17 September 2020

Keywords Studios PLC (“Keywords Studios”, “the Group”)
Half year results for the six months to 30 June 2020
Robust revenue growth driven by strong demand and flexible, resilient business model
Keywords Studios, the international technical and creative services provider to the global video
games industry, today announces its half year results for the six months to 30 June 2020.
Financial overview:H1 2020

H1 2019% change

Group revenue
Organic Revenue growth1€173.5m+8.0%€153.2m+17.3%+13.3%

Adjusted EBITDA2
Adjusted EBITDA margin€30.8m17.8%€25.8m16.9%+19.3%

Adjusted profit before tax3
Profit before tax€21.7m€11.1m€18.4m€6.7m+17.9%+66.0%

Adjusted earnings per share4
Earnings per share

25.25c9.49

21.53c4.69c+17.3%+102.3%

n/a

0.58p

Adjusted cash conversion rate5

50.2%

30.0%

Net cash / (net debt)€101.0m€(9.0)m

Results for the six month ended 30 June

Dividend per share

Highlights:
Robust H1 revenue growth (+13.3% to €173.5m) despite COVID-19 disruptions

8.0% Organic Revenue growth (H1 2019: 17.3%) supported by growth across all service lines
with the exception of Localization. Particularly strong growth in the Group’s largest service line,
Game Development
Strong demand for most of our services throughout the period, albeit certain services were
held back by COVID-19 related supply side constraints, particularly in Testing and Audio, while
Localization suffered from postponements on the demand side
By May, we had transitioned the majority of our people to remote working, following someshort-term disruption
Since June, we have been able to reopen most of our Audio studios and are performing certain
tasks from our Testing studios

Increased margins despite revenue being held back by COVID-19


Increase in Adjusted EBITDA of 19.3% to €30.8m, represented a 0.9% pts increase in margin
to 17.8% (H1 2019: 16.9%)

Good cash generation

Increase in Adjusted Free Cash Flow6 of €5.4m to €10.9m (H1 2019: €5.5m)
Improvement in adjusted cash flow conversion rate to 50.2% (H1 2019: 30%, FY 2019:80.2.%) for the seasonally lighter first half
Driven by the timing of MMTC/VGTR receipts, a reduction in tax payments and a small
reduction in capex as a result of lower equipment purchases due to the COVID-19 disruption
and reduced levels of expansionary capex

Robust balance sheet and liquidityRobust balance sheet with net cash of €101.0m (H1 2019: net debt €9.0m), strengthened by
our well supported placing in May that raised net proceeds of €110m€100m of further funds available from undrawn committed facilities under the Group’s
Revolving Credit Facility (RCF)

Delivering on our acquisition strategyCompleted the acquisition of Coconut Lizard in June, strengthening Game Development witha high quality Unreal Engine development specialist
Maverick Media, acquired in August, adding scale and a sixth studio to our Marketing services
business, with one of the longest established video game creative agencies in Europe
Announced separately today, the acquisition of Heavy Iron, further enlarging and bringing a
new base on the West Coast for our Game Development services

Current trading, COVID-19 update and outlook








Trading in the second half has started well with continued growth across all service lines,
despite ongoing headwinds from the disruption caused by COVID-19
Anticipate continued strong demand for our services, aided by the upcoming new console
launches, increased game play and further development of new streaming platforms driving
content demand
Expect good revenue growth in the second half despite some COVID-related hiringconstraints in our Testing businesses in the Americas, restricted use of our studios, stronger
comparatives in the second half and the impact of the recent weakening of the US dollar
Anticipate maintaining effective remote working model in the majority of locations for the restof the year, with a focus on certain priority activities taking place in studios
Expect to continue to drive incremental margin increases in the second half and beyond
towards historic norms by the end of 2021
Well-funded to deliver on our value accretive acquisition strategy and we are actively engaging
with selected targets from an expanded pipeline of opportunities
The Board remains committed to resuming its progressive dividend policy in 2021

Andrew Day, Chief Executive of Keywords Studios, commented:"The resilience of our business continues to shine through as we delivered growth despite therestricted use of our 60+ studios around the world, recruiting and training challenges, and someshort term disruption to content flowing into the business. The resolve, continued passion andprofessionalism of Keywordians around the globe to do the best we can for each and every project
entrusted to us helps ensure we are the global supplier of choice to the industry. We are incredibly
proud of the contribution we make to creating, adapting and supporting the majority of the world’s
leading video games.

We are delighted to announce the acquisition of Heavy Iron today, joining recently added Coconut
Lizard in our Game Development service line and to have added Maverick Media to our expanding
Marketing services business. Our strong balance sheet and continued good cash generation places
us in a strong position to continue our highly successful acquisition strategy as we selectively
welcome new companies into the Keywords family.
The growth drivers across our underlying video games market remain intact and we anticipate
continued strong demand across all our service lines, including some pent-up demand from ourclients as our operating environment continues to normalise. As governments around the world easesupport measures for the unemployed or furloughed workers, we expect to be better able to recruitat the entry level positions that fuel growth in our testing and player support businesses. We believe
Keywords will be seen as an even more attractive employer, with a hybrid model of remote andsocially distanced, in-studio working in a thriving interactive entertainment sector.
While margins were held back by lower volumes compared to our original plans for the year,
outweighing the benefits of COVID-19 related cost savings, we expect our margins to move towards
our historic norms as we settle into this hybrid working model to serve the strong demand we areseeing from our customers.”
A presentation of the half year results will be made to analysts at 9.30am this morning and the live
webcast can be accessed via this link: http://bit.ly/KWS_H120_Webinar . To register for dial inaccess, or for any enquiries, please contact Charles Hirst or Isabella Grace at MHP Communications
on +44 7595 461 231 / +44 7860 821978 or email keywords@mhpc.com.
The Group reports a number of alternative performance measures (APMs) to present the financial performance of thebusiness which are not 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 tounderstand the underlying trading performance of the business. In particular, adjusted profit measures are used toprovide the users of the accounts a clear understanding of the underlying profitability of the business over time. For fulldefinitions and explanations of these measures and a reconciliation to the most directly referenceable IFRS line item,
please refer to the APMs section at end of the statement.
1

Organic revenue at constant exchange rates is calculated by adjusting the prior year revenues, adding pre-acquisition
revenues for the corresponding period of ownership, and applying the prior year foreign exchange rates to both years.

2

EBITDA comprises Operating profit as reported in the Consolidated statement of comprehensive income, adjusted foramortisation of intangible assets, depreciation, and deducting bank charges. Adjusted EBITDA comprises EBITDA,
adjusted for share option expense, costs of acquisition and integration and non-controlling interest. In order to present themeasure consistently year-on-year, the impact of COVID-19 government subsidies claimed is also excluded. Both
EBITDA and Adjusted EBITDA include the impact of IFRS 16 in the current and prior year periods.

3

Adjusted profit before tax comprises Profit before taxation as reported in the Consolidated statement of comprehensive
income, adjusted for costs including share option expense, costs of acquisitions and integration, amortisation of
intangible assets, non-controlling interest, foreign exchange gains and losses, and unwinding of discounted liabilities. In
order to present the measure consistently year-on-year, the impact of COVID-19 government subsidies claimed is also
excluded.

4

Adjusted earnings per share comprises the adjusted profit after tax divided by the non-diluted weighted average numberof shares as reported. The adjusted profit after tax comprises the adjusted profit before tax, less the Tax expense asreported in the Consolidated statement of comprehensive income, adjusted for the tax impact of the adjusting items inarriving at adjusted profit before tax.

5

Adjusted cash conversion rate is the adjusted free cash flow as a percentage of the adjusted profit before tax.

6

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). In order to present themeasure consistently year-on-year, the impact of COVID-19 government subsidies claimed is also excluded.

For further information, please contact:
Keywords Studios (www.keywordsstudios.com)
Andrew Day, Chief Executive Officer
Jon Hauck, Chief Financial Officer
Joseph Quinn, Investor Relations+353 190 22 730

Numis (Financial Adviser, Nominated Adviser
and Corporate Broker)
Stuart Skinner/Kevin Cruickshank/Will Baunton

020 7260 1000

MHP Communications (Financial PR)
Katie Hunt/James Midmer/Charles Hirst

020 3128 8100
keywords@mhpc.com

About Keywords Studios (www.keywordsstudios.com)
Keywords Studios is an international technical services provider to the global video games industry.
Established in 1998, and now with 62 facilities in 21 countries strategically located in Asia, the Americas andEurope, it provides integrated art creation, marketing services, software engineering, testing, localization,
audio and customer care services across more than 50 languages and 16 games platforms to a blue-chipclient base of over 950 clients across the globe.
Keywords Studios has a strong market position, providing services to 23 of the top 25 most prominent games
companies, including Activision Blizzard, Bandai Namco, Bethesda, Electronic Arts, Konami, Microsoft, Riot
Games, Square Enix, Supercell, TakeTwo, Epic Games and Ubisoft. Recent titles worked on include Call of
Duty: Modern Warfare, Anthem, Star Wars Jedi: Fallen Order, Assassin's Creed Odyssey, Valorant, Leagueof Legends, Fortnite, Clash Royale and Doom Eternal. Keywords Studios is listed on AIM, the London Stock
Exchange regulated market (KWS.L).

CEO Review
Robust revenue growth driven by strong demand
Keywords delivered a robust performance in H1 2020, with revenues up 13.3% to €173.5m, as we
worked hard in the context of COVID-19 disruptions to deliver on the strong demand for our services
as our clients, in turn, experienced accelerated demand for their content, and some constraints to theirproduction and support.
I am exceptionally proud of the efforts of all our people through this challenging period, as we reactedwith agility to fundamental changes to our ways of working, whilst continuing to deliver the high qualityof service for which we have become well-known.
The Group delivered 8.0% Organic Revenue growth including, in particular, a continued strong
performance from our largest service line, Game Development, which grew Organic Revenues by
25.7%. The Group’s Organic Revenue growth was complemented by contributions from prior year
acquisitions.
Whilst we experienced strong demand for most of our services, revenues were held back by some
operational and market disruption caused by COVID-19. This was particularly apparent in Testing
which historically is done in secure facilities and Audio services which generally requires actors,
directors and audio engineers to be in recording studios. We were able to move the vast majority of
our Testing operations to work-from-home arrangements albeit with some short term delays as we
put in place the IT infrastructure to support this and secured client consents. Our Localization
business, which saw some short term disruption to content flowing into it in the first half, has seen amarked increase in volume in the early part of the second half.
Since June we have been able to reopen most of our Audio studios and from July we have started tooperate certain activities from our Testing studios, albeit recently extended unemployment support
measures have been constraining our ability to recruit at the entry level, particularly in our testing
operations in the Americas.
Our Art Creation service performed well in the period, given that some of its later stage marketing
activities were held back by COVID-19 and we lost around two weeks of production in China as it
went into lockdown first, earlier in the year. Player Support returned to growth, as expected, with somebenefit from increased game playing activity since lockdown commenced.
The Group’s Adjusted EBITDA increased by 19.3% to €30.8m, representing a 0.9% pts increase in
margin. The operational investments made in 2019 such as increased seat numbers and more
efficient recruitment aided growth and margins in the first two months of the year but have since beennullified by the effects of COVID-19 as we continue to pay our rents and associated property costs
and deal with some recruitment headwinds as previously reported. We look forward to being able tofully capitalise on these investments as we ease back into greater use of our studios, and we haveindeed continued to invest prudently in 2020 in expanding capacity at studios including Mexico City,New Delhi and Katowice. We were also pleased to continue to expand Electric Square with the
opening of a new studio in Singapore, which extends our Game Development capabilities in thisimportant market.
Delivering on our strategy
As we continue to build our services platform into the ‘go to’ provider to the video games industry inaccordance with our strategy, the Group is increasingly standing out as the leader in a market
characterised by highly fragmented, local, single-service providers, despite the growing needs of the
major video games publishers and developers who act globally. These customers are increasingly
turning to external development and support services as a way to manage the demands of generatingmore sophisticated content whilst limiting their fixed costs, and so they require the quality, flexibility,
and security of a full service provider of scale. This trend has been particularly evident through the
COVID-19 situation, where Keywords has been able to support its clients’ business continuity.
Demand for video games has accelerated during the pandemic which is likely to result in an enlarged
market for video games content going forward. We are continuing to invest, as appropriate, toposition the Group as an increasingly integral partner to our clients, ahead of the launch of next
generation games consoles later in 2020 and through the important growth period that should follow
this refresh. Further development of new and existing video games streaming platforms will also
increase demand for content and its ongoing support.
We have been determined not to allow COVID-19 to halt our highly successful M&A program thathas always been an integral part of our strategy. Following our strongly supported €110m placing inMay, we are delighted to have been able to welcome three new companies to the Keywords family
since June and continue to systematically work through a healthy pipeline of further acquisition
opportunities.
The acquisitions of Coconut Lizard in June and Heavy Iron today have brought two high quality
game development studios into the Keywords family, whilst Maverick Media, acquired in August,added scale and a sixth studio to our Marketing services business, in line with our stated strategy
to have a particular focus on acquisitions in these areas of expertise.
Supporting our people, clients and communities
Keywords’ ongoing success is based on its people, and I am exceptionally proud of the way that all
Keywordians around the world have responded to the challenges and the changes to our ways ofworking to keep everybody safe in the context of COVID-19.
Where we were not able to provide work for all our colleagues, particularly in the earlier months ofthe pandemic, we were fortunate in being able to help them access enhanced unemployment
benefits in various territories in which we operate while they were temporarily laid off, and we arepleased to have been able to bring the vast majority of our people back to work and to have begun
hiring in earnest as we scale into the consistently busier second half of the year. In addition, weestablished our own US$500,000 hardship fund to support those experiencing more acute financial
issues as a result of COVID-19.
We constantly strive to provide great work and career development opportunities for Keywordiansin a supportive, relaxed but professional culture. We believe that our business model provides
structural advantages for both our colleagues and our clients. Our broad pool of highly experienced
and games-passionate talent provides a tremendous resource that our customers can access in a
flexible and cost-efficient manner across the globe and in convenient time zones. For ourcolleagues, we work on over 200 game titles from game developers and publishers around the world
at any one time, providing a steady stream of engaging work for our full-time staff, our flexible
workers and our freelance collaborators.
During the period, our studios have implemented various local initiatives to help colleagues feel
connected, engaged and appreciated while working from home. Gift packs, online social events,
access to wellbeing counselling and the provision of helplines are just some of these many
initiatives. Additionally, we have deployed several measures to enhance the working experience at
Keywords, including our new e-card which allows colleagues to show gratitude and appreciation for
one another and the launch of a fund under the ‘Keywords Cares’ banner that matches funds raisedby Keywordians for their local community outreach and charitable initiatives.

Service line review
With the exception of our Localization business which was held back by scheduling delays further
upstream, all our services lines grew despite the pandemic and the operational challenges it hascreated.
The following table provides a summary of our revenues by service line, including their growth rates
on a reported and Organic Revenue** basis. We have also presented pro forma revenues by service
line, which includes the annualised revenue of Coconut Lizard, in line with our practice in prior periods
to provide an overview of the size and balance of the business at the end of the period. The service
line commentary which follows reports on the statutory reported revenues unless otherwise stated.

Revenue% of H1 2020
Group
revenue

H1 2020
Revenue€m

H1 2019*
Revenue€mChange year
on year%

H1 2020
Organic
Revenue**
growth%Art Creation

15.2%

26.3

22.2

18.5%

7.9%

26.3

Game Development

22.3%

38.7

29.6

30.7%

25.7%

39.7

Audio

11.9%

20.6

18.3

12.6%

0.5%

20.6

Functional Testing

20.6%

35.8

31.8

12.6%

10.7%

35.8

Localization

12.4%

21.6

22.7

(4.8%)(7.4%)

21.6

Localization Testing

6.2%

10.7

10.3

3.9%

1.9%

10.7

Player Support

11.4%

19.8

18.3

8.2%

5.5%

19.8

Total

100.0%

173.5

153.2

13.3%

8.0%

174.5

H1 2020 Pro
forma**
Revenue€m* The prior year comparatives for Audio and Localization have been re-classified to reflect the current year presentation as the
Directors consider this to be more meaningful.
** The group reports certain Alternative performance measures (APMs) which the Directors believe provide valuable additional
information for the users of the financial information to understand the underlying trading performance of the business. For fulldefinitions and explanations of these measures and a reconciliation to the most directly referenceable IFRS line item, please see theAPMs section at the end of the statement.

Art Creation (15.2% of Group revenues for the half year)
Our Art Creation service line creates graphical art assets for video games including concept art
creation, 2D and 3D art asset production and animation. Also included under Art Creation is theMarketing services business we are building through acquisitions, and subsequent organic growth.
H1 2020 performance
Art Creation revenues grew by 18.5% to €26.3m (H1 2019: €22.2m) with the benefit of contributions
from 2019 acquisitions, Sunny Side Up and Ichi. Organic Revenue, which excludes the impact of
currency movements and acquisitions, grew by 7.9% for Art Creation.
This was a good performance given that the Art Creation team saw some disruption from the very
early stages of the COVID-19 pandemic in China, that affected five of its studios, before lockdowns
became more widespread, and as some of the earlier stage Marketing services were held back by
COVID-19 as game developers and publishers paused early stage marketing planning whileassessing the implications of COVID-19. However, demand across all of these businesses is now
strong and they have settled into their new ways of working.

The market opportunity and outlook
Art Creation and Marketing services operate in large addressable markets which remain highly
fragmented, particularly given the range of Marketing services provided both internally and externallywhich range from key art, trailer creation, advertising, PR, branding, campaign management,
influencer marketing and management through to marketing analytics and community management.
Marketing services remains a particular area of focus for acquisitions, and we expect to report thisbusiness separately once it achieves scale.
While we continue to work within the operational constraints of COVID-19, demand for all our services
in this area has been building into the second half of the year and we expect to maintain good levelsof activity through to the end of the year, including our newly acquired Maverick Media business.
Game Development (22.3% of Group revenue for the half year)
Our Game Development service line provides external development services to game developers andpublishers including full game development, co-development, porting and general software
engineering consultancy.
H1 2020 performance
Now our largest service line, Game Development increased revenues by 30.7% to €38.7m (H1 2019:€29.6m). This increase reflected a full contribution from Wizcorp, which was acquired in April 2019.
Organic Revenue, which excludes the impact of currency movements and acquisitions, increased
very strongly for Game Development, up 25.7% compared to H1 2019.
Our investments in the latter part of 2019 and early in 2020 in new studios in Leamington Spa, UK, in
Singapore and in Austin, Texas, and the access to talent that they have provided, along withsuccessfully moving to remote working and continued recruitment across all our Game Development
studios, have enabled us to meet much of the strong demand we are seeing for our services.
We are continuing to build this service line through organic expansion as well as through acquisitions
with a focus on accessing pools of talent from which we can expand organically, as the industry
continues to make greater use of external development services.
At the very end of June we acquired Coconut Lizard, a well-regarded provider of game development
engineering services with particularly deep expertise in the video game development environment,
Unreal Engine. Importantly, in addition to expanding Game Development’s services, Coconut Lizard
brings with it good access to talent including graduates from the specialised video game development
and engineering degree courses at the University of Sunderland and Newcastle University.
The market opportunity and outlook
Game Development is our largest addressable market; a market that is growing strongly and has thelowest proportion of services outsourced of all of the Group’s market segments. Characterised by per
project engagements, rather than the ongoing service provision of many of our other service lines,
Game Development revenues can be impacted by the transitions from one project to another. As aresult of COVID 19, we have witnessed some delays in getting new projects started which may holdthis service line back from maintaining the very strong growth rate seen in the first half, albeit theunderlying trend in this area of our business remains extremely positive. As previously communicated,
Game Development remains an area of particular focus in our M&A program, where we target
companies that provide access to strong pools of talent to help support the fast pace of organic growth.

Audio (11.9% of Group revenue for the half year)
Our Audio service line provides multi language voice-over, original language voice recording, music,
sound design, accessibility and related services.
H1 2020 performance
Audio revenues rose by 12.6% in the period to €20.6m (H1 2019: €18.3m), with the benefit of fullcontributions from the 2019 acquisitions of Descriptive Video Works, TV+SYNCHRON, and Syllabes.
Organic Revenue, which excludes the impact of currency movements and acquisitions, increased by
0.5% compared to H1 2019.
Our Audio services businesses were held back in the period by the closure of their recording studios
during the lockdowns in their respective cities. We were able to partially mitigate the effects of theseclosures with some level of remote recording and, since June, most of our studios have been
operational albeit at reduced capacity levels due to the extra measures in place to safeguard our staff
and recording artists.
The market opportunity and outlook
The audio localization services market remains highly fragmented in terms of service provision, withclients requiring state of the art studios for optimal sound quality. This represents an opportunity for
us to grow our market share organically, as well as make acquisitions over time, and with the majorityof our studios now open we expect to be able to deliver against pent up demand in the second half ofthe year and beyond.
Assuming the environment continues to normalise in relation to COVID-19 measures, our Audio
service line should also benefit from a better second half of 2020 for AAA game releases, to coincidewith the anticipated new console launches from Microsoft and Sony, as well as continued content
generation for the streaming services, with some of our studios benefitting from Netflix preferredvendor status.
Functional Testing (20.6% of Group revenue for the half year)
Functional Testing is our second largest service line and provides quality assurance including thediscovery and documentation of game defects; testing to ensure games are compatible with thevarious hardware devices and configurations they are played on; and testing to verify that games
comply with console manufacturers’ specifications.
H1 2020 performance
Functional Testing revenues increased by 12.6% to €35.8m (H1 2019: €31.8m). Organic Revenue,
which excludes the impact of currency movements and acquisitions, increased by 10.7%.
This represented a strong performance, given the operational constraints created by the COVID-19
lockdown measures. This service line had been severely constrained at the beginning of the lockdown,
as the security implications of working on valuable, pre-release content meant the work needed to be
conducted from within our security audited testing studios. However, in consultation with our clients,
we worked quickly to move the majority of our team to remote working arrangements. We now haveaccess to our studios again and are cautiously deploying testing teams there, as well as using thestudios for training and testing purposes and for housing particularly sensitive projects such as thoserequiring new generation console test kits.
The market opportunity and outlook

In the second half, we are already seeing an increase in demand as anticipated and this is now coming
at a time where we are beginning, as from August, to see an easing in the recruitment constraints wehad been experiencing. We therefore expect to be able to scale quickly into the peak months of
September and October, albeit we will be trading against stronger comparatives.
We are a leading player in this large and growing market segment of the market which is seeing a
trend towards outsourcing. Our scale, flexibility and proven robustness, even in the most challenging
of circumstances, positions us well as games companies continue to increase the proportion offunctional testing that they outsource.

Localization (12.4% of Group revenue for the half year)
Our Localization service line provides translation of in-game text, audio scripts, cultural and local
adaptation, packaging and marketing materials. We have also recently added neural machinetranslation technology and a global crowd sourcing translation platform, through the acquisition of
Kantan in December 2019.
H1 2020 performance
Localization revenues were down by 4.8% to €21.6m (H1 2019: €22.7m). Organic Revenue, which
excludes the impact of currency movements and acquisitions, was down by 7.4% as we experienced
some delays in the receipt of content as production schedules further upstream were disrupted bywork from home transitions at some of our clients.
The market opportunity and outlook
We have seen an improvement in Localization’s performance in the second half to date as thevolumes of content flowing to us have picked up, leaving it on track to return to organic growth in thesecond half, with its flexible production model able to respond quickly to an increase in demand for its
services.
Service provision in this segment of the market remains highly fragmented, with most competitors
being single language providers without the scale to deliver simultaneous multi-jurisdictional
localization projects for our global video games customer base. In this context, we expect Localization
to continue to build on its leading market position as it increasingly differentiates itself by combining
proprietary software tools like XLoc, and recently acquired Artificial Intelligence (AI) and Machine
Learning (ML) technology from Kantan, with its market leading expertise in games localization built up
over the past 20 years. We have made steady progress in developing our AI/ML capabilities for thevery challenging specific requirements of the games industry and we expect to see this technology
being adopted by our clients as an integral part of our partnership arrangements with them going
forward.
Localization Testing (6.2% of Group revenue for the half year)
Our Localization Testing service line identifies out of context translations, truncations, overlaps,
spelling, grammar, age-rating and cultural issues and tests for console manufacturer compliancerequirements in over 30 languages using native speakers.
H1 2020 performance
Localization Testing revenue increased by 3.9% to €10.7m (H1 2019: €10.3m). On an organic basis,
which also excludes the impact of currency movements, Localization Testing was 1.9% higher
compared to H1 2019.

Localization Testing experienced the same operational constraints seen in our Functional Testing
division during the period, compounded by some lack of availability of native language resources due
to people returning to be with their families in their home countries and the subsequent travel
restrictions. However, as in the case of Functional Testing, we have successfully transitioned the
majority of people to remote working and are also now using our studios for priority activities.
The market opportunity and outlook
We would expect strong demand for Localization Testing’s services as it benefits from a stronger
second half for AAA game releases including some demand related to the anticipated new console
launches from Microsoft and Sony. Our ability to meet that demand will be subject to the availabilityof language skills as described above, albeit we hope these constraints will continue to ease as wemove through the second half.
As market leader in this segment, for which scale, breadth of languages, and the agility of a larger
player is critical to customers, we look forward to building on our leadership during an anticipated busy
period for the industry.
Player Support (11.4% of Group revenue for the half year)
Our Player Support service line provides multi-lingual, cost effective and flexible customer careservices including managing communities of gamers across all forms of social media, within thegames themselves and on the official game forums.
H1 2020 performance
Player Support increased revenue by 8.2% to €19.8m (H1 2019: €18.3m) and Organic Revenue,
which is on a constant currency basis, by 5.5%.
Player Support returned to growth in H1, representing a good performance in the context of the
COVID-19 disruption. During the period, it successfully transitioned its teams around the world toremote working arrangements enabling it to provide continuous support to its clients.
The market opportunity and outlook
We continue to aim to differentiate ourselves from the large generalist call centre operators who havebenefited from video game operators turning to them for support as they have developed ‘games asa service’ products, requiring player support for the first time. Our specialist video games “DNA”, ourextensive range of capabilities and our fundamental understanding of what is important to players
shows through in the quality of our service delivery compared to these generalist providers. We
continue to extend our services to cover more ‘touch points’ of gamer engagement, and develop our
technological tools, in order to make further progress in this market.
Our focused business development activities in this area, following a period in which the operations
settled into the new COVID-19 era regime, have started to produce interesting new businessprospects and we expect Player Support to trade strongly through the second half.

COVID-19, current trading and outlook
Trading in July and August has started strongly with all our service lines performing well, even withthe continued operational and market disruption resulting from COVID-19. We are still seeing someconstraints particularly to our recruitment efforts but these should ease as governments rein in someof the COVID-19 specific support measures to individuals, thereby encouraging them back into thework place.

Since April, the vast majority of our business has operated a remote working model that we havesupported efficiently and robustly. On an ongoing basis, we have adopted an approach tailored toeach studios’ needs in each of the 60+ locations in which we have our production operations. Eachstudio continually assesses the needs and desires of its staff and the requirements of our customers
in determining how much, if any, of its operations move back into studios. As such, we are retaining
a very flexible approach to where and how we work in order to adapt to the COVID-19 related
challenges over the months ahead.
The underlying drivers of growth across the video games market remain intact and we anticipate
continued strong demand across all our service lines further aided by the market refresh in the
console games sector that will follow the launch of the PlayStation ™5 and Xbox X Series consoles
towards the end of 2020, by the ongoing development of new streaming platforms, and by increased
game playing on current platforms which is driving demand for ever more content. We also hope tocontinue to benefit from pent up demand from our clients as our operating environment continues
to normalise.
We expect to continue to drive incremental margin increases in the second half and beyond towards
historic norms by the end of 2021, benefitting from our previous investment in expanding anddiversifying the business, improving our technology, strengthening our management team andextending our functional support. The investments made in expanding studio capacity in many of
our studios in 2019, in order to support continued growth, have yet to be put to work with only
marginal occupancy rates in all but our China based studios at present, due to COVID-19.
Nevertheless, these previous investments did provide us with broader access to talent and theinfrastructure to enable us to operate well through the lockdowns.
Our recent placing and revolving credit facility mean we are well-funded to deliver on our value
accretive acquisition strategy and we are actively engaging with selected targets from an expanded
pipeline of opportunities. We remain ideally placed to capitalise on our clear opportunity to take aleading share of the increasingly outsourced video games services market both organically and via
acquisitions, as we further enhance shareholder value.
Thanks to the robustness of the Group’s model and its proven business continuity capability, thegrowth characteristics of our end markets and the strength of our market position, we are confident
that the Group is well positioned for growth and long-term success.
Andrew Day
Group Chief Executive Officer

Financial and Operating Review
Resilient performance in period of significant disruption
Revenue
Despite the COVID-19 disruptions, revenue for H1 2020 increased by 13.3% to €173.5m (H1 2019:€153.2m). Total revenue growth was supplemented by the impact of acquisitions made in 2019 andthe impact of currency movements, in particular the strengthening of the US dollar against the Eurobetween H1 2019 and H1 2020 which contributed 1.7% pts of the growth in the first half.
Organic Revenue growth (which adjusts for the impact of currency movements and acquisitions)
was 8.0% driven by a robust performance in most service lines, despite the closure of most of ourstudios in March and the move to work from home arrangements, and a particularly strong
performance in Game Development which delivered organic growth of 25.7%. Whilst we saw
continued strong demand for most of our services, all of our service lines were held back due tostudio closures, particularly in our Testing and Audio businesses, while Localization was held backby some short term client disruption which caused delays to content flowing into the service line.
Gross margin
Gross profit in H1 2020 was €62.9m (H1 2019: €55.2m) representing an increase of 13.9%. The
gross profit margin improved by 0.2% pts to 36.3% (H1 2019: 36.1%) albeit the margin improvement
was held back by the revenue shortfalls from March onwards compared to pre-COVID-19
expectations, particularly in our Testing, Audio and Localization service lines.
Operating costs
Adjusted operating costs increased by 9.1% in the first half of the year to €32.1m (H1 2019: €29.4m)
representing 18.5% of revenue versus 19.2% in H1 2019. This was partly driven a reduction incertain costs including travel and marketing as a result of the lockdown restrictions.
EBITDA
Adjusted EBITDA increased 19.3% to €30.8m compared with €25.8m for H1 2019 resulting in an
improvement in Adjusted EBITDA margin of 0.9% pts to 17.8% (H1 2019: 16.9%). As noted above,the margin partly benefited from a reduction in certain costs during COVID-19, albeit it was heldback by the revenue shortfalls from March onwards versus previously anticipated levels.
Net finance costs
Net finance costs reduced by €0.8m to €1.6m (H1 2019: €2.4m largely driven by a reduction on the
net foreign exchange loss of €0.9m which is described in more detail below). Underlying interest
costs (excluding IFRS 16 interest, deferred consideration discount unwind and foreign exchange)
increased by €0.2m to €0.6m (H1 2019: €0.4m) reflecting the increase in drawings in the RCF
entering into the year which was repaid in May following the successful €110m placing.
Alternative performance measures
The group reports a number of Alternative performance measures (APMs) to present the financial
performance of the business which are not GAAP measures as defined by IFRS. The Directors
believe these measures provide valuable additional information for the users of the financial
information to understand the underlying trading performance of the business. In particular, adjusted
profit measures are used to provide the users of the accounts a clear understanding of theunderlying profitability of the business over time. A breakdown of the adjusting factors is provided
in the table below:

Share option expense
Costs of acquisition and integration
Amortisation and impairment of intangible assets
COVID-19 related subsidies claimed
Foreign exchange and other items

H1
2020
€m
6.8
1.2
5.7
(3.4)
0.4
10.7

H1 2019
€m
4.0
2.8
3.5
1.4
11.7

FY 2019
€m
9.8
4.3
7.3
2.1
23.5

2.3m of options were granted under the Share Option Scheme and Long Term Incentive Plan in H1
2020. This, together with grants from previous years, has resulted in a non-cash share option
expense of €6.8m in H1 2020 (H1 2019: €4.0m). The increase is largely due to an increase in thefair value charge for the more recent grants compared to previous years.
One-off costs associated with the acquisition and integration of businesses of €1.2m (H1 2019:€2.8m) were incurred in the period, including deferred consideration true ups for acquisitions madein earlier periods.
The amortisation charge of €5.7m (H1 2019: €3.5m) for the period includes a €1.9m non-cash
charge relating to an impairment of intangible assets in certain pre-revenue businesses. Thesebusinesses have potentially exciting prospects but the speed to market has been hampered by
COVID-19.
During the first half the group benefited from €3.4m of COVID-19 related government subsidies
largely in the Americas aimed at supporting employment retention during the COVID-19 crisis. Dueto the temporary nature of the support the income was excluded in arriving at the adjusted profit
measures.
Foreign exchange and other items amounted to a net charge of €0.4m (H1 2019: net charge of€1.4m). Keywords does not hedge foreign currency exposures. The effect on the Group’s results ofmovements in exchange rates and the foreign exchange gains and losses incurred during the year
mainly relate to the effect of translating net current assets held in foreign currencies. This resulted
in a net foreign exchange loss of €0.3m in the first half, recorded within financing cost (H1 2019:€1.2m).
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 the statement.
Profit before taxation
Profit before tax increased by €4.4m to €11.1m (H1 2019: €6.7m). Adjusted Profit Before Tax, which
adjusts for share option charge, costs of acquisition and integration, amortisation and impairment ofintangibles (as described above), non-controlling interest, foreign currency exchange movements,
unwinding of discounted liabilities, and COVID-19 government employment retention subsidies
increased by 17.9% to €21.7m compared with €18.4m in H1 2019, representing an improvement in
net margin of 0.5% pts to 12.5% (H1 2019: 12.0%).
Taxation
The tax charge in the period was €4.7m (H1 2019: €3.6m) resulting in a reduction in the Adjusted
Effective Tax Rate to 21.5% of Adjusted Profit Before Tax versus the full year rate of 22.4% in 2019,
largely due to the non-repeat of a legacy pre-acquisition tax charge of €0.5m in the prior year.
Basic earnings per share
Basic earnings per share increased by 102.3% to 9.49c (H1 2019: 4.69c) reflecting the increase in
the statutory profit after tax of 110.6% and a 4.1% increase in the weighted average number ofshares in issue which does not yet include the full impact of the 10.5% equity placing in May of thisyear.
Adjusted earnings per share which adjusts for the items noted in the APM section above was 25.25c
representing an increase of 17.3% (H1 2019: 21.53c).

Acquisitions
The Group entered the year with a strong acquisition pipeline but progress was slowed due to
COVID-19 disruption. Following the successful equity placing in May, the Group completed its firstacquisition in June, the Game Development business Coconut Lizard for an initial consideration of€1.7m comprising cash of €1.3m and shares of €0.4m. Up to a further €0.7m is payable in a mixtureof cash and shares subject to the business meeting certain performance conditions over the first 12
months post completion.

Going forward we will continue to execute our targeted and disciplined approach to M&A to build
out our global services platform to enhance further our position as the ‘go to’ provider for technicaland creative services to the video games industry.
Cash flow and net debt

Cash flow statement
Adjusted EBITDA
MMTC and VGTR
Working capital and other items
Capex - property, plant and equipment (PPE)
Capex - intangible assets
Payments of principal on lease liabilities
COVID-19 employment support subsidies
Operating cash flows
Interest paid
Free cash flow before tax
Tax
Free cash flow
M&A - acquisition spend
M&A – acquisition and integration costs
Dividends paid
Shares issue for cash
Underlying increase / (decrease) in net cash
/ (debt)
FX and other items
Increase in net cash / (debt)
Opening net cash / (debt)

H1
2020
€m
30.8
(4.3)
(6.6)
(4.9)
(3.9)
3.4
14.5
(0.9)
13.6
(2.0)
11.6
(1.3)
(1.2)
110.7

H1
2019
€m
25.8
(7.0)
(5.8)
(5.1)
(0.3)
(3.2)
4.4
(0.7)
3.7
(3.8)
(0.1)
(7.0)
(1.7)
(0.8)
0.6

119.8
(0.9)
118.9
(17.9)

(9.0)
0.4
(8.6)
(0.4)

Closing net cash / (debt)

101.0

(9.0)

Change
€m
5.0
2.7
(0.8)
0.2
0.3
(0.7)
3.4
10.1
(0.2)
9.9
1.8
11.7
(5.7)
0.5
0.8
110.1
128.8
(1.3)
127.5

The Group generated Adjusted EBITDA of €30.8m in H1, an increase of €5.0m from €25.8m in H1
2019. This was reduced by an increase in the amounts due in respect of multi-media tax credits(MMTC) that are earned in the year of production, and are collected a year in arrears, and Video
Games Tax Relief (VGTR). Other working capital outflows increased by €0.8m compared to H1
2019, with trade receivable days of 46 in line with H1 2019.
Investment in property, plant and equipment amounted to €4.9m (H1 2019: €5.1m), a slight
reduction on H1 2019 reflecting a lower relative level of equipment spend as a result of the COVID19 disruption and a reduction in the level of expansionary capex. Lease payments increased by€0.7m as a result of the flow through of the studio expansions in the prior year.

Cash received in respect of COVID-19 government employment retention subsidies amounted to€3.4m in the period, resulting in operating cash flows of €14.5m (H1 2019: €4.4m), an increase of€10.1m on H1 2019.
Interest payments were €0.9m in the first half, an increase of €0.2m reflecting the increased level ofdebt at the start of the year prior to it being repaid in May following the placing. Tax payments
amounted to €2.0m (H1 2019: €3.8m) a reduction of €1.8m on H1 2019 driven by the increase intaxable profits offset by tax settlements in the prior year.
This resulted in Free Cash Flow of €11.6m, an increase of €11.7m on H1 2019 and an adjusted
cash conversion rate (which adjusts for capital expenditure that is supporting growth in future
periods and the COVID-19 government employment retention subsidies) of 50% (H1 2019: 30%).
Cash spent on acquisitions totalled €2.5m and this together with the €110m received from thesuccessful equity placing results in an underlying increase in cash of €119.8m (H1 2019 increase in
net debt: €9.0m). This, together with foreign exchange and other items, resulted in closing net cashof €101.0m (H1 2019: net debt €9.0m).
Balance sheet and liquidity
The Group funds itself primarily through cash generation and a syndicated revolving credit facility(RCF) of €100m, with an accordion option to increase this up to €140m. The RCF matures in October
2022 with an option to extend it for up to a further 2 years.
The majority of Group borrowings are subject to two financial covenants that are calculated inaccordance with the facility agreement:Leverage: Maximum Total Net Borrowings to Adjusted EBITDA ratio of 3 times; andInterest cover: Minimum Adjusted Operating Profit to Net Finance Costs ratio of 4 times.

The Group entered the year with a strong balance sheet, with net debt (excluding IFRS 16 leases)of €17.9m as at 31 December 2019 representing a net debt to Adjusted EBITDA ratio of 0.4x. In
May, the Group placed 6,900,000 new ordinary shares representing c.10.5% of the Group’s issued
share capital generating net proceeds of €110m. The placing allows the Group to continue to pursue
its value accretive acquisition strategy whilst maintaining a strong balance sheet.
The funds were used to repay drawings under the RCF and at the end of June the group had net
cash of €101.0m and undrawn committed facilities of €100m. As a result of the equity placing, theprocess to exercise the accordion option under the RCF has been halted.
Dividend
The Group has delivered a robust performance in the first half of the year and has demonstrated
the resilience of the Group’s business model, the benefit of its diversified services platform, and thecontinued strong demand for most of its services. Our service lines have performed well given theoperational and market disruption caused by COVID-19, delivering revenue and profit growth andthe Group has continued to generate cash in the period. The Board intends to resume its progressive
dividend policy in 2021.
Jon Hauck
Chief Financial Officer

Condensed interim consolidated statement of comprehensive income

Revenue from contracts with customers
Cost of sales
Gross profit
Share option expense
Costs of acquisition and integration
Amortisation and impairment of intangible assets
COVID-19 government subsidies claimed
Total of items excluded from adjusted profit measures
Other administration expenses
Administrative expenses
Operating profit
Financing income
Financing cost
Profit before taxation
Taxation
Profit

Note
5

10
19

6
6

Other comprehensive income:Items that will not be reclassified subsequently to profit or loss
Actuarial gain / (loss) on defined benefit plans
Items that may be reclassified subsequently to profit or loss
Exchange gain / (loss) in net investment in foreign operations
Exchange gain / (loss) on translation of foreign operations
Total comprehensive income / (expense)
Profit / (loss) for the period attributable to:
Owners of the parent
Non-controlling interest

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

Earnings per share
Basic earnings per ordinary share
Diluted earnings per ordinary share88

Unaudited
26 weeks ended
30 Jun 20€'000
173,485(110,565)
62,920(6,750)(1,185)(5,662)
3,411(10,186)(39,997)(50,183)
12,737

Unaudited
26 weeks ended
30 Jun 19€'000
153,190(97,950)
55,240(4,011)(2,804)(3,491)(10,306)(35,897)(46,203)
9,037

Audited52 weeks ended
31 Dec 19€'000
326,463(206,234)
120,229(9,775)(4,348)(7,318)(21,441)(77,246)(98,687)
21,54231(1,674)
11,094(4,691)
6,403(2,354)
6,683(3,643)3,040

74(4,245)
17,371(7,462)
9,909

(82)

13

(167)

(304)
(7,297)(1,280)

620
2,895
6,568

1,267
5,960
16,969

6,453
(50)
6,403

3,132
(92)
3,040

10,022(113)
9,909(1,230)(50)(1,280)

6,660
(92)
6,568

17,082(113)
16,969€ cent9.49
9.11€ cent4.69
4.50€ cent15.23
14.73

Condensed interim consolidated statement of financial position
Unaudited
26 weeks ended
30 Jun 20

Note

€'000

Unaudited
26 weeks ended
30 Jun 19
Restated(note 12)€'000

Non-current assets
Property, plant and equipment
Right of use assets
Intangible assets
Deferred tax assets

10
10
10

21,98831,321
188,657
5,698
247,664

17,666
20,410186,432
3,340
227,848

22,163
21,469196,769
5,060
245,461

Current assets
Trade receivables
Other receivables
Cash and cash equivalents

11
11

44,941
43,941
101,213
190,095
437,759

43,09437,23837,763
118,095
345,943

43,24335,413
41,827
120,483
365,944

12
12
12
12

872
3,033
21,836244,845(1,837)(1,997)23,19949,558339,509(15)
339,494

773
8,679
20,617
126,603
2,052(1,997)
10,68536,901
204,31356
204,369

780
5,310
20,718132,712
5,764(1,997)
16,44943,187
222,92335
222,958

6,434
42,703
76
5,984
8,186
63,383

7,068
50,642
46,584
6,249
7,268
117,8118,027
38,712
80
2,732
7,741
57,292

11
2,049
142
8,879
23,801
34,882437,759

1,496
1,489
208
7,196
13,37423,763345,943285
2,049
59,671
9,523
14,166
85,694
365,944

Total assets
EquityShare capital
Share capital - to be issued
Share premium
Merger reserve
Foreign exchange reserve
Shares held in Employee Benefit Trust ("EBT")
Share option reserve
Retained earnings
Non-controlling interest
Total equity
Current liabilities
Trade payables
Other payables
Loans and borrowings
Corporation tax liabilities
Lease liabilities
Non-current liabilities
Other payables
Employee defined benefit plans
Loans and borrowings
Deferred tax liabilities
Lease liabilities
Total equity and liabilities

14
15
17

14
15
17

Audited52 weeks ended
31 Dec 19
Restated(note 12)€'000

Condensed interim consolidated statement of changes in equity

Retainedearnings

Total
attributableto ownersof parent

Noncontrollinginterest

Total
equity

€'000

€'000

€'000

€'000

€'000

6,674

34,529192,375-

192,375

-

-

-

-

34,529192,375-

192,375

3,132

3,132

(92)

3,040

-

13

3,528

-

3,528

-

3,145

6,660

(92)

6,568

-

4,011

-

4,011

-

4,011

-

-

-

547

-

547

-

-

-

(773)

(773)

-

(773)

8,346

-

-

-

-

1,493

-

1,493

-

-

-

-

-

-

148

148

(773)

5,278

148

5,426

36,901

204,31356

204,369

6,890

6,890

(21)

6,869

(180)

3,532

-

3,532

-

6,710

10,422(21)

10,401

-

5,764

-

5,764

-

5,764

-

-

-

214

-

214

-

-

-

(424)

(424)

-

(424)

6,109

-

-

-

-

2,634

-

2,634

101

6,109

-

-

5,764

(424)

8,188

-

8,188

5,310

20,718132,712

5,764(1,997)

16,44943,187

222,92335

222,958

-

-

-

-

-

-

-

6,453

6,453

(50)

6,403

-

-

-

-

(7,601)

-

-

(82)

(7,683)-(7,683)

-

-

-

-

(7,601)

-

-

6,371

(1,230)(50)(1,280)Shares issued for cash

77

-

-

109,459

-

-

-

-

109,536-

109,536

Share option expense

-

-

-

-

-

-

6,750

-

6,750

-

6,750

Share options exercised
Acquisition related issuance ofshares (note 12)
Contributions by andcontributions to the owners

13

-

1,118

-

-

-

-

-

1,131

-

1,131

2

( 2,277)

-

2,674

-

-

-

-

399

-

399

92

(2,277)

1,118

112,133

-

-

6,750

-

117,816-

117,816

At 30 June 2020

872

3,033

21,836244,845(1,837)(1,997)23,19949,558339,509(15)

339,494

SharecapitalSharecapital - tobe issued

Mergerreserve

Foreignexchangereserve

Sharesheld in
EBT

Share
optionreserveSharepremium

€'000

€'000

€'000

€'000

€'000

€'000

At 01 January 2019
Reclassification of Sharepremium within Reserves(note 12)763

15,648102,225

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

At 01 January 2019 (restated)--(82,261)

82,261

-

-

-

763

15,64819,964

118,257(1,463)(1,997)

6,674

Profit for the period

-

-

-

-

-

-

-

Other comprehensive income
Total comprehensive income
for the period
Contributions by andcontributions to the owners:

-

-

-

-

3,515

-

-

-

-

-

3,515

-

Share option expense

-

-

-

-

-

Share options exercised

4

-

543

-

-

Dividends
Acquisition related issuance ofsharesNet assets on acquisition of
AppSecTest
Contributions by andcontributions to the owners

-

-

-

-

6

(6,969)

110

-

-

-

10

(6,969)

653

8,346

-

-

4,011

At 30 June 2019 (restated)

773

8,679

20,617

126,603

2,052(1,997)

10,685

Profit for the period

-

-

-

-

-

-

-

Other comprehensive income
Total comprehensive income
for the period
Contributions by andcontributions to the owners:

-

-

-

-

3,712

-

-

-

-

-

-

3,712

-

Share option expense

-

-

-

-

-

Share options exercised

3

-

211

-

-

Dividends
Acquisition related issuance ofsharesContributions by andcontributions to the owners
At 31 December 2019(restated)

-

-

-

-

4

(3,369)(110)

7(3,369)780

Profit for the period
Other comprehensive income
Total comprehensive income
for the period
Contributions by andcontributions to the owners:

Condensed interim consolidated statement of cash flows

Note
Cash flows from operating activities
Profit after tax
Income and expenses not affecting operating cash flows
Depreciation - property, plant and equipment
Depreciation - right of use assets
Amortisation and impairment of intangible assets
Taxation
Share option expense
Fair value adjustments to contingent consideration
Fair value adjustments to right of use assets
Disposal of property, plant and equipment
Unwinding of discounted liabilities - deferred consideration
Unwinding of discounted liabilities - lease liabilities
Interest receivable
Fair value adjustments to employee defined benefit plans
Interest expense
Unrealised foreign exchange (gain) / loss

Unaudited

Unaudited

Audited26 weeks ended
30 Jun 20€’000

26 weeks ended *30 Jun 19€’000

52 weeks ended
31 Dec 19
€’000

6,403

3,040

9,909

4,209
3,935
5,662
4,691
6,750
(34)
239
119
344
(31)
84
645
(378)
26,235

3,168
3,467
3,491
3,643
4,011
1,127
177
338
138
434
1,669
21,663

7,295
7,849
7,318
7,462
9,775
493
200
330
694
(74)
504
934
(577)
42,203(2,276)(4,267)(6,033)
2,028(10,548)(1,961)
20,129(5,521)(7,048)(5,129)4,320(13,378)(3,769)7,556(4,370)(5,913)(2,162)
6,402(6,043)(13,288)
32,781(1,027)(237)(4,888)31(6,121)(5,156)(1,808)(5,061)(332)(12,357)(13,051)(14,711)(13,145)(391)
74(41,224)(64,022)4,500(3,930)(344)
110,667(553)
46,318(500)
7,001(3,236)
(338)
(773)
547
(394)
2,307

(7,973)27,000(7,355)(694)(1,197)761(1,436)
9,106

60,326(940)
41,827
101,213(2,494)386
39,871
37,763663
1,293
39,871
41,827

10
10
10

10
6
6
6
6

Changes in operating assets and liabilities
Decrease / (increase) in trade receivables
Decrease / (increase) in MMTC and VGTR receivable
Decrease / (increase) in other receivables(Decrease) / increase in accruals, trade and other payables
Taxation paid
Net cash generated by / (used in) operating activities
Cash flows from investing activities
Current year acquisition of subsidiaries net of cash acquired
Settlement of deferred liabilities on acquisitions
Acquisition of property, plant and equipment
Investment in intangible assets
Interest received
Net cash generated by / (used in) investing activities
Cash flows from financing activities
Repayment of loans
Drawdown of loans
Payments of principal on lease liabilities
Interest paid on principal of lease liabilities
Dividends paid
Shares issued for cash
Interest paid
Net cash generated by / (used in) financing activities
Increase / (decrease) in cash and cash equivalents
Exchange gain / (loss) on cash and cash equivalents
Cash and cash equivalents at beginning of the period
Cash and cash equivalents at end of the period

18
10
10

15
15
17
17
12

* Please note that the comparative period to 30 June 2019 has been re-classified to reflect the presentation in the Annual Report 2019

Notes forming part of the Condensed interim consolidated financial statements
1 Basis of Preparation
Keywords Studios PLC (the “Company”) is a company incorporated in the United Kingdom. The consolidated financial statements include the financial
statements of the Company and its subsidiaries (the “Group”) made up to 30 June 2020. The Group was formed on 8 July 2013 when Keywords
Studios PLC (formerly Keywords Studios Limited) acquired the entire share capital of Keywords International Limited through the issue of 31,901,332
ordinary shares.
The interim results for the 26 weeks ended 30 June 2020 and the 26 weeks ended 30 June 2019 are neither audited nor reviewed by our auditors andthe accounts in this interim report do not therefore constitute statutory accounts in accordance with Section 434 of the Companies Act 2006. They do
not include all of the information required for full annual financial statements, and should be read in conjunction with the latest annual audited financial
statements of Keywords Studios PLC for the year ended 31 December 2019, which have been filed with Companies House. The report of the auditorson those accounts was unqualified, did not contain any statements under Section 498 (2) or (3) of the Companies Act 2006 and did not contain any
matters to which the auditors drew attention without qualifying their report.
There have been no changes in the principal risks and uncertainties during the period and therefore these remain consistent with the year ended 31
December 2019 and are disclosed in the Annual Report for that year. The Directors have considered the impact of COVID-19 and do not consider
that it has (at this point in time) changed the principal risks and uncertainties which the Group is facing. The directors continue to monitor the impact
of COVID-19 on the principal risks and uncertainties.
After making enquiries, the Directors consider it appropriate to continue to adopt the going concern basis in preparing the Condensed interim consolidated
financial statements. In doing so, the Directors have considered the uncertain nature of the current COVID-19 pandemic, but have noted:






the strong cash flow performance of the Group in the first half of the year;
the continued demand for the Group’s services;
the ability to operate most of its services in a work from home model whilst 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 €101m and committed undrawn facilities under the
Revolving Credit Facility (RCF) of €100m as at 30 June 2020.
The Directors have applied downside sensitivities to the Group’s cash flow projections to evaluate the Group’s ability to withstand a further
prolonged period of studio closures as a result of the COVID-19 pandemic, leading to a reduction in production capability. Under this severe casethe Group would have sufficient liquidity and remain within its banking covenants. The Directors have a reasonable expectation that the Company
and the Group have adequate resources to continue to operate and meet their liabilities as they fall due for the foreseeable future, a period
considered to be at least 12 months from the date of these interim financial statements and therefore the going concern basis of preparation
continues to be appropriate.
The interim financial statements made up to 30 June 2020 were approved by the Board of Directors on 16 September 2020.

2 Changes in Significant Accounting Policies
The Group has not applied early adoption of any standards not yet effective.
A number of new amendments and interpretations to accounting standards are effective from 1 January 2020 including:Definition of Material – amendments to IAS 1 and IAS 8
Definition of a Business – amendments to IFRS 3
Revised Conceptual Framework for Financial Reporting
Interest Rate Benchmark Reform – amendments to IFRS 9, IAS 39 and IFRS 7

These amendments and interpretations would not have resulted in the accounting applied by the Group changing and would not have had amaterial effect on the Group’s financial statements.
On 28 May 2020, the IASB issued amendments to IFRS 16: COVID-19 Related Rent Concessions. These amendments introduce a practical
expedient available to lessees in accounting for rent concessions (e.g. rent holidays and deferrals of lease payments) that are a direct consequenceof the COVID-19 pandemic and that satisfy certain other criteria. As the relevant topics have not had a material impact on the Group’s financial
statements, the Group has not availed of these practical expedients.

3 Significant Accounting Policies
These financial statements have been prepared in accordance with the accounting policies adopted in the Group’s most recent annual financial
statements for the year ended 31 December 2019, with the exception of the issues highlighted in note 4 below.

4 Critical Accounting Estimates and Judgements
The Group makes certain estimates and assumptions regarding the future. Estimates and judgements are continually evaluated based on historicalexperience and other factors, including expectations of future events that are believed to be reasonable under the circumstances. In the future, actual
experience may differ from these estimates and assumptions.
The judgements, estimates and assumptions applied in these interim financial statements, including the key sources of estimation uncertainty, were thesame as those applied in the Group’s last annual financial statements for the year ended 31 December 2019. The only exceptions are:The estimate of tax liabilities which are determined in these interim financial statements using the estimated annual effective tax rate applied
to the pre-tax income of the interim period.
The effects of COVID-19 have required judgements and estimates to be made. These issues are considered in note 19 in the context of the
impact the pandemic has had on the Group.

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

Revenue by line of business

Unaudited
26 weeks ended
30 Jun 20€'000
26,28038,715
20,59935,78921,595
10,701
19,806
173,485

Art creationGame development
Audio
Functional testing
Localisation
Localisation testing
Player support

Unaudited
26 weeks ended *30 Jun 19€'000
22,24529,56718,28831,81522,666
10,28818,321
153,190

Audited52 weeks ended *31 Dec 19€'000
43,601
66,29041,856
68,93047,06022,63836,088326,463* The prior year comparative has been re-classified to reflect the current year presentation, as the Directors consider this to be more meaningful.

Revenue is earned from external customers, with no individual customer accounting for 10% or more of the Group’s revenue in any period presented.

Unaudited
26 weeks ended
30 Jun 20€'000
66,99129,75918,22827,574
7,331
7,919
4,272
3,170
2,611
2,579
1,084
502
465
355
359
286
173,485

Geographical analysis of revenues

IrelandUnited States
CanadaUnited Kingdom
Switzerland
Japan
Italy
FranceIndia
Germany
Singapore
Spain
PolandBrazilChina
MexicoUnaudited
26 weeks ended
30 Jun 19€'000
49,337
24,74726,283
20,242
8,411
7,051
6,056
3,430
2,225
396
2,199
775
754
422
339
523
153,190

Audited52 weeks ended
31 Dec 19€'000
118,095
52,265
48,112
41,76819,045
15,501
9,395
7,606
6,355
1,920
1,637
1,588
1,285
802
691
398
326,463

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 a schedule of work that extends
beyond one year, representing the aggregate amount of the transaction price allocated to the performance obligations that are unsatisfied (or partiallyunsatisfied) as at the end of the reporting period:

Revenue expected to be recognised
At 30 June 2020
At 30 June 2019
At 31 December 2019

Total undelivered€'000
18,571
38,85924,645

Scheduledcompletion
within 1 year€'000
16,06531,523
23,593

Scheduledcompletion
1-2 years
€'000
2,219
6,893
1,052

Scheduledcompletion
2-5 years
€'000
287
443
-

Segmental Analysis

Geographical analysis of non-current assets from continuing businesses

United States
United Kingdom
CanadaItaly
Switzerland
Ireland
China
FranceSpain
GermanyJapan
Philippines
India
MexicoPolandBrazilRussiaSingapore
Netherlands
TaiwanGeographical analysis of non-current assets from continuing businesses
Deferred tax assets
Non-current assets

Unaudited
26 weeks ended
30 Jun 20€'000
86,12955,33429,424
11,90010,381
10,645
8,249
6,729
5,333
5,227
3,436
2,449
2,350
1,783
1,547
885
821
1,341
61
2
244,026

Unaudited
26 weeks ended
30 Jun 19€'000
85,941
48,65622,33812,554
12,264
4,694
8,999
6,531
5,776
1,184
4,542
2,356
2,723
2,062
1,318
1,303
926
271
66
4
224,508

Audited52 weeks ended
31 Dec 19€'000
84,13952,23329,772
12,222
10,644
9,296
8,776
6,725
5,924
5,250
3,905
2,798
2,526
2,164
1,563
1,247
925
225
64
3
240,401

244,026
5,698
249,724

224,508
3,340
227,848

240,401
5,060
245,461

6 Financing Income and Cost

Financing income
Interest received
Financing cost
Bank charges
Interest expense
Unwinding of discounted liabilities - lease liabilities
Unwinding of discounted liabilities - deferred consideration
Foreign exchange loss
Net financing income / (cost)

Unaudited
26 weeks ended
30 Jun 20€'000

Unaudited
26 weeks ended
30 Jun 19€'000

Audited52 weeks ended
31 Dec 19
€'000

31
31

-

74
74

(302)
(645)
(344)
(119)
(264)
(1,674)(1,643)

(246)
(434)
(338)
(177)
(1,159)(2,354)(2,354)

(629)
(934)
(694)
(330)
(1,658)(4,245)(4,171)

7 Seasonal Business

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

Revenue
Gross profit

Unaudited
52 weeks ended
30 Jun 20
€'m
347
128

Unaudited
52 weeks ended
30 Jun 19
€'m
294
110

8 Earnings per Share

Unaudited
26 weeks ended
30 Jun 20

Unaudited
26 weeks ended
30 Jun 19

Audited52 weeks ended
31 Dec 19

Basic
Diluted€ cent9.49
9.11€ cent4.69
4.50€ cent15.23
14.73

Earnings
Profit for the period from continuing operations

€'000
6,403

€'000
3,040

€'000
9,909

Number
67,506,245
2,770,558
70,276,803

Number
64,845,831
2,674,175
67,520,006

Number
65,081,403
2,187,083
67,268,486

Number259,900

Number
733,900

Number
510,350(ii) Contingently issuable Ordinary Shares have been excluded where the conditions governing exercisability have not been satisfied:
NumberNumber
LTIPs
1,910,100
948,200
Share options
289,397
1,239,400
2,199,497
2,187,600

Number
2,067,536
1,128,000
3,195,536

Weighted average number of equity shares
Basic (i)Diluting impact of Share options (ii)
Diluted (i)(i) Includes (weighted average) shares to be issued:

9 Dividends

The Board remains committed to resuming its progressive dividend policy in 2021 but does not believe it would be appropriate to propose an interim
dividend at this time.

10 Non-current Assets

Movement of the carrying value of Non-current
assetsCarrying amount at the beginning of the period
Recognition on acquisition of subsidiaries (note 18)
Other additions
Depreciation charge
Amortisation charge
Impairment charge
Exchange rate movement
Carrying amount at the end of the period

Unaudited
26 weeks
ended
30 Jun 20€'000
Property,plant andequipment
22,163
165
4,888(4,209)(1,019)21,988Unaudited
26 weeks
ended
30 Jun 20€'000
Right of use
assets21,469331
14,711(3,935)(239)(1,016)31,321

Unaudited
26 weeks
ended
30 Jun 20€'000
Intangible
assets goodwill
175,639
1,746(147)(4,158)173,080

Unaudited
26 weeks
ended
30 Jun 20€'000
Intangible
assets other
21,130(3,602)(1,913)(38)
15,577

Unaudited
26 weeks
ended
30 Jun 20€'000
Intangible
assets total*
196,769
1,746(3,602)(2,060)(4,196)
188,657*Please note that goodwill and other intangible assets have been amalgamated for presentation purposes in the Consolidated statement of financial position, for both current and comparative periods presented.

While the Group performs a full assessment of the carrying value of goodwill and intangible assets on an annual basis, at 30 June 2020 an interim
assessment was made taking into account the potential impact of COVID-19 (see note 19). Based on this interim review, an impairment charge ofapproximately €2m was made in the period to intangible assets, in relation to certain early technology pre-revenue businesses.

11 Trade and Other Receivables

Unaudited
26 weeks ended
30 Jun 20€'000

Unaudited
26 weeks ended
30 Jun 19€'000

Audited52 weeks ended
31 Dec 19€'000

Trade receivables derived from contracts with customers
Provision for bad debts (i) (ii)
Financial asset held at amortised cost

45,940(999)
44,94144,058(964)
43,09444,526(1,283)43,243

Accrued income from contracts with customers
Prepayments and rent deposits
Other receivablesMultimedia tax credits / video games tax relief
Tax and social security
Other receivables - short term

10,5694,714
4,346
20,8383,474
43,941

8,029
3,002
4,534
18,232
3,441
37,238

7,010
4,089
3,151
17,626
3,537
35,413(i)

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

Provision at the beginning of the period
Impairment of financial assets (trade receivables) charged to other administration
expenses
Amounts written off against the provision in the period
Exchange rate movement
Provision at end of the period
Credit loss experience(ii)

Unaudited
26 weeks ended
30 Jun 20€'000(1,283)
(236)
490
30
(999)
0.5%

The composition of the provision for bad debts at period end was as follows:

Credit impaired
Expected credit losses
Provision at end of the period

Unaudited
30 Jun 20
€'000
(774)
(225)
(999)

12 Share Capital and Prior Year Restatement of Share Premium to Merger Reserve

Issue date

At 31 December 2019 (restated)
Acquisition related issuance of shares:
Sunny Side Up
Cord and Laced
Descriptive Video Works
Coconut Lizard
Acquisition related issuance of shares
Share placing
Issue of shares on exercise of shareoptions
At 30 June 2020

Per share €Number ofordinary£0.01 shares

Number ofordinary£0.01 shares to be issued

Share capital€’000

Share capital- to be issued
€'000

Share
premium€’000

Mergerreserve€’000

65,212,515

349,721

780

5,310

20,718132,71206-Jan-20
14-Apr-20
12-Jun-20
25-Jun-20

12.46
17.48
17.93
20.23

60,17973,74435,560-(60,179)(73,744)(35,560)
19,739

1
1
-

(750)
(1,289)
(637)
399

-

749
1,288
637
-

20-May-20

16.23

169,483
6,900,000(149,744)-2
77(2,277)--

2,674
109,459

1,182,408
73,464,406

199,977

13
872

3,033

1,118
21,836244,845

0.96

In May 2020, the Company completed a placing of 6,900,000 new ordinary shares issued at a price of €16.23 (£14.50) per share, representing
approximately 10.5% of the issued share capital prior to the placing. Net of transaction costs, the placing raised proceeds of approximately €110m(£98m). The placing was made via a cash box structure, resulting in the Company acquiring the proceeds via a share for share exchange andhence the premium on the issuance of new shares of €109.5m has been credited to Merger reserve (in accordance with S610 of the Companies Act
2006). At the time of the placement, the proceeds were not allocated to a specific acquisition or specific purpose, and thus this reserve isconsidered distributable. The new shares rank pari passu in all respects with the existing ordinary shares of the Company, including the right toreceive all future dividends and other distributions declared or paid after the date of placing.
Following completion of the share placement via the cash box structure in May 2020, a review of the Company’s merger reserves was performed. It
was identified that the premium on shares issued as part of the share placement in 2017 of €82.3m, was incorrectly recorded in non-distributableshare premium. As the placing was also made via a cash box structure, resulting in the Company acquiring the proceeds via a share for shareexchange, the premium on the issuance of new shares of €82.3m should have been credited to Merger reserve (in accordance with S610 of theCompanies Act 2006). At the time of the placing the proceeds were identified as allocated to specific acquisitions. Hence the reserve is notconsidered distributable, but may become distributable in the future. The premium has been re-designated to Merger reserve and the prior periodbalances have been restated accordingly.
Prior period restatement
At 01 January 2019 - as reported
Reclassification of Share premium within Reserves
At 01 January 2019 - as restated

Share premium

Merger reserve

€'000

€'000

102,225(82,261)
19,96435,99682,261
118,257

It was further identified that the share premium of €14.4m on the share placement in 2015, again via a cash box structure, that was posted toMerger reserve in 2015, is in fact distributable (as at the time of the placement the proceeds were not allocated to a specific purpose). For clarity,
this transaction together with the €109.5m from the share placement in 2020, or €123.9m included in the Merger reserve, is considered
distributable.

13 Share Options

Outstanding at 01 January 2020
Granted
LapsedExercised
Outstanding at 30 June 2020
Exercisable at 30 June 2020
Weighted average share price at date of exercise

Share Option Scheme
Average
exercise
price in £ per
Number ofshareoptions
9.96
2,148,102
15.93
822,000
15.20(43,487)
2.85(350,018)
12.72
2,576,597
5.15
737,097
16.89

Long Term Incentive Plan
Average
exercise
price in £ per
Number ofshareoptions
0.01
3,445,868
0.01
1,428,000
0.01(71,600)
0.01(832,390)
0.01
3,969,878
0.01
545,942
16.62

14 Other Payables

Current liabilities
Accrued expenses
Payroll taxes
Other payables
Deferred and contingent consideration (i)Related party payable (ii)
Non-current liabilities
Other payables
Deferred and contingent consideration (i)(i)

Unaudited
26 weeks ended
30 Jun 20€'000

Unaudited
26 weeks ended
30 Jun 19€'000

Audited52 weeks ended
31 Dec 19€'000

23,382
2,886
10,081
6,354
42,703

21,6973,553
6,643
18,74950,64222,809
3,833
6,104
5,966
38,712

11
11

1,383
113
1,496

216
69
285

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

Carrying amount at the beginning of the period
Consideration settled by cash
Unwinding of discount (note 6)
Additional liabilities from current year acquisitions (note 18)
Fair value adjustments
Exchange rate movement
Carrying amount at the end of the period

Unaudited
26 weeks ended
30 Jun 20
€'000
6,035
(237)
119
721
(34)
(250)
6,354

In general, in order for contingent consideration to become payable, pre-defined profit and / or revenue targets must be exceeded. The valuation ofcontingent consideration is derived using data from sources that are not widely available to the public and involves a degree of judgement (Level 3
input in the fair value hierarchy). On an undiscounted basis, at period end the Group may be liable for deferred and contingent consideration
ranging from €5.6m to a maximum of €6.4m. A 10% movement in expected performance results has no impact on the fair value of the contingent
consideration, and hence there are no reasonably probable changes to the assumptions and inputs (including the discount rate) that would lead to amaterial change to the fair value of the total amount payable.
The contractual maturities of the Group's deferred and contingent consideration liabilities were as follows:

Not later than one year
Later than one year and not later than two years
Later than two years and not later than five years
Carrying amount at the end of the period(ii)

Unaudited
30 Jun 20
€'000
6,354
6,354

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

Canteen charges
Rental payments

Unaudited
26 weeks ended
30 Jun 20
€'000
13
13

15 Loans and Borrowings and Capital Management

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

Carrying amount at the beginning of the period
Drawdowns
Repayments
Exchange rate movement
Carrying amount at the end of the period

Unaudited
26 weeks ended
30 Jun 20€'000
59,751
4,500(64,022)(11)
218

There were a number of drawdowns during the period mainly to fund payments of deferred consideration on acquisitions. Following on the shareplacing in May 2020, the balance of the revolving credit facility (“RCF”) was repaid in June 2020, with the residual balance being loans owed by
Keywords Studios QC-Interactive Inc. Throughout the period, the Group operated well within the interest cover and leverage ratio terms of the RCF
agreement. The RCF remains in place allowing the Group to access financing of up to €100m (with an option to increase this by up to €40m to a
total of €140m, subject to lender consent), extending to October 2022 (with an option to extend this maturity date by up to a further 2 years).

At the period end the net debt and the debt to capital ratio were as follows:

Loans and borrowings
Less: cash and cash equivalents
Net debt / (net cash) position
Total equity
Net debt / (net cash) to capital ratio (%)

Unaudited
30 Jun 20€'000
218(101,213)(100,995)
339,494(30%)

16 Financial Instruments

During the period there has been no change in the measurement basis of the financial assets and liabilities shown in the Consolidated statement offinancial position. The carrying amounts of the financial assets and liabilities are stated at amortised costs, with the exception of contingent
consideration (note 14) held at fair value.

17 Lease Liabilities

Carrying amount at the beginning of the period
Recognition on acquisition of subsidiaries (note 18)
Liabilities recognised on new leases in the period
Unwinding of discounted liabilities - lease liabilities
Payment of principal and interest on lease liabilities
Exchange rate movement
Carrying amount at the end of the period

Unaudited
26 weeks ended
30 Jun 20€'000
21,907331
14,711344(4,274)(1,032)
31,987The value of leases not yet commenced to which the lessee is committed, which are not included in the lease liability at 30 June 2020, were €Nil.

18 Business Combinations / Acquisitions Completed in the Current Period

Coconut
Lizard€'00025-Jun-20

Date of acquisition
Acquisition company jurisdiction

UK

Book value of identifiable assets and liabilities
Property, plant and equipment

192

Right of use assets

331

Trade and other receivables - gross325

Bad debt provision-

Cash and cash equivalents

232

Trade and other payables(56)

Lease liabilities(331)

Net book value

693

Fair value adjustments
Identifiable tangible assets(27)

Trade and other payables(33)

Total fair value adjustments(60)

Total identifiable assets

633

Goodwill

1,746

Total consideration

2,379% Share capital acquired

100%

Satisfied by:
Cash

1,259

Deferred cash contingent on performance
Shares to be issued

721
399

Total consideration transferred

2,379

Number of shares
Fixed amount agreed to be issued

19,739Net cash outflow arising on acquisition
Cash paid in the period

1,259

Less: cash and cash equivalent balances transferred(232)

Net cash outflow - acquisitions
Related acquisition costs charged through to theConsolidated Statement of Comprehensive Income

1,027Pre-acquisition revenue in H1

1,007

Post-acquisition revenue
Pro forma revenue

32
38
1,045

Pre-acquisition profit / (loss) before tax
Post-acquisition profit / (loss) before tax
Pro forma profit / (loss) before tax

181
8
189

The main factors leading to the recognition of goodwill on the acquisition is the presence of certain intangible assets in the acquired entity, which
are not valued for separate recognition, such as:
The experience and expertise in game development services at Coconut Lizard, in particular their deep expertise in the video gamedevelopment engine, Unreal Engine.

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

19 Significant Events and Transactions
During the first half of the year, the Group’s operations have been impacted by the COVID-19 pandemic. This has resulted in restrictions being put
in place requiring most of the Group’s studios to be temporarily closed from March onwards. The Group has been able to move most employees towork from home arrangements and whilst this has resulted in some short term disruption, particularly in the Audio and Testing service lines, it has
allowed production to continue across most of the Group’s operations. Since June, most of the Group’s Audio studios have reopened and from Julysome activities have started to operate from Testing studios.
The Group has demonstrated a strong financial resilience during the period, with continued demand for most of the Group’s services albeit certain
service lines have been held back by COVID-19 operational and market disruption particularly in Testing, Audio and Localisation. The significant
events and transactions (together with relevant judgements, estimates and assumptions) that have occurred in the period relating to the effects of
the COVID-19 pandemic are summarised below:
Impairment review:
While the Group performs a full assessment of the carrying value of goodwill on an annual basis, at 30 June 2020 an interim assessment was madebased on the same underlying assumptions used in the last Annual Report, but using updated forecasts and projections taking into account the
impact of COVID-19. Based on this interim review, an impairment charge of approximately €2m was made in the period to intangible assets in relation
to certain early technology pre-revenue businesses.
Credit risk:
The Group’s exposure to credit risk is limited to the carrying amount of financial assets (Trade receivables) recognised at the balance sheet date.
The Group has not seen a significant increase in credit risk during the pandemic, largely due to the resilience of the broader video games industry
during the period. However credit risk continues to be monitored and managed closely by the Group, with a heightened awareness due to thepandemic.
Government subsidies claimed:
The Group has received COVID-19 government subsidies in various jurisdictions, introduced in response to the global pandemic. Judgement has
been applied in determining both the eligibility for these programs, and the presentation of the subsidies in the financial statements. In certain
jurisdictions COVID-19 supports displaced ongoing government incentives and reliefs. In these instances, the Group has elected to present theongoing incentives as if they have been received, reducing the amounts recognised as COVID-19 government subsidies accordingly. Included in
the Consolidated statement of comprehensive income are government subsidies received of €3.4m (net of amounts recognised as othergovernment incentives). The supports relate to wage subsidies designed to help prevent job losses and better position companies to resume normal
operations following the crisis. Given the temporary nature of the subsidies, the amounts received have been added back when arriving at theGroup’s adjusted profit measures (see Alternative performance measures section).

20 Events after the Reporting Date
Acquisition of Maverick Media Limited
On 27 August 2020, the Group announced the acquisition of the entire issued share capital of Maverick Media Limited (“Maverick”), for an amount of up
to STG£3.6m. Maverick produces marketing campaigns and related services for some of the world's leading games publishers, developers and brands.
The Group will pay non-contingent consideration of STG£2.7m, comprising STG£2.4m upfront in cash and the remainder through the issue of 13,579
new ordinary shares to the sellers on the first anniversary of completion. The remaining consideration of up to STG£0.9m will become payable to thesellers, in a mixture of cash and up to 22,632 shares, based upon performance targets over the first six months post completion.
Acquisition of Heavy Iron Studios
On 17 September 2020, the Group announced that it has entered into a conditional agreement to acquire the entire issued share capital of Heavy Iron
Studios, Inc., a provider of specialised game development services, for total consideration of up to US$13.3m. Keywords will pay initial consideration of
US$4m in cash and the equivalent of US$0.5m in new ordinary shares to the seller on the first anniversary of the acquisition, which will then be subject
to orderly market provisions for a further year. The deferred consideration of up to US$8.8m will be payable to the seller, in a mix of cash and shares,
based on performance targets being met by the first and second year anniversaries of the acquisition. The acquisition will further the Group’s strategy to
become the ‘go to’ technical and creative services platform for the global video games industry.

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 usersof 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 internalmanagement targets. These measures can have limitations as analytical tools and therefore should not be considered in isolation, or as a substitutefor 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 like comparison with thecurrent year, and applying the prior year’s foreign exchange rates to both years.
Constant exchange rates – Given the international nature of the Group’s operations, foreign exchange movements can have an impact on thereported results of the Group when they are translated into the Group’s reporting currency of Euros. In order to understand the 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 and otherusers of the accounts with a clear understanding of the underlying profitability of the business over time. Adjusted profit measures are calculated byadding 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 the Group.
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 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.
COVID-19 government subsidies claimed – The Group has received COVID-19 government subsidies in various jurisdictions,introduced in response to the global pandemic. These subsidies have been added back in order to present adjusted profit and cash flow
measures consistently year-on-year.

Free cash flow measures - The Group aims to generate sustainable cash flow (Free cash flow) in order to support its acquisition program and to
fund dividend payments to shareholders. Free cash flow is measured as Net cash generated by / (used in) operating activities after capital
expenditure, payments of principal on lease liabilities, interest and tax payments, and before acquisition and integration cash outlay. 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) and also adjusted for COVID-19 subsidies claimed.
The remainder of this section provides a reconciliation of the APMs with the relevant IFRS GAAP equivalent.

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 2019 foreign exchange rates, in order to give
management and other users of the accounts better visibility of underlying trading performance against the prior period.

26 weeks
ended
30 Jun 20
Revenue
AER
€m
26.3
38.7
20.6
35.8
21.6
10.7
19.8
173.5

Art creationGame development
Audio*
Functional testing
Localisation*
Localisation testing
Player support

26 weeks
ended
30 Jun 20
Revenue
CER
€m
26.0
38.1
20.5
35.2
21.3
10.5
19.3
170.9

26 weeks
ended
30 Jun 19
Revenue
AER
€m
22.2
29.6
18.3
31.8
22.7
10.3
18.3
153.2

HY 2020Growth
AER
%
18.5%
30.7%
12.6%
12.6%
(4.8%)
3.9%
8.2%
13.3%

HY 2020Growth
CER
%
17.1%
28.7%
12.0%
10.7%
(6.2%)
1.9%
5.5%
11.6%

*The prior year comparative has been re-classified to reflect the current year presentation as the Directors consider this to be more meaningful.

Pro forma revenue
Pro forma revenue is calculated by adding pre-acquisition revenues of current year acquisitions, excluding any pre-acquisition revenues with the
Keywords Group, to the current year revenue numbers.

26 weeks
ended
30 Jun 20

Revenue
AER
€m
26.3
38.7
20.6
35.8
21.6
10.7
19.8
173.5

Art creationGame development
Audio
Functional testing
Localisation
Localisation testing
Player support

26 weeks
ended
30 Jun 20
Preacquisition
revenue
AER
€m
1.0
1.0

26 weeks
ended
30 Jun 20
Pro forma
Revenue
AER
€m
26.3
39.7
20.6
35.8
21.6
10.7
19.8
174.5

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 the corresponding
period of ownership, and applying the 2019 foreign exchange rates to both years.

26 weeks
ended
30 Jun 19

Art creationGame development
Audio*
Functional testing
Localisation*
Localisation testing
Player support

Revenue
AER
€m
22.2
29.6
18.3
31.8
22.7
10.3
18.3
153.2

26 weeks
ended
30 Jun 19
Preacquisition
revenue
AER
€m
1.9
0.7
2.1
0.3
5.0

26 weeks
ended
30 Jun 19

26 weeks
ended
30 Jun 20

26 weeks
ended
30 Jun 20

Like for likerevenue
AER
€m
24.1
30.3
20.4
31.8
23.0
10.3
18.3
158.2

Revenue
growth
CER
€m
1.9
7.8
0.1
3.4
(1.7)
0.2
1.0
12.7

Revenue
CER
€m
26.0
38.1
20.5
35.2
21.3
10.5
19.3
170.9

*The prior year comparative has been re-classified to reflect the current year presentation as the Directors consider this to be more meaningful.

26 weeks
ended
30 Jun 20
Organic
revenue
growth
CER
%
7.9%
25.7%
0.5%
10.7%
(7.4%)
1.9%
5.5%
8.0%

Adjusted operating costs
This comprises Administrative expenses as reported in the Consolidated statement of comprehensive income, adding back share option expense,
costs of acquisitions and integration, amortisation of intangible assets, depreciation, non-controlling interest and deducting bank charges. In orderto present the measure consistently year-on-year, the impact of COVID-19 government subsidies claimed is also excluded.

Calculation
Administrative expenses
Share option expense
Costs of acquisition and integration
Amortisation and impairment of intangible assets
Depreciation - property, plant and equipment
Depreciation - right of use assets
Non-controlling interest
Bank charges
COVID-19 government subsidies claimed
Adjusted operating costs
Revenue from contracts with customers
Adjusted operating costs as a % of revenue

Consolidated statement of comprehensive income
Consolidated statement of comprehensive income
Consolidated statement of comprehensive income
Consolidated statement of comprehensive income
Note 10Note 10
Consolidated statement of comprehensive income
Note 6
Consolidated statement of comprehensive income
Consolidated statement of comprehensive income

26 weeks
ended
30 Jun 20€'000(50,183)
6,750
1,185
5,662
4,209
3,935
50
(302)
(3,411)(32,105)
173,48518.5%

26 weeks
ended
30 Jun 19€'000(46,203)
4,011
2,804
3,491
3,168
3,467
92
(246)
(29,416)
153,19019.2%

52 weeks
ended
31 Dec 19€'000(98,687)
9,775
4,348
7,318
7,295
7,849
113
(629)
(62,618)
326,463
19.2%

Adjusted operating profit
The adjusted operating profit consists of the Operating profit as reported in the Consolidated statement of comprehensive income, adjusted for shareoption expense, costs of acquisition and integration and amortisation of intangible assets. In order to present the measure consistently year-on-year,
the impact of COVID-19 government subsidies claimed is also excluded.

Calculation
Operating profit
Share option expense
Costs of acquisition and integration
Amortisation and impairment of intangible assets
COVID-19 government subsidies claimed
Adjusted operating profit
Revenue from contracts with customers
Adjusted operating profit as a % of revenue

Consolidated statement of comprehensive income
Consolidated statement of comprehensive income
Consolidated statement of comprehensive income
Consolidated statement of comprehensive income
Consolidated statement of comprehensive income
Consolidated statement of comprehensive income

26 weeks
ended
30 Jun 20€'000
12,737
6,750
1,185
5,662
(3,411)
22,923
173,485
13.2%

26 weeks
ended
30 Jun 19
€'000
9,037
4,011
2,804
3,491
19,343
153,190
12.6%

52 weeks
ended
31 Dec 19€'000
21,542
9,775
4,348
7,318
42,983
326,463
13.2%

EBITDAEBITDA comprises Operating profit as reported in the Consolidated statement of comprehensive income, adjusted for amortisation of intangible
assets, depreciation, and deducting bank charges.

Calculation
Operating profit
Amortisation and impairment of intangible assets
Depreciation on property plant and equipment
Depreciation on right of use assets
Bank charges
EBITDA

Consolidated statement of comprehensive income
Consolidated statement of comprehensive income
Note 10Note 10Note 626 weeks
ended
30 Jun 20€'000
12,737
5,662
4,209
3,935
(302)
26,241

26 weeks
ended
30 Jun 19
€'000
9,037
3,491
3,168
3,467
(246)
18,91752 weeks
ended
31 Dec 19€'000
21,542
7,318
7,295
7,849
(629)
43,375

Adjusted EBITDA
Adjusted EBITDA comprises EBITDA, adjusted for share option expense, costs of acquisition and integration and non-controlling interest. In orderto present the measure consistently year-on-year, the impact of COVID-19 government subsidies claimed is also excluded.

Calculation
EBITDA
Share option expense
Costs of acquisition and integration
Non-controlling interest
COVID-19 government subsidies claimed
Adjusted EBITDA
Revenue from contracts with customers
Adjusted EBITDA as a % of revenue

As above
Consolidated statement of comprehensive income
Consolidated statement of comprehensive income
Consolidated statement of comprehensive income
Consolidated statement of comprehensive income
Consolidated statement of comprehensive income

26 weeks
ended
30 Jun 20€'000
26,241
6,750
1,185
50
(3,411)30,815
173,48517.8%

26 weeks
ended
30 Jun 19€'000
18,917
4,011
2,804
92
25,824
153,19016.9%

52 weeks
ended
31 Dec 19€'000
43,375
9,775
4,348
113
57,611
326,463
17.6%

Adjusted profit before tax
Adjusted profit before tax comprises Profit before taxation as reported in the Consolidated statement of comprehensive income, adjusted for costs
including share option expense, costs of acquisitions and integration, amortisation of intangible assets, non-controlling interest, foreign exchange
gains and losses, and unwinding of discounted liabilities. In order to present the measure consistently year-on-year, the impact of COVID-19
government subsidies claimed is also excluded.

Calculation
Profit before tax
Share option expense
Costs of acquisition and integration
Amortisation and impairment of intangible assets
Non-controlling interest
Foreign exchange (gain) / loss
Unwinding of discounted liabilities - deferredconsideration
COVID-19 government subsidies claimed
Adjusted profit before tax
Revenue from contracts with customers
Adjusted profit before tax as a % of revenue

Consolidated statement of comprehensive income
Consolidated statement of comprehensive income
Consolidated statement of comprehensive income
Consolidated statement of comprehensive income
Consolidated statement of comprehensive income
Note 6Note 6
Consolidated statement of comprehensive income
Consolidated statement of comprehensive income

26 weeks
ended
30 Jun 20€'000
11,094
6,750
1,185
5,662
50
264
119

26 weeks
ended
30 Jun 19
€'000
6,683
4,011
2,804
3,491
92
1,159
177

52 weeks
ended
31 Dec 19€'000
17,371
9,775
4,348
7,318
113
1,658
330

(3,411)
21,713
173,485
12.5%

18,417
153,190
12.0%

40,913
326,463
12.5%

Adjusted effective tax rate
The adjusted effective tax rate is the Tax expense as reported in the Consolidated statement of comprehensive income, adjusted for the tax impactof the adjusting items in arriving at adjusted profit before tax, as a percentage of the adjusted profit before tax.

Calculation
Adjusted profit before tax
As aboveTax expense
Consolidated statement of comprehensive income
Effective tax rate before tax on adjusting items
Tax expense / Adjusted profit before tax
Tax arising on bridging items to adjusted profit before tax^
Adjusted tax expense
Adjusted effective tax rate
Adjusted tax expense / Adjusted profit before tax

26 weeks
ended
30 Jun 20€'000
21,713
4,691
21.6%
(21)
4,670
21.5%

*The prior year comparative has been restated to reflect to reflect the presentation in the Annual Report 2019.
^Being mainly the tax impact of amortisation of intangible assets €0.90m (2019: €0.81m) and COVID-19 government subsidies claimed €0.92m (2019: NIL).

26 weeks
ended*
30 Jun 19€'000
18,417
3,643
19.8%
813
4,456
24.2%

52 weeks
ended
31 Dec 19€'000
40,913
7,462
18.2%
1,703
9,165
22.4%

Adjusted earnings per share
The adjusted profit after tax comprises the adjusted profit before tax, less the Tax expense as reported in the Consolidated statement ofcomprehensive 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 as reported
in note 8.

Calculation
Adjusted profit before tax
Tax expense
Tax arising on bridging items to adjusted profit before
tax^
Adjusted profit after tax
Denominator (weighted average number of equity shares)

As above
Consolidated statement of comprehensive income

Note 8Adjusted earnings per share
Adjusted earnings per share % growth

26 weeks
ended
30 Jun 20€'000
21,713(4,691)
21

26 weeks
ended*
30 Jun 19€'000
18,417(3,643)(813)

52 weeks
ended
31 Dec 19€'000
40,913(7,462)(1,703)

17,04367,506,245
€c
25.25
17.3%

13,961
64,845,831
€c
21.53
11.8%

31,74865,081,403
€c
48.78
7.2%

*The prior year comparative has been restated to reflect to reflect the presentation in the Annual Report 2019.
^Being mainly the tax impact of amortisation of intangible assets €0.90m (2019: €0.81m) and COVID-19 government subsidies claimed €0.92m (2019: NIL).

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. In order to present themeasure consistently, the half year adjusted profits are presented on a rolling 12 month basis.
Capital employed represents Total equity as reported on the Consolidated statement of financial position adding back employee defined benefit
liabilities, cumulative amortisation of intangible assets (customer relationships), acquisition related liabilities (deferred and contingent consideration),
together with loans and borrowings, while deducting cash and cash equivalents.

Calculation
Adjusted profit before tax
Interest received
Bank charges
Interest expense
Unwinding of discounted liabilities - lease liabilities
Pre-acquisition profits of current year acquisitions
Adjusted profit before tax including pre acquisition profit
excluding interest for the period
Rolling 12 month adjustment
Adjusted profit before tax including pre acquisition profit
excluding net interest on a rolling 12 month basis

As above
Note 6Note 6Note 6Note 6Note 18

26 weeks
ended
30 Jun 20€'000
21,713
(31)
302
645
344
181
23,15426 weeks
ended*
30 Jun 19€'000
18,417
246
434
338
(15)
19,42052 weeks
ended
31 Dec 19€'000
40,913
(74)
629
934
694
151
43,247

23,827
46,981

27,18846,60843,247

Total equity
Employee defined benefit plans
Cumulative amortisation of intangibles assets (customer
relationships)
Deferred and contingent consideration
Loans and borrowings
Cash and cash equivalents
Capital employed

Consolidated statement of financial position
Consolidated statement of financial position

339,494
2,049
23,157204,369
1,489
16,476

222,958
2,049
20,017Note 14
Note 15
Consolidated statement of financial position

6,354
218
(101,213)
270,059

18,862
46,792(37,763)
250,225

6,035
59,751(41,827)
268,983

Return on capital employed

Adjusted profit before tax including preacquisition profit excluding net interest expense
on a rolling 12 month basis / capital employed

17.4%

18.6%

16.1%

*The prior year comparative has been restated to reflect to reflect the presentation in the Annual Report 2019.

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, net interest paid, payments of principal on lease liabilities and is presented both
before and after taxation paid.

Calculation
Net cash generated by / (used in) operating activities
Acquisition and integration cash outlay:
Costs of acquisition and integration
Fair value adjustments to contingent consideration
Acquisition of property, plant and equipment
Investment in intangible assets
Interest received
Interest paid
Payments of principal on lease liabilities
Free cash flow after tax
Taxation paid
Free cash flow before tax

Consolidated statement of cash flows
Consolidated statement of comprehensive
incomeConsolidated statement of cash flows
Consolidated statement of cash flows
Consolidated statement of cash flows
Consolidated statement of cash flows
Consolidated statement of cash flows
Consolidated statement of cash flows

26 weeks
ended
30 Jun 20€'000
20,12926 weeks
ended*
30 Jun 19
€'000
7,556

52 weeks
ended*
31 Dec 19€'000
32,781

1,185

2,804

4,348

34
(4,888)31(897)(3,930)11,664
1,961
13,625(1,127)(5,061)(332)(732)(3,236)
(128)
3,769
3,641

(493)
(13,145)(391)
74(2,130)(7,355)
13,68913,28826,977* The presentation of the 2019 comparatives have been re-stated to align to the pre IFRS 16 reported measures in the Annual Report 2019, as the Directors consider this to be more meaningful.

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

Calculation
Free cash flow before tax
Capital expenditure in excess of depreciation:
Acquisition of property, plant and equipment
Depreciation on property, plant and equipment
Capital expenditure in excess of depreciation
COVID-19 government subsidies claimed

As above
Consolidated statement of cash flows
Consolidated statement of cash flows
Consolidated statement of comprehensive
incomeAdjusted free cash flow

26 weeks
ended
30 Jun 20€'000
13,62526 weeks
ended*
30 Jun 19
€'000
3,641

52 weeks
ended*
31 Dec 19€'000
26,977

4,888(4,209)679(3,411)

5,061(3,168)
1,893-

13,145(7,295)5,850-

10,893

5,534

32,827* The presentation of the 2019 comparatives have been re-stated to align to the pre IFRS 16 reported measures in the Annual Report 2019, as the Directors consider this to be more meaningful.

Adjusted cash conversion rate
Adjusted cash conversion rate is the adjusted free cash flow as a percentage of the adjusted profit before tax:

Calculation
Adjusted free cash flow
Adjusted profit before tax
Adjusted cash conversion ratio

As above
As aboveFree cash flow before tax and capital expenditure
in excess of depreciation, as a % of adjusted profit
before tax

26 weeks
ended
30 Jun 20€'000
10,893
21,71350.2%

26 weeks
ended*
30 Jun 19
€'000
5,534
18,41730.0%

52 weeks
ended*
31 Dec 19€'000
32,82740,913
80.2%* The presentation of the 2019 comparatives have been re-stated to align to the pre IFRS 16 reported measures in the Annual Report 2019, as the Directors consider this to be more meaningful.