobile Game Development services
in Japan; and accessibility services in North America to our Audio offering. All have served to further strengthen our
position as the leading global player in the outsourced services market by expanding the breadth of the value-added
services we are able to offer our clients.
We have also made good progress with integrating prior period acquisitions, all of which are making good
contributions to the Group. The Group's largest acquisition in 2018 (completed in August), Studio Gobo and Electric
Square, have outperformed expectations while our largest acquisition in 2017 (completed in October), VMC, was fully
integrated in 2018, achieving margins in line with those of the Group, with the subsequent benefits of our additional
scale demonstrated in the first half of the current year in the particularly strong growth in our Functional Testing
service line.
Post period end events
We today announce the acquisition of TV Synchron, a Berlin based dubbing and voice over studio in German languagefor €3.7m, of which €2.8m is being paid in cash on completion and €0.9m in KWS shares to be issued on the firstanniversary of completion. TV Synchron, was founded in 1991 by Thomas Wolfert, a veteran of the German dubbing
industry, and has a very solid pedigree in the entertainment industry, having worked on over 7,000 episodes and aquarter of a million minutes of voiced materials. Its clients include TOEI Animation, VIZ, Turner, Discovery Channels,
A&E and has recently had its production quality and processes recognized when it was granted a “gold rated” Netflix
Post Partner Program certification (“NP3”) by Netflix. The company is expected to generate revenues of €4.1m for theyear ended December 2019.
Overall, the acquisitions and organic investments made to date leave us better placed than ever to support our video
game developers and publishers from the very early concept stages of game design through to launch and live
operations phases.

Financial overview
Revenue
The Group’s very strong performance in the first half, with revenues increasing by 39.3% to €153.2m (H1 2018:€110.0m), reflected a combination of strong organic growth and our success in executing and integrating
acquisitions.
Currency
Currency movements had a material impact in the first half, primarily the strengthening of the US dollar 7% against
the Euro between H1 2018 and H1 2019 (in which approximately 55% of the Group's revenues were denominated).
On a constant currency basis, revenues would have been €6.7m lower at €146.4m. In order to provide a moremeaningful H1 2018 and H1 2019 comparison of underlying performance, all like for like revenue figures in thisreport have been provided on a constant currency basis to exclude foreign exchange impacts.
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Gross profit margin
The gross profit margin of 36.1% (H1 2018: 37.4%) was lower than the comparative period resulting from theparticularly rapid recruitment and training of new staff to meet very strong demand for our Functional Testing andGame Development. This was combined with the impact in the current year of an underperforming, fixed priceproject which is not expected to be a drag as we move in to 2020.

Administrative expenses
Administrative expenses increased in the first half of the year to €35.9m, or 23.4% of revenue, (H1 2018: €24.7m or
22.5% of revenue). Excluding the impact of IFRS 16, Adjusted Operating Costs8 were €32.9m or 21.5% of revenue (H1
2018: €22.5m or 20.5% of revenue) reflecting the costs in the acquired entities and investments made in existing andnew facilities, strengthened management, support personnel and infrastructure. As the first half investments start
to contribute in the second half, we expect to see our administrative expenses trending back towards our target of
20% as we move into 2020. Revenues and cost management remains a point of focus across the Group’s activities as
we drive synergies across the enlarged group.
Exceptional items
One-off costs of acquiring and integrating the newly acquired companies of €2.8m (H1 2018: €2.0m) were incurredin the period. Included in net finance costs is a translational foreign exchange loss of €1.2m (H1 2018: €0.8m gain) in
the first half of the current year which is primarily due to the effect of translating net current assets held in foreign
currencies.

EBITDA
Adjusted EBITDA2 was €25.8m, on a pre IFRS 16 basis it was €22.3m, (H1 2018: €18.7m). EBITDA was €18.9m, on a pre
IFRS 16 basis it was €15.3m, (H1 2018: €15.3m).
Profit before tax
Adjusted profit before tax3 for the first half of the current financial year increased by 14.3% to €18.4m, on a pre IFRS
16 basis it was €18.6m (H1 2018: €16.0m). After these items, the Group reported a profit before tax for the periodof €6.7m (H1 2018: €10.8m).

Taxation
The tax charge in the period was €3.6m including a one off €0.5m tax charge relating to a legacy pre acquisition tax
issue (H1 2018: €3.1m). This represented an effective tax rate on the adjusted profit of 19.8% (H1 2018: 19.2%). We
anticipate that the effective tax rate will return to lower levels over time.

Earnings per share
Adjusted earnings per share4 was 18.36c, on a pre IFRS 16 basis it was 18.71c (H1 2018: 18.30c), resulting from thehigher tax charge combined with the increase in the tax related to adjusted items offsetting the growth in Adjusted
profit before tax. Basic earnings per share were down 61% to €4.7c (H1 2018: €12.1c), primarily due to increases inamortisation, share option and depreciation charges. The denominator used for these calculations includes the shares
which will be issued for all of the outstanding deferred consideration for prior acquisitions, comprising those due tothe sellers of Sunny Side Up and Descriptive Video Works.
Cashflows
In spite of a combination of the increased trading in the second quarter, and the Group entering a traditionally busy
third quarter, where the Group typically has its maximum cash requirement for the year, the Group generated a net
inflow of cash from operations of €9.2m, excluding the impact of IFRS 16 €5.7m (H1 2018: €6.0m). Debtor days
improved to 46 days (H1 2018: 49) as a result of our continued focus on tightly managing cashflows.

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In the period, the Group completed four acquisitions and a further investment in AppSecTest Ltd, reflected in a net
cash outflow on consideration of €5.2m (H1 2018: €10.6m) and paid deferred consideration of €1.8m (H1 2018:€1.0m). Capital expenditure was €1.3m higher than the prior period at €5.1m (H1 2018: €3.8m), reflecting the costof increasing capacity in several studios and a continued refresh of IT equipment.

Funding and capital structure
As at 30 June 2019, the Group had cash balances at €37.8m (H1 2018: €32.2m) and borrowings of €46.8m (H1 2018:€32.1m), giving net debt of €9.0m (H1 2018: net cash of €0.1m).
To help fund acquisitions and general working capital requirements the Group has successfully agreed a new
revolving credit facility, provided by Barclays Bank plc, Citibank N.A., HSBC and Silicon Valley Bank, for an initial €100m
over a three-year term, with the option to extend the facility up to €140m and by a further two years. It replaces theexisting €105m facility, on the same terms.

Operational review
Following acquisitions during the first half and prior periods, Keywords is well diversified, both geographically andthrough a broader portfolio of services.

Art Creation (15% of group revenues in H1 2019)
Our Art Creation service line creates graphical art assets for video games including concept art creation, 2D and 3D
art asset production and animation. Also included under our Art services business is the Marketing services business
we have started building through the acquisitions of Fire Without Smoke, The Trailer Farm and Sunny Side Up.
Art Creation revenues grew by 50% to €22.2m (H1 2018: €14.8m, restated to exclude Sperasoft art resources) withthe benefit of contributions from 2018 and 2019 acquisitions Fire Without Smoke, The Trailer Farm and Sunny Side
Up. On a like for like basis, Art Creation revenues were 15.8% higher than in H1 2018.
We expect Art Creation to continue to deliver strong growth in the second half. Marketing services is expected to be
an area of particular focus for future acquisitions and, once it achieves sufficient scale through organic andacquisitive growth, we plan to report its results separately from Art Creation.

Game Development (formerly Engineering - 19% of group revenues in H1 2019)
Formerly called Engineering, our Game Development service line provides outsourced software engineering andgame development services to publishers and developers .
Now our second largest service line, Game Development increased revenues by 129.5% to €29.6m in the first half
(H1 2018: €12.9m after restating for certain art-related revenues in Sperasoft that are now classified under Game
Development). This increase reflected a marginal benefit from the acquisition of Wizcorp in April 2019 and thebenefit of full six month contributions from Studio Gobo, Electric Square and Snowed In. Like for like revenue
increased 32.9% compared to H1 2018.
We expect Game Development to grow strongly as we move into the second half, although not at the same rate as
the particular strong growth seen in the first half, albeit we do expect increases in pricing to reflect current market
rates to underpin improving margins in the service line.
Audio Services (12% of group revenues in H1 2019)
Our Audio service line provides multi language voice-over, original language voice recording, music, sound design
and related services.
Audio revenues rose by 30.9% in the period to €17.8m (H1 2018: €13.6m), with the full six month contributions fromthe acquisitions of Cord, Laced, Blindlight and Maximal in 2018 and that of Descriptive Video Works in 2019. On alike for like basis revenues were up 6.7% compared to H1 2018.

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The investment made in our Liquid Violet audio production facility in London’s Covent Garden in 2018 is adding to
the growth in that business as it establishes itself as a destination studio for English voice production. We weredelighted that this studio and our Burbank, Los Angeles voice production facility were granted Netflix preferredvendor status in 2019 alongside that of Descriptive Video Works.
We expect Audio Services not to experience the marked seasonal peak in activity in the second half that it has
experienced in previous years due to ‘AAA’ games normally being scheduled for release during the end of year
gifting season. This is due to the potential effect of the transition to the new consoles launching in 2020 on clients’
games launch cycles and we have started to see some shifts in projects as certain clients choose to target the newconsoles rather than existing devices.

Functional Testing (20% of group revenues in H1 2019)
Our Functional Testing service line provides quality assurance including the discovery and documentation of gamedefects, testing to ensure games are compatible with the various hardware devices and configurations they areplayed on and testing to verify that games comply with console manufacturers’ specifications.
Functional testing revenues increased by 42% to €31.8m (H1 2018: €22.4m). Like for like revenues increased by
33.3%.
In the second half, we expect Functional Testing to continue to grow strongly without the same level of drag on
margins seen in the first half from the steep ramp up in staff, albeit we will continue to invest as we move throughthe second half. Overall, these investments will enable it to continue to strengthen its market leadership, in North
America in particular.

Localisation (15% of group revenues in H1 2019)
Our Localisation service line provides translation of in-game text, audio scripts, cultural and local adaptation,
packaging and marketing materials.
Localisation revenues grew by 7.9% to €23.1m (H1 2018: €21.4m). On a like for like basis, Localisation revenues havegrown by 4.6% as this service line continues to benefit from the movement towards continuous content generation
for games in live operation.
We expect Localisation to continue to build on its leading market position in this market.

Localisation Testing (7% of group revenues in H1 2019)
Our Localisation Testing service line identifies out of context translations, truncations, overlaps, spelling, andgrammar, age rating issues, cultural issues and tests for console manufacturer compliance requirements in over 30
languages using native speakers.
Localisation Testing revenue increased by 7.3% to €10.3m (H1 2018: €9.6m). On a like for like basis, Localisation
Testing was 4.7% higher compared to H1 2018.
Whilst we anticipate some growth in Localisation Testing in the second half, we are not expecting to see theseasonally typical higher peak in activity in the second half of the year due to potential shifts in games release
schedules as certain clients focus more on the new games consoles to be launched in 2020.

Player Support (formerly called Customer Support - 12% of group revenues in H1 2019)
Our Player Support service line provides multi-lingual, cost effective and flexible customer care services including
managing communities of gamers across all forms of social media, within the games themselves and on the official
game forums.
Player Support has been consolidating the extremely strong growth of 2018, investing in management talent andexpanded facilities. None-the-less, its revenue increased by 19.6% to €18.3m (H1 2018: €15.3m) with like for likerevenues up 11.3%.

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We expect Player Support to continue to consolidate gains made in 2018 at the full year, as we aim to differentiate
our video games specific services from other large providers in the wider customer support market.
Dividends
The Board is pleased to announce a 10% increase in its interim dividend payment, in line with its progressive
dividend policy. The interim dividend of 0.58p per share will be paid on 25 October 2019 to shareholders on theregister on 4 October 2019 and will go ex-dividend on 3 October 2019. The interim dividend payment will absorb
approximately €0.4m of cash resources.

People
The average number of employees across the Group in the period grew to c.6,600 (H1 2018: c. 4,934) driven
primarily by the very robust growth in our Functional Testing business. This increase has been primarily focussed on
North America and further growth is expected to flow through in Katowice, Poland and Mexico City as these new
testing studios ramp up.
We are constantly striving to provide great working environments for all Keywordians around the world. This can beseen in the central locations of our studios. Rather than seek out low cost locations and low cost facilities we feel thebenefits of being able to attract the best talent in the most scalable manner outweigh any savings from lower
operational costs.
Our continued growth and reputation for consistently delivering good quality service on highly agile engagements todemanding deadlines is testament to the Keywords culture and the skills and commitment of Keywords’ talented
and games-passionate employees and collaborators.
We are proud of the passion, commitment and professionalism of this invaluable resource of over 7,000
Keywordians which means there is a contribution from Keywords to most of the world’s leading games - we would
like to thank everyone involved for their valuable contribution to the continued success of the Group.

Current trading and outlook
Trading in the second half has started well, with continued strong performances in our Game Development,
Functional Testing and Art Creation service lines in particular, whilst Audio and Localisation Testing are not expected
to see their typical seasonal peak in activity in the second half due to certain clients’ shift towards focussing ongames for the new consoles expected to launch in late 2020.
One of the benefits of Keywords’ model is that it is highly diversified by service line, geography and across all gaming
platforms. As a result, we expect to benefit from the continued strong growth across mobile and PC games whilst weare already winning significant new business from the recent entrants in game streaming and subscription services.
We are seeing an accelerating trend towards outsourcing, including growing demand for co-development and fullgame development services and we have invested to match that demand and continue to increase our market share.
Much of our first half investment in enlarged and improved facilities will only come on stream incrementally during
the second half and into 2020, despite carrying the additional costs in the first half. As such, with our underlying
margins remaining in line with historic norms, we expect margins to progress incrementally in the second half andthrough to 2020 as we benefit from our first half and ongoing investments.
Overall, our strong start to the second half and improving margins leave us well placed to deliver revenues for thefull year at the upper end of current market expectatons with our profit expectations broadly unchanged.
Our acquisition pipeline is very healthy and we are actively reviewing a number of attractive acquisition
opportunities that would add critical mass, capacity, and extend our service offering or geographical penetration,with an emphasis on game development and marketing services businesses in particular.
The acquisition of synergistic businesses, combined with our continued investment in additional talent and better
facilities will enable us to build the ‘go to’ global games services platform. This will enable us to continue to lead theconsolidation of a highly-fragmented market as we take advantage of the accelerating trend towards outsourced
services in the growing video games market.
-9-Condensed Interim Consolidated Statement of Comprehensive Income
Unaudited

Unaudited

Audited26 weeks ended

26 weeks ended

52 weeks ended

30 Jun 19

30 Jun 18

31 Dec 18

€'000

€'000

€'000

153,190109,951

250,805

Cost of sales(97,950)(68,791)(154,997)

Gross profit

55,24041,16095,808

Share option expense(4,011)(835)(4,129)Costs of acquisition and integration(2,804)(2,006)(5,296)(3,491)(3,095)(6,872)

Total of items excluded from adjusted profit measures(10,306)(5,936)(16,297)

Other administration expenses(35,897)(24,742)(56,826)

Administrative expenses(46,203)(30,678)(73,123)

9,037

10,482

22,685

Revenue from contracts with customers

Amortisation of intangible assets

5

10Operating profit
Financing income

6

-

859

791

Financing cost

6

(2,354)(503)(1,316)

-

-

(66)

Profit before taxation

6,683

10,83822,094

Tax expense(3,643)(3,088)(7,191)

Profit

3,040

7,750

14,903

13

(40)

27

Share of post-tax profit / (loss) of equity accounted associates

Other comprehensive income:Items that will not be reclassified subsequently to profit or (loss)
Actuarial gain / (loss) on defined benefit plans
Items that may be reclassified subsequently to profit or loss
Exchange gain / (loss) in net investment in foreign operations *

620

834

1,270

2,895

6

771

6,568

8,550

16,971

Owners of the parent

3,132

7,750

14,903

Non-controlling interest

(92)

-

-

3,040

7,750

14,903

Owners of the parent

6,660

8,550

16,971

Non-controlling interest

(92)

-

-

6,568

8,550

16,971€ cent€ cent€ centExchange gain / (loss) on translation of foreign operations
Total comprehensive income

Profit / (loss) for the period attributable to:Total comprehensive income attributable to:Earnings per share
Basic earnings per ordinary share

8

4.69

12.10

23.16

Diluted earnings per ordinary share

8

4.50

11.62

22.24

* Please note that “Exchange gain / (loss) in net investments in foreign operations in the comparative period to 30 June 2018, has been re-classified to correctly classify them as “Items that may bereclassified subsequently to profit or loss”, within Other Comprehensive Income

The notes from page 15 onwards form an integral part of these consolidated financial statements.

- 10 -

Condensed Interim Consolidated Statement of Financial Position
Unaudited

Unaudited

Audited26 weeks ended

26 weeks ended

52 weeks ended

30 Jun 18

31 Dec 18

30 Jun 19

Restated ^
€'000

€'000

€'000

Non-current assets
Property, plant and equipment

11

17,666

11,422

15,002Right of use assets

18

20,410--Goodwill

10

163,372

123,471

154,202

Intangible assets

10

23,06027,201

25,884

Investment in associate

19

-

114

160

3,340

1,265

2,967

227,848

163,473

198,215

Deferred tax assets

Current assets
Trade receivables

12

43,09436,22637,019Other receivables

12

37,23830,11823,45937,76332,18439,871

118,095

98,528100,349

345,943

262,001

298,564

Cash and cash equivalents

Total assets
EquityShare capital

13

773

760

763

Share capital - to be issued

13

8,679

10,446

15,648

Share premium

13

102,878

102,158

102,225

Merger reserve

13

44,34235,29035,996

2,052(2,664)(1,463)(1,997)(1,997)(1,997)

Foreign exchange reserve
Shares held in Employee Benefit Trust ("EBT")

13

Share option reserve

10,685

3,362

6,674

Retained earnings

36,901

27,69434,529204,313

175,049

192,375

56--

204,369

175,049

192,375

7,068

7,268

7,142

Non-controlling interest
Total equity
Current liabilities
Trade payables
Other payables

15

50,64232,85041,153Loans and borrowings

16

46,58432,08440,071

6,249

2,877

6,665

7,268

-

-

117,81175,07995,031

1,496

1,035

1,062

1,489

1,233

1,378

208

45

230

7,196

9,560

8,488

13,374--23,763

11,873

11,158345,943

262,001

298,564

Corporation tax liabilities
Lease liability

18

Non-current liabilities
Other payables NCL

15

Employee defined benefit plans
Loans and borrowings NCL

16

Deferred tax liabilities
Lease liability NCL

Total equity and liabilities18^ Please note the comparative period to 30 June 2018 has been restated to reflect the Measurement Period Adjustment outlined in note 31 of the Annual Report 2018

The notes from page 15 onwards form an integral part of these consolidated financial statements.
- 11 -

Condensed Interim Consolidated Statement of Changes in Equity

Share
capitalSharecapital to beissuedSharepremium

Mergerreserve

Foreignexchangereserve

Sharesheld in
EBT

Share
optionreserve

Retainedearnings

Total
attributableto ownersof parent

Noncontrolling
Interest

Total
equity

€'000

€'000

€'000

€'000

€'000

€'000

€'000

€'000

€'000

€'000

€'000

737

11,739102,054

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

2,545

20,679161,131-

161,131

Measurement period adjustment^

-

(119)

-

-

-

-

-

-

(119)

-

(119)

Balance at 1 January 2018 restated737

11,620102,054

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

2,545

20,679161,012-161,012

Profit for the period

-

-

-

-

-

-

-

7,750

7,750

-

7,750

Other comprehensive income

-

-

-

-

840

-

-

(40)

800

-

800

Total comprehensive income forthe period

-

-

-

-

840

-

-

7,710

8,550

-

8,550

Share option expense

-

-

-

-

-

-

817

-

817

-

817

Share options exercised

3

-

104

-

-

-

-

-

107

-

107

Dividends paid
Acquisition related issuance ofshares

-

-

-

-

-

-

-

(696)

(696)

-

(696)

20

(1,174)

-

6,412

-

-

-

-

5,258

-

5,258

Contributions by andcontributions to the owners

23(1,174)

104

6,412

-

-

817

(696)

5,486

-

5,486

Balance at 30 June 2018

760

10,446102,158

35,290(2,664)(1,997)

3,362

27,694

175,049-

175,049

Profit for the period

-

-

-

-

-

-

-

7,153

7,153

-

7,153

Other comprehensive income

-

-

-

-

1,201

-

-

67

1,268

-

1,268

Total comprehensive income forthe period

-

-

-

-

1,201

-

-

7,220

8,421

-

8,421

Share option expense

-

-

-

-

-

-

3,312

-

3,312

-

3,312

Share options exercised

-

-

67

-

-

-

-

-

67

-

67

Dividends paid
Acquisition related issuance ofshares

-

-

-

-

-

-

-

(384)

(384)

-

(384)

3

5,202

-

706

-

-

-

-

5,911

-

5,911

Contributions by andcontributions to the owners

3

5,202

67

706

-

-

3,312

(384)

8,906

-

8,906

Balance at 31 December 2018

763

15,648102,225

35,996(1,463)(1,997)

6,674

34,529192,375-

192,375

Adjustment from adoption of IFRS
16

-

-

-

-

-

-

-

-

-

-

-

Adjusted balance at 31 December
2018

Balance at 1 January 2018

Contributions by andcontributions to the owners:

Contributions by andcontributions to the owners:

763

15,648102,225

35,996(1,463)(1,997)

6,674

34,529192,375-

192,375

Profit for the period

-

-

-

-

-

-

-

3,132

3,132

(92)

3,040

Other comprehensive income

-

-

-

-

3,515

-

-

13

3,528

Total comprehensive income forthe period

-

-

-

-

3,515

-

-

3,145

6,660

(92)

6,568

Share option expense

-

-

-

-

-

-

4,011

-

4,011

-

4,011

Share options exercised

4

-

543

-

-

-

-

-

547

-

547

Dividends paid

-

-

-

-

-

-

-

(773)

(773)

-

(773)

Acquisition related issuance ofshares (note 13)6(6,969)

110

8,346

-

-

-

1,493

-

1,493

Liabilities on acquisition of
AppSecTest

-

-

-

-

-

-

-

-

-

148

148

10

(6,969)

653

8,346

-

-

4,011

(773)

5,278

148

5,426

Balance at 30 June 2019
773
8,679
102,878
44,342
2,052(1,997)
10,68536,901^ Please note the comparative period to 30 June 2018 has been restated to reflect the Measurement Period Adjustment outlined in note 31 of the Annual Report 2018

204,31356

204,369

3,528

Contributions by andcontributions to the owners:

Contributions by andcontributions to the owners- 12 -

Condensed Interim Consolidated Statement of Cash Flows

Note

Unaudited

Unaudited

Audited26 weeks ended

26 weeks ended

52 weeks ended

30 Jun 19

30 Jun 18

31 Dec 18

€’000

€’000

€’000

3,040

7,750

14,903

3,168

2,472

5,316

3,467

-

-

3,491

3,095

6,872

3,643

3,088

7,191

4,011

817

4,129

2,804

2,006

5,296

Cash flows from operating activities
Profit after tax
Income and expenses not affecting operating cash flows
Depreciation - property, plant and equipment

11

Depreciation - right of use assets

18

Intangibles amortisation

10

Income tax expense
Share option expense
Costs of acquisition and integration *Disposal of property, plant and equipment
Unwinding of discounted liabilities - deferred consideration *6

Unwinding of discounted liabilities - lease liability *Interest receivable

6

Employee benefit costs
Interest expense *6

Unrealised foreign exchange (gain) / loss *

-

-

63

177

127

311

338

-

-

-

(65)

66

138

40

279

434

144

502

1,669

(1,039)(992)

23,34010,68529,033(5,521)(7,700)(7,680)(7,048)(4,341)(370)(5,129)

1,366

2,850

Changes in operating assets and liabilities
Decrease / (increase) in trade receivables
Decrease / (increase) in MMTC and VGTC receivable
Decrease / (increase) in other receivables(Decrease) / increase in trade and other payables

Income taxes paid
Net cash provided by operating activities

4,320

1,228

(252)

(13,378)(9,447)(5,452)(3,769)(2,891)(6,304)

9,233

6,097

32,180(5,156)(9,899)(24,163)

-

(726)

(726)

(1,808)(1,011)(1,603)

-

(114)

(226)

(5,061)(3,791)(9,440)Cash flows from investing activities
Current year acquisition of subsidiaries net of cash acquired *20

Prior year acquisition of subsidiaries net of cash acquired *Settlement of deferred liabilities on acquisitions

15

Investment in associate
Acquisition of property, plant and equipment

11

Investment in intangible assets
Acquisition and integration cash outlay
Net cash used in investing activities

(332)

-

(1,599)(1,677)(2,006)(4,530)(14,034)(17,547)(42,287)

(500)

(853)

(10,835)(3,236)--

Cash flows from financing activities
Repayment of loans

16

Payments of principal on lease liability

18Interest paid on principal of lease liability

18

Loan to finance acquisitions

16

(338)

-

-

7,001

13,75531,850

(773)

(696)

(1,080)

547

1,203

174

(394)

(144)

(502)

Net cash provided by financing activities

2,307

13,265

19,607

Increase / (decrease) in cash and cash equivalents(2,494)

1,815

9,500

386

(5)

(3)

39,87130,37430,37437,76332,18439,871Dividends paid

9

Share options exercised

13

Interest paid

Exchange gain / (loss) on cash and cash equivalents
Cash and cash equivalents at beginning of the period
Cash and cash equivalents at end of period* Please note that the comparative period to 30 June 2018 has been re-classified to reflect the presentation in the Annual Report 2018

- 13 -

Notes Forming Part of the Condensed Interim Consolidated Financial Statements
1 Basis of Preparation
Keywords Studios PLC (the “Company”) is a company incorporated in the United Kingdom. The consolidated financial statements include the financial
statements of the Company and its subsidiaries (the “Group”) made up to 30 June 2019. The Group was formed on 8 July 2013 when Keywords
Studios PLC (formerly Keywords Studios Limited) acquired the entire share capital of Keywords International Limited through the issue of 31,901,332
ordinary shares.
The interim results for the 26 weeks ended 30 June 2019 and the 26 weeks ended 30 June 2018 are neither audited nor reviewed by our auditors andthe accounts in this interim report do not therefore constitute statutory accounts in accordance with Section 434 of the Companies Act 2006. They do
not include all of the information required for full annual financial statements, and should be read in conjunction with the latest annual audited financial
statements of Keywords Studios PLC for the year ended 31 December 2018, which have been filed with Companies House. The report of the auditorson those accounts was unqualified, did not contain any statements under Section 498 (2) or (3) of the Companies Act 2006 and did not contain any
matters to which the auditors drew attention without qualifying their report.
After making enquiries, the Directors have a reasonable expectation that the Company and the Group have adequate resources to continue inoperational existence for the foreseeable future. Accordingly, they continue to adopt the going concern basis in preparing the interim condensed
consolidated financial statements.
Except as outlined in note 2, the same accounting policies, presentation and methods of computation are followed in these financial statements as wereapplied in the Keywords Studios PLC latest annual audited financial statements.
The interim financial statements made up to 30 June 2019 were approved by the Board of Directors on 17 September 2019.

2 Changes in Significant Accounting Policies
The Group has adopted new accounting standards which have become effective 1 January 2019, as follows:
Impact of IFRS 16 Leases
IFRS 16 ‘Leases’ replaces IAS 17 ‘Leases’ along with three Interpretations (IFRIC 4 ‘Determining whether an Arrangement contains a Lease’, SIC 15‘Operating Leases-Incentives’ and SIC 27 ‘Evaluating the Substance of Transactions Involving the Legal Form of a Lease’). The new Standard has
been applied using the modified retrospective approach, with the cumulative effect of adopting IFRS 16 being recognised in equity as an adjustment to
the opening balance of retained earnings for the current period. Prior periods have not been restated.
From 1 January 2019, the Group now recognise a liability to make lease payments (i.e. the lease liability) and an asset representing the right to use theunderlying asset during the lease term (i.e. the right of use asset), for all material lease arrangements over 12 months in duration. On transition, forleases previously accounted for as operating leases with a remaining lease term of less than 12 months and for leases of low value assets the Group
has applied the optional exemptions to not recognise right of use assets but to account for the lease expense on a straight-line basis over the remaining
lease term. For those leases previously classified as finance leases, the right of use asset and lease liability are measured at the date of initial
application at the same amounts as under IAS 17 immediately before the date of initial application. Instead of performing an impairment review on theright of use assets at the date of initial application, the Group has relied on its historic assessment as to whether leases were onerous immediately
before the date of initial application of IFRS 16. The impact of the application of IFRS 16 is outlined in note 18.
The following is a reconciliation of operating lease commitments at 31 December 2018 to the lease liabilities recognised at 1 January 2019:€m
Total operating lease commitments disclosed at 31 December 201817

Recognition exemptions:Leases of low value assets
Leases with remaining lease term of less than 12 months
Lease payments for expected lease renewals extending payments beyond the minimum
lease payment period

( 1)
8
7

Operating lease liabilities before discounting

24

Discounted using incremental borrowing rate *( 1)

Operating lease liabilities

23

Finance lease obligations-

Total lease liabilities recognised under IFRS 16 at 1 January 2019
* Weighted average incremental borrowing rate applied to lease liabilities on transition

23
3.1%

Impact of IFRIC 23
IFRIC 23 Uncertainty over Income Tax Positions, which was issued in June 2017, clarifies how to recognise and measure current and deferred income
tax assets and liabilities when there is uncertainty over income tax treatments. The adoption of this standard has not had a material impact on thefinancial statements on transition to the new standard.
Other New Standards, Interpretations and Amendments effective 1 January 2019
Other accounting pronouncements which have become effective from 1 January 2019 have not had a material impact on the Group.

- 14 -

3 Significant Accounting Policies
These Financial Statements have been prepared in accordance with the accounting policies adopted in the Group’s most recent annual financial
statements for the year ended 31 December 2018, with the exception of the issues highlighted in note 2 above.
IFRS 16 Leases
As described in note 2, the Group has applied IFRS 16 using the modified retrospective approach and therefore comparative information has not been
restated. This means comparative information is still reported under IAS 17 and IFRIC 4.
Accounting policy applicable from 1 January 2019For any new contracts entered into on or after 1 January 2019, the Group considers whether a contract is, or contains a lease. A lease is defined as ‘acontract, or part of a contract, that conveys the right to use an asset (the underlying asset) for a period of time in exchange for consideration’.
At lease commencement date, the Group recognises a right of use asset and a lease liability on the balance sheet. The right of use asset is measured
at cost, which is made up of the initial measurement of the lease liability, any initial direct costs incurred by the Group, an estimate of any costs todismantle and remove the asset at the end of the lease, and any lease payments made in advance of the lease commencement date (net of any
incentives received).
The Group depreciates the right of use assets on a straight-line basis from the lease commencement date to the earlier of the end of the useful life of
the right of use asset or the end of the lease term. The Group also assesses the right of use asset for impairment when such indicators exist. At thecommencement date, the Group measures the lease liability at the present value of the lease payments unpaid at that date, discounted using theinterest rate implicit in the lease if that rate is readily available or the Group’s incremental borrowing rate. Lease payments included in the measurementof the lease liability are made up of fixed payments (including in substance fixed), variable payments based on an index or rate, amounts expected to bepayable under a residual value guarantee, and payments arising from purchase and extension options reasonably certain to be exercised.
Subsequent to initial measurement, the liability will be reduced for payments made and increased for interest. It is remeasured to reflect any
reassessment or modification, or if there are changes to in substance fixed payments. When the lease liability is remeasured, the corresponding
adjustment is reflected in the right of use asset, or profit and loss if the right of use asset is already reduced to zero.
The Group has elected to account for short-term leases and leases of low value assets using the practical expedients. Instead of recognising a right ofuse asset and lease liability, the payments in relation to these are recognised as an expense in profit or loss on a straight-line basis over the lease term.
The Group has applied judgement to determine the lease term for contracts in which it is a lessee that include renewal options. The assessment of
whether the Group is reasonably certain to exercise such options impacts the lease term, which significantly affects the lease liabilities and right of use
assets recognised.
Accounting policy applicable before 1 January 2019
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 of Comprehensive Income on a straight-line basis over the term of the lease.
Where substantially all of the risks and rewards incidental to ownership of a leased asset have been transferred to the Group (a “finance lease”), theasset 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 andthe present value of the minimum lease payments payable over the term of the lease. 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 of Comprehensive 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 the lessor.

4 Critical Accounting Estimates and Judgements
The Group makes certain estimates and assumptions regarding the future. Estimates and judgements are continually evaluated based on historicalexperience and other factors, including expectations of future events that are believed to be reasonable under the circumstances. In the future, actual
experience may differ from these estimates and assumptions.
The judgements, estimates and assumptions applied in the Interim Financial Statements, including the key sources of estimation uncertainty, were thesame as those applied in the Group’s last Annual Financial Statements for the year ended 31 December 2018. The only exceptions are the estimate oftax liabilities which are determined in the Interim Financial Statements using the estimated annual effective tax rate applied to the pre-tax income of theinterim period and the judgements related to lessee accounting outlined in note 3.

- 15 -

5 Revenue from Contracts With Customers and Segmental Analysis
Revenue from Contracts With Customers

Revenue by line of business

Unaudited

Unaudited

Audited26 weeks ended

26 weeks ended

52 weeks ended

30 Jun 19

30 Jun 18

31 Dec 18

€’000

€’000

€’000

Game Development (previously Engineering)

29,567

8,886

26,161

Art creation

22,245

18,15041,688

Audio

17,815

13,561

34,190Functional testing

31,81523,061

49,128

Localisation

23,13921,39543,983

Localisation testing

10,2889,570

19,751

Player support

18,321

15,32835,904

153,190109,951

250,805

Unaudited

Unaudited

Audited26 weeks ended

26 weeks ended

52 weeks ended

30 Jun 19

30 Jun 18

31 Dec 18

€’000

€’000

€’000

Canada26,28330,792

69,536

United States

24,747

26,42952,321

Ireland49,337

17,77447,203

United Kingdom

20,242

4,610

21,205

Switzerland

8,411

7,284

20,067

Italy

6,056

5,805

8,673

France

3,430

3,981

8,489

India

2,225

1,529

2,407

Japan

7,051

3,648

7,724

Spain

775

1,377

1,968

China

339

2,433

3,126

Singapore

2,199

2,392

5,046

Germany

396

479

741

Brazil

422

532

1,016

Mexico

523

886

936

Poland

754

-

347

153,190109,951

250,805

Geographical analysis of revenues

The value of undelivered performance obligations for contracts greater than one year in the current period was as follows:

At 30 June 2019

Total undelivered

Scheduledcompletion within
1 yearScheduledcompletion
1-2 years

Scheduledcompletion
2-5 years

€’000

€’000

€’000

€’000

38,85931,5236,893

443- 16 -

Segmental Analysis

Geographical analysis of non-current assets fromcontinuing businesses

Unaudited

Unaudited

Audited26 weeks ended

26 weeks ended

52 weeks ended

30 Jun 19

30 Jun 18

31 Dec 18

Restated^
€’000

€’000

€’000

Canada22,3389,254

11,760

Ireland

4,694

1,120

3,542

Switzerland

12,264

11,057

11,117

Italy

12,554

11,581

11,650

India

2,723

2,423

2,321

United States

85,94191,50984,685

Japan

4,542

635

796

United Kingdom

48,656

15,67548,929

Spain

5,776

1,544

1,535

China

8,999

7,785

7,850

Singapore

271

34

52

Germany

1,184

1,130

1,097

Brazil

1,303

578

888

Mexico

2,062

903

885

France

6,531

6,420

6,318

Russia

926

756

797

Poland

1,318

54

267

Philippines

2,356

576

595

Netherlands

66

-

-

Taiwan4

5

4

224,508

163,039

195,088

224,508

163,039

195,088

-

114

160

Deferred tax assets

3,340

1,265

2,967

Non-current assets

227,848

164,418

198,215

Geographical analysis of non-current assets fromcontinuing businesses
Investment in associate^ Please note the comparative period to 30 June 2018 has been restated to reflect the Measurement Period Adjustment outlined in note 31 of the Annual Report 2018- 17 -

6 Financing Income and Cost

Unaudited

Unaudited

Audited26 weeks ended

26 weeks ended

52 weeks ended

30 Jun 18

31 Dec 18

30 Jun 19

Restated ^
€’000

€’000

€’000

Interest received

-

65

-

Foreign exchange gain

-

794

791

-

859

791

Bank charges

(246)

(232)

(503)

Interest expense

(434)

(144)

(502)

Unwinding of discounted liabilities - lease liability

(338)

-

-

Unwinding of discounted liabilities - deferredconsideration*

(177)

(127)

(311)

(1,159)--(2,354)(503)(1,316)(2,354)

356

(525)

Financing income

Financing cost

Foreign exchange gain / (loss)

Net financing income / (cost)*Please note the comparative period to 30 June 2018 has been restated to separate “Unwinding of discounted liabilities - deferred consideration” from “Interest expense”, to be consistent with thepresentation in note 6 of the Annual Report 2018.

7 Seasonal Business

The video games industry is heavily impacted by sales of new releases of games and platforms during the traditional holiday season, including the run
up to Thanksgiving in the United States and Christmas in other parts of the world. As with all other service providers to the video games industry, certainof Keywords Group's service lines typically experience significantly higher activity as part of this release cycle, during the six months from June toNovember. This activity drives increased revenues in that period and generates higher gross profit margins compared with the first six months of eachcalendar year.
Revenue and Gross Profit for the twelve months up to the end of the interim period and comparative information for the prior twelve-month period arepresented below, which include the post-acquisition results of acquisitions completed in the current year.

Unaudited

Unaudited

52 weeks ended

52 weeks ended

30 Jun 19

30 Jun 18

€’m

€’m

Revenue294

198

Gross Profit

110

74

- 18 -

8 Earnings per Share
Unaudited

Unaudited

Audited26 weeks ended

26 weeks ended

52 weeks ended

30 Jun 19

30 Jun 18

31 Dec 18€ cent€ cent€ cent

Basic

4.69

12.10

23.16

Diluted

4.50

11.62

22.24

Adjusted Earnings per Share*
18.36
18.30
41.80
* Adjusted EPS for the periods endied 30 Jun 2018 and 31 Dec 2018 have been restated to be consistent with the revised 2019 calculation aspresented on page 3 notes regarding alternative performance measures4
€'000

€'000

€'000

3,040

7,750

14,903

NumberNumberNumberBasic*

64,845,831

64,027,256

64,335,162

Diluting impact of Share Options

2,674,175

2,692,147

2,679,932

Diluted*67,520,006

66,719,403

67,015,094

733,900

702,424

1,321,707

Profit for the period from continuing operations

Denominator (weighted average number of equity
shares)* Includes (weighted average) shares to beissuedContingently issuable Ordinary Shares are excluded from the computation of diluted earnings per Ordinary Share where the conditions governing
exercisability have not been satisfied:Unaudited

Unaudited

Audited26 weeks ended

26 weeks ended

52 weeks ended

30 Jun 19

30 Jun 18

31 Dec 18

NumberNumberNumber948,200

978,600

951,800

1,239,400

568,500

544,900

2,187,600

1,547,100

1,496,700

LTIPs
Share options

The revised calculation with restated prior periods of Adjusted Earnings per Share is based on the following:

Unaudited

Unaudited

Audited26 weeks ended

26 weeks ended

52 weeks ended

30 Jun 19

30 Jun 18

31 Dec 18

€'000

€'000

€'000

Profit for the period from continuing operations

3,040

7,750

14,903

Cost of Acquisition & Integration

2,804

2,006

5,296

Share Option Expense

4,011

835

4,129

Amortisation of intangible assets

3,491

3,095

6,872

Foreign exchange (gain)/losses

1,159

(794)

(791)

Unwinding of discounted liabilities - deferred consideration

177

127

311

Non Controlling interest

92

n/a

n/a

(2,870)(1,302)(3,826)

11,904

11,716

26,894

Tax arising on the above items
Adjusted profit used for adjusted earnings per share for continuing
operations- 19 -

9 Dividends

Dividends paid
Final

Dividends recommended
InterimIn respectofApprovaldate€ cent per
share

Pence
STG per
share

Total
dividend€'000

Payment
date

2018

May-19

1.21

1.08

773

Jun-19In respectof

Expected €cent per
share

Pence
STG pershare

Expected
total
dividend€'000

Expected
payment
date

2019

0.65

0.58

421

Oct-19At 30 June 2019, Retained Earnings available for distribution (being retained earnings plus share option reserve) in the Company were €6.65m.
Following on distributions made in 2016 and 2017 that were not fully in compliance with the Companies Act 2006, the Directors have implemented legal
advice to ensure ongoing compliance and rectify the oversights in earlier periods, which was envisaged in the Annual Report and Accounts 2018.
Following the approval by shareholders of a specific resolution at the 2019 AGM, the Company entered into deeds of release, to put all relevant parties
in the position where they were always intended to be, had the relevant dividends been made in accordance with the Act. Interim accounts for theCompany have also been filed at Companies House to support the payment of an interim dividend in 2019.

10 Goodwill and Intangible Assets
Goodwill
The movement of the carrying value of goodwill in the period was as follows:
Unaudited
26 weeks ended
30 Jun 19€’000
Carrying amount at the beginning of the period

154,202

Recognition on acquisition of subsidiaries (note 20)

7,001

Exchange rate movement

2,169

Carrying amount at the end of the period

163,372

While the Group performs a full assessment of the carrying value of goodwill on an annual basis, at 30 June 2019 an interim assessment was madebased on the same underlying assumptions used in the last annual report, using updated forecasts and projections. Based on this interim review of thevalue in use calculations, no impairment is required in the period.
Intangible assets
The movement of the carrying value of intangible assets in the period was as follows:
Unaudited
26 weeks ended
30 Jun 19€’000
Carrying amount at the beginning of the period

25,884

Recognition on acquisition of subsidiaries (note 20)

150

Other additions
Amortisation charge
Exchange rate movement
Carrying amount at the end of the period

332(3,491)
185
23,060Intangible assets are principally comprised of customer relationships. While the Group performs a full assessment of the carrying value of customer
relationships and other intangible assets on an annual basis, at 30 June 2019 an interim assessment was made based on the same underlying
assumptions used in the last annual report, using updated forecasts and projections. Based on this interim review of the value in use calculations no
impairment is required in the period.
- 20 -

11 Property, Plant and Equipment
The movement of the carrying value of property, plant and equipment in the period was as follows:
Unaudited
26 weeks ended
30 Jun 19€’000
Carrying amount at the beginning of the period

15,002

Recognition on acquisition of subsidiaries (note 20)

396

Other additions

5,061

Depreciation charge(3,168)Exchange rate movement
Carrying amount at the end of the period

375
17,666- 21 -

12 Trade and Other Receivables
Unaudited

Unaudited

Audited30 Jun 19

30 Jun 18

31 Dec 18

€’000

€’000

€’000

Trade receivables derived from contracts withcustomers

44,05836,55538,736

Provision for bad debts (i)

(964)

(329)

(1,717)

Financial asset held at amortised cost

43,09436,22637,019Accrued income from contracts with customers

8,029

7,109

6,317

Prepayments and rent deposits

3,002

5,609

2,490

Other receivables

4,534

1,622

2,459

Multimedia tax credits / video games tax credits

18,232

14,357

10,820Tax and social security

3,441

1,421

1,373

Other receivables - short term

37,23830,11823,459(i)

The movements in provision for bad debts in the current period were as follows:

Unaudited
26 weeks ended
30 Jun 19€’000
Provision at the beginning of the period

1,717

Impairment of financial assets (trade receivables)
charged to other administration expenses

450

Amounts written off against the provision in the
period(1,209)Foreign exchange movement

6

Provision at end of the period

964

Credit loss experience

(i)

0.50%

The composition of trade receivables at period end was as follows:

Unaudited
30 Jun 19€’000
Trade receivables gross

44,058Credit impaired(748)

Expected credit losses(216)

At 30 June 2019

43,094- 22 -

13 Share Capital

Date

Per
share €At 31 December 2018
Shares to be Issued on acquisition of Sunny Side Up
Shares issued on the anniversary of the acquisition
of Sperasoft
Shares issued on the anniversary of the acquisition
of Sperasoft re bonus to employees

Number ofordinary£0.01
sharesissuedNumberofordinary£0.01
shares to
be issued

Sharecapital
€’000

Share
premium€’000

Mergerreserve€’000

Sharesheld in
EBT€'000

Shares to
be issued€'000

63,788,286

923,139763

102,225

35,996(1,997)

15,64804-Jan12.46-

60,179

-

-

-

-

750

18-Jan16.48

243,442(243,442)

2

-

4,010

-

(4,013)18-Jan

14.13

7,801

-

-

110

-

-

-

30-May20.12

77,006(77,006)

1

-

1,548

-

(1,549)04-Jun9.12

160,297(160,297)

2

-

1,461

-

(1,463)04-Jun

9.07

-

(545)

-

-

-

-

(5)

12-Jun17.93-

35,560

-

-

-

-

638

21-Jun20.57

64,521(64,521)

1

-

1,327

-

(1,327)

Acquisition related issuance of shares

553,067(450,072)

6

110

8,346

-

(6,969)Issue of shares on exercise of share options

366,500

-

4

543

-

-

-

64,707,853

473,067773

102,878

44,342(1,997)

8,679

Shares issued on the anniversary of the acquisitionof Fire Without Smoke
Shares issued on the anniversary of the acquisition
of Red Hot
Shares not issued on the anniversary of theacquisition of Red Hot
Shares to be issued on acquisition of Descriptive
Video Works
Shares issued on the anniversary of the acquisitionof Blindlight

At 30 June 201914 Share Options

Average
exercise pricein £ per share

Number ofoptions

Outstanding at 31 December 2018

7.11

1,832,701

Granted15.88

738,400

Lapsed13.02(44,690)

Exercised

2.80(87,871)

Outstanding at 30 June 2019

9.81

2,438,540

Exercisable at 30 June 2019
Weighted Average Share Price at date of
exercise

2.00

958,675

Share option scheme

16.88

Long term incentive plan scheme

Average
exercise pricein £ per share

Number ofoptions

Outstanding at 31 December 2018

0.01

2,677,467

Granted0.01

1,212,621

Lapsed0.01(13,200)

Exercised

0.01(108,500)

Outstanding at 30 June 2019

0.01

3,768,388

Exercisable at 30 June 2019
Weighted Average Share Price at date of
exercise

0.01

923,167

17.50- 23 -

15 Other Payables
Unaudited

Unaudited

Audited30 Jun 19

30 Jun 18

31 Dec 18

€’000

€’000

€’000

Accrued expenses

21,697

17,02016,671

Payroll taxes

3,553

2,061

2,338

Other payables

6,643

8,116

3,890

Deferred and contingent consideration (i) ST

18,7495,653

18,249--550,64232,85041,153Current liabilities

Related party payable (ii)

Non-current liabilities
Other payables LT
Deferred and contingent consideration (i) LT

(i)

1,383

-

5

113

1,035

1,057

1,496

1,035

1,062

The movements in deferred and contingent consideration (Level 3 input in the fair value hierarchy), in the current period were as follows:

Unaudited
26 weeks ended
30 Jun 19€’000
Carrying amount at the beginning of the period

19,306

Consideration settled by cash

(1,808)

Unwinding of discount (note 6)

177

Additional liabilities from current year acquisitions (note
20)

112

Fair value adjustment

1,127

Translation adjustment(52)

Carrying amount at the end of the period

18,862

In general, in order for contingent consideration to become payable, pre-defined profit and / or revenue targets must be exceeded. The valuation ofcontingent consideration is derived using data from sources that are not widely available to the public and involves a degree of judgement (Level 3
input in the fair value hierarchy). On an undiscounted basis, the Group may be liable for deferred and contingent consideration ranging from €0m to
a maximum of €22m. A 10% movement in expected performance results, has no impact on the fair value of the contingent consideration, and hence
there are no reasonably probable changes to the assumptions and inputs (including the discount rate), that would lead to a material change to thefair value of the total amount payable.
The contractual maturities of the Group's deferred and contingent consideration liabilities were as follows:

Unaudited
30 Jun 19€’000
Not later than one year

18,749Later than one year and not later than two years

113

Later than two years and not later than five years

18,862- 24 -

(ii)The related party transactions in the current period were as follows:

Unaudited
26 weeks ended
30 Jun 19€’000
Canteen charges

30

Rental payments

12

16 Loans and Borrowings and Capital Management
The movements in loans and borrowings (classified as financial liabilities, held at amortised cost under IFRS 9), in the current period were as follows:

Unaudited
30 Jun 19€’000
Carrying amount at the beginning of the period

40,301

Drawdowns

7,001

Repayments(500)

Exchange rate movement(10)

Carrying amount at the end of the period

46,792At the period end the debt to capital and net debt ratios were as follows:

Unaudited
30 Jun 19€’000

Loans and borrowings

46,792

Less: cash and cash equivalents(37,763)

Net debt / (net cash) position

9,029

Total equity
Net debt / (net cash) to capital ratio (%)

204,313
4.4%

Throughout the period, the Group operated well within the interest cover and leverage ratio terms of the facilities agreement.

17 Financial Instruments
During the period there has been no change in the measurement basis of the financial assets and liabilities shown in the Group Statement of Financial
Position. The carrying amounts of the financial assets and liabilities are stated at amortised costs, with the exception of contingent consideration (note15) held at fair value.

- 25 -

18 Leasing
The Group has entered into leases, across the business, principally relating to property. These property leases have varying terms and renewal rights.
Right of use assets
Unaudited
26 weeks ended
30 Jun 19
€'000
Cost
At 1 January 2019
Adjustments from adoption of IFRS 16

22,750Additions412

Acquisitions through business combinations at fair value

262

Currency revaluation

450

At 30 June 201923,874

Accumulated depreciation
At 1 January 2019-

Depreciation charge

3,467

Currency revaluation( 3)

At 30 June 2019

3,464

Net book value
At 1 January 2019-

At 30 June 2019

20,410

Lease payments not recognised as a liability
The Group has elected not to recognise a lease liability for short term leases (leases with an expected term of 12 months or less) or for leases of low
value assets. Payments made under such leases are expensed on a straight-line basis. The expenses in the period relating to payments not included in
the measurement of the lease liability were as follows:
Unaudited
30 Jun 19€’000
Short-term leases
Leases of low value assets

938
938

The future minimum lease payments related to these leases at 30 June 2019 were as follows:
Unaudited
30 Jun 19€’000
Not later than one year

713

Later than one year and not later than five years-

Later than five years

713- 26 -

Lease liability
The maturity analysis of the lease liability is as follows:
Unaudited

Unaudited

Unaudited

30 Jun 19

30 Jun 19

30 Jun 19

€’000

€’000

€’000

Lease payments

Finance charges

Liability

Not later than one year

7,819

590

7,268

Later than one year and not later than five years

12,134713

11,382Later than five years

2,251

259

1,992

22,204

1,562

20,642The value of leases not yet commenced to which the lessee is committed, which are not included in the lease liability at 30 June 2019, were €Nil.
The interest expense on the unwinding of the lease liability is presented in note 6, while the total cash outflow in relation to leases is presented in theConsolidated Statement of Cash Flows.

Impact analysis
The impact of IFRS 16 on certain key metrics is as follows:
Unaudited

Unaudited

Unaudited

26 weeks ended

26 weeks ended

26 weeks ended

30 Jun 19

30 Jun 19

30 Jun 19

€’000

€’000

€ centOperating Profit

ProfitEarnings Per Share

9,037

3,040

4.69

-

338

0.52

Depreciation (note 18)

3,467

3,467

5.35

Leases expenses now reported under IFRS 16(3,574)(3,574)(5.51)

Calculated excluding the impact of IFRS 16

8,930

3,271

5.05

IFRS performance measure
Calculated with reference to reported performance
Unwinding of liability (note 6)- 27 -

19 Investment in Associate

Unaudited
26 weeks ended
30 Jun 19
Reconciliation of carrying amount of Investment in
Associate€’000

Cumulative Ownership %Carrying amount at the beginning of the period

160

30%

Additional investment

114

45%

Post-acquisition changes in the Group’s share of net
assetsRecognised as a business combination (note 20)
Carrying amount at the end of the period

(274)
-

In May 2018, the Group, through the newly established Keywords Ventures Ltd, invested £100k (€114k) in 15% of the share capital of AppSecTest
Limited. Incorporated in the UK, AppSecTest is creating a cloud based automatic testing solution for mobile apps, including games (principally for GDPR
compliance). A further investment of £100K (€114K) was made in September 2018 bringing the total investment to 30% of the share capital of thecompany. Following on an additional investment 20 January 2019, the Group consider this to be a business combination, having acquired effective
control over the entity.

- 28 -

20 Business Combinations / Acquisitions Completed in the Current Period

Sunny Side Up

GetSocial (i)Wizcorp

Descriptive Video
Works

Other (ii)

Total

€'000

€'000

219

396

€'000

€'000

€'000

€'000

04-Jan-19

21-Feb-19

18-Apr-19

11-Jun-19

CanadaNetherlands

Japan

Canada

44

10

37

86

Intangible assets

-

125

25

-

-

150

Trade and other receivables - gross

84

-

352

165

2

603

Bad debt provision

-

-

-

-

-

-

Date of acquisition
Acquisition company jurisdiction
Book value of identifiable assets and liabilities
Property, plant and equipment

Cash and cash equivalents

338

-

297

93

65

793

Trade and other payables

(218)

(19)

(847)

(83)

(16)

(1,183)

Net book value

248

116

(136)

261

270

759

Identifiable intangible assets - customer relationships

-

-

-

-

-

-

Right of use assets

-

-

178

84

-

262

Lease liabilities

-

-

(178)

(84)

-

(262)

Deferred tax liabilities

-

-

-

-

-

-

Total fair value adjustments

-

-

-

-

-

-

248

116

(136)

261

270

759

-

-

-

-

(148)

(148)

248

116

(136)

261

122

611

Fair value adjustments

Total identifiable assets
Less non-controlling interest
Total identifiable assets attributable to the Group
Goodwill

3,845

54

1,088

1,862

152

7,001

Total consideration

4,093

170

952

2,123

274

7,612

% Share capital acquired

100%

n/a

100%

100%

45%

3,342

170

952

1,373

274

6,111

-

-

-

112

-

112

Satisfied by:
Cash
Deferred cash
Shares to be issued

751

-

-

638

-

1,389

4,093

170

952

2,123

274

7,612

60,179--35,560-95,739Sunny Side Up

GetSocial (i)Wizcorp

Descriptive Video
Works

Other (ii)

Total

€'000

€'000

€'000

€'000

€'000

€'000

Cash

3,342

170

952

1,373

112

5,949

Less: cash and cash equivalent balances transferred

(338)

-

(297)

(93)

(65)

(793)

Net cash outflow - acquisitions

3,004

170

655

1,280

47

5,156

Related acquisition costs charged through to theConsolidated Statement of Comprehensive Income

93

7

5

24

-

129

Pre-acquisition revenue in H1

-

25

656

558

-

1,239

Post-acquisition revenue

1,164

63

386

86

-

1,699

Pro forma revenue

1,164

88

1,042

644

-

2,938

Pre-acquisition profit / (loss) before tax

-

(23)

1

7

-

(15)

Post-acquisition profit / (loss) before tax

499

(45)

(99)

30

(167)

218

Pro forma profit / (loss) before tax
499
(68)
(98)
37
(i) We acquired the activities and net assets of GetSocial. This met the requirements of a business combination under IFRS 3(ii) Other - relates to AppSecTest Limited which is now recognised as a business combination (note 19)

(167)

203

Total consideration transferred

Number of shares
Fixed amount agreed to be issued

Net cash outflow arising on acquisition- 29 -

The main factors leading to the recognition of goodwill on the acquisitions are the presence of certain intangible assets in the acquired entities,
which are not valued for separate recognition, such as••••

The experience and expertise in producing trailers for the marketing and support of video games in Sunny Side Up.
The experience and expertise in social media technology for the games industry in GetSocial.
The experience and expertise in engineering services in Wizcorp, in particular for the mobile development market in Japan.
The experience and expertise in audio description services for broadcast and over the top streamed programming in Descriptive
Video Works.

The goodwill that arose from these business combinations is not expected to be deductible for tax purposes.

21 Events after the Reporting Date
Acquisition of TV+SYNCHRON Berlin GmbHOn 17 September 2019, Keywords Germany Holdings GmbH agreed to acquire the entire issued share capital of TV+SYNCHRON Berlin GmbH ("TVS")
with an effective date of 1st of October 2019. Based in Berlin, Germany, TVS is a leader in dubbing and localizing content into German across a wide
range of entertainment formats with a track record spanning over 25 years. The total consideration for the acquisition is €3.7m, of which €2.8m to be paidin cash on completion, and €0.9m to be met through the issue of new ordinary shares in Keywords on the first anniversary of the acquisition, which willthen be subject to orderly market provisions for a further 12 months.

- 30 -