Imagine More

Keywords Studios plc
Annual Report and Accounts 2022

Keywords Studios plc Annual Report and Accounts 2022

We Imagine Morefor the global
video gaming andentertainment
communities

What's inside
Overview
01
02
04
06
08

2022 Highlights
Who we are
Our footprint
Chair's statement
Investment case

Strategic report
10
16
18
20
26
32
34
40
56
58
62
69

Chief Executive’s review
Market review
Business model
Our strategy
Strategy in action
Key performance indicators
Service line review
Responsible business review
Section 172(1) statement
Financial and operating overview
Principal risks and uncertainties
Non-financial information statement

Governance
70 Corporate governance report
70 Board of Directors
74 Chairman's introduction
80 Nominations Committee report
82 Audit Committee report
86 Directors' Remuneration report
102 ESG Committee report
104 Directors’ report
106 Statement of Directors’ responsibilities

Financial statements

We are trusted and relied upon by theworld’s leading video game companies towork alongside them during the full gamedevelopment cycle, from concept throughto launch and beyond, to bring immersive
content to life for the joy of billions ofgamers across the world.
Read more on page 02

107 Independent Auditor’s Report
113 Consolidated statementof comprehensive income
114 Consolidated statementof financial position
115 Consolidated statementof changes in equity
116 Consolidated statement of cash flows
117 Notes forming part of theconsolidated financial statements
157 Company statement of financial position
158 Company statement of changes in equity
159 Company statement of cash flows
160 Notes forming part of the Company
financial statements

Supplementary information
165 Alternative performance measures
171 Key disclaimers
172 Company information

Overview

Strategic report

Governance

Financial statements

Supplementary information

2022 Highlights

Excellent performance
underpinned by strongorganic revenue growth
Revenue

Organic Revenue growth*€690.7m

21.8%+34.8% year-on-year

2021: +19.0%

EBITDA*

Profit before tax€120.9m€68.0m+41.1% year-on-year+41.7% year-on-year

Adjusted EBITDA*

Adjusted profit before tax*

€146.9m€112.0m

Margin 21.3% (2021: 21.5%)

Margin 16.2% (2021: 16.8%)+33.4% year-on-year+30.2% year-on-year

Basic earnings per share

Adjusted earnings per share*

61.54c113.50c

Adjusted cash conversion rate*

Total dividend per share

100.1%

2.37p+36.3% year-on-year

2021: 107.3%+27.2% year-on-year+10.0% year-on-year

Continuing to perform• Strong performance driven by healthy
demand for our services.
• Divisional results now reported acrossthree segments, each of which
performed well.
• Five acquisitions for a total maximum
consideration of €140 million**.

Refreshed strategy to drive
long-term sustainable growth• Driving strategic partnerships, whilst
adopting new technologies that enable
us to do more for our clients as well as
exploring adjacent markets.
• Simplified structure to drive culture,collaboration and support talent acquisition.

Tangible progress against
ESG goals• Client net promoter score increased to 37.
• Renewed and strengthened partnershipwith Women in Games.
• Reduced emissions intensity (CO2e per€m) by 16% during 2022.
Read more on page 10* Alternative performance measures
	The Group reports a number of alternative
performance measures (APMs) to present thefinancial performance of the business which are
not Generally Accepted Accounting Principles(GAAP) measures as defined by International
Financial Reporting Standards (IFRS). The Directors
believe these measures provide valuable additional
information for the users of the financial information
to understand the underlying trading performanceof the business. In particular, adjusted profit
measures are used to provide the users of thefinancial statements a clear understanding of theunderlying profitability of the business over time.
	For full definitions and explanations of thesemeasures and a reconciliation to the most directly
referenceable IFRS line item, please see pages
165 to 170.
** Excluding cash acquired of €5.4 million.

01

02

Keywords Studios plc Annual Report and Accounts 2022

Who we are

About usFrom art creation to game development,
localization to launch, we're helping todefine the games and entertainment
landscape and ultimately the experiencesof over three billion players worldwide.
Combining our expertise and imagination,
we're more than the sum of our parts.
Together we have the power to unlock
the potential of gaming and beyond.

We’re on a mission to Imagine More…
more for our clients, more for ourstudios, more for our people and more
for the games that we work on.
We aim to be the world’s most trusted
partner in technical and creative solutions
for the video games and entertainment
industries. We want to be a sustainablebusiness that positively contributes to theenvironment and our communities acrossthe globe.

What we do

Globalize
Our connected network of gamedevelopment and art studios
across four continents deliver the fullsuite of production services
to clients across the globe.
Our services range from creationof concept art, 2D and 3D asset
production and animation to full andco-development of games acrossall major platforms, porting andremastering and consulting services.
In Create, each studio maintains its
own brand, due to the strength oftheir reputations and relationships
with their clients.

Globalize brings together our
audio, testing and localization
businesses to create a global
offering encompassing all the postproduction services required byclients to get a game to launch.

Engage is a collective of studios that
operate across the marketing andplayer experience spectrum to makesurethegamestheyworkoncaptivateand engage their players.

Globalize works to make surethat the initial game experience
is as great as possible and bothsupports global launches andopens new markets by making
games accessible in languages
from around the world. These
technology-enabled services
are generally branded under the
Keywords banner.

In a world where games continue
to evolve after launch, successful
and continued engagement withplayers is critical to the longterm success of a game. Engage
creates world-class trailers andPR campaigns, as well as offeringcommunity management and more.
Its leading player support businessincorporates in-game automatedsolutions twinned with a customer
service team of over 2,000 people.

23

32

29

~3,500~5,000~2,500Studios

People across 42 cities

Read more on page 34

Studios

People across 27 cities

Read more on page 36

Studios

People across 23 cities

Read more on page 38

Overview

Strategic report

Governance

Financial statements

Supplementary information

Our purpose

We bring to life
digital content thatentertains, connects,
challenges and educatespeople worldwide
Our strategic priorities

Strategic Technology
partnerships

One
Keywords

Talent andcapabilities

Adjacent
markets

Read more on page 20

Our responsible business pillars

PeoplePlanetCommunity
Read more on page 40

ClientGovernance

03

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Keywords Studios plc Annual Report and Accounts 2022

Our footprint
SeattleChicagoCincinnati

A global business

International
scale anddiversification
across markets

Saint Jerome

Mexico City

VancouverAustinOttawaMontreal

OrlandoWe operate in strategically important locations,which provide both proximity to the world’s leading
video game companies and good access to skilled
talent pools across five continents. Through theyear we extended our global reach into three newcountries as we continue to fully support our clients’production needs.

#1

Quebec City

New York

Raleightechnical and creative
solutions provider to thevideo games industry

Rio de Janeiro
New Orleans

26

Portlandcountries

Los Angeles

70+

San Francisco
São Paulostudios~12k
employees

CreateGlobalize
Engage*Offices closing in 2023

OverviewPortsmouth

Strategic report

Governance

Financial statements

05

Supplementary information

Leamington Spa

Beijing

BerlinLiverpool

Newcastle
Kunshan

Katowice
Dublin (HQ)

Yanjiao

LondonWarsaw
Bucharest

YerevanDalianChangsha

Volgograd*

Seoul

St Petersburg*

Tokyo

Brighton

ManilaNew Delhi
Pune
MadridBangalore
Barcelona
ChengduParis

Zhengzhou

The Hague

Belgrade

Hamburg

Milan

Brisbane

Krakow

Melbourne

Rome

Valetta

Adelaide

Singapore
Taipei
Yogyakarta
Shanghai

Qingdao

06

Keywords Studios plc Annual Report and Accounts 2022

Chairman's statement

This is my tenth and will be my last
Chairman's statement since I joined
Keywords just before the IPO in July
2013, and what a journey it has been!
Ross Graham
Chairmanpride &
respecLooking back with

Overview

Strategic report

I can look back on those 10 years with a
combination of pride and respect – pride forhaving overseen such a remarkable journeyfrom a small company with three studios anda turnover of just €16m to where it is today atthe very centre of the video games industry,and respect for all the people who madeit happen.
This last year, 2022, has, in many ways, been
the most rewarding of all. Finding a new CEO
is always a hazardous enterprise, especiallygiven the unplanned circumstances of theretirement of Andrew Day, who had been thedriving force behind the growth of Keywords
until ill-health forced him to stand down.
We were fortunate to have real strength indepth across our leadership team, allowing
time to undertake a comprehensive process
to appoint a high calibre successor with therequisite experience and expertise.

&ct

In Bertrand Bodson we have found theembodiment of everything for which I waslooking for, with the enthusiasm, energy,
understated charisma and ambition to lead
Keywords through the next phase of its
development; the aim is simply for Keywords
to become an ever more integral part ofthe industry which it serves. Rarely has thepassing of a mantle been achieved withsuch panache.

Governance

Financial statements

For many companies 2022 was a difficultyear. I think it says much for the resilienceof the video games industry and Keywords’
positioning within it that we are able to report
another record year of results, with revenue
growth of ~35% and with the cash generationof the business continuing to impress. For an
acquisitive business this crucial dynamic is afundamental aspect of the business model.
Acquisition activity continued apace with fivehigh-quality acquisitions spread across eachof our service lines. Perhaps to me the mostpleasing aspect of the acquisitions was thegreater influence of technology, which willcontribute to keeping us at the forefront of
our industry.
Earlier, I referred to the major influence ofBertrand in creating a new sense of ambition
within the business. The areas identified
in collaboration with senior management
formed the basis for the evolved strategy set
out at the capital markets day in June 2022
(and is detailed on pages 20 to 31 of thisreport) and involves:• A shift to more of a strategic partner
relationship with clients.
• A focus on enhancing service delivery
through greater use of technology.
• Increased coordination of activities
between service lines through theconcept of a "One Keywords" mindset.
• Talent management.
Also more analysis has been undertaken on
attractive adjacent industries where gaming
technologies are already, or likely to have amajor future role and where the technology/
expertise is already embedded throughout
Keywords. Media and Entertainment is anatural area to target but the management
team has been careful to balance the natural
attraction of expanding our overall target
market with opportunities to extend its
position as the leading service provider tothe video games industry. As Keywords still
represents less than 10% of the growing
market of provision of external services tothe video games industry, there remains
ample scope for Keywords to continue
its own exciting growth trajectory, within
this market.

Supplementary information

From the foregoing it will be apparent that, inmy opinion, the Keywords business is better
positioned than it was a year earlier, with aclear strategy to take the business forward.
What is more, the senior leadership teamunder Bertrand has a far stronger sense ofcohesion and common purpose. As alreadyannounced, Jon Hauck is taking on theposition of COO having operated alongside
Bertrand for most of the year and assisted in
the streamlining of the operational structuresat the senior management level. During thisperiod Jon has also continued as CFO (helped
immensely by the finance team) and has
been in charge of M&A. Our search for a CFO
continues, and the comprehensive process
has identified a range of highly qualified
candidates for the role.
Success doesn’t happen by chance andduring 2022 some hurdles have had to be
overcome. Not least of these has been
the necessary relocation of our Russianbased game development operation –now largely completed with new centres
established in Serbia, Armenia and Malta– a major accomplishment. For all that has
been achieved overall, great credit must
go to the senior management personnel
throughout the organisation and, of course,
every employee who has put in such effort.
My thanks are extended to you all.
I also want to pay tribute to my fellow
Directors who have been a great support tothe executives under Bertrand and to me as
Chairman. Working with these talented andhard-working people has been immensely
satisfying and great fun. Together we havevisited a number of studios, including Dublin,
Milan and Tokyo, and benefited from theinsights provided by the local teams – in turn,I hope we have given something back.
Finally, and with a certain sense of sadness(but knowing the time is right for a change),
I hand over the Keywords torch to Don
Robert, my successor as Chairman. I pass tohim, Bertrand, and all Keywordians, my goodwishes and all good fortune for the next
phase in the life of Keywords, now in its 25th
year. During my 10-year tenure as Chairman
most of the relevant statistics have multipliedby at least 20 times – so no pressure, Don!

Ross Graham
Chairman07

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Keywords Studios plc Annual Report and Accounts 2022

Investment caseMarket-leading
position
Keywords is the only global provider of fully integrated creative andtechnical solutions to the global video games industry and is ~3x thesize of our nearest competitor. With an industry reputation for quality,
reliability and flexibility, our global scale, full-service offering andtechnology platform mean we are well placed to take advantage of thetrend for customers to move to more collaborative partnerships withfewer, larger suppliers.

~3x

the size ofnearest competitor

Read more on page 17

Access to alarge, dynamic
growth market
We operate in a growing industry that services the needs of over threebillion players, and requires the ongoing creation of engaging content.
The content creation market is estimated to be worth ~$36bn, witharound one third of this spent with external providers like us, presenting
a large growth opportunity. Our focus on content means we areplatform agnostic and the increasing complexity of games and consoles
is driving demand for larger providers, such as Keywords.

3bn

players driving
demand for content

Read more on page 17

Strong growth
track record
Since our listing in 2013, we have grown from €16m of revenues to€691m in 2022. Over the last five years, revenues have grown at acompound average growth rate of ~35% through a combination ofstrong organic growth and M&A. Over the same time period, organic
revenue growth has averaged ~15% as we have benefited from both thegrowth in the video games industry and the trend towards greater useof our services.
Read more on page 32

35%
five-year Revenue
compound annual
growth rate

Overview

Strategic report

Governance

Trustedpartner
We are trusted by the leading players in the industry to work with themon their biggest franchises and releases. We currently provide a rangeof services to 24 of the top 25 games companies and all 10 of the top
10 mobile games publishers by revenue and are increasingly looking todeepen these relationships.

Financial statements

Supplementary information

24/25

Trusted partner to
24 of the top 25
games companies

Read more on page 21

Diversified
enabler ofthe industry
Our business model means we provide services and solutions to a broadclient base rather than owning the intellectual property of a game. Thismeans we have exposure to the underlying growth in the overall exciting
video games market, without the risk of exposure to the performance ofindividual game titles. This is then supplemented by the increasing trend
for developers and publishers to utilise external service providers.

150

clients take threeor more of ourservices

Read more on page 18

Inorganic
growth engine
Since 2013, we have acquired over 60 businesses to augment ourcustomer offerings, consolidate a fragmented market, extend ourgeographic reach and continually improve the quality of our earnings.
The M&A pipeline continues to be very healthy, and we are selectively
pursuing value accretive acquisitions, at valuations well below Keywords'
own rating, that support our strategic ambitions.

Read more on page 14

60>

Completed over
60 acquisitions in
the last 10 years

09

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Keywords Studios plc Annual Report and Accounts 2022

Chief Executive’s review

2022 marked my first full year as CEO
of Keywords, and what a year it was.
We delivered extremely strong growthand continued to build out our platform,
furthering our position at the forefront of
the industry and delivering the solutions ourclients require to support the success of
their games.
Bertrand Bodson
Chief Executive Officer

Taking us to theOverview

5

Strategic report

new strategic
priorities designed
to drive long-termsustainable growth
Read more on page 20

Governance

Financial statements

In June, we set out our evolved strategy to takethe business to the next level, and have madegreat initial progress delivering against thoseambitions. We also unveiled a new, simplified
structure to strengthen collaboration
across our Group, sharpened our focus
on technology, and welcomed five highquality businesses with over 300 employees,
providing further scale and new capabilities
to build out our platform. None of this would
have been possible without the tireless effortsof our 12,000 Keywordians who consistently
Imagine More to deliver high-quality, engaging
content and services for our clients.
I spent a considerable part of 2022 visiting
our studios across the world with othermembers of the management team;
between us, we have been to Keywords
businesses across four continents. Having
the opportunity to visit the vast majorityof our teams has confirmed to me thefantastic culture and leadership across theorganisation and given me great insight
into the incredible energy and enthusiasmof our people across the globe. I've also
immersed myself in the industry, as comingfrom a digital but non-gaming background,it was important for me to develop a deeper
understanding of the complexities of such avibrant industry. I thank those who have given
their time to support me in this endeavour,and of course, our clients for trusting us towork on their precious content.
I also wholeheartedly extend my thanks to
Ross Graham, our departing Chairman, who
has offered tremendous guidance to me
in my first 12 months. Ross has been with
Keywords since the very beginning of our life
as a public company, and it is with sadness
that we see him retire. Ross has been an
exemplary guardian of the business, and wecannot thank him enough for all that he has
given to Keywords over the last 10 years. We
wish him a long and happy retirement. Whilst
we are sad to see Ross go, we are delighted
that he is being replaced by someone as
experienced and talented as Don Robert.
His success in scaling global technology
businesses will be invaluable for us as we
look to Imagine More for this business.
I look forward to working with him overthe coming years.

Supplementary information

11

Performance
2022 was another exceptional year. We
delivered revenues of €690.7m, representing
growth of 34.8%, with organic revenue
growth of 21.8%, helped by foreign exchange
movements. We also saw a good margin
performance with adjusted profit before taxof €112.0m (profit before tax was €68.0m),
a margin of 16.2%. As guided, this margin
was lower than the 16.8% that we deliveredin 2021, as a number of cost savings madedue to COVID-19 naturally dissipated, andwe incurred meaningful costs relating
to the change in operating environment
around our single Russia-based business,and our subsequent relocation of staff andoperations out of the country. Together,
these costs offset the benefit from thestrong US dollar on our margins.
During the year we consolidated our eight
service lines into a more simplified structureof just three; Create, Globalize and Engage. All
three service lines, which will be discussed in
more detail later in this report, demonstrated
good growth against the previous year which
had benefited strongly from post COVID-19
trends. Organic growth was particularly
pleasing in our Create and Globalize
businesses, driven by strong demand for ourservices. We also delivered excellent cash
generation in the year, which supported ourongoing M&A activities. Our adjusted free
cash flow of €112.1m meant that despite
spending €116.4m on acquisitions, the total of
the cash component of both the current andprevious years’ transactions, we ended theyear with net cash of €81.8m, providing a solid
foundation for future M&A. This demonstrates
the highly cash generative nature of thisbusiness, with cash conversion of 100.1% for
the year, ahead of our guidance of 80%.

Market opportunity
Whilst 2023 has so far seen mixed news fromthe video games industry, we must not forget
the industry’s journey in recent years. The
video gaming sector is larger than the media
and entertainment industry and has grown by
over 25% since the start of the pandemic.
In 2022, the industry consolidated gains
it had made and, due to a lighter release
schedule, changes to mobile privacy and theavailability of out-of-home entertainment
once again, shrank slightly compared to2021. Despite this, we continue to see
industry forecasts for strong growth over the
medium-term, with video games continuing
to offer incredibly good value on a per-hourof entertainment basis, compared to otherforms of entertainment.

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Keywords Studios plc Annual Report and Accounts 2022

Chief Executive’s review continued

In the content generation segment of
the industry, where we focus, we believe
demand remains robust as our clientsseek to continue to engage and captivate
consumers. Demand for high quality,
engaging games, which our business is
skewed towards, is still very strong as
evidenced by record sales across someof the industry's key franchises over theimportant holiday period.
The ongoing shift towards live operations,where games are nurtured through regular
content updates, will also mean there will
be increasing demand for new content fromconsumers that publishers and developers
will have to meet; we will be there to
support them.
The trend towards external partnering
within the industry is ongoing as it becomesincreasingly complex and challenging
to bring a game to market. This growing
complexity, combined with a shortage ofindustry talent, means that publishers are
increasingly leaning on trusted large-scale
partners like us to help them.
We are by far the largest player in our space,and yet remain at only a 6% share of a highly
fragmented market. We believe that wehave a significant opportunity to continue
to take market share organically, as larger
developers and publishers will want to workwith larger providers with geographic scale,and to consolidate through our successfulacquisition programme.

Delivering against evolved strategy
As I detailed at our capital markets day inJune, we have set out an evolved strategy
which seeks to build on the highly successful
platform created over the last few years.
The aim of this is to better position thebusiness to serve our clients by enhancing
collaboration and the use of technology
across our platform.
In addition, we are seeking to build our talentpool, not only by attracting some of the besttalent in the industry, but also by retaining
and developing key talent ourselves.
We also believe that there is a significant
opportunity in markets closely adjacent
to gaming in which the technologies
we already use are increasingly being
deployed; with a key focus on the media
and entertainment space.
Across each of these areas we havededicated project teams who are embedding
key initiatives and workstreams acrossthe organisation in collaboration with ourleaders. Taking the core elements of theevolved strategy in turn:

Strategic partnerships
We are working hard to shift our
relationships with key clients from tacticalto strategic partnerships. In this way, we
can provide more value for our clients andexpand the range of services that theyutilise from across our business.

Our new leadershipprinciples will help us tocollaborate, and Imagine
More for our partners,
ourselves, the games
industry and beyond.”
Bertrand Bodson
Chief Executive Officer

During the year, we initiated strategic
partner reviews with our key clients, wheresenior members from each side can cometogether for open discussions about how
we can work together over the longerterm. This process, which is ongoing, hasalready significantly improved our clients'
understanding of how we can support their
growth, and in turn is improving our visibilityof activity.
We have also increased our specialist
resourcing within the service lines, so that
we are better able to respond to clientneeds with a more holistic offering. I havespent a significant portion of my timeobsessively getting to know our clients andtheir leadership teams. We believe thathaving both a bottom-up, as well as a topdown approach, will best support long-term
relationship building and value creation.

Technology
The technology landscape continues
to evolve at a rapid pace, and we must
continue to adopt new technologies into ourworkstreams to remain at the forefront of
the industry. Having a background in digital,
it was immediately clear to me that Keywords
has an opportunity to better utilise thetechnology that exists within the business,both to enhance its internal systems andprovide more comprehensive customer
solutions. This will also support the scalabilityof the business longer-term and ensure
we maintain our leadership in the industry.
Through utilising existing technologies more,
as we have with the KantanAI partnershipwith Microsoft, and bringing exciting newtechnologies into the Group through theacquisitions of Mighty Games and Helpshift,
we have already made real progress. Both ofthese acquisitions complement our existing
offerings and enable us to broaden oursolutions for our clients.
To support our adoption of technology,
we have created a standalone innovation
team, which is scouring both our businessto surface innovations within individual
studios, and the broader industry, to ensurethat we are able to continually enhance ourclient offering and ways of working within
our business.

Overview

Strategic report

6%market share in ahighly fragmented
industry
Read more on page 16

Governance

Financial statements

One Keywords
Through our One Keywords initiative weare seeking to galvanise and leverage theGroup's culture of entrepreneurism andcollaboration. We have already seen tangible
benefits from the simplification of ourstructure, which helps us to serve our clients
more effectively and ensure employees
get the full benefit of being part of thewider Group.
With the support of our new solutionarchitects, we have been able to go to ourclients with broader offerings from across
many studios, something that was previously
difficult to achieve. We have also refreshedour executive team and brought in new
talent to lead our Engage business, drive ourtechnology strategy and hired our first Chief
People and Culture Officer. In addition, we
have launched a studio hub model to allow
studio heads to participate in and have avoice at leadership events.
We have also refreshed our previous set ofcompany values, by putting in place a simple
set of five leadership principles, which aredesigned as a practical tool to be applied toeveryday working life:• Power of Partnership• One Keywords• Raise the Game• Embrace an Open World• Trust through Transparency
These are guiding actions which create theconditions for us to collaborate, and Imagine
More for our partners, ourselves, the games
industry and beyond, whilst supporting theindividual cultures that exist within each of
our studios and service lines.

Talent and capabilities
We have enhanced our engagement withour 12,000 employees, establishing global
town halls, a key communicators network
to empower regional management andconsistent messaging across the Group.
We have also added dedicated resource
to address some of the industry’s key
issues, such as diversity, equity, inclusion
and belonging.

Supplementary information

We have also put in place dedicated teams
to support talent acquisition in an industry
where this remains a challenge, yet is criticalto our growth trajectory. Internally, we are
seeking to develop our talent by expanding
our in-game academies and boot camps
which offer the opportunity for people
to enter or progress within the industry.
Longer-term, we are building a pipelineof talent, specifically in India, where wehave an agreement with the government
to expand our Academy, which is currently
focused on art, into game development,
taking advantage of the quantity of highquality engineering talent emerging from
Indian universities.

Adjacent markets
Gaming remains our core market, and one inwhich we see huge opportunity for growthover the coming years. It is still a highly
fragmented market, and our focus remains
on ensuring we grow our market leading
position. However, gaming technologies are
increasingly being utilised in other industries,
primarily media and entertainment, where
virtual production and visual effects(VFX) are increasingly using game engine
technology. We believe this shift will present
opportunities for us and we are looking atways to capture these opportunities overtime. We already serve elements of thismarket through our Globalize business,
primarily providing dubbing and subtitlingservices to companies such as Netflix, andhave seen strong growth during the year.
The trend towards live operations, with theaim of keeping a game live and engaging
consumers for as long as possible, hascontinued during the year. Across Keywords,
we are able to support clients as theynurture games to stay live, and we continue
to augment the Group to deliver the rightoffering for clients in this regard. We havealso started to explore ways in which we
can service clients in respect of longerterm opportunities such as the metaverse
where we see emerging opportunities for
the Group.

13

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Keywords Studios plc Annual Report and Accounts 2022

Chief Executive’s review continued

M&A
Complementary to the five pillars of ourstrategy is our M&A approach, which has
added significant value to the businessover the past ten years and something we
believe is a key differentiator for us. In 2022,
we completed five high-quality acquisitionsin the US, Australia, Canada and Italy,
meaning we have now completed over 60
transactions in the past 10 years. In that time,
we have carefully deployed almost €600m
on M&A, predominantly funded from free
cash generation, systematically expanding
our initial localization and testing offering,
into the only service provider able to deliver
across the full game development cycle.
We continue to take a strategic approachto M&A and are looking to extend ourcapabilities and geographical reach in ourCreate and Engage service lines, as well
as scaling our technology offering andexploring opportunities to enter adjacentmarkets. During 2022, three acquisitions
were game development studios (Forgotten
Empires, Smoking Gun and Mighty Games),
with Mighty Games also bringing an
automated testing technology solution,and one in marketing (LabCom). We alsoacquired Helpshift, which has developed
a market leading software-as-a-service
customer support automation tool to resolve
customer issues in real-time within its
clients’ mobile apps and complements ourPlayer Support offering within the Engage
service line. In early 2023 we acquired 47
Communications, a leading US-based PR andcommunications agency to further enhance
Engage’s marketing and PR offering.

RussiaSadly, the humanitarian crisis in Ukraine isongoing. At the start of 2022, we had one
game development studio, Sperasoft, with
offices in Russia and Poland, which was purely
working for international gaming businesses,
rather than serving domestic Russian clients.
In discussion with our clients and to support
colleagues, in the first half of 2022 wecommenced relocating the majority of ourpeople and work from Russia to alternative
locations, including Poland, together with
Serbia, Armenia and Malta, where we haveestablished new operations.

This was a major project, requiring crossfunctional support and a project teamwhich has dedicated considerable time andresource to making this transition as smoothas possible for all, with the second half of2022 having been the key transition phase.
Their efforts enabled us to relocate over 400
people from Russia by the year-end to the
new locations in Europe, a true example ofwhat is possible when teams come together
in adversity and look for long-term solutions.
We have already started to organically growour headcount in the new locations, withclient work having transitioned to alternative
locations successfully. In H1 2023, we willcontinue to look to transition further staff
out of Russia, before closing our operations.

Media and Entertainment

Emmy award winners
Sound Lab, one of our media andentertainment focused audio studios
based in Los Angeles, won a Children'sand Family Emmy for their work for Mayaand the Three. The programme was anine-part animated fantasy streaming
series on Netflix. The team at the studio
took home the award for 'Outstanding
Sound Mixing and Sound Editing for
an Animated Program'.

Responsible businessOur responsible business agenda is centredaround five key areas; our people, planet,
community and our clients, underpinnedby our commitment to good governanceand ethics.
During the year we continued to makegood progress with these priorities. In an
organisation of over 12,000 people, ourpeople are our largest and most valuableasset and rightly have high expectations of
us. A good culture, in which our people feelrewarded, trusted, and included, is criticalfor our long-term success. We believe thathaving a diverse workforce is the best way
to provide highly creative solutions for ourclients and have made meaningful progressin establishing this. We have renewed ourpartnership with Women in Games after
a successful first year of our ambassador
programme and have a full schedule ofevents planned for 2023.
In 2022, the Group was composed of 26%
women, 73% men, with according to current
data, a collective 1% of colleagues identifying
as non-binary or declining to disclose theirgender (2021: 25%/74%/1%). Our support
functions have a more balanced split ofwomen and men (44% and 55%, respectively,
with 1% non-binary/not disclosed).

Gender diversity, and addressing underrepresentation remain a focus for the Groupand Board both across our business and thewider industry. Following changes to Board
composition during the year, the percentageof women Directors on the Board at yearend of 29% was marginally lower than in
2021 (30%). We continue to apply inclusive
appointment processes, in line with our
Board Diversity Policy.
Internally we have created a three-yearroadmap with dedicated resourcing toprovide more structure to our diversity,
equity, inclusion and belonging (DEIB)
initiatives and believe we will start tosee tangible benefits from this as we go
forward. We have also continued to win
best workplace awards across the globe,
demonstrating the efforts made to makesure Keywords is a great place to work
for all.

Overview

Strategic report

We have made positive steps in our
Sustainable Studios initiative to identify
the areas where we can reduce our impact
on the planet, something of importanceto all our stakeholders. During our review,
we identified moving to renewable energy
supplies, wherever possible, as having themost significant positive impact, and we are
exploring this on a studio-by-studio basis.
We made progress in switching tariffs torenewable providers, with 16 of our studios
now on green tariffs. Going forward, we
will also ensure that all new office andstudio space meets modern environmentalbuilding requirements.
We are working towards a target of reducing
the intensity of our emissions (tonnes ofCO2e per €m of revenue) by 50% by 2030
and in 2022, achieved a 16% reduction. In
the meantime, we have continued to expand
the greenhouse gas inventory that we reportagainst and, during the year, we offset our
2021 operational emissions through a highly
respected carbon offset project in Tanzania.

5acquisitions
completed in
2022
Read more on page 27

Governance

Financial statements

We have also continued to make a positive
impact through our Keywords Cares
initiative, which is an annual central fundwhich can be applied to match funds raisedby our local teams. This year our teams
raised over €45,000 for a range of causes
across the globe, undertaking our first global
initiative in November. It was great to see somany different activities taking place acrossthe Group, with over 35 different charitable
and community activities being completed,more than double the number in 2021.

Outlook
We delivered an excellent performance in
2022, demonstrating the strength of ourplatform and the dedication and hard workof the 12,000 people within Keywords.
Whilst mindful of the increasing uncertainty
within the broader industry and potential forforeign exchange movements, we are excitedabout the opportunity ahead with ourbusiness model, highly diversified client base,adoption of technology and geographic
reach. We are increasingly well positioned tosupport our clients in generating engaging
content for their leading franchises andtrading has started well, in line with our
expectations for the year.
We expect to continue to see robust demandfor content generation as our clients seek tocapture the imagination of the three billion
gamers globally. We continue to have ahealthy pipeline of acquisition opportunities
to broaden our capabilities, geographic
footprint and service offerings. This, together
with our organic growth, will enable us
to continue to grow market share, andbuild upon our position as the partner ofchoice for the global video games industry,and beyond.

Bertrand Bodson
Chief Executive Officer

Supplementary information

15

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Keywords Studios plc Annual Report and Accounts 2022

Market review

The video games and entertainment industries are large, vibrant and fast
moving. Due to COVID-19, there was a significant acceleration in many ofthe broader demand and industry trends. These have provided further
opportunity for the Group to grow and consolidate its position as theleading services provider to the global video games industry.
Demand trends

Following two extremely strong years,
where demand grew over 20% in 2020 and
8% off an elevated base in 2021, trends
in gaming spend in 2022 reflected thenormalisation of the industry. In November
2022, Newzoo released updated market
forecasts for 2022 predicting a 4% decline
year-on-year. Key factors contributing to
the decline include the impact of privacychanges on mobile spending, fewer AAA
releases and the impact of the cost ofliving increases on disposable income,leading to lower discretionary spend
by consumers.
In addition, as the first “post-COVID-19”
year, consumers had a range of alternative
leisure activities available. With mobile themost impacted by reduced disposable
spend, compounded by privacy changes,
this market is expected to see a 6% decline
in 2022. By comparison, Newzoo forecasts
the console market to fall 4% and expects

Whilst the overall market value has
contracted during 2022, predominantly
driven by the mobile market, and to alesser extent a slower release cycle in thefirst half of the year, there continues to be
growth in key areas of the market. Within
the PC gaming market, player engagement
through the Steam platform, which is theleading platform through which PC games
are distributed and played, has continued
to rise. Player engagement increased
significantly during the pandemic years,
and rather than falling back in 2022,

a small increase of +0.5% in the PC market.
Although lower than the previous year,
it is worth noting that, overall, the total
revenue generated from 2020 to 2022 isstill $43bn higher than original forecasts
and the industry is still 26% larger thanpre-pandemic.
Even with the slowing demand backdrop
Keywords has continued to experience
excellent demand for its services, withorganic growth of 21.8%, as there isan ever-increasing need for content
development to satisfy consumer
demands. With the supply shortagesof the next generation consoles largely
resolved and a healthy pipeline of AAA
and indie releases scheduled for 2023, we
believe the demand for new content willcontinue to be supportive to demand forour services, despite the pressures on costof living, as publishers and developers lookto drive increased player engagement.

we continued to see engagement risethrough 2022, reaching an all-time high inJanuary 2023 of over 33 million concurrent
users. This is up from a previous peak of 28
million users in December 2021, or a 17%
rise in engagement. At the same time, thenumber of players “in-game” breached 10
million for the first time in January 2023.
In the week prior to the pandemic being
declared in March 2020, concurrent
players were at just over 20 million, witharound 6 million being “in-game”.

Global video game market
2022E$184bn2021$193bn2020$179bn2019$146bn2018$135bnSource: Newzoo estimates

Average concurrent
players on Steam
2022

29.1m

2021

25.8m

2020
2019
2018
Source: SteamDB

21.8m
18.0m
16.9m

Overview

Strategic report

Governance

Financial statements

Supplementary information

Industry trends

The video gaming market has historically conducted the
majority of the game development cycle in-house, for a varietyof reasons. Over the past 25 years, Keywords has been at theforefront of the liberalisation of the industry, as publishers anddevelopers increasingly utilise external partners to support thelaunches of their games. This process started with the morefunctional or specialist areas of the game development cycle,
such as audio, testing and localization and in aggregate external
providers now account for around 50% of these segments.
This trend has accelerated in recent years as the video games
publishing cycle requires significant and skilled resources todeliver increasingly complex projects to a tight timeline.
Games publishers and developers are either unable to, or are
seeking to avoid, expanding their own teams and a higher
proportion of work is being entrusted to third party service
companies like Keywords.
Over the past few years Keywords has built a significant gamedevelopment platform around the world. We now have oneof the largest game development teams in the world andwith our reputation for high-quality service, we believe we will
benefit from our position as the market's leading provider ofscale, as there is a trend towards increasing partnerships at
a more strategic level. This includes a growing demand forco-development and full game development services, and weare investing to continue to grow our offering and increase ourmarket share.
As we operate in a highly fragmented market, our position as
the only service provider of scale with depth and breadth in allareas, means we are uniquely placed to support our customers’
needs whilst also consolidating the market. Industry players
are attracted to joining the Group as they see the benefitsof our stability, access to a wider customer base and service
offering. Our continued M&A success means we are increasingly
benefiting from our scale relative to competitors, and we believe
this will enable us to get closer to the largest players in theindustry as they look for support on their large-scale complex
projects going forward.

Following work completed with the research company IDG,
we believe that Keywords’ addressable market in video gamecontent creation stood at ~US$36bn in 2022. Of this work,
broadly one third, or ~US$12bn, is completed by service
providers, with Keywords being the largest player. Our 2022
revenue of €691 million implies our market share has grown to~6% of the market, with the second largest player in the market
believed to be around one third of our size.
The total addressable market (TAM) is expected to grow fasterthan industry growth levels as the trend towards external
providers continues and the level of technical support increases.
IDG forecasts that this growth will average around 9% over the
next five years, compared to industry growth averaging around
5%. Game development remains the most internalised service,with around 20% of the market taken up by external provision
and IDG expects this will be a key area of growth going forward,
even with the current trends in the market.
We also continue to see game engine technology, which
underpins our industry, increasingly being used in other markets
to improve their processes. In the media and entertainment
space, we have seen virtual production, which uses gameengines to render the backgrounds onto large, high resolution
LED screens, increase in use and we also see potential in visual
effects (VFX) and animation. These trends will remain supportive
over the medium-term and provide an opportunity for us toutilise our expertise in broader sectors over time.

External~$12bn (~33%)

 e operate in a large, highlyWfragmented industry, where themedium-term growth prospects
remain highly exciting.”
Bertrand Bodson
Chief Executive Officer

TAM~$36bnInhouse~$24bn (~66%)

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Keywords Studios plc Annual Report and Accounts 2022

Business model

Creating value by
driving long-termsustainable growth1

2

What we do
Barriers to entry
Scale and flexibility
Customers increasingly need large reliable supplierswith flexible resourcing to match their needs,
allowing scaling up and down to meet demand,
mirroring the seasonality of games production.

Reputation for quality

Game Development

Art Services

Includes full and co-development,
porting and remastering,
tool development andconsulting services

Creation of video gamegraphical art, including
concept, 2D and 3D asset
production and animation

Financial strength

Player Support

Marketing Services

Our strong financial performance and position
gives our customers reassurance of resilience intheir supply chain and is part of our attraction tobusinesses we acquire.

Holistic multilingual supportdelivered in game, on digitalcommunity and social platforms
and through our proprietary techplatform, Helpshift

Creation of game trailers,marketing art and materials,
PR and full brand campaign
strategies

At the heart of our culture is our commitment
to quality, reliability and integrating with ourcustomers’ processes, promoting long-term
customer relationships.

Knowledge and expertise
Our talented people have deep games-specificknowledge and experience, enabling them to add
value to our customers’ games at all stages in thedevelopment lifecycle.

Global presence
Providing access to the best talent enables us todeliver projects across studios in multiple timezones, allowing global workflow capabilities whileremaining close to our customers.

Technology
Necessity of regular investment in technology andsecurity makes it difficult for smaller suppliers tocompete. The importance of resilience and security
is demonstrated by our robust IT infrastructure.

Overview

Strategic report

Governance

Financial statements

Supplementary information

At Keywords, we are using our passion for games, technology and media tocreate a global, integrated services platform of scale for video games and beyond.
By working as their external development partner, we enable leading content
creators and publishers to leverage our expertise.
Our presence across the full game development cycle creates multiple
opportunities to support our clients though the below service lines.

3

Creating value forour stakeholders
Shareholders

Audio Services
Multi-language voiceover recording, original language voice
production, music management and sound effects

Functional Testing
Quality assurance, testing for defects, compliance with hardware/
platform specifications, as well as test automation tools and services

Localization
Translation of in-game text, audio scripts, cultural and local adaptation,accreditation, packaging and marketing materials in 50+ languages

Localization Testing
Testing for out of context translations, truncations, overlaps,
spelling, grammar, geopolitical and cultural sensitivities andcompliance requirements

35%

Consistent track record ofdelivering revenue and profit
growth, augmented by value
creating M&A.

five-year revenue
CAGR

Customers

150

Deepening and broadening
our relationships withour clients.

customers taking
three or more
services

Employees
Growing scale and diversity of our teams
within the supportive One Keywords culture.

17%

26%

increase in average
number of employees
in 2022of workforce
are women

Environment

16%

Minimising our impact on theplanet through SustainableStudios programme.

Communities
Increasing community
involvement and support forgood causes.

GHG intensity
reduction in 2022

38
projects
supported, morethan double 2021

19

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Keywords Studios plc Annual Report and Accounts 2022

Our strategy

Imagine More...
In 2022, we set out how we intend to build on our strong foundations
to further unlock Keywords’ considerable potential and deliver anever-more compelling proposition globally for our partners in thevideo games industry, and adjacent content markets.
Our strategy from2019 to 2021

2022 and beyond

Cementingour position

Moving to
the next level

Cementing our position as the “go to”
technical and creative services provider
for the global video games industry.

Our key areas of focus to take Keywords
forward and to drive accelerated sustainablegrowth and opportunity are:

Building our platform

Strategic
partnerships

Growing the number of services andlocations within the organisation to createa full service offering for our clients.

Selective acquisitions
and integration
Extending the Group's service capacity,
capabilities and geographical reach inorder to serve our client base.

Organic growthand cross selling
Driving the organic growth of the service
lines and increasing the number of clientstaking three or more services.

Technology
One Keywords
Talent andcapabilities

Key achievements for the period

27% 22% 21
Revenue
CAGR

increase inemployees
CAGR

acquisitions
completed

Adjacent markets

Overview

Strategic report

Governance

Financial statements

Supplementary information

1

Strategic
partnerships
We are developing deeper strategic client partnerships at all levels tocreate and capture more value together, driving success for our clientsand more demand for Keywords’ services.

Priorities
Managing our top 25
strategic partners
As the leader in the industry, we alreadywork with 24 of the top 25 games
publishers and all of the top 10 mobile
publishers.
A clear theme from our client discussions
is to elevate our relationships, make themmore strategic and enhance our ability to
cross-sell solutions that benefit their needs
as the industry evolves.

Progress• Commenced strategic partnershipreviews with key clients to share anddiscuss ambitions for the mid-tolong term.
• Created consolidated client IP-level
data views providing clearer total
relationship insight.
• Improved internal capability tosupport collaborative responses toclient requests.

Developing our strategic
partnering capability
and capacity
We have enhanced our capability to delivera more coordinated end-to-end offer tomeet our clients’ longer-term needs. By
facilitating greater cross service line andstudio collaboration, we aim to capture
more value for all throughout the content
development lifecycle.

Progress• Introduced Client Partner roles tolead overall relationships with ourstrategic partners.
• Integrated Solution Producers now
coordinate the delivery of complex
cross service line solutions for clients.
• Established Service Line Architects tocreate value-based solutions based on
deep client and industry knowledge.

Lighthouse deals
We are targeting the generation of 5–10
multi-service line, long-term engagementswith key players in the industry that createand deliver improved solution offeringsand strategic advantage.

Progress• Enhanced capability to deliver crossservice line bid responses to supportclients’ needs.
• Ongoing discussions with a range ofclients about complex multi-service
line projects.

Discover how wecollaborate with
our partners
Read more on page 12

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Keywords Studios plc Annual Report and Accounts 2022

Our strategy continued

2

Technology
We are harnessing new and existing technologies to enable Keywords
to work smarter, do more for our clients and stay at the forefront of
the industry. This includes broadening our use of AI, Machine Learningand automation across our global platform enabling us to scaleand enhance our offering.

Priorities
Internal tech spine
While we have robust systems already inplace, we are strengthening our internal
capability to support ongoing growth andour ability to deliver larger, more complex
work ever more seamlessly throughbetter integration of our systems acrossthe business.

Progress• Dan McCormick joined as Chief Digitaland Information Officer to spearhead
deeper integration of technology
across the Group.
• Enhancing our systems to provide
richer insights and reporting
capabilities as well as supporting crossservice line collaboration.
• Scaling proven systems across ourglobal platform for more integrated
planning and delivery.

Service line automation
We have been identifying and investingin automation opportunities and provencapabilities across our service lines toenable us to deliver more for clients.
When appropriate, we will augment ouroffering by acquiring innovative technology
to develop.

Progress• Built and expanding an end-to-end
automated solution for a key client
to enhance their localization using
our KantanAI technology to delivertranslations in over 30 languages.

• Acquisition of Mighty Games brought a
proprietary AI-based testing technology
platform to complement our existing
capabilities.
• Acquisition of Helpshift has provided
a propriety customer support AI
automation tool to resolve issues withinclients’ mobile apps, complementing
our Player Support capabilities.

Innovation
Innovation is very much part of theentrepreneurial spirit of our 70+ studios
with many smart solutions already adding
value to clients across our global platform.
We have a global initiative to leverage ourshared innovation mindset and activity
across Keywords to ensure we have thebest technology and solutions in eachof our service lines and remain at theforefront of the industry.

Progress• Created a dedicated stand-alone
innovation team led by an Executive
Committee member.
• Launching Labs @ Keywords Studios toidentify and develop future tech-based
solutions.
• Integrating KantanAI into Helpshift
to expand the number of languages
supported on platform.

Discover how
we are building
our technology
platform
Read more on page 26

Overview

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Governance

Financial statements

Supplementary information

23

3

One
Keywords
We are galvanising the Group’s “One Keywords” culture ofentrepreneurialism and collaboration to make it easier to navigate
our comprehensive service and studio platform and facilitate morecollaboration and scalability.

Priorities
Values and leadership principles

M&A integration

Developing our shared cultural values
and leadership principles to facilitate
platform growth.

Enhancing our strong track record of M&A
execution with deeper integration of posttransaction processes to support future
value creation and realise synergies.

Progress• Launched new Leadership Principles
capturing the essence of theGroup, while retaining unique studiocharacteristics.
• Established Key Communicators
network to enhance engagement
and enable transparent and open
communication across the Group.
• Established quarterly Group-wide town
hall sessions to share organisation-wide
key themes.

Spine business partnering
One of the key strengths of our businessis its entrepreneurial spirit. To retain this,
we are amplifying the voice of the studios
to ensure we have a global platform thatcombines invaluable local knowledge
with the benefits of our strong ‘spine’ ofshared services to support the growth of
our studios.

Progress• Introduced a regional hub model tocreate centres of excellence.
• Scaled our strategic and tactical Shared
Services to empower every studio withthe expertise of the Group.

Progress• Development of updated M&A
integration memorandum.
• Creation of a London marketing
hub, bringing all recently acquired
studios under one roof to enhancecollaboration.
• Encouraging collaboration between
newly acquired studios and otherlocations and service lines to identify
opportunities to expand services andcreate new integrated solutions.

Discover our newleadership principles
Read more on page 43

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Keywords Studios plc Annual Report and Accounts 2022

Our strategy continued

4

Talent andcapabilities
We aim to establish Keywords as the destination for talent and careerdevelopment in the industry. Our goal is to enhance our employee value
proposition to support the growth of our global and increasingly diverse
workforce. We will do this through talent acquisition and development, effective
communication and engagement, and a broadening of our DEIB initiatives.

Priorities
Compensation and benefits

Keywords academies

We are working on aligning and better
communicating our incentives.

Expanding our talent development acrossour global footprint to offer the best
opportunities for talent, aligned within‑demand industry growth areas.

Progress• Mid-year review and benchmarking ofcompensation across the globe.
• Remuneration Committee review of pay
scales and incentives emphasising fair
pay and rewarding strong performance.
• Evolving emphasis of long-term awards
at the service line level to provide
clearer link between performanceand reward.

Specialised recruitment
and development pathways
We are investing in and expanding ourtalent acquisition and development
success stories across our global footprint
to enable our studios to grow faster,particularly within strategically importantcapabilities like Game Development, where
demand and competition for talent is more
pronounced across the industry.

Progress• Established a global talent acquisitionteam modelled on the successful
approach used at Snowed In Studios.
• Building out our talent development
strategy based on our new Leadership
Principles.
• Piloting leadership skills training
in partnership with a leadingindustry provider.

We are also seeking to replicate thesuccess of our Art Academy, which has
been highly successful in developing talent
for our studios in India, by creating training
courses to develop a further pool of talent
to support studios around the world.

Progress• Memorandum of Understanding
with the National Skill Development
Corporation in India to jointly fund,promote, and support the expansion of
the InGame Art Academy, to develop
a further pool of talent to support ourgame development studios aroundthe world as part of our Destination
India initiative.
• Expanded Bootcamps which look toprovide those with some industry
experience in games with the skills to
become ‘AAA’ game developers.

Discover how
we are building
talent pipelines
for the future
Read more on page 28

Overview

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Governance

Financial statements

Supplementary information

5

Adjacent
markets
We are leveraging the Group’s capabilities to target closely adjacentmarkets that are increasingly utilising video games expertise, thatnaturally fit with our current offering, or where we can transfer our
gaming experience to other close verticals.

Priorities
Live operations
We are developing a dedicated LiveOps
offering, to build on our existing offering,as an increasing proportion of games are
released as Games as a Service (GaaS),
where content is constantly iterated
and developed.

Progress• Expanded our Lively studio in
Leamington Spa focused on LiveOps
offering.
• Broadened LiveOps capabilities
through the acquisition of Smoking
Gun in Vancouver.

• Investing in broadening current
audio offering to media andentertainment clients.
• Exploring M&A opportunities toleverage game engine capabilities
in the media and entertainment space.

Metaverse
Opportunity to leverage our existing
service propositions to meet metaverse
requirements such as large-scale art, live
Q&A, and player/user support or act as aconsultant to large non-gaming brands
and render their proposition digitally.

• Investing in our data and analytics
capabilities.

Progress

Media and entertainment• Continue to review opportunity set tosupport clients’ needs in the metaverse.

The TV/film market is predicted to bealmost $150bn by 2025 (Source: IDG
Consulting 2021) and we are seeing
convergence of both the customer baseand the technology, with game engines
increasingly being used to create content
through virtual production and animation.

Progress• Demonstrated our in-house Virtual
Production (VP) skill set through theend-to-end production of video using
VP techniques.

• Developing metaverse presence to use
as a test bed for future support.

Discover how
we are capturing
new opportunities
Read more on page 13

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Keywords Studios plc Annual Report and Accounts 2022

Strategy in action

Embracing new and existing technologies
to enable Keywords to work smarter, domore for our clients, and to enable us tostay at the forefront of the industry, iscritical to our long‑term success.
Read more on page 22

Overview

Strategic report

Governance

Financial statements

Supplementary information

Case study

Building our technology stack
During 2022, we made technology one of the key areasof focus for our M&A activity and successfully completed
two acquisitions that significantly built out our
technology platform. Both acquisitions were different
to our normal profile in that the solutions they provide
are highly scalable and have the potential to automate
traditional processes in the game lifecycle, whilst being
highly complementary to our current offering.
Mighty Games brought an innovative set of AI-led tools to
help developers go from build to test using ‘zero touch’ tech
and automation. These tools automatically test the qualityof code on multiple machines and produce automatic
feedback on defects, bugs and errors. Currently focusedon mobile games, we are investing to broaden the TestBot’s
capabilities into other game engines and will be able toutilise it within our internal processes to give our clients afurther quality control oversight, as well as providing it as asolution to clients' internal development studios.
Effective customer support is at the core of making sure aplayer remains engaged, and with Helpshift’s combinationof smart segmentation and conversational AI, we areable to facilitate a positive customer support journey
without leaving the game. Helpshift can either solve anissue outright, or direct the customer to one of our 2,000
agents to provide tailored support in the consumer's
own language, thanks to the capabilities of KantanAI, ourmachine translation solution.
We will continue to broaden our technology stack andare integrating technology to enhance our offering andincrease automation to support the scaling of our businessas a key part of our long-term strategy.

Link to strategic pillars

27

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Keywords Studios plc Annual Report and Accounts 2022

Strategy in action continued

Imagine More

Building on the success of our InGame Art
Academy in India, we are looking to provide
opportunity and development for graduates
within the exciting and ever-evolving gamedevelopment industry.
Read more on page 24Overview

Strategic report

Governance

Financial statements

Supplementary information

Case study

Strengthening ourtalent pipeline
In an industry where there is a significant shortageof available talent, we have a long track-record ofdeveloping our own.
Our Lakshya art studio in India, has grown from270 people in 2014 to over 700 people acrossfour cities today. A large part of their growth has
been through their highly successful InGame Art
Academy, where we have offered structured training
programmes to graduates. As part of this we also
run programmes designed especially for women toencourage more women to be part of the industry.
In 2022, we decided to expand the academy concept
into Game Development, given the critical shortageof talent, and to take advantage of the near one
million engineers graduating in India each year. In
collaboration with a number of our game development
studios in the UK, Australia and US, and in conjunction
with the Ministry for Skills Development andEntrepreneurship, we have built on the learnings fromthe Art Academy and created a tailored programmethat provides specific training for recent graduates tobe able to work in the video gaming industry.
This isn’t an overnight process, and once they have
graduated from the academy, we will continue to train
the graduates to enable them to provide the quality ofoutput that our studios require to satisfy our clients andcreate a long-term career in the industry.

Link to strategic pillars

29

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Keywords Studios plc Annual Report and Accounts 2022

Strategy in action continued

Imagine More

Imagine working with the biggest titles
and best people in the industry.
Human talent is our most valuable resource
and as a business we thrive on diversity andcollaboration, and work as teams to create
world-class entertainment and empower
people to fulfill their potential.
Read more on page 46

Overview

Strategic report

Governance

Financial statements

Supplementary information

Case study

Supporting diversity andrepresentation in gaming
The video games industry has not traditionally attracted orretained a diverse talent pool and we believe we have a keyrole to play in making it a more attractive career choice forpeople of all backgrounds and characteristics.
Whilst still early in our journey, we are already seeing
notable progress in certain areas of our business aroundgender equality. One of our UK studios, Lively, which started
life as part of Electric Square, already has a workforceof 70 people having been operating for only two years.
Importantly, 37% of those staff are women and over half of
those women have been hired or promoted into senior orleadership roles, including two of Lively’s directors.
In India, in what has traditionally been a workforce ofpredominantly men, we saw the first all-woman cohort go
through our InGame Art Academy during 2022. This was partof a specific initiative targeted at increasing the participationof women in the space. The women completed a threemonth paid internship programme, with the curriculum
designed for women who aspire to excel in 3D Game Art,
providing the support and inspiration for them to leave amark in the industry once they are fully employed at Lakshya.
Members of our team have also been instrumental in setting
up the Women in Games (WIG) chapter in Asia. Keywords
is the proud sponsor of the Women in Games IndividualAmbassador programme, with 30+ Keywordians part of thiscommunity of women making an impact within the industry
globally. This creates a strong foundation for us to continue
to drive the agenda in the coming years, and expand our
support for more underrepresented groups.

Link to strategic pillars

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Keywords Studios plc Annual Report and Accounts 2022

Key performance indicators

We monitor our financial performance against a numberof different benchmarks and these are set in agreementwith the Board.
Revenue growth

Organic Revenue growth

34.8%

21.8%

2022

34.8%

2021
2020

37.1%

21.8%

2021
2020

14.4%

2019

2022
19.0%
11.7%

2019

30.2%

Reasons for choice
Quantifies the growth in revenue from our operations on a reported basis.
How we calculate
Increase year-on-year in reported revenue.
Objectives
The Group aims for continued revenue growth and development.

15.5%

Reasons for choice
Due to the number of acquisitions the Group makes, and because it
integrates them quickly, this provides the most meaningful measure ofunderlying revenue growth.
How we calculate
Organic revenue at constant exchange rates is calculated by adjusting
the prior year revenues, adding pre-acquisition revenues for thecorresponding period of ownership, and applying the prior year foreignexchange rates to both years, when translating studio results into theeuro reporting currency.
Objectives
The Group aims to achieve Organic Revenue growth in excess of 10% perannum over the medium-term.

Adjusted operating
costs as a % of revenue

Gross margin

38.7%

17.4%

2022

38.7%

2022

17.4%

2021

39.1%

2021

17.6%

2020

18.1%

2020
2019

38.0%
36.8%

2019

19.2%

Reasons for choice
The Board believes this to be a consistent measure of trading
performance.

Reasons for choice
The Board monitors overheads to ensure the operating costs of theGroup are in line with the level of business being generated.

How we calculate
Revenues from services supplied to customers less cost of sales,
as a percentage of revenue.

How we calculate
Administration expenses, adding back non-operating costs including
share-based payments expense, costs of acquisition and integration,amortisation of intangible assets, depreciation and impairment, noncontrolling interest and deducting bank charges, expressed as apercentage of revenue.*

Objectives
The Group aims for gross margins in line with historic norms.

Objectives
The Group will continue to seek to control these costs closely and inline with the level of business being generated.

Overview

Strategic report

Governance

Strategic
partnerships

Link to strategic priorities

Financial statements

One
Keywords

Technology

Talent andCapabilities

Adjacent
markets

Adjusted profit
before tax margin

Adjusted EBITDA margin

21.3%

16.2%

2022

21.3%

2022

2021

21.5%

2021

2020
2019

Supplementary information

19.9%

16.2%
16.8%

2020

14.7%

2019

17.6%

12.5%

Reasons for choice
Provides an indication of how we are performing both internally andrelative to our peers.

Reasons for choice
The Board believes this to be a consistent measure of trading
performance, aligned with the interests of our shareholders.

How we calculateComprises EBITDA (operating profit, adjusted for amortisation of
intangible assets, depreciation and impairment, while deducting
bank charges) adjusted for share-based payments expense, costs ofacquisition and integration and non-controlling interest, as a percentageof revenues.*

How we calculateComprises profit before taxation adjusted for share-based payments
expense, costs of acquisition and integration, amortisation andimpairment of intangible assets, non-controlling interest, foreignexchange gains and losses, and unwinding of discounted liabilities.*

Objectives
The Group aims to increase margins through operational efficiencies.

Objectives
The Group aims for margins in line with historic norms.

Adjusted cash conversion rate

Growth in Adjusted EPS

100.1%

27.2%

2022

100.1%

2021

107.3%

2020
2019

97.2%
80.2%

2022

27.2%

2021

46.5%

2020
2019

24.9%
7.2%

Reasons for choice
Measures operating cash generation and our capacity to pay dividends,
service debt and fund acquisitions.

Reasons for choice
Reports the underlying profit growth generated on a per share basis,demonstrating the value being created for shareholders.

How we calculate
Adjusted free cash flow before tax as a percentage of the Adjusted profit
before tax. The calculation is described in more detail on page 170.

How we calculate
The Adjusted profit after tax comprises the Adjusted profit before
tax, less the tax expense as reported on the Consolidated statementof comprehensive income, further adjusted for the tax arising on thebridging items to Adjusted profit before tax.

Objectives
Cash generation and working capital management will remain a
key focus.

The Adjusted earnings per share comprises the Adjusted profit after
tax divided by the non-diluted weighted average number of shares asreported in note 8.
Objectives
The Group aims for continued growth in Adjusted earnings per share.

*	In 2020, in order to present the measure consistently year-on-year, the impact of COVID-19 government subsidies claimed is also excluded.

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Keywords Studios plc Annual Report and Accounts 2022

Service line review

At a glance

Service offerings
Game Development
Includes full and co-development, porting
and remastering, tool development andconsulting services.

Art Services
Creation of video game graphical art,
including concept, 2D and 3D asset
production and animation.

Performance indicators
Service line revenue€275.5m+46.4%

Organic Revenue growth

25.9%

Average operational staff

3,417+26.3%

Overview

Strategic report

Governance

Financial statements

Supplementary information

The Create service line combines Art Services andGame Development to deliver a range of services toclients and partners globally. It represents around3,500 people in 23 studios across 42 cities.

2022 Performance
Create performed strongly during the year,with total revenues up by 46.4% to €275.5m(2021: €188.2m). Organic Revenue, which
excludes the impact of acquisitions, grewby 25.9%, as the service line continued tobenefit from the strong industry demand
for new content creation and the increasing
complexity of games.
The performance was driven by strong
growth in a number of Create studios,
with increased headcount enabling our
game development studios to take on
more work and meet demand, with the
UK and Australia seeing strong growth inparticular. In Art Services, we continued
to experience very strong performance inQuebec and in our Indian business. We havealso begun to benefit from the increased
collaboration between Art Services andGame Development, with studios increasingly
utilising each other's services to support theneeds of clients.
Due to the industry-wide shortage of talent
within the game development and art
sectors, we have established a dedicatedtalent acquisition team to complement
local efforts and have started a numberof local talent development initiatives.
These combined efforts, together with our
extensive geographic footprint allowing us tohire from around the world, has meant that
we have been able to meaningfully grow ourCreate team during the period, and bettersupport our clients.
Despite Game Development being themost directly affected by the situation in
Ukraine, the scale and broad footprint of
the business has meant that the service line
continued to perform well during the period.
During the year, we started to relocate
people and work from our single Russiabased business, Sperasoft, to alternative
locations in Europe. Sperasoft purely works
for international gaming businesses, rather
than serving domestic Russian clients.

Revenue €m

The majority of this transition took placein the second half of the year, and in total
we have moved over 400 people to new
locations as of the year end. The situation in
Ukraine meant that our initial growth plans
for Sperasoft, that had been resourced,
could not be fulfilled, and the focus for theyear was on completing existing projects
and undertaking the transition. This had ameaningful impact on profitability of thebusiness. Due to the successful transition,and pace of new hires in the new locations,
we are now able to start to take on new
projects as well as continuing to support
our existing clients. In H1 2023, we willcontinue to look to transition further staff
out of Russia, before closing our operations.
As a result, we will continue to incur costs
from the transition into the year, as well
as a modest one-off charge relating to
the closure.
Revenues derived from Russia represented
3.8% of Group revenues (€26.3m), downfrom 5.7% in 2021 and in December 2022,
represented just 1.7% of Group revenues.
Adjusted EBITDA in Create grew 40.2% to€69.7m in 2022 (2021: €49.7m), with the
Adjusted EBITDA margin of 25.3% in 2022
lower than the previous period (2021: 26.4%)
due to the impact of the transition of people
and work from Russia in the second halfof the year. This was largely offset by thebenefit of foreign exchange movements.
We welcomed three new Game Development
studios this year, Forgotten Empires, thesmall game development team at Mighty
Games and Smoking Gun Interactive. Eachof the acquisitions bring different skills
and capabilities to our business. Forgotten
Empires brings extensive experience inreal-time strategy games. Smoking Gun
has a long track record in developing
highly rated, cross platform games andgives access to talent in Vancouver, a gamedevelopment hub. The Mighty Games teamalso support the scaling of our broader
Australian business.

2022

2021

Change

275.5

188.2

46.4%

69.7

49.7

40.2%

25.3%

26.4%

Organic Revenue growth %Adjusted EBITDA €m
Adjusted EBITDA margin %25.9%

The market opportunityand outlook
The video games market remains robust,with strong player engagement on major
platforms and titles. Whilst there is potential
for large publishers to have a narrower
focus on major titles, we continue to believe
there will be a focus on the generation of
new content to ensure that players remain
engaged for longer.
We expect continued robust demand across
our Create service line, as the industry
remains capacity constrained in terms ofaccess to highly-skilled talent as games
continue to increase in complexity. This has
meant that clients are increasingly seeking
external support to deliver the required,engaging content for their projects. While weare starting to see a more cautious approach
to investment in new games at the beginningof the year, the Create service line remains
resilient, due to the quality of our studios andtalent, its strong client relationships globally,
and the mix of franchises we work on.

Percentage ofGroup Revenue

Percentage of Group
Adjusted EBITDA

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Keywords Studios plc Annual Report and Accounts 2022

Service line review continued

At a glance

Service offerings
Audio Services
Multi-language voiceover recording,original language voice production, music
management and sound effects.

Functional Testing
Quality assurance, testing for defects,
compliance with hardware/platform
specifications, as well as test automation
tools and services.

Localization
Translation of in-game text, audio scripts,
cultural and local adaptation, accreditation,
packaging and marketing materials in 50+
languages.

Localization Testing
Testing for out of context translations,
truncations, overlaps, spelling, grammar,
geopolitical and cultural sensitivities andcompliance requirements.

Performance indicators
Service line revenue€300.9m+29.8%

Organic Revenue growth

23.4%

Average operational staff

4,562
+6.9%

Overview

Strategic report

Governance

Financial statements

Supplementary information

Globalize brings together our Audio,
Testing and Localization businesses tocreate a global business with around
5,000 people in 32 studios across
27 cities.

2022 Performance
Globalize performed well in 2022 with total
revenues up by 29.8% to €300.9m (2021:€231.9m). Organic Revenue, which excludes
the impact of acquisitions, grew by 23.4%.
Each of the lines of business within Globalize
performed well during the year, and ourincreased scale and footprint meant we were
well positioned to capitalise on the industry’s
healthy demand for post-production
services, despite it being a slower period
for new launches.
In Functional Testing we saw strong growth,
as our Polish operations relocated to a newstate-of-the-art facility enabling increased
recruitment, and Montreal performed well.
We also benefited from several large testing
contracts in the second half of the yearthat we were able to fulfil due to our scale
and footprint. Our broad footprint acrossdifferent time zones allows clients access toa global workflow, and access to different
cost to serve models. This enables us tocontinue to mitigate the impact of increasing
costs, with considered pricing adjustments.
Our footprint also provides the opportunity
to grow our talent base and maintain highquality output for our clients.
Mighty Games was added to the portfolio tobe able to offer automated games testing
solutions and expertise to our clients. Thisacquisition illustrates our commitment toutilise technology to provide more valueadded services to our client base and stayat the forefront of our industry.

Revenue €m

In Localization, performance was also strong
as we benefited from the deployment of a
specific AI-driven text localization workflow
in H1 for a key client. Audio localization
saw a good second half of the year, which
offset weaker H1 performance from delays
to certain projects. Our Audio media andentertainment business continued to growrapidly as we expanded our capabilities
and relationships with several large
industry players, including Netflix.
Adjusted EBITDA in Globalize grew 30.0%
to €61.6m in 2022 (2021: €47.4m), with the
Adjusted EBITDA margin maintained at 20.5%
in 2022 compared to 20.4% in 2021.

The market opportunity andoutlookDuring the year we saw the trend towards
external service provision continue acrosseach of our Globalize lines of business. We
believe that even in a more constrained
market environment this trend will continue
over the medium-term, as the opportunity tomove from fixed to variable costs for certain
functions will become more attractive forclients. Due to the scale of the service line
we are now able to meet the needs of ourlargest clients, across the globe, and in a
rapid manner, which should further enable
us to capture increasing demand across theservice line.

2022

2021

Change

300.9

231.9

29.8%

61.6

47.4

30.0%

20.5%

20.4%

Organic Revenue growth %Adjusted EBITDA €m
Adjusted EBITDA margin %Percentage ofGroup Revenue

23.4%

Percentage of Group
Adjusted EBITDA

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Keywords Studios plc Annual Report and Accounts 2022

Service line review continued

At a glance

Service offerings
Marketing Services
Creation of game trailers, marketingart and materials, PR and full brandcampaign strategies.

Player Support
Holistic multilingual support deliveredin game, on digital community andsocial platforms and through ourproprietary tech platform, Helpshift.

Performance indicators
Service line revenue€114.3m+24.1%

Organic Revenue growth

9.7%

Average operational staff

2,292+21.2%

Overview

Strategic report

Governance

Financial statements

Supplementary information

Our Engage service line brings together
our Marketing Services and Player
Support businesses to create a holisticoffering focused on player engagement,
encompassing around 2,500 people in
29 studios across 23 cities.

2022 Performance
Engage saw robust growth during the year,with revenues up by 24.1% to €114.3m (2021:€92.1m). Organic Revenue, which excludes
the impact of acquisitions, grew by 9.7%.
Player Support performed strongly acrossthe year, with the addition of a number of
new clients and healthy growth across our
top clients. Social Media and Trust and Safety
Services also continue to grow and aredeveloping into a key part of our offering. In
December, we were delighted to announce
the acquisition of Helpshift, which willtransform our player support business intoa unique market-leading holistic offering
for our clients. Helpshift brings a marketleading customer support automation tool
to resolve customer issues in real-time within
its clients’ mobile apps, which together with
our existing player support capabilities, andKantanAI machine translation capability, will
create an unrivalled player support offering
for customers.
Our Marketing studios delivered a moremodest performance, in part due tothe exceptional performance in 2021,
during which the business experienced
significant growth of over 150% and organic
growth of ~34%. In addition, the 2022
performance was impacted by some clientspecific project delays and cancellations,particularly in our North American studios.
In December, we were pleased to extend
the geographic spread of our PR offering,with the acquisition of LabCom in Italy,
complementing our UK-based PR agency,
Indigo Pearl and the January 2023 acquisitionof 47 Communications in the US opens
up opportunities in the world’s largest
gaming market. Increasingly, our marketingstudios are collaborating to provide broader
solutions to clients as well as working withplayer support to provide a holistic offering.

Revenue €mAdjusted EBITDA grew 20.0% to €15.6m in
2022 (2021: €13.0m), with the 2022 Adjusted
EBITDA margin of 13.6% slightly behind theprevious year period (2021: 14.1%).

The market opportunityand outlook
Our ambition for Engage is to create the next
generation of connected companies thatencompass the marketing, communications,and player-centred aspects of the games
industry. This will enable us to offer a holistic
solution focused on driving and maintaining
player engagement with our clients’ games.
We will continue to broaden our marketing
offerings, both geographically and to ensurethat we have all of the capabilities our global
clients need.
In Player Support, the nature of the businessmeans that clients need to focus on keeping
players engaged and supported within
their games. The Helpshift acquisition,whilst early in its integration, provides an
exciting opportunity to scale our business,by providing a market-leading solution forclients, although it will take the majority of2023 before we believe we will be able todemonstrate meaningful traction with clients
due to the longer sales cycle in this segment.
As highlighted previously, the successful
integration of KantanAI, our MachineTranslation solution, into Player Support,
provides further opportunities for thebusiness to provide cost effective and highquality solutions to meet industry needs.

2022

2021

Change

114.3

92.1

24.1%

15.6

13.0

20.0%

13.6%

14.1%

Organic Revenue growth %Adjusted EBITDA €m
Adjusted EBITDA margin %Percentage ofGroup Revenue

9.7%

Percentage of Group
Adjusted EBITDA

39

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Keywords Studios plc Annual Report and Accounts 2022

Responsible business review

We conduct our business responsibly,
operating to the highest standards ofhonesty, integrity and ethical conduct. We
take our wider corporate responsibility
seriously and are conscious of the role weplay in our communities and our impact
on the environment. We are very proud of
the thousands of Keywordians, across 26
countries, for upholding the highest standards
as we engage and grow with our colleagues,
our customers and our communities.

Highlights
During 2022, we made good
progress on our priority areas,
with highlights including:• Renewed partnership with
Women in Games Ambassador
programme and formalised
our DEIB journey.
• Increased net promoter score
to 37 across our client base.
• More than doubled charitable
and community activities to
38 initiatives across our studios.
• Reduced carbon intensity by
16% and progressed SustainableStudios initiative.

Overview

Strategic report

PeopleGovernance

Financial statements

Page 42

PlanetSupplementary information

Page 48

Our largest andmost valuable asset

Minimising our impact

Priorities

Priorities• Employee engagement• Health and safety• Minimising environmental footprint• Diversity, equity, inclusion
and belonging• Training and development• Sustainable Studios programme• Renewable energy sourcing

Key highlight

Key highlight

employee Net Promoter Score (eNPS)

reduction in GHG intensity in 2022

30
Community

Page 52

16%
ClientPage 54

Making a positive impact
through Keywords CaresAt the heart ofeverything we doPriorities

Priorities• Supporting good causes• Pursuing strategic partnerships• Celebrating across cultures• Delivering client-led solutions• Employee support fund• Cybersecurity

Key highlight

Key highlightraised for good causes

Net Promoter Score (NPS)€45.6k37

Governance

Setting the highest standards ofpositive behaviour, honesty andintegrity underpins everything we doPage 55

Priorities• Corporate governance and compliance• Modern slavery• Tax compliance• Human rights

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Keywords Studios plc Annual Report and Accounts 2022

Responsible business review continued

01

Our people
People are our largest and most valuableasset. We value them; we trust them andwe work with them to support their passion
to provide the best service for each projectand customer. As a multicultural business,
we thrive on diversity, celebrate uniquenessand collaborate as a team across our
70+ studios around the world. We aim toprovide a respectful and inclusive working
environment free from discrimination
and with fair and equal opportunities.
The key areas of focus are: employee
engagement, health and safety, training
and development, and diversity, equity,
inclusion and belonging.

Our people
An average of 11,141 full-time equivalent employees made up ourglobal team in 2022, balanced across three regions; 38% in Northand South America, 30% in Europe and 32% in Asia and Australia.
The number of people and the diversity of skills in our workforce
allows us to deploy these resources across the industry to meet ourcustomers’ needs.
We have continued to grow the size of the business, both organicallyand through acquisition, with our average overall workforce growing
by 17% during the year, and we ended the year with 11,969 people. It
is important to manage this growth accordingly and we have invested
in growing our human resources capacity, systems and capabilities
as part of this. We have also meaningfully grown our employee
engagement initiatives as set out below to make sure that our people
remain informed, included and energised at Keywords, as well as
taking steps to more deeply embed diversity, equity, inclusion andbelonging (DEIB) across our business.
This year we have refreshed our operating principles to be more inline with our strategic priorities, help our employees understand whatis expected of them, and to reinforce our common culture acrossthe Group. We believe this will support our hard-won reputation fordelivering high-quality service, to demanding deadlines in an ever
evolving industry.

UN SDGs
Good healthand well-being:

Genderequality:

Ensure healthy lives and promote
well-being for all at all ages

Achieve gender equality andempower all women and girls

Decent work and economic growth:

Reducedinequalities:

Promote sustained, inclusive and sustainableeconomic growth, full and productive
employment and decent work for all

Reduce inequality within
and among countries

Overview

Strategic report79%
Employee engagement
survey response rate
(2021: 69%)

Governance

Financial statements

30
eNPS(2021: 42)

Our culture
The success of our business is testament to the Keywords culture,and the skills and commitment of our talented and games-passionate
employees and collaborators, and as the business scales wecontinue to curate that culture and ensure it resonates across all
aspects of our multi-faceted business. Through our One Keywords
initiative we are looking to galvanise the Group's humble cultureof entrepreneurialism by facilitating more collaboration throughthe simplification of structures. We have already seen tangible
benefits of these changes, which help us to serve our clients more
effectively and ensure our employees get the most out of being partof the Group.

Supplementary information

180+
people in the Key
Communicator
Network

As part of this we have also refreshed our operating principles,
replacing the old Rule of Nine, with a simpler set of five Leadership
Principles. These are designed as a practical tool that we can apply
to everyday working life, whilst supporting the individual cultures thatexist within each of our studios and service lines.
Our people, with their drive and talent, make Keywords the global
service provider that it is today, and it is essential for us that we
continue to foster a diverse organisation and an inclusive culture,
which includes welcoming new faces and ensuring they feel just as
supported and welcomed as their more established colleagues.

Leadership Principles
Our Leadership Principles act as a practical tool we can apply in our everyday working life, guiding our actions and creating
the conditions for us to collaborate, to Imagine More for our partners, ourselves, the games industry and beyond.

Power of partnership

One Keywords

Raise the game

We collaborate with our clients as anextension of their team. With sharedpassion and purpose, we proactively
support them in bringing their stories
to life.

We believe in a network with efficiency
at its core. Combining the strength of a
global platform with the agility of local
studios creates our superpower.

We embrace technology, innovationand our entrepreneurial spirit to help
our clients and the industry thrive.
Leveraging the sum of our experience
brings new value to gaming and beyond.

Embrace an open world

Trust through transparency

We champion diversity of talentand ideas from every corner of ourglobal community. Inclusivity makes
us stronger and enables us to deliverworld-class entertainment creation to
our partners.

We pursue open and honest
relationships with our people, clients,
and communities. Clear and authentic
communication is foundational as wecreate success together.

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Keywords Studios plc Annual Report and Accounts 2022

Responsible business review continued

Health and safety
We care about the health and well-being of our people andendeavour to provide a safe and healthy work environment for all.
Our global and local leadership teams are responsible for healthand safety in the workplace and all Keywords’ people are involved inhelping create a positive safety culture to minimise accidents. We do
not believe that any task is so urgent as to merit compromising thesafety of our people or any visitors to one of our studios.
As part of our efforts to support our employees we have taken ameasured approach to returning to the office post the COVID-19
lockdowns and have continued to support our employees based
in regions of the world which have experienced major mobility
restrictions during the year. Where practical, our studios operate ahybrid work environment, with some studios likely to remain primarily
as virtual offices due to employee feedback. We believe our flexible,
studio-led approach provides the best balance of ensuring both
employees’ and clients’ needs are met.

Global Trust and Safety

Keeping players andmoderators safe
Keeping players safe and healthy online is an increasingly important
facet of the gaming world, and it is more important than ever forgame developers to curate positive experiences for their players.
At the same time, it is vital to look after those teams who areresponsible for moderating those online interactions.
Keywords has set up a dedicated global Trust and Safety team tohelp ensure our moderation teams have all the necessary tools tokeep our clients’ players safe online, and, in some cases, real life.
This is important because online interactions and their moderation
are constantly happening, some of them are entirely positive but
many others are not.

We seek to offer progressive and proactive support when it comesto mental health and wellbeing to prevent ill-health and to foster aworking environment that facilitates our people to feel and perform
at their best. We encourage our employees to take reasonable careof their own and other people’s welfare and to report any situationthat may pose a threat to the wellbeing of any other person to theirappropriate manager.

Gamers play video games to find a space to hang out withfriends and have a fun, engaging experience. With transparent
and clear guidelines from our clients, Keywords can act uponcases that prevent players from having the best experience,
expanding their community, improving gaming safety and creating
valuable experiences for players as well as protecting our clients'
reputations.

We have been conscious that the return to offices may have an
impact on employees’ mental health, both positively or negatively,
depending on the circumstances. As such we have increased our
engagement around mental health and wellbeing. We have employee
assistance programme coverage in many studios, to make sureemployees have the best care we can give, and are looking to build a
Wellbeing Champions Network in 2023 to create the foundation for
future wellness initiatives.

We deliver customised and specific training to our moderators (orSuperheroes as they are known internally), across all of our studios
to make sure that processes, actions and well-being practices are
adopted and ensure that the everyday mental health of our teams
is supported.

Employee engagement
We undertook our fifth annual survey, and heard from the highest
percentage of employees to date with 9,223 of our colleagues
responding, representing a 79% response rate (2021: 69%). We
believe our improved and increased communications has driven
the higher engagement. Compensation in a high inflationary
environment, permanent or hybrid work from home solutions andfuture career plans are all key topics for employees.
In respect of eNPS, our score fell from 42 to 30, although this is still
considered to be at the top end of “Good” and is still well ahead of
pre-pandemic levels. Generally, organisations saw an uptick in eNPS
during the pandemic as employees were responsive to the way that
employers reacted to protect them. In 2022, we saw the reverse, as
people returned to the office post-COVID-19, and felt inflationarypressures, which has lowered the score. One of the key findings isthat there has been a higher degree of passives (score 7-8) thanin previous years, and we will focus on turning these passives into
promoters with our actions in 2023.

We also continue to explore the use of technology to protect
players and Superheroes, but where our people come acrossunlawful and toxic content, we have put in place a process for themto easily access psychological help and to uplift our Superheroes
with kindness, empathy, and compassion.
Our ambition is to establish Keywords as a Trust and Safety industry
leader, with a full-cycle wellness programme for Superheroes anda partnership network with moderation tech companies in order tobenefit our Superheroes, players and our clients.

Overview

Strategic report

Governance

Whilst eNPS is a clear quantitative measure, we received a range of
qualitative feedback through the survey and as we communicate andsurvey more efficiently, we will be able to better understand areas offocus in need of immediate attention and improvement. We plan touse shorter and more efficient pulse surveys throughout the year to
make sure the data on eNPS and other important questions is freshand relevant.
Over the past year, enhancing our global employee engagement
has become a key area of focus for our Chief People and Culture
Officer. In order to help with this, our Key Communicator network
was established last year and now consists of 180+ managers,
leaders and other key roles across the organisation. This network
enables transparent and open communication, and was createdin order to share pertinent news in advance of a global internalannouncement to all employees. Our goal is to empower our Key
Communicators and to share knowledge and spark information
flow among our teams.

Financial statements

Supplementary information

Integrating acquisitions into Keywords
We have completed over 60 acquisitions as a public company,
buying five companies in 2022 alone, across three continents. Whilst
we use a range of strict criteria to ensure we only buy high-quality,
responsibly operating companies, the critical factor in proceedingwith a transaction is the cultural fit. We want the businesses we buy
to thrive post acquisition, and they will only do that by having people
who feel that they belong within the Group. We respect the history
and individual culture that each new studio brings to Keywords whilst
making sure they feel a part of our long-term success. The benefits ofthis approach are evident by the fact that a significant proportion of
our broader executive team joined us through acquired companies.

Great Place to Work

We have also started to undertake global town halls, led by senior
management. More than 4,500 of our employees joined each of ourthree global town halls last year that were held twice in different timezones to accommodate people from all over the globe. In addition tothese communication channels, we started using Yammer in January2022 as an internal communication tool. Since then, we have grown
to over 10,000 active members, with 3,500 employees also visiting
our Communications Hub every month.

We continue to work hard to make Keywords a great place to work,with our initiatives increasingly recognised. As an example of this, weare delighted that both our D3T Studio in Runcorn and Indigo Pearlin London were included in GamesIndustry.biz’s 2022 Best Places toWork Awards. Keywords Studios in Mexico has been awarded theSocially Responsible Company (SRC) badge and Keywords Studios
Manila has recently been recertified as a Great Place to Work in
the Philippines with 91% of employees saying it is a great place towork. D3T was also awarded the title as Best Creative Provider at
the Develop Star Awards in Brighton, with Keywords Studios being
awarded Best QA and Localization Provider.

Training and development

Staying connected

Across Keywords, we provide training and development programmes
to support the development of our talented employees. The majorityof this training, whether management or technical, is embedded
within our studios and service lines so that it is appropriate to thefunction and the professional disciplines involved therein. We havealso undertaken Group-wide training on DEIB as we seek to makesure that our language and behaviours build inclusion.
However, there is always more that can be done to invest in our people
and to support the development of careers, which is why we haveinvested in broadening our Art Academies in India to include Game
Development, as well as running bootcamps in a range of locations to
support people in transitioning their skills into a different area of theindustry. Within our testing business we run a level up programme,
enabling functional testers who wish to make a career out of testing,the opportunity to take on responsibility and ultimately progressin the organisation. We continue to partner with local institutes
and professional bodies with online and in-person management
development and skills programmes throughout Keywords.

In 2020, Keywords started a partnership with our art studios tocreate a series of gratitude e-cards, allowing our people to send
personalised thank you e-cards to other employees for their help
and continued support. With a focus on inclusivity, we expanded theprogramme to include seven language options, offering a new set ofcard designs and messaging each quarter, from celebrated holidays
and fun, to care and wellbeing. Over 20,000 gratitude e-cards
were sent to employees, from each other, throughout the year,
a significant increase from the 4,500 cards sent in 2021.

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Diversity, Equity, Inclusion and Belonging (DEIB)
Keywords is a team of ~12,000 employees spread over 70+ studios
serving a global gaming community. Diversity is a key feature of
our identity, and we are committed to building a more diverse andinclusive Group, with equitable practices and processes, where ourpeople can feel proud to belong. We set up our first Global Diversity
and Inclusion Council in 2020 and since then we have been on a
purposeful diversity, equity, inclusion, and belonging journey. We arein a stage of learning and building, focusing on establishing a strong
base for our DEIB programme for 2022-2025 and catalysing industry
impact through our partnerships.
In 2022 we accelerated this process by hiring the first dedicatedmember of our DEIB Team, and in 2023 this role will be expanded
to lead our global DEIB efforts. Over the year we refined our DEIB
operational model, established governance and reporting processes
and set out our roadmap of activities to 2025.
Keywords has slightly increased the proportion of women across theGroup, up from 25% in 2021 to 26% in 2022. According to current
data a collective 1% of colleagues identify as non-binary or decline todisclose their gender and 73% are men. Our Shared Services teams
have a more balanced split with (44%) women and (55%) men. Within
our service lines, Create has the lowest proportion of women, with
our media and entertainment business, within Globalize, having thehighest, at over 50% women.
Our DEIB talent acquisition and talent development activities aredesigned to address under-representation. Recognising that thevideo games industry has not traditionally attracted or retained
a more diverse talent pool; it is essential to focus on looking foropportunities to highlight Keywords, and the gaming industry
as a whole, as an attractive career choice for a diverse range oftalent. Following changes to Board composition during the year,
the percentage of women on the Board was 29% at year-end(2021: 30%).

26% 33% 29%% women in the organisation(2021: 25%)

% women in leadershiproles (Exco + Direct Reports)(2021: 33%)

UN SDGs
Genderequality:
Achieve gender equality andempower all women and girls% women on the Board(2021: 30%)

Overview

Strategic report

GovernanceWe reached some important milestones over the year, especially interms of communities. We established our first Keywords Affinity
Group, Women @ Keywords and are now growing this globally.
This is in addition to our Asia Women’s Empowerment Programme,
which is designed to support women and increase their presence inleadership roles within Keywords. The empowerment programme
is now in its second year, with participants consistently reporting
positive career impact.

Financial statements

Supplementary information

Accessibility in video gaming

A global inclusion calendar of events and awareness raising was
implemented spanning the whole of 2022. In March we celebrated
International Women’s Day with local and global events, such as the#Breakthebias Women’s Summit, and kicked off nominations for the
Inspiring Women at Keywords project.
June to August was Pride season at Keywords; with studios
participating in parades, hosting events, fundraising, and sharing
knowledge. A key part of this is supporting our Keywords andgaming industry communities, ensuring Keywordians of all sexual
orientations, gender identities, and gender expressions feel
welcomed and appreciated whilst acknowledging the discriminationand inequalities the LGBTQ+ community continues to face.
2022 was also a time of learning, with training and learning sessions
covering DEIB themes. A Dignity at Work course was launched acrossEurope for colleagues and managers to foster a safer and more
inclusive Keywords. Towards the end of the year a global inclusive
language course and style guide for Keywordians was released tofacilitate inclusive communications across the Group.
Our Global Diversity and Inclusion Council continues to represent
voices from around Keywords, with growing regional chapters. The
Council provides invaluable insights and support in the developmentof the Keywords DEIB programme.

Celebrating Pride

Making games accessible
We are at the forefront of providing Audio Description (AD) or
Described Video (DV) for video games through our Descriptive
Video Works studio in Canada. We provide AD or DV for video
games, TV, feature films, sports, live events and many otherforms of media.
This rich narration provides information about key visualelements so that those who are blind, have low vision, or
experience sensory processing issues, can fully enjoy thecontent. Descriptive Video Works also works closely with a
global advisory council of activists, gamers, filmmakers, writersand voice actors to increase awareness, develop new resources
and services, and make advancements in Audio Description, as
well as working to highlight and address accessibility issues andsystematic barriers for people who are blind or have low vision.
We have partnered with Netflix, Ubisoft and many other industry
leaders on accessibility services across many platforms. In
working with our clients, one thing we regularly hear from thoseutilising Audio Description for the first time is how it completelychanges their entertainment experience.
With over a billion people worldwide with a vision, hearing,motor, or cognitive disability, we want to increase awarenessand our range of services to ensure that everyone, regardlessof ability or disability, can enjoy media, games, and othernew technology.

Waste Creative merchandise
Waste Creative marked Pride Month in June with the launch of abespoke range of merchandise, created by its in-house creatives
and designers. All proceeds from sales went to a UK-based
charity providing support for gender-diverse kids, young people
and their families.

We invest in improving industry diversity, representation, andinclusion through our renewed partnership with Women in Games.
We sponsor their Individual Ambassador Programme that provides asafe space to connect and exchange knowledge and perspectives toactivate change. In fact, we are proud to have 30+ Women in Games
Ambassadors at Keywords and the impact they are having in theindustry. Keywords continues to be a proud UKIE #RaiseTheGame
pledge partner.

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02

PlanetTaskforce on Climate-related Financial
Whilst we are not a large emitter ofDisclosures ("TCFD")
greenhouse gases (GHG), we recognise ourThis section sets out Keywords’ reporting against the TCFD
responsibility to minimise our impact on therequirements. As an Alternative Investment Market (AIM) listed
planet as well as to respond to our stakeholder company, we are not currently required to report against TCFD but
have set out the following disclosures as part of our journey towards
needs. We are taking concrete actions to do
future compliance. The following section endeavours to provide
this and during the year set long-term GHG
the information set out under the four pillars of the disclosures toprovide transparency to our stakeholders relating to our governance,
intensity reduction targets.
strategy, risks and targets for climate-related impacts.

Sustainable Studios
Our Sustainable Studios programme, aimed at supporting our studios
in their efforts to minimise greenhouse gas emissions and reduce
their environmental impact, continued to make good progress in theyear. As part of this we completed our first Group-wide environmental
assessment of all studios, which showed a good level of adherence
to best practices across many studios.
We have started to roll out a number of initiatives focused on
implementing the Group's Environmental Policy guidelines on energy
consumption and waste reduction. Amongst these, the highest
priority has been given to switching to renewable energy sources
wherever possible.
In a number of countries, including Spain, Japan, Germany, Australia,
the UK and Italy, most studios are now on 100% renewable electricity,and other countries are working on implementing the conversion.
Overall 16 of our studios are now on renewable tariffs globally.
We recognise that significantly reducing our carbon emissions willtake time and that the plans will need to evolve and adapt in the
future in response to both challenges as well as new opportunities.
Therefore, during the year, in the path to reaching our goal ofachieving net zero carbon emissions ahead of 2050, we have built
a transition plan with near-term actions to 2025. This is aligned with
our longer-term target of reducing by 50% our carbon emission
intensity ratio ahead of 2030 (tonnes of CO2e per revenue €m).

GovernanceOver the past two years, Keywords has made substantial steps informalising its ESG governance and oversight, including around
potential climate change impacts. In 2020, the Group conducted its
first materiality assessment, identifying the Planet as a key pillar of its
Responsible business approach and subsequently reporting its GHG
emissions for the first time. During 2021, the Responsible BusinessCommittee was formed and subsequently re-named the ESG
Management Co (ESG MgtCo), led by Jon Hauck along with seniorregional and functional executives. This committee is designed to
implement and support Group initiatives across the five Responsible
business pillars. As part of its work, the Committee formulated theGroup’s first Environmental Policy and has supported the roll-outof this throughout the business in 2022, through the SustainableStudios initiative. Going forward, this policy will be used as a basis
for all studios to ensure they work on introducing environmental
initiatives to conserve natural resources and reduce our emissions.
In tandem with the formation of the ESG MgtCo, the Board recognised
the increasing importance of ESG matters and the need to havea clear focus on the Group’s impact on its stakeholders and theenvironment. To support this, Keywords established an ESG Board
Committee in 2021. Further details of the ESG Committee can befound on pages 102 to 103. During 2022, the ESG Committee received
presentations from various Keywords leads across each of the
Responsible business pillars including Planet. These presentations
were designed to provide a “deep dive” into the progress across the
key initiatives and ensure that the ESG Committee had sufficient
opportunity to review and scrutinise progress across the year. In
terms of Planet, Management presented the review that had been
undertaken of the environmental footprint of each of our 70+ studios
across the world, action plans to embed initiatives into local businessplans, and overall carbon reduction strategies and ambitions.

UN SDGs
ClimateAction:Take urgent action to combat
climate change and its impacts

Overview

Strategic report

Governance

Strategy
The video games industry has a relatively low carbon footprintcompared to other “harder to abate” sectors but Keywords is playing
its part in minimising its impact on the environment.
Whilst still only an emerging risk, the Company has taken steps
to address its climate impact by extending the activities of its
Sustainable Studios programme. From our engagement with ourclients and people, climate is an important reputational factor foreach stakeholder group, with investors also focused on the issue.
In particular, a large client has made commitments to reduce theirvalue chain emissions which may directly impact us. We are engaging
with them and taking the appropriate actions. Over time we may seeother clients look to make similar commitments. However, the Group
does not consider climate change to be of significant risk to thedemand for our own products and services. Conversely, we do not
expect it to increase demand either, as we see limited climate-related
growth opportunities in external services to the video games market.
We recognise that investors are increasingly looking at the climate
standards and policies of potential investment opportunities, andthat there are also increasing reporting requirements around climate
which we will need to continue to adhere to. Over time we intend toenhance both our data collection and external reporting accordingly,
and participated in CDP for the first time this year.
During the year we conducted an employee survey in Australia tobetter understand the issues our local employees cared most about.
Climate and the environment was one of the leading issues and assuch our Australian hub of studios has accelerated a range of actions,
including local carbon offsetting, to ensure that we are addressing
the issue appropriately for our staff. As we move forward, we expect
climate to continue to be an important issue for employees.
During the year, as part of our Sustainable Studios programme led
by our Chief Administration Officer, we undertook an assessment of
all our studios to gain a comprehensive view of our emissions andenergy consumption across the business. Following this we havecreated an initial transition plan with both near-term targets and alonger-term intensity target of reducing our Scope 1 and 2 emissions
intensity per euro millions of revenue by 50% ahead of 2030. Please
see the metrics section for more details.
Within our operational carbon footprint, our Scope 2 emissions are
significantly larger than our Scope 1 emissions as the majority of ourstudios rely on purchased energy. As a result, the key opportunity for
us to reduce emissions will be to move to renewable energy tariffs
where possible and to increase our energy efficiency within ourstudios to reduce overall usage. Despite the energy crisis, during theyear we made progress in switching tariffs to renewable providers,with 16 of our studios now on green tariffs. As our footprint grows,
we expect to add or expand facilities in emerging markets such as
India and the Philippines, which have limited opportunities to moveto renewable tariffs and will explore other opportunities to reduce
emissions in these geographies.
For properties under landlord managed services, we are aiming totransition leases over time to more energy efficient buildings, wherelandlords already procure electricity from renewable sources, if
possible. As part of this process, we have established a policy thatoutlines the requirements that all new property locations must meetcertain environmental standards. As an example, we’ve moved ourlargest European studio in Katowice, Poland, to new leased premises
which will host over 1,200 employees in a state of the art modernbuilding which has the highest credentials in terms of land use andecology, technology for energy saving, water saving, and meets therequirements for BREEAM certification at the Outstanding level.

Financial statements

Supplementary information

Keywords continues to offset any remaining emissions where it is
not operationally possible to eliminate them completely. In 2022,
Keywords continued to offset our operational carbon impact throughpurchasing credits in respect of its 2021 emissions, from the Ntakata
REDD+ project in Tanzania, chosen by our employees, which helps tolimit deforestation.
In terms of Scope 3, value chain emissions, we have reported theimpact of our purchased goods and services for the first time andintend to expand the number of categories we report against toother categories that may be material, including business travel andemployee commuting/work from home impacts.
We believe that business travel is likely to be a material contributor to
our overall carbon impact and have taken steps to limit this, aiming totravel only when it is necessary. When we do travel, we fly economy(where flights are shorter than five hours), we do not have company
cars and encourage the use of public transport, where practical, forall our colleagues.
Due to almost all roles within Keywords being able to complete theirwork from home, as evidenced during the pandemic, Keywords
should prove resilient to any climate-related events facing thebusiness, with only a limited number of studios needing more
complex plans to ensure the security of server infrastructure orcomputer hardware.

Risk management
As climate is classed as an emerging risk it is subject to the Group’s
risk management framework and shall continue to be monitored
closely. More details of the risk management framework can befound on page 62.
The Board believes that there is not a significant direct material
risk to Keywords from climate change beyond the general global
impacts that will be felt across society. As a digital-led business wehave flexibility to respond to extreme weather events that render our
properties, our sole source of operations, unusable. Over the past
few years, we have been able to conduct operations in a largely workfrom home environment without interruption and in a number oflocations our employees will remain as remote workers permanently,
with others generally undertaking a hybrid approach. This, together
with our global reach further reduces the risk from physical impacts.
Where we continue to see direct physical risk from climate-related
weather events, is around our server facilities and computer
hardware which are housed in our premises. Keywords locations
known to be at risk, as well as the broader Group locations, are in theprocess of creating a system to record all hardware/software assets
which is anticipated to be live in 2023, and will be used to inform theexisting disaster recovery plans already in place across our locations.
With an increasingly interconnected global economy, there
are potentially indirect climate impacts that could represent a
potential issue for the Group. The semiconductor shortage that
impacted the global economy throughout 2021 and for much of2022 demonstrated the vulnerability of existing supply chains to
unexpected disruptions, both climate related and geo-political. In
turn, this shortage impacted production of the next generation of
gaming consoles dampening the short-term demand for games
published by our customers. These shortages have now eased but
may materialise again in the future.

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Climate-related risks are factored into our risk assessments, which
are reviewed throughout the year. Any new risks are included andmonitored to ensure the plans remain effective and ensure thesafety of both our colleagues and business. Financial risks are taken
into consideration by our existing top-down and bottom-up risk
management processes each year, details of which can be found on
page 62 of our Principal risks and uncertainties.

Case study

Metrics and targets
In line with the Streamlined Energy and Carbon Reporting (SECR)
disclosure, Keywords undertook its third formal review of the Group’s
global energy usage, resulting in the identification, assessment andmeasurement of our energy and greenhouse gas (GHG) emissions.
In keeping with previous years, we have used the GHG Protocol
Corporate Accounting and Reporting standard (revised edition) andemission factors from the UK Government’s GHG Conversion Factors
for Company Reporting 2022 and International Energy Agency (IEA)
conversion factors for non-UK electricity to calculate our disclosures.
As well as absolute emissions figures, the information is presented
as an intensity ratio against Scope 1 and Scope 2 emissions once
market-based deductions have been accounted for, against both
employee numbers and our revenue in €m. These figures were
calculated from data available from regional offices across theGroup. Where direct consumption data was not available, data has
been extrapolated in line with GHG Protocol allowances. Our datacollection processes continue to grow more robust each year, withmore accurate data in 2022 than has previously been available.

Enhancing our office footprint
In 2022, we opened a new state of the art office in Katowice,
Poland, which will host around 1,200 people, nearly 10% of theGroup’s overall workforce. This office is our largest in Europe
and meets the requirements for BREEAM certification at the
Outstanding level, and is designed to ensure high energy
efficiency in order to limit energy and water consumption.

We continue to report on Scope 3 – Category 3: Well-to-Tank
emissions (WTT) related to the combustion of fuels and operationof facilities related to our Scope 1 and Transmission & Distribution
emissions (T&D) in relation to the purchase of electricity related to
Scope 2. In addition, we have started to collect data around our
Scope 3 – Category 1: Purchased goods and services for 2022.

GHG emissions data

Tonnes of CO2e

Reporting year –1 October 2021 to
30 September 2022

Comparison year –1 October 2020 to
30 September 2021

Comparison year –1 October 2019 to
30 September 2020

UK andoffshore

Total
GlobalUK andoffshore

Total
GlobalUK andoffshore

Total
GlobalScope 1 – Combustion of fuels and operation of facilities

8

268

4

201

1

244

Scope 2 – Emissions from purchase of electricity, heat,steam, and cooling purchased for own use

239

4,026

188

3,406

171

3,734

Total Scope 1 and Scope 2 emissions (Location-based)

247

4,294

192

3,607

172

3,978

Scope 2 Market-based emissions reduction

(76)

(267)

(11)

(63)

–

(23)

Total Scope 1 and Scope 2 emissions (Market-based)

171

4,027

181

3,544

172

3,955

Scope 3 – Category 3: Well-to-Tank (WTT) related to Scope 1
and Transmission & Distribution (T&D) related to Scope 2

24

367

17

339

14

316

Total – Scope 1, 2 and Scope 3: Category 3 (Market-based)

195

4,394

198

3,883

186

4,271

Scope 1 – Includes emissions from the combustion of fuels and the operation of our facilities.
Scope 2 – Our Scope 2 emissions are derived from the purchase of electricity. This has been split between Location- and Market-based to account for those operations
switching to green and renewable tariffs. Changes to previous years' reporting are as a result of more accurate data being available and changes in the updated IEA factors.
Scope 3 – Our Scope 3 reporting includes emissions in relation to our operations, Transmission & Distribution, and Well-to-Tank. Changes to previous years' reporting are as aresult of changes in the updated IEA factors as well as the removal of Well-to-Tank figures for electricity following the cessation of the publication of relevant UK Government
conversion factors for other countries.

Overview

Strategic report

Governance

Financial statements

51

Supplementary information

In 2022, our global Scope 1 and 2 emissions (Location-based) were 4,294 tonnes CO2e. UK emissions accounted for 247 tonnes of CO2e,
representing 6% of global emissions.
This year we have also continued to work on the development of our emissions reporting, specifically focusing on Scope 3 – Category 1:
Purchased goods and services. Though this remains a complex area, we have been able to use a spend-based method in line with the US
Supply Chain GHG Emission Factors for US Commodities and Industries. This area of reporting required assumptions and estimations to betaken where financial data did not accurately align with the factors available, and we will continue to work on improving its accuracy in the
coming year.
In 2022, our Global Scope 3 – Category 1: Purchased goods and services emissions are set out below:
Reporting year –1 October 2021 to
30 September 2022

Tonnes of CO2e

Scope 3 – Category 1: Purchased goods and services

6,055

Energy consumption (MWh)Reporting year –1 October 2021 to
30 September 2022

Comparison year –1 October 2020 to
30 September 2021

Comparison year –1 October 2019 to
30 September 2020

UK andoffshore

Total
GlobalUK andoffshore

Total
GlobalUK andoffshore

Total
GlobalScope 1 – Energy consumption from the combustion of fuels
and operation of facilities

43

1,379

21

1,057

2

1,303

Scope 2 – Energy consumption from purchase of electricity,heat, steam, and cooling purchased for own use

1,276

11,606

865

9,812

690

10,289Total Energy consumption

1,319

12,985886

10,869692

11,592

Energy consumption (MWh)Total energy consumption includes all activities for which the Group is responsible, as Scope 1 and 2.
The energy consumption is calculated using electricity purchased (kWh) and fuel volumes converted to kWh using the UK Government GHG Conversion Factors for Company
Reporting, presented in MWh.

In 2022, our global energy consumption was 12,985 MWh, with the UK representing 10% of our global energy consumption.

Intensity ratio (tonnes of CO2e per unit)
Reporting year –1 October 2021 to
30 September 2022

Comparison year –1 October 2020 to
30 September 2021

Comparison year –1 October 2019 to
30 September 2020

Ratio of Scope 1 & 2 emissions to employees

0.38

0.39

0.48

Ratio of Scope 1 & 2 emissions to revenue (€m)

6.26

7.49

10.9

Index of Scope 1 & 2 emissions to revenue (€m) relative tobaseline year

57.49

68.78

100

The intensity metric is now calculated using Market-based emissions with previous periods restated due to more accurate information being available.
The baseline used for the intensity reduction target is 2020. The Group may choose to restate the baseline in future depending on acquisitions and if more accurate
information becomes available.
Revenue and employee numbers adjusted to align to the emissions reporting period from 1 October through to the 30 September of each year.

Following the return to more normal operations post-COVID-19, the progress in our revenue intensity has slowed slightly in 2022. However,
we still reduced our revenue intensity by 16% during the year. As such we remain well on track to achieve the objective of a 50% reduction of
Scope 1 & 2 emissions to revenue (€m) ahead of 2030. Emissions per employee reduced marginally during the year to 0.38 tonnes per person(2021: 0.39).
Developments in our Sustainable Studios initiative have focused on driving our environmental commitment forwards and helped to ensure
we have maintained the levels of emissions efficiency established during the pandemic. These initiatives will continue to develop the Group’s
sustainability by identifying practical changes that we can implement and measure against targets, supporting transformation at the local
studio level and thus helping us deliver our long-term ambition to reach net zero carbon emissions well ahead of the UK Government’s targetof 2050.

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03

Community
At Keywords, we encourage community
involvement and support good causes
throughout our local studios across 26
countries. In order to do more to support
good causes across the communities that
we are a part of, we have set aside an annual
central fund under the Keywords Cares
initiative which can be applied to match funds
raised by our local teams.

Throughout 2022, Keywordians, with the support of Keywords Cares,
raised funds of over €45,000 and supported numerous initiatives,
ranging from local charities, not-for-profit programmes, educational
initiatives, or community outreach programmes.
In 2022, 38 charitable and community activities took placeacross 21 studios, more than double the previous year. Keywords
Cares has also extended its matching programme to allow for amore rapid support process in the event of a natural disaster orhumanitarian crisis.
We have continued to extend the use of our support fund that we
set up during COVID-19 to support those experiencing more acute
financial issues. This remains accessible by all and provided €38,000
in the year to applicants. The majority of the funding in 2022 went tothose affected by the Ukraine crisis and staff who were experiencing
specific family related issues.
We were also pleased to participate in our first global event –Movember – which is dedicated to making a difference in mental
health and suicide prevention – and became our highest groupfundraising event to date. Whether it was rowing in London, runningin Mexico City, walking in Orlando, or growing moustaches aroundthe world, 51 Keywordians participated in Movember fundraising thisyear, with countless others supporting by donation to the cause.

UN SDGs
Good healthand well-being:

Genderequality:

Reducedinequalities:

Ensure healthy lives and promote
well-being for all at all ages

Achieve gender equality andempower all women and girls

Reduce inequality within
and among countries

Overview

Strategic report

GovernanceBroader initiatives
Lakshya India conducted an Eye Camp at Red Rose Public School,
Gijhore, and Bhawani Shankar Inter college in December, andsimultaneously conducted a Women's Health and Hygiene campin Sector 78, Noida. They partnered with the NGO, Smile India
Trust, to create the initiative as part of their CSR commitment tolocal communities.
Our Taipei studio held their first ever CSR activity, partnering with the
National Museum of Marine Science, a member of ICC (International
Costal Cleanup) and Taiwan Ocean Cleanup Alliance, with a beachclean-up day at the Northern Coast of Keelung.
Electric Square chose Special Effect as their charity of the year, whoenable physically disabled people to use technology to improve their
quality of life. Throughout the year, the team held charity quizzes andboard game nights, sold tote bags to raise funds, organised charity
lunches and a silent auction, all to benefit this worthy organisation.
Snowed In holds a community month each year and this year theirfocus was on Operation Come Home! OCH is an organisation that
supports Ottawa’s homeless youth. Donations go towards theirdrop-in programme, educational support, substance use assistance,
housing support, food bank, and more. Over the course of themonth, they accepted donations, they sent volunteers to do work inperson and they not only supported the organisation, but also gained
useful knowledge along the way.
A team of volunteers from Keywords Studios Manila gave their timeand energy to travel to Balagbag Elementary School in Rodriguez,
Rizal to deliver food and supplies for the Forest Guards there. Once
our volunteers had joined the trekking programme to Mt. Balagbag,
they were lucky to witness the beauty of the Sierra Madre mountain
range from the summit before handing over all donations, including
30 sleeping bags, 65 first aid kits and 10 packs of rice.

Lakshya India supporting a women's health camp in India

Financial statements

Supplementary information

53€45,600
Contributed to charity
2022
2021

€45,600€26,500

2020
2019€46,000€29,000

Climax Studios held a Game Jam to support the mental healthcharity, Mind. Participants were challenged to design, craft, andcode a game in 48 hours. All funds raised during this virtual Jam went
towards improving awareness of mental health issues, advice calllines and resources, and supporting community projects.
Avid runners at Keywords Montreal joined in the Terry Fox Run forcancer research, raising funds to support the charity.
Keywords Italy organised a 24-hour Game Marathon in support ofEmergency, who offer free treatment to victims of war, landminesand poverty. The team felt they had the opportunity to do this byusing our greatest passion, video games.
Our teams in India teamed up with ‘A Giggles Welfare Organization’and distributed blankets to under-privileged families in and aroundDelhi and to children at the Don Bosco Ashalayam orphanage. We
hope this can support them through the cold nights that can reacharound zero degrees.

Keywords Manila supporting the Forest Guards

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Keywords Studios plc Annual Report and Accounts 2022

Responsible business review continued

04

ClientOur clients and their projects are at the heart Information technology
Keywords has a dedicated Information Security and Privacyof everything we do at Keywords and we
department which follows a comprehensive global Information
are focused on continually deepening our
Security and Privacy framework with policies, guidelines andprocedures, covering industry best practices that all studios must
engagement and enhancing the experienceadhere to.
of our clients. We always seek to better
This framework incorporates compliance checks to ensure that
understand their needs so that we can fully
studios meet the Keywords standard security requirements.
meet expectations for each and every project. ourSupplementary penetration tests are also executed as required, in
We have a broad client list of around 1,000 gaming companies anddue to the strength and breadth of our offering we are a trusted
partner to almost all of the top global games publishers anddevelopers. These companies rightfully demand the highest levels ofservice and confidentiality from us and we are set up to deliver that.
During 2022, we introduced a number of new roles to be able tobetter service our clients’ needs and ensure they have accessto our broader offering, whilst maintaining our “One Keywords”
collaborative culture. We have also introduced new Leadership
Principles, which are a practical tool we apply in our everyday
working life to Imagine More for our partners.
Our top five customers account for 30.1% (2021: 30.0%) of theGroup's revenues, with 150 customers using three or more services,up from 133 in 2021. In 2022, we launched our strategic partnering
approach as we look to get closer to our key customers and movefrom a tactical approach to a more strategic relationship. A keyelement of this was beginning to undertake Strategic Partner
Reviews which involve the leadership of both Keywords and theclient, and are designed to identify how we can better serve theneeds of each of our key customers. We also undertook thesecond iteration of a more involved feedback survey with all of ourcustomers, gathering a range of feedback. This survey delivered
an increased overall customer NPS of 37 compared to 30 in 2021
(a score of between 30-70 is considered “great” by Retently) andhighlighted that quality was the number one reason for choosing
Keywords over other providers.

addition to external compliance assessments and audits performedby our third-party customers on an ongoing basis. The activities
include managing the Security and Privacy framework, monitoring of
information systems and infrastructure, security and privacy incident
management, client security and raising employee awareness.
We continue to invest in our information security and back-up
infrastructure and report on the Group’s information security to the
Audit Committee at least twice a year.
Several studios hold and maintain, or are in the process of acquiring,
information security and privacy-related certifications, including,but not limited to: Trusted Partner Network (TPN), Supplier Security
and Privacy Assurance (SSPA), Payment Card Industry Data Security
Standard (PCI-DSS), System and Organization Controls 2 (SOC-2),
Netflix Post Partner Program (NP3).
As part of our strategy we look to introduce new technologies thatwill enable Keywords to stay at the forefront of the industry. During
the year we made two key technology acquisitions to enhance ourclient offering. The first, Mighty Games, has an innovative AI testing
solution that enables game developers to have real-time feedbackon the quality of their coding and is complementary to our current
functional testing capabilities. We also acquired Helpshift, thathas developed a market-leading proprietary software-as-a-service
customer support automation tool that resolves customer support
issues in real-time within its clients’ mobile apps. Helpshift, together
with Keywords' existing player support offering, and our KantanAImachine translation capabilities, provides a unique, holistic player
experience solution for our clients.
During 2022, we also continued to build out our internal technology
spine with investments in shared technology platforms, integration of
new financial tools, and the creation of an innovation team to look toharness scalable innovations created within the organisation.

UN SDGs
Decent work andeconomic growth:

Industry, innovationand infrastructure:

Promote sustained, inclusive and sustainableeconomic growth, full and productive
employment and decent work for all

Build resilient infrastructure, promote
inclusive and sustainable industrialisationand foster innovation

Overview

Strategic report

Governance

Financial statements

Supplementary information

05

Governance
Our Code of Business Conduct (the “Code”)
provides the backbone for the way weconduct business, underpinned by our
Leadership Principles and aligned with the
expectations of our key stakeholders.

The Group continues to make all reasonable endeavours to ensure
all employees and suppliers are not subject to any form of forced,
compulsory/bonded labour or human trafficking through our
Supplier Code of Conduct.

Data privacy

Business ethics
The Code sets the highest standards of behaviour when interactingwith internal and external stakeholders.

Corporate governanceWe recognise the value of good corporate governance in every partof the business and, whilst we have adopted the Quoted Companies
Alliance (QCA) Corporate Governance Code, which is appropriate forthe size and maturity of our business, we meet the provisions of the
UK Corporate Governance Code where possible and appropriate.
The Board takes seriously its responsibility to take account of theinterests of key stakeholders in its decision-making. The ways inwhich the Board engages with key stakeholders to understand theirinterests are described on pages 56 and 57.

Whistleblowing
The Group is committed to the highest levels of integrity andaccountability and fosters an environment where employees feel
confident and supported by the Group in speaking up and shining
a light on unethical behaviour. In 2022, we implemented a newwhistleblowing portal which allows colleagues and third parties toraise any concerns about possible financial or other irregularities,
anonymously should they wish to. Further details are provided on
page 84.

Keywords is committed to processing data in accordance with its
responsibilities under applicable data protection legislation, and has
created the Keywords Privacy Framework, based on the General
Data Protection Regulation (GDPR). This framework is constantly
updated to take into account other applicable privacy regulations.
We regard the lawful and correct processing of personal informationby the Group as very important to our successful operations and formaintaining confidence between our clients and ourselves.

M&A
We are a highly acquisitive business and apply strict financial andnon-financial criteria, including reviewing ESG areas such as DEIB,
environmental initiatives and culture of our acquisition targets.
Before acquisition, we complete a thorough due diligence process
and the Board receives a detailed acquisition report to support
decision-making. We operate a comprehensive integration process
post-acquisition, formalised by an agreed integration plan tailored to
the relevant business designed to ensure seamless integration.

Tax governance
The Group takes a balanced approach to the management of its
tax affairs and has a tax policy which is approved by the Board. Our
overall strategy is to meet our tax obligations and ensure that longterm shareholder returns are responsibly optimised by structuring
our business and transactions in a tax efficient manner, while taking
into account reputational factors. Tax risks are regularly reviewed by
the Board and the Audit Committee.

Human rights
At Keywords, we do not tolerate any form of modern slavery or
human trafficking in any part of our business. Our annual Modern
Slavery Statement is published on the Group's website. We operate
to international standards and principles, including the International
Bill of Human Rights, the UN’s Guiding Principles on Business andHuman Rights, the International Labour Organization’s Declaration
on Fundamental Principles and Rights at Work and the Children’s
Rights and Business Principles.

UN SDGs
Decent work andeconomic growth:

Industry, innovationand infrastructure:

Promote sustained, inclusive and sustainableeconomic growth, full and productive
employment and decent work for all

Build resilient infrastructure, promote
inclusive and sustainable industrialisationand foster innovation

55

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Keywords Studios plc Annual Report and Accounts 2022

Section 172(1) statement

We have set out below a summary of our key stakeholder groups, how the Board
engages with them, how they are addressed by our strategic priorities as well as how
we measure the outcomes of our engagements. We also explain how key strategic
decisions made by the Board considered stakeholder interests.
Key stakeholders

Investors

Clients

Individuals and institutions

Top 25 and other publishers and developers

Engagement mechanisms
Q&A at the AGM and capital markets day covering key topics of interest,
including technology and continued focus on growth.

Annual net promoter score survey highlighted areas for improvement.

Important information provided in regulatory and media announcements.

Strategic partnership meetings to build closer relationships anda deeper understanding of needs and opportunities.

Meetings with top shareholders and institutional investors to discuss key
matters of interest, including strategy and capital allocation.

Attendance at industry events to connect with existingand prospective clients.

Annual remuneration consultation on implementation and plans.

Measures
AGM voting outcome

NPS

Read further on page 76

Read further on page 54

Link to strategic priorities

Principal decisions
Acquisition of Helpshift Inc.
In December 2022, Keywords announced theacquisition of Helpshift, a market-leading
proprietary software-as-a-service customer
support automation tool.
The acquisition of Helpshift enables Keywords
to cover the full spectrum of support needs andservice levels, further executing on the Group's
strategy to enhance our technology offering forthe benefit of our strategic partners. The strategy
had been presented to shareholders at the capital
markets day in June 2022, with a very positive
response to our application of KantanAI to ourGlobalize service line offering.
The Board, and Keywords as a whole, is constantly
striving to understand our clients’ needs so that
we can enhance our capability to deliver solutions
tailored to their needs. By combining the highly
complementary capabilities of our experienced
player support agents, KantanAI and Helpshift’s
platform, Keywords created a market-leading
customer support platform to better serve ourclients’ needs.

Appointment of Chair Designate
It was proposed that Helpshift be integrated into
Keywords’ Player Support business and build on along-standing partnership and natural cultural fit.
Working more closely together and developing
the combined offering presented opportunities
for both teams who were excited to get started.
To ensure the seamless integration of Helpshift
into the Group, both teams worked closely
together to develop an intimate understandingof each other’s capabilities, identify synergies,
and define the combined solution for clients. This
meant teams were able to hit the ground runningonce the acquisition completed.
Taking account of the balance of interests ofkey stakeholders, the Board determined that theacquisition of Helpshift presented an opportunity
to promote the long-term success of the Group,
having numerous prospective benefits for clients,
employees and shareholders.

In January 2023, Keywords announced theappointment of Don Robert as a Non-Executive
Director and Chair Designate, to succeed Ross
Graham following the 2023 AGM.
In deciding how to manage the succession of
the Chair role through 2022, the Directors were
mindful of the interests of all stakeholders, but
in particular the CEO, who was new in role, in
ensuring stability during any transition period.
These interests were known from the CFO
and SID’s periodic engagements with major
shareholders and the executive team. As such,the Board requested that Ross remain a Director
beyond the standard nine-year tenure, to allow
for a suitable successor to be secured and anorderly handover to be conducted.
Being mindful of the interests of shareholders
in good corporate governance, the Board
emphasised the need to strongly consider
diversity in the search process and toassess candidates on the strength andbreadth of their experience for the role.

Overview

Strategic report

Governance

Financial statements

Supplementary information

Strategic priorities

Strategic partnerships

Technology

One Keywords

Talent and capabilities

Adjacent markets

Workforce

Communities

Permanent, temporary and freelance

Global gaming community and our studio locations

Board visits to studios worldwide, to discuss strategic and operational
matters with senior managers and learn about projects and teams.

Board visits to studios worldwide to understand gaming culture indifferent countries.

Annual eNPS survey highlighted workers’ concerns about the rising costof living.

Attendance at industry events provided an opportunity to learn about key
industry trends.

The Board spent two days with senior leaders at an Executive Summit,
discussing culture and sharing ideas on strategic opportunities. Global
townhalls were attended by Directors to hear about topics of key interest.

Keywords Cares programme provided funds to charitable causes our
employees care most about.

eNPS

Keywords Cares matching

Read further on page 43

Read further on page 52

Transitioning our Russia-based business
Don presented a strong track record of building
and leading international businesses, including
through acquisitions, and a deep understandingof technology, data and analytics. The Board
regarded his experience to be very well alignedwith the Group’s strategic priorities around
growth and technology, which shareholders had
supported at the capital markets day.
Throughout the recruitment process, Don
stood out due to his experience of growing
global businesses, both organically and throughacquisitions, his deep knowledge of thetechnology landscape and his strong leadership.
His extensive experience will complement andenhance the skills of the existing Board andleadership team and he built a good rapport
with each Director during the interview process.
Don was regarded as an excellent cultural fit for
the Board and executive team, adding expertisein several areas to further strengthen the Board.
The Board were confident that Don was the best
candidate to promote the long-term successof Keywords.

In September, Keywords announced that it wasin the process of transitioning people and workfrom our Russia-based business, Sperasoft, to new
locations outside Russia, including Poland, Serbia,
Armenia and Malta. This was part of an existing
strategy for Sperasoft, revised and accelerated inlight of the situation in Ukraine.
The Board’s priority was to reassure employees
and their families that their interests werebeing considered. Information was gatheredon the morale and interests of employees andfreelancers working in Russia, Ukraine andneighbouring countries, to inform strategies
for operational transition and engagement.
A working group was established to deliver assmooth a transition as possible and ensure agood flow of communication, from the studio tothe boardroom.
It was also important for the Group to implementa smooth transition to ensure continued service
to Sperasoft’s international clients. This required
regular, open communication on the Group's

response to the situation and solution forsupporting ongoing and planned projects.
While we have moved a significant numberof people and work at year-end, this was
predominantly second half weighted, andremains ongoing. To date the transition has beensmooth and mitigated many of the operationaland financial risks, however it has naturally led
to increased costs, which have impacted onGroup margins.
In global townhalls and management meetings,
employees also communicated a desire forgreater flexibility to donate to humanitariancauses in Ukraine. In response, the Board
supported changes to the Keywords Cares
programme, including to the level of matchingfunds available and list of authorised charities.
Ultimately, the ongoing transition was regarded
as necessary to promote the long-term successof the Company, protecting our workforce
and business.

57

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Keywords Studios plc Annual Report and Accounts 2022

Financial and operating overview

We delivered another year of strong
financial performance, driven by healthy
demand for our services and carefulmanagement of our cost base.
Jon Hauck
Chief Financial Officer

our
platf
Investing inOverview

Strategic report

Governance

Financial statements

59

Supplementary information

Revenue

EBITDA

Revenue for 2022 increased by 34.8% to€690.7m (2021: €512.2m). This performance
included the impact of acquisitions in
2021 and 2022 and an ~8% benefit fromthe impact of currency movements,
when translating studio results from local
currency into the euro reporting currency,
and particularly the strengthening of the
US dollar.

EBITDA increased 41.1% to €120.9m (2021: €85.7m). Adjusted EBITDA increased 33.4% to€146.9m compared with €110.1m for 2021. The Adjusted EBITDA margin in 2022 of 21.3%
was marginally lower than 2021 (21.5%) reflecting the lower gross margin.

Organic Revenue growth (which adjusts forthe impact of acquisitions) was 21.8%. Thiswas driven by a strong performance acrossall service lines, against the comparative
period in 2021, particularly in our Create andGlobalize Service Lines. Excluding the impactof currency, when converting amounts billed
by studios in US dollars into local currency
organic revenue growth would have been
approximately 3% lower. Further details of
the trading performances of each of theService Lines are provided in the Service
Line Review.

Gross profit and margin
Gross profit in 2022 was €267.3m (2021:€200.1m) representing an increase of 33.6%.
The gross margin of 38.7% was broadly in linewith 2021 (39.1%). While currency movements
mentioned above were also supportive tomargins, the uplift was predominantly offset
by the cost and disruption of building up
our capacity in new locations to migrate
work previously performed within Russia,
to outside of the country.

Operating costs
Adjusted operating costs increased by 33.8%
to €120.4m (2021: €90.0m), reflecting thelarger Group, but at 17.4% of revenue wereslightly lower than 2021 (17.6%). This was
driven by continued good cost control, as
the Group looked to manage the impact ofincreased travel and business development
costs as these activities increased with theeasing of COVID-19 restrictions.

Net finance costs
Net finance costs were €1.4m higher at €3.8m (2021: €2.4m), primarily driven by a €1.0m
increase in the unwinding of discounted liabilities relating to deferred consideration.

Alternative performance measures (APMs)
The Group reports a number of APMs to present the financial performance of the business
which are not GAAP measures as defined by IFRS. The Directors believe these measuresprovide valuable additional information for the users of the financial information tounderstand the underlying trading performance of the business. In particular, adjusted profit
measures are used to provide the users of the financial statements a clear understanding of
the underlying profitability of the business over time. A breakdown of the adjusting factors isprovided in the table below:

Share-based payments expense

2022
€m

2021
€m

18.7

16.4

Costs of acquisition and integration

8.4

8.0

Amortisation of intangible assets

16.8

13.7

Foreign exchange and other items

0.1

–

44.0

38.1

1.14m options were granted under incentive plans in 2022. This, together with grants fromprevious years, has resulted in a non-cash share-based payments expense of €18.7m in 2022
(2021: €16.4m).
One-off costs associated with the acquisition and integration of businesses amounted to€8.4m (2021: €8.0m). Amortisation of intangible assets increased by €3.1m to €16.8m (2021:€13.7m) reflecting the recent levels of acquisition activity.
Foreign exchange and other items amounted to a net loss of €0.1m (2021: €nil). This includes€2.9m for the unwinding of discounted liabilities on deferred consideration (2021: €1.9m)
offset by a net foreign exchange gain of €1.7m (2021: €2.0m) and other income of €1.1m(2021: €nil). Keywords does not hedge foreign currency exposures in relation to net current
assets. While more material movements in foreign exchange can be impactful on revenues
and expenses, the net impact on the Group's results of movements in exchange rates andthe foreign exchange gains and losses incurred during the year mainly relate to the effect oftranslating net current assets held in foreign currencies.

form

A more detailed explanation of the measures used together with a reconciliation to thecorresponding GAAP measures is provided in the APMs section at the end of this report.

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Keywords Studios plc Annual Report and Accounts 2022

Financial and operating overview continued

Profit before taxation
Profit before tax increased by €20.0m(+41.7% year-on-year) to €68.0m (2021:€48.0m). Adjusted profit before tax, which
adjusts for the items described in the
APMs section above increased by €26.0m(+30.2% year-on-year) to €112.0m comparedwith €86.0m in 2021. This reflects a small
reduction in Adjusted profit before tax
margin of 0.6% points to 16.2% ( 2021:
16.8%). This was due to costs and disruption
associated with the relocation of our Russiabased operations to outside of the country,
which impacted margins by ~2% points,
together with the return of travel, businessdevelopment and return to office costs (~1%)
post COVID-19. Largely offsetting these wasa ~2.5% point margin benefit from foreignexchange, particularly the strong US dollar
during the period as we invoice more than
50% of our sales in US dollars.

Cash flow and net debt
2022
€m

2021
€m

Change€m

Adjusted EBITDA

146.9

110.1

36.8

MMTC and VGTR

(3.6)

(4.5)

0.9

Working capital and other items

0.6

11.3

(10.7)

Capex – property, plant and equipment (PPE)(27.0)(19.4)(7.6)

Capex – intangible assets

(0.5)

(0.3)

(0.2)

Payments of principal on lease liabilities(11.4)(10.0)(1.4)

Operating cash flows

105.0

87.2

17.8

(1.5)

(2.7)

1.2

103.5

84.5

19.0

Tax

(17.5)(23.9)

6.4

Free cash flow

86.0

60.6

25.4

M&A – acquisition spend

Net interest paid
Free cash flow before tax(113.3)(63.1)(50.2)

M&A – acquisition and integration costs

(3.1)

(2.4)

(0.7)

Other income and other items

1.6

–

1.6

Taxation

Dividends paid

(2.0)

(0.6)

(1.4)

The tax charge increased by €6.7m to€20.6m (2021: €13.9m) largely reflecting
the increase in the Profit before tax of thebusiness. After adjusting for the items notedin the APMs section above and the tax
impact arising on these items, the Adjusted
effective tax rate for 2022 was 22.0%, slightly
higher than the rate of 21.6% in 2021.

Shares issued for cash

6.8

5.3

1.5

(24.0)(0.2)(23.8)

Underlying increase/(decrease)in net cash/(debt)

0.2

2.9

(2.7)

Increase in net cash/(debt)(23.8)

2.7(26.5)

Opening net cash/(debt)

105.6

102.9

Closing net cash/(debt)

81.8

105.6

FX and other items

Earnings per share
Basic earnings per share increased by 36.3%
to 61.54c (2021: 45.16c) primarily reflecting
the 38.9% increase in the statutory Profit
after tax. Adjusted earnings per share which
adjusts for the items noted in the APMs
section above and the tax impact arisingon these items was 113.50c (2021: 89.24c),
representing an increase of 27.2%, with therise in Adjusted profit before tax of 30.2%
partially offset by a 1.9% increase in the basic
weighted average number of shares.

The Group generated Adjusted EBITDA of€146.9m in 2022, an increase of €36.8m
from €110.1m in 2021. There was a €3.6m
outflow in respect of the amounts due forMulti-Media Tax Credits (MMTCs) and Video
Game Tax Credits (VGTRs), lower than 2021,
as we saw a return to more normal phasingof payments in H2 2022. MMTCs and VGTRs
are subsidies that are recognised as work
is performed but are typically paid in thesecond half of the following year. Other
working capital saw an inflow of €0.6m, a€10.7m change from 2021, mainly due to anincrease in accrued income associated withthe strong performance of the business at
the end of the year offset by a reduction in
debtor days.

Investment in property, plant and equipment
increased by €7.6m to €27.0m (2021:€19.4m) as we continued to invest in growing
the business. Property lease payments
of principal of €11.4m were 14.0% higher
than the prior period (2021: €10.0m) mainly
related to acquisitions in the period.
Operating cash flows of €105.0m wereahead of 2021 (€87.2m), primarily due
to the €36.8m increase in Adjusted
EBITDA, partially offset by the change inworking capital.
There was a €6.4m reduction in cash tax
paid to €17.5m (2021: €23.9m) as payment
schedules return to a more normal
pattern following pandemic related timing
differences in 2021. Net interest payments,
which largely relate to fees on the Revolving
Credit Facility (RCF), were €1.5m comparedto €2.7m in 2021.

Overview

Strategic report

This resulted in Free cash flow of €86.0m,€25.4m ahead of 2021 (€60.6m). Adjusted
free cash flow, which adjusts for capital
expenditure that is supporting growth infuture periods was €112.1m in 2022, ahead of2021 (€92.3m). The Adjusted cash conversion
rate of 100.1% was below 2021 (107.3%), butahead of our guidance for the year of 80%.
Cash spent on acquisitions totalled €116.4m,
of which €25.8m was in respect of the cash
component of prior year acquisitions and€3.1m was in relation to acquisition andintegration costs. This was €50.9m higher
than the spend in 2021 due to the timingof acquisitions.
This resulted in a reduction in net cash of€23.8m in 2022, leading to closing net cashof €81.8m (2021: €105.6m).

Balance sheet and liquidity
The Group funds itself primarily through cash
generation and a syndicated RCF of €150m
that matures in December 2024. The RCF
includes an accordion option to increase thefacility up to €200m and an option to extend
the term by two further one-year periods(both subject to lender consent). During
the year the first one-year extension was
exercised. The majority of Group borrowings
are subject to two financial covenants thatare calculated in accordance with the facility
agreement:• Leverage: Maximum Total Net Borrowings
to Adjusted EBITDA ratio of three times;and• Interest cover: Minimum Adjusted
Operating Profit to Net Finance Costs
ratio of four times.
The Group entered the year with a strong
balance sheet, with net cash (excluding IFRS
16 leases) of €105.6m as at 31 December
2021. Following €116.4m of cash deployedin the period to support the Group’s value
accretive M&A programme, at the end of2022, Keywords had net cash (excluding IFRS
16 leases) of €81.8m and undrawn committed
facilities of €150m. The Group has no
exposure to Silicon Valley Bank.

Governance

Financial statements

Supplementary information

Capital allocation

Guidance for 2023

The Board's progressive dividend policy
seeks to reflect the Group's continued
growth in earnings and strong cash
generation, balanced with the need to retain
the resources to fund growth opportunities,
particularly M&A, in line with our strategy.

We have made a good start to 2023, withtrading in line with our expectations for theyear. As previously guided, we continue to
expect organic growth to moderate from2022 levels but remain above the mediumterm guidance of 10%+.

Following the interim dividend payment of
0.77p per share in September 2022, theBoard has recommended a final dividend of
1.60p per share, which will make the total
dividend for the year ended 31 December
2022 of 2.37p per share, an increase of 10%
over the 2021 full year dividend (2021: 2.15p
per share).

Adjusted profit before tax margin normalised
during 2022 and is expected to remainaround 15% in 2023 as previously guided,
excluding the potential impact of any debt
we take on in the future to fund acquisitions.
Moving forward, and against a backdrop of
higher interest rates globally, we will focus
future guidance on Adjusted operating
profit, which historically has been very similar
to Adjusted PBT, and we expect this to bearound 15% in 2023.

Subject to shareholder approval at the2023 Annual General Meeting, the final
dividend will be paid on 30 June 2023 toall shareholders on the register at 2 June
2023 and the shares will trade ex-dividendon 1 June 2023. The final dividend payment
will represent a total cost of approximately€1.4m of cash resources subject to currency
fluctuations.
The Group has authorised the Link Market
Services Trustees Limited (‘Link’) to operatea Dividend Reinvestment Plan (DRIP) for theGroup's shareholders for the final dividendand going forward, to provide greater
flexibility for shareholders to manage theirdividends. Instructions for shareholders on
how to apply for the DRIP will be included incommunications regarding the final dividend,
and any queries regarding the DRIP should
be directed to Link.
The Group also intends to use its Employee
Benefit Trust to undertake market purchasesof Company shares in H1 2023, amounting
to an aggregate of up to €5m, in order tosatisfy future exercises of LTIPs or stock
options pursuant to the relevant share plan.

During 2022, we benefited from the strengthof the US dollar and are mindful that there
remains potential volatility in the foreignexchange markets beyond our control that
may impact on our performance throughthe year. The transition out of Russia will
also continue during 2023 and will resultin a modest one-off charge relating to theclosure of our operations in the country.
The Adjusted Effective Tax rate is expected
to be in line with the 2022 rate of ~22%. We
are anticipating capex to be slightly ahead of2022 relative to revenue, reflecting continued
expansionary capex and investment in ourplatform to support future growth, with an
overall Adjusted Cash Conversion rate of atleast 80%.

Jon Hauck
Chief Financial Officer

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Keywords Studios plc Annual Report and Accounts 2022

Principal risks and uncertainties

The principal risks to which the Group is exposed are set out below, together with detailsof their potential impact; the likelihood of occurrence (on a scale of 1 to 4, with 4 being themost likely); an indication of whether the trend in the risk exposure is materially increasing,decreasing or broadly unchanged since last year; and the actions taken to mitigate the risk.
We operate a top-down and bottom-up approach to risk management,
where current and emerging risks are identified and assessed as part ofour strategy and budget process, and semi-annually the senior executives
formally review and assess the risks for their business areas, and update
as necessary. The results are reviewed and discussed in detail at the Audit
Committee on an ongoing basis throughout the year. Furthermore, oncea year in January, we have a dedicated deep dive risk session at the Audit
Committee where the Committee analyses current and emerging risks inmore detail and their links to our overall strategy. Read further details on
the activities of the Audit Committee on pages 82 to 85.

Key year-on-year changes in risk profile*
Global political risk and uncertainty

Failure to manage human resources/talent effectively

Client concentration risk

The principal risks associated with the Group’s strategy are divided into:• Those specific to the Keywords Group and its strategy;

Please see the relevant risk discussion for the
explanation of the change in the specific risk
profile during 2022.

• Industry-related risks; and• General business risks for any international company.

*

2022 v 2021 trend changeGroup and strategy risks
Unsuitable acquisition and/or failure of integration process
Description and Impact

Mitigation

Keywords has an active acquisition agenda
which complements its strategic ambitions.
Selecting the right acquisitions, managing
them successfully and embedding the
Keywords culture is a crucial ingredientof success.

The Group has a focused M&A strategy targeting attractive industry segments where it
has built detailed knowledge. The key areas of focus are Game Development, Marketing,Technology, and certain adjacent elements of the Media and Entertainment industry.

ImpactFailure to do so could result in the businessnot achieving the expected financial andoperational benefits and adversely impact
growth, profitability and cash flow.

For each acquisition, the Group has an established process led by a dedicated corporate
development team, which involves the relevant senior management in the acquisition process
to lead the detailed due diligence.
The shared services team support the service lines with the integration process and haveissued an updated integration manual to support both Keywords and the acquired businessin the process.
Management regularly presents the acquisition pipeline to the Board and provide a detailed
acquisition memorandum ahead of formal approvals, which incorporates the integration planfor the business.
The Group also uses earn-out structures linked to future performance as part of its acquisition
consideration, including equity, in order to incentivise good performance as well as promoteretention of key staff.

Link toStrategy

Likelihood

2

Trend

Overview

Strategic report

Governance

Financial statements

Supplementary information

Group and strategy risks continued
Failure to deliver services
Description and Impact

Mitigation

Most of Keywords’ services are of a time-criticalnature.

Delivering on tight deadlines is integral to the Group's modus operandi, and we prioritise
timely delivery and flexible resourcing to meet these deadlines, with Keywords’ approach toproject management applied across the Group. The Group also utilises technology to support
the scheduling of its resources on a studio-by-studio basis.

ImpactDelays or service delivery failures could
potentially impact the development or launchplans for games or result in lost contracts and/or idle capacity.

Link toStrategy

Post-pandemic, the business has adapted its contracts and processes to ensure that it is able
to complete contracts in a hybrid manner to provide more flexibility and support its ability todeliver against contracts.

Likelihood

2

Trend

Cross-contamination risk
Description and Impact

Mitigation

One of the Group’s strategic focus areas is
to create strategic partnerships with key
industry players to enable closer long-term
collaboration and enhance the ability of theGroup to cross-sell services to each of its
key clients. Keywords also intends to sign
“Lighthouse deals” with key clients that will
involve complex service delivery across multiple
service lines.

Adhering to Keywords’ strong standards of delivery and efficient communication acrossservice lines is key to managing this risk.
As the Group forms strategic partnerships with major customers, it is conducting regularreviews with them to ensure Keywords continues to deliver to expectations and identify any
potential emerging issues so that they can be addressed.
Keywords has also introduced new roles within the organisation that are designed to develop
the appropriate solutions for clients at the outset of a project, as well as new roles that
support the service delivery to key clients.

Impact
The risk of failure in one service line
contaminating the relationship with thesame customer across the other service
lines increases.

Link toStrategy

Likelihood

2

Trend

Client concentration risk
Description and Impact

Mitigation

The majority of the Group’s revenues comefrom global gaming companies whose revenues
tend to greatly exceed those of Keywords.
These companies have exacting standards anddemand a high quality of service.

With a renewed focus on Strategic Partnerships with top clients to create and capture morevalue together, Keywords’ client concentration may increase over the medium-term. In
addition, industry consolidation between two clients may lead to an increase in concentration.

Keywords’ top five customers in 2022
accounted for 30% (2021: 30%) of theGroup’s revenues.

ImpactAny failure or breakdown in the relationships
with key strategic partners could cause
considerable damage to the business.

Link toStrategy

The potential impact is partially mitigated through the Group’s highly flexible resource base.
The Group continues to expand its footprint and is seeking to make relationships with key
clients more strategic. Despite their size, clients tend to be comprised of several individual
entities which have certain levels of autonomy over purchasing decisions. Keywords is also
focused on developing both bottom up and top down relationships.
The Group’s exposure to a single customer remains limited at 7.4%, slightly higher than 2021
(6.5%) due to M&A activity.

Likelihood

2

Trend

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Keywords Studios plc Annual Report and Accounts 2022

Principal risks and uncertainties continued

Group and strategy risks continued
Failure to meet market expectations
Description and Impact

Mitigation

Keywords floated on AIM in 2013 with an
expressed set of objectives of growing thebusiness organically and by acquisition.

The Group makes every effort to communicate regularly with investors via announcements,
face-to-face contact and virtual meetings. This effective communication of the continued
opportunities for growth in the sector, how the Group continues to execute on its statedstrategy and successfully integrate the businesses it acquires, should continue to maintainthe confidence of its investors.

ImpactShould the Group lose the confidence
of investors, this will affect its ability toraise money for or place shares to pay
for acquisitions.

Link toStrategy

The Group maintains a conservative balance sheet and through its Revolving Credit Facility,
negotiated during 2021 and extended in 2022, has access to substantial debt funding which
gives it the flexibility and headroom to invest in the business. More details can be found in the
Financial and operating overview on pages 58 to 61.

Likelihood

2

Trend

Inadequate financial and operational controls
Description and Impact

Mitigation

Keywords has grown rapidly and it is importantthat global financial controls are in place toensure smooth, timely and accurate reportingof financial results to satisfy external reporting
obligations as well as the Board.

The Group has invested in and continues to invest in its financial reporting function andsystems to facilitate strong reporting and management control as it grows, with a newconsolidation and forecasting tool implemented in 2022.

ImpactFailure to accurately report or forecast financial
results through error or fraud would damage
the Group’s reputation.

Link toStrategy

During 2022, Keywords reformulated and extended the Executive Committee to broaden
its leadership capabilities. As part of this the Group has made a number of senior hires andinternal appointments. To simplify operations and enhance oversight, the Group decided to
streamline its structure from eight to three services lines – Create, Globalize and Engage.

Likelihood

2

Trend

Overview

Strategic report

Governance

Financial statements

Supplementary information

Group and strategy risks continued
Failure to manage human resources/talent effectively
Description and Impact

Mitigation

Keywords employed an average of 11,141 people
in 26 countries across the Group in 2022, andpeople management is key to performance andservice delivery.

Establishing Keywords as a leading destination for talent is one of the Group's key strategic
focus areas and is detailed in the Our strategy section on page 24.

ImpactFailure to attract, retain or develop highquality entrepreneurial talent across thebusiness could impact on the attainment ofstrategic objectives. The Group is focusedon these areas with the implementation of
globally managed service lines, management
development and remuneration programmes,
incorporating long and short-term incentives.
But with an ever-increasing workforce thisbecomes more demanding.

Keywords’ culture has been fundamental to the Group's success as it binds teams together,whilst preserving the individual cultures of the studios. To facilitate this in the growing Group,Management recently introduced new Leadership Principles as a practical tool to support a
collaborative culture. The Group has also introduced a new Culture leadership team, which
includes talent acquisition and development, responsible business initiatives as well as
enhancing employee engagement.
The Group works to develop and incentivise its people and to support their passion to provide
the best service for clients, with regular staff surveys undertaken. In addition, special emphasis
is placed on the prevention of any form of discrimination, harassment, or malpractice in theworkplace, recognising that any sense of dissatisfaction can be very disruptive.
In order to provide consistent long-term access to talent, the Group is building local
talent development, specifically in India, in segments where talent is scarce, such as
game development, and is extending its bootcamp initiative to attract talent fromadjacent industries.
The Group’s Diversity, Equity, Inclusion and Belonging agenda for 2023-2025 includes targeted
initiatives for talent acquisition and development to increase women's participation in its
workforce and at senior levels in the business. More details of the employee survey and DEIB
agenda can be found in the Responsible business review on pages 44 to 46.

Link toStrategy

Likelihood

Trend

2

Non-compliance with legal and ethical standards
Description and Impact

Mitigation

New standards and disclosure requirements
are evolving such as in environmental andclimate change reporting, whistleblowing
and sanctions.

The Group promotes a culture of “Doing the right thing” in all activities. Code of BusinessConduct guidelines were rolled out to all studios during 2021 and are supported by moredetailed policies and procedures where needed, which are published on the Group's website.

ImpactA material failure to comply with applicablelegal and ethical standards could result inpenalties, costs, reputational harm and damage
to relationships with suppliers and customers.

During 2022, the existing whistleblowing process was enhanced through the launch of the
Keywords Integrity line, a 24-7 online portal for whistleblowing reports, and management ofconfidential communications in line with recent EU and local requirements.
Due to Keywords’ presence in Russia, the Group also has had to adhere to the evolving
sanctions regime that has been placed on the country. Keywords has put in place a clear
process to monitor any changes to sanctions and adapt its processes in order to ensurecompliance. The Group has also significantly reduced its presence in Russia during the year,
and will continue to do so in 2023.
More details are contained in the Responsible business review on page 55 and the Audit
Committee report on pages 82 to 85.

Link toStrategy

Likelihood

3

Trend

65

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Keywords Studios plc Annual Report and Accounts 2022

Principal risks and uncertainties continued

Industry-related risks
Breaches to information and cybersecurity
Description and Impact

Mitigation

The industry requires the highest standards of
security and privacy from a company offering
services such as Keywords.

The Group uses various third party and proprietary tools and technologies for process control
and productivity purposes. Continued investment in these tools is important to ensure theGroup’s effectiveness.

ImpactKeywords maintains physical and data security and privacy policies and procedures which are
regularly audited by its larger customers.

Cyber attacks and security breaches, which are
happening with increased frequency globally,
may lead to piracy, disruption of customers’marketing plans, loss of competitive edge andcould result in compensation claims.

Link toStrategy

A dedicated Information Security team sets policies, conducts regular penetration testing,monitors activity and rapidly responds to any incidents that arise. More details are contained in
the Responsible business review on page 54 and in the Audit Committee report on page 82.

Likelihood

4

Trend

Technology innovation and industry disruption
Description and Impact

Mitigation

Innovations in the gaming industry continue
to evolve.

As a key strategic focus area, the Group is focused on effectively utilising technology for the
benefit of the Group and its clients. More details can be found in the Chief Executive's review
on page 10 and the Our strategy section on page 22 .

Impact
New technologies for automated testing,machine translation and crowdsourcing could
pose a threat to the Group in the long-term.

The Group is constantly innovating to create and adopt technology tools to deliver its services
more effectively and participates directly with customers in various pilot programmes for new
technologies to keep abreast of technological developments.
Keywords has strengthened the senior management team in this area with the appointmentof a new Chief Digital Information Officer and created a standalone innovation team, led by a
dedicated Executive Committee member to drive its innovation agenda forward.
In addition, two technology-led acquisitions were completed during the year. Thesebusinesses bring AI-led technologies that will augment the client offering and complement
the existing offering.

Link toStrategy

Likelihood

3

Trend

Negative impact of regulation on video games
Description and Impact

Mitigation

Changes in regulation on video games, suchas those seen in the Chinese market which
imposed curfews on minors, and requirements
to address responsible gaming in the industry
introduces complexity for clients.

In relation to the Chinese market, Keywords has limited revenue exposure to games destinedsolely for the Chinese market. In addition, any potential impact is partially mitigated throughthe Group’s diverse geographic revenue base (no single client larger than 7.4% (2021: 6.5%)).

ImpactChanges and new requirements could resultin the delay or cancellation of video games
by customers.

Link toStrategy

Responsible gaming issues arising during game play can be identified by thePlayer Support teams, who have a dedicated Trust and Safety team trained tohandle and report safety incidents as well as support the team members exposed
to such incidents.

Likelihood

2

Trend

Overview

Strategic report

Governance

Financial statements

Supplementary information

Industry-related risks continued
Tax credits withdrawal risk
Description and Impact

Mitigation

The Group receives multimedia tax credits (MMTC) in
Canada and video games tax relief (VGTR) in the UK,
relating to qualifying costs in those markets. These tax
credit regimes are designed to promote growth andinvestment in the relevant regions.

The Group works closely with regulators and governments in relation to relevant
country tax credits and has been given no indication that these tax credits will
be removed in the medium term, but increased scrutiny has lead to some delays
in payments.

ImpactAny reduction or cancellation of these tax credits would
increase the cost base of the business and make thebusiness less competitive.

Link toStrategy

The Group has seen the introduction of a number of new subsidy regimes in the past
year, including Australia and Ireland, and other jurisdictions are considering whether
to do the same. Due to the Group’s geographically diversified operating platform it
retains an element of flexibility in being able to move work to other operating centres
if material changes were made.

Likelihood

Trend

2

General business risks
Sudden business interruption
Description and Impact

Mitigation

Keywords is a global business and needs to minimisebusiness interruptions and be able to continue servicing
customers.

The Group’s multiple, full-service delivery hubs provide for a good level of contingency
and, supported by business continuity plans, the effects of such disasters can be
managed.

This threat could be internal, such as a major failure
in its IT systems, but also external, such as the Groupexperienced and managed during the 2011 Tokyo
earthquake and tsunami or more recently 2020-2022
with COVID-19, when the Group was able to quickly
move to a work from home model, and services
remained robust throughout the pandemic.

Keywords also operates a highly distributed model, with operations in 26 countries
and in over 60 cities. This, in addition to the business successfully operating as a
hybrid working model in 2022, provides the Group with the ability to service clientsfrom different locations as required.

ImpactWithout access to key systems, data or dedicatedwork locations, services to clients and/or the ability
to report to investors on a timely basis could be
adversely affected.

Link toStrategy

Likelihood

3

Trend

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Keywords Studios plc Annual Report and Accounts 2022

Principal risks and uncertainties continued

General business risks continued
Global political risk and uncertainty
Description and Impact

Mitigation

Keywords operates and owns assets in a large numberof geographic regions and countries.

The diversification and spread of activities geographically mitigate the risk of
disruption in any one location.

The Group operates a single Russia-based business,
Sperasoft, which is reported within the Group’s Create
service line, but has no operations in Ukraine.

During the year Keywords undertook a process to relocate people and work from
Sperasoft to alternative locations (Poland, Serbia, Armenia and Malta). At the yearend the Group had relocated over 400 people to new locations and commenced
hiring in those locations to rebuild the business. Keywords has focused on making thetransition as smooth as possible for both its people and international clients. Revenue
derived from the Russia-based business represented 3.8% (€26.3m) of Grouprevenues during 2022 down from 5.7% in 2021, and in December 2022 it accounted
for 1.7% of Group revenues due to the reduction of its footprint in the country.

ImpactAs a result of this geographic spread, the Groupis exposed to a wide range of political, economic,
regulatory, social and tax environments. Policies orlaws, as well as armed conflict involving the countries inwhich Keywords operates, may change in a manner that
may be adverse for the Group, even those with stable
political environments.

Link toStrategy

Keywords is monitoring other geopolitical trends around the Group.

Likelihood

3

Trend

Negative impact of currency risk
Description and Impact

Mitigation

The Group transacts in multiple currencies, given its
customers are located globally. The Group’s largest
exposure is to the US dollar followed by the euro
and sterling.

The Group serves a global customer base, with production facilities spread acrossmultiple geographies and currencies.

ImpactKeywords is exposed to short-term currency risks,in addition to longer-term risk that could develop
between its functional currency (euro) and its multiple
billing currencies.

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 with theexpenses incurred and by settling liabilities denominated in their functional currency
with cash generated from their own operations in that currency.
Where entities invoice in a foreign currency, studios have the ability to offset adverse
foreign exchange currency movements through increasing prices. Hence the Group
does not hedge its currency risk.
In addition to revenues and expenses being impacted by movements in exchange
rates, the Group is also exposed to gains or losses related to the effect of translating
net current assets held in foreign currencies.

Link toStrategy

Likelihood

3

Trend

Other risks have been classified as emerging risks for the Group, such as climate change, specific aspects of talent management risks suchas talent acquisition and unionisation, lack of a standard operating system and the growth risks associated with acquisitions and organic
growth. More details on these areas and how we are mitigating them through our strategic and ESG initiatives are in the Our strategy section
on pages 20 to 31 and the Responsible business review on pages 40 to 55. These risks and how they evolve over time are discussed at the
Audit Committee and continue to be monitored closely by senior management and addressed throughout the year.

Overview

Strategic report

Governance

Financial statements

Supplementary information

Non-financial information statement

Our non-financial information statement is set out below on environmental matters, social andemployee matters, respect for human rights, and anti-corruption and anti-bribery. Details ofour business model can be found on pages 18 and 19, and our principal risks are on pages 62 to
68. Our Modern Slavery Policy and Code of Business Conduct can be found on our website.
Reporting requirement

Policies and standards which govern our approach

Page reference

Environmental matters

Environmental Policy

Page 48 Responsible business review

Social and employee matters

Code of Business Conduct

Pages 23 and 24 Our strategy

Recruitment Policy

Pages 40 to 55 Responsible business review

Employee handbook
Diversity and equal opportunity
Grievance Policy
Employee assistance programme
Health & Safety Policy
Data protection
Respect for human rights

Supplier Code of Conduct

Page 55 Responsible business review

Modern Slavery Policy
Anti-bribery and corruption

Anti-bribery and corruption Policy

Page 55 Responsible business review

Whistleblowing

Pages 82 to 85 Audit Committee report

Fraud Policy
Sanctions Policy
Business model

Pages 18 and 19 Business model

Description of principal risks
and impact of business activity

Pages 62 to 68 Principal risks
and uncertainties

Non-financial key performance indicators

Page 20 Our strategy
Pages 40 to 55 Responsible business review

The Strategic report was approved by the Board and signed on its behalf by:

Bertrand Bodson
Chief Executive Officer
15 March 2023

69

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Keywords Studios plc Annual Report and Accounts 2022

Corporate governance report

Leadership& experience
The Board is comprised of Directors
who contribute extensive and diverse
skills, knowledge and experience. It is
responsible for the overall managementof the Group, its long-term objectives
and strategy, culture and reputation.

Chairman

Ross
GrahamAppointment
July 2013

Committee memberships
Audit
Nomination
Remuneration
ESG
Committee Chair

Skills and Experience
Ross has extensive executive and non-executive
experience in the technology sector. Since retiringfrom Misys plc, he has held a number of nonexecutive directorships, including Psion plc andWolfson Microelectronics plc. Ross was appointed
Director and Chairman of Keywords shortly prior to
its IPO in July 2013.

External Appointments
None.

Meeting attendance

100%
Committee membership

Overview

Strategic report

Governance

Financial statements

Supplementary information

Chief Executive Officer

Chief Financial Officer andChief Operating Officer Designate

Senior Independent
Non-Executive Director

BertrandBodsonJon
HauckCharlotta
GinmanAppointment

Appointment

Appointment

December 2021

October 2019

September 2017

Skills and Experience

Skills and Experience

Skills and Experience

Bertrand brings deep experience indriving and executing growth strategies
for international businesses. He was Chief
Digital Officer for Novartis and previously
spent four years as Chief Digital andChief Marketing Officer at Sainsbury’s
Argos, leading the integration of Argos
into the Sainsbury’s store network. Earlyexperience includes senior roles involved
with content creation and entertainment
at EMI Group, Bragster (which he cofounded) and Amazon.

Jon has a wealth of finance, change
management and M&A experience,
having held a variety of roles at Rentokil
Initial plc. Over that time, he was CFO
in North America and was responsible
for leading a substantial integration
programme, and from 2015 he held therole of Group Financial Controller andTreasurer. Prior to Rentokil Initial plc, heworked in PwC’s Assurance practice. Jon
is a Fellow of the ICAEW.

A Chartered Accountant, Charlotta has over
30 years of experience working in investmentbanking and commercial organisations,principally within the technology andtelecom sectors. Charlotta has held senior
positions with UBS, Deutsche Bank,JP Morgan and Nokia Corporation.

External Appointments
He is currently a Non-Executive Directorof Tesco plc and Wolters Kluwer N.V.

External Appointments
None.

It is intended that Bertrand will step downfrom the board of Wolters Kluwer N.V. at
its AGM in May 2023.

External Appointments
Charlotta is a Non-Executive Director
and Chair of the Audit Committee of two
investment trusts, Polar Capital Technology
Trust PLC and Pacific Asset Trust PLC,
as well as Gamma Communications plc(an AIM-listed company). She is also a
Non-Executive Director of Unicorn AIM VCT
PLC, a venture capital trust, and Boku Inc.
As three out of Charlotta’s six non-executive
directorships are with investmentcompanies that require less timecommitment throughout the year, and therest are AIM-listed companies with overall
less regulatory burden than a company
listed on the main market, the Board issatisfied that Charlotta has sufficient time
to devote to each of her appointments.

Meeting attendance

Meeting attendance

Meeting attendance

100%

100%

100%

Committee membership

Committee membership

Committee membership

71

72

Keywords Studios plc Annual Report and Accounts 2022

Corporate governance report continued

Independent
Non-Executive Director

Independent
Non-Executive Director

Independent
Non-Executive Director

Georges
FornayMarionSears

Neil
ThompsonAppointment

Appointment

Appointment

September 2017

August 2021

August 2021

Skills and Experience

Skills and Experience

Skills and Experience

Georges has over 30 years’ experiencein the technology and video games
sectors and is currently Deputy CEO of
Qobuz, the French high-quality musicstreaming service. Georges worked insenior management at Sony ComputerEntertainment (Europe), culminatingas Senior Vice President from 2004 to
2011. Georges has also held significant
industry-wide roles, including Presidentof SELL, France’s Union of Entertainment
Software Publishers.

Marion brings extensive investmentbanking and international M&A
experience. She has many years serving
on a number of public company boards
as a non-executive director, seniorindependent director, committee
chair and People NED, giving her longstanding listed company experience andstakeholder understanding.

Neil held a number of senior positions
within Microsoft Corporation, including
as part of the management teamthat launched Xbox in Europe andfor a number of years ran Microsoft’s
Consumer and Devices business across
EMEA. He has extensive experienceof scaling new businesses acrossinternational territories and building
resilient organisations in constantly
changing environments.

External Appointments
None.

External Appointments
Marion is currently a Non-Executive
Director at Dunelm Group plc andWH Smith plc and is Senior Independent
Director at abrdn New Dawn Investment
Trust plc.

External Appointments
He is a Non-Executive Director at
E.P. Barrus Ltd. and acts as a board
adviser to start-up SaaS businesses.

Meeting attendance

Meeting attendance

Meeting attendance

100%

100%

100%

Committee membership

Committee membership

Committee membership

Overview

Strategic report

Independent Non-Executive
Director and Chair Designate

Governance

Financial statements

73

Supplementary information

Attendance at 2022 Board and Committee meetings
Committees

Don
RobertAppointment

Principle

Overall

Board

Audit

Remuneration

Nominations

ESG

Bertrand Bodson

100%

11/11

–

–

–

4/4

Jon Hauck

100%

11/11

–

–

–

4/4

Ross Graham

100%

11/11

5/5

6/6

3/3

–

Charlotta Ginman

100%

11/11

5/5

6/6

3/3

–

Georges Fornay

100%

11/11

5/5

–

–

4/4

Marion Sears

100%

11/11

5/5

6/6

3/3

4/4

Neil Thompson

100%

11/11

5/5

6/6

3/3

4/4

Don Robert

n/a

–

–

–

–

–

Sonia Sedler

67%

2/3

–

–

–

–

David Reeves

100%

5/5

2/2

3/3

2/2

1/1

Giorgio Guastalla

100%

1/1

–

–

–

–

It is noted that:

February 2023

• Sonia Sedler retired from the Board on 18 March 2022.

Skills and Experience• Giorgio Guastalla retired from the Board on 26 January 2022.

Don was CEO of Experian plc for nine
years, during which time he more thandoubled operating profits and scaled
the business into a global market leader.
He subsequently became Chair ofExperian between 2014-2019. He has
also served as a Non-Executive Directorof Court for the Bank of England andSenior Independent Director of Compass
Group. Prior to joining Experian, Don held
executive positions with First American
Financial Corp. and U.S. Bank.

• David Reeves retired from the Board on 20 May 2022.
• Don Robert joined the Board on 1 February 2023.

Directors with experience in ourgeographic regions (of 8 maximum)
Europe7

Americas6

Asia Pacific 3

External Appointments
Don currently serves as Chair of the
London Stock Exchange Group (LSEG).
He is also involved in several private
technology-focused businesses.
It is intended that Don will become Chair
at Keywords' Annual General Meetingon 26 May 2023 as part of the planned
succession for Ross Graham.

EuropeAmericas

Asia PacificDirectors with relevant
experience against our
strategic pillars (of 8 maximum)
Talent and capabilities

7

Women on the Board(as at 31 December)

2022

Strategic partnerships

6

2021

Technology

6

2020

One Keywords

6

Adjacent markets

6

29%
30%

Meeting attendance

N/A
Committee membership

14%

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Keywords Studios plc Annual Report and Accounts 2022

Chairman's introduction

The Board encourages good corporate
governance and an enterprising culture topromote the long-term success of Keywords.
Ross Graham
Chairman of the Board

It gives me great pleasure to introduce,
for the last time before my retirement, theCorporate Governance Report for 2022.
The Board is committed to the highest
standards of corporate governance, effective
engagement with our stakeholders andrigorous oversight of strategic, financial
and risk matters, to promote the longterm success of this exciting business.
This report will provide insight into how the
Board operated during the year, its principal
activities and the key issues considered.
As Chairman of the Board, it is my
responsibility to ensure that the Group has
both sound corporate governance and a
Board which is mindful of its responsibility
to all stakeholders, and in particular to thecreation of shareholder value and nurturing
our most important asset, our people. My
responsibilities include leading the Board
effectively, overseeing the Group’s corporate
governance model, communicatingwith shareholders and ensuring that
good information flows freely between
management and Non-Executive Directors ina timely manner. An internal Board evaluation
conducted in 2022 concluded that the Board
continues to operate well, and some minor
actions were agreed to further enhance theBoard’s operational effectiveness in 2023.
The Board recognises the value of good
corporate governance in promoting the longterm success of the Company. The Company
adheres to the Quoted Companies Alliance"Corporate Governance Code" (QCA Code),which we believe is the most appropriate for
Keywords. The Board regards the applicationof the QCA Code as a valuable tool tounderpin the Board’s effective operation and
the Group’s long-term success; however,the Board is also committed to the highest
standards of corporate governance and, assuch, seeks to comply with the principles of
the UK Corporate Governance Code 2018
where possible and appropriate.
The Board is assured that the Company
continues to comply with the QCA Codein all applicable respects. Our QCA Codedisclosures within this Annual Report aresummarised in the following table and thefollowing pages present a comprehensive
statement of how we have applied the QCA
Code during the year.
I am confident that, when he succeeds me
as Chairman at the 2023 AGM, Don Robertwill continue to ensure strong corporate
governance practice at Keywords.

Overview

Strategic report

Governance

Financial statements

75

Supplementary information

Corporate governance report continued

QCA Corporate Governance CodeDisclosure
within this report

Principle

1

Establish a strategy and business model which promotes long-term value for shareholders

Pages 18–33

2

Seek to understand and meet shareholder needs and expectations

Pages 56–57

3

Take into account wider stakeholder and social responsibilities and their implications for long-term successPages 40–57

4

Embed effective risk management, considering both opportunities and threats, throughout the organisation

Pages 62–68

5

Maintain the Board as a well-functioning, balanced team led by the chair

Pages 70–81

6

Ensure that between them the directors have the necessary up-to-date experience, skills and capabilities

Page 73

7

Evaluate Board performance based on clear and relevant objectives, seeking continuous improvement

Page 798

Promote a corporate culture that is based on ethical values and behaviours

Pages 42–47

9

Maintain governance structures and processes that are fit for purpose and support good decision-making
by the Board

Pages 74–79

10

Communicate how the company is governed and is performing by maintaining a dialogue with shareholders
and other relevant stakeholders

Pages 76–79

Governance structure

Board

CEO

Nominations
Committee

Audit
Committee

Remuneration
Committee

Investment
Committee

Risk &
Compliance
Committee

ESG
Management
Committee

Executive
Committee

Disclosure
Committee

ESG
Committee

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Keywords Studios plc Annual Report and Accounts 2022

Corporate governance report continued

Strategy and business model
A description of the Company’s strategy,
business model and supporting strategicpillars, along with key attributes of ourpositioning and growing maturity, canbe found in the Strategic report on
pages 1 to 69.

Shareholder needs andexpectations
The Board is committed to maintaining
good communication and constructive
interaction with all shareholders. In addition
to its regulatory disclosure obligations,
the Executive Directors and divisional
management meet shareholders, potential
investors and market participants at regularintervals, through analyst and investor
presentations, roadshows and attendance
at investor conferences. The Group has adedicated investor relations function, whichis responsible for managing relationships
with all market participants throughout
the year and there is an investor relations
section of the corporate website which hosts
corporate disclosures and other pertinent
information. The Chairman is also available
to meet with the largest shareholders during
the year without management present.
The whole Board attends the Annual
General Meeting, which we regard as anopportunity to meet, listen and present toour shareholders, and all shareholders areencouraged to attend and ask questions.
Shareholders who were unable to attend
were also given the opportunity to submit
questions to the Board in advance via email,and a videoconferencing facility was madeavailable for shareholders to pose questions
live at the meeting. The Board were pleased
that this approach generated constructive
engagement between the Board andshareholders at the meeting, and that it
took into account the accessibility needsof our shareholders.
The Board is committed to maintaining
effective communication and having
constructive dialogue with its shareholders.
The Company aspires to have close ongoing
relationships with its private shareholders,institutional shareholders and analysts,
and for them to have the opportunity to
discuss issues and provide feedback at
meetings with the Company. The Company
receives reports from proxy voting agencies,
reviews their findings and meets to discussshareholder matters. The Board maintains
that, if there is a resolution passed at a
general meeting with 20% votes castagainst, the Company will seek tounderstand the reason for the result and,
where appropriate, take suitable action.

At the 2022 AGM, all resolutions werepassed comfortably except Resolution 2
which passed with 66.3% of votes in favour.
The Company issued an announcement
providing an explanation as to the result
and inviting shareholders to submit theirinterests to the Company, which were thenconsidered by the Board, and the Chair of
the Remuneration Committee was charged
with engaging with those shareholders
in early 2023. The votes on all resolutions
were taken on a poll to ensure that fullshareholder representation was reflected.
All corporate documents, including historicalannual reports, notices of general meetingsand details of the 2022 AGM results, can befound online at www.keywordsstudios.com.

CultureInvestors have access to current information
about the Company through the Company’s
website, www.keywordsstudios.com.
The Company promotes electronic
communications with shareholders
to be more efficient and mindful of its
environmental impact.

A whistleblowing process operates acrossthe Group to encourage employees andother stakeholders to report suspected
misconduct, illegal acts or failures to act. The
aim of this is to create a safe environment
for employees and others who have serious
bona fide concerns about any aspect of theGroup’s work to come forward and voice
those concerns without personal risk ofretribution or reprisal. The Board reviewed
the operation of the whistleblowing portal
and received regular reports of incidents andinvestigations, and is confident that a robust
process is in place.

Wider stakeholder and social
responsibilities
The corporate governance arrangementsthat the Board has adopted are designed
to ensure that the Company delivers
long-term value to its shareholders whilst
being cognisant of the interests of otherstakeholders. The Board recognises thatthe long-term success of the Company
relies upon good relations with other key
stakeholders, identified as our workforce,clients, suppliers and communities. The
Board has put in place a range of processes
to ensure it maintains close contact withthese key stakeholders.
The ESG Committee is responsible foroversight of Group initiatives designed
to promote the long-term success of theCompany as a sustainable, well-governed
and responsible employer, partner, supplierand customer. A summary of its activities ispresented on pages 102 and 103.
The Company has developed close
relationships with many of its key
stakeholders and provides them with theopportunity to raise issues and provide
feedback to the Company. Examples include
customer feedback surveys, strategy
discussions with key clients, employee
surveys and a variety of communication
sessions to cater for various employee
groups. Full details of the Company’s and theBoard’s engagement with its stakeholders ispresented on pages 56 and 57.

The Board recognises that its decisions
regarding strategy and risk may impact theculture of the Group and that this may impact
the performance of the Company. The Boardis also aware that the tone and culture set by
the Board can have an important influence on
employee behaviour.
In 2022, our "Rule of Nine" corporate
values were reviewed and replaced with a
new set of five core leadership principles
under the rubric “Imagine More”. These
underpin our corporate culture and promote
entrepreneurial and open ways of working, so
we can build close, trusting relationships withcolleagues, suppliers, partners and clients.

The Board seeks to better understandthe interests of employees through anannual employee survey, which in 2022 hadover 8,000 employees across the Groupparticipating (approximately 79% of all
employees), and regular town hall meetings
which provide a forum for management
to present important matters and responddirectly to feedback from employees. Further
details can be read on pages 44 and 45.
The ESG Committee is responsible foroverseeing workforce matters, including
corporate culture, further details of which
can be read in the ESG Committee report on
pages 102 and 103.

Overview

Strategic report

Internal controls andrisk management
The Board recognises the need for aneffective and well-defined risk management
process and it oversees and regularly
reviews the Group’s risk management andinternal control mechanisms. The status ofour principal risks, as well as any emerging
risks, is recorded in a comprehensive
risk register for discussion at the Audit
Committee. The Company’s principal risks,along with key challenges in the executionof the Company’s strategy, and along withthe controls implemented to mitigate them,can be found on pages 62 to 68.
The Audit Committee is responsible
for the oversight of the Company’s risk
management and internal controls andprocedures, as well as determining theadequacy and efficiency of internal control
and risk management systems. This process
enables the Board to determine whether therisk exposure has changed during the year.
When setting and implementing strategy,
the Board takes into account the principal
risks and seeks to limit the extent of theCompany’s exposure to them, having regard
to both its risk tolerance and risk appetite,through appropriate mitigations.
The Directors believe that the Group has
internal control systems in place appropriate
to the size and nature of its business. The key
elements are:• Board meetings are held at least eighttimes per year, with which contain reports
from and discussions with managementon performance and key risk areas in
the business.
• Monthly financial reporting, for theGroup and for each service line, of actual
performance compared to budget andthe prior year and a dashboard of Key
Performance Indicators.
• Visits to key studio locations.
• Annual budget setting.
• Robust cash management.
• Annual strategy conference with thesenior leadership team.
• A defined organisational structure withappropriate delegations of authority.

Governance

Financial statements

The Board
The Board, as a whole, is responsible for theoverall management of the Group and for its
strategic direction, including approval of theGroup’s strategy (including corporate andbusiness development), its corporate culture,
its annual business plans and budgets, theinterim and full year financial statements
and reports, any dividend proposals, theaccounting policies, major capital projects,
treasury management policies, any
investments or disposals, its succession plans
and the monitoring of financial performanceagainst budget and the formulation of
the Group’s risk appetite, including theidentification, assessment and monitoringof Keywords’ principal risks.
The Board comprises two Executive
Directors, Bertrand Bodson (CEO) andJon Hauck (CFO), and six Non-Executive
Directors, Ross Graham (Chairman),Charlotta Ginman (Senior Independent
Director), Georges Fornay, Marion Sears,
Neil Thompson and Don Robert (who joined
the Board on 1 February 2023). Director
biographies and Committee memberships
are detailed on pages 70 to 73. Details of
directorship changes in the year can be readin the Nominations Committee report on
page 81.
Letters of appointment of all Directors areavailable for inspection at the Company’s
registered office during normal businesshours. The Executive Directors work fulltime for the Company. All Non-Executive
Directors are expected to dedicate at least
30 days per annum to the Company, rising to
40 days if they also chair a committee, andthe Chairman is expected to dedicate 60days per annum. The Company has adopted
a policy whereby all members of the Board
are subject to re-election at each AGM. In
practice, all the Non-Executive Directors
spend more than the minimum number ofdays on Company business.
Charlotta Ginman currently holds six nonexecutive directorships. Of those, three roles
are at investment companies that generally
only have four to five meetings a year, andthe other three are at AIM-listed entities, withless regulatory burden than premium listedcompanies, and the Nominations Committee
is therefore confident that Charlotta has
sufficient time to devote to her Keywords
role. In particular, during 2022 Charlotta
dedicated additional time in leading the
Chairman search and audit tender process.

Supplementary information

The Board is satisfied that it has a suitablebalance between independence andknowledge of the Company, and that noindividual or group may dominate theBoard’s decisions. The Non-Executive
Directors have both the breadth and depthof skills, and experience, to effectively
discharge their responsibilities. The Board
conducted a comprehensive review of its
skills, knowledge, experience and diversity,and concluded that the current balance ofskills on the Board, as a whole, reflects a
broad range of personal, commercial andprofessional experience, including a variety
of financial and managerial skills. The graphic
on page 73 shows the strength of experience
relating to our strategic priorities.
The Chairman fosters healthy debate in theboardroom by encouraging all Directors to
use their independent judgement and torobustly challenge management on strategicand operational matters.
The Board meets a minimum of eight times
a year and a forward schedule of meetingsand matters is fixed to ensure the Board
considers a broad range of appropriate
matters. Given the global nature of ourbusiness, the Directors meet in person
and remotely, as required, with senior
managers across the business and visit
one or two studios each year. Meetings areopen and constructive, with every Director
participating fully. Executives are invited topresent deep dives on particular areas ofinterest to the Board, providing the Board theopportunity to engage directly with senior
managers and maintain a comprehensive
view of the business. Management supply
the Board with appropriate and timely
information and the Directors are free toseek any further information they
consider necessary.
In line with good corporate governancepractice, the responsibilities of the Chairman
and CEO are separate and well defined.
A copy of the Chairman/CEO Split of
Responsibilities is available on the Company’s
website www.keywordsstudios.com.

77

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Keywords Studios plc Annual Report and Accounts 2022

Corporate governance report continued

Charlotta Ginman succeeded David Reeves
as the Senior Independent Director (SID)of the Company, serving as a sounding
board for the Chairman and acting as anintermediary for the other Directors. The SID
is also available to shareholders and other
Non-Executive Directors to address any
concerns or issues they feel have not beenadequately dealt with through the usual
channels of communication. The Board has
the mix of skills, experience and capabilities
required to fulfil its responsibilities. The
Company believes that the current balanceof skills in the Board as a whole reflects a
broad range of commercial and professional
skills across geographies and industries
and each of the Directors has experience inpublic markets.
The Non-Executive Directors meetwithout Executive Directors present andmaintain ongoing communications with
Executive Directors between formal Board
meetings. In addition to their general Board
responsibilities, Non-Executive Directors
are encouraged to be involved in specificworkshops or meetings, in line with theirindividual areas of expertise.
The Chairman is supported by the GeneralCounsel and Company Secretary, Andrew
Kennedy, in maintaining excellent standardsof corporate governance and providing
necessary updates to the Board on
corporate governance developments andAIM regulations.
The Directors have access to the Company’s
nominated adviser, company secretary,
lawyers and auditors and are able to obtain
external advice, as required. The Directors
are entitled to take independent legal advice
and if the Board is informed in advance, thecost of the advice will be reimbursed by
the Company.
The Board reviews annually theappropriateness and opportunity forcontinuing professional development,
whether formal or informal.

Nominations Committee

ESG Committee

The Nominations Committee is chaired
by Ross Graham and its other members
are Charlotta Ginman, Marion Sears, Neil
Thompson and Don Robert. The Nominations
Committee is responsible for keeping underreview the structure, size and compositionof the Board, its Committees, and the
Executive Committee. Further informationon the Nominations Committee, including its
role and responsibilities, can be found in the
Nominations Committee Report on pages
80 to 81.

The ESG Committee is chaired by Georges
Fornay and its other members are Neil
Thompson, Marion Sears, Bertrand Bodson
and Jon Hauck. The remit of the ESG
Committee is to oversee the following areas
which have been identified as environmental,social and governance priorities: (i) people;(ii) client; (iii) community; and (iv) planet; andall underpinned by (v) corporate governance.
Further information on the ESG Committee,
including its role and responsibilities, can befound in the ESG Committee report on pages
102 and 103.

Audit Committee
The Audit Committee is chaired by Charlotta
Ginman, and its other members are Ross
Graham, Georges Fornay, Marion Sears
and Neil Thompson. The Audit Committee
is responsible for overseeing financial
reporting, risk management, internal control
procedures and internal audit, as well as theappointment, removal and scope of workof the external Auditor (including non-audit
services, independence and objectivity).
Further information on the Audit Committee
can be found in the Audit Committee Reporton pages 82 to 85.

Remuneration Committee
The Remuneration Committee is chairedby Marion Sears, and its other members
are Ross Graham, Charlotta Ginman
and Neil Thompson. The Remuneration
Committee is responsible for determining
the remuneration of the Chairman (withthe Chairman absenting himself), Executive
Directors and senior executives of Keywords.
The Remuneration Committee is responsible
for making recommendations to theBoard on Directors’ and senior executives’
remuneration. Non-Executive Directors’
remuneration is determined by the Executive
Directors. Further information on the
Remuneration Committee can be found in
the Directors’ Remuneration Report on pages
86 to 101.

The Matters Reserved for the Board andterms of reference for all the Committees
are available on the Company’s website
www.keywordsstudios.com.

Executive structure
During the year, the governance structureof the executive management was reviewed
to enhance support of the Board and its
Committees. The Disclosure Committee,
managing market disclosures, and the
ESG Management Committee, driving ESG
programmes, were reconstituted. We alsoestablished the Investment Committee,
responsible for key decisions of the Group,
and Risk & Compliance Committee, reviewing
risk and financial controls and legal andregulatory compliance.

Overview

Strategic report

Governance

Financial statements

Board evaluation

Advisers

In 2022, an internal evaluation of theeffectiveness of the Board and its
Committees was conducted with the supportof the Company Secretary, which concluded
that the Board and its Committees continue
to operate effectively. An externallyfacilitated evaluation was last conducted
in 2021 and the Board is committed to aperiodic external evaluation.

The Board has regular contact with its
advisers to ensure that it is aware of changes
in corporate governance procedures andrequirements and that the Group is, at all
times, compliant with applicable rules andregulations. The Company had Director andOfficers’ liability insurance cover in placethroughout the year and it is intended forthe policy to continue for the year ending
31 December 2023 and subsequent years.
Additionally, the Company provides anindemnity in respect of all the Company’s
Directors or other officers of the Company
against all costs, charges, losses, expenses
and liabilities incurred by them in theexecution and discharge of their duties.

The 2022 evaluation exercise comprised
two stages. The first stage was a detailed
questionnaire to gather feedback fromeach Director on the overall performanceof the Board and the Board’s Committees.
The second stage was a series of individual
discussions held between the Chairman
with each Director and the Senior
Independent Director with the Chairman.
The areas addressed by the evaluation were:composition and skills, culture and integrity,
operating effectiveness and efficiency,
stakeholder engagement, quality of
information and ongoing development,
the overall contribution of each Director
and the effectiveness of the Chairman.
Progress was noted for all areas highlighted
for attention in 2022, as follows:• Succession planning for the Chairman,
COO and CFO roles included anassessment of candidates with media andentertainment, technology or videogame
experience.
• More time at Board meetings wasdedicated to discussions on culture andlong-term strategic and operational plans.
• Contact between the Board and senior
management team was enhanced withthree Board visits to studios during 2022,
two executive summits, and a series ofsubject matter deep dives presented bysenior managers to the Board.
Following a review of the findings of the 2022
evaluation, the Board has highlighted thefollowing areas for attention in 2023:• To review opportunities for enhancing
engagement with key stakeholders.
• To offer Directors a range of opportunities
for development.
• More time dedicated at meetings
to review (i) acquisition success andintegration activity, and (ii) competitors.
• Succession planning for members of theexecutive committee.

The Company’s nominated adviser, Numis,
provides guidance on regulatory andcorporate governance matters to the Board,
as required.
The Company has retained Deloitte LLP, whoprovide advice in relation to remuneration
matters. Additional information can be foundin the Remuneration Report on page 94.
Directors may receive independent
professional advice at Keywords’ expense,
if necessary, for the performance of
their duties.

Supplementary information

79

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Keywords Studios plc Annual Report and Accounts 2022

Nominations Committee report

We are pleased to welcome
Don Robert as a Non-Executive
Director and Chair Designate.
Ross Graham
Chairman of the Nominations Committee

At a glanceCommittee membership
The Committee is comprised ofIndependent Non-Executive Directors andis chaired by the Chairman of the Board.
The biographical details of the membersof the Committee and their attendance atmeetings during the year can be found on
pages 70 to 73.

Key responsibilities• Review the structure, size andcomposition of the Board• Consider succession planning for
Directors, the Company Secretaryand Executive DIrectors• Evaluate the balance of skills,
experience, knowledge on the
Board, as well as its independence
and diversity• To review the time commitmentsof Directors

Succession planning
Ross
GrahamCharlotta
GinmanGeorges
FornayMarionSears
Neil
ThompsonDon
RobertTenure (years)

Overview

Strategic report

Changes to the Board
and Committees
On 27 January 2022, Giorgio Guastalla
resigned as a Non-Executive Director and, on
18 March 2022, Sonia Sedler stepped down
as Chief Operating Officer. At the Company’s
AGM on 20 May 2022, David Reeves retired
as a Director following the completion ofnine years of service, at which time Charlotta
Ginman and Marion Sears succeeded him
as Senior Independent Director and Chair of
the Remuneration Committee, respectively.
We were pleased to announce in October
2022 that Jon Hauck had been appointed as
Chief Operating Officer Designate and would
continue in his CFO role until a successor isappointed to ensure a smooth transition of
responsibilities.
In July 2022, I completed nine years’ service
but agreed to remain in the Chairman
position for a further year as the Committee,
supported by the whole Board, deemed it
necessary to ensure the continued smooth
operation of the Board and provide robust
support for Bertrand Bodson as the recently
appointed CEO. In February 2023, Don
Robert joined the Board as a Non-Executive
Director and Chair Designate, to succeed me
as Chairman following the 2023 AGM. Don
brings a strong track record of building andleading international businesses.
Details of the independent evaluation of theBoard’s and Committees’ performance canbe read on page 79.

Succession
Succession planning is designed to consider
the planned process of transition to newleadership over time and also the potential
for unforeseen change over a shorter timeframe. In respect of the longer-term Board
composition, as Board members progress
through their tenure, the Committee
continues to consider their independence.
The tenure of Non-Executive Directors isshown on page 80.
Charlotta Ginman chaired a sub-committee
charged with the search for my successor
and, following a search facilitated by
Lygon Group (having no other connection
with the Company or Directors) and arigorous selection process, Don Robert wasappointed as a Non-Executive Director andChair Designate.
Following the appointment of Jon Hauck as
COO, a comprehensive process is underway
to identify a suitable candidate for the CFO
role and the search criteria emphasises
financial, technology and international
experience. The Committee is mindful ofcurrent diversity guidelines for UK
listed companies.
The Board is committed to effectively
managing leadership succession andproactively engages with executives toassess the wider senior manager talent pool.

Governance

Financial statements

The Board and its committees receive
regular contributions from executives andsenior managers throughout the year.
These contributions are valuable for the
Board’s decision-making and have helped
the Non-Executive Directors to develop a
clear understanding of the strength of the
management team.

Skills and experience
The Committee is responsible for keeping
under review the composition of the Boardand succession to it. It reviewed the size,
composition and skill set of the Board during
the year and concluded that there was an
appropriate mix of experience, skills andknowledge to provide effective leadershipof its business activities. Consideration
was given to the deep industry knowledge
provided by Georges Fornay and Neil
Thompson, strong financial knowledge
provided by Ross Graham and Charlotta
Ginman and broad experience of technology
and growing global businesses.
Full biographical details of our Directors,
and details of Board composition and mixof relevant skills and experience against our
strategic priorities, can be read on pages
70 to 73.

Diversity
The Board sees championing diversity,
equity, inclusion and belonging as one of its
key commitments. Our Board composition
was 29% women Directors at 31 December
2022, 25% on 1 February 2023 following theappointment of Don Robert and will be 29%
following the 2023 AGM, when Ross Graham
steps down as a Director. Charlotta Ginman
is our Senior Independent Director as well
as Chair of the Audit Committee, providing
extensive financial experience to the Board.
The Committee regularly reviews the Board
Diversity Policy, which acknowledges that aneffective Board will include and make gooduse of differences in the skills, geographic
and industry experience, background,
ethnicity, gender and other distinctions
between Directors. It emphasises that,in identifying suitable candidates forappointment to the Board, the Committee
will consider candidates on merit against
objective criteria, with due regard for the
benefits of diversity on the Board andthe skills, experience, independence andknowledge which the Board as a whole
requires to be effective.

Supplementary information

External appointments held by Directors
were considered and assessed as providing
valuable experience and insights for
Directors to apply to their role at Keywords,
and do not impact a Directors' ability to
dedicate the required time to Keywords.

Activities in the year
During the year, the Committee’s key
activities included:• The search for the Chairman role;• The search and selection process for the
COO role, and nomination of Jon Hauck;• The search for the CFO role;• Conducting a Board effectiveness
review; and• Assessing the skills, knowledge andexperience and diversity on the Boardand the time commitments of Directors.

Induction and development
Don Robert was appointed to the Board on
1 February 2023 and is currently engaged
in a comprehensive induction programme,
including meetings with each of the
Directors, executives and key external
stakeholders, to obtain a deep understandingof the business’ operations and environment,
corporate governance matters, investor
relations and M&A.
Non-Executive Directors are encouraged
to be involved in specific workshops or
meetings, in line with their individual areas ofexpertise. Further training and development
needs are assessed on a periodic basis andas part of Board and Committee evaluations.

Governance
The Committee meets at least twice a year
and at such other times as the Committee
Chair or any member of the Committee
may request. The Committee has formal
terms of reference which can beviewed on the Company’s website,www.keywordsstudios.com.

Company Secretary
The Directors had direct access to theGeneral Counsel and Company Secretary,
Andrew Kennedy, for advice on legal andcorporate governance matters.

2023 plan

The Company is focused on improving
diversity across the entire Group from theboardroom to the studios. Information about
diversity across the Group can be found on
pages 46 and 47.

The Committee has two meetings scheduled
for 2023. Its attention will be focused
immediately on succession planning for the
CFO role, and afterwards reviewing the balanceof skills, knowledge, experience and diversity
on the Board to identify areas of focus for
future Non-Executive Director recruitment.

Time commitment

Ross Graham

During the year, the Committee reviewed
the time commitments of Board roles.

Chairman of the Nominations Committee
15 March 2023

81

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Keywords Studios plc Annual Report and Accounts 2022

Audit Committee report

Focusing on financial performance, balanced
reporting, risk oversight, and effective
internal and external audit activities.
Charlotta Ginman
Chair of the Audit Committee

At a glance
Key responsibilities• Oversight of integrity of financial
reporting, including significant
judgements and an assessment offair, balanced and understandable
disclosures• Monitor the risk management system,
including principal and emerging risks• Review effectiveness of the internal
audit function and oversight of internal
control systems• Review the effectiveness of the external
audit, including independence andobjectivity• Set the audit fee and services andreview engagements for non-audit
services

Membership and attendance• The Committee members are Charlotta
Ginman, Ross Graham, Georges Fornay,
Marion Sears and Neil Thompson. Ross
will remain on the Committee for 2023
until he retires from the Board• More information about the Committee
members and their attendance during
the year can be found on pages 70
to 73

Non-audit services (€)
2022

675,613

13,0002021

591,650

2020

540,000 13,000

Audit fee

13,350Non-audit services

Overview

Strategic report

Introduction from the Chair
I am pleased to present, once again as Chairof the Audit Committee, the report for theyear ended 31 December 2022. This reportdetails the work of the Committee overthe past year, fulfilling our responsibilities
to provide effective governance over theGroup’s financial activities.

Composition and attendance
The Audit Committee, as a whole, hascompetence relevant to the video games
industry, both Ross Graham and I are
Chartered Accountants and I also chair
the Audit Committees for other publiccompanies. The Committee met five times
during the financial year and all members
attended all Committee meetings. Meetings
have been held in person, with some invitees
attending remotely via videoconferencing,which has enabled the Committee to operate
effectively and allow senior managers toparticipate in meetings from whicheverregion they are located.

Role and responsibilities
The Committee has written terms ofreference which are available to view on the
Company’s website www.keywordsstudios.
com. The terms of reference clearly define
the Committee’s responsibilities and duties
and these were reviewed by the Committee
and approved by the Board in December
2022. In addition to the terms of reference,
the Committee has developed an annual
agenda which corresponds with the meetingschedule, to ensure all key responsibilities arecompleted and managed.

Significant matters considered by
the Committee during the year
Key reporting issues
During the year and as part of the year-end
procedures, the Committee considered
the following key financial matters in
relation to the Group’s financial statements
and disclosures with input from bothmanagement and the external auditor:• Business combinations – we reviewed,
the key business combination accounting
assumptions used during the year.
• Valuation of goodwill and intangible assets– we received goodwill impairment review
results, and challenged the underlying
assumptions made. In particular, we heldrobust discussions around suggestedchanges to the Company WACC and thejustifications and implications of this.

Governance

Financial statements• Segmental reporting – in particular,changes to segmental reporting to alignwith the new organisational and reporting
structures: Create, Globalize and Engage.
• Revenue recognition – we reviewed, aspart of the regular CFO update, areas ofmaterial judgement relating to revenue
recognition in client contracts.
• Functional currency – we reviewed papers
supporting the functional currency of
the Group.
• Taxation – we considered tax
management practices across the Groupand reviewed the updated Tax Policy
Statement and Anti-Tax Evasion Policy.
• During the year, we continued to closely
monitor the impact the Ukraine crisis hason the Group.
Furthermore, the Committee discussed
management estimates and judgements inconnection with bad debt provisioning (IFRS
9), going concern, taxation and treasury.
For further detail on these, see the Notes
forming part of the consolidated financial
statements on pages 117 to 156.

Annual report andfinancial statements
The Board has asked the Committee toconfirm that, in its opinion, this Annual
Report as a whole can be taken as fair,balanced and understandable and provides
the information necessary for shareholders
to assess the Group’s financial position,
performance, business model and strategy.
In doing so, the Committee has given
consideration to:• the way the Strategic Report (including
the Chairman’s statement and reports of
the CEO and CFO) presents the Groupand its operations, financial and businessmodel and the metrics management uses
to measure performance;• whether suitable accounting policies havebeen adopted and have challenged therobustness of significant management
judgements and estimates reflected in
the financial results;• the comprehensive control frameworkaround the production of the Annual
Report, including the verification
processes in place to deal with thefactual content;• the extensive levels of review that areundertaken in the production process, byboth management and advisers; and• the Group’s internal control environment.

Supplementary information

The Group uses certain APMs to present
its results alongside the statutory financial
statements. These are non-GAAP measuresused by management and the Board
designed to provide the users with a further
understanding of the trading performanceof the business. An explanation of the APMs
and a reconciliation to the nearest statutory
equivalent measure is provided on
pages 165 to 170.
As a result of the work performed, theCommittee has concluded that the Annual
Report for the year ended 31 December
2022, taken as a whole, is fair, balanced andunderstandable and provides the informationnecessary for shareholders to assess theGroup’s performance, business modeland strategy, and it has reported on thesefindings to the Board.

Internal control and risk
assurance framework
The Committee has continued to review
and challenge the upgrades that haveand are taking place during the year to
the Company’s internal control and risk
assurance framework to ensure that
following its rapid expansion, the Company
operates within a fit-for-purpose framework.
Twice a year, at the time of the interims
and full year results, the regional heads ofoperations, finance teams and service line
directors provide to the CFO, management
confirmations of compliance in such areas
such as key policy rollouts, risk reviews,
internal controls and contract management.
The Committee was pleased to see
the implementation of a performance
management system, which unified
budgeting, forecasting, consolidation, andperformance reporting activities acrossthe Group.
The industry and our clients require thehighest standards of security. During 2022,
Keywords updated the Group Information
Security Framework to align to industry
standards. A deep dive review of information
security and cybersecurity was undertaken.
For 2023, the security programme will placestrategic focus on building the technology
spine of the business, in line with theTechnology strategic priority, and further
enhancements including security controls
and a global risk assessment framework.

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Audit Committee report continued

During the year, the Committee continued
its regular review of the Company’s principal
risks on behalf of the Board, ensuring these
are top of mind and relevant, and mitigationplans are in place where appropriate. During2022, the Committee reviewed the Risk
Register at each meeting and conducted a
deep dive review in January 2022 and 2023,
considering the principal and emerging risks
identified from both the top-down Board
risk overview and the bottom-up seniorleadership team review. A comprehensive
overview of our principal risks, and changes
in the year, can be read on pages 62 to 68.
There was greater emphasis on the risk of
fraud during the year. The Committee took
comfort from a report from management,as part of its year-end procedures, on the
low likelihood of a material misstatement of
the financial results caused by fraud, error
or omission and mitigating controls andprocedures in place to prevent
this happening.

Internal audit
The Head of Internal Audit reports into me,
the Chair of the Audit Committee, with adotted line into the CFO. The activities of theinternal audit function are governed by an
Internal Audit Charter which was re-approved
and signed off by the Committee during theyear. The 2022 internal audit plan was revised
to take into account the ability to conductsite visits in person. The Committee received
updates on the results of internal audit
work, including:• integration of recently acquired
businesses;• implementation and communication ofGroup policies;• business assurance processes; and• IT and physical security.
During 2022, the Head of Internal Audit
continued to benefit from dedicated support
from Deloitte Ireland to provide a risk
assessment and internal control review of
the Group, to:• gain an external view of the material risks,
including financial and operational risks;• review our internal controls framework
for three key process areas: customer
onboarding, intercompany transactions,and hire-to-retire practices; and• implementing remediation plans andalternative controls.
The results of this review were presented to
the Committee at each meeting throughout
the year and helped us to scope the 2023
internal audit plan.

Group policies
Key Group policies relating to financial andcompliance processes are reviewed annuallyby the Committee, including:• Protected disclosures (whistleblowing)• Anti-bribery and corruption• Non-audit services• Employment of former auditors• Anti-tax evasion• Anti-fraud and theft• Information security and cybersecurity• Data protection

Whistleblowing
During the year, a new externally facilitatedwhistleblowing portal was implemented
to co-ordinate responses to protecteddisclosures received and to securely
handle confidential or anonymous reports
in line with data privacy rules and thelatest whistleblowing legislation in relevant
jurisdictions where we operate.
The portal gives employees and third parties
the opportunity to raise any concerns they
may have about possible financial or otherirregularities confidentially, anonymously ifthey wish. During 2022, eight reports werereceived, which were fully investigatedand either substantiated and resolved ordisproven (2021: three). The greater numberof reports received in the year gives theCommittee confidence that employees areaware of the whistleblowing portal and are
confident to use it without fear of retribution.

External audit
Audit services
The Auditor is appointed by the shareholders
annually to provide an opinion on financial
statements prepared by the Directors.
BDO, the Company’s current Auditor, wasfirst appointed in 2013. Currently, Stephen
McCallion acts as our lead partner.
The Auditor attends all Committee meetings.
The scope of the current annual yearend audit was agreed in advance with theCommittee with a focus on areas of audit risk
and the appropriate level of audit materiality.
The Committee also had discussions withthe auditor on fees, internal controls,
accounting policies and areas of criticalaccounting estimates and judgements.

Following the audit, BDO reported to theCommittee on the results of the audit workand highlighted any issues identified, or that
the Committee had previously identified as
significant or material in the context of thefinancial statements.
There were no adverse matters brought
to the Committee’s attention in respect ofthe 2022 audit, which were material andwhich should be brought to the Company’s
shareholders’ attention.

Effectiveness
The Committee monitored and evaluatedthe effectiveness of the Auditor under thecurrent terms of appointment based on anassessment of the Auditor’s performance,
qualification, knowledge, expertise andresources and in light of current COVID-19
restrictions. The Auditor’s effectiveness was
also considered along with other factors
such as audit planning and interpretationsof accounting standards and separate
discussions with management (without
the Auditor present) and with the Auditor(without management present). I also
held discussions with the audit partner
throughout the year outside ofCommittee meetings.
The Committee was satisfied that the audit
was effective and that BDO continues todemonstrate the skills and experienceneeded to fulfil its duties effectively.

Independence and non-audit fees
The non-audit services policy was reviewed
and updated in 2022. Any non-audit
services are required to be pre-approvedin advance by the Committee. During theyear, BDO provided non-audit services to
the Company of €13,000 (2021: €13,350),
representing work done in association with
the interim accounts.
In order to fulfil the Committee’s
responsibility regarding independence of
the Auditor, the Committee reviewed thesenior staffing of the audit, the Auditor’sarrangements concerning any conflicts ofinterest, the extent of any non-audit services,
the fact that no former external auditors
have been employed in the business, and
the Auditor’s independence statement. The
Committee was satisfied that the Auditor
remains independent.

Overview

Strategic report

Governance

Financial statements

Supplementary information

Audit tender
During 2022, as stated in our 2021 Annual
Report, the Company had initial discussions
with a number of potential Irish audit firms
we had hoped would participate in an audit
tender during the second part of the year.
It became apparent during those discussions
that the Irish audit market is experiencing
a turbulent time, with no one qualifying
firm able to fully commit to partaking in atender this year. Reasons stated were acutestaff shortages in the Irish audit market.
This, coupled with our pending changeof CFO following the current recruitment
process, led us to believe that forcing anaudit tender during the year could seriously
risk the quality of our audit for next year. We
held extensive discussions with BDO, andtogether concluded that the best option for
the Company was to delay the audit tender
for a year or possibly two, allowing the Irish
audit market to settle down. Whilst BDO
has been our auditor for 10 years (and bestpractice would be to run a tender), Stephen
McCallion has only acted as lead partner for
three of the five years he has been involved
with the Company’s audit. We therefore
believe he remains independent and able tocarry on as lead partner for a maximum two
more years. BDO Ireland has confirmed to us
that they share this view and this potential
continuation is not in breach with theirinternally set independence guidelines.
The Audit Committee has therefore, in
accordance with the 2019 Ethical Standard,
recommended to the Board that BDO shouldin these exceptional circumstances be
proposed to remain the Company auditor
for 2023 at the upcoming AGM.

Focus for the coming year
The Committee has five meetings scheduled
for 2023. Attention will be focused onreviewing the internal controls framework forother key process areas and overseeing theenhancement of compliance processes.

Charlotta Ginman FCA
Chair of the Audit Committee
15 March 2023

Case Study

Principal risk deep dive:
Information and cybersecurity
In October 2022, the Board held a deep dive session with the Information
and Cybersecurity team to discuss the current state of maturity of theGroup, progress made in the year and the strategic priorities for the future.
The Board recognises information and cybersecurity as one of the Group's
principal risks, assessed as having a high likelihood and severe potential
impact. As such, regular updates are presented to the Board and each year
a deep dive is conducted to review this fast-evolving area.
Areas that were the subject of focused discussion included:• the level of investment in the information and cybersecurity programme;• the maturity of the Group;• lessons learned from past incidents;• the standardisation of policies and processes across the Group;• communications with clients regarding Keywords' programme andincidents; and• internal training for employees.
The Board were pleased to note the growing team supporting our studios
around the world, and the continued investment in technological solutions,which together were enhancing the Group's visibility of, and ability torespond to, cyber incidents. The key priority for the coming year was
agreed: to develop a crisis management plan, asset management framework
and risk impact assessments across the Group.
Furthermore, additional feedback loops to the Board on security incidents
and penetration testing activity were implemented to ensure Directors
remain up-to-date on information and cybersecurity matters, in light of
their strategic and operational importance.

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Directors' Remuneration report

Focusing on fair pay for all employees, competitive
rates for the wider workforce and a balanced
structure with incentives for executives that alignwith shareholder experience.
Marion Sears
Chair of the Remuneration Committee

At a glanceCommittee membership
The members of the Committee are
Non-Executive Directors (all of whom
are independent) and the Chairman of
the Board. The Committee will continue
to monitor its composition to ensure it
remains appropriate and reinforces ourability to provide independent oversight.
The members of the Committee and theirattendance at meetings during the year
are disclosed on pages 70 to 73, together
with their biographical details.

Key responsibilities• Set the Remuneration Policy• Set measures for short and long-term
incentives and measure performance,
including the use of discretion• Review Group-wide pay conditions,
including equality and the gender
pay gap

Taking care of ourlowest-paid colleagues

c.4,000
received additional interim
salary increases

c.5,000
received a one-off thank you payment
to support the cost of living

Overview

Strategic report

Governance

Financial statements

Supplementary information

Introduction from the Chair
I became Chair of the Remuneration
Committee in May 2022 and I am pleased topresent the Directors’ Remuneration Reportfor the year ended 31 December 2022.
The Company has chosen to adopt the
Corporate Governance Code for Small andMid-size Quoted Companies published by
the Quoted Companies Alliance. However,the Board recognises the importanceof transparency and high standards ofcorporate governance, so this reportcontains disclosures similar to those requiredby the UK Corporate Governance Code 2018.
We have continued to implement a simple
Executive Director remuneration structure
comprising base salary at a level median or
below FTSE 250, pension in line with theworkforce, lower quartile annual bonus, andupper quartile long-term share incentive
plan. This structure provides a clear anddirect link between pay and our strategic
priorities, it takes into account the wider
workforce remuneration and employment
conditions and it is aligned withshareholders’ experience.
During the year, a number of directorshipchanges took place. Sonia Sedler stepped
down from the Board in March 2022 andSonia's exit arrangements were set out
in the 2021 Annual Report and Accounts.
These are described again on page 97 but
since they were the subject of engagementa year ago, and the subject of voting at the2022 AGM, we hope they will not influencevoting at the forthcoming AGM. In November
2022, Jon Hauck, our CFO, was promoted
to COO Designate in addition to his CFO
responsibilities, which he retains until a
new CFO is appointed. This report explains
how we addressed Jon's promotion, taking
the opportunity to harmonise all Executive
Director compensation arrangements.
Full details of directorship changes can beread on page 81.

Executive pay outcome for 2022
The Group delivered a strong performancein 2022 with good growth in revenue of
34.8% to €690.7m. Adjusted pre-tax profit
increased 30.2% to €112.0 and adjusted
cash conversion rate of 100.1%. We madefive acquisitions during the year, further
strengthening the breadth and depth of theGroup’s value-added services offered toour global video games clients. This strong
performance was achieved in contrast toa more difficult period for the technology
sector as a whole, which has cut backon employees and investment due tolower consumer spending and economic
headwinds. During the year our new CEO,
Bertrand Bodson, focused on shaping his
leadership team, prioritising our integrated
services offer, embracing greater use oftechnology and building relationships
with customers.
In the context of the strong businessperformance the Committee awarded ahigh bonus pay-out which it believes fairly
reflects achievements in the year. Bertrand
Bodson did not receive any LTIP vesting as
he joined the business in 2021 but Jon Hauck
received an LTIP vesting for the three years
to September 2022, based on relative total
shareholder return ("TSR") performance,
together with the vesting of an additional
LTIP granted on his appointment to Keywords
in 2019 to compensate for remuneration left
behind at his previous employer. Accordingly
the single figure remuneration earned by
the CEO was £809,000 and the single figure
remuneration earned by the CFO
was £2,092,800.

SalaryBertrand Bodson, our CEO, did not receive abase salary increase in the year as he joinedin December 2021.
In October, when we announced that
Jon Hauck would take on the COO role,
the Committee took the opportunity toharmonise executive remuneration suchthat going forward our CEO, our COO
and our new CFO (when appointed) will all
have the same elements making up theircompensation. We decided to restructure
Jon’s pay by removing the historical salaryshare element and increasing base salary to amore market-competitive level. Accordingly
Jon’s salary increased from £365,000 p.a.
(being £305,000 salary plus £60,000 salaryshares) to £390,000 p.a. with effect from
1 November 2022, and will remain at this level
until the review in April 2024. Having proved
himself in role over the last three years
since appointment, Jon now has increased
commercial responsibility as COO Designate
and remains in charge of the demanding
M&A programme. Therefore, commensuratewith the increased scale and complexity of
Keywords, the Remuneration Committee
concluded this change was appropriate,
fair and in the interests of all stakeholders.

Bonus
The bonus represents 30% of base salary andwas measured against financial metrics (60%)
and non-financial metrics (40%). Targets
were set in line with our strategic priorities
and, as described above, management
performed strongly. Achievement against
targets is described on page 96 and thisled to a 98% payout (equating to 29%
salary). The Committee determined that theoutcome reflected performance in the year
and therefore decided that no discretion
would be applied.

LTIP
The LTIP represents 275% of salary for the
Executive Directors and the performance
period is three years. Bertrand joined in
December 2021, and therefore no LTIP
vesting has yet occurred for Bertrand. Jon
Hauck received LTIPs vesting relating to
the performance period September 20192022 which vested in full, measured against
relative TSR against FTSE Small Cap, relating
to a regular award and a one-off LTIP which
was awarded to him in compensation for
remuneration foregone when he left his
previous employer. Total shares vesting
to Jon Hauck under these awards in 2022
amounted to 68,936 shares; the Committee
considers that Jon has performed well since
appointment in 2019 and has been paid a lowbase salary, therefore these awards vesting
are fair and acceptable and no discretion
was applied.

Workforce remuneration
All employees received a regular salary
increase on 1 April 2022, and around 4,000
employees on lower salaries received afurther raise, taking their total increase up
to 10% by way of salary following a mid-year
review in October 2022. In addition, all lowerpaid employees received a one-off thank you
payment at the end of the year to support
cost of living. This was calculated according
to location and salary level and on averageamounted to around $300. The overall
effect was to increase the pay of lower-paid
employees by a higher percentage thanour management teams, who received anaverage 3.5% increase in the year. As a result
we are seeing positive employee feedback
and reduced attrition.

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Directors' Remuneration report continued
Introduction from the Chair continued
Stakeholder considerations

Shareholder engagement

The Committee has balanced the interestsof shareholders and employees in reachinga determination that the remuneration
outcomes described above are fair andreasonable and that no discretion needed to
be exercised to adjust outturns or to address
windfall gains. In coming to this conclusion,
the Committee took into account thefollowing factors:

The former Chair of the Remuneration
Committee and I engaged with our major
shareholders in January and March to discuss
2021 remuneration and plans for 2022 andthere was good support for our Policy and
Implementation. Specific engagement
relating to the AGM vote clarified that the2022 AGM vote reflected dissatisfaction withthe presentation of the leaving arrangementsfor our COO and we have noted thisfeedback (full details of payments made andtreatment of share awards on departure aredisclosed in the 2021 Annual Report). Further
engagement with shareholders has since
taken place and the Committee is confident
that our current remuneration structure isin line with the interests of shareholders andconsistent with good corporate governancepractice in the UK.

• The financial performance of the Group
had been strong. Financial performancein the year can be read on pages 58 to 61.
• The Group continued to pay dividends
to shareholders in line with the dividend
policy. Dividends are described further on
page 131.
• 2019 LTIP awards were not made at asignificantly lower level than those in2018 and any gain received during theyear is due to consistently strong shareprice performance, reflecting the robust
growth of the business.
• The employee net promoter score (eNPS)
remained at a good level. Employee
engagement is described further on
pages 43 and 44.
• Lower-paid employees received higher
percentage increases in salary thanmanagement through an additional midyear review, plus a one-off thank you
payment to support cost of living.
• Employee feedback positivity has
improved and attrition has fallen.

2023 remuneration
No decision has yet been taken in respectof Executive Director salary increases in2023 but in line with our Policy executive
salaries will only increase in line with thewider UK workforce as a maximum. In 2023,
the maximum bonus opportunity will again
remain at 30% of base salary, based on 60%
financial objectives and 40% non-financial
objectives. During the year, we reviewed
whether it was appropriate to maintainrelative TSR as a single metric for the LTIP
and after taking advice and consideringother metrics, including ESG targets, we
decided not to make any change at thistime. Therefore in 2023 LTIP awards will
be granted at 275% base salary (measured
against TSR vs FTSE 250 index (excluding
investment trusts)).

The Committee will continue to keep its
Remuneration Policy under continuous
review to ensure it delivers a positive
workforce pay philosophy.
I hope you find this Directors’ Remuneration
Report provides you with a clear, concise
and comprehensive insight of remuneration
matters at Keywords and I hope you will
support the remuneration report resolution
at the AGM.

Marion Sears
Chair of the Remuneration Committee
15 March 2023

Overview

Strategic report

Governance

Financial statements

Supplementary information

Section 1: Directors’ Remuneration Policy
Executive Directors’ remuneration at a glance
The following is a summary of the key components of Executive Director remuneration, including changes and implementation in theforthcoming financial year.
Element

Remuneration in 2022

Remuneration in 2023

Base salaryWith effect from 1 January 2022

CEO: £600,000
CFO/COO Designate: £390,000

CEO: £600,000
CFO: £295,000
COO: £295,000
With effect from 1 March 2022
CEO: £600,000 (no increase)
CFO: £305,325 (3.5% increase)
COO: £305,325 (3.5% increase until departure on 18 March 2022)

With effect from 1 April 2023
CEO: Salary increase to be decided in late March 2023
CFO/COO Designate: Salary will not be reviewed until 1 April 2024
New CFO: to be appointed

With effect from 1 November 2022
CEO: £600,000 CFO/COO Designate: £390,000
Salary shares

Shares were granted with the following values:

No intention to grant salary shares to Executive Directors

CEO: nil
CFO: £60,000
COO: nilPension

5% of base salary for all Executive Directors, in line with UK workforce

No change

Annual bonus

Maximum opportunity of 30% of base salary based on:

No change

LTIP•

Financial targets, including turnover and profitability (weighted 60%)•

Individual performance vs Non-Financial Objectives (weighted 40%)275% of base salary for Executive Directors, subject to the Company’s
TSR performance versus the FTSE 250 Index (excluding investment
trusts) over a three-year performance period

No change

Shareholding requirements apply

Policy and principles
The Remuneration Committee determines the Company’s policy on the remuneration structure for the Executive Directors and Executive
Committee members (ExCo) plus the Company Secretary and is responsible for oversight of the Remuneration Policy for the broader
employee population.
The objectives of this policy are to:• reward executives in a manner that ensures they are properly incentivised and motivated to perform in the best interests of shareholders;• provide a level of remuneration required to attract, motivate and retain high-calibre individuals;• encourage value creation, through consistent and transparent alignment of incentive arrangements with the agreed Company strategy overthe long term; and• ensure the total remuneration packages, comprising both performance-related and non-performance-related remuneration, are designed tomotivate the individual, align interests with shareholders and comply with corporate governance best practice.
The Remuneration Committee believes the foregoing objectives are best achieved by a remuneration structure whereby:• base salaries are targeted at up to median vs relevant comparator groups. In 2021 and early 2022, the award of salary shares was used tocompensate for base salaries at the lower quartile of relevant comparator groups and to ensure a more competitive position is achievedin a structure aligned with shareholders. From November 2022 we moved to a more typical market-competitive base salary structure andthere is no intention to use salary shares going forward;• annual bonuses are set at a low level, with a maximum of 30% of base salary; and• long-term incentives are set at upper quartile, being the means by which executives can earn significant rewards if, but only if,
shareholders likewise have obtained a good return.

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Directors' Remuneration report continued
Section 1: Directors’ Remuneration Policy continued
Executive Director remuneration components
Various remuneration components are combined to ensure an appropriate and balanced remuneration package which reflects the sizeand complexity of the Group, the executive’s experience, responsibility and position, as well as wider market conditions. For this, theRemuneration Committee takes into account the performance of the individual, comparisons with peer companies and, where consideredappropriate, reports from external independent consultants.
The remuneration package comprises the following elements:• Fixed remuneration (base salary, benefits and pension)• Performance-based remuneration (annual bonus and share awards)
These elements are detailed in the table below, which refers to the structure used for the Executive Directors; the structure is cascaded
down to the ExCo and leadership team with variation in quantum according to level.
During 2022, the Remuneration Committee reviewed the pay structure for the Executive Directors with a particular focus on how the
package appropriately reflects the strategic priorities of the Group (focused on continued strong growth), and the appropriateness of theperformance conditions applied to long-term incentives (including a review of ESG-related measures). The Committee concluded that thecurrent structure continued to be appropriate and effectively linked the remuneration of Executive Directors with the long-term success of
the Company and interests of shareholders.
Purpose and link to strategy

Operation

Opportunity

Performance measures

Base salaries are reviewed by
the Committee annually andbenchmarked periodically againstcomparable roles at comparable
companies of similar size andcomplexity.

Salaries are set on a case-by-case basis
to reflect the role, the experience andqualifications of the individual.

n/aBase salary
To attract and retain talented
executives to deliver the Group’s
strategy, by ensuring base salaries
and the implied total package
are competitive in relevant talentmarkets, while not overpaying.

Paid in cash.

Base salary increases for the executives
take into account personal performance,
Group performance, significant changes
in responsibilities, the average increase
awarded to the wider workforce, andcompetitive market practice.
In the normal course, the expectation isthat base salary will increase annually inline with, or below, any increase paid to thewider workforce.

Pension and benefits
To provide an appropriate
structure and level of postretirement benefit for executives
in a cost-efficient manner thatreflects local market norms in therelevant jurisdiction.

At the discretion of theRemuneration Committee, an
executive may participate in a
pension scheme facilitated by
the Company.

The Company provides access to pension n/aschemes based on local legal requirements
or where expected by local labour
markets. Contributions meet the minimum
requirements or are of a modest level.

The Company also provides access Basic additional benefits may also be
to Group benefit schemes where provided where available and whereappropriate by region which may considered the norm for managerial
include moderate contribution
positions in similar businesses.
towards private health insurance, An amount is paid equivalent to adeath in service cover and otherpercentage of base salary not exceedingGroup-based benefits.
the average paid in respect of the local
workforce (currently 5% in UK).

Annual bonus
To provide a modest award
where individual and Company
performance have been at or
above expected levels.

Executives are eligible toparticipate in an annual
bonus scheme.
The Remuneration Committee
reviews the range and weightingsof financial and non-financial
performance measures each year.

Up to a maximum of 30% of base salary.
Paid in cash.

The portion of bonus earned in any one year
depends on the Remuneration Committee’s
assessment of each individual’s performanceand the overall performance of theCompany against predetermined targets
for the year.
Performance targets are 60% weighted
on the Company’s financial performanceand 40% weighted on performanceagainst strategic and personal targets.
The Remuneration Committee has
discretion over outcomes; for example, if
the Company’s financial performance isconsidered to be unsatisfactory, the element
based on personal performance is likely to
be foregone or reduced.

Overview

Strategic report

Purpose and link to strategy

GovernanceOperation

Financial statements

Supplementary information

Opportunity

Performance measures

LTIP
To incentivise delivery against
total shareholder return targets
and align the interests ofexecutives and shareholders ingrowing the value of the Groupover the long term.

LTIP grants are made annually in
Maximum opportunity 275% of base salary.
the form of conditional awards of Dividends are accrued over theshares or nil-cost share options
vesting period.
which vest subject to performance
conditions measured over three
years. Once vested, awards may
be exercised up to 10 years
from grant.
Malus and clawback provisions
apply.

Vesting of LTIP awards is subject tocontinued employment during theperformance period and the achievementof performance conditions based on TSR.
The Committee has the discretion to adjust
the outcome in exceptional circumstances
to ensure it is a fair reflection of underlying
performance. Further details, including
the performance targets attached to
the LTIP in respect of each year will be
disclosed in the relevant implementation
report on remuneration (subject to thesebeing considered not to be commerciallysensitive).
For Executive Directors, a proportion(currently 25%) of LTIP shares vesting after
tax and NI must be held to build towards
the required shareholding.

Executive Director shareholding guidelines
Executive Directors are encouraged to build and maintain over time a shareholding in the Company. To align the interests of Executive
Directors with those of shareholders, and to promote long-term thinking, the Remuneration Committee imposes shareholding requirements
which apply to all LTIP awards made to Executive Directors. The Committee has adopted shareholding requirements which apply both during
employment and for a period following employment, although the Remuneration Committee retains the right to waive this requirement inexceptional circumstances such as death, ill health or severe financial hardship.
At the time of Jon Hauck’s promotion to COO Designate the Committee decided to harmonise Executive Director shareholding guidelines
which had been higher for the CEO (250%) and lower for other Directors (100% in 2021 and 200% in 2022). In conjunction with Jon Hauck’ssalary increase in November 2022, the Committee decided that all Executive Directors are required to build a shareholding equivalent to250% of base salary. This may be built over time, but with a requirement to hold 25% of any LTIP shares vesting (after tax and NI) until therequired shareholding level is achieved. On departure, an Executive Director must continue to hold the required shareholding (or their actual
shareholding if lower) for 12 months.
Details of the Executive Directors’ current shareholdings are provided on page 100.

Recovery provisions (malus and clawback)
Recovery provisions may be applied to the annual bonus and LTIP awards in cases of fraud, dishonesty or deceit, gross misconduct or material
financial misstatement in the audited financial results of the Group. The Remuneration Committee may determine that an award is cancelled inits entirety or be reduced to the extent they see fit.
Malus provisions apply which enable the Committee to determine before the payment of an annual bonus or the vesting of an LTIP award,that the bonus opportunity or LTIP award may be cancelled or reduced. Clawback provisions apply which enable the Committee todetermine for up to two years following the payment of a cash bonus or the vesting of an LTIP award, that the amount of the bonus paid may
be recovered and the LTIP or share award may be cancelled or reduced (if it has not been exercised) or recovery may be applied to it (if it has
been exercised).

Use of discretion
The Remuneration Committee may apply its discretion when agreeing any remuneration outcomes, to help ensure that the implementationof our Remuneration Policy is consistent with underlying Company performance and is equitable to all parties.

Process for determining the Remuneration Policy
The Committee periodically reviews the Remuneration Policy to ensure it reflects, if appropriate, trends in remuneration design andgovernance developments, taking into account market practices, best practices, and revisions to the pay guidelines published by major
investors and their representative bodies. In approving any changes to the policy, the Committee considers the impact on individual
Executive Directors and as well as the consistency of pay structures and levels throughout the organisation. The Committee uses specificpay benchmarking studies, when relevant, to ensure Keywords’ remuneration levels are positioned at the appropriate level. If major changes
are considered for Executive Director remuneration, the Committee will undertake a consultation of major shareholders and relevant proxyagencies to ensure their feedback is taken into account before implementation.

91

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Section 1: Directors’ Remuneration Policy continued
Executive Director service contracts
In accordance with general market practice, each of the Executive Directors has a rolling service contract. The following table shows thedate of the service contract for each Executive Director in post during 2022:
Executive Director

Position

Date of appointment

Date of service
agreement

Notice period

Bertrand BodsonCEO

1 Dec 2021

19 Sep 2021

6 months

Jon Hauck

CFO

14 Oct 201930 Sep 2019

6 months

Remuneration for the wider workforce
In addition to determining the pay of the Executive Directors and ExCo members plus the Company Secretary, the Committee is responsible
for overseeing the pay conditions of the wider workforce. The Committee seeks to understand the interests of the workforce by receiving
reports from management on the global employee survey and town hall events, and benchmarking surveys provide a view of pay conditionsin the context of the broader environment. In 2022, the workforce supported enhanced pay-for-performance measures and expressed
concerns over the rising cost of living and other inflation-related pressures.
Keywords currently employs over 12,000 people in 26 countries on a variety of permanent and flexible contract types, and salary levels
range across our service lines from minimum wage equivalent to highly paid technical experts. The complexity of this matrix means that
remuneration is necessarily structured by country and service line however, consistent principles are applied in doing so, and the Committee
provides support, advice and guidance to management in determining the appropriate structure across the Group.
Annual salary reviews normally take place to account for high performance, local pay and market conditions. In light of the high rates
of inflation seen in many of our operating territories, the Committee supported management in conducting a review of the lowest-paid
employee groups during the year and in applying salary increases where considered appropriate to help employees avoid any potential
hardship. In addition, in light of the high rates of inflation seen in many of our operating territories, a one-off payment was made to thelowest-paid employees to support cost of living.
Many permanent employees are eligible to participate in the annual bonus scheme. Performance metrics for the bonus are set to reflect anindividual’s specific objectives and are designed to reward over-performance and collaboration.
The remuneration principles applied for senior managers and senior roles are consistent with those applied to executive remuneration – topromote growth, achieve strategic objectives and contribute to the long-term success of the Group.
As such, objectives and performance conditions set for the bonus and share awards of Executive Directors are cascaded through theorganisation to align the whole workforce strategically. In total, over 1,200 employees received share awards in 2022. Two types of shareaward are used: LTIPs and RSUs. LTIPs vest after a three-year performance period and are subject to continued employment and the same
performance measures applied to executive awards. These are principally used for senior managers who have a role in executing Groupstrategic objectives and ensures alignment across the entire senior leadership team. RSUs are not subject to a performance measure but are
subject to continued employment over two years. These are principally used as a retention mechanism for key roles across the Group.
In 2022, our all-employee savings scheme, the Employee Share Purchase Plan (ESPP) was amended to increase the discount at which
employees can purchase shares. Under the Plan, our employees can save up to £416 per month and at the end of a defined savings period
purchase Keywords shares at a 15% discount. The ESPP is a benefit provided on equal terms to all employees in eligible countries and offers asavings opportunity and promotes share ownership by our employees. In 2022, over 550 employees participated in the ESPP.
The Board does not accept a pay differential between men and women in the same role. At 31 December 2022, there were over 12,000
employees globally, of which 26% were women (by voluntarily disclosure), and the Committee noted that gender balance varied bygeography and service line. In 2022, there was continued focus on the recruitment of women and our continued sponsorship of Womenin Games demonstrates our commitment to improving the gender balance in the industry as a whole. The Group complies with equalpay directives across all its locations, conducting periodic assessments and analysis, and the Board is satisfied that there is equal gender
pay given location and roles. Gender, diversity, inclusion, equity and behaviour are an important focus for our ESG Committee and theRemuneration Committee has included targets relating to this topic in the bonus non-financial objectives for 2023.
The CEO pay ratio presented on page 99 relates to our UK workforce of 783 employees as this is considered the most appropriatecomparator group for the purpose of the ratio.

External appointments held by Executive Directors
The Board believes that external appointments can be useful in providing wider commercial context and providing a personal development
opportunity for an Executive Director however, any external time commitments must be carefully considered. Executives may not accept any
external appointment without the consent of the Board. Any associated fees are retained by executives.
Upon appointment in 2021, Bertrand Bodson held two non-executive positions which he was given permission to retain. Since the year end,
Bertrand has informed us that he will step down from his board role at Wolters Kluwer N.V. in May 2023 and therefore going forward he will
only have one external appointment. Jon Hauck has no external appointments.

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Consideration of shareholder views
AGM voting and other shareholder feedback is important in shaping the Company’s implementation of its Remuneration Policy as well as any
changes to the Policy. The Committee engaged with shareholders and representative agencies before and after the 2022 AGM to explainchanges to remuneration structure and measures, events during the year and priorities for the coming year. The Committee has continued
to engage with shareholders in 2023.

Leaver treatment
Fair treatment will be extended to departing executives. The Group’s policy on termination payments is to consider the circumstances on a caseby-case basis, taking into account the relevant contractual terms in the executive’s service contract and the circumstances of termination.
Executives who resign or are dismissed for cause are, by default, not eligible for an annual bonus if they have left or are under notice at dateof payment and forfeit all unvested LTIP shares, including salary shares.
Good leavers (normally including such circumstances as retirement, death, disability and redundancy) are permitted to exercise unvested
LTIP awards, reduced pro rata to reflect the remaining vesting period (unless such reduction is waived by the Remuneration Committee) andto the extent that the performance criteria are met over the full performance period. At its discretion, the Remuneration Committee may
allow the acceleration of vesting to the termination date, for which the achievement of the performance condition would be at the discretionof the Committee.
On a change of control, all unvested LTIP awards and salary shares may be exercised in full at the time of the event subject to discretion by
the Remuneration Committee. It is intended that the Committee would only apply discretion to reduce vesting if the change of control took
place due to poor underlying performance. A rollover of unvested awards into new awards may also be offered.

Pay for performance scenario analysis
The charts below provide an estimate of the potential future reward opportunities for the CEO and CFO/COO-designate and the potential
split between the different elements of remuneration under four different performance scenarios: “Minimum”, “On-target”, “Maximum” and“Maximum +50% (share price appreciation)”. These charts illustrate how performance-orientated and long term the Company’s remuneration
arrangements are, with the majority of the remuneration opportunity being delivered only under the “Maximum” scenarios. We have also
included a bar showing the value of the actual package paid for 2022. A graph is not provided for Sonia Sedler as she left the Company on
18 March 2022 and her single figure remuneration for 2022 is provided on page 94.
Potential reward opportunities are based on the Remuneration Policy, applied to 2023 base salaries and incentive opportunities. Note that
the LTIP awards granted in a year will not normally vest until the third anniversary of the date of grant, and the projected value excludes theimpact of share price movement except in the “Maximum +50%” scenario.

Bertrand Bodson

Jon Hauck£3,285k

Max +50%£2,460k

Maximum

0

1,000
Fixed

£410k

Minimum£809k

Actual 2022

£736k

On-target£630k

Minimum£1,599k

Maximum£1,133k

On-target£2,135k

Max +50%£2,093k

Actual 2022
2,000

Short-term

3,000

4,000

0

Long-term

1,000
Fixed

2,000
Short-term

3,000

4,000

Long-term

Assumptions:
Actual 2022: Fixed remuneration (2022 base salary, salary shares, benefits and pension), bonus paid for 2022 and LTIP vesting in 2022.
Minimum: Fixed remuneration only (2022 base salary and pension).
On-target: Fixed remuneration as above, plus target bonus (50% of maximum) and threshold LTIP vesting (25% of maximum).
Maximum: Fixed remuneration, plus maximum bonus (30% of base salary) and full vesting of LTIP awards.
Maximum+50%: As per Maximum scenario but with an assumption of share price growth of 50% over the three-year performance period for LTIP awards.

Chairman and Non-Executive Director fee policy
The Chairman and Non-Executive Directors receive fees for preparation for an attendance at Board and Committee meetings. The Company
does not operate any pension scheme for Non-Executive Directors nor do they participate in any variable pay plan. Any reasonable business
expenses (including tax thereon) may be reimbursed.

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Directors' Remuneration report continued
Section 2: Implementation of the Remuneration Policy in 2022
The Remuneration Committee
The members of the Remuneration Committee in 2022 were Marion Sears (who succeeded as Committee Chair in May 2022), Neil
Thompson, Charlotta Ginman and Ross Graham. David Reeves (former Committee Chair) stepped down from the Board on 20 May 2022 andNeil Thompson joined the Committee at that time.
The members are all independent Non-Executive Directors. In the year ended 31 December 2022, the Remuneration Committee met on six
scheduled occasions. Members attended all Committee meetings for which they were eligible to attend throughout the year. Full attendance
details are provided on page 73. At the request of the Committee Chair, the CEO, CFO, COO, Chief People and Culture Officer andremuneration advisor may also attend meetings.
The Chairman and the Chair of the Remuneration Committee met with shareholders, key investors and relevant proxy agencies in 2022 toobtain input and feedback on executive and wider workforce remuneration.
The remit of the Committee is to determine and agree with the Board the framework for the remuneration of the Chairman, Executive
Directors, the General Counsel and Company Secretary, and also oversee the share awards and Remuneration Policy for the wider workforce.
No Director is involved in any discussion or decision about his or her own remuneration.
The Committee engaged Deloitte LLP to provide independent advice to the Committee from 1 November 2022. Ellason LLP also provided
advice to the Committee until 31 October 2022. Neither advisor has any other association with the Company and both are considered
independent, are members of the Remuneration Consultants Group and, as such, voluntarily operate under the Code of Conduct in relation
to executive remuneration consulting in the UK.

Directors’ emoluments
The remuneration for the Directors of the Company for the year ended 31 December 2022 is detailed in the table below:
2022 Fixed pay £’000
Cashsalary/fee

Director

2022 Total
remuneration

2022 Variable pay £’000

SalarySharesBenefits

Pension

Total

Bonus

LTIP

Total

£’000

Bertrand Bodson

600.0

–

5.0

30.0

635.0

174.0

–

174.0

809.0

Jon Hauck

317.7

60.0

2.0

15.9

395.6

113.1

1,584.1

1,697.2

2,092.8

Sonia Sedler 1

514.2

–

1.0

–

515.2

–

–

–

515.2

Ross Graham

95.7

–

–

–

95.7

–

–

–

95.7

David Reeves

29.6

–

–

–

29.6

–

–

–

29.6

2

Giorgio Guastalla3

4.3

–

–

–

4.3

–

–

–

4.3

Georges Fornay

66.4

–

–

–

66.4

–

–

–

66.4

Charlotta Ginman

69.4

–

–

–

69.4

–

–

–

69.4

Marion Sears

65.6

–

–

–

65.6

–

–

–

65.6

Neil Thompson
TOTAL

59.7

–

–

–

59.7

–

–

–

59.7

1,822.6

60.0

8.0

45.9

1,936.5

287.1

1,584.1

1,871.2

3,807.7

1. Sonia Sedler left the Company on 18 March 2022 and her cash salary figure includes payments made on leaving.
2. David Reeves stepped down as a Director on 20 May 2022.
3. Giorgio Guastalla stepped down as a Director on 26 January 2022.

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The remuneration for the Directors of the Company for the period year ended 31 December 2021 is detailed in the table below:
2021 Fixed pay £’000

2021 Total
remuneration

2021 Variable pay £’000

Cashsalary/fee

SalarySharesBenefits

Pension

Total

Bonus

LTIP

Total

50

–

–

2.5

52.5

15.0

–

15.0

67.5

Jon Hauck2

279.8

77.5

–

14.3

371.6

84.0

–

84.0

455.6

Sonia Sedler 2,3

319.3

47.5

–

15.9

382.7

95.8

–

95.8

478.5

Andrew Day7

61.2

–

–

4.9

66.1

–

1,226.0

1,226.0

1,292.1

Ross Graham5

132.5

–

–

132.5

–

–

–

132.5

David Reeves5

94.3

–

–

94.3

–

–

–

94.3

Director

Bertrand Bodson1£’000

Giorgio Guastalla

51.8

–

–

51.8

–

–

–

51.8

Georges Fornay

62.3

–

–

62.3

–

–

–

62.3

Charlotta Ginman5

89.3

–

–

89.3

–

–

–

89.3

Marion Sears6

22.8

–

–

22.8

–

–

–

22.8

21.3

–

–

1,184.6

125.0–

Neil Thompson6
TOTAL

37.6

21.3

–

–

–

21.3

1,347.2

194.8

1,226.0

1,420.8

2,768.0

1. Bertrand Bodson was appointed on 1 December 2021. His one-off award of restricted stock granted on appointment is not included as this award is compensation forawards forfeited at a previous employer.
2. Cash salary includes one-off £37,500 as co-CEO allowance; Salary Shares include one-off £37,500 as co-CEO allowance.
3. Sonia Sedler was appointed on 18 January 2021 and left the Company since the year end on 18 March 2022.
4. Andrew Day retired on 14 June 2021; his salary shares granted in FY21 do not appear in the table as these lapsed on his retirement.
5. Ross Graham, Charlotta Ginman and David Reeves all received an additional fixed fee to reflect the additional work undertaken in relation to the change of CEO and othernew director appointments during the year. Ross Graham received £40,000 and Charlotta Ginman and David Reeves each received £25,000.
6. Marion Sears and Neil Thompson were appointed as Non-Executive Directors on 13 August 2021.
7. 50,000 LTIP shares, granted to Andrew Day in 2018, fully vested on 18 May 2021 due to Keywords’ three-year TSR exceeding the full vesting level. The value shown in thetable is based on the vest-date share price of £24.52, and 30% of which is based on the gain in the share price over the period (from a grant price of £17.22).

Salaries in 2022
The following cash salaries were applied in 2022:• Bertrand Bodson: £600,000• Jon Hauck: cash salary of £295,000 plus salary shares of £60,000 for the period to 1 March 2022, and £305,325 to 1 November 2022,
increased to a cash salary of £390,000 thereafter• Sonia Sedler: £295,000 prorated for the period up to her departure on 21 March 2022
In May and September 2021, Jon Hauck was awarded salary shares to supplement base salary, which were subject to phased vesting with
one third of the award vesting on the anniversary of the date of grant each year, subject to continued employment. Accordingly, 543 salaryshares vested automatically in May 2022 and 410 salary shares vested automatically in September 2022. In total, 4,468 salary shares remain
outstanding, with vesting dates between 2023 and 2025.

PensionDuring 2022, the Executive Directors were paid pension contributions of 5% of salary, in line with the rest of the UK workforce.

Annual bonus outcome for 2022
During 2022, the Executive Directors participated in the annual bonus scheme, and were eligible to earn awards of up to 30% of base salary,subject to the attainment of specific targets. The portion of bonus earned in the year was dependent on Company performance (weighted 60%)
against financial targets for the year in line with our financial KPIs (see pages 32 and 33) and on the Remuneration Committee’s discretionary
assessment against non-financial strategic targets (weighted 40%).
The financial targets were based on revenue (weighted 20% of bonus), adjusted profit before tax (20%) and cash conversion (20%).
The discretionary element considers the Director’s performance for the year against non-financial targets, under various categories. The nonfinancial objectives related to the strategic priorities for the business in 2022, including strategic partnerships, M&A, technology and cybersecurity
and One Keywords (culture and talent). Performance against all the targets set for the year was assessed by the Committee, and the Committee
determined that each Director had achieved 98% of the bonus, equating to 29% of salary.

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The table below shows each element of the executive bonus for 2022, the achievement for each element, and the total achievement and value.

2022 Executive Bonus outcomes
Bonus element

TargetAchievement% OutcomeRevenue

34.8% growth, exceeded budget

60% Financial
20%

20%

20%

Adjusted profit before tax

30.3% growth, exceeded budget

20%

20%

Cash conversion

Exceeded stretched target

20%

10%

Strategic partnerships

Increased customer NPS, strategic partnership reviewsin place, new business growth

10%

10%

M&A

Five acquisitions added sales, profits, and technology,
improved service offer

10%

10%

Technology and cybersecurity

Key recruitment, success with automation

9%

10%

One Keywords (talent and culture)eNPS high for Create & Engage, lower attrition rate,focus on fair pay

9%40% Non-Financial

98%

Total (out of 100%)
Formulaic outcome, %of base salary

Bonus for 2022£'000

Bertrand Bodson

29%

174.0

Jon Hauck

29%

113.1

Director

Long-term incentives vesting in 2022
Jon Hauck joined Keywords in October 2019. At that time, he received 25,000 LTIP shares as part of regular awards to Executive Directors,
and an additional 43,936 LTIP shares as a one-off grant in compensation for awards forfeited on joining Keywords. The full vesting of the LTIP
awards required Keywords TSR to outperform the Numis Smaller Companies (excluding Investment Trusts) Index by 20% over the three year
performance period. The Company’s TSR performance over this period outperformed that of the Index by 34.4% resulting in full vesting ofboth awards in September 2022 and amounted to 68,936 shares in total. No discretion was applied.

Long-term incentives outstanding and granted during 2022
LTIP awards granted to the Executive Directors in May 2020 and May 2021 remained outstanding during 2022. Vesting of the 2020 awards
requires Keywords TSR to outperform the FTSE Small Cap Index over a three-year period. Threshold vesting (10% of the award) will be earned
for TSR in line with the Index and full vesting will be earned for exceeding the Index TSR by 20% over the performance period. Vesting of
the 2021 award requires Keywords TSR to outperform the FTSE 250 Index (excluding investment trusts) over a three-year period. Thresholdvesting (25% of the award) will be earned for TSR in line with the Index and full vesting will be earned for exceeding the Index TSR by 20%
over the performance period.
Bertrand Bodson was granted his LTIP award on his appointment on 1 December 2021, and was also awarded a one-off grant of restricted
shares with a face value of 100% of salary in compensation for awards forfeited on joining Keywords. These conditional LTIP shares will vest
based on performance over the period to May 2024, in line with other LTIP awards granted in 2021, and the restricted shares will vest in
December 2024 subject to continued employment.
In 2022, the Executive Directors were awarded LTIP shares, the vesting of which is based on the Company’s TSR performance versus
the FTSE 250 Index (excluding investment trusts) over a three-year performance period. Given Keywords’ growth during the period theCommittee deemed it appropriate to use the FTSE 250 as the Index against which TSR should be measured. Threshold vesting (25% of theaward) will be earned for TSR in line with the Index and full vesting will be earned for exceeding the Index TSR by 20% over the performance
period. The number of performance-based LTIP shares granted to the Executive Directors in 2022 is summarised in the table below.

Director

Number ofshares granted atnominal value of £0.01

Value as % of salary

Performance period

Vest date

Bertrand Bodson

70,392275%

5 May 2022 – 4 May 2025

5 May 2025

Jon Hauck

35,586275%

5 May 2022 – 4 May 2025

5 May 2025

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TSR performance up to 28 January 2023 for in-flight LTIP awards
2022–2025
Expected vesting: 100%

2021–2024
Expected vesting: 60%

2021–20241
Expected vesting: 100%

2020–2023
Expected vesting: 100%

FTSE 250-5%Keywords

17%

FTSE 250-6%

Keywords

6%
18%

FTSE SmallCap

102%

Keywords
39%

FTSE SmallCap

91%

Keywords-20%

0%

Keywords

20%

FTSE 250

40%

60%

80%

100%

120%

FTSE SmallCap

1. This relates to a 2021 grant to Sonia Sedler on joining the Company.

Sonia Sedler leaving arrangements
Sonia left the company on 18 March 2022 due to personal reasons and was treated as a good leaver. Sonia received base pay and benefits up
to 18 March and received her bonus in respect of 2021. Upon departure Sonia received a payment of £183,536 plus payment in lieu of noticeof £147,500. Sonia retains the 25,000 LTIP award made in respect of compensation foregone at her joining and this award will vest subject
to performance conditions at the normal vesting date. The May award of 35,000 LTIP shares was prorated according to time served under
our new good leaver provisions and Sonia retains 10,144 LTIP shares which will also vest subject to performance conditions at the normal
vesting date in 2024. All salary shares lapsed. We note that the 2022 AGM vote reflected dissatisfaction with the presentation of Sonia's
leaving arrangements and we have noted this feedback. Further engagement with shareholders has since taken place and the Committee
is confident that our current remuneration structure is in line with the interests of shareholders and consistent with good corporate
governance practice in the UK.

TSR performance
The chart below shows the Company’s TSR since listing versus relevant indices.

Value of £100 invested in July 2013
£2,500£2,000£1,500£1,000

£500

£0

2013

2014

2015

2016

Keywords Studios

2017
FTSE 250

2018

2019

FTSE SmallCap

2020

2021

2022

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The chart below shows shareholder value created each year, based on the change in share price plus dividends paid over each financial year
multiplied by the number of shares outstanding at the start of each year.

Shareholder value created each year, £m
2022

3

2021

126

2020

1,009
280

2019
2018 -337

664

2017
176

2016
34

2015

15

2014
-400

-200

0

200

400

600

800

1000

1200

The table below illustrates the CEO’s single figure of total remuneration over the same period as the charts above.
Director

FY14

FY15

FY16

FY17

FY18

FY19

FY20

FY21

Single figure (£’000)1

146

213

449

397

820

1,198

1,012

1,532

FY22

809

Annual bonus outcome(% of max)2

100%

100%

100%

100%

30%

0%

0%

100%

98%

LTIP vesting (% of max)3

N/A

N/A

100%

N/A

100%

100%

100%

100%

100%

SOP vesting (% of max)

N/A

100%

100%

100%

N/A

N/A

N/A

N/A

N/A

1. The numbers in the table for FY14-FY20 are for Andrew Day; FY21 is based on a combination of Andrew Day, Bertrand Bodson, Jon Hauck and Sonia Sedler; FY22 figures
relate to Bertrand Bodson.
2. 100% bonus outcome reflects the bonus outcome for those individuals performing the role of CEO in FY21 (Andrew Day, who retired in FY21, was not paid a bonus).
3. Of those who performed the CEO role during FY21, only Andrew Day benefited from an LTIP vesting in FY21.

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Chief Executive Officer pay ratio
The table below provides disclosure of the ratio between the CEO’s total remuneration and that of the lower quartile, median and upper
quartile of our 783 (2021: 679) UK-based employees. The CEO pay data in 2021 includes all income paid to Andrew Day up to his retirement,
the co-CEO cash salary and Salary Shares paid to the CFO and COO and any bonus earned for the cash element of this, and all income
paid to Bertrand Bodson from 1 December excluding his one-off award of restricted shares paid as compensation for forfeited awards at aprevious employer.
Year

Methodology used

P25 (lower quartile)

2022

Option A

27:1

18:1

15:1

2021

Option A

51:1

38:1

27:1

2020

Option A

33:1

25:1

18:1

P25 (lower quartile)P50 (median)

P75 (upper quartile)

CEO

Year

2022
2021

P50 (median)

P75 (upper quartile)

Base Salary (£’000)

20

33

39

600

Total remuneration (£’000)

22

33

49

809

Base Salary (£’000)

27

35

50

261

Total remuneration (£’000)

30

40

57

1,532

The lower, median and upper quartile employees were determined using calculation methodology Option A which involved calculating theactual full-time equivalent remuneration for all UK employees for the year ended 31 December 2022. From this analysis, three employees
were then identified as representing the 25th, 50th and 75th percentile of the UK employee population. Keywords chose this method as it is
the preferred approach of the Government and that of shareholders, and the Company had the systems in place to undertake this method.
As the drafting of this report was earlier than the final determination of bonuses for the wider population, the bonus outcomes have been
based on the financial forecasts in December 2022.
The CEO pay ratio decreased from 38 in 2021 to 18 in 2022, primarily as a result of the significant vest-date value of the LTIP award vesting in
2021 to Andrew Day (£1.2m) due to the strength of the share price growth over the vesting period of the LTIP awards granted in May 2018, andBertrand Bodson, having joined in December 2021, not receiving the benefit of share awards vesting during 2022.
The CEO pay ratio is based on comparing the CEO’s pay to that of Keywords’ UK-based workforce, a large proportion of whom are engineers,
artists and support staff. The Committee expects that the ratios will be largely driven by the CEO’s incentive pay outcomes, which will likely
lead to greater variability in his pay than that observed at lower levels who, consistent with market practices, have a greater proportion of
their pay linked to fixed components. The Committee considers these ratios when making decisions around the Executive Director pay
packages, and Keywords takes seriously the need to ensure competitive pay packages across the organisation. The Company believes themedian pay ratio for the relevant financial year is consistent with the pay, reward and progression policies for the Company’s UK employees
taken as a whole.

Implementation of the Remuneration Policy in 2023
Base salary
All employees are eligible for a base salary review effective 1 April each year. At this stage no decision has been taken with regard to a salary
increase for Bertrand Bodson. Any increase will be in line with or below that of the UK workforce. The CFO/COO Designate will receive asalary of £390,000 as awarded with effect from 1 November 2022, and the salary for this role will not be reviewed until 1 April 2024.

Salary sharesNo grants of salary shares will be made to Executive Directors in 2023.

Pension
The Executive Directors’ pensions will remain at 5% of base salary, in line with the UK workforce.

Annual bonus
The CEO and CFO will be eligible to earn an annual bonus of up to 30% of base salary in line with previous years. The outcome will be
determined with reference to targets set at the start of 2023 around financial performance (weighted 60%) and non-financial performance(weighted 40%). These follow the same structure as the targets for 2022, reflecting our strategic priorities, and will be disclosed next year.

LTIP
The Committee intends to grant LTIP awards of 275% of base salary to the CEO and CFO/COO Designate, with vesting based on the
Company’s three-year TSR performance relative to the FTSE 250 Index (excluding Investment Trusts), with threshold vesting (25% of theaward) for TSR in line with the Index and full vesting for exceeding the Index TSR by 20% over the performance period.
For simplicity, it is planned to align the LTIP performance period to the fiscal year and therefore the LTIP awards in May 2023, will bemeasured over the three calendar years 2023-2025. Vesting will not take place until three years have elapsed following award and shares
vesting will be subject to Executive Director shareholding requirements.

100

Keywords Studios plc Annual Report and Accounts 2022

Directors' Remuneration report continued
Section 2: Implementation of the Remuneration Policy in 2022 continued
Chairman and Non-Executive Directors’ remuneration
Non-Executive Director fees are based on the roles and responsibilities of the Directors (see table below) and are reviewed annually. The next
review of Non-Executive Director fees will take place in late March 2023 and will take into account the scale of the business and the timerequirement of the Non-Executive Directors.
On 19 January 2023, the Company announced the appointment of Don Robert as a Non-Executive Director and Chair Designate and proposed,
subject to his election by shareholders at the 2023 AGM and the passing of a resolution to amend the Articles of Association of the Company
at that time, to increase the Board Chair annual fee to £400,000. This increase, compared with the fee paid to our previous Chairman, reflects
benchmarking we have conducted as well as expected tenure, our growth ambition, our strategic complexity and our international positioning.
Role

Fee

Board Chairman(up to 26 May 2023)£96,255

Board Chairman(from 26 May 2023)£400,000

Non-Executive Director£51,232.50

Role

Fee

Additional fees:
Member of Audit, Remuneration or ESG Committee£3,105Chair of Audit, Remuneration or ESG Committee£12,420

Senior Independent Director£5,175

Directors’ interest in shares
The interests of each person who was a Director of the Company (together with interests held by his or her connected persons) at the end ofeach financial year (or the time the Director departed the Board, if relevant) is set out below. In line with our Executive Director shareholding
guidelines (detailed on page 91), Jon Hauck, following share award vestings during the year and changes to his salary and applicable
shareholding requirements, has achieved a shareholding of approximately 1x salary as at 31 December 2022. Having joined in December 2021,
Bertrand Bodson will be required to build his shareholding from awards vesting from December 2024.
Director

FY22

FY21

Giorgio Guastalla

Director

FY22

FY21

n/a

500,736

Bertrand Bodson

nil

nil

Ross Graham

64,37659,819Georges Fornay

6,521

6,521

David Reeves3n/a33,464

Charlotta Ginman

1,733

1,733

Jon Hauck

12,937nil

Marion Sears

2,000

1,000

Sonia Sedler2

n/a

nil

Neil Thompson

3,387

2,496

90,954

3,902,342

1

1 	Giorgio Guastalla stepped down as a Director on 26 January 2022. His indirect shareholding related to his 90% holding in P.E.Q. Holdings Limited.
2	Sonia Sedler left the Company on 18 March 2022.
3 David Reeves stepped down as a Director on 20 May 2022.

The outstanding LTIP awards held by each Executive Director of the Company are as follows.

LTIP
Director

Bertrand Bodson

Jon Hauck

Total

Number at
31 December
2021

Number Number vesting Number lapsed/
granted during
duringforfeited
the yearthe year during the year––

Numberexercisedduring the year

Number at
31 December
2022–

61,156First vesting Current vesting
date
expectation1

61,156––70,392–––25,000–25,000––43,936–43,936–43,936–30 Sep 2022–

25,000––––25,000

1 May 2023

100%

25,000––––25,000

5 May 2024

60%–

35,586–––35,586

5 May 2025

100%

180,092

105,978

68,936–43,936242,134

1. Vesting expectation (% of award) is based on the achievement of the TSR performance condition up to 28 February 2023.

5 May 2024

60%

70,392

5 May 2025

100%

25,00030 Sep 2022–

Overview

Strategic report

Governance

Financial statements

101

Supplementary information

Salary shares and restricted shares

Director

Number at
31 December
2021

Jon Hauck2

Sonia Sedler3

Number Number vesting Number lapsed/
granted during
duringforfeited
the yearthe year during the year

Numberexercisedduring the year

Number at
31 December
2022

First vestingdate for one- Current vesting
third tranche1
expectation

1,630

–

543

–

543

1,087

5 May 2022

100%

1,231

–

410

–

410

821

16 Sep 2022

100%
100%

–

2,560

–

–

–

2,560

5 May 2023

407

–

–

407

–

–

-

-

1,231

–

–

1,231

–

–

-

-

1 Nov 2024

100%

Bertrand Bodson2

22,239––––22,239Total

26,738

2,560

953

1,638

953

26,707

1. Salary shares granted to Jon Hauck vest in one-third annual tranches over three years.
2. Restricted awards granted to Jon Hauck and Bertrand Bodson were granted as compensation for forfeited awards from previous employment and vest in full after three
years subject to continued employment.
3. Sonia Sedler’s salary shares lapsed on her leaving on 18 March 2022.

Share Option Scheme
Executive Directors no longer receive awards under the Share Option Scheme. There are no awards outstanding under this scheme.

102

Keywords Studios plc Annual Report and Accounts 2022

ESG Committee report

Setting the framework for our ESG
programme and supporting initiatives
across the Group.
Georges Fornay
Chair of the ESG Committee

At a glanceCommittee membership
The members of the ESG Committee
are Georges Fornay, Marion Sears,
Neil Thompson, Bertrand Bodson and
Jon Hauck.
The members of the Committee and theirattendance at meetings during the year,
as well as full biographies of each member
can be found on pages 70 to 73.

Key responsibilities• Oversight of ESG priorities: People(including diversity, equity, inclusion andbelonging), Client, Community, Planet
and Corporate Governance• Setting metrics and targets• Oversight of related policies
and frameworks• Supporting related activities

Our framework
PeoplePlanetCommunity
ClientGovernanceSee pages 40 to 55 fordetails of our ESG initiatives

Overview

Strategic report

Governance

Financial statements

Introduction from the Chair

Key activities during the year

As Chair of the ESG Committee, I’m very
pleased to present our ESG Committee
Report for the first full calendar year of
its operation.

Four meetings were held during the year.
The Committee received presentations oneach pillar, to understand initiatives currently
underway and those planned for 2023, andoversaw the development of measures andmulti-year targets for each pillar. A numberof Group policies have been reviewed
and updated to support ESG initiatives,
listed below.

The global focus on ESG matters is
sharpening, and we acknowledge that
our shareholders, employees, customers
and suppliers are becoming increasinglyinterested in our ESG programme. We see
this as a positive development because
we’re conscious of the social impactof our business, as well as the impact
climate change may have on our business.
At Keywords, we recognise a collective
responsibility and accountability to takeaccount of the interests of our stakeholders
and to contribute positively to theenvironmental and social initiatives of ourcustomers and wider industry.

Composition and attendance
The Committee members are Marion Sears,
Neil Thompson, Bertrand Bodson, Jon
Hauck and myself. More information about
the Committee members can be foundon pages 70 to 73. The Committee met
four times during the financial year and all
members attended all Committee meetings.
Attendance is reported in detail on page
73. Meetings have been held in person,with some invitees attending remotely via
videoconferencing, which has enabled theCommittee to operate effectively and allow
senior managers to participate in meetingsfrom whichever region they are located.

• Supplier Code of Conduct• Sanctions

The following examples, described in moredetail in our Responsible Business Reporton pages 40 to 55, illustrate progress madeduring the year:• Planet – assessed opportunities forcarbon offsetting, assessed scope 1
and 2 carbon emissions and identify
environmental initiatives been undertaken
at studios• People – enhanced engagement with
employees though regular town
hall events• Client – increased number of strategy
discussions with key clients• Grievance• Business Travel• Community – enhancing the process formatching charitable donations• Health and Safety• Charitable Giving
Responsibility for oversight of these policies
has migrated from the Audit Committee
to reflect the ESG Committee’s enhanced
interest and oversight in those aspects of theGroup's operations. The Audit Committee
remains consulted on and informed ofchanges to these policies.

• Governance – implementing a newwhistleblowing portal

Framework
The table below sets out our ESG programme pillars and key metrics. Further details,
including targets and initiatives, can be found on pages 40 to 55.

PeoplePlanet• Employee
satisfaction• Sustainablestudios• Keywords
Cares• Clientsatisfaction• 
Training• Carbon
offsetting• Hardship fund• Strategic
partnerships

Role and responsibilities• Mental health

The Committee has written terms ofreference which are available to view on the
Company’s website www.keywordsstudios.
com. The terms of reference clearly define
the Committee’s responsibilities andduties and were reviewed by the Board in
December 2022. In addition to the terms ofreference, the Committee has developed
an annual agenda, which corresponds withthe meeting schedule, to ensure each ESG
priority area receives appropriate dedicatedfocus during the year.

• Women inGames

The role of the Committee is to implement
and oversee initiatives across the Group,
which aim to improve the Group’s impact
on the areas, which have been identified
as ESG priorities for our business and key
stakeholders. These pillars are Planet, People,
Clients and Communities, which are allunderpinned by our Governance practices.

103

Supplementary information

Community

ClientGovernance
Underpins the four pillars with high standards of governance and business ethics.

Focus for the coming year
The Committee has four meetings scheduled for 2023. Attention will be focused onmonitoring initiatives and measuring progress against targets. Deep dives into each pillar will
be conducted throughout 2023, to further enhance the Committee’s understanding of key
opportunities and challenges.

Georges Fornay
Chair of the ESG Committee
15 March 2023

104

Keywords Studios plc Annual Report and Accounts 2022

Directors’ report

The Directors present the Annual Report
together with both the audited consolidated
financial statements and the parent Company(Keywords Studios plc) financial statements
for the year ended 31 December 2022.

Dividends
The results for the year are set out on page
59 to 61. As described in the Financial andoperating overview section, the Board is
proposing a final dividend of 1.60 pence pershare (2021: 1.45 pence 2022 per share),bringing the total dividend for 2023 to 2.37
pence per share (2021: 2.15 pence per share).

Directors and changes
to the Board
The Directors of the Company during theyear were Ross Graham, Bertrand Bodson,
David Reeves (resigned on 24 May 2022),
Giorgio Guastalla (resigned on 26 January2022), Georges Fornay, Charlotta Ginman,
Marion Sears, Neil Thompson, Jon Hauck,
Sonia Sedler (stepped down on 18 March
2022) and Don Robert (appointed on
1 February 2023). Biographical details of
current members of the Board are set out on
pages 70 to 73.
The business of the Company is managed by
the Board, which may exercise all the powersof the Company subject to the Company’s
Articles of Association and the Companies
Act 2006.
A list of Directors, their interests in theordinary share capital of the Company, theirinterests in its long-term performance shareplan and details of their options over theordinary share capital of the Company are
given in the Directors’ remuneration report on
pages 100 and 101. No Director had a materialinterest in any significant contract, other thana service contract or contract for services,with the Company or any of its operatingcompanies at any time during the year.

Corporate governance statement
During the year, Keywords adopted theprinciples set out in the Quoted Companies
Alliance Corporate Governance Code
(QCA Code). Our Corporate GovernanceStatement, prepared in accordance withrule 7.2 of the Financial Conduct Authority’s
Disclosure Guidance and Transparency rules
setting out how the Group has complied with
the QCA can be read in full on the Company’s
website at www.keywordsstudios.com

Directors’ indemnity provisions
As permitted by the Company’s Articles of
Association and the Companies Act 2006,
the Directors had the benefit of an indemnityfrom the Company in respect of liability
incurred as a result of their office throughout
the financial period and at the date of
approval of these financial statements.
The Group also purchased and maintained
throughout the financial period Directors’
and Officers’ liability insurance in respect ofitself and its Directors.

Going concern
The Directors have performed anassessment, including a review of the Group’sbusiness activities, performance, position,
principal risks and uncertainties (as set out
in the Strategic report on pages 62 to 68),
as well as the Group’s budget for the 2023
financial year and its longer-term plans. Aftermaking enquiries, the Directors consider it
appropriate to continue to adopt the going
concern basis in preparing the consolidated
and Company financial statements. In
doing so, the Directors have considered theuncertain nature of the Ukrainian crisis, buthave noted:• the net cash position of the Group;• the strong cash flow performance of theGroup through the year;• the historical resilience of the broader
video games industry in times of
economic downturn; and• the ability of the Group to flex its costbase in response to a reduction in
trading activity.
The Directors have also considered theGroup’s strong liquidity position, with net
cash of €81.8m and committed undrawn
facilities under the Revolving Credit Facilityof €150m as at 31 December 2022.

The Directors have a reasonable expectationthat the Company and the Group haveadequate resources to continue to operate
and meet their liabilities as they fall due forthe foreseeable future, a period considered
to be at least 12 months from the dateof these full-year financial statements
and therefore the going concern basis ofpreparation continues to be appropriate.

Financial risk management
The Group’s approach to capitalmanagement is shown in Note 25 of thefinancial statements. The Group’s exposureand approach to liquidity, credit, interest rate
and foreign currency risk is shown in Note 24of the financial statements. Our approach torisk management generally and the principal
risks facing the Group can be found in theStrategic report on pages 62 to 68.

Articles of Association
Our Articles of Association can be amended
by special resolution. They are available on
the Company’s website atwww.keywordsstudios.com

Political donations
No political donations were made in the year.

Share capital structure
At 31 December 2022, the Company’s issued
share capital was 77,990,057 ordinary sharesof one pence each. Further details of theCompany’s issued share capital are given
in Note 2 to the Consolidated Financial
Statements on page 123. The Company’s
ordinary shares rank pari passu in all
respects with each other, including for voting
purposes and for all dividends and eachshare carries the right to one vote at general
meetings of the Company.

Significant shareholdings
At 28 February 2023, the Company was aware of the following shareholdings of 3% or moreof its issued share capital:
Name

Shares%Capital Group

6,583,780

8.43Franklin Templeton

5,120,715

6.56

Octopus Investments

3,953,686

5.06

Liontrust Asset Management

3,093,992

3.96

T Rowe Price Global Investments

3,080,992

3.95

Perone Limited SCSP

2,489,700

3.19

Swedbank Robur

2,455,900

3.14

abrdn

2,445,566

3.13

Overview

Strategic report

Governance

Financial statements

Subsidiary undertakings

Employment policy

A list of the Group’s subsidiary undertakingsand non-UK branches is provided in the Note
28 of the financial statements on pages 152
to 155.

A key imperative of the Group is to attract,develop and retain high calibre individuals.
Keywords has a range of employment
policies covering such issues as diversity,
equity, inclusion and belonging, wellbeing and equal opportunities. The Group
continues to give full and fair consideration
to applications for employment madeby disabled persons, having regard totheir particular skills and experience.
Appropriate arrangements are made for thecontinued employment and training, careerdevelopment and promotion of people livingwith disabilities employed by the Group,
including making reasonable adjustments
where required.

Significant events andfuture developments
Important events and changes to the Groupsince the financial year end are describedin Note 29 of the financial statements, theChief Executive Officer’s review on pages 10
to 15, the service line review on pages 34 to
39 and the Financial and operating overview
on page s 58 to 61. Future developments
are described in the Strategy section of theStrategic report on pages 20 to 25.

Post balance sheet events

Employee involvement

Information on agreements between
the Company and its Directors providing
for compensation for loss of office of
employment (including details of changeof control provisions in share schemes) is
set out on page 93. Otherwise, there are noagreements between the Company and its
employees providing for compensation forloss of office or employment that occurs
because of a takeover bid.

The Group provides employees withinformation on matters of concern tothem so that their views can be taken into
account when making decisions that arelikely to affect their interests. A summaryof the methods we use to engage with our
employees are provided in the Responsible
business report on pages 40 to 55 and theSection 172 statement on pages 56 and57. The Company operates a number of
employee share plans to incentivise andretain employees (see page 92). We continue
to review options to expand participationin employee share schemes to improve
incentives and align them with the long-term
success of the Group.

Non-financial information

Employee share plans

There have been no material events affecting
the Group since 31 December 2022.

Change of control

Information providing an understandingof our development, performance andposition on key non-financial matters areincorporated within the Strategic report byreference and can be read on page 69.

People and organisation
Keywords is, and always has been,
dependent on the quality and commitmentof its entire staff to provide and maintainthe high levels of services expected by theGroup’s customers.
Keywords’ average number of employees
was 11,141 during 2022. We are committed
to positively contributing to our company
culture and helping our Keywordians fulfil
their complete potential. This permanent
headcount is supplemented with staff on
short-term contracts as activity changes
throughout the year.

Details of employee share plans are set out in
Note 10 to the Financial Statements on
page 115.

Corporate responsibility
Keywords seeks to be a socially responsible
Group which has a positive impact on thecommunities in which it operates. By thenature of the business, we employ a diverse
workforce, with many nationalities working
closely together at our studio locations
globally. No discrimination is tolerated and
we endeavour to give all employees theopportunity to develop their capabilities. We
provide an inclusive working environment
and appropriate training. Further details areprovided in the Responsible business reporton pages 42 to 47.

Supplementary information

Disclosure of information
to auditor
As far as the Directors are aware, there
is no relevant audit information (that is,
information needed by the Group’s Auditor
in connection with preparing their report) of
which the Group’s Auditor is unaware, andeach Director has taken all reasonable steps
that they ought to have taken as a Director
in order to make themselves aware of any
relevant audit information and to establishthat the Group’s Auditor is aware of that
information.

Annual general meeting
It is intended that the 2023 AGM will be heldat 9.30 a.m. on 26 May 2023 at the officesof DLA Piper UK LLP at 160 Aldersgate
Street, London EC1A 4HT, United Kingdom.
The Notice of AGM accompanies this Annual
Report and is available online atwww.keywordsstudios.com
By order of the Board

Jon Hauck
Chief Financial Officer
15 March 2023

105

106

Keywords Studios plc Annual Report and Accounts 2022

Statement of Directors’ responsibilities

Financial statements andaccounting records

Disclosure of information
to the auditors

The Directors are responsible for preparing
the Annual Report and financial statementsin accordance with the applicable law
and regulations.

This confirmation is given and should beinterpreted in accordance with the provisionsof section 418 of the Companies Act 2006.

Company law requires the Directors to
prepare financial statements for eachfinancial year. Under that law the Directors
have prepared the Group and Company
financial statements in accordance with UKadopted international accounting standards
in conformity with the requirements of theCompanies Act 2006.
Under company law, the Directors must not
approve the Annual Report and financial
statements unless they are satisfied thatthey give a true and fair view of the state ofaffairs of the Company and the Group andof the profit or loss of the Group for that
period. The Directors are also required toprepare financial statements in accordancewith the rules of the London Stock Exchange
for companies trading securities on the
Alternative Investment Market.
In preparing these financial statements the
Directors are required to:• select suitable accounting policies andthen apply them consistently;• make judgements and estimates thatare reasonable and prudent;• state whether international accounting
standards in conformity with therequirements of the Companies Act
2006 have been followed, subject toany material departures disclosed andexplained in the Group and Company
financial statements respectively; and• prepare the financial statements ona going concern basis, unless it isinappropriate to presume that theCompany will continue in business.
The Directors are responsible for keeping
adequate accounting records that are
sufficient to show and explain the Company’stransactions and disclose with reasonableaccuracy at any time the financial position of
the Company and the Group and to enable
them to ensure that the financial statements
and the Directors’ remuneration reportcomply with the Companies Act 2006.
The Directors also responsible forsafeguarding the assets of the Company and
the Group and hence for taking reasonable
steps for the prevention and detection of
fraud and other irregularities.

The Directors as at the date of this report,
whose names and functions are listed in the
Board of Directors section on pages 70 to 73,
confirm that:• so far as the Director is aware, there is no
relevant audit information of which theCompany’s auditors are unaware; and• the Director has taken all the steps
that he or she ought to have taken as a
Director in order to make himself/herself
aware of any relevant audit informationand to establish that the Company’s
auditors are aware of that information.
We confirm that to the best of ourknowledge:• the financial statements, prepared inaccordance with the applicable set ofaccounting standards, give a true andfair view of the assets, liabilities, financial
position and profit or loss of the Company
and the undertakings included in the
consolidation taken as a whole;• the Strategic report on pages 2 to 69
and the Directors’ report on pages
70 to 106 include a fair review of thedevelopment and performance of thebusiness and the position of the Groupand the undertakings included in the
consolidation taken as a whole, together
with a description of the principal risks
and uncertainties that they face; and• the Annual Report and financial
statements taken as a whole, are fair,balanced and understandable, andprovide the information necessary
for shareholders to assess theGroup’s performance, businessmodel and strategy.

Website publication
The Directors are responsible for ensuring
the Annual Report and financial statements
are made available on a website. Financial
statements are published on the Group’s
website in accordance with legislation in the
United Kingdom governing the preparationand dissemination of financial statements,
which may vary from legislation in otherjurisdictions. The maintenance and integrityof the Group’s website is the responsibilityof the Directors. The Directors’ responsibility
also extends to the ongoing integrity of thefinancial statements contained therein.
By order of the Board

Jon Hauck
Chief Financial Officer
15 March 2023

Overview

Strategic report

Governance

Financial statements

Supplementary information

Independent Auditor’s Report
To the members of Keywords Studios plc

OpinionWe have audited the financial statements of Keywords Studios plc (the ‘parent company’) and its subsidiaries (the ‘group’) for the year
ended 31 December 2022 which comprise the Group and Parent Company Statements of Financial Position, the Group Statement ofComprehensive Income, the Group and Parent Company Statements of Cash Flows, the Group and Parent Company Statements of
Changes in Equity, and the notes to the financial statements, including a summary of significant accounting policies.
The financial reporting framework that has been applied in the preparation of the financial statements is applicable law and United Kingdom
adopted international accounting standards, and as regards the Parent company financial statements, as applied in accordance with theprovisions of the Companies Act 2006.
In our opinion:• the financial statements give a true and fair view of the state of the group’s and of the parent company’s affairs as at 31 December 2022
and of the group’s profit for the year then ended;• the group financial statements have been properly prepared in accordance with UK adopted international accounting standards inconformity with the requirements of the Companies Act 2006;• the parent company financial statements have been properly prepared in accordance with UK adopted international accounting
standards in conformity with the requirements of the Companies Act 2006 and as applied in accordance with the provisions of theCompanies Act 2006; and• the financial statements have been prepared in accordance with the requirements of the Companies Act 2006.

Basis for opinion
We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our responsibilities
under those standards are further described in the Auditor’s responsibilities for the audit of the financial statements section of our report.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Independence
We are independent of the Group and Parent Company in accordance with the ethical requirements that are relevant to our audit of thefinancial statements in the UK, including the FRCs Ethical Standard as applied to listed entities, and we have fulfilled our other ethicalresponsibilities in accordance with these requirements.

Conclusions relating to going concern
In auditing the financial statements, we have concluded that the directors’ use of the going concern basis of accounting in the preparation of
the financial statements is appropriate.
Our evaluation of the Directors assessment of the group and parent company’s ability to continue to adopt the going concern basis ofaccounting in the preparation of the financial statements included;• We considered as part of our risk assessment the nature of the company, its business model and related risks, the requirements of theapplicable financial reporting framework and the system of internal control.
• We have reviewed the Directors’ assessment of the Group and Company’s ability to continue as a going concern, challenging theunderlying data and key assumptions used to make the assessment, and stress tested the directors’ plans for future actions in relation totheir going concern assessment.
• We have reviewed the historical accuracy of budgeting and forecasts made by the Group and Company as an indicator as to theirreliability.
• We have reviewed the performance of the business in the year, including its cash flow performance, liquidity position, and financing
facilities, up to and including the date of signing the audit opinion.
Based on the work we have performed, we have not identified any material uncertainties relating to events or conditions that, individuallyor collectively, may cast significant doubt on the group’s and parent company's ability to continue as a going concern for a period of at least
twelve months from when the financial statements are authorised for issue.
Our responsibilities and the responsibilities of the directors with respect to going concern are described in the relevant sections of this report.

An overview of the scope of our audit
The Group has diverse international operations. Our audit was scoped by obtaining an understanding of the Group and its environment,
including the group wide controls, and assessing the risks of material misstatement identified at group level. We also assessed the riskof management override of internal controls, including assessing whether there was evidence of bias by the Directors that may haverepresented a risk of material misstatement.

107

108

Keywords Studios plc Annual Report and Accounts 2022

Independent Auditor’s Report continued
To the members of Keywords Studios plc

Significant components
Based on our assessment, we have completed full scope audit procedures in relation to the following entities; Keywords Studios plc,
Keywords International Limited, Keywords Studios QC Games, Tantalus Media Pty Limited, High Voltage Software Inc, Heavy Iron Inc,
G-Net Media Inc and Climax Studios Limited.

Specified audit procedures
In addition, specific audit procedures have been completed in relation to certain material balances and transaction streams in VMC
Embedded Services, Keywords Canada Holdings Inc (formerly Volt Canada Inc), Keywords Studios QC-Tech Inc (formerly Alchemic DreamInc), D3T Limited, Electric Square Limited and Studio Gobo.
The above full scope and specified audit procedure entities represent 85% of group revenues.
Desktop review procedures have been performed on the remaining non-significant components in the group.
The Group auditor, BDO Dublin, has audited Keywords Studios plc, Keywords International Limited, Studio Gobo Limited, Electric Square
Limited, Climax Studios, Keywords Studios QC-Games Inc, Keywords Studios QC-Tech Inc, VMC Embedded Services, Keywords Canada
Holdings Inc, G-Net Media Inc, High Voltage Software Inc, Heavy Iron Inc and D3T Limited. Their involvement in the work performed by othercomponent auditors varies by location and involves, at a minimum, direction of the audit procedures to be completed, and review of thereports received in relation to the results of the audit work undertaken by component audit teams. In the current year the Group Auditor
visited Montreal to assess the audit work completed for several North American entities.

Parent Company and consolidation
At the parent company level we have also tested the consolidation process and carried out additional procedures to confirm our conclusionthat there were no significant risks of material misstatement of the aggregated financial information of the remaining components not
subject to full scope or specific procedures.

Key audit matters
Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the financial statementsof the current period and include the most significant assessed risks of material misstatement (whether or not due to fraud) we identified,including those which had the greatest effect on: the overall audit strategy, the allocation of resources in the audit; and directing the effortsof the engagement team. These matters were addressed in the context of our audit of the financial statements as a whole, and in forming
our opinion thereon, and we do not provide a separate opinion on these matters.

1 Business Combinations
Key Audit Matter
The Group has entered into a significant number of acquisitions and business combinations throughout the year, which have had a material
and extensive impact on the group’s financial performance and position.
Following the purchase price allocations (in which identifiable assets and liabilities assumed were recognised at fair value), €397m (2021 :€325m) of goodwill has been recognised cumulatively to date. The fair value of certain identifiable assets acquired and liabilities assumed
in a business combination is different from their carrying amounts in the acquired statements of financial position which can give rise to fairvalue adjustments as part of the purchase price allocations of these business combinations. Accordingly, the cumulative acquisitions arematerial and significant judgement is required in relation to the purchase price allocations including the resulting goodwill.
Management determined the fair value of the identifiable assets and liabilities and notably the value of the customer relationships andIntellectual property. The valuation of these assets was primarily based upon the expected future cash flows related to these acquisitions.
A number of these acquisitions have also included deferred consideration in the form of shares and cash payments at future dates, which
add further complexity with regard to the acquisition-date fair value of such consideration as part of the consideration transferred in
exchange for the acquisitions and business combinations.

Related Disclosures
Refer to note 2 of the accompanying consolidated financial statements for the accounting policy in relation to business combinations. In
addition, detailed disclosures have been made in relation to the current year business combinations in note 27 to the financial statements.

Audit Response
We have reviewed the underlying contracts and share purchase agreements relating to each acquisition to assess whether the basis fortreatment of the acquisitions is in accordance with the accounting policy and International Financial Reporting Standard 3 – Business
Combinations.
We have assessed the carrying value of each material balance at the date of acquisition, and have reviewed management’s assessmentsof the fair value of the assets and liabilities acquired, and in particular, the methodology applied in the valuation of intangible assets
and goodwill.

Overview

Strategic report

Governance

Financial statements

Supplementary information

Our procedures included;• We reviewed the methodology applied to identify the categories of intangible assets,• We evaluated whether the cash flow forecasts used in the valuation are consistent with information approved by the Board and havereviewed the historical accuracy of management’s forecasts in order to assess the reliance which can be placed upon management’s
forecasting,• We have challenged the key assumptions such as the growth factors and discount rates by comparing them to relevant market rates andhistoric acquisitions to evaluate whether management had been consistent in its approach to valuations, and• We assessed the adequacy of the acquisition disclosures in the Group’s financial statements.
In addition, we have examined the terms of all business combinations to assess whether the fair value of any deferred/contingent
consideration is treated appropriately in accordance with the group accounting policy and IFRS 3.
We also examined the key post combination employment contracts of former shareholders of the acquired entities, reviewing the substanceof the transactions and considered whether they have been appropriately accounted for in line with the group accounting policy and therequirements of IFRS 3.

2 Valuation of goodwill and intangible assets
Key Audit Matter
As a result of both the current year and prior year acquisitions, the group has amassed significant intangible assets and goodwill balances.
These balances are material to the financial statements, with goodwill carrying value of €397m (2021: €325m), and intangibles carrying
value of €73m (2021: €29m). The valuation of goodwill and other intangible assets is significant to our audit due to the fact that the
impairment test calculations are based on several key assumptions which are estimated by management, and are by nature judgemental.
Key assumptions include the expected future cash flows for the forecasting period, the discount rates and perpetual growth rate.
The Directors have concluded that there are eight cash generating units (“CGU’s”) in the group, for the purposes of impairment assessment.

Related Disclosures
Refer to note 2 of the accompanying consolidated financial statements for the accounting policy in relation to business combinations,intangible assets and goodwill. In addition, detailed disclosures have been made in relation to the current year business combinations in note
27 to the financial statements. Detailed disclosures are made in note 11 relating to goodwill and intangible assets.

Audit Response
We have reviewed the Director’s assessment of the carrying value of goodwill and intangible assets. We have challenged the Directors
assumptions in relation to CGU identification, cash flow forecasting, discount rates applied, and future growth rates.
Our procedures included;• We have evaluated that the CGU’s identified are the lowest level at which management monitors goodwill and intangible assets,• We have reviewed the accuracy of the cash flow forecasts used, and ensured that these represent those which are reviewed by the Board,• We have reviewed and assessed the accuracy of the historical forecasts prepared by the Group,• We have assessed the key estimates and inputs into the discounted cash flow models, including the growth rates assumed, and tested
these where possible to supporting evidence such as post year end activities,• We have completed sensitivity analyses in relation to the cash flow models and have stress tested all key assumptions used, and• We have considered the appropriateness of the disclosures relating to the valuation of goodwill and intangible assets in the financial
statements.

3 Revenue Recognition – cut off
Key Audit Matter
We have assessed revenue recognition under all eight revenue streams individually including the cut off risk of revenue, trade receivables
and deferred revenue.
Although the majority of the Group’s revenue contracts are non complex in nature, there is a material accrued revenue balance as at
31 December 2022 of €13.2m (2021: €10m). We focused on this area due to the risk of management manipulation of the timing of revenue
recognition and the cut off relating to accrued revenue at the year end.

Related Disclosures
Refer to note 2 of the accompanying consolidated financial statements for the accounting policies of the Group in relation to Revenue
Recognition.

109

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Keywords Studios plc Annual Report and Accounts 2022

Independent Auditor’s Report continued
To the members of Keywords Studios plc

Audit Response
We have performed audit procedures to understand the application of the revenue recognition accounting policies and to assess whether
for each material revenue stream, that revenue has been recognised correctly in accordance with the Group Revenue Recognition policy.
We have completed a substantive based audit approach across all full scope locations and completed specific audit procedures on a sample
basis on less significant components of the group.
Our audit work included, but was not restricted to, reviewing a sample of transactions both throughout the year and around the year end,
to assess that the stage of completion and therefore accrued revenue is reflective of the underlying project status. We have tested thesetransactions to supporting documentation such as sales orders and contracts from customers, project status evidence, and subsequentbilling. When examining samples of transactions around the year end we have assessed whether the revenue has been recognised in thecorrect period.

Our application of materiality
We apply the concept of materiality both in planning and performing our audit, and in evaluating the effect of misstatements. We consider
materiality to be the magnitude by which misstatements, including omissions in the financial statements, could influence the economic
decisions of reasonable users that are taken on the basis of the financial statements.
Importantly, misstatements below these levels will not necessarily be evaluated as immaterial as we also take into account the nature ofidentified misstatements, and in particular the circumstances of their occurrence, when evaluating their effect on the financial statements as
a whole.
We determined materiality for the financial statements as a whole to be €5.7m, which represents 5% of adjusted profit before tax, 8% ofprofit before taxation, and represents approximately 1% of equity. We consider profit before income tax, and adjusted profit before tax, to be
the most significant determinant of the group’s financial performance used by shareholders and other users and therefore consider this as
an appropriate basis for materiality. Our materiality is higher than the level we set for the year ended 31 December 2021 (€4.4m), due to theincreased profits of the group.
We assessed the parent company’s materiality using a % of net assets as the most appropriate benchmark as the parent company is aninvestment holding Company. However we capped this same level as the group materiality.
Whilst materiality for the financial statements as a whole was €5.7m, each component of the group was audited to a lower level of materiality
within a range from €3.9m to €3.4m. Audits of these components were performed at a materiality level calculated by reference to a
proportion of group materiality appropriate to the relative scale of the business concerned.
We agreed with the Audit Committee that we would report to the Committee all individual differences identified during the course of
our audit in excess of €285,000 (2021: €220,000). We also agreed to report differences below this threshold that, in our view, warranted
reporting on qualitative grounds.

Other information
The directors are responsible for the other information. The other information comprises the information included in the annual report, otherthan the financial statements and our auditor’s report thereon. Our opinion on the financial statements does not cover the other information
and, except to the extent otherwise explicitly stated in our report, we do not express any form of assurance conclusion thereon.
In connection with our audit of the financial statements, our responsibility is to read the other information and, in doing so, consider whether
the other information is materially inconsistent with the financial statements or our knowledge obtained in the audit or otherwise appears
to be materially misstated. If we identify such material inconsistencies or apparent material misstatements, we are required to determine
whether there is a material misstatement in the financial statements or a material misstatement of the other information. If, based on thework we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact.
We have nothing to report in this regard.

Opinions on other matters prescribed by the Companies Act 2006
In our opinion, based on the work undertaken in the course of the audit:• the information given in the strategic report and the directors’ report for the financial year for which the financial statements areprepared is consistent with the financial statements; and• the strategic report and the directors’ report have been prepared in accordance with applicable legal requirements.

Overview

Strategic report

Governance

Financial statements

Supplementary information

Matters on which we are required to report by exception
In the light of the knowledge and understanding of the group and the parent company and its environment obtained in the course of theaudit, we have not identified material misstatements in the strategic report or the directors’ report.
We have nothing to report in respect of the following matters in relation to which the Companies Act 2006 requires us to report to you if, in
our opinion:• adequate accounting records have not been kept by the parent company, or returns adequate for our audit have not been received frombranches not visited by us; or• the parent company financial statements are not in agreement with the accounting records and returns; or• certain disclosures of directors’ remuneration specified by law are not made; or• we have not received all the information and explanations we require for our audit.

Responsibilities of directors
As explained more fully in the directors’ responsibilities statement set out on page 106 the directors are responsible for the preparation of
the financial statements and for being satisfied that they give a true and fair view, and for such internal control as the directors determine isnecessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.
In preparing the financial statements, the directors are responsible for assessing the group’s and the parent company’s ability to continue
as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the
directors either intend to liquidate the group or the parent company or to cease operations, or have no realistic alternative but to do so.

Auditor’s responsibilities for the audit of the financial statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement,
whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance,
but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists.
Misstatements can arise from fraud or error and are considered material if, individually or in aggregate, they could reasonably be expected toinfluence the economic decisions of users taken on the basis of these financial statements.
The objectives of our audit, in respect to fraud, are; to identify and assess the risks of material misstatement of the financial statements
due to fraud; to obtain sufficient appropriate audit evidence regarding the assessed risks of material misstatement due to fraud, throughdesigning and implementing appropriate responses; and to respond appropriately to fraud or suspected fraud identified during the audit.
However, the primary responsibility for the prevention and detection of fraud rests with both those charged with governance of the entity
and management.
Our approach was as follows:• We obtained an understanding of the legal and regulatory frameworks that are applicable to the Group and Company. We determinedthat the most significant which are directly relevant to specific assertions in the financial statements are those related to the reporting
framework (United Kingdom adopted International Accounting Standards and the Companies Act 2006).
• We understood how the Group and Company are complying with those legal and regulatory frameworks by making enquiries tomanagement and those responsible for legal and compliance procedures and the Company secretary. We corroborated our enquiries
through our review of board minutes.
• We assessed the susceptibility of the Group and Company’s financial statements to material misstatement, including how fraud mightoccur by meeting with management from various parts of the business to understand where it is considered there was a susceptibilityof fraud. We considered the programs and controls that the Group and Company have established to address risks identified, or that
otherwise prevent, deter and detect fraud; and how senior management monitors those programs and controls. Where the risk wasconsidered to be higher, we performed audit procedures to address each identified fraud risk. These procedures included testing manualjournals and were designed to provide reasonable assurance that the financial statements were free of fraud or error.
A further description of our responsibilities for the audit of the financial statements is located on the Financial Reporting Council’s website at:https://www.frc.org.uk/auditors/audit-assurance/auditor-s-responsibilities-for-the-audit-of-the-fi/description-of-the-auditor%E2%80%99sresponsibilities-for. This description forms part of our auditor’s report.

111

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Keywords Studios plc Annual Report and Accounts 2022

Independent Auditor’s Report continued
To the members of Keywords Studios plc

Use of our report
This report is made solely to the company’s members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act 2006. Our
audit work has been undertaken so that we might state to the company’s members those matters we are required to state to them in anauditor’s report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone otherthan the company and the company’s members as a body, for our audit work, for this report, or for the opinions we have formed.

Stephen McCallion (Senior Statutory Auditor)
For and on behalf of BDO, Statutory Auditor
Dublin 2, Ireland
15 March 2023

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Governance

Financial statements

113

Supplementary information

Consolidated statement of comprehensive income

Years ended 31 December
Note

2022
€'000

2021
€'000

Revenue from contracts with customers

4690,718

512,200

Cost of sales

5(423,452)(312,086)

267,266

200,114Gross profit
Other income

5

1,098

–

Share-based payments expense

23(18,678)(16,394)

Costs of acquisition and integration

5(8,413)(7,972)

Amortisation of intangible assets

11

Total of items excluded from adjusted profit measures
Other administration expenses
Administrative expenses
Operating profit(16,810)(13,688)(43,901)(38,054)(152,653)(111,695)(196,554)(149,749)

71,81050,365

Financing income

6

1,986

2,045

Financing cost

6

(5,814)(4,427)

67,982

47,983(20,612)(13,875)

47,37034,108286

27

Profit before taxation
Taxation

7

Profit after taxation
Other comprehensive income:Items that will not be reclassified subsequently to profit or loss
Actuarial gain/(loss) on defined benefit plans

20

Items that may be reclassified subsequently to profit or loss
Exchange gain/(loss) in net investment in foreign operations(7,947)

8,228

Exchange gain/(loss) on translation of foreign operations

6,144

14,581

Non-controlling interest; recycled on disposal of subsidiary
Total comprehensive income/(expense)

162–

46,01556,94447,41534,175

Profit/(loss) for the period attributable to:
Owners of the parent
Non-controlling interest

(45)

(67)

47,37034,10846,01557,011

Total comprehensive income/(expense) attributable to:
Owners of the parent
Non-controlling interest

Earnings per share

–

(67)

46,01556,944€ cent€ centBasic earnings per ordinary share

8

61.54

45.16

Diluted earnings per ordinary share

8

58.86

42.98

The notes from page 117 onwards form an integral part of these consolidated financial statements.
On behalf of the Board

Bertrand Bodson			

Jon Hauck

Director				Director
15 March 2023

114

Keywords Studios plc Annual Report and Accounts 2022

Consolidated statement of financial position

Note

2022
€'000

2021
€'000

11

469,953

353,943

Non-current assets
Intangible assets
Right of use assets

12

37,67235,991

Property, plant and equipment

13

44,78436,018Deferred tax assets

21

22,757

21,468Investments

14

175

175

575,341

447,595

Current assets
Cash and cash equivalents

81,886

105,710

Trade receivables

15

81,56368,067

Other receivables

16

61,415

49,110

Corporation tax recoverable

6,503

6,764

231,367

229,651

Current liabilities
Trade payables
Other payables

17

Loans and borrowings

18

Corporation tax liabilities
Lease liabilities

19

Net current assets/(liabilities)

15,878

11,122

139,355

108,42345

81

22,028

12,635

12,414

11,217

189,720

143,478

41,647

86,173

Non-current liabilities
Other payables

17

18,30818,254

Employee defined benefit plans

20

2,861

3,088

Loans and borrowings

18

6

48

Deferred tax liabilities

21

8,617

13,840

Lease liabilities

19

30,105

26,418

Net assets

59,89761,648557,091

472,120924

904

EquityShare capital

22

Share capital – to be issued

22

2,467

2,185

Share premium

22

47,021

38,549Merger reserve22

286,655

273,677

11,01812,821

Foreign exchange reserve–(1,997)

Share-based payments reserve

Shares held in Employee Benefit Trust ("EBT")

65,37948,193Retained earnings

143,627

97,905557,091472,237

Non-controlling interest
Total equity

22

–

(117)

557,091

472,120

The notes from page 117 onwards form an integral part of these consolidated financial statements. The financial statements were approved
and authorised for issue by the Board on 15 March 2023.
On behalf of the Board

Bertrand Bodson			

Jon Hauck

Director				Director
15 March 2023

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Governance

Financial statements

115

Supplementary information

Consolidated statement of changes in equity

At 01 January 2021

Sharecapital
€'000

Share
capital– to beissued€'000

Sharepremium€'000

Mergerreserve€'000

Foreignexchangereserve€'000

Sharesheld in
EBT€'000

Sharebased
payments
reserve€'000

Retainedearnings
€'000

Total
attributableto ownersof parent€'000

Noncontrollinginterest
€'000

Total
equity€'000

879

13,047

22,951

250,276(9,988)(1,997)31,79964,318371,285(50)

371,235

Profit/(loss) for the period

–

–

–

–

–

–

–

34,17534,175(67)

34,108Other comprehensive
income––––22,809––27

22,836–

22,836

Total comprehensive
income for the period

–

–

–

–

22,809––34,20257,011(67)

56,944

Share-based
payments expense

–

–

–

–

–

–

16,394–

16,394–

16,394

Share options exercised

11

–

4,929

–

–

–

–

–

4,940

–

4,940

Contributions by
and contributions
to the owners:

Employee Share
Purchase Plan

–

–

398

–

–

–

–

–

398

–

398

Dividends

–

–

–

–

–

–

–

(615)

(615)

–

(615)

Acquisition-related
issuance of shares

14(10,862)

10,271

23,401––––

22,824–

22,824Contributions by andcontributions to theowners25(10,862)

15,59823,401––

16,394(615)

43,941–

43,941

At 31 December 2021

904

2,185

38,549273,677

12,821(1,997)48,19397,905472,237(117)

472,120

Profit/(loss) for the period

–

–

–

–

–

–

–

47,41547,415(45)

47,370Recycled on disposalof subsidiary

–

–

–

–

–

–

–

–

–

162

162

Other comprehensive
income––––(1,803)––286(1,517)–(1,517)

Total comprehensive
income for the period

–

–

–

–

(1,803)––47,70145,898117

46,015Contributions by
and contributions
to the owners:
Share-based
payments expense

–

–

–

–

–

–

18,577–

18,577–

18,577

Share options exercised

14

–

5,862

–

–

1,997

(1,492)

–

6,381

–

6,381

Employee Share
Purchase Plan

–

–

909

–

–

–

101

–

1,010

–

1,010

Dividends

–

–

–

–

–

–

–

(1,979)(1,979)–(1,979)Acquisition-related
issuance of shares

6

282

1,701

12,978––––

14,967–

14,967

Contributions by
and contributions
to the owners

20

282

8,472

12,978–

1,997

17,186(1,979)38,956–

38,956

At 31 December 2022

924

2,467

47,021

286,655

11,018–65,379143,627

557,091–

557,091

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Keywords Studios plc Annual Report and Accounts 2022

Consolidated statement of cash flows

Years ended 31 December
Note

2022
€’000

2021
€’000

47,37034,108Cash flows from operating activities
Profit after taxation
Income and expenses not affecting operating cash flows
Depreciation – property, plant and equipment

13

18,365

11,661

Depreciation and impairment – right of use assets

12

14,585

10,473

Amortisation and impairment of intangible assets

11

16,81013,688

Taxation

7

20,612

13,875

Share-based payments expense

23

18,67816,394

Fair value adjustments to contingent consideration

5

2,282

5,567

Unwinding of discounted liabilities – deferred consideration

6

2,922

1,882

Unwinding of discounted liabilities – lease liabilities

6

969

985

Interest receivable

6

(309)

(62)

Fair value adjustments to employee defined benefit plans

20

514

419

Interest expense

6

1,261

1,040

Unrealised foreign exchange (gain)/loss

766

583

97,45576,505

Changes in operating assets and liabilities
Decrease/(increase) in trade receivables(11,771)(15,117)

Decrease/(increase) in MMTC and VGTR receivable(3,591)(4,502)

Decrease/(increase) in other receivables(6,457)

3,341(Decrease)/increase in accruals, trade and other payables

18,785

20,158(3,034)

3,880

Taxation paid

(17,505)(23,948)

Net cash generated by/(used in) operating activities

124,286

90,545

Cash flows from investing activities
Current year acquisition of subsidiaries net of cash acquired

27(87,494)(48,697)

Settlement of deferred liabilities on acquisitions

17(25,800)(14,393)

Acquisition of property, plant and equipment

13(27,007)(19,360)

Investment in intangible assets

11

(501)

(315)

Other investment

14

–

(175)

Interest received
Net cash generated by/(used in) investing activities

309

62

(140,493)(82,878)

Cash flows from financing activities
Cash proceeds, where EBT shares were utilised for the exerciseof share options

22

505

–

Repayment of loans

18

(79)

(80)

(11,361)(9,953)

Payments of principal on lease liabilities
Interest paid on principal of lease liabilities

6

Dividends paid
Shares issued for cash
Interest paid

22

(969)

(985)

(1,979)

(615)

6,785

5,338

(828)

(1,753)

Net cash generated by/(used in) financing activities(7,926)(8,048)

Increase/(decrease) in cash and cash equivalents(24,133)(381)

Exchange gain/(loss) on cash and cash equivalents

309

3,021

Cash and cash equivalents at beginning of the period

105,710103,070

Cash and cash equivalents at end of the period

81,886

105,710

Overview

Strategic report

Governance

Financial statements

Supplementary information

117

Notes forming part of the 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 thefinancial statements of the Company and its subsidiaries (the “Group”) made up to 31 December 2022.
The consolidated financial statements have been prepared in accordance with UK-adopted international accounting standards, and in
conformity with the requirements of the Companies Act 2006.
Unless otherwise stated, the financial statements have been prepared in thousands (’000) and the financial statements are presented in euro(€) which is the functional currency of the Company.

Going Concern Basis of Accounting
After making enquiries, the Directors consider it appropriate to continue to adopt the going concern basis in preparing the Consolidated andCompany financial statements. In doing so, the Directors have considered the following:• The net cash position of the Group;• The strong cash flow performance of the Group through the year;• The continued demand for the Group’s services;• The ability to operate most of its services in a work from home model where studios are temporarily closed;• The historical resilience of the broader video games industry in times of economic downturn; and• The ability of the Group to flex its cost base in response to a reduction in trading activity.
The Directors have also considered the Group’s strong liquidity position with net cash of €81.8m as at 31 December 2022, and committed
undrawn facilities of €150m under the Revolving Credit Facility (“RCF”).
The Directors have applied downside sensitivities to the Group’s cash flow projections to assess the Group’s resilience to adverse outcomes.
This assessment included a reasonable worst-case scenario in which the Group's principal risks manifest to a severe but plausible level.
Even under the most severe case, the Group would have sufficient liquidity and remain within its banking covenants. The Directors have areasonable expectation that the Company and the Group have adequate resources to continue to operate and meet liabilities as they fall due
for the foreseeable future, a period considered to be at least twelve months from the date of these financial statements and therefore thegoing concern basis of preparation continues to be appropriate.

New Standards, Interpretations and Amendments effective 01 January 2022
A number of new amendments and interpretations to accounting standards are effective from 01 January 2022 including:• Onerous Contracts – Cost of Fulfilling a Contract – amendments to IAS 37;• Property, Plant and Equipment: Proceeds before Intended Use – amendments to IAS 16;• Annual Improvements to IFRS Standards 2018-2020 – amendments to IFRS 1, IFRS 9, IFRS 16 and IAS 41; and• References to Conceptual Framework – amendments to IFRS 3.
These amendments and interpretations have not resulted in any Group accounting policy changes, and have not had a material effect on theGroup’s financial statements.
Other accounting pronouncements which have become effective from 01 January 2022 have not had a material impact on the Group.

New Standards, Interpretations and Amendments not yet effective
There are a number of standards, amendments to standards, and interpretations which have been issued by the IASB that are effective infuture accounting periods that the Group has decided not to adopt early.
The following amendments effective for the period beginning 01 January 2023 are expected to be impactful on the Group moving forward:• Disclosure of Accounting Policies (Amendments to IAS 1 and IFRS Practice Statement 2): These amendments relate to the application ofmateriality in relation to the disclosure of accounting policies, requiring companies to disclose their material accounting policies rather
than their significant accounting policies, clarifying that accounting policies related to immaterial transactions, other events or conditions
are themselves immaterial and as such need not be disclosed; and clarifying that not all accounting policies that relate to materialtransactions, other events or conditions are themselves material to a company’s financial statements. The Board will consider theseamendments in the context of the 2023 Annual Report.
• Deferred Tax related to Assets and Liabilities arising from a Single Transaction (Amendments to IAS 12): Amendments effective 01 January2023, narrow the scope of the initial recognition exemption so that it does not apply to transactions that give rise to equal and offsetting
temporary differences e.g. Right of use assets and Lease liabilities. As a result in 2023, deferred tax assets and liabilities associated withleases will need to be recognised gross from the beginning of the earliest comparative period presented, with any cumulative effectrecognised as an adjustment to retained earnings or other components of equity at that date. The estimated impact of adoption based on
the carrying value of Right of use assets and Lease liabilities at 31 December 2022 would result in additional Deferred tax assets of €9.6m
and Deferred tax liabilities of €8.4m being recognised.

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Keywords Studios plc Annual Report and Accounts 2022

Notes forming part of the consolidated financial statements continued

1

Basis of Preparation continued

Other amendments effective for the period beginning 01 January 2023:• Classification of Liabilities as Current or Non-current – Amendments to IAS 1;• Definition of Accounting Estimate – Amendments to IAS 8.
The Group does not expect these other amendments, or any other standards issued by the IASB but not yet effective, to have a material
impact on the Group.

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
to affect those variable returns. Control is reassessed whenever facts and circumstances indicate that there may be a change in any of theseelements of control.
De facto control exists in situations where the Company has the practical ability to direct the relevant 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 other parties 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.

Business Combinations
The consolidated financial statements incorporate the results of business combinations using the purchase method. The results of acquired
operations are included in the consolidated financial statements from the date on which control is obtained. They are consolidated until thedate on which control ceases. In the Consolidated statement of financial position, the acquired identifiable assets, liabilities and contingent
liabilities are initially recognised at their fair values at the acquisition date. If the initial accounting for a business combination is incomplete by
the end of the reporting period in which the combination occurs, the Group reports provisional amounts for the items for which the valuationof the fair value of assets and liabilities acquired is still in progress. Those provisional amounts are adjusted when additional information is
obtained about facts and circumstances which would have affected the amounts recognised as of that date, and any adjustments to theprovisional values allocated to the consideration, identifiable assets or liabilities (and contingent liabilities, if relevant) are made within themeasurement period, a period of no more than one year from the acquisition date.
Any contingent consideration payable is recognised at fair value at the acquisition date and is split between current liabilities and long-term
liabilities depending on when it is due. The fair value of contingent consideration at acquisition date is arrived at through discounting the
expected payment (based on scenario modelling) to present value. In general, in order for contingent consideration to become payable,
pre-defined profit and/or revenue targets must be exceeded. At each balance sheet date, the fair value of the contingent considerationis revalued, with the expected pay-out determined separately in respect of each individual acquisition and any change recognised in thestatement 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 of shares, the deferred consideration is classified as an equity arrangement and the valueof the shares is fixed at the date of the acquisition. Deferred consideration may also be in the form of cash consideration payable at a future
defined date. Such consideration is recognised at fair value at the acquisition date and is split between current liabilities and non-current
liabilities depending on when it is due.

Intangible Assets
The Group’s Intangible Assets comprise Goodwill, Customer Relationships and Other Intangible Assets.

Goodwill
Goodwill represents the excess of the cost of a business combination over the total acquisition date fair value of the identifiable assets,
liabilities and contingent liabilities acquired. The cost comprises the fair value of assets given, liabilities assumed and equity instruments
issued, plus the amount of any non-controlling interests in the acquiree plus, if the business combination is achieved in stages, the fair valueof the existing equity interest in the acquiree. Contingent consideration is included at fair value on the acquisition date and, in the case ofcontingent consideration classified as a financial liability, re-measured subsequently through the profit and loss. Acquisition-related costs arerecognised immediately as an expense in the periods in which the costs are incurred and the services are received. Goodwill is capitalised as
an intangible asset with any impairment in carrying value being charged to the Consolidated statement of comprehensive income.

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Customer Relationships
Intangible assets, separately identified from goodwill acquired as part of a business combination (mainly Customer Relationships), are initiallystated at fair value. The fair value attributed is determined by discounting the expected future cash flows generated from the net margin of
the business from the main customers taken on at acquisition. The assets are amortised on a straight-line basis (to administration expenses)
over their useful economic lives (typically five years is deemed appropriate, however, this is re-examined for each acquisition).

Other Intangible Assets
Other intangible assets include Intellectual Property and Music Licences, both acquired and internally developed. Other intangible assets
are recognised as assets where it is probable that the use of the asset will generate future economic benefits and where the costs of theasset can be determined reliably. Other intangible assets that are acquired by the Group are stated at cost less accumulated amortisation(see below) and impairment losses, if any. Subsequent expenditures on capitalised intangible assets are capitalised only when they increase
the future economic benefits embodied in the specific assets to which they relate. All other expenditure is expensed as incurred. Other
intangible assets with definite useful lives are amortised from the date they are available for use on a straight-line basis over their useful
lives, being the estimated period over which the Group will use the assets. Residual amounts, useful lives and the amortisation methods arereviewed at the end of every accounting period.
Development costs are capitalised as an intangible asset if all of the following criteria are met:
• The technical feasibility of completing the intangible asset so that it will be available for use or sale;• The intention to complete the intangible asset and use or sell it;• The ability to use or sell the intangible asset;• The asset will generate probable future economic benefits and demonstrate the existence of a market or the usefulness of
the intangible asset if it is to be used internally;• The availability of adequate technical, financial and other resources to complete the development and to use or sell it; and• The ability to measure reliably the expenditure attributable to the intangible asset during its development.
Following initial recognition of the development expenditure as an intangible asset, the cost model is applied requiring the intangible asset to
be carried at cost, less any accumulated amortisation and accumulated impairment losses. The intangible asset is amortised on a straight-line
basis over the period of its expected benefit, starting from the date of full commercial use of the product. During the period of development,
the asset is tested for impairment annually. If specific events indicate that impairment of an item of intangible asset may have taken place,the item’s recoverability is assessed by comparing its carrying amount with its recoverable amount. The recoverable amount is the higher ofthe fair value net of disposal costs and the value in use.

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 to impairment 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 fairvalue less costs to sell), the asset is written down accordingly.
Where it is not possible to estimate the recoverable amount of an individual asset, the impairment test is carried out on the smallest group ofassets to which it belongs for which there are separately identifiable cash flows: its cash generating units (“CGUs”). Goodwill is allocated on
initial recognition to each of the Group’s CGUs that are expected to benefit from a business combination that gives rise to the goodwill.
Impairment charges are included in profit or loss, except to the extent they reverse gains previously recognised in other comprehensive
income. An impairment loss recognised for goodwill is not reversed.

Investments
Investments are held at cost where the Group does not have control and is not able to exercise significant influence over the investee.

Cash and Cash Equivalents
For the purpose of presentation in the Statements of financial position and in the Statements of cash flows, cash and cash equivalents
include cash on hand and on-call deposits with financial institutions.

Foreign Currency
The consolidated financial statements are presented in euro, which is the presentation currency of the Group and the functional currency of
the Parent Company.
Transactions entered into by Group entities in a currency other than the currency of the primary economic environment in which they
operate (their “functional currency”) are recorded at the rates ruling when the transactions occur. Foreign currency monetary assets andliabilities are translated at the rates ruling at the reporting date. Exchange differences arising on the retranslation of unsettled monetary
assets and liabilities are recognised immediately in profit or loss.

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On consolidation, the results of overseas operations are translated into euro at rates approximating when the transactions took place. All
assets and liabilities of overseas operations, including goodwill arising on the acquisition of those operations, are translated at the rateruling 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 are recognised in other comprehensive income and accumulated in the foreign exchange reserve.
Exchange differences recognised in profit or loss in Group entities’ separate financial statements on 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 andaccumulated in the foreign exchange reserve on consolidation. On disposal of a foreign operation, the cumulative exchange differences
recognised in the foreign exchange reserve relating to that operation up to the date of disposal are transferred to the consolidated
statement of comprehensive income as part of the profit or loss on disposal.

Revenue from Contracts with Customers
Contracts are typically for services, performing agreed-upon tasks for a customer and can be time-and-materials or milestone-based. Most
contracts are short term in duration (generally less than one month); however, milestone-based contracts can be longer term and extend toseveral months (or in some cases over a year). Where there are multiple performance obligations outlined in a contract, each performanceobligation is separately assessed, the transaction price is allocated to each obligation, and related revenues are recognised as services
or assets are transferred to the customer. Performance obligations are typically satisfied over time, as the majority of contracts meet thecriteria outlined in IFRS 15 paragraph 35 (a) and (c).
Due to the nature of the services provided and the competitive nature of the market, contracts generally allocate specific transaction prices
to separate performance obligations. Individual services or individual milestones generally involve extensive commercial negotiation to arriveat the specific agreed-upon tasks, and the related pricing outlined in the contract. Such negotiations extend further for milestone-based
contracts to also include the criteria involved in the periodic and regular process of milestone acceptance by the customer. Such criteria may
involve qualitative, as well as quantitative, measures and judgements.
In measuring progress towards complete satisfaction of performance obligations, the input method is considered to be the most appropriate
method to depict the underlying nature of the contracts with customers, the interactive way the service is delivered and projects aremanaged with the customer. For time-and-materials contracts, other than tracking and valuing time expended, significant judgement is notnormally involved. For milestone-based contracts, progress is generally measured based on the proportion of contract costs incurred at thebalance sheet date (e.g. worked days), relative to the total estimated costs of the contract, involving estimates of the cost to completionetc. Added to this, significant judgement can be involved in measuring progress towards customer acceptance of the milestone. Significant
judgement may also be involved where circumstances arise that may change the original estimates of revenues, costs or extent of progress
towards complete satisfaction of the performance obligations. In such circumstances estimates are revised. These revisions may result inincreases or decreases in revenue or costs and are reflected in income in the period in which the circumstances that give rise to the revisionbecame known. When the outcome of a contract cannot be measured reliably, contract revenue is recognised only to the extent thatmilestones have been accepted by the customer. Contract costs are recognised as incurred. When it is probable that total contract costs will
exceed total contract revenue, the expected loss is recognised immediately.
Revenue recognised represents the consideration received or receivable, net of sales taxes, rebates discounts and after eliminatingintercompany sales. Revenue is recognised only where it is probable that consideration will be received. Where consideration is received andthe related revenue has not been recognised, the consideration received is recognised as a contract liability (Deferred Revenue), until either
revenue is recognised or the consideration is refunded.
Revenue is derived from eight main service groupings:• Art Creation – 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. Contracts can be either time-and-materials based or milestone-based,with performance obligations satisfied over time. Contracts are generally short term in duration; however, for longer contracts the input
method is used to measure progress (e.g. worked days relative to the total expected inputs). Time-and-materials based contract revenue
is recognised as the related services are rendered. For milestone-based contracts where progress can be measured reliably towards
complete satisfaction of the performance obligation, revenue is recognised using the input method to measure progress. Where progresscannot be measured reliably, revenue is recognised on milestone acceptance.
• Marketing – Marketing services include game trailers, marketing art and materials, PR and full brand campaign strategies. Contracts
can be either time-and-materials based or milestone-based, with performance obligations satisfied over time. Contracts are generally
short term in duration; however, for longer contracts the input method is used to measure progress. Time-and-materials based contract
revenue is recognised as the related services are rendered. For milestone-based contracts where progress can be measured reliably
towards complete satisfaction of the performance obligation, revenue is recognised using the input method to measure progress. Where
progress cannot be measured reliably, revenue is recognised on milestone acceptance.
• Game Development – Game Development relates to software engineering services which are integrated with client processes to develop
video games. Contracts can be either time-and-materials based or milestone-based, with performance obligations satisfied over time.
Contracts are generally longer term in duration. Time-and-materials based contract revenue is recognised as the related services are
rendered. For milestone-based contracts where progress can be measured reliably towards complete satisfaction of the performanceobligation, revenue is recognised using the input method to measure progress. Where progress cannot be measured reliably, revenue isrecognised on milestone acceptance.

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Supplementary information• Audio – Audio services relate to the audio production process for computer 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. Audio contracts may also involve music licensing or selling music soundtracks. Audio service contracts are
typically milestone-based, with performance obligations satisfied over time. Audio services contracts are generally short term in duration;
however, for longer contracts where progress towards complete satisfaction of the performance obligation can be measured reliably,revenue is recognised using the input method to measure progress. Where progress cannot be measured reliably, audio services revenue
is recognised on milestone acceptance. Music licensing and music soundtracks performance obligations are assessed separately, andrelated revenue is recognised on licence inception and on delivery of the soundtracks, respectively.
• Functional Testing – Functional Testing relates to quality assurance services provided to game producers to ensure games function as
required. Contracts are typically time-and-materials based and performance obligations are satisfied over time. Contracts are generally
short term in duration. Revenue is recognised as the related services are rendered.
• Localization – Localization services relate to translation and cultural adaptation of in-game text and audio scripts across multiple gameplatforms and genres. Contracts are typically time-and-materials based and performance obligations are satisfied over time. Contracts
are generally short term in duration; however, for longer contracts the input method is used to measure progress. Localization contracts
may also involve licensing translation software as a service. Such revenue is assessed separately. Revenue is recognised as the related
services are rendered.
• Localization Testing – Localization Testing involves testing the linguistic correctness and cultural acceptability of computer games.
Contracts are typically time-and-materials based and performance obligations are satisfied over time. Contracts are generally short termin duration. Revenue is recognised as the related services are rendered.
• Player Support – Player Support relates to the live operations support services such as community management, player support andassociated services provided to producers of games to ensure that consumers have a positive user experience. Contracts are typicallytime-and-materials based and performance obligations are satisfied over time. Contracts are generally long term in duration. Player
Support contracts may also involve digital support platform software as a service. Revenue is recognised as the related services are
rendered.

Multimedia Tax Credits/Video Game Tax Relief
The multimedia tax credits (“MMTC”) received in Canada and video games tax relief (“VGTR”) in the UK are tax credits related to staff costs.
Tax credits are recognised as income over the periods necessary to match the credit on a systematic basis with the costs that it is intended
to compensate. Thus, credits are taken as a deduction against direct costs each period, but typically paid in the following financial year
once the claims have been submitted and agreed. The nature of the grants is such that they are not dependent on taxable profits, and arerecognised (under IAS 20), at their fair value when there is a reasonable assurance that the grant will be received and all attaching conditions
have been complied with.

Share-based Payments
The Company issues equity-settled share-based payments to certain employees and Directors under a Share Option Scheme and a Long-Term
Incentive Plan (“LTIP”). Conditional awards under the rules of the LTIP Plan (“Salary Shares”) are also issued to certain employees and Directors.
The fair value determined at the grant date is expensed on a straight-line basis over the vesting period. Other than continuous service, grants
do not have non-market-based vesting conditions. At each reporting date the Company adjusts for unvested forfeitures and the impact isrecognised in profit or loss, with a corresponding adjustment to equity reserves. The Company has no legal or constructive obligation to
repurchase or settle the options in cash.
Additional employer costs, including social security taxes, in respect of options and awards are expensed over the vesting period with acorresponding liability recognised. The liability recognised depends on the number of options that are expected to be exercised, and theliability is adjusted by reference to the fair value of the options at the end of each reporting period.
Where share-based payments are issued to employees of subsidiary companies, the annual cost of the options are recharged to thesubsidiary company through an inter-company recharge.

Employee Share Purchase Plan
In 2021, the Group introduced an Employee Share Purchase Plan (“ESPP”). The ESPP allows individual employees the possibility to save up
to €500 monthly and acquire KWS shares discounted by 10% on the market price at the date of purchase. The plan has bi-annual purchaseperiods, with share-based benefits expensed within the period.

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Share Option Plan
These are measured at fair value on the grant date using a Black-Scholes option pricing model which calculates the fair value of an option
by using the vesting period, the expected volatility of the share price, the current share price, the exercise price and the risk-free interest
rate. The fair value 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 vesting after four years. The only vesting condition is continuous service. There is no requirement to revalue theoption at any subsequent date.

LTIP
The exercise of LTIP awards is subject to the Company's share price (stock symbol: KWS) performance versus the designated Share Index
in terms of shareholder return over a three-year period. For the awards granted up to 2015, one-third of the share options vested if theCompany exceeded the Total Shareholder Returns (“TSR”) of the Numis Small Cap Index (excluding Investment Trusts) by 10%, two-thirds if
the TSR exceeded the Index by 20% and full vesting if the TSR exceeded the Index by 30%. This was amended for the 2016 and 2017 awards
to 100% vesting if the shareholder return exceeds the Index by 45%, and a prorated return between 10% if the TSR matches the Index, to100% if the TSR exceeds the Index by 45%. The scheme was further amended in 2018 to 100% vesting if the TSR exceeds the Index by 20%,and a prorated return between 10% and 100% if the TSR exceeds the Index by between 0% and 20%. In 2019, the benchmark Index wasamended for future grants to be the FTSE Small Cap Index, with the same performance conditions as 2018. In 2021, the benchmark Index wasamended to be the FTSE250 Index (excluding investment trusts) and threshold vesting (25% of the award) will be earned for TSR in line with
the Index and full vesting will be earned for exceeding the Index TSR by 20% over the performance period. A prorated return will be earned
between 25% and 100% if the TSR exceeds the Index by between 0% and 20%.
These are measured at fair value, taking into account market vesting conditions but not non-market vesting conditions, at the date of grant,measured by using the Monte Carlo binomial model.

Salary Shares
Salary shares are measured at fair value on the grant date. As the only vesting condition is continuous service, the fair value of the shares isamortised over the vesting period.

Dividend Distribution
Final dividends are recorded in the Group’s financial statements in the period in which they are approved 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 applicable tax 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 for differences arising on:• The initial recognition of an asset or liability in a transaction which is not a business combination 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 not reverse 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 andare 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 to offset current tax assets and liabilities and thedeferred 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 theliabilities simultaneously, in each future period in which significant amounts of deferred tax assets or liabilities are expected to be settled
or recovered.

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Property, Plant and Equipment
Property, plant and equipment comprise computers, leasehold improvements, and office furniture and equipment, and are stated at costless accumulated depreciation. Carrying amounts are reviewed for impairment whenever events or changes in circumstances indicate that
their carrying amount may not be recoverable. Where the carrying amount of an asset is greater 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 value on 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

3–5 years

Office furniture and equipment
Leasehold improvements

10 years
over the length of the lease

Gains and losses on disposals are determined by comparing proceeds with carrying amount and are included in the Consolidated statementof comprehensive income.

Financial Assets
The Group’s most significant financial assets comprise trade and other receivables and cash and cash equivalents in the Consolidated
statement of financial position, whereas the Company’s most significant financial assets comprise inter-group receivables.

Trade Receivables
Trade receivables, which principally represent amounts due from customers, are recognised at amortised cost as they meet the IFRS 9
classification test of being held to collect, and the cash flow characteristics represent solely payments of principal and interest. The Group’s
impairment methodology is in line with the requirements of IFRS 9. The simplified approach to providing for expected credit losses has been
applied to trade receivables, which requires the use of a lifetime expected loss provision.

Cash and Cash Equivalents
Cash and cash equivalents comprise cash in hand, deposits held on call with banks and other short-term highly liquid investments. Where
cash is on deposit with maturity dates greater than three months, it is disclosed as short-term investments.

Accrued Income from Contracts with Customers
Accrued income from contracts with customers, arising from Revenue from contracts with customers, is recognised in accordance with our
Revenue Recognition policy, as discussed separately in this note. The Group applies the simplified approach to assessing expected credit
losses in relation to such assets, as their maturities are less than twelve months. Based upon the recoverability of contract assets at year end,no significant expected credit loss provision has been applied.

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
Contingent consideration is initially recognised at fair value and subsequently re-measured through the profit and loss. Trade payables, bankborrowings and other monetary liabilities are initially recognised at fair value and subsequently carried at amortised cost using the effective
interest rate method.

Leased Assets
A lease is defined as "a contract, or part of a contract, that conveys the right to use an asset (the underlying asset) for a period of time inexchange 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, anestimate of any costs to dismantle and remove the asset at the end of the lease, and any lease payments made in advance of the leasecommencement 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 theuseful 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 the commencement date, the Group measures the lease liability at the present value of the lease payments unpaid at thatdate, discounted using the interest rate implicit in the lease if that rate is readily available or at the Group’s incremental borrowing rate.

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Lease payments included in the measurement of the lease liability are made up of fixed payments (including in-substance fixed), variable
payments based on an index or rate, amounts expected to be payable under a residual value guarantee, and payments arising from purchaseand 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, thecorresponding 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 recognisinga right of use 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 leaseliabilities and right of use assets recognised.

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 the Consolidated statement of financial position. 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 Group makes certain estimates and assumptions regarding the future. Estimates and judgements are continually evaluated based on
historical experience 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.

Judgements
The judgements, apart from those involving estimations, that management have made in the process of applying the Group’s accounting
policies and that have the most significant effect on the amounts recognised in the financial statements, are outlined below.
• Group– Functional Currency: The Directors have considered the requirements of IAS 21 in determining the currency that most faithfully
represents the economic effects of the underlying transactions, events and conditions to determine the functional currency. Detailed
consideration has been given to both the Primary and Secondary Indicators in forming this conclusion. The Primary Indicators relate torevenues, regulation, competitive forces and costs, while the Secondary Indicators are primarily concerned with financing the businessand the currency in which receipts from operating activities are usually retained. With a mix of currencies dominating the indicators,
there is no clear single currency that influences the Group; however, the euro remains marginally the most dominant when all factors
are considered. Therefore, the Directors consider the euro as the currency that most faithfully represents the economic effects of theunderlying transactions, events and conditions.
– Business Combinations (Customer relationships): When acquiring a business, the Group is required to identify and recognise
intangible assets, the determination of which requires a significant degree of judgement. Acquisitions may also result in intangible
benefits being brought into the Group, some of which qualify for recognition as intangible assets while other such benefits do notmeet the recognition requirements of IFRS and therefore form part of goodwill. Customer relationships are recognised as separate
assets where revenues are recurring in nature and material revenues have been generated with the customer for a continuous periodof three years. For the Game Development service line, the key asset acquired is typically “know-how”, an asset that is not readilymeasurable and thus intrinsically linked to goodwill. Relationships are typically fixed term contract based rather than relationshipbased. Therefore, neither customer contracts nor customer relationships are typically recognised on the acquisition of a Game
Development business.
– IFRS 16 Leases: The Group has determined that the Group’s incremental borrowing rate is the appropriate rate to use to discountlease liabilities. 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, whichsignificantly affects the lease liabilities and right of use assets recognised.

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Supplementary information– Business Combinations (put and call options over Non-controlling interest): The Group acquired an 85% interest in Tantalus in March
2021, with the sellers retaining a minority shareholding. The shareholder agreement (signed with the purchase agreement) includes
put and call options (“the Forward”) that require the sellers to sell, or require the Group to buy, the remaining 15% shareholding inthree years using a pre-determined valuation methodology linked to post-acquisition performance. IFRS 3 does not provide specificguidance on how such contracts should be accounted for in a business combination. The Board determined, taking into consideration
all the contracts’ terms and conditions, that the impact of the Forward put the Group in a similar position as if the Group had acquired
a 100% interest in the subsidiary on the acquisition date, with deferred contingent consideration payable at a future date. In doing
so, the Board considered whether the risks and rewards of ownership reside with the Non-controlling interest or had effectivelytransferred to the Group, and concluded that the Non-controlling interest arising on the acquisition had been extinguished by a
combination of the Forward and other conditions in the agreements. Therefore, the Group has accounted for the acquisition as if a
100% interest was acquired on acquisition, accounting for the initial investment and the Forward as a single linked transaction in which
100% control is gained, with the Forward recognised at fair value, as a financial liability within Deferred and contingent consideration(note 17), and no Non-controlling interest recognised on the acquisition. Any subsequent re-measurement required due to changes in
the fair value of the liability will be recognised in the Consolidated statement of comprehensive income.
– Operating Segments: While previously it was considered that the Group’s activity, as a single-source supplier of services to thegaming industry, constituted one operating and reporting segment (as defined under IFRS 8 Operating Segments), following on recent
executive and organisational changes, the Board consider it more meaningful to present information by segment aligning to the neworganisational and reporting structures:
Create – Game Development and Art Creation;
Globalize – Functional Testing, Localization Testing, Audio and Localization; andEngage – Marketing and Player Support.
The Operating segments are reported in note 4, in a manner consistent with the new internal organisational and management
structure, and the internal reporting information provided to the Chief Operating Decision Maker (“CODM”) who is responsible
for allocating resources and assessing performance of the operating segments. The CODM has been identified as the executive
management team made up of the Chief Executive Officer and the Chief Financial Officer. As a corollary, the Board also considered
how the change in segmental reporting impacted the Group’s cash generating units (“CGUs”). CGUs represent the lowest level atwhich goodwill is monitored for internal management purposes and are not larger than the operating segments determined inaccordance with IFRS 8. While previously the Group was considered to have one CGU, the change in segmental reporting requires
the Group’s CGUs to be reconsidered. The Board determined that monitoring goodwill for impairment at the line of business level(i.e. Art Creation, Game Development etc.) would be the most appropriate (see note 11).
– Goodwill: Goodwill is required to be tested for impairment at least annually or more frequently if changes in circumstances or theoccurrence of events indicating potential impairment exist. The Group uses the present value of future cash flows to determine
recoverable amounts. In calculating the value in use, significant judgement and estimation is required in forecasting cash flows of
CGUs, in determining terminal growth values and in selecting an appropriate discount rate.

Estimates and Assumptions
The Group makes certain estimates and assumptions regarding the future. Estimates and judgements are continually evaluated based on
historical experience 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.
A number of areas requiring the use of estimates and critical judgements impact the Group’s earnings and financial position. These include
revenue recognition, the computation of income taxes, the value of goodwill and intangible assets arising on acquisitions, the valuationof multimedia tax credits/video game tax relief, leasing and the valuation of defined retirement benefits. The Directors consider that noreasonably possible changes to any of the assumptions used in the estimates would in the view of the Directors give rise to significant risk ofa material adjustment to the carrying value of the associated balances in the subsequent financial year.

125

126

Keywords Studios plc Annual Report and Accounts 2022

Notes forming part of the consolidated financial statements continued

4

Segmental Analysis and Revenue from Contracts with Customers

Segmental Analysis*
2022
€'000

2021
€'000

Create275,570

188,178

Globalize

300,875

231,901

Engage114,273

92,121

690,718

512,200

Create69,74849,730Globalize

61,57747,383Engage15,576

12,987

146,901

110,100

Revenue from external customers

Segment operating profit

Reconciliation of Segment operating profit

Adjusted EBITDA^

146,901

110,100

Share-based payments expense(18,678)(16,394)

Costs of acquisition and integration(8,413)(7,972)

–

(67)

1,098

–

Non-controlling interest
Other income
Amortisation of intangible assets(16,810)(13,688)

Depreciation – property plant and equipment(18,365)(11,661)

Depreciation and impairment – right of use assets(14,585)(10,473)

Bank charges

662

520

Operating profit

71,81050,365

Financing income

1,986

2,045

Financing cost

(5,814)(4,427)

Profit before taxation

67,982

47,983*The prior year comparatives have been re-classified to present information by segment, aligning to the new organisational and reporting structures (see note 3).

^	The Group reports a number of alternative performance measures (“APMs”), including Adjusted EBITDA, to present the financial performance of the business, that are
not GAAP measures as defined under IFRS. Segmental results are reported in a manner consistent with these measures. A reconciliation of Adjusted EBITDA to therelevant GAAP measure is presented in the APMs section.

Operating segments are reported in a manner consistent with the internal organisational and management structure, and the internalreporting information provided to the Chief Operating Decision Maker (“CODM”) who is responsible for allocating resources and assessing
performance of the operating segments. The CODM has been identified as the executive management team made up of the Chief Executive
Officer and the Chief Financial Officer.

Overview

Strategic report

Governance

Financial statements

127

Supplementary information

Geographical analysis of non-current assets from continuing businesses*

2022
€'000

2021
€'000

United States

264,117

171,126

United Kingdom

121,556

114,871

Canada57,65231,096Australia

51,86945,528Italy

16,471

15,612

Poland12,561

3,275

Ireland

10,311

8,422

Switzerland

10,025

10,025

China

9,296

8,296

France

7,150

7,548

Other

14,33331,796575,341

447,595*

The prior year comparatives have been re-classified to align to the current year presentation and ranking, as the Directors consider this measure to be more meaningful.

Revenue from Contracts with Customers
Revenue recognised in the reporting period arises from contracts with customers, and is predominantly recognised over time. There were no
significant amounts of revenue recognised in the reporting period that were included in a contract liability balance at the beginning of thereporting period, or from performance obligations satisfied in the previous reporting period.			
2022
€'000

2021
€'000

Canada155,50997,748Geographical analysis of revenues, by production location*

United States

120,72296,060

United Kingdom

115,017

94,426

Poland42,731

21,397

Italy

39,19532,448

China

26,75920,350Russia26,281

29,424

India

25,29018,640Japan

22,716

21,898Australia

22,211

7,408

Other

*

94,28772,401

690,718

512,200

The prior year comparatives have been re-classified to align to the current year presentation and ranking by production location.

For many contracts, operations are completed across multiple sites. Analysis of revenues by geographical regions is presented by production
location, which may not reflect the jurisdiction from which the final invoice to the client is raised, or the region of the Group’s customers,
whose locations are worldwide.
No single customer accounted for more than 10% of the Group’s revenue in either year presented.

128

Keywords Studios plc Annual Report and Accounts 2022

Notes forming part of the consolidated financial statements continued

4

Segmental Analysis and Revenue from Contracts with Customers continued

Revenue Expected to be Recognised
For Game Development, games are developed to an agreed specification and time schedule, and often have delivery schedules and/or
milestones that extend well into the future. The following are Game Development revenues expected to be recognised for contracts with aschedule of work that extends beyond one year, representing the aggregate amount of the transaction price allocated to the performanceobligations that are unsatisfied (or partially unsatisfied) as at the end of the reporting period:
Totalundelivered€'000

Scheduledcompletion within
1 year€'000

Scheduledcompletion
1–2 years€'000

Scheduledcompletion
2–5 years€'000

At 31 December 2022

82,06077,4484,612–

At 31 December 2021

55,29444,973

9,319

1,002

Revenue expected to be recognised

For all service lines excluding Game Development, contracts do not extend to more than one year, therefore information concerning
unsatisfied performance obligations are not disclosed, as allowed under the practical expedient exemption under IFRS 15. This practical
expedient is also availed of for Game Development contracts of less than one year in duration.

5

Cost of Sales and Operating Profit
2022
€'000

2021
€'000

Operating expenses

430,475

320,159

Multimedia tax credits/video game tax relief(21,540)(20,966)

Other direct costs

14,517

12,893

423,452

312,086

Operating profit is stated after charging/(crediting):

2022
€'000

2021
€'000

Depreciation – property, plant and equipment

18,365

11,661

Depreciation and impairment – right of use assets

14,585

10,473

Amortisation of intangible assets

16,81013,688

Costs of acquisition and integration

8,413

7,972

Cost of sales

Auditor's remuneration

689

605

Short-term leases

2,140

1,531

Other income(1,098)–

Costs of acquisition and integration

2022
€'000

2021
€'000

Acquisition and integrations costs re: current year acquisitions (note 27)

1,177

1,099

Acquisition and integrations costs re: prior acquisitions

631

191

Fair value adjustments to contingent consideration (note 17)

2,282

5,567

Deferred consideration related to continuing employment

3,266

454

Acquisition team and related costs

671

313

Other reorganisation and restructuring costs

386

348

8,413

7,972

Overview

Strategic report

Governance

Auditor's remuneration

Financial statements

129

Supplementary information

2022
€'000

2021
€'000

Audit services:
Parent company and Group audit

318

314

Subsidiary companies audit

358

278

13

13

689

605

2022
€'000

2021
€'000

Non-audit services:
Audit-related assurance services

Other income

Gain on disposal of investment(1,098)–(1,098)–Other income represents the gain on disposal of the Group’s investment in AppSecTest in April 2022 (including related Non-controllinginterest re-cycled on disposal).

6

Financing Income and Cost
2022
€'000

2021
€'000

Financing income
Interest received

309

62

Foreign exchange gain

1,677

1,983

1,986

2,045

Financing cost
Bank charges

(662)

(520)

Interest expense(1,261)(1,040)

(969)

(985)

Unwinding of discounted liabilities – deferred consideration

Unwinding of discounted liabilities – lease liabilities(2,922)(1,882)(5,814)(4,427)

Net financing income/(cost)(3,828)(2,382)

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Keywords Studios plc Annual Report and Accounts 2022

Notes forming part of the consolidated financial statements continued

7

Taxation
2022
€'000

2021
€'000

Income tax on profits

25,844

17,632

Deferred tax (note 21)(5,232)(3,757)

20,612

13,875

2022
€'000

2021
€'000

Profit before tax

67,982

47,983

Tax charge based on the Effective tax rate*

12,156

10,527

Current income tax

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

Income tax prior year (over)/under provision

(653)

(261)

Deferred tax prior year (over)/under provision and impact of change in tax rates

(204)

148

Items disallowed for tax purposes

7,468

3,430

Exempt and non-taxable income

(72)

(174)

Tax incentives

(924)

(951)

Current year tax losses utilised

(250)

(363)

Current year tax losses where deferred tax has not been provided

346

204

State and other direct taxes

932

658

Other differences – net
Total tax charge* Effective tax rate – being the statutory tax rate relative to the profit before tax in each jurisdiction

1,813

657

20,612

13,875

17.9%

21.9%

The Group’s subsidiaries are located in different jurisdictions and are taxed on their residual profit in those jurisdictions. The effective tax rate
will vary year on year due to the effect of changes in tax rates and changes in the proportion of profits in each jurisdiction.
Tax effects relating to each component of other comprehensive income

2022
€'000

2021
€'000

Exchange gain/(loss) in net investment in foreign operations(7,947)8,228

Tax (expense)/benefit

993(1,029)(6,954)

7,199

286

27

–

–

Net of tax amount

286

27

Exchange gain/(loss) on translation of foreign operations

6,144

14,581

Net of tax amount
Actuarial gain/(loss) on defined benefit plansTax (expense)/benefit

Tax (expense)/benefit
Net of tax amount

–

–

6,144

14,581

Overview

8

Strategic report

Governance

Financial statements

131

Supplementary information

Earnings per Share2022€ cent2021€ cent

Basic

61.54

45.16

Diluted

58.86

42.98

Earnings

€'000

€'000

Profit for the period from continuing operations

47,37034,108Weighted average number of equity shares

Basic (i)NumberNumber

76,979,596

75,526,296

Diluting impact of share options (ii)

3,502,301

3,826,990

Diluted (i)80,481,897

79,353,286(i) Includes (weighted average) shares to be issued:
NumberNumber

67,802

219,146(ii) Contingently issuable ordinary shares have been excluded where the conditions governing exercisability have not been satisfied:

LTIPs
Share options

NumberNumber409,728

903,656

511,411–921,139

903,656

Details of the number of share options outstanding at the year-end are set out in note 23.

9

Dividends
In respect ofApproval date€ centper share

Pence STG
per share

Total dividend€'000

Payment
date

2021

Sep-21

0.81

0.70

615

Oct-21

0.81

0.70

615

Final

2021

Mar-22

1.70

1.45

1,305

Jun-22

Interim2022

Sep-22

0.90

0.77

674

Oct-22

2.60

2.22

1,979

Pence STG
per share

Expected total
dividend€'000

Expected
payment date

1.60

1,406

Jun-23

Dividends paid

Interim
Dividends paid to shareholders 2021

Dividends paid to shareholders 2022

Recommended

Final

In respect ofApproval date

Expected€ centper share

2022

Mar-23

1.80

At 31 December 2022, Retained earnings available for distribution (being Retained earnings plus Share-based payments reserve) in the
Company were €77.6m (2021: €47.7m). In addition, certain amounts within Merger reserve are considered distributable (see note 22).
In light of COVID-19 the Directors did not recommend any dividend payments for 2020. Dividend payments were resumed in 2021, and the
Directors do not foresee any impediment in continuing to implement the dividend policy of the Group moving forward.
The Group does not recognise deferred tax on unremitted retained earnings, as, in general, retained earnings (as dividends) are only remitted
where there are minimal or no tax consequences.

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Keywords Studios plc Annual Report and Accounts 2022

Notes forming part of the consolidated financial statements continued

10 Staff Costs
2022
€'000

2021
€'000

345,857

263,036

Social welfare costs

27,78830,455Pension costs

7,222

6,685

Total staff costs (including Directors)

Salaries and related costs

Share-based payments expense

Average number of employees

Operations
General and administration

18,67816,394

399,545

316,570

2022

2021

10,272

8,821

869

672

11,141

9,493

Key management compensation

2022
€'000

2021
€'000

Salaries and related costs

2,258

1,569

Social welfare costs

431

201

Pension costs

54

25

Share-based payments expense

1,142

698

3,885

2,493

The key management compensation comprises compensation to ten Directors of Keywords Studios plc during the year (2021: eleven).

Overview

Strategic report

Governance

Financial statements

133

Supplementary information

11 Intangible Assets
Goodwill€'000

Customer
relationships€'000Intellectual property/
Development costs
€'000

Total
€'000

At 01 January 2021

212,164

52,423

3,799

268,386

Recognition on acquisition of subsidiaries

97,918

11,502–

109,420

Cost

Additions

–

–

315

315

14,9554,400–

19,355

At 31 December 2021

325,037

68,325

4,114

397,476

Recognition on acquisition of subsidiaries

70,482

34,69525,914

131,091

–

–

501

501

Exchange rate movement

Additions
Disposals

(159)

–

–

(159)

Exchange rate movement

1,373

1,317

(134)

2,556

396,733

104,337

30,395

531,465

At 01 January 2021

147

25,1782,251

27,576

Amortisation charge–

13,261427

13,688At 31 December 2022
Accumulated amortisation

–

2,269

–

2,269

At 31 December 2021

Exchange rate movement

147

40,7082,678

43,533

Amortisation charge–

16,285525

16,810

(147)

–

–

(147)

Exchange rate movement

Disposals

–

1,308

8

1,316

At 31 December 2022–

58,301

3,211

61,512Net book value
At 01 January 2022

324,890

27,617

1,436

353,943

At 31 December 2022

396,733

46,03627,184

469,953

Customer relationships and intellectual property/development costs are amortised on a straight-line basis over five years. Customer
relationships amortisation commences on acquisition, whereas intellectual property/development costs amortisation commences when
the product is launched.

Impairment tests for goodwill
The Group assesses the carrying value of goodwill each year on the basis of budget projections for the coming year extrapolated using
a one to five year growth rate and a terminal value calculated using a long-term growth rate projection. The (pre-tax) discount rate used of
10.0% (2021: 12.5%) is based on the Board’s assessment of the weighted average cost of capital (“WACC”) of the Group.
A cash-generating unit (“CGU”) is the smallest identifiable group of assets that generates cash inflows that are largely independent of the
cash inflows from other assets or group of assets. The CGUs represent the lowest level within the Group at which the associated goodwill
is assessed for internal management purposes and are not larger than the operating segments determined in accordance with IFRS 8
Operating Segments. As outlined in note 3, the Board have determined the lines of business as CGUs, and Goodwill acquired in businesscombinations has been allocated to the CGUs that are expected to benefit from business combinations to date.

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Keywords Studios plc Annual Report and Accounts 2022

Notes forming part of the consolidated financial statements continued

11 Intangible Assets continued
A summary of the allocation of the carrying value of goodwill by segment and by CGU is presented below:
Segment

CGU

2022
€m

2021
€m

Create:Game Development

218

177

Art Creation

19

19

Functional Testing

15

14

Globalize:

Engage:Localization Testing

14

13

Audio

33

32

Localization

19

17

Marketing35

42

Player Support

44

11

397

325

The value in use calculations were consistently calculated year over year, with no significant changes in the assumptions made. The result of
the value in use calculations was that no impairment is required in this period.

Key assumptions
Actual1 to 5 year growth rate assumption
Long-term growth rate assumption

Sensitivity analysis

2022

2021

2022

2021

2022

2021

10%

10%

15%

15%

5%

5%

2%

2%

2%

2%

2%

2%

Value in use (€m) – all CGUs

1,295

792

1,552

947

1,096

673

Carrying value – goodwill (€m)

397

325

Sensitivity analysis has been performed across all the CGUs to flex the growth rate by 5% and separately to flex the discount rate by 1%.
Under both scenarios there would have been no requirement for the Group to recognise any impairment charge in either period presented,
in any individual CGU. The Directors consider that no reasonably probable change in the assumptions would result in an impairment.

12 Right of Use Assets
The Group has entered into leases, across the business, principally relating to property. These property leases have varying terms andrenewal rights.
2022
€'000

2021
€'000

At 01 January

63,84044,092

Additions

15,24915,392580

1,402(14,186)–

Cost

Recognition on acquisition of subsidiaries
De-recognition of expired leases
Exchange rate movement
At 31 December

366

2,954

65,84963,84027,84916,285
10,473

Accumulated depreciation
At 01 January
Depreciation charge

11,753De-recognition of expired leases(14,186)–

Impairment charge

2,832

–

Exchange rate movement

(71)

1,091

28,177

27,849At 01 January

35,99127,807

At 31 December

37,67235,991

At 31 December
Net book valueOverview

Strategic report

Governance

Financial statements

135

Supplementary information

13 Property, Plant and Equipment
Computers
and software€'000

Office furnitureand equipment€'000

Leaseholdimprovements
€'000

Total
€'000

Cost
At 01 January 2021

29,206

6,906

14,91251,024

Exchange rate movement

2,877

783

1,289

4,949

Additions

13,492

1,444

4,424

19,360

304

266

2

572

Disposals(2,830)(185)(5,699)(8,714)

At 31 December 2021

43,0499,214

14,92867,191

(94)

(109)

105

(98)

21,962

1,129

3,916

27,007

243

131

48

422

Acquisitions through business combinations at fair value

Exchange rate movement
Additions
Acquisitions through business combinations at fair value
Disposals(1,132)

(490)

(828)

(2,450)64,028

9,875

18,16992,072

At 01 January 2021

16,886

3,302

4,417

24,605

At 31 December 2022
Accumulated depreciation
Exchange rate movement

2,342

603

676

3,621

Depreciation charge

8,170

590

2,901

11,661

Disposals(2,830)(185)(5,699)(8,714)

At 31 December 2021

24,568

4,310

2,295

31,173

47

71

82

200

Exchange rate movement
Depreciation charge

12,539799

5,027

18,365

Disposals(1,133)

(490)

(827)

(2,450)At 31 December 2022

36,021

4,690

6,577

47,288

At 01 January 2022

18,481

4,904

12,63336,018At 31 December 2022

28,007

5,185

11,592

44,784

2022
€'000

2021
€'000

175

175

Net book value

14 Investments

Investments

From time to time, the Group (via Keywords Ventures Limited) has made modest investments in businesses developing innovativetechnologies and services that will benefit its clients, while further accelerating the success of investee companies through access to its
global platform and relationships.

136

Keywords Studios plc Annual Report and Accounts 2022

Notes forming part of the consolidated financial statements continued

15 Trade Receivables

Trade receivables

2022
€'000

2021
€'000

85,012

69,835

Provision for bad debts (note 24)(3,449)(1,768)Financial asset held at amortised cost

81,56368,067

2022
€'000

2021
€'000

Trade receivables arise from revenues derived from contracts with customers.

16 Other Receivables
Current

Multimedia tax credits/video games tax relief

25,75622,860Accrued income from contracts with customers

13,2209,997

Prepayments and rent deposits

10,527

7,114

Tax and social security

6,538

4,936

Other receivables

5,374

4,203

61,415

49,110

2022
€'000

2021
€'000

64,73453,526

Accrued income from contracts with customers represent mainly contract assets in process and related items.

17 Other Payables

Current liabilities
Accrued expenses

3,577

2,666

Deferred and contingent consideration (i)Payroll taxes

44,94535,888Other payables (ii)26,09916,343

139,355

108,423

2022
€'000

2021
€'000

Non-current liabilities
Deferred and contingent consideration (i)18,30818,25418,30818,254

Overview

Strategic report

Governance

Financial statements

137

Supplementary information(i) The movement in deferred and contingent consideration during the financial year was as follows:
2022
€'000

2021
€'000

Carrying amount at the beginning of the year

54,14220,802

Consideration settled by cash

(25,800)(14,393)

Consideration settled by shares(8,040)(2,838)

Unwinding of discount (note 6)

2,922

1,882

Additional liabilities from current year acquisitions (note 27)

37,95040,059Adjustment arising from prior year business combinations

2,282

5,567

Exchange rate movement
Carrying amount at the end of the year

(203)

3,063

63,25354,142

In general, in order for contingent consideration to become payable, pre-defined profit and/or revenue targets must be exceeded. The
valuation of contingent consideration is derived using data from sources that are not widely available to the public and involves a degree ofjudgement (Level 3 input in the fair value hierarchy). A 10% increase in expected performance would increase the carrying value of contingent
consideration by €1.0m, while a 10% reduction in expected performance would decrease the carrying value by €4.0m. On an undiscounted
basis, the Group may be liable for deferred and contingent consideration ranging from €7.7m to a maximum of €66.6m.
(ii) Other payables includes deferred income from contracts with customers of €9,127k (2021: €3,470k), which mainly comprise items
invoiced prior to services being delivered. Excluding amounts recognised on acquisition of subsidiaries (€3,461k, see note 27), the movementin the year comprises transfers in and out as items are deferred and subsequently recognised as revenue.

18 Loans and Borrowings
2022
€'000

2021
€'000

–

–

Expiry between 1 and 2 years––

Expiry over 2 years

51

129

51

129

51

129

51

129

Maturity analysis of Loans and borrowings

Current
Expiry within 1 year
Non-current

Currency denomination

Canadian dollars

The Company has an unsecured revolving credit facility (“RCF”) in place with a syndicate of four lenders. The RCF is a committed facility thatallows financing of up to €150m, which may be drawn down in euro, sterling, US dollars or Canadian dollars, with an option (subject to lenderconsent), to increase the facility by up to €50m to a total of €200m, at interest rates based on a margin over currency benchmark rates, plus
a separate margin charged for the unutilised facility. The RCF agreement extends to December 2024, with an option to extend the term by
two further one-year periods. The first extension (to 2025) was triggered during 2022.
Loans and borrowings (classified as financial liabilities under IFRS 9), are held at amortised cost. Interest expenses which are calculated using
the effective interest method are disclosed in note 6. While technically any borrowings are repaid and re-borrowed multiple times during theterm of the RCF, so long as the Group remains compliant with the financial covenants and certain other terms of the RCF, any debt is rolledfrom one period to another, with the legal and commercial substance of a multi-year committed facility. Hence the Group presents any RCF
liabilities as non-current.
In connection with the financial covenants of the RCF, the Group is required to comply with and report certain interest cover and leverage
ratios. Non-compliance with RCF terms could result in lenders refusing to advance funds under the facility or, in the worst case, callingin outstanding loans. Throughout the period, the Group operated well within the applicable ratio terms of both the new and previous
RCF agreements.

138

Keywords Studios plc Annual Report and Accounts 2022

Notes forming part of the consolidated financial statements continued

18 Loans and Borrowings continued
The movements in Loans and borrowings are as follows:
Current€'000

Non-current
€'000

Total
€'000

73

122

195

Drawdowns–––

Repayments

–

(80)

(80)

At 01 January 2021
Cash flows:

Non-cash flows:
Exchange rate movement

8

6

14

At 31 December 2021

81

48

129

Drawdowns–––

Repayments

(37)

(42)

(79)

–

–

–

Cash flows:

Non-cash flows:
Recognition on acquisition of subsidiaries (note 27)
Exchange rate movement
At 31 December 2022

1

–

1

45

6

51

There were no drawdowns on the RCF during 2022. Loans outstanding refer to amounts owed by Keywords Studios QC-Interactive Inc.

19 Lease Liabilities
The Group has entered into leases, across the business, principally relating to property. These property leases have varying terms and renewal
rights. Management applies judgement in determining whether it is reasonably certain that a renewal or termination option will be exercised.
The movement in lease liabilities during the financial year was as follows:

Carrying amount at the beginning of the year

2022
€'000

2021
€'000

37,63528,864

Recognition on acquisition of subsidiaries (note 27)

580

1,402

Liabilities recognised on new leases in the period

15,244

15,392

Unwinding of discounted liabilities – lease liabilities

969

985

Payment of principal and interest on lease liabilities(12,330)(10,938)

421

1,930

42,51937,635

Exchange rate movement
Carrying amount at the end of the year

The value of leases not yet commenced to which the lessee is committed, which are not included in lease liabilities at 31 December 2022,
was €nil (2021: €nil).

Maturity analysis of lease liabilities

2022
€'000

2022
€'000

2022
€'000

2021
€'000

2021
€'000

2021
€'000

Lease
payments

FinancechargesLeaseliabilities

Lease
payments

FinancechargesLeaseliabilities

12,740326

12,414

12,059842

11,217

26,491

1,447

25,044

21,2991,488

19,811

Current
Not later than one year
Non-current
Later than one year and not later than five years
Later than five years
At 31 December

5,317

256

5,061

7,000

393

6,607

31,808

1,703

30,10528,2991,881

26,41844,5482,029

42,51940,3582,723

37,635

Overview

Strategic report

Governance

Financial statements

139

Supplementary information

The Group has elected not to recognise a lease liability for short-term leases (leases with an expected term of twelve months or less) or forleases 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:
Lease payments not recognised as a liability

2022
€'000

2021
€'000

Short-term leases

2,140

1,531

–

–

2,140

1,531

1,282

516

Leases of low value assets

The future minimum lease payments related to these leases

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

Later than five years

–

–

1,282

516

The effect of variable lease payments and reinstatement costs on future cash outflows arising from leases is not material for the Group.

20 Employee Defined Benefit Plans
In line with statutory requirements in France, Italy and India, we are required to maintain employee defined benefit termination payment
schemes.
In France, employees are entitled to a lump sum on retirement or early termination, based on salary and length of service (“Indemnité de Finde Carrière” or “IFC”), entitling the Group's French employees to benefits of up to two months’ salary per year of service.
In Italy, on leaving employment, each employee is entitled to 1/13.5 of their final salary for each year of service (“Trattamento di Fine
Rapporto” or ”TFR”).
In India, in compliance with statutory requirements, employees with over five years’ service are entitled to a termination benefit of 15/26 ofmonthly salary for each year of service (“Gratuity” benefits).
The Group commissions an actuarial valuation of the related liabilities in each jurisdiction annually.
The liabilities at year end are recorded as long term. The actuarial gain or loss is recorded separately within Other comprehensive income.
The movements through the year are as follows:

Opening liabilities at 01 January

2022
€'000

2021
€'000

3,088

2,693

Service cost

514

419

Interest cost51

33

Benefits paid

(155)

(141)

Actuarial (gain)/loss

(286)

(27)

Exchange rate movement

(351)

111

Closing liabilities at 31 December

2,861

3,088

The Directors have considered the key specific risk factors which the Group faces due to the employee defined benefit plans which are inplace. Having fully considered all specific elements of these 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 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 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 Group’s results caused by any of these factors. A maturity profile of the obligation is not presented as
the liability is not significant in the context of the Group, and due to the age profile of employees a significant outlay is not anticipated for theforeseeable future.

140

Keywords Studios plc Annual Report and Accounts 2022

Notes forming part of the consolidated financial statements continued

20 Employee Defined Benefit Plans continued
In 2023, the Group expects the costs of the employee defined benefit plan to be in line with current year levels, as staff levels are notanticipated to change significantly in the period.
The actuarial valuation is based on the Projected Unit Credit Method, in line with IAS 19.
Cost for year

2022
€'000

2021
€'000

Service cost

514

419

Interest cost

51

33

(286)

(27)

279

425

2022
€'000

2021
€'000

Change due to experience80

41

Change due to demographical assumptions

(89)

(9)

(277)

(59)

(286)

(27)

Actuarial (gain)/loss

Actuarial (gain)/loss

Change due to financial assumptions

Assumptions Underlying the Actuarial Valuations and Sensitivities of the Assumptions
For the actuarial valuations, the following demographic and economic and financial assumptions were applied:• Mortality probabilities were derived from the population demographics, as recorded by the government statistics offices in each jurisdiction.
• Disability, retirement age and other relevant demographic assumptions were taken from relevant life assurance statistics.
• Certain inputs were estimated by management, including:– Employee attrition rates, estimated based on company experience in each jurisdiction.
– In Italy, TFR rules allow for early drawdown of benefits in certain circumstances. Such advances were estimated on the basis ofcompany experience.
Economic and financial assumptions

2022

2021

Staff salary increase rate

4.87%

4.07%

Inflation rate

4.87%

3.04%

Discount rate

3.62%

1.67%

Key statistics

2022

2021

Staff (number)

945

874

Average age (years)

32

31

Average service (years)

44Interest rate sensitivities

2022
€'000

2021
€'000

(0.25)%

2,987

3,176

0.25%

2,782

2,880

Mortality rate sensitivities

2022
€'000

2021
€'000

(0.025)%

2,876

3,018

0.025%

2,875

3,015

Staff turnover rate sensitivities

2022
€'000

2021
€'000

(0.50)%

2,886

3,049

0.50%

2,863

2,985

Overview

Strategic report

Governance

Financial statements

141

Supplementary information

Staff salary increase rate sensitivities

2022
€'000

2021
€'000

(0.50)%

2,849

2,976

0.50%

2,916

3,072

21 Deferred Tax
Details of the deferred tax assets and liabilities, and amounts recognised in the Consolidated statement of comprehensive income areas follows:

Defined benefit termination payments
Available losses

2022
€'000

2022
€'000

2022
€'000

2022
€'000

AssetsLiabilities

Net(Credited)/charged toincome statement

308

124

184

144

2,830

13

2,817

(1,000)Rent-free period provisions

258

–

258

(36)

Fixed asset tax base versus accounting book value

1,092

1,983

(891)

1,007

( 2)

3,877

(3,879)309(2,992)

Deferred tax related to tax credits
Deferred tax arising on items deductible on a paid basis

8,879

2,091

6,788

Recognition on acquisition of subsidiaries

15,393

13,341

2,052–

Deferred tax arising on intangibles

11,293

4,482

6,811

(1,892)

Offset where legally enforceable right of set off exists(17,294)(17,294)––

Net tax assets/liabilities

22,757

8,617

14,140(4,460)

Impact of change in tax rates

13

Prior year (over)/under provision(785)

Total (credited)/charged to income statement(5,232)
2021
€'000

2021
€'000

2021
€'000

2021
€'000

AssetsLiabilities

Net(Credited)/charged toincome statement

Defined benefit termination payments

328

–

328

(259)

Available losses

1,817

–

1,817

(660)

Rent-free period provisions

222

–

222

(147)

Fixed asset tax base versus accounting book value

1,818

1,702

116

(217)

–

3,570

(3,570)1,464

Deferred tax arising on items deductible on a paid basis

Deferred tax related to tax credits

5,557

1,761

3,796

(1,857)

Recognition on acquisition of subsidiaries

2,539

3,006

(467)

–

Deferred tax arising on intangibles

9,187

3,801

5,386

(2,345)

Offset where legally enforceable right of set off exists
Net tax assets/liabilities

–

–

–

–

21,468

13,8407,628(4,021)

Impact of change in tax rates

189

Prior year (over)/under provision75

Total (credited)/charged to income statement(3,757)The deferred tax asset not recognised on available losses at the period end is €3.8m (2021: €3.2m). Deferred tax assets and deferred tax
liabilities are offset where a legally enforceable right to offset the recognised amounts exists, the deferred tax assets and deferred tax
liabilities relate to taxes levied by the same taxation authority, and the Group anticipates they will be settled either at the same time, or on
a net basis.

142

Keywords Studios plc Annual Report and Accounts 2022

Notes forming part of the consolidated financial statements continued

22 Shareholders’ Equity
Share Capital

Issue date

Per share€

At 01 January 2021

Number ofordinary£0.01 shares

Number ofordinary
Share capital£0.01 shares– to be– to be Share capitalissued€’000
issued€'000

Sharepremium€’000

Mergerreserve€’000

74,079,243

532,985879

13,047

22,951

250,276

307,597(307,597)

4(8,017)–

8,013

Acquisition-related issuance of shares:
High Voltage Software

12-Jan-21

26.06

Heavy Iron

12-Jan-21

31.84

–

12,914

–

411

–

–

Tantalus

18-Mar-21

27.87

–

368,750–

10,275––

Tantalus

15-Apr-21

27.87

368,750(368,750)

4(10,275)

10,271–

Climax Studios

21-Apr-21

33.53

–

232,517

–

7,797

–

–

Climax Studios

17-May-21

33.53

232,517(232,517)

3(7,797)

–

7,794

Ichi

28-May-21

15.94

14,635(14,635)

–

(233)

–

233

Coconut Lizard

25-Jun-21

18.24

19,739(19,739)

–

(399)

–

399

Kantan02-Jul-21

15.86

12,614(12,614)

–

(200)

–

200

Kantan related adjustment

02-Jul-21

15.86

–

(2,683)

–

–

–

–

AMC

11-Aug-21

33.49

–

25,080

–

840

–

–

Maverick Media

27-Aug-21

25.35

36,211(13,579)

–

(334)

–

918

Coconut Lizard

07-Sep-21

28.44

7,962

–

–

–

–

227

G-Net Media

06-Dec-21

23.26

130,410(130,410)

2(3,034)–

3,032

G-Net Media related adjustment

06-Dec-21

23.26

–

(38)

–

(1)

–

–

Waste

16-Dec-21

30.78

–

20,585

–

634

–

–

Indigo Pearl

22-Dec-21

26.27

20,125(20,125)

–

(529)

–

528

High Voltage Software

24-Dec-21

29.77

Acquisition-related issuance of shares
Employee Share Purchase Plan
Exercise of share options
At 31 December 2021

69,130

–

1

–

–

2,057

1,219,690(462,841)

14(10,862)

10,271

23,401

13,982

–

–

–

398

–

962,860

–

11

–

4,929

–

76,275,775

70,144904

2,185

38,549273,677

Acquisition-related issuance of shares:
Waste

24-Jan-22

30.78

20,585(20,585)

–

(634)

–

633

Heavy Iron

03-Feb-22

31.84

12,914(12,914)

–

(411)

–

411

Heavy Iron related adjustment

03-Feb-22

31.84

53

–

–

–

–

–
300

Jinglebell

11-Mar-22

25.94

11,564(11,564)

–

(300)

–

Tantalus Media

04-Jul-22

31.03

28,473

–

–

–

884

–

Forgotten Empires

28-Jul-22

28.41

–

60,857

–

1,729

–

–

Forgotten Empires

28-Jul-22

27.44

–

26,881

–

738

–

–

Mighty Games

03-Aug-22

28.74

–

28,443

–

817

–

–

Climax

08-Aug-22

28.71

135,559

–

2

–

–

3,889

AMC

31-Aug-22

33.49

25,081(25,081)

–

(840)

–

840

Smoking Gun

05-Oct-22

25.78

–

107,025

–

2,759

–

–

Mighty Games

25-Oct-22

28.74

28,443(28,443)

–

(817)

817

–

Smoking Gun

25-Oct-22

25.78

107,025(107,025)2(2,759)–2,758

G-Net Media

25-Nov-22

33.56

114,038

–

2

–

–

4,147

Acquisition-related issuance of shares

483,735

17,594

6

282

1,701

12,978

Employee Share Purchase Plan

33,372

–

–

–

909

–

Exercise of share options

1,197,175

–

14

–

5,862

–

At 31 December 2022

77,990,057

87,738924

2,467

47,021

286,655

Overview

Strategic report

Governance

Financial statements

143

Supplementary information

Subject to applicable law, the Company’s articles of association and any relevant authority of the Company passed by the shareholders ingeneral meeting, there is no limit to the number of shares which the Company can issue, nor are there are any restrictions on dividends
or distributions on such shares. In the context of the Company’s general meeting authorities, at the Company’s AGM on 20 May 2022 its
shareholders gave the Directors the authority to allot the following number of shares (or grant rights to subscribe for, or convert any security
into, shares) in the capital of the Company:a) Up to 3,818,215 shares in respect of the Company’s Long Term Incentive Plan and Share Option Plan (5% of the Company’s issued sharecapital as at 4 April 2022); andb) Otherwise, up to 25,454,768 shares (33.3% of the Company’s issued share capital as at 4 April 2022).
This authority is considered prudent as it gives the Company flexibility to take advantage of possible opportunities which may arise from time
to time. The authority granted at the 2022 AGM will expire on the earlier of (i) fifteen months after 20 May 2022; and (ii) the conclusion of the2023 AGM.
Shares to be issued are valued at the share price at the date of acquisition, and are recorded in accordance with IAS 32.16.

Shares held in the Employee Benefit Trust (“EBT”)
2022

Ordinary shares held in the EBT

2021

Shares€'000

Shares

€'000

–

–

335,425

1,997

During the period all of the shares held in the EBT were utilised for the exercise of share options.

Reserves
The following describes the nature and purpose of each reserve within owners’ equity:
Reserve

Description and purpose

Retained earnings

Cumulative net gains and losses recognised in the Consolidated Statement of Comprehensive
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 their nominal
value, net of share issuance costs.

Share-based payments reserve

The Share-based payments reserve is the credit arising on share-based payment charges in relation
to the Company’s share and share option schemes.

Shares to be issued

For deferred consideration which is to be provided for by the issue of a fixed number of shares at afuture defined date, where there is no obligation on Keywords to offer a variable number of shares,
the deferred consideration is classified as an Equity Arrangement and the value of the shares is fixedat 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 consideration for the acquisition of an entity
and has secured at least a 90% equity holding in the acquisition, the value of the shares in excess ofthe nominal value (net of share issuance costs) is also recorded within this reserve, in line with S612 of
the Companies Act 2006.
Within Merger reserve are balances related to the share premium on the share placements in 2015
and 2020, of €14.4m and €109.5m respectively, both completed via a cash box structure, with
the Company acquiring the net proceeds via a share-for-share exchange. In both cases, the sharepremium on the issuance of new shares was credited to Merger reserve (in accordance with S610
of the Companies Act 2006). At the time of the placements, the proceeds were not allocated to a
specific acquisition or specific purpose, and thus, amounts totalling €123.9m included in the Merger
reserve are considered distributable.

144

Keywords Studios plc Annual Report and Accounts 2022

Notes forming part of the consolidated financial statements continued

23 Share Incentive Schemes
In July 2013, at the time of the IPO, a Share Option Scheme and a Long-Term Incentive Plan (“LTIP”) was put in place, while in 2021, the Group
introduced an Employee Share Purchase Plan. The charge in relation to these arrangements is as follows:
2022
€'000

2021
€'000

Share option scheme expense

2,689

3,446

LTIP option scheme expense

15,88812,904

Employee Share Purchase Plan

101

44

Share-based payments expense

18,67816,394Of the total Share-based payments expense, €1,142k relates to Directors of the Company (2021: €698k).

Share Option Scheme
Share options are granted to Executive Directors and to permanent employees. The exercise price of the granted options is equal to themarket 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 the options in cash.
Movements in the number of share options outstanding and their related weighted average exercise prices are as follows:
2022

2021

Average exercise
price in £ per share

Number of options

Outstanding at the beginning of the period

Average exercise
price in £ per share

Number of options

15.65

2,423,568

12.66

2,345,238

Granted

–

–

25.48

616,000

Lapsed19.17(133,323)

18.96(163,791)

Exercised

7.88(704,426)

11.46(373,879)

Outstanding at the end of the period

18.78

1,585,819

15.68

2,423,568

Exercisable at the end of the period

15.19

481,319

6.74

668,734

Weighted average share price at date of exercise

23.57

27.42

Summary by year
Year of Option

2015

2016

2017

2018

2019

2020

2021

2022

Exercise price

£1.58

£2.54

£7.76

£17.10£15.88£15.93£25.48–385,295

20,57757,000244,924452,750

698,022565,000–

Outstanding at the
beginning of the period

Total

2,423,568

Granted

–

–

–

–

–

–

–

–

–

Lapsed(4,442)––(8,000)(11,270)(56,022)(53,589)–(133,323)

Exercised(380,853)(6,238)(15,450)(85,405)(120,830)(95,650)––(704,426)

320,650

546,350

511,411–

1,585,819

Outstanding at theend of the period–

14,33941,550151,519

Exercisable at
31 December 2022–

14,33941,550151,519

153,150

120,350411–

481,319

Exercisable 2023

–

–

–

–

167,500

213,000

170,333–

550,833

Exercisable 2024

–

–

–

–

–

213,000

170,333–

383,333

Exercisable 2025

–

–

–

–

–

–

170,334–

170,334

Exercisable 2026

–

–

–

–

–

–

–

–

–

Overview

Strategic report

Governance

Financial statements

145

Supplementary information

The inputs into the Black-Scholes model, used to value the options, are as follows:Year of Option

2015

2016

2017

2018

2019

2020

2021

2022

Weighted average
share price (£)

£1.64

£2.54

£7.75

£17.22£16.09£16.00£26.42–

Weighted average
exercise price (£)

£1.58

£2.54

£7.76

£17.10£15.88£15.93£25.48–Fair value atmeasurement date (€)

€0.56

€0.40

€1.13

€3.79

€5.72

€6.06

€9.32

–

Average expected life

4 Years

4 Years

4 Years

4 Years

4 Years

4 Years

4 Years–

Expected volatility

28.03%

27.17%

24.79%

35.87%

45.23%

50.15%

47.70%–

Risk-free rates

0.90%

0.58%

0.16%

0.89%

0.81%

0.07%

0.15%

–

Average expected
dividend yield

0.75%

0.55%

0.21%

0.10%

0.10%

0.10%

0.10%

–

Weighted averageremaining life of
options in months

–

–

–

–

5

17

29

–

Weighted
average

16

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

Long-term Incentive Plan Scheme
LTIP share awards are subject to KWS performance versus the designated share index over a three-year period.
Movements in the number of share options outstanding and their related weighted average exercise prices are as follows:
2022

2021

Average exercise
price in £ per share

Average exercise
price in £ per share

Number of options

Number of options

Outstanding at the beginning of the period

0.01

Granted0.01

3,704,898

0.01

3,692,817

901,6900.01

932,656

Lapsed0.01(130,241)0.01(312,006)

Exercised

0.01(828,174)

0.01(608,569)

Outstanding at the end of the period

0.01

3,648,173

0.01

3,704,898

Exercisable at the end of the period

0.01

741,2120.01

559,506

Weighted average share price at date of exercise

24.73

27.62

Summary by year
Year of Option

2015

2016

2017

2018

2019

2020

2021

2022

Exercise price

£0.01

£0.01

£0.01

£0.01

£0.01

£0.01

£0.01

£0.01

39,00085,888105,036

329,582

1,018,536

1,223,200

903,656–

3,704,898

–

–

–

–

–

–

–

901,690901,690

Outstanding at the
beginning of the period
Granted
LapsedExercised
Outstanding at theend of the period

Total

–

–

–

–

(8,656)(52,410)(58,349)(10,826)(130,241)(39,000)(64,200)(60,293)(143,582)(521,099)–––(828,174)

1,170,790

845,307890,8643,648,173–

21,68844,743

186,000

488,781

Exercisable at
31 December 2022–

21,68844,743

186,000

488,781–––741,212

Exercisable 2023

–

–

–

–

–

1,170,790––

1,170,790

Exercisable 2024

–

–

–

–

–

–

845,307–845,307

Exercisable 2025

–

–

–

–

–

–

–

890,864

890,864

146

Keywords Studios plc Annual Report and Accounts 2022

Notes forming part of the consolidated financial statements continued

23 Share Incentive Schemes continued
The inputs into the Monte Carlo binomial model, used to value the options, are as follows:Year of Option

2015

2016

2017

2018

2019

2020

2021

2022

Weighted average
share price (£)

£1.60

£2.56

£7.75

£17.24£16.05£16.00£26.42£22.31

Weighted average
exercise price (£)

£0.01

£0.01

£0.01

£0.01

£0.01

£0.01

£0.01

£0.01

Fair value atmeasurement date (€)

€1.38

€1.74

€4.96

€11.83€13.98€13.28€16.73€15.70

Average expected life

3 Years

3 Years

3 Years

3 Years

3 Years

3 Years

3 Years

3 Years

Expected volatility

28.21%

27.11%

24.79%

35.87%

45.26%

50.15%

47.70%

41.22%

Risk-free rates

0.88%

0.54%

0.16%

0.89%

0.81%

0.07%

0.13%

1.59%

–

–

–

–

–

5

17

29

Weighted averageremaining life of
options in months

Weighted
average

13

Expected volatility was determined by reference to KWS share price volatility. The expected life used in the model has been adjusted basedon management’s best estimate, for the effects of non-transferability, exercise restrictions and behavioural considerations. As any dividends
earned are to be reinvested into the business, the impact of dividends has been ignored in the calculation of the LTIP share option charge.
LTIPs vest on the third anniversary of the grant, if the market performance criteria are met. LTIPs must be exercised before the seventh
anniversary of the grant.

Salary Shares
Conditional awards under the rules of the LTIP Plan (“Salary Shares”), are issued to certain employees and Directors, where the only vesting
condition is continuous service.
Movements in the number of share options outstanding and their related weighted average exercise prices are as follows:
2022
Average exercise
price in £ per share

0.01

Granted
LapsedOutstanding at the beginning of the period

2021
Number of options

Average exercise
price in £ per share

Number of options

26,738––0.01

237,676

0.01

26,738

0.01

(953)

–

–

Vested0.01(3,838)––

Outstanding at the end of the period

0.01

259,6230.01

26,738

Total

Summary by year
Year of Option

2021

2022

Exercise price

£0.01

£0.01

Outstanding at the beginning of the period

26,738–26,738–

237,676

237,676

Granted
Lapsed

(953)

–

(953)

Vested(1,638)(2,200)(3,838)

Outstanding at the end of the period

259,623

24,147

235,476

Vesting 2023

–

5,928

5,928

Vesting 2024

24,147

225,740

249,887

Vesting 2025

–

3,808

3,808

Overview

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Governance

Financial statements

147

Supplementary information

Details of the awards by year are as follows:Year of Option

2021

2022

Weighted average share price (£)£27.40£22.41

Weighted average exercise price (£)

£0.01

£0.01

Fair value at measurement date (€)€32.08€26.47

Average expected life

3 Years

2 Years20

17

Weighted average remaining life of options in months

Weighted average

17

24 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 substantially independent of changes in market interest rates. Management monitor interest rate fluctuations
on a continuous basis and acts accordingly.
Where the Group has a significant amount of surplus cash, it invests 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.
As there were no drawdowns on the RCF in either period presented, any strengthening or weakening of interest rates would not have been
impactful on the pre-tax profit/(loss) reported for the year.

Credit Risk
The Group’s main financial assets are cash and cash equivalents, as well as trade and other receivables which represent the Group’s
maximum exposure to credit risk in connection with its financial assets.
Credit risk arises when a failure by counterparties to discharge their obligations could reduce the amount of future cash inflows fromfinancial assets on hand at the reporting date. Customer credit risk is managed at appropriate Group locations according to establishedpolicies, procedures and controls. Customer credit quality is assessed and credit limits are established where appropriate. Outstanding
customer balances are regularly monitored and a review for indicators of impairment (evidence of financial difficulty of the customer,
payment default, breach of contract, etc.) is carried out at each reporting date. Significant balances are reviewed individually while smaller
balances are grouped and assessed collectively. Receivables balances are unsecured and non-interest-bearing.
Credit risk arises on trade receivables and accrued income from contracts with customers (reported within other receivables). Trade andother receivables are carried on the Consolidated statement of financial position net of provisions.
Trade Receivables
The trade receivables balances disclosed comprise a large number of customers spread across the Group’s activities and geographies withbalances classified as “Not past due” representing 73.0% of the total trade receivables balance at the balance sheet date (2021: 77.5%).
The ageing of trade receivables can be analysed as follows:
Total
€'000

Not past due€'000

1–2 months
past due€'000

More than
2 months past due€'000

At 31 December 2022

81,56359,532

16,8035,228

At 31 December 2021

68,06752,753

14,192

1,122

2022
€'000

2021
€'000

Provision at the beginning of the year

1,768

1,982

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

1,733

821

79

63

(131)

(1,098)

3,449

1,768

A provision for doubtful debtors is included within trade receivables and can be reconciled as follows:

Foreign exchange movement in the year
Utilised
Provision at the end of the year

148

Keywords Studios plc Annual Report and Accounts 2022

Notes forming part of the consolidated financial statements continued

24 Financial Instruments and Risk Management continued
Trade receivables loss allowance is estimated using a practical expedient to arrive at lifetime expected credit losses. Overdue receivables areevaluated to calculate an expected credit loss using a historical credit loss experience of 1.0% (2021: 1.0%). Taking into account internal andexternal information, the historical credit loss experience may be adjusted where it is determined that there has been a significant increase incredit risk. Where a receivable is credit impaired, the impairment is recognised immediately.
Total
€'000

Not past due€'000

1–2 months
past due€’000

More than
2 months past due€'000

Trade receivables gross

85,01260,134

17,175

7,703

Credit impaired(2,598)–(200)(2,398)

Expected credit losses

(851)

(602)

(172)

(77)

At 31 December 2022

81,56359,532

16,803

5,228

Total
€'000

Not past due€'000

1–2 months
past due€'000

More than
2 months past due€'000

Trade receivables gross

69,83553,286

14,502

2,047

Credit impaired(1,070)

–

(165)

(905)

Expected credit losses

(698)

(533)

(145)

(20)

68,06752,753

14,192

1,122

At 31 December 2021

Accrued income from contracts with customers
Accrued income from contracts with customers balances comprise a large number of projects in process spread across the Group’s
activities and geographies, with balances classified as aged “0-30 days” representing 76.6% of the balance at the balance sheet date
(2021: 74.1%).
The ageing of accrued income from contracts with customers can be analysed as follows:
Total
€'000

0–30 days€'000

31–60 days€'000

60+ days€'000

At 31 December 2022

13,22010,124

3,096–

At 31 December 2021

9,997

7,412

2,162

423

Accrued income from contracts with customers loss allowance is estimated using a practical expedient to arrive at lifetime expected credit
losses using a historical credit loss experience of 1.0% (2021: 1.0%). Taking into account internal and external information, the historical credit
loss experience may be adjusted where it is determined that there has been a significant increase in credit risk. Where a receivable is credit
impaired, the impairment is recognised immediately.
Total
€'000

0–30 days€'000

31–60 days€'000

60+ days€'000

Accrued income from contracts with customers gross

16,652

10,227

3,897

2,528

Credit impaired(3,265)–(762)(2,503)

Expected credit losses

(167)

(103)

(39)

(25)

At 31 December 2022

13,22010,124

3,096

–

Total
€'000

0–30 days€'000

31–60 days€'000

60+ days€'000

Accrued income from contracts with customers gross

12,582

7,487

2,663

2,432

Credit impaired(2,459)–(474)(1,985)

Expected credit losses

(126)

(75)

(27)

(24)

At 31 December 2021

9,997

7,412

2,162

423

Accrued income from contracts with customers represent mainly contract assets in process and related items. Excluding movements in theprovision, the movement in the year comprises transfers in and out as items are accrued and subsequently invoiced to customers, with nosignificant amounts recognised on the acquisition of subsidiaries.
Related Party Receivables
There were no related party receivables at the end of either period presented.

Overview

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Governance

Financial statements

149

Supplementary information

Currency Risk
Currency risk is the risk that the value of financial instruments will fluctuate due to changes in foreign exchange rates. The foreign exchange
risk arises for the Group where assets and liabilities arise in a currency other than the functional currency of the entity.
The Group’s policy, where possible, is for Group entities to manage foreign exchange risk at a local level by matching the currency in whichrevenue is generated with the expenses incurred and by settling liabilities denominated in their functional currency with cash generated
from their own 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 settle them), cash already denominated in that currency will, where possible, betransferred from elsewhere within the Group.
The Group is predominantly exposed to currency risk on the balances held within working capital across the Group and the exposure isconcentrated in the movement of the US dollar, sterling and Canadian dollar against the euro. The effect of a strengthening or weakening of
10% in those currencies against the euro at the reporting date on the working capital balances would, all other variables held constant, haveresulted in the following pre-tax profit/(loss) impact for the year:
2022
€'000

2022
€'000

2021
€'000

2021
€'000

10% Strengthening

10% Weakening

10% Strengthening

10% Weakening

US dollar to euro

5,981

(4,894)

5,545(4,536)

Sterling to euro

365

(299)

(1,333)

1,091

Canadian dollar to euro

591

(483)

169

(138)

Total Financial Assets and Liabilities
The carrying amount of the financial assets and liabilities shown in the Consolidated and Company Statements of financial position are stated
at amortised costs, with the exception of contingent consideration held 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 Directors consider
liquidity risk is mitigated by the strong working capital position, with €44.6m of current assets, including cash of €81.9m available to settle
liabilities as they fall due.
The following are the contractual maturities (representing undiscounted contractual cash flows) of the Group’s financial liabilities:
Carrying value

Contractual cash flows

At 31 December 2022

Total
€'000

Total
€'000

Within 1 year€'000

1–2 years€'000

2–5 years€'000

Over 5 years€'000

Trade payables

15,87815,87815,878–––Deferred and contingent consideration (i)63,253

66,59845,11520,031

1,452–

Other payables (ii)94,410106,410

94,410

7,000

5,000

–

Loans and borrowings

51

51

45

6

–

–

Loan interest

–

2

2

–

–

–

Lease liabilities

42,51944,54812,7409,267

17,224

5,317

Total

216,111

233,487

168,190

36,304

23,676

5,317

150

Keywords Studios plc Annual Report and Accounts 2022

Notes forming part of the consolidated financial statements continued

24 Financial Instruments and Risk Management continued
Carrying value

Contractual cash flows

At 31 December 2021

Total
€'000

Total
€'000

Within 1 year€'000

1–2 years€'000

2–5 years€'000

Over 5 years€'000

Trade payables

11,122

11,122

11,122–––

Deferred and contingent consideration (i)54,142

61,22337,95314,008

9,262–

Other payables (ii)72,53572,53572,535

–

–

–

129

129

81

48

–

–

Loans and borrowings
Loan interest

–

6

4

2

–

–

Lease liabilities

37,63540,35812,0598,257

13,042

7,000

Total

175,563

185,373

133,754

22,31522,3047,000(i) Deferred and contingent consideration at 31 December 2022 has arisen on business combinations, and is based on contracted amounts
to be paid in the future to sellers under share purchase agreements. In general, in order for contingent consideration to become payable,
pre-defined profit and/or revenue targets must be exceeded. On an undiscounted basis, the Group may be liable for deferred andcontingent consideration up to a maximum of €66.6m.
(ii) Other payables contractual cash flows include liabilities of €15.0m (2021: €8.0m), for Deferred and contingent consideration related tocontinuous employment at Helpshift and Waste, where the purchase agreement for those acquisitions included deferred consideration
contingent on both pre-defined profit and/or revenue targets being exceeded and also tied to the retention of key staff, that areconsidered post-acquisition expenses under IFRS 3.

25 Capital Management
Group

2022
€'000

2021
€'000

Loans and borrowings (note 18)

51

129

Less: cash and cash equivalents(81,886)(105,710)

Net debt/(net cash) position(81,835)(105,581)

Total equity

557,091

472,120

Net debt/(net cash) to capital ratio(14.7)%(22.4)%The Group manages capital by monitoring debt to capital and net debt ratios. This debt to capital ratio is calculated as net debt to total
equity. Net debt is calculated as loans and borrowings (as shown in the Consolidated statement of financial position) less cash and cash
equivalents. The liquidity risk and cash management for the Group is managed centrally by the Group Treasury function. Group Treasury
manage bank balances centrally, and monitors the credit rating and stability of the institutions the Group banks with. The Board receives
projections on a monthly basis as well as information regarding cash balances. The Group's strategy is to preserve a strong cash base andsecure access to finance at reasonable cost by maintaining a good credit rating.

26 Related Parties and Shareholders
The details of key management compensation (being the remuneration of the Directors) are set out in note 10.

Overview

Strategic report

Governance

Financial statements

151

Supplementary information

27 Business Combinations
2022
€'000

2021
€'000

422

572

Details of goodwill and the fair value of net assets acquired
Book value:
Property, plant and equipment
Right of use assets

580

1,402

Trade and other receivables – gross

6,145

7,439

–

(7)

Cash and cash equivalents

Bad debt provision

5,401

10,618(8,245)Trade and other payables(4,762)

Deferred income(3,461)–

Lease liabilities(580)(1,402)

3,745

10,377

Identifiable intangible assets – Customer relationships

34,695

11,502

Identifiable intangible assets – Intellectual property

25,914–

Book value of identifiable assets and liabilities acquired
Fair value adjustments:

Deferred tax assets

15,393

2,539

Deferred tax liabilities(13,341)(3,006)

Total fair value adjustments

62,661

11,035

Net assets acquired

66,406

21,412

Goodwill from current year acquisitions
Total purchase consideration

70,482

97,918136,888

119,330

Details of purchase consideration and outflows from current acquisitions
Cash

92,89559,314

Deferred cash

8,993

1,565

Deferred consideration contingent on performance

28,95733,726–

4,768

Combination put/call options to acquire residual 15% of Tantalus
Shares to be issued

6,043

19,957

136,888

119,330

1,177

1,099

Shares issued on acquisition

135,468

621,852

Fixed number of shares to be issued

87,73837,994

92,89559,314

Total purchase consideration
Related acquisition costs charged to the Consolidated statement of comprehensive income:Number of shares:

Net cash outflow arising on acquisition:
Cash paid in the period
Less: cash and cash equivalent balances transferred
Net cash outflow arising on acquisition(5,401)(10,617)87,494

48,697

19,32910,779Details of pro forma revenues and profitability of current acquisitions
Pre-acquisition revenue in H1
Pre-acquisition revenue in H2

12,0705,566Pre-acquisition revenue

31,39916,345Pre-acquisition revenue with Keywords Group
Post-acquisition revenue
Pro forma revenue–(1,908)9,106

24,99040,50539,427

152

Keywords Studios plc Annual Report and Accounts 2022

Notes forming part of the consolidated financial statements continued

27 Business Combinations continued
2022
€'000

2021
€'000

Pre-acquisition profit before tax

1,601

2,573

Post-acquisition profit before tax

3,440

9,653

5,041

12,226

Pro forma profit before tax

Disclosures required by IFRS 3 Business Combinations are provided separately for those individual acquisitions that are considered to bematerial, and in aggregate for individually immaterial acquisitions. Acquisitions are considered individually material if the impact on theGroup's Revenue and Adjusted Profit Before Tax measures (on an annualised basis) is greater than 5%*. None of the business combinations
completed during the period were considered individually material and therefore warrant separate disclosure.
During the period, the Group completed five acquisitions, Forgotten Empires, Mighty Games, Smoking Gun, LabCom, and Helpshift,purchasing 100% of the share capital of these businesses. The aggregate amounts recognised in respect of the identifiable assets acquired
and liabilities assumed on acquisitions completed in the period are set out in the table above. Details of the purchase consideration andother information relevant to the evaluation of the financial effect of the acquisitions are also presented.
Total purchase consideration of €136.9m includes amounts attributable to Forgotten Empires €35.0m, Mighty Games €6.5m, Smoking Gun€30.2m and Helpshift €63.0m, while Goodwill from current year acquisitions of €70.5m includes amounts related to Forgotten Empires€11.8m, Mighty Games €6.1m, Smoking Gun €22.4m, and Helpshift €29.3m. Identifiable intangible assets – Customer Relationships of€34.7m includes amounts attributable to Forgotten Empires €17.8m, Smoking Gun €9.1m and Helpshift €7.8m, while Identifiable intangible
assets – Intellectual property of €25.9m is mainly attributable to Helpshift.
Total purchase consideration excludes €6.0m of Deferred and contingent consideration related to continuous employment at Helpshift,where the purchase agreement includes deferred consideration contingent on both pre-defined profit and/or revenue targets being
exceeded and which is also tied to the retention of key staff, that are considered post-acquisition expenses under IFRS 3 (note 24).
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. These include expertise in the acquired entities, enhancing and growing our service
capabilities, broadening our service offering, and extending our geographical footprint, further building out our global platform.
The goodwill that arose from business combinations completed in the period that is expected to be deductible for tax purposes was €30.3m(for which a deferred tax asset has been recognised of €7.2m).
*	The Group reports a number of alternative performance measures ("APMs") including Pro forma revenue and Adjusted Profit Before Tax, to present the financial
performance of the business, that are not GAAP measures as defined under IFRS. A reconciliation of these measures to the relevant GAAP measures is presented
in the APMs section.

28 Subsidiaries
The results and financial position of all the subsidiaries are included in the consolidated financial statements. Details of the Company’s direct
and indirect subsidiaries as at 31 December 2022 are set out below:

Name

Country ofincorporation

Date ofincorporation/acquisition
Ownership^

Registered office3455 Productions, LLC

USA

24-Nov-20

100%

251 Little Falls Drive, Wilmington, New Castle, DE 19808, USA

9409-2954 Québec Inc.

Canada04-Dec-19

100%

1751 Richardson, Suite 8400, Montreal, QC H3K 1G6, Canada

Alset Limited

UK

17-Aug-18

100%

110 High Holborn, London, WC1V 6JS, UK+

AMC RO Studios S.R.L

Romania

11-Aug-21

100%

Stirbei Voda 36, etaj 1, sector 1, Bucharest, Romania

Babel Media Limited *UK

17-Feb-14

100%

110 High Holborn, London, WC1V 6JS, UK+

Babel Media USA, Inc.

USA

17-Feb-14

100%

251 Little Falls Drive, Wilmington, New Castle, DE 19808, USA

Bitsy SG Limited

UK

17-Aug-18

100%

110 High Holborn, London, WC1V 6JS, UK+

Blindlight, LLC

USA

08-Jun-18

100%1111 South Flower Street, Suite 101, Burbank, CA 91502,USA

Climax Development Limited

UK

22-Apr-21

100%

110 High Holborn, London, WC1V 6JS, UK+

Climax Studios Limited

UK

22-Apr-21

100%

110 High Holborn, London, WC1V 6JS, UK+

Coconut Lizard LimitedUK

25-Jun-20

100%

110 High Holborn, London, WC1V 6JS, UK+

Cord Worldwide Limited

UK

07-Apr-18

100%

110 High Holborn, London, WC1V 6JS, UK+

d3t Development Limited

UK

30-Aug-18

100%

110 High Holborn, London, WC1V 6JS, UK+

d3t LimitedUK

19-Oct-17

100%

110 High Holborn, London, WC1V 6JS, UK+

Overview

Strategic report

Governance

Financial statements

Supplementary information

Name

Country ofincorporation

Date ofincorporation/acquisition
Ownership^

Descriptive Video Works Inc.

Canada11-Jun-19

100%

400-725 Granville Street, PO Box 10325, Vancouver BC V7Y
1G5, Canada

Eastern New Media Limited

Hong Kong

19-May-17

100%4404, 44/F Hopewell Centre, 183 Queen’s Road East,
Wanchai, Hong Kong

Edugame Solutions Private LimitedIndia

09-Oct-14

100%

3rd floor, Vardhman Orchard Plaza, Plot No 4, LSC,
West Enclave, Pitampura, New Delhi, 110034, India

Electric Square Limited

UK

17-Aug-18

100%

110 High Holborn, London, WC1V 6JS, UK+

Fire Without Smoke Inc

USA

29-May-18

100%

251 Little Falls Drive, Wilmington, New Castle, DE 19808, USA

Fire Without Smoke Limited

UK

29-May-18

100%

110 High Holborn, London, WC1V 6JS, UK+

Forgotten Empires LLC

USA

28-Jul-22

100%8730 Cincinnati Dayton Rd. #1072, West Chester, OH 45071,
USA

Forgotten Software S.L.U

Spain

28-Jul-22

100%

nº 1 – La Cala Del Moral Rincon De La Victoria calle Murillo

GameSim Inc.

USA

16-May-17

100%13501 Ingenuity Drive, Suite 310, Orlando, FL 32826, USA

g-Net Media, Inc.

USA

24-Nov-20

100%

251 Little Falls Drive, Wilmington, New Castle, DE 19808, USA

Heavy Iron Studios, IncUSA

12-Jan-21

100%

1600 Rosecrans Ave., Bldg 7 Ste 300, MBS Media Campus,
Manhattan Beach CA, 90266, USA

Helpshift Inc

USA

15-Dec-22

100%

343 Sansome Street, Suite 500, San Francisco, California,
94104, USA

Helpshift Information Technology (Shanghai)
Co. Ltd

China

15-Dec-22

100%Southwest Area, 3rd Floor, No. 2123 Pudong Avenue,
Shanghai, China

Helpshift Technologies Private Limited

India

15-Dec-22

100%

3rd floor, Vardhman Orchard Plaza, Plot No 4, LSC, West
Enclave, Pitampura, New Delhi, 110034, India

Helpshift UK Ltd

UK

15-Dec-22

100%

New Penderel House 4th Floor, 283-288 High Holborn,
London, WC1V 7HP, United Kingdom

High Voltage Software, Inc.

USA

14-Dec-20

100%2345 Pembroke Ave., Hoffman Estates, IL 60169, USA

HVS Nola LLC

USA

14-Dec-20

100%

201 St. Charles Ave., Suite 2220, New Orleans, LA 70170, USA

Ichi Limited

UK

26-Nov-19

100%

110 High Holborn, London, WC1V 6JS, UK+

Indigo Pearl LimitedUK

15-Dec-20

100%

110 High Holborn, London, WC1V 6JS, UK+

Itsy SGD Limited

UK

17-Aug-18

100%

110 High Holborn, London, WC1V 6JS, UK+

Jinglebell S.r.l.

Italy

10-Dec-20

100%

Via Marco d’Oggiono 12, 20123, Milan, Italy

Jurango Pty Limited ~~Australia

20-Dec-21

85%

29 Thornton Crescent, Mitcham, VIC 3132, Australia

Keywords (Shanghai) Information
Technology Limited

China

02-Apr-15

100%

Room 701, Building 5, No.860 Dong Ti Yu Hui Road, Hongkou
District, Shanghai, China

Keywords Asia Private Limited

Singapore

15-Mar-16

100%

20 Kallang Avenue, #06-6A, Lobby B, Pico Creative Centre,
339411, Singapore

Keywords Australia Holdings Limited

UK

17-Mar-21

100%

110 High Holborn, London, WC1V 6JS, UK+

Keywords Australia Pty Limited ~Australia

18-Mar-21

85%

12 Spring Street, Fitzroy, Victoria, 3065, Australia

Keywords Canada Holdings Inc.

Canada27-Oct-17

100%

1751 Richardson, Suite 8400, Montreal, QC H3K 1G6, Canada

Keywords do Brasil Localização e Tradução Ltda

Brazil

18-Jan-15

100%

Rua Professor Aprígio Gonzaga, 35 – 7º andar – São Judas –São Paulo – SP CEP: 04303-000, Brazil

Keywords Germany Holdings GmbHGermany

06-Sep-19

100%

Moriz-Seeler-Strasse 5-7, Franz Ehrlich Haus, 12489, Berlin,
Germany

Keywords International Co., Limited.

Japan

30-Nov-10100%

1-22-19 Izumi, Suginami-ku, Tokyo, 168-0063 Japan

Keywords International Limited *Ireland13-May-98

100%

Whelan House, South County Business Park, Leopardstown,
Dublin 18, D18 T9P8, Ireland

Keywords International Pte. Limited

Singapore

24-Apr-14

100%

20 Kallang Avenue, #06-6A, Lobby B, Pico Creative Centre,
339411, Singapore

Keywords International, Inc.

USA

26-Sep-12

100%

251 Little Falls Drive, Wilmington, New Castle, DE 19808, USA

Keywords Sperasoft LLC

Armenia

07-Apr-22

100%

18/1 Vardanants str., 3rd floor, Yerevan 0010, Armenia

Registered office

153

154

Keywords Studios plc Annual Report and Accounts 2022

Notes forming part of the consolidated financial statements continued

28 Subsidiaries continued
Name

Country ofincorporation

Date ofincorporation/acquisition
Ownership^

Keywords Studios B.C., Inc.

Canada27-Oct-17

100%

1700-1075 West Georgia Street, Vancouver, BC, V6E 3C,
CanadaKeywords Studios d.o.o. Beograd

Serbia18-May-22

100%

Belgrade, BULEVAR MIHAJLA PUPINA 10L, floor 9, BelgradeNew Belgrade, NEW BELGRADE, 11070, Serbia

Keywords Studios France SAS

France08-Jun-16

100%

59 Boulevard Exelmans, 75016 Paris, France

Keywords Studios India Private Limited

India

17-Feb-14

100%

3rd floor, Vardhman Orchard Plaza, Plot No 4, LSC, West
Enclave, Pitampura, New Delhi, 110034, India

Keywords Studios Italy S.R.L.

Italy

08-May-14

100%

Via Egadi 2, Milan, MI, 20144, Italy

Keywords Studios Korea Corporation

South Korea

11-Jan-21

100%

16th Floor, Gangnam Building, 1321-1, Seocho-dong, Seochogu, Seoul 137-070, South Korea

Keywords Studios Los Angeles, Inc.

USA

08-May-14

100%1115 Flower Street, Burbank, CA 91502, USA

Keywords Studios Malta Limited

Malta

04-May-22

100%

Level 3, Valletta Buildings, South Street, Valletta VLT 1103,
Malta

Keywords Studios México, S. de R.L. de C.V.

Mexico16-Jul-15

100%

Torrente #75, Colonia Ampliación Alpes, Del. Álvaro
Obregón, CP. 01710, Ciudad de México, México

Keywords Studios Netherlands B.V.

Netherlands

05-Feb-19

100%

Wilhelmina van Pruisenweg 35, 2595AN The Hague,
The Netherlands

Keywords Studios Poland Spolka z.o.o.

Poland04-Feb-21

100%

11 Ul. Na Zjezdzie, Krakow 30-527, Poland

Keywords Studios QC-Games Inc.

Canada17-Feb-14

100%

1751 Richardson, Suite 8400, Montreal, QC H3K 1G6, Canada

Keywords Studios QC-Interactive Inc.

Canada16-Nov-16

100%

1751 Richardson, Suite 8400, Montreal, QC H3K 1G6, Canada

Keywords Studios QC-Tech Inc.

Canada06-Jan-15

100%

1751 Richardson, Suite 8400, Montreal, QC H3K 1G6, Canada

Keywords Studios Romania S.R.L.

Romania

15-Jun-21

100%

6-8 Corneliu Coposu Bvd., Unirii View Building, office 103,
1st floor, 3rd district, Bucharest, Romania

Keywords Studios Spain SLU

Spain

16-Jul-15

100%

Julián Camarillo 6A, 3B, 28037 Madrid, Spain

Keywords Studios Texas, LLC

USA

22-Jan-20

100%

7800 Shoal Creek Blvd. Suite 240S, Austin, Texas 78757, USA

Keywords Studios Unlimited Company*

Ireland27-Mar-18

100%

Whelan House, South County Business Park, Leopardstown,
Dublin 18, D18 T9P8, Ireland

Keywords Studios US Inc

USA

24-Oct-17

100%

251 Little Falls Drive, Wilmington, New Castle, DE 19808, USA

Keywords Treasury Holdings Limited

Ireland30-Nov-22

100%

Whelan House, South County Business Park, Leopardstown,
Dublin 18, D18 T9P8, Ireland

Keywords UK Holdings Limited

UK

28-Mar-18

100%

110 High Holborn, London, WC1V 6JS, UK+

Keywords US Holdings Inc.

USA

23-Oct-17

100%

251 Little Falls Drive, Wilmington, New Castle, DE 19808, USA

Keywords Ventures Limited

UK

06-Apr-18

100%

110 High Holborn, London, WC1V 6JS, UK+

Laboratorio Comunicazione S.r.l.

Italy

04-Nov-22

100%

Via Lazzaro Spallanzani 6, 20129 Milan, Italy

Laced Music Limited

UK

07-Apr-18

100%

110 High Holborn, London, WC1V 6JS, UK+

Laced Publishing Limited

UK

07-Apr-18

100%

110 High Holborn, London, WC1V 6JS, UK+

Lakshya Digital Private Limited *India

09-Oct-14

100%

3rd floor, Vardhman Orchard Plaza, Plot No 4, LSC, West
Enclave, Pitampura, New Delhi, 110034, India

Lakshya Digital Singapore Pte. Limited

Singapore

09-Oct-14

100%

20 Kallang Avenue, #06-6A, Lobby B, Pico Creative Centre,
339411, Singapore

Liquid Development, LLC

USA

19-Aug-15

100%

411 SW 2nd Ave Ste 300, Portland, OR 97204, USA

Liquid Violet Limited *UK

15-Jan-14

100%

110 High Holborn, London, WC1V 6JS, UK+

Lonsdale Miller LimitedUK

15-Dec-20

100%

110 High Holborn, London, WC1V 6JS, UK+

Maverick Media LimitedUK

27-Aug-20

100%

110 High Holborn, London, WC1V 6JS, UK+~~

Australia

03-Aug-22

85%

29 Thornton Crescent, Mitcham, VIC 3132, Australia

Mighty Games Group Pty Limited ~~Australia

03-Aug-22

85%

29 Thornton Crescent, Mitcham, VIC 3132, Australia

Mighty Games Productions Pty Limited ~~Australia

03-Aug-22

85%

29 Thornton Crescent, Mitcham, VIC 3132, Australia

Player Research Limited

UK

26-Oct-16

100%

110 High Holborn, London, WC1V 6JS, UK+

Mighty Developments Pty Limited

Registered officeOverview

Strategic report

Governance

Financial statements

155

Supplementary information

Name

Country ofincorporation

Date ofincorporation/acquisition
Ownership^

Registered office

PT Limitless Indonesia

Indonesia

19-May-17

100%

JI. Timoho II, No. 32, Muja Muju, Kota Yogyakarta, Indonesia

Smoking Gun Interactive Inc

Canada05-Oct-22

100%

1100-333 Seymour St, Vancouver, BC V6B 5A6, Canada

Snowed In Studios, Inc

Canada19-Jul-18

100%

400-981 Wellington Street West, Ottawa, Ontario, K1Y 2Y1,
CanadaSperasoft Poland Spólka z.o.o.

Poland13-Dec-17

100%

Kraj Polska, woj. Małopolskie, powiat Kraków, miejsc. Kraków,
ul. Na Kozłóce 27 30-664 Kraków, Poland

Sperasoft Studios LLC

Russia13-Dec-17

100%196084, Russia, Saint-Petersburg, Kievskaya Street,
5 - building 4

Sperasoft, Inc.

USA

13-Dec-17

100%

251 Little Falls Drive, Wilmington, New Castle, DE 19808, USA

SperaSystems LLC

USA

13-Dec-17

100%2033 Gateway Pl Ste 500 San Jose, CA 95110-3712, USA

SPOV LimitedUK

16-Feb-17

100%

110 High Holborn, London, WC1V 6JS, UK+

Strongbox Limited

Seychelles

19-May-17

100%

306 Victoria House, Victoria, Mahe, Seychelles

Studio Gobo Limited

UK

17-Aug-18

100%

110 High Holborn, London, WC1V 6JS, UK+

Sunny Side Up Creative Inc.

Canada03-Jan-19

100%

410 Boulevard Charest Est, Suite 410, Québec, Québec, G1K
8G3, Canada

Synthesis Deutschland GmbH *Germany

12-Apr-16

100%

Holstenkamp 46 A, Bahrenfeld, 22525 Hamburg, Germany

Synthesis Global Solutions SA *Switzerland

12-Apr-16

100%

Corso Elvezia 16, 6900 Lugano, Ticino, Switzerland

Tantalus Media Pty Limited ~Australia

18-Mar-21

85%

12 Spring Street, Fitzroy, Victoria, 3065, Australia

The Trailerfarm Limited

UK

13-Sep-18

100%

110 High Holborn, London, WC1V 6JS, UK+

TV+SYNCHRON Berlin GmbHGermany

01-Oct-19

100%

Moriz-Seeler-Strasse 5-7, Franz Ehrlich Haus, 12489, Berlin,
Germany

Waste Creative LimitedUK

16-Dec-21

100%

110 High Holborn, London, WC1V 6JS, UK+

Waste Holdings LimitedUK

16-Dec-21

100%

110 High Holborn, London, WC1V 6JS, UK+

Wicked Witch Software Pty Limited

Australia

20-Dec-21

85%

29 Thornton Crescent, Mitcham, VIC 3132, Australia

Wizcorp Inc.

Japan

18-Apr-19

100%

1-22-19 Izumi, Suginami-ku, Tokyo, 168-0063 Japan

Xcelerator Machine Translations Limited

Ireland12-Dec-19

100%

Invent, Dublin City University, Glasnevin, Dublin 9, Ireland

Xloc, Inc.

USA

08-May-17

100%8801 Fast Park Drive, Suite 301, Raleigh, NC 27617, USA~~*

Indicates a direct subsidiary (all other holdings are indirect, being subsidiaries of various intermediate group holding companies).

^

Proportion of voting rights and ordinary share capital ultimately held by Keywords Group.

+

The registered office address was changed on 1 February 2023.

~ 	A combination of put and call options are in place requiring the sellers to sell, or the Group to buy the remaining 15% shareholding three years from acquisition.
The Group has accounted for the acquisition as if a 100% interest was acquired on acquisition (see note 3).
~~

Wholly owned subsidiary of Keywords Australia Pty Limited. The Group has accounted for the company as if a 100% interest was held (see note 3).

Post-acquisition, the Group reviews entities to streamline activities and close any dormant entities acquired or re-structured entities.
Restructuring details are set out below:
Name

Country of incorporation

Date of incorporation/acquisition

Ownership

Date of re-structuring

Re-structuring details

AppSecTest Limited

UK

22-Jan-19

49%

13-Apr-22

Dissolved

Ichi Creative LimitedUSA

26-Nov-19

100%

15-Dec-20

Dissolved

156

Keywords Studios plc Annual Report and Accounts 2022

Notes forming part of the consolidated financial statements continued

29 Significant Events and Events after the Reporting Date
Crisis in Ukraine
In 2022, the Group’s operations have been impacted by the tragic events in Ukraine. Whilst the Group do not have operations in Ukraine, theGroup does have Game Development teams in Russia, and also works with a number of freelance suppliers in Ukraine. Our priority has been
to support our people and our freelance suppliers in the territory, whilst contributing to the wider humanitarian efforts in the region.
In the period, the Group produced €26.3m of Revenue in Russia, down from €29.4m in 2021, and represents approximately 3.8% of Grouprevenue, down from 5.7% in 2021. During the period, a significant number of projects supported in Russia have been transferred to otherparts of the Group, as we ramp up production capacity in these locations with a combination of employees relocating from Russia and local
hires. As a consequence, revenues produced in Russia were approximately 1.7% of Group revenue in December 2022.
We continue to work with our customers supporting their preferences for where their work should be performed. We also remain focusedon mitigating any potential business interruption or other risks associated with our activities in Russia. As a consequence, we expect thevolume of work produced in Russia to continue to reduce over time.
The Group does not have significant receivables exposure in Russia, as work produced in Russia is contracted and collected in other
territories. In addition, the Group does not have significant amounts of net current assets or non-current assets located in Russia. Thus any
exposure to impairment of assets located in Russia is not considered material.
As a consequence of the crisis, an additional impairment assessment was performed in the Game Development CGU, to evaluate any
potential Goodwill impairment resulting from the crisis. The result of the value in use calculations was that no impairment would be required
even in a worst-case scenario where the contribution from all Russian-located production capacity was excluded from projections, assuming
no further work is able to be transferred to other parts of the Group.

Acquisition of 47
On 1 February 2023, the Group announced the acquisition of 47 Communications LLC ("47"), a leading US-based PR and communications
agency with expertise in the video game, technology, entertainment and digital lifestyle sectors. For the twelve months to 30 September
2022, 47 generated revenues of approximately USD $11 million. The consideration payable for the Company is in line with Keywords' targetedvaluation range. The terms of the transaction include contingent consideration payable in a mix of cash and new ordinary shares dependingon the future performance of the Company over the three years from completion. The new ordinary shares to be issued will be subject toorderly market provisions for a year.

Overview

Strategic report

Governance

Financial statements

157

Supplementary information

Company statement of financial position

At 31 December
Note

2022
€'000

2021
€'000

Right of use assets

36

5,071

206

Property, plant and equipment

37

446

308

454

657

Non-current assets

Deferred tax assets
Investment in subsidiaries

38

30,28730,175

Other receivables

39

385,066

335,511421,324

366,857

Current assets
Cash and cash equivalents
Other receivables

39

46

17,043

15,481

7,468

15,527

24,511

Current liabilities
Trade payables

430

1,127

Other payables

40

10,95819,651

Lease liabilities

41

1,030

216

12,41820,994

3,109

3,517
3,660

Net current assets/(liabilities)
Non-current liabilities
Other payables

40–

Lease liabilities

41

4,081

–

4,081

3,660

420,352

366,714

Net assets
EquityShare capital

22

924

904

Share capital – to be issued

22

2,467

2,185

Share premium

22

Merger reserve
Shares held in Employee Benefit Trust ("EBT")
Share-based payments reserve
Retained earnings
Total equity

22

47,021

38,549292,336

279,358–(1,997)65,37948,193

12,225(478)

420,352

366,714

In accordance with the Companies Act 2006, the Company is availing of the exemption from presenting its individual Statement ofcomprehensive income to the Annual General Meeting and from filing it with Companies House. The amount of profit after tax dealt with in
the parent undertaking is €14,682k (2021: profit of €6,404k).
The notes from page 160 onwards form an integral part of these Company financial statements. The financial statements were approved andauthorised for issue by the Board on 15 March 2023.
On behalf of the Board

Bertrand Bodson			

Jon Hauck

Director				Director
15 March 2023

158

Keywords Studios plc Annual Report and Accounts 2022

Company statement of changes in equity

At 01 January 2021

Sharecapital
€'000

Share
capital – tobe issued
€'000

Share
premium€'000

Mergerreserve€'000

Sharesheld in
EBT€'000

Sharebased
payments
reserve€'000

Retainedearnings
€'000

Total
equity€'000

879

13,047

22,951

255,957(1,997)31,799(6,267)

316,369

Profit/(loss) for the period

–

–

–

–

–

–

6,404

6,404

Total comprehensive income for the period

–

–

–

–

–

–

6,404

6,404

Share-based payments expense

–

–

–

–

–

16,394–

16,394

Share options exercised

11

–

4,929

–

–

–

–

4,940

Employee Share Purchase Plan

–

–

398

–

–

–

–

398

Contributions by and contributions to the owners:

Dividends

–

–

–

–

–

–

(615)

(615)

Acquisition-related issuance of shares

14(10,862)

10,271

23,401–––

22,824Contributions by and contributions to the owners

25(10,862)

15,59823,401–

16,394(615)

43,941904

2,185

38,549279,358(1,997)48,193(478)

366,714

Profit/(loss) for the period

–

–

–

–

–

–

14,682

14,682

Total comprehensive income for the period

–

–

–

–

–

–

14,682

14,682

Share-based payments expense

–

–

–

–

–

18,577–

18,577

Share options exercised

14

–

5,862

–

1,997

(1,492)–

6,381

Employee Share Purchase Plan

–

–

909

–

–

101

–

1,010

Dividends

–

–

–

–

–

–

(1,979)(1,979)At 31 December 2021

Contributions by and contributions to the owners:

Acquisition-related issuance of shares

6

282

1,701

12,978–––

14,967

Contributions by and contributions to the owners

20

282

8,472

12,978

1,997

17,186(1,979)38,956

At 31 December 2022

924

2,467

47,021

292,336–

65,37912,225420,352

Overview

Strategic report

Governance

Financial statements

159

Supplementary information

Company statement of cash flows

Years ended 31 December
Note

2022
€’000

2021
€’000

14,682

6,404

3,838

4,099

Cash flows from operating activities
Profit/(loss) after tax
Income and expenses not affecting operating cash flows
Share-based payments expense, net of amounts recharged to subsidiary companies
Taxation

203–

Interest expense

1,249

935

Depreciation – property, plant and equipment

37

304

54

Depreciation – right of use assets

36

510

204

–

(126)

Amounts written off financial assets
Unrealised foreign exchange (gain)/loss

(39)

34

6,065

5,200

78,07525,123

Changes in operating assets and liabilities(Increase)/decrease in other receivables
Increase/(decrease) in trade and other payables
Taxation paid
Net cash generated by/(used in) operating activities(12,825)

14,232

65,25039,355––85,99750,959(105,815)(64,200)–(3,124)

Cash flows from investing activities
Funding advanced to subsidiaries
Current year acquisition of subsidiaries net of cash acquired
Acquisition of property, plant and equipment

37

Net cash generated by/(used in) investing activities

(442)

(45)

(106,257)(67,369)

Cash flows from financing activities
Cash proceeds, where EBT shares were utilised for the exerciseof share options

505–

Payments of principal on lease liability

(478)

(206)

Interest paid on principal of lease liability
Dividends paid

9

Shares issued for cash

22

(33)

(7)

(1,979)

(615)

6,785

5,338

Interest paid

(1,537)(1,753)

Net cash generated by/(used in) financing activities

3,263

2,757

Increase/(decrease) in cash and cash equivalents(16,997)(13,653)

Cash and cash equivalents at beginning of the period

17,04330,69646

17,043

Cash and cash equivalents at end of the period

160

Keywords Studios plc Annual Report and Accounts 2022

Notes forming part of the Company financial statements

30 Basis of Preparation
The Company financial statements have been prepared in accordance with UK-adopted international accounting standards, and in
conformity with the requirements of the Companies Act 2006.
Unless otherwise stated, the financial statements have been prepared in thousands (’000) and the financial statements are presented
in euro (€).
Please refer to the Group financial statements for additional information concerning the basis of preparation. References in the Company
financial statements to notes numbered earlier than note 30, refer directly to specific notes in the Group financial statements.

31 Significant Accounting Policies
Intercompany Receivables
Intercompany receivables are recognised at amortised cost as they meet the IFRS 9 classification test of being held to collect, and the cash
flow characteristics represent solely payments of principal and interest.
The Company applies the general approach to applying the expected credit losses to its related party loans. Under the General Approach, ateach reporting date, the Company determines whether there has been a Significant Increase in Credit Risk (“SICR”) since initial recognition
and whether any balances are credit impaired. This determines the amount, if any, of expected credit losses to be recognised.
Other Significant Accounting Policies
The Company applies consistent accounting policies to those applied by the Group. Please refer to the Group financial statements fordisclosure of other relevant accounting policies.

32 Critical Accounting Estimates and Judgements
The Company makes certain estimates and assumptions regarding the future. Estimates and judgements are continually evaluated based on
historical experience 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.
Judgements
The judgements, apart from those involving estimations, that management have made in the process of applying the Company’s accounting
policies and that have the most significant effect on the amounts recognised in the Company financial statements, are outlined below.
• Company– Expected Credit Loss Provision on Company Receivables from Subsidiaries: As outlined in note 39, the Company has significant
receivables from subsidiaries, primarily related to investments in acquisitions. The Directors have taken into account both the ongoingacquisition integration programme and the cash-generating capacity of the Group, in concluding (in note 43) that all such loans arerecoverable and the expected credit loss provisions are adequate.
– Other Judgements: The Company applies consistent judgements to those applied by the Group. To the extent that judgements
are relevant to both Group and Company financial statements, please refer to the Group financial statements for other relevant
judgements.

33 Auditor Statutory Disclosure
The audit fee for the Company is outlined in note 5 of the Group financial statements.

34 Dividends and Distributable Reserves
Details of dividends and distributable reserves of the Company are presented in note 9 of the Group financial statements.

Overview

Strategic report

Governance

Financial statements

161

Supplementary information

35 Staff Costs
Total staff costs (including Directors)

2022
€'000

2021
€'000

Salaries and related costs

8,492

5,221

Social welfare costs

1,925

525

275

88

Pension costs
Share-based payments expense

Average number of employees

Operations
General and administration

18,67816,39429,37022,228

2022

2021

7

3

53

34

60

37

2022
€'000

2021
€'000

835

781

36 Right of Use Assets
The Company has entered into leases, principally relating to property.

Cost
At 01 January
Additions

5,592

–

De-recognition of expired leases

(825)

–

Exchange rate movement

(237)

54

At 31 December

5,365

835

Accumulated depreciation
At 01 January

629

392

Depreciation charge

510

204

De-recognition of expired leases

(825)

–

Exchange rate movement

(20)

33

At 31 December

294

629

Net book value
At 01 January

206

389

At 31 December

5,071

206

162

Keywords Studios plc Annual Report and Accounts 2022

Notes forming part of the Company financial statements continued

37 Property, Plant and Equipment
Computers
and software€'000

Office furnitureand equipment€'000

Leaseholdimprovements
€'000

Total
€'000

At 01 January 2021

12

145

280

437

Additions

45

–

–

45

Cost

At 31 December 2021

57

145

280

482

Additions

211

21

210

442

At 31 December 2022

268

166

490

924

5

38

77

120

Accumulated depreciation
At 01 January 2021
Depreciation charge

9

15

30

54

At 31 December 2021

14

53

107

174

Depreciation charge

38

94

172

304

At 31 December 2022

52

147

279

478

At 01 January 2022

43

92

173

308

At 31 December 2022

216

19

211

446

2022
€'000

2021
€'000

30,28730,175Net book value

38 Investment in Subsidiaries

Details of the Company’s direct and indirect subsidiaries as at 31 December 2022 are set out in note 28 of the Group financial statements.

39 Other Receivables
Current

2022
€'000

2021
€'000

Intercompany receivables (financial assets held at amortised cost, see note 44)

12,682

5,099

Prepayments

2,163

1,702

Other receivables

459

478

Tax and social security

177

189

15,481

7,468

2022
€'000

2021
€'000

385,066

335,511

385,066

335,511

Non-current

Intercompany receivables (financial assets held at amortised cost, see note 44)

Overview

Strategic report

Governance

Financial statements

163

Supplementary information

40 Other Payables
Current

2022
€'000

2021
€'000

Accrued expenses

3,226

1,915

Payroll taxes–

164

Other payables

158

253

Intercompany payables

Non-current

Intercompany payables

7,574

17,31910,95819,651

2022
€'000

2021
€'000

–

3,660

–

3,660

41 Lease Liabilities
The Company has entered into leases principally relating to property. Management applies judgement in determining whether it is reasonably
certain that a renewal or termination option will be exercised.
The movement in lease liabilities during the financial year was as follows:
2022
€'000

2021
€'000

Carrying amount at the beginning of the year

216

399

Liabilities recognised on new leases in the period

5,591

–

Unwinding of discounted liabilities – lease liabilities

33

7

Payment of principal and interest on lease liabilities

(511)

(213)

Exchange rate movement

(218)

23

Carrying amount at the end of the year

5,111

216

Maturity analysis of lease liabilities

2022
€'000
Lease payments

2022
€'000
Finance charges

2022
€'000
Lease liabilities

2021
€'000
Lease payments

2021
€'000
Finance charges

2021
€'000
Lease liabilities

1,133

103

1,030

218

2

216

4,248

167

4,081

–

–

–

Current
Not later than one year
Non-current
Later than one year andnot later than five years
Later than five years
At 31 December

–

–

–

–

–

–

4,248

167

4,081

–

–

–

5,381

270

5,111

218

2

216

42 Loans and Borrowings
Loans and borrowings (classified as financial liabilities under IFRS 9), are held at amortised cost. Details of the Company’s credit facilities are
outlined in note 18 of the Group financial statements. There were no drawdowns on the RCF during 2022.

164

Keywords Studios plc Annual Report and Accounts 2022

Notes forming part of the Company financial statements continued

43 Risk Management
A description of the Group’s financial risk management objectives and policies is provided in note 24 to the Group financial statements.
These financial risk management objectives and policies also apply to the Company.

Credit Risk
As presented in note 39, receivables from subsidiaries relating to investments in acquisitions comprise term loans extended to subsidiaries,
while receivables from subsidiaries relating to trading activities comprise trading balances repayable on demand. Balances are analysed interms of the risk profile of the subsidiary.
The Directors have assessed the ongoing expected recovery strategy of loans due from subsidiaries of €385.1m (2021: €335.5m), within
Stage 1 of the IFRS 9 impairment assessment model. Having noted that such loans are within their repayment terms, the Directors haveconcluded that no provision for expected credit losses is required (2021: €nil).
Separately, the Company has balances of €12.7m (2021: €5.1m), which are technically repayable upon demand. These loans are within Stage 3 ofthe IFRS 9 impairment assessment model. The Directors have reviewed in detail the recovery strategy in relation to these loans and concluded
that none are credit-impaired, and therefore no expected credit loss has been recognised in relation to these balances (2021: €nil).
The following are the contractual maturities (representing undiscounted contractual cash flows) of the Company’s financial liabilities:
Carrying value

Contractual cash flows

Total
€'000

Total
€'000

Within 1 year€'000

1–2 years€'000

2–5 years€'000

Over 5 years€'000

Trade payables

430

430

430

–

–

–

Other payables

10,958

10,958

10,958–––

Lease liability

5,111

5,381

1,133

1,133

3,115

–

16,49916,76912,521

1,133

3,115

–

At 31 December 2022

Total

Carrying value
At 31 December 2021

Total
€'000

Contractual cash flows
Total
€'000

Within 1 year€'000

1–2 years€'000

2–5 years€'000

Over 5 years€'000

Trade payables

1,127

1,127

1,127

–

–

–

Other payables

23,311

23,311

23,311–––

Lease liability
Total

216

218

218

–

–

–

24,65424,656

24,656–––44 Related Parties
As at 31 December 2022 and 2021, the Company had amounts receivable from its subsidiaries as follows:

Receivables from subsidiaries related to investment in acquisitions
Receivables from subsidiaries relating to trading activities

Non-current (note 39)
Current (note 39)

2022
€'000

2021
€'000

385,066

335,511

12,682

5,099

397,748

340,610

2022
€'000

2021
€'000

385,066

335,511

12,682

5,099

397,748

340,610

Overview

Strategic report

Governance

Financial statements

Supplementary information

Alternative performance measures

The Group reports a number of alternative performance measures (“APMs”) to present the financial performance of the business, that are
not GAAP measures as defined under IFRS. The Directors believe that these measures, in conjunction with the IFRS financial information,
provide the users of the financial statements with additional information to provide a more meaningful understanding of the underlying
financial and operating performance of the Group. The measures are also used in the Group’s internal strategic planning and budgeting
processes and for setting internal management targets. These measures can have limitations as analytical tools and therefore should not be
considered in isolation, or as a substitute for IFRS measures.
The principal measures used by the Group are set out below:
Organic revenue growth – Acquisitions are a core part of the Group’s growth strategy. Organic revenue growth measures are used to help
understand the underlying trading performance of the Group excluding the impact of acquisitions. Organic revenue growth is calculated
by adjusting the prior year revenues, adding pre-acquisition revenues for the corresponding period of ownership to provide a like-for-likecomparison with the current year, and applying the prior year’s foreign exchange rates to both years, when translating studio results into theeuro reporting currency.
Constant exchange rates (“CER”) – Given the international nature of the Group’s operations, foreign exchange movements can have an
impact on the reported results of the Group when they are translated into the Group’s reporting currency, the euro. In order to understandthe underlying trading performance of the business, revenue is also presented using rates consistent with the prior year in order to provide
year-over-year comparability.
Adjusted profit and earnings per share measures – Adjusted profit and earnings per share measures are used to provide management andother users of the financial statements with a clear understanding of the underlying profitability of the business over time. Adjusted profit
measures are calculated by adding the following items back to the equivalent GAAP profit measures:– Amortisation of intangible assets – Customer relationships and music licence amortisation commences on acquisition, whereas
intellectual property/development costs amortisation commences when the product is launched. These costs, by their nature, can varyby size and amount each year. As a result, amortisation of intangibles is added back to assist with the understanding of the underlying
trading performance of the business and to allow comparability across regions and categories.
– Costs of acquisition and integration – The level of acquisition activity can vary each year and therefore the costs associated withacquiring and integrating businesses are added back to assist with the understanding of the underlying trading performance of theGroup.
– Share-based payments – The Group uses share-based payments as part of remuneration to align the interests of senior management
and employees with shareholders. These are non-cash charges and the charge is based on the Group’s share price which can change.
The costs are therefore added back to assist with the understanding of the underlying trading performance.
– Foreign exchange gains and losses – The Group does not hedge foreign currency translation exposures. The effect on the Group’s
results of movements in exchange rates can vary each year and are therefore added back to assist with understanding the underlying
trading performance of the business.
– Other income – Other income comprises gains on investments or other non-trading income. As the gains have arisen outside thenormal trading activities of the Group, the income has been added back to assist with the understanding of the underlying trading
performance.
Free cash flow measures – The Group aims to generate sustainable cash flow (free cash flow) in order to support its acquisition programme
and to fund dividend payments to shareholders. Free cash flow is measured as net cash generated by/(used in) operating activities after
capital expenditure, non-cash movements in deferred and contingent consideration related to continuous employment, payments ofprincipal on lease liabilities, interest and tax payments, but before acquisition and integration cash outlay, other income and dividend
payments. Adjusted free cash flow is a measure of cash flow adjusting for capital expenditure that is supporting growth in future periods(represented by capital expenditure in excess of depreciation).
Net debt – The Group manages capital by monitoring debt to capital and net debt ratios. Net debt is calculated as loans and borrowings lesscash and cash equivalents, and excludes lease liabilities. The debt to capital ratio is calculated as net debt as a percentage of total equity.
The remainder of this section provides a reconciliation of the APMs with the relevant IFRS GAAP equivalent.

165

166

Keywords Studios plc Annual Report and Accounts 2022

Alternative performance measures continued

Service line analysis*
The following table presents revenue growth by service line at both actual exchange rates (“AER”) and constant exchange rates (“CER”). Constantexchange rates are calculated by retranslating current-year reported numbers at the corresponding 2021 foreign exchange rates, in order togive management and other users of the financial statements better visibility of underlying trading performance against the prior year.
2022
Revenue
AER
€m

2022
Revenue
CER
€m

2021
Revenue
AER
€m

2022
GrowthAER%

2022
GrowthCER%

Create

275.5

255.9

188.2

46.4%

36.0%

Globalize

300.9

286.2

231.9

29.8%

23.4%

Engage

114.3

108.9

92.1

24.1%

18.2%

690.7

651.0

512.2

34.8%

27.1%

*

The prior year comparatives have been reclassified to present information by service line in alignment with the new organisational and reporting structures (see note 3).

Pro forma revenue
Pro forma revenue is calculated by adding pre-acquisition revenues of current-year acquisitions to the current-year revenue numbers, toillustrate the size of the Group had the acquisitions been included from the start of the financial year.
2022
Revenue
AER
€m

2022
Pre-acquisition
revenueAER€mCreate

275.5

14.0

289.5

Globalize

300.9

–

300.9

Engage2022
Pro forma revenue
AER
€m

114.3

17.4

131.7

690.7

31.4

722.1

Organic revenue at constant exchange rates*
Organic revenue at constant exchange rates is calculated by adjusting the prior year revenues, adding pre-acquisition revenues for thecorresponding period of ownership, and applying the 2021 foreign exchange rates to both years, when translating studio results into theeuro reporting currency.
2022
Revenue growth
CER
€m

2022
Revenue
CER
€m

2022
Organic
revenue growth
CER
%

203.2

52.7

255.9

25.9%

231.9

54.3

286.2

23.4%

2021
Revenue
AER
€m

2021
Pre-acquisition
revenue
AER
€m

2021
Like for likerevenueAER€mCreate

188.2

15.0

Globalize

231.9

–

Engage

*

92.1

7.2

99.3

9.6

108.9

9.7%

512.2

22.2

534.4

116.6

651.0

21.8%

The prior-year comparatives have been reclassified to present information by service line in alignment with the new organisational and reporting structures (see note 3).

Overview

Strategic report

Governance

Financial statements

167

Supplementary information

Adjusted operating costs
This comprises Administrative expenses as reported in the Consolidated statement of comprehensive income, adding back share-based
payments expense, costs of acquisition and integration, amortisation of intangible assets, depreciation and impairment, non-controllinginterest and deducting bank charges.
2022
€'000

2021
€'000

Consolidated statement of comprehensive income(196,554)(149,749)

Share-based payments expense

Consolidated statement of comprehensive income

18,67816,394

Costs of acquisition and integration

Consolidated statement of comprehensive income

8,413

7,972

Calculation

Administrative expenses

Amortisation of intangible assets

Consolidated statement of comprehensive income

16,81013,688Depreciation – property, plant and equipment

Note 13

18,365

11,661

Depreciation and impairment – right of use assets Note 12

14,585

10,473–

67

Non-controlling interest

Consolidated statement of comprehensive income

Bank charges

Note 6

Adjusted operating costs
Adjusted operating costs as a % of revenue

(662)

(520)

(120,365)(90,014)

17.4%

17.6%

Adjusted operating profit
The Adjusted operating profit consists of the Operating profit as reported in the Consolidated statement of comprehensive income, adjusted
for share-based payments expense, costs of acquisition and integration, and amortisation of intangible assets. In order to present themeasure consistently year-on-year, the impact of other income is also excluded.
2022
€'000

2021
€'000

Consolidated statement of comprehensive income

71,81050,365

Share-based payments expense

Consolidated statement of comprehensive income

18,67816,394

Costs of acquisition and integration

Consolidated statement of comprehensive income

8,413

7,972

Amortisation of intangible assets

Consolidated statement of comprehensive income

16,81013,688Other income

Consolidated statement of comprehensive income(1,098)–Adjusted operating profit

114,61388,419Adjusted operating profit as a % of revenue

16.6%

17.3%

Calculation

Operating profit

EBITDAEBITDA comprises Operating profit as reported in the Consolidated statement of comprehensive income, adjusted for amortisation of
intangible assets, depreciation and impairment, and deducting bank charges.
Calculation

2022
€'000

2021
€'000

Operating profit

Consolidated statement of comprehensive income

71,81050,365

Amortisation of intangible assets

Consolidated statement of comprehensive income

16,81013,688Depreciation – property plant and equipment

Note 13

18,365

11,661

Depreciation and impairment – right of use assets Note 12

14,585

10,473

Bank charges
EBITDA

Note 6

(662)

(520)

120,908

85,667

168

Keywords Studios plc Annual Report and Accounts 2022

Alternative performance measures continued

Adjusted EBITDA
Adjusted EBITDA comprises EBITDA, adjusted for share-based payments expense, costs of acquisition and integration and non-controllinginterest. In order to present the measure consistently year-on-year, the impact of other income is also excluded.
Calculation

2022
€'000

2021
€'000

EBITDAAs above

120,908

85,667

Share-based payments expense

Consolidated statement of comprehensive income

18,67816,394

Costs of acquisition and integration

Consolidated statement of comprehensive income

8,413

7,972

Non-controlling interest

Consolidated statement of comprehensive income–

67

Other income

Consolidated statement of comprehensive income

Adjusted EBITDA
Adjusted EBITDA as a % of revenue(1,098)–146,901

110,100

21.3%

21.5%

Adjusted profit before tax
Adjusted profit before tax comprises Profit before taxation as reported in the Consolidated statement of comprehensive income, adjusted
for share-based payments expense, costs of acquisition and integration, amortisation of intangible assets, non-controlling interest, foreignexchange gains and losses, and unwinding of discounted liabilities. In order to present the measure consistently year-on-year, the impact ofother income is also excluded.
Calculation

2022
€'000

2021
€'000

Profit before taxation

Consolidated statement of comprehensive income

67,982

47,983

Share-based payments expense

Consolidated statement of comprehensive income

18,67816,394

Costs of acquisition and integration

Consolidated statement of comprehensive income

8,413

7,972

Amortisation of intangible assets

Consolidated statement of comprehensive income

16,81013,688Non-controlling interest

Consolidated statement of comprehensive income

Foreign exchange (gain)/loss

Note 6–67(1,677)(1,983)

Unwinding of discounted liabilities – deferredconsideration

Note 6

2,922

1,882

Other income

Consolidated statement of comprehensive income(1,098)–112,030

86,003

16.2%

16.8%

Adjusted profit before tax
Adjusted profit before tax as a % of revenue

Adjusted effective tax rate
The Adjusted effective tax rate is the Taxation expense as reported in the Consolidated statement of comprehensive income, adjusted for thetax impact of the adjusting items in arriving at Adjusted profit before tax, as a percentage of the Adjusted profit before tax.
Calculation

2022
€'000

2021
€'000

Adjusted profit before tax

As above

112,030

86,003

Taxation

Consolidated statement of comprehensive income

20,612

13,875

Effective tax rate before tax on adjusting items

Taxation/Adjusted profit before tax

18.4%

16.1%

4,043

4,729

24,655

18,604

22.0%

21.6%

Tax arising on bridging items to
Adjusted profit before tax^
Adjusted taxation
Adjusted effective tax rate

Adjusted taxation/Adjusted profit before tax^	Being mainly the tax impact of share-based payments expense €0.4m and amortisation of intangible assets €4m less foreign exchange €0.4m, with the prior period
being mainly the tax impact of share-based payments expense €2.8m, amortisation of intangible assets €2.1m, less foreign exchange €0.2m.

Overview

Strategic report

Governance

Financial statements

169

Supplementary information

Adjusted earnings per share
The Adjusted profit after tax comprises the Adjusted profit before tax, less the Taxation expense as reported in the Consolidated statementof comprehensive income, adjusted for the tax impact of the adjusting items in arriving at Adjusted profit before tax.
The Adjusted earnings per share comprises the Adjusted profit after tax divided by the non-diluted weighted average number of shares asreported in note 7.
Calculation

2022
€'000

2021
€'000

Adjusted profit before tax

As above

112,030

86,003

Taxation

Consolidated statement of comprehensive income(20,612)(13,875)

Tax arising on bridging items to
Adjusted profit before tax^

(4,043)(4,729)Adjusted profit after tax

87,37567,39976,979,596

75,526,296€c€c

Denominator (weighted average
number of equity shares)

Note 8Adjusted earnings per share

113.5089.24

Adjusted earnings per share % growth

27.2%

46.5%

^	Being mainly the tax impact of share-based payments expense €0.4m and amortisation of intangible assets €4m less foreign exchange €0.4m, with the prior period
being mainly the tax impact of share-based payments expense €2.8m, amortisation of intangible assets €2.1m, less foreign exchange €0.2m.

Return on capital employed (ROCE)ROCE represents the Adjusted profit before tax (excluding net interest costs, unwinding of discounted lease liabilities and bank charges,
and also adjusted to include pre-acquisition profits of current year acquisitions), expressed as a percentage of the capital employed. As
the Group continues to make multiple acquisitions each year, the calculation further adjusts the Adjusted profit before tax and the capital
employed as if all the acquisitions made during each year were made at the start of that year.
Capital employed represents Total equity as reported on the Consolidated statement of financial position, adding back employee defined
benefit plan liabilities, cumulative amortisation of intangible assets (customer relationships), acquisition-related liabilities (deferred andcontingent consideration), together with loans and borrowings, while deducting cash and cash equivalents.
Calculation

2022
€'000

2021
€'000

112,030

86,003

(309)

(62)

Adjusted profit before tax

As above

Interest received

Note 6

Bank charges

Note 6662

520Interest expense

Note 6

1,261

1,040

Unwinding of discounted liabilities – lease liabilities

Note 6969

985

Pre-acquisition profits of current year acquisitions

Note 27

1,601

2,573

116,21491,059Adjusted profit before tax including pre-acquisition
profit and excluding net interest
Total equity

Consolidated statement of financial position

557,091

472,120

Employee defined benefit plans

Consolidated statement of financial position

2,861

3,088

Cumulative amortisation of intangibles assets(customer relationships)

Note 1158,30140,708Deferred and contingent consideration

Note 17

63,25354,142Loans and borrowings

Note 18

51

129

Cash and cash equivalents

Consolidated statement of financial position(81,886)(105,710)

599,671464,477

19.4%

19.6%

Capital employed
Return on capital employed

Adjusted profit before tax including pre-acquisition
profit and excluding net interest expense/capital
employed

170

Keywords Studios plc Annual Report and Accounts 2022

Alternative performance measures continued

Free cash flow
Free cash flow represents Net cash generated by/(used in) operating activities as reported in the Consolidated statement of cash flows,
adjusted for acquisition and integration cash outlay, capital expenditure, non-cash movements in deferred and contingent consideration
related to continuous employment, net interest paid, payments of principal on lease liabilities and is presented both before and after
taxation paid. In order to present the measure consistently year-on-year, the impact of other income is also excluded.
Calculation

Net cash generated by/(used in) operating activities

Consolidated statement of cash flows

2022
€'000

2021
€'000

124,286

90,545

8,413

7,972

(2,282)(5,567)(3,000)–Acquisition and integration cash outlay:
Costs of acquisition and integration

Consolidated statement of comprehensive income

Fair value adjustments to contingent consideration Consolidated statement of cash flows
Non-cash movements in Deferred and contingent
consideration related to continuous employment
Acquisition of property, plant and equipment

Consolidated statement of cash flows(27,007)(19,360)

Investment in intangible assets

Consolidated statement of cash flows

(501)

(315)

Other income

Consolidated statement of comprehensive income

Interest received

Consolidated statement of cash flows

Interest paid

Consolidated statement of cash flows(1,797)(2,738)

Payments of principal on lease liabilities

Consolidated statement of cash flows(11,361)(9,953)85,96260,646

17,50523,948103,467

84,594

Free cash flow after tax
Taxation paid

Consolidated statement of cash flows

Free cash flow before tax(1,098)

–

309

62

Adjusted free cash flow
Adjusted free cash flow is a measure of cash flow adjusting for capital expenditure that is supporting growth in future periods (as measured
by capital expenditure in excess of maintenance capital expenditure).
2022
€'000

2021
€'000

As above

103,467

84,594

Acquisition of property, plant and equipment

Consolidated statement of cash flows

27,007

19,360Depreciation – property, plant and equipment

Consolidated statement of cash flows(18,365)(11,661)

Calculation

Free cash flow before tax
Capital expenditure in excess of depreciation:

Capital expenditure in excess of depreciation

8,642

7,699

Adjusted free cash flow

112,10992,293

2022
€'000

2021
€'000

Adjusted cash conversion rate
The Adjusted cash conversion rate is the Adjusted free cash flow as a percentage of the Adjusted profit before tax:
Calculation

Adjusted free cash flow

As above

112,10992,293Adjusted profit before tax

As above

112,030

86,003Adjusted cash conversion ratio

Free cash flow before tax and capital expenditure
in excess of depreciation, as a % of Adjusted profit
before tax

100.1%

107.3%Net debt
The Group manages capital by monitoring debt to capital and net debt ratios. Net debt is calculated as Loans and borrowings (as shown in
the Consolidated statement of financial position) less Cash and cash equivalents, and excludes Lease liabilities.
Calculation

2022
€'000

2021
€'000

129

Loans and borrowings

Consolidated statement of financial position

51

Cash and cash equivalents

Consolidated statement of financial position(81,886)(105,710)(81,835)(105,581)

Net debt/(net cash) position

Overview

Strategic report

Governance

Financial statements

Supplementary information

Key disclaimers

References to “Keywords”, “Keywords Studios” or the “Group” are to Keywords Studios Plc (the “Company”) and its subsidiaries unlessotherwise stated. The “Keywords Studios” word and logo marks are trademarks owned by Keywords International Limited, a member of theGroup. Other product and company names mentioned herein may be the trademarks of their respective owners.
This report contains “forward-looking statements” with respect to the Group’s financial condition, results of operations and businesses
and certain of the Group’s plans and objectives. In particular, such forward-looking statements include, but are not limited to, statementswith respect to: expectations regarding the Group’s financial condition or results of operations and the guidance for a financial year; theGroup’s sustainable business strategy and targets; expectations for the Group’s future performance generally; expectations regarding theoperating environment and market conditions and trends, including customers, new game launches and next generation consoles, adjacentmarkets, games-as-a-service, competitive position and macroeconomic pressures, price trends, commercial momentum and opportunities in
specific geographic markets; expectations regarding the integration or performance of current and future investments and newly acquired
businesses. Forward-looking statements are sometimes, but not always, identified by their use of a date in the future or such words as “will”,“anticipates”, “could”, “may”, “should”, “expects”, “believes”, “estimates”, “intends”, “plans” “projects” or “targets” (in each case including in their
negative form or other variations or their comparable terminology). By their nature, forward-looking statements include matters that are
not historical facts and are inherently predictive, speculative and involve risk and uncertainty because they relate to events, and depend on
circumstances, that may or may not occur in the future. No reliance whatsoever should be placed on any forward-looking statements.
There are a number of factors that could cause actual results and developments to differ materially from those expressed or implied bythese forward-looking statements. These factors include, but are not limited to, the following: changes in economic, financial, political andregulatory conditions; factors that contribute to uncertainty and volatility, including natural and man-made disasters, civil unrest, pandemics(e.g. the coronavirus (COVID-19) pandemic (the “COVID-19 pandemic”)) and geopolitical uncertainty; the ability of the Group to successfully
recover from a disaster, force majeure event or other business continuity problem including, but not limited to, due to a hurricane, flood,earthquake, terrorist attack, war, pandemic, security breach, cyber-attack, insider threats or supplier breach, disclosure or misuse ofconfidential information, power loss, data loss, telecommunications failure or other natural or man-made event; any governmental or otherthird party policies or actions to maintain the functioning of national or global economies and markets; changes to legal, regulatory and tax
environments; increased competition; the Group’s ability to generate and grow revenue; the Group’s ability to meet its ESG-related goals
and targets; the Group’s ability to adapt to rapid advances in technology; the Group’s ability to attract and retain customers; reductions orchanges in customer trends or spending and increased pricing pressure; the Group’s ability to attract and retain talent and wage inflation;
the Group’s ability to realise expected benefits or synergies from acquisitions; acquisitions and divestments of Group businesses andassets and the pursuit of new, unexpected strategic opportunities; the Group’s ability to integrate acquired business or assets; the extent
of any future write-downs or impairment charges on the Group’s assets, or restructuring charges incurred as a result of an acquisition
or disposition; developments in the Group’s financial condition, earnings and distributable funds and other factors that the Board takes
into account in determining the level of dividends; the Group’s ability to satisfy working capital requirements; and changes in foreignexchange rates.

171

172

Keywords Studios plc Annual Report and Accounts 2022

Company information

Directors

Principal Bankers

Ross Graham
Don Robert
Bertrand Bodson
Jon Hauck
Georges Fornay
Charlotta Ginman
Marion Sears
Neil Thompson

Citibank, N.A., London Branch
Citigroup Centre, Canada Square,
Canary Wharf,
London E14 5LB, UK

Secretary
Andrew Kennedy

Registered Number
8548351

Registered Office
Fourth Floor,
110 High Holborn,
London WC1V 6JS, UK

Auditors
BDO Registered Auditors
Block 3, Miesian Plaza,50-58 Lower Baggot Street,
Dublin 2, Ireland

Registrars
Link Group
10th Floor,
Central Square,
29 Wellington Street,
Leeds LS1 4DL, UK

Remuneration Consultants
Deloitte LLP
1 New Street Square,
London EC4A 3HQ, UK

Fifth Third Bank
National Association Representative Office,38 Fountain Square Plaza, Cincinnati,
Ohio 45263, USA
HSBC Continental Europe
38 Avenue Kléber,75116 Paris, France
ING Bank N.V., Dublin Branch
Block 4, Dundrum Town Centre,
Sandyford Road, Dundrum, Dublin 16, Ireland

Nominated Adviser and Broker
Numis Securities Limited
45 Gresham Street,
London EC2V 7BF, UK

Financial PR Adviser

MHP Group
4th Floor, 60 Great Portland Street,
London W1W 7RT, UK

Solicitors

DWF LLP, 20 Fenchurch Street,
London EC3M 3AG, UK

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Keywords Studios plc
4th Floor
110 High Holborn
London WC1V 6JS
United Kingdom

www.keywordsstudios.com