Admission Document

Keywords is an international technicalservices provider to the global video
games industry.
Established in 1998, and now with facilities in
Dublin, Tokyo, Rome, Montreal and Seattle, it
provides integrated localisation, testing andaudio services across 30 languages and 12 games
platforms to a blue chip client base in circa
15 countries.

Contents
Expected Timetable of Principal Events
Placing Statistics
Directors, Secretary and Advisers
Definitions
Glossary Of Technical Terms
Part I Information on the GroupPart II Risk Factors
Part III Financial Information
Section A – Accountant’s Report on Keywords
Studios Plc
Section B – Financial Information on Keywords
Studios Plc
Section C – Accountant’s Report on Keywords
International Limited
Section D – Financial Information on Keywords
International Limited
Part IV Additional Information
Appendix

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89

THIS DOCUMENT IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION. If you are in any doubt about the contents of thisdocument and/or the action you should take, you should immediately consult your stockbroker, bank manager, solicitor,
accountant or other independent financial adviser duly authorised under the Financial Services and Markets Act 2000 (“FSMA”)
if you are in the United Kingdom or, if not, you should immediately consult another appropriately authorised independent
professional adviser.
This document, which comprises an AIM admission document, has been drawn up in accordance with the AIM Rules for Companies.
This document does not contain an offer of transferable securities to the public within the meaning of section 85 of FSMA and is not
a prospectus for the purposes of the Prospectus Rules made under section 73A of FSMA. Accordingly this document has not been
prepared in accordance with the Prospectus Rules, nor has it been approved by the Financial Conduct Authority (the “FCA”) pursuant
to section 85 of FSMA and a copy has not been delivered to the FCA under regulation 3.2 of the Prospectus Rules.
Application will be made for all of the Ordinary Shares, issued and to be issued, to be admitted to trading on the AIM market of
London Stock Exchange plc (“AIM”).
AIM is a market designed primarily for emerging or smaller companies to which a higher investment risk tends to be attachedthan to larger or more established companies. AIM securities are not admitted to the Official List of the United Kingdom Listing
Authority. A prospective investor should be aware of the risks of investing in such companies and should make the decision toinvest only after careful consideration and, if appropriate, consultation with an independent financial adviser. Each AIM
company is required pursuant to the AIM Rules for Companies to have a nominated adviser. The nominated adviser is required
to make a declaration to the London Stock Exchange on Admission in the form set out in Schedule Two to the AIM Rules for
Nominated Advisers. The London Stock Exchange has not itself examined or approved the contents of this document.
It is expected that admission to AIM will become effective, and that dealings in the Ordinary Shares will commence on 12 July 2013.
The Directors, whose names are set out on page 4 of this document, and the Company accept responsibility for the information
contained in this document. To the best of the knowledge and belief of the Directors and the Company (each of whom has taken all
reasonable care to ensure that such is the case) the information contained in this document is in accordance with the facts and does
not omit anything likely to affect the import of such information.

Keywords Studios plc(Incorporated and registered in England and Wales under the Companies Act 2006
with registered number 08548351)

Placing of up to 22,757,104 Ordinary Sharesat 123 pence per Ordinary Share
Admission to trading on AIM
Nominated Adviser and Broker

Numis Securities Limited
Numis Securities Limited, which is authorised by the Prudential Regulation Authority and regulated in the United Kingdom by the
Prudential Regulation Authority and the Financial Conduct Authority and is acting as nominated adviser and broker for the purposesof the AIM Rules for Companies exclusively for the Company and no one else in connection with the matters described herein and will
not be responsible to any other person for providing the protections afforded to customers of Numis Securities Limited, or foradvising any other person on the contents of this document or any matter referred to herein. The responsibilities of Numis Securities
Limited, as nominated adviser, are owed solely to the London Stock Exchange and are not owed to the Company or to any Director
or any other person and accordingly no duty of care is accepted in relation to them. Numis Securities Limited has not authorised thecontents of, or any part of, this document and no representation or warranty, express or implied, is made by Numis Securities
Limited as to, and no liability whatsoever is accepted by Numis Securities Limited in respect of, any of the contents of this document(without limiting the statutory rights of any person to whom this document is issued).
This document does not constitute an offer to issue or sell, or the solicitation of any offer to subscribe for or buy, any of the Ordinary
Shares in any jurisdiction where it may be unlawful to make such offer or solicitation. The distribution of this document in certain
jurisdictions may be restricted by law and therefore persons into whose possession this document comes should inform themselves
about and observe such restrictions. Any such distribution could result in a violation of the laws of such jurisdictions. In particular,
this document is not for distribution into the United States, Canada, Australia, Japan, the Republic of Ireland or the Republic of South
Africa and is not for distribution directly or indirectly to any US person. The Ordinary Shares have not been and will not be registeredunder the US Securities Act of 1933, as amended (the “US Securities Act”), or under the securities legislation of, or with any
securities regulatory authority of, any state or other jurisdiction of the United States or under the applicable securities laws of any
province or territory of Canada or under the securities laws of Australia, Japan, the Republic of Ireland or the Republic of South
Africa.
No broker, dealer or other person has been authorised by the Company, the Directors or Numis Securities Limited to issue any
advertisement or to give any information or make any representation in connection with the offer or sale of the Placing Shares otherthan those contained in this document and, if issued, given or made, any such advertisement, information or representation must not
be relied upon as having been authorised by the Company, the Directors or Numis Securities Limited.
Copies of this document will be available free of charge during normal business hours on any day (except Saturdays, Sundays andpublic holidays) from the registered office of the Company and at the offices of Numis Securities Limited at The London Stock
Exchange Building, 10 Paternoster Square, London EC4M 7LT from the date of this document and for a period of at least one monthfrom Admission.

Forward Looking Statements
Certain statements in this document are “Forward Looking statements”. These Forward Looking
statements are not based on historical facts but rather on the Directors’ expectations regarding theCompany’s future growth, results of operations, performance, future capital and other expenditures(including the amount, nature and sources of funding thereof), planned expansion and business prospects
and opportunities. Such Forward Looking statements reflect the Directors’ current beliefs andassumptions and are based on information currently available to the Directors. Forward Looking
statements involve significant known and unknown risks and uncertainties. A number of factors could
cause actual results to differ materially from the results discussed in the Forward Looking statements,
including risks associated with vulnerability to general economic market and business conditions,competition, environmental and other regulatory changes or actions by governmental authorities, theavailability of capital, reliance on key personnel, uninsured and underinsured losses and other factors,
many of which are beyond control of the Company. Although the Forward Looking statements containedin this document are based upon what the Directors believe to be reasonable assumptions, the Company
cannot assure investors that actual results will be consistent with these Forward Looking statements.
Market and Financial Information
The data, statistics and information and other statements in this document regarding the markets inwhich the Group operates, or the Group’s position therein, are based on the Group’s records or are taken
or derived from statistical data and information derived from the sources described in this document.
In relation to these sources, such information has been accurately reproduced from the publishedinformation, and, so far as the Directors are aware and are able to ascertain from the information
provided by the suppliers of these sources, no facts have been omitted which would render suchinformation inaccurate or misleading.
Unless otherwise indicated, financial information in this document, including the audited consolidated
financial statements for the years ended 31 December 2010, 31 December 2011 and 31 December 2012,
and the notes to those financial statements, has been prepared in accordance with International
Financial Reporting Standards.
Various figures and percentages in tables in this document have been rounded and accordingly may not
total.
Certain financial data has also been rounded. As a result of this rounding, the totals of data presented inthis document may vary slightly from the actual arithmetical totals of such data.
All times referred to in this document are, unless otherwise stated, references to London time.
United States securities law
The Ordinary Shares have not been and will not be registered under the US Securities Act or securities
laws of any US state or other jurisdiction and will not be offered or sold within the United States except
pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the
US Securities Act and such other applicable laws.
The Ordinary Shares are generally only being offered and sold outside the United States to persons who
are not US Persons (within the meaning of Regulation S under the US Securities Act (“Regulation S”)) intransactions complying with Regulation S, which provides an exemption from the requirement to registerthe offer and sale under the US Securities Act.
The Ordinary Shares have not been approved or disapproved by the U.S. Securities and Exchange
Commission (the “US SEC”) or by any US state securities commission or authority, nor has any such US
authority passed on the accuracy or adequacy of this document. Any representation to the contrary is acriminal offence.
Investment in the Company carries risk. Prospective investors should read the whole text of thisdocument and should carefully consider whether an investment in Ordinary Shares is suitable forthem in light of their circumstances and financial resources. Your attention is particularly drawn toPart II of this document which sets out certain risk factors relating to any investment in the
Company. All statements regarding the Group’s business, financial position and prospects should beviewed in the light of the risk factors set out in Part II of this document.
The contents of the Company’s website, including any websites available from hyperlinks on the
Company’s website, do not form part of this document.

2

EXPECTED TIMETABLE OF PRINCIPAL EVENTS
Publication of this document

9 July 2013

Admission and dealings in the Ordinary Shares to commence on AIM

12 July 2013

CREST accounts to be credited with VCT Placing Shares

7.00 a.m. on 12 July 2013

CREST accounts to be credited with New Shares(excluding VCT Shares)

8.00 a.m. on 12 July 2013

Despatch of definitive share certificates in respect of the
Existing Ordinary Shares (excluding the Sale Shares) and thePlacing Shares to be held in certificated form

19 July 2013

Notes:
Each of the times and dates in the above timetable is subject to change without further notice. References to all times are
to London time.

PLACING STATISTICS*
Placing price per Placing Share

123 pence

Number of New Shares to be issued by the Company pursuant to the Placing

8,130,081

Number of Sale Shares to be sold pursuant to the Placing

14,627,023

Total number of Placing Shares

22,757,104

Number of Ordinary Shares in issue following Admission

40,032,413

Percentage of the Enlarged Share Capital represented by the Placing Shares

56.8%

Estimated gross proceeds of the Placing receivable by the Company£10.0 million

Estimated net proceeds of the Placing receivable by the Company£8.6 million

Market capitalisation, upon Admission, of the Company at the Placing Price£49.2 million

ISIN

GB00BBQ38507

SEDOL

BBQ3850

AIM symbol

KWS* Assuming that the Placing is fully subscribed.

3

DIRECTORS, SECRETARY AND ADVISERS
Directors:

Ross King Graham (Non-Executive Chairman)*
Andrew John Day (Chief Executive Officer)
David Alan O’Connor (Group Financial Director)
David Alan Reeves (Non-Executive Director)*
Giorgio Guastalla (Non-Executive Director)* Denotes independent director

Registered Office andprincipal place of business:

8 Clifford Street
London W1S 2LQ

Company Secretary:

David O’Connor

Nominated Adviser
and Broker:

Numis Securities Limited
The London Stock Exchange Building
10 Paternoster Square
London EC4M 7LT

Solicitors to the Company:

Brown Rudnick LLP:
London Office
8 Clifford Street
London W1S 2LQ

Reporting Accountant:

BDO LLP
55 Baker Street
London W1U 7EU

Auditors:

BDO
Beaux Lane House
Mercer Street Lower
Dublin 2
Ireland

Solicitors to theNominated Adviser:

Dorsey & Whitney (Europe) LLP
21 Wilson Street
London EC2M 2TD

Registrars:

Capita Registrars Limited
The Registry
34 Beckenham Road
Beckenham
Kent BR3 4TU

Website:www.keywordsstudios.com

4

Whelan HouseSouth County
Business Park
Dublin 18
IrelandDublin Office
Alexandra House
The Sweepstakes
Ballsbridge
Dublin 4
IrelandDEFINITIONS
The following words and expressions shall have the following meanings in this document unless thecontext otherwise requires:“€” and “Euro”

the lawful currency for the time being of the European Union;“2006 Act”

the Companies Act 2006, as amended;“Admission”

the admission of the issued and to be issued Ordinary Shares to
trading on AIM and such admission becoming effective inaccordance with Rule 6 of the AIM Rules;“Admission Document”

this document;“AIM”

the market of that name operated by the London Stock Exchange;“AIM Rules”

the AIM Rules for Companies published by the London Stock
Exchange, as amended from time to time which sets out therules, responsibilities and guidance notes in relation to companies
whose shares are admitted to trading on AIM;

“AIM Rules for NominatedAdvisers”

the AIM Rules for Nominated Advisers setting out the eligibility,
ongoing obligations and certain disciplinary matters in relation tonominated advisers published by the London Stock Exchange, as
amended from time to time;“Andrew Day”

a director of the Company and a Selling Shareholder whosebusiness address is at Whelan House, South County Business Park,
Dublin 18 Ireland;“Articles”

the articles of association of the Company adopted on 8 July
2013, conditional on Admission;“Audit Committee”

the audit committee of the Board;“Business Day”

a day other than a Saturday, Sunday or other day when banks in
the City of London, England are not generally open for business;“certificated” or“certificated form”

is the description of a share or other security which is not in
un-certificated form (that is not in CREST);“Company” or“Keywords Studios”

Keywords Studios plc;

“Connected Persons”

connected persons as defined in section 252 of the 2006 Act;

“CREST”

the relevant system (as defined in the Uncertificated Securities
Regulations) in respect of which Euroclear UK & Ireland is theoperator (as defined in the un-certificated Securities Regulations)in accordance with which securities may be held or transferred in
Uncertificated form;“Directors” or “Board”

the directors of the Company (each a “Director”) whose names
appear on page 6 of this Admission Document;“Enlarged Share Capital”

the entire issued Ordinary Shares in the capital of the Company
following Admission;“EU” or “European Union”

has the meaning given to it in Article 299(1) of the Establishing
the European Economic Community Treaty as amended by, among
others, the Treaty on European Unity (the Maastricht Treaty), theTreaty of Amsterdam and the Treaty of Lisbon;“Euroclear UK & Ireland”

Euroclear UK & Ireland Limited;“Existing Ordinary Shares”

the 31,902,332 Ordinary Shares in issue at the date of this
Admission Document;

5

“Executive Directors”

Andrew Day and David O’Connor;“FCA”

the Financial Conduct Authority of the United Kingdom;“FSMA”

the Financial Services and Markets Act 2000, as amended;“Founders”

all the shareholders in P.E.Q. (a Selling Shareholder) being
Giorgio Guastalla and Teresa Luppino (each a 45 per cent.
shareholder in P.E.Q.) and Giacomo Duranti(1) and Marco De
Sanctis(2) (each a 5 per cent. shareholder in P.E.Q.);“Giorgio Guastalla”

a director of the Company and a director and shareholder of
P.E.Q.;“Group” or “Keywords”

the Company and its subsidiaries or, as the context requires,
Keywords International Limited and its subsidiaries for the periodprior to 29 May 2013;“HMRC”Her Majesty’s Revenue & Customs;“IFRS”

International Financial Reporting Standards, as adopted for use in
the European Union;“Investment Company Act”

the United States Investment Company Act of 1940, as amended;“ITEPA”

Income Tax (Earnings and Pensions) Act 2003;“London Stock Exchange”

London Stock Exchange plc;

“LTIP”

the Keywords Long Term Incentive Plan;“Lock-In Agreements”

the lock-in agreements entered into between: (i) P.E.Q, theFounders, Numis and the Company; and (ii) certain of the
Directors, Numis and the Company; further details of which canbe found in paragraph 17.3 of Part IV of this document;“New Non-Executive Directors” Ross Graham and David Reeves;“New Shares”

up to 8,130,081 new Ordinary Shares to be issued by the Company
pursuant to the Placing and which shall include the VCT Placing
Shares;“Numis”

Numis Securities Limited, nominated adviser and broker to theCompany;“Official List”

the Official List of the UK Listing Authority;“Options”

the options to be granted on Admission under the Share Plans
being: (i) in respect of the LTIP, the 86,593 options to beawarded to Andrew Day, the 65,811 options to be awarded toDavid O’Connor, the 64,841 options to be awarded to Giacomo
Duranti and the 41,565 options to be awarded to Marco De
Sanctis; and (ii) in respect of the Share Option Plan, the 57,152
options to be granted to Andrew Day, the 13,470 options to be
granted to David O’Connor, the 126,080 options to be granted to
Giacomo Duranti and the 80,821 options to be granted to Marco
De Sanctis;“Ordinary Shares”

ordinary shares of 1p each in the capital of the Company;“P.E.Q”

P.E.Q. Holdings Ltd, a Selling Shareholder, of Unit 40, Newtown
Business and Enterprise Centre, Newtownmountkennedy, Wicklow;“Placees”

subscribers or purchasers (as the case may be) for the Placing
Shares, as procured by Numis on behalf of the Company pursuant
to the Placing Agreement;(1)

Shares held on trust for Giacomo Duranti by Giorgio Guastalla.

(2)

Shares held on trust for Marco De Sanctis by Giorgio Guastalla.

6

“Placing”

the conditional placing by or on behalf of the Company of the
New Shares and by or on behalf of the Selling Shareholders of theSale Shares pursuant to the terms of the Placing Agreement;“Placing Agreement”

the conditional agreement dated 8 July 2013 between the
Company, Numis, the Selling Shareholders, the Directors and theFounders, details of which are set out in paragraph 17.1 ofPart IV of this Admission Document;“Placing Price”

123p per Ordinary Share issued or sold pursuant to the Placing;“Placing Shares”

the New Shares and the Sale Shares;“PRA”

the Prudential Regulation Authority;“Prohibited Territories”

United States, Canada, Australia, South Africa, the Republic of
Ireland, Japan and any other jurisdiction where the distributionof this document or the offer of Ordinary Shares (or any
transaction contemplated thereby and any activity carried out in
connection therewith) would breach applicable law;“Prospectus Directive”

the Prospectus Directive (2003/71/EC);“Prospectus Rules”

the prospectus rules of the UK Listing Authority made inaccordance with section 73A of FSMA as amended from time totime brought into effect on 1 July 2005 pursuant to Commission
Regulation (EC) No.809/2004 and the Prospectus Regulations 2005
(SI 2005/1433);“QCA Guidelines”

the Corporate Governance Code for small and mid-size Quoted
Companies 2013 published by the Quoted Companies Alliance, as
amended from time to time;“Registrars”

Capita Registrars Limited;“Remuneration Committee”

the remuneration committee of the Board;“Sale Shares”

up to 14,627,023 Existing Ordinary Shares to be sold by the
Selling Shareholders pursuant to the Placing;“Securities Act”

the United States Securities Act of 1933, as amended;“Selling Shareholders”

P.E.Q. Holdings Limited and Andrew Day;

“Shareholders”

holders of Ordinary Shares;“Share Option Plan”

the Keywords Share Option Plan;“Share Plans”

the Share Option Plan and the LTIP;“Takeover Code”

the City Code on Takeovers and Mergers (as amended from time
to time);“UK Listing Authority”

the FCA acting in its capacity as the competent authority for the
purposes of Part VI of FSMA;“uncertificated” or“in uncertificated form”

a share or shares recorded on the register of members as being
held in uncertificated form in CREST, entitlement to which, by
virtue of the Uncertificated Securities Regulations, may betransferred by means of CREST;“Uncertificated Securities
Regulations”

the Uncertificated Securities Regulations 2001 (SI/2001/3755);“United Kingdom” or “UK”

the United Kingdom of Great Britain and Northern Ireland;“£”, “pound”, “p” or “pence”

British pound sterling, the legal currency of the United Kingdom;“United States” or “US”

the United States of America, its territories and possessions, any
state in the United States, the District of Columbia and otherareas subject to its jurisdiction;

7

“VCT”a Venture Capital Trust as defined in Part 6 of the Income Tax
Act 2007;“VCT Placing”

the proposed placing and issue of the VCT Placing Sharesprocured by Numis with VCT Placees at the Placing Price pursuant
to the Placing Agreement;“VCT Placing Shares”

those New Shares to be issued to VCTs as part of the VCT Placing;“VCT Scheme”

Venture Capital Trust Scheme under the provisions of Part 6 of
the Income Tax Act 2007;“Warrant Instrument”

the deed poll executed by the Company dated 8 July 2013
constituting the Warrants; and“Warrants”

the 400,324 warrants issued to Numis conditional upon Admission
to subscribe for in aggregate 400,324 Ordinary Shares(representing 1 per cent. of the Enlarged Share Capital) pursuant
to the Warrant Instrument.

8

GLOSSARY OF TECHNICAL TERMS“AAA titles”

means a title capable of selling more than 10 million units(packaged and digital) globally.

“CAGR”

means compound annual growth rate.

“Certification Test”

means the process by which each local version of a gameproduced by a Publisher needs to be submitted to a first-party
licensor (console manufacturer) and undergo testing prior tobeing licensed.

“Developer”

means a software developer (a business or an individual) which
creates video games. Most video games publishers maintain
development studios, however, since publishing is their main
activity they are generally described as “publishers” rather than“developers’.

“MMO”

massively multiplayer online games.

“Publisher”

means a company that publishes video games that they have
either developed internally or have had developed by a video
game developer. Video games publishers are responsible for theirproduct’s manufacturing, marketing and, in the case of the large
video games publishers, also distribution.

“QA”

means quality assurance – the process whereby interactive
content is tested ‘end to end’ to conform with bothmanufacturers’ and platform holders’ quality and functionality
standards and be capable of passing the platform holders’certification testing and quality criteria both in an original and alocalised form.

9PART IINFORMATION ON THE GROUP
1.

OVERVIEW

Keywords is an international technical services provider to the global video games industry.
Established in 1998, and now with facilities in Dublin, Tokyo, Rome, Montreal and Seattle, it
provides integrated localisation, testing and audio services across 30 languages and 12 games
platforms to a blue chip client base in circa 15 countries.
The Directors believe that Keywords is the only platform agnostic, multi-lingual, internationallyintegrated provider of global video games localisation, testing and audio services. It enjoys aleading market position, providing services to 15 of the top 25 most prominent games companies,
including Microsoft, Namco Bandai, Konami, Electronic Arts and Square Enix. Keywords enjoys
excellent client retention and has also seen continued momentum with new client and title winsfrom Blizzard Entertainment, Disney and King.com in the last nine months alone.
Keywords is entirely focused on the provision of quality, outsourced technical services to the video
games industry globally, worth $63.4 billion in 2012(1). Analysts predict strong growth in this market,
with PwC forecasting a CAGR of 6.5 per cent. through to 2017(1).
Keywords has a consistent track record of profitability since 2002 and since 2009 has enjoyedaccelerated year on year growth in revenue, operating profit and profit after tax. In the financial
year to 31 December 2012 revenues were €14.34 million with profit before tax of €2.74 million,
representing a CAGR of 59.8 per cent. and 157.6 per cent. respectively since its financial year to
31 December 2010. The Company has consistently achieved healthy profit margins; in the financial
year to 31 December 2012 securing gross margins of 39 per cent. and operating profit margins of
20 per cent.
The proliferation of games platforms and monetisation models is taking video gaming into newmarkets both geographically and demographically; making content more dynamic and continuous, asgames developers seek to keep users engaged for longer; and, the Directors believe, furthering aperceived trend towards outsourcing localisation and testing services.
Keywords’ strong expertise, geographical footprint and client relationships provide a sound platformto grow organically by extending its services into original games content development andoperational support services; expanding geographically, as clients require support, in Asia Pacificand Latin America; by executing full outsourcing of client localisation requirements for a particular
title; and by selective acquisitions to extend the client base, market penetration and/or service
lines in the fragmented games services industry, or to enter adjacent entertainment markets.
2.

BACKGROUND AND HISTORY

Keywords provides localisation, audio and testing services to the global video games market fromoffices in Dublin, Tokyo, Rome, Montreal and Seattle. Its service offering includes:•

Localisation – translation and cultural adaption including age rating support across different
platforms.

•

Localisation Testing – testing that the translated and adapted content fits the games’ context.

•

Audio – voice over recordings including script translation and actor selection.

•

Functional Testing – testing for defects and compliance with console specifications.

Founded in Ireland in 1998 by Teresa Luppino and Giorgio Guastalla, Keywords’ operational
headquarters remain in Dublin. Originally established as a localisation service provider to thebusiness software market, the Group gradually became exposed to the more creative challenge of
localising video games. In 2004, working with a key client, Keywords developed a model of video
game localisation testing whereby native language testers play, test and report bugs in the localised
versions of the games covering both functional and linguistic aspects simultaneously. Previously such
(1)

PwC Global Entertainment and Media Outlook, 2013-2017.

10

processes would have been handled by either a team of non-native speaking testers supported by aseparate team of linguists or two separate teams, one focusing on functional issues in the localised
game builds and another looking only at linguistic elements. The Directors believe that Keywords
was the first to perform computer game localisation testing in this new way which enabled it toprovide a superior service compared to its competitors at that time.
In 2005, Keywords made a strategic decision to focus only on the localisation and testing of video
games and over the following years the Directors believe it earned a reputation for delivering aquality, tailored service.
In April 2009, Andrew Day joined Keywords as Chief Executive Officer, further driving the growth of
the Group and gaining new strategic customers. He became a significant shareholder in Keywords in
2012.
In November 2010, driven by the demands of existing clients, Keywords commenced its geographic
expansion by opening its Tokyo office, with capacity for 100 employees per shift specialising in
Asian languages.
In June 2010, Keywords moved to new premises in Dublin due to its rapid organic expansion, whilst
also taking advantage of falling rents in the Irish economy at the time. In the same year Keywords
opened its first North American production facility in Montreal principally to provide a physicalpresence for its existing customers in North America and to service the games company cluster inQuebec. This was followed in 2011 by the integration of Keywords Italia SRL, Rome. The Group’s
geographic expansion continued in September 2012, in response to ongoing rapid growth and clientdemand, with the start of the Company’s operations in Seattle.
3.

KEY STRENGTHS

Strong market position: Keywords is entirely focused on the provision of quality, outsourced
technical services for the video games industry globally. Its customers include many well-known
blue chip multinational games publishers and developers including 15 out of the 25 most prominent
games companies listed by Gartner(2). The Group has built a strong reputation for quality of service
and delivery, from secure facilities, as evidenced by its excellent client retention and new client
and title wins, including Blizzard Entertainment, Disney and King.com in the last nine months alone.
Full service, international offering: The Group has expanded geographically and now has five
facilities in three continents (these locations reflect video game company clusters) providing full
localisation services to local and global clients. This broad reach has enabled Keywords to offer
localisation services into more than 30 languages across 12 platforms to clients in circa 15 countries.
Keywords provides a fully integrated service offering, comprising functional testing, localisation,
audio recording and localisation testing and the Directors believe that it is currently the only
platform agnostic, multi-lingual, internationally integrated provider of global video games
localisation and testing services. The Directors believe that competitors tend to follow a networkmodel using third party partners to deliver particular languages or other elements of theirlocalisation services for large global projects, whereas Keywords has the ability to offer an
end-to-end service for all languages.
A pure focus on a high growth market: The global video games market is predicted to growsignificantly and spending on games software is predicted to grow by solid double-digit percentages
during the next five years(2). Meanwhile, the eighth generation console cycle is expected torevitalise the console games market now that Sony and Microsoft have joined Nintendo with thelaunch of PlayStation 4 (Sony) and the new Xbox One (Microsoft). The Group’s business model isplatform agnostic enabling it to take advantage of the increase in content resulting from a
proliferation of platforms in the video games market (for example console, social and mobile
games) as localisation and testing services are required for each platform and in each language inwhich a game is to be produced.
Multiple structural growth drivers: A proliferation of games platforms (beyond console and PCs toonline, social, mobile and cloud-based gaming), and monetisation models (beyond traditional retailsales to in-game purchases and advertising and bolt-on content models) has resulted in a number ofkey growth drivers for Keywords: it is taking video gaming into new markets both geographically anddemographically; it is making content more dynamic and continuous, as games developers seek to(2)

Gartner, Market Trends: Gaming Ecosystem Goes Mobile with New Monitization Models, 21 November 2012.

11

keep users engaged for longer; and it is, the Directors believe, furthering a perceived trend towards
outsourcing localisation and testing services, as set out below.
•

Geographic and demographic market expansion: The development of mobile gaming inparticular has opened up new geographical markets, including in developing countries whichhave little history of console or PC gaming, whilst there has also been a significant expansionof demographic markets; 47 per cent. of all games players (video and computer games) are
women and 68 per cent. of games players are 18 years of age or older(3).

•More dynamic and continuous content: With new content and upgrades being continually
produced by developers, in order to extend the lifetime value of the consumer, games
content now evolves considerably after its initial launch and has become richer overall. Thisevolution of content delivery and the industry shift to online games requires greater
localisation and testing support for the more complex and continuous downloadable content
well beyond the game going on sale.

•

Trend towards outsourcing: As localisation and testing has become more complex andresource-intensive, due to the proliferation of devices, audiences, distribution channels,monetisation models and the increased complexity of content, the trend for publishers anddevelopers to outsource some or all of these services has continued.

Overall, the trend to outsourcing, growth in platforms, development of more dynamic content andmarket expansion has increased demand for localisation and testing services, leaving Keywords well
positioned to grow its share of existing customers’ spend and win new contracts with global blue
chip gaming and software companies.
Proven financial record: Keywords has achieved strong organic growth in revenue and profits
throughout the recent economic downturn. Over the three year financial period ended 31 December
2012, it has secured compound annual growth rates of 60 per cent., 51 per cent. and 154 per cent.
in revenue, gross profit and operating profit respectively. The Group’s gross margins were 39 per
cent. and operating profit margins were 20 per cent. in the 2012 financial year. Historically theGroup has been entirely funded from internally generated cash flows. Notwithstanding theseinvestments, the Group is in a cash positive position with low CAPEX requirements. It has no longterm debt and no reliance on external finance providers.
4.

BUSINESS DESCRIPTION

Keywords provides a complete outsourced, integrated, localisation service for console, PC, online,
handheld and mobile content for the video games industry. The Group serves most of the largest
video games publishers in the world, working on hundreds of titles across all genres including manyof the best-selling titles of the past few years. For instance, key titles it has worked on recently
include Pro Evolution Soccer 2013, Halo 4 and Farmville 2.
Video games are a particularly immersive form of entertainment and capturing the atmosphere of
the game equally well for audiences playing in their native language as for those playing in theoriginal language of the game is a creative and technically demanding task.
Clients sometimes outsource the entire localisation process to Keywords which typically spans threeof the Group’s four key offerings: localisation, audio recording and localisation testing; covering thefollowing specific areas:
Localisation Services
The process of localising video games encompasses a number of different technical and creative
services depending on the nature and genre of the game as well as the video game platform:•

Conversion of text: Translation and cultural adaptations from the source language in-gametext and audio scripts. Translations need to be appropriate to the context of the game,relevant to the target language and country and consistent throughout the game.

•

Cultural and geopolitical context: Keywords’ linguists are required to translate creatively
and, where required, to adjust the storyline, character depictions, look and feel of the game

(3)

Entertainment Software Association, 2012 Sales, Demographic and Usage Data.

12(such as locations or brands) for more appropriate ethnicity and to avoid government or
historical restrictions or local sensitivities.
•

Age-ratings: there are a variety of age and content ratings boards in various regions to which
video game publishers submit games in order to obtain the appropriate rating symbol for thegames by region. Keywords provides advice on this and helps ensure the localised games
obtain the ratings desired by the publisher.

•

Non in-game: Keywords are also able to localise the website, manuals, packaging, marketingand legal materials associated with any video game.

A game can be localised by Keywords into more than 30 languages, with each language requiring a
different dedicated team with relevant experience of the genre. Each team works within theframework of the Company’s workflow process and under tight, centralised, project management
control in order to ensure the quality of output. Core languages of English, French, Italian, German
and Spanish have been supplemented by additional languages which reflect the growth of the global
video games market (e.g. Russian, Brazilian Portuguese and Arabic).
Audio
Keywords takes delivery of the audio project in a game’s native language and provides localised
recordings in all major languages. Keywords project manages in-country recording using its networkof studio recording facilities and hiring local directors and actors to deliver consistency of
production quality and on-time delivery.
Localisation Testing
Keywords provides comprehensive localisation and compliance testing across all console, PC, online,
handheld and mobile platforms. Keywords believes it is recognised as one of the leading localisation
testing facilitators with a high first-time submission pass rate.
This process involves testing for:•

Console manufacturer terminology compliance issues: This involves testing for issues
regarding compliance with the specified terminology as dictated by the console
manufacturers. Each localised version of the game will need to pass a “certification test”
with each platform manufacturer before it can be released. A “certification test” is theprocess by which each local version of a game produced by a publisher needs to be submitted
to a first-party licensor (console manufacturer) and undergoes testing prior to being licensed.
This is for the licensor to ensure the quality of the games produced for its platform, andhappens after the developer’s internal testing is complete. First-party licensors for console
platforms have strict technical requirements for games licensed for their platforms. The
manufacturer will examine the adherence to such technical requirements and othercompliance issues, such as proper handling of legally trademarked material (for instanceensuring that icons for control buttons are correctly depicted) and consistency of behaviour(such as error messages being triggered correctly and being worded according to thefirst-party licensor’s guidelines).

•

Erroneous translations, overlaps, incorrect spelling, incorrect grammar and out of context
translations.

Given that Keywords receives early versions of games before they are released, the testing isundertaken at Keywords’ on-site laboratories in Tokyo, Dublin and Montreal by its native test teams
under significant security to prevent leaks. Keywords can equally work alongside existing in-house
testing teams to assist with any peaks in demand, using its scalable teams based in its global
facilities.
Functional Testing
Keywords also has a small QA service provided from its Montreal facility which extends theCompany’s activities to the beginning of the video game production chain. The primary service
provided is functional testing whereby Keywords’ testers in Montreal discover and document non
language related game defects and verify the games’ functional compliance to console
manufacturers’ specifications.

13

The Group’s 2012 revenues generated from its divisions were as follows:
7%36%

Localisation Testing

2%

2012

55%

Localisation

Audio

Functional Testing

The Group’s multinational team of full-time regional managers and project managers provide asingle point of contact for publishers and developers throughout the entire localisation process.
Management responsibilities are divided between service-line project managers, who ensure thehigh quality of service provided by the Group to its customers on each project, and the regional
managers who are responsible for the day-to-day operations of the Group, with their responsibility
broadly divided by geography.
The Group deploys a flexible workforce for its project-based work comprising freelance translators
working mainly in its localisation services (including audio) and both permanent and temporary
contract staff for its localisation testing services. Keywords’ headcount fluctuates from month tomonth, mainly due to changes in demand for localisation testing.
Keywords has built up a comprehensive network in the industry, with more than 600 multilingual
in-country games specialist freelance translators in its pool of resources who have passed the
Keywords’ qualification tests, and accepted Keywords’ rights assignment and confidentiality
requirements.
Staff undergo a rigorous recruitment process followed by in-house, continuous training. All
Keywords’ localisation testers are native speakers, so are strong linguists in both their native
language and English, and are enthusiastic gamers. They are selectively recruited and trained to thehigh standards to maintain the Group’s focus on providing quality localisation and testing services.
5.

CUSTOMERS

Keywords’ blue chip client base includes 15 of the top 25 most prominent video game publishers
listed in the table below and includes Microsoft, Namco Bandai, Konami, Electronic Arts and Square
Enix.
Top 25 Important Vendors in the Gaming Ecosystem
Activision Blizzard
AmazonNamco Bandai Games
Nintendo

Apple

Rovio

Atari

Sega

CapcomSony

DeNa

Square Enix

Disney Interactive MediaElectronic Arts

Take-Two Interactive Software
Tecmo Koei Holdings

Facebook

THQ

GoogleUbisoft Entertainment

Gree

Zynga

KonamiValve

Microsoft

Source: Gartner, Market Trends: Gaming Ecosystem Goes Mobile with
New Monetization Models, 21 November 2012.
Note: Keywords’ logo indicates that the Vendor is currently a Keywords’ customer.

Keywords’ customers are mostly large, international businesses, and therefore the Group derives
90 per cent. of its revenues from outside of Ireland.
Major games developers and publishers are spread throughout the world but there are someparticular areas of geographic concentration. Japan continues to play a leading role in video games.

14

The West Coast of the United States is very important and in Europe countries such as the UK and
Germany are major contributors to the industry. The Group’s facilities are well located to serve
these areas of concentration of game development:
City

DublinMontreal

Seattle

Tokyo

Rome

Year presence
established

1998

2010

2012

2009

2011

Employee pershift capacityof current
office350

100

Currently 8,
scope toexpandto 100100

10ServicesofferedLocalisation,
Localisation
Testing andAudio
Management
Services

Localisation,
Localisation
Testing, Audio
Management
services andFunctional
Testing

Localisation andLocalisation
Testing

Localisation,
Localisation
Testing andAudio
Management
Services

Localisation
and Audio
Management
Services

Keywords’ customers represent the wide spectrum of games types published for various devices:•

Console game market: customers include Sony Computer Entertainment, Microsoft Studios,
Square Enix, Electronic Arts, Konami, 2K and Disney;•

MMOs (massively multiplayer online games): customers include Sony Online Entertainment,
Gameforge, Square Enix and Mail.Ru;•

Mobile games: customers include Glu, Gree, DeNA, Disney and Electronic Arts; and•Social/casual games: customers include sector leading players like Zynga and King.com.

In 2012 the Group had 34 distinct customers, with the top 10, as shown in the chart below,
accounting for just under three-quarters of its revenue for 2012.
Revenue Concentration, 2012
Client 1
Client 2
17%

Client 3

26%

Client 4
Client 5
13%

2%
2%

Client 6
Client 7

3%

Client 8
4%

12%
Client 9

6%
7%

8%

Client 10
OthersGiven the significant size of these customers, some have multiple distinct relationships (often
determined by geographical and service factors) with Keywords, and the Group count46 relationships for 2012.

15

Illustrative Client Distribution by Place of Relationship
REGIONUSA

CANADAEUROPEASIA

Example Clients
Disney

X

X

Zynga

X

Microsoft

X

Sony Online Entertainment

X

I Got GamesX

Blizzard Entertainment

X

X

X

Electronic Arts
Ubisoft

X

X

X

X

X

X

Sony Computer Entertainment

X

Namco Bandai

X

KonamiX

Gameforge

X

Gala

X

Take 2 Interactive

X

X

Square Enix

X

X

Larger games may take several years to develop, and release dates are planned well in advance.
Keywords, therefore, has “master agreements” with many of its main customers, whereby theGroup will have a committed volume of work for the year, or will work on individual statements ofwork on a project by project basis. In most cases, the clients will share production details of games
to be worked on between six and twelve months in advance. Microsoft, for example, has announced
that of the 15 exclusive launch games it will release in the first year of the Xbox One’s life cycle,
eight of those titles will be brand new games specifically for the Xbox One. Keywords is hopeful that
it will work on all of Microsoft’s new titles for Xbox One, as well as a range of new titles for the
PlayStation 4 to be published by Ubisoft, Electronic Arts, Activision Blizzard and others.
Most customers plan their projects based on their own financial year-ends which tend to range from
December through to June, ensuring that games are ready for the peak selling season in the fourth
quarter of the calendar year. Keywords’ detailed knowledge of release schedules, and therefore its
own likely workload, offers a substantial degree of visibility of its pipeline and headcountrequirements. The typical seasonal pattern is for a peak in activity during the middle of thecalendar year prior to the games release period in the last quarter of the calendar year in time forthe peak selling season.
The Directors believe that the Group’s high level of customer retention, high degree of repeat
business and visible workflows, and very low level of bad debts are due to strong customer
relationships built on Keywords’ reputation for quality, security and timeliness of delivery.
6.

MARKET OVERVIEW

The global video games market is predicted to grow significantly, with PwC forecasting a CAGR of
6.5 per cent. from $63.4 billion in 2012 to $86.9 billion in 2017(4).
The key drivers of this growth are:•

A proliferation of games platforms: although console and PC packaged games currently
represent the majority of revenues in the video games market, broader device ownership andimproved internet access globally have underpinned the rapid growth of online, social, mobileand cloud-based gaming. This increased accessibility has opened up:(4)

PwC Global Entertainment and Media Outlook 2013-2017.

16

—New geographical markets, given the absence of the requirement for relatively
expensive console systems or landline based internet connectivity. The development ofmobile gaming in particular has opened up new geographical markets. While the U.S.A.
remains the largest video games market in the world, high rates of growth are being
seen in developing countries which have little history of console or PC gaming. For
instance, PwC forecasts double-digit growth through to 2017 from a number of markets,with the most significant increases coming from Nigeria (22 per cent. CAGR), Kenya(20 per cent. CAGR), India (18 per cent. CAGR), and Vietnam (15 per cent. CAGR).

—

New demographic markets, a recent survey of the US entertainment software market
by the Entertainment Software Association reveals that of 47 per cent. of all gameplayers (video and computer games) are women and that 68 per cent. of games players
are 18 years of age or older, demonstrating that the market has moved well beyond theaverage gamer being a young male.

•Emerging monetisation models: the industry is shifting from the traditional retail sales ofstatic boxed games, to monetisation models which include generating revenues from in-game
purchases, advertising and ongoing upgrades which are downloadable and extend the lifetime
value of the game. With new content continually produced by developers to support thesemodels, games content now evolves considerably after its initial launch and has becomericher and more complex overall. Games content is, therefore, predicted to grow at a fasterrate than the overall market, whilst the need for localization and testing support has
extended well beyond the games’ initial sale.

•

Console cycle: The console market remains the largest single sub-sector of the video games
market by revenue. The growth rate of software sales into that market is cyclical, driven by
the launch of new consoles. Mainstream console releases generally come in generations, andthe Nintendo Wii U was the first release of what the industry terms the eighth generation ofhome consoles. The near future is expected to be an extremely busy time in the video gameindustry. Microsoft (Xbox One) and Sony (PlayStation 4) will join Nintendo in 2013 with thelaunch of their next generation consoles. It was reported by both Microsoft and Sony that aseries of new game franchises are to follow the launch of the new consoles.
Global Games Market, 2013 Estimate
PC Boxed/Downloaded($6.1 bn)
9%
MMO ($14.5 bn)
21%

Mobile ($12.3 bn)
18%

Consoles ($30 bn)
43%

Casual/Social ($6.6 bn)
9%

Due to the growth in the video games industry, video game localisation and testing has turned into
a complex and increasingly outsourced industry. Publishers are focused on devising successful new
business models based on in-game purchases, advertiser funding and premium digital downloads,
whilst also aiming to optimise their return on investment by ensuring content is delivered efficiently
and successfully across a growing number of games platforms and geographical markets. Given theincreased complexity of game content, the Directors believe that it has become less cost effective
to have sufficient resources for in-house localisation and testing and they are turning to trusted
external providers.

17Localisation is not limited to translation into multiple languages; developers and publishers need totake into account the varied cultural, technical and legal differences of their global consumers andthe quality of localisation is now viewed as a critical factor in the success of a new launch. The
geographical differences require localisation service providers to diligently consider the target
gamers’ age range, gender and linguistic variables as well as the cultural and political context ofthe game. Keywords employs games specialised native speakers who translate content into morethan 30 languages, a resource base which would require substantial investment to replicate
in-house.
The growing number of platforms and the increase in the number of gamers playing online video
games (particularly via smartphones and tablets) has enabled developers to constantly evolve thecontent of the game through in-game and digitally distributed content purchases, extending the life
cycle of the game beyond that typical of the traditional “boxed titles” console and PC market. Thisin turn requires localisation companies to provide services not only at the production stage but on
a continuing operational support basis.
The Directors believe that the expected market growth (from demographical, geographical andtechnical developments) will have a positive effect on both the localisation industry and also
Keywords increasing revenue share of that market.
7.

COMPETITORSThe Directors believe that Keywords operates in a fragmented market. They believe the Group is
one of very few international providers of the full range of localisation services – localisation, audio
and testing – with a pure focus on the video games industry.
The majority of the Group’s competitors in the video games localisation industry offer either:(i) translation; or (ii) translation and audio; or (iii) testing (localisation and functional) and oftenwith limited geographical reach. As such they do not provide the complete outsourced integrationof localisation and testing services that the Group is able to provide internationally. Babel Media isregarded by the Directors as the most comparable business in terms of spread of services offeredand outright focus on the games industry.
Aside from competitors in the localisation or functional testing markets, there are non-specialised
providers of generic localisation and testing services. Such companies include Lionbridge
Technologies and SDL, both of whom are significantly larger in size than Keywords. Given the uniquechallenges that video game localisation provides, including cultural adaptation, audio production
and localisation testing, the Group does not consider such non-specialised providers to be major
direct competitors at this stage.
The Directors believe that Keywords has established an industry reputation for quality. The
Company’s unique selling points, including the use of games-specialised native staff for all
languages, the ability to offer their services on-site at clients’ premises or in its specialised andsecure global facilities, its track record of delivery for many of the most prominent games
companies, together with its integrated localisation, audio and testing capabilities, differentiates
Keywords from its direct and in-direct competitors.
The Directors consider the video games localisation market to be fragmented and imbalanced when
considering that the major clients for these services are large, multinational organisations. The
wider market for general video games technical services is even more fragmented. With nospecialised provider offering a complete video games technical services solution, the Directors
believe that the Group is well placed to expand its service offering and increase its market share.
8.

STRATEGY

The Group intends to continue to grow organically, building on its existing expertise to further
extend its technical services offering to the games industry. In addition, the Group plans to play aleading role in the consolidation of the highly fragmented games services industry through selective
acquisitions of complementary businesses. The Directors believe that there is clear opportunity for
Keywords to build on its existing relationships with many of the major games companies byextending its services offering and geographical footprint as follows:

18

New Service Activities:•
By expanding its services downstream into operational support services of video gaming
including developing multilingual customer services support (such as offering support togamers through online forums, email and over the phone); payments services (to support
microtransactions such as in-game purchases or content bolt-ons); and analytics (probably inpartnership with a leading predictive analytics firm, offering customers analysis of game data
as well as embedded real time analytics); and•By moving further upstream into original games content development services, including art
outsourcing (such as 2D and 3D concept art and character animation using sophisticatedsoftware systems); original language audio (undertaking the original audio recording on themaster game as opposed to only currently providing voiceover and dubbing); and motion
capture (the process of recording actions of, for example, human actors using sensors andmultiple cameras, and using that information to animate digital character models in
3D computer games animation).

Geographic Expansion: Asia Pacific, which accounts for three out of the top four video games
markets in the world, is projected to be the fastest growing region during the next five years,
increasing to $40 billion in 2016 (2011: $24 billion)(5). The Group may therefore look to strengthen
its global presence by opening facilities in South Korea and China, responding to existing customers
already requesting support in such countries, whilst also taking advantage of the lower cost baseand access to more resources. There is similar demand from customers requiring support in Brazil,
another large growth market for video games.
Outsourcing: It is becoming technically costly for publishers and developers to cater themselves for
all types of games localisation around the world, given the growing complexity of entertainment
software products and business models. As international demand for video games rises, Keywords
believes it can demonstrate to the blue chip games companies that it has the geographicalfootprint, capacity and expertise for such companies to outsource all their localisation requirements
to Keywords.
Acquisitions: Complementary to the Group’s organic growth opportunities, the Directors willconsider selective acquisitions which are considered value enhancing to the Group’s client base,market penetration and/or service lines and where the Group can use its existing expertise,multi-service platform, scale and global reach to generate synergies and increase profitability. The
Group may also consider acquisitions or joint ventures which provide a platform for it to take itscore technical expertise into new, adjacent entertainment markets such as online gambling,E-learning and film dubbing and subtitle services.
9.

CURRENT TRADING AND PROSPECTS

We are pleased with the performance of the business year to date. 2013 is a significantly important
year for the video games industry marked by the launch of the latest generation of consoles circa
eight years after the launch of Xbox 360 and PlayStation 3. We are hopeful that we will be working
on all Microsoft titles and many of Sony’s titles that will be released in support of the Xbox One and
PlayStation 4 launches. The launches of these consoles have now been confirmed for later this year
in time for the important holiday sales period. This means that revenue will be weighted more
towards the second half than in an ordinary year. In the meantime our revenues for the five months
to 31 May are 18 per cent. ahead of the same period last year.
10.

SUMMARY FINANCIAL INFORMATION

The financial information set out in the table below has been extracted from the historical financial
information of the Group included in Part III of this document. Shareholders should read the full
historical financial information in Part III of this document and not rely solely upon the summary
below.

(5)

PwC Global Entertainment and Media Outlook, 2012-2016.

19

Localisation Testing(1)Localisation(2)Revenue
Percentage growth
Gross Profit
Percentage gross profit margin
Operating profit
Percentage operating profit margin
Tax expense
Tax rate (%)
Profit from continuing operations
Net cash provided by operating activities
Net cash used in investing activities
Net cash used in financing activities
Net cash

2010
€’000

2011
€’000

2012
€’000

4,280.9
1,337.75555
5,618.65555
2,411.0
42.9%
5555
436.7
7.8%
5555
(57.3)
13.9%
5555
355.5
aaaa

6,212.8
4,079.55555
10,292.3
83.2%
5555
4,944.5
48.0%
5555
2,452.3
23.8%
5555(356.9)14.5%
5555
2,111.6aaaa

8,119.6
6,223.35555
14,342.9
39.4%
5555
5,525.7
38.5%
5555
2,814.8
19.6%
5555(410.6)15.0%
5555
2,328.1
aaaa

540.4
5555
194.0
5555
145.5
5555
936.9
aaaa

2,610.2
5555
282.0
5555
2.4
5555
3,262.6
aaaa

1,901.4
5555
896.4
5555
375.5
5555
3,892.1aaaa(1)Localisation Testing revenue includes revenue from Functional Testing division.

(2)

Localisation revenue includes revenue from Audio division.

Revenue has grown by a CAGR of 60 per cent. between 2010 and 2012 and operating profit has
grown by a CAGR of 154 per cent. over the same period.
Revenue growth
Revenue is currently dominated by localisation testing – the lead service in terms of revenue share –and localisation. Each of these services generally occur at different stages of a game’s development
and lifecycle. Localisation testing occurs towards the end of a game’s development and therefore
sees greater seasonal variation in line with the general release of games skewed towards the peakselling season in the fourth quarter of the calendar year. Given the different profile of the two main
revenue streams, it has been management’s intention to increase the relative proportion of
localisation income so as to create a broader based offering and smoother revenues over the year.
Keywords’ revenue growth has been driven by a number of factors, principally existing customers
committing a larger share of their business with the Company and new client wins. Both of thesetrends have been underpinned by underlying growth of Keywords’ addressable market, as describedin the Market Overview section above.
Gross margin
Gross margin in 2011 was inflated by unusually high workloads relative to the operating base of thebusiness. As a result, there was “over-utilisation” in 2011 that was not sustainable, resulting indecision to invest in permanent and contract staff in 2012 to deliver more sustainable growth.
As a result 2012 saw gross margin return to more sustainable levels as a result of an increase in thenumber of permanent staff, in addition to a decision to capture guaranteed minimum volumes fromcertain key customers by offering better terms for larger quantities of work, thereby improving
visibility. Further, the trend was enhanced by the relatively higher level of Localisation in the salesmix (as noted above); Localisation typically delivers a lower gross profit margin than Localisation
Testing, but has a much lower infrastructure requirement and therefore operating costrequirement, resulting in a higher proportion of this revenue flowing through to profit.
Cash Generation
As a people-based business, Keywords’ is not capital intensive, as exhibited by its strong cash
generation. It has been cash generative at the operating level throughout the period being
reviewed, with the decline in 2012 principally due to taxation catch-up payments required following
the Company’s rapid growth and investment in the opening of a new operation in Montreal.
20

Investing activities principally comprises capital expenditure, and financing activities represent
dividend payments.
11.

INFORMATION ON THE DIRECTORS AND SENIOR MANAGEMENT

The Board consists of two Executive Directors and three Non-Executive Directors. Brief biographiesof the Directors are set out below. Paragraph 7.1 of Part IV of this document contains details of
current and past directorships and certain other information relating to the Directors. The Directors
believe that Keywords benefits from a strong, stable and proven entrepreneurial management team.
The executive management team has been enhanced by the appointment of Non-Executive
Directors with substantial technology, growth company, financial and public markets experience.
Board of Directors
Ross Graham (aged 65) – Independent Non-Executive Director and Chairman
Ross Graham has extensive executive and non-executive experience in the technology sector. He
worked from 1987 to 2003 at Misys plc, a global financial software product and solutions provider. He
joined Misys as Finance Director upon its flotation, latterly becoming corporate development director,
where he played a key role in developing and implementing its acquisition strategy. Ross also held anon-executive directorship at Psion plc from 2005 until 2012 when that company was successfully soldto Motorola Solutions Inc. During his time at Psion, he held various roles including the seniorindependent directorship and chairman of the audit and remuneration committees. He is currently anon-executive director at Wolfson Microelectronics Plc and was previously the audit committee
chairman. Ross qualified as a chartered accountant with Arthur Young in 1969 and was made a partnerof that firm in 1981. He is a Fellow of the Institute of Chartered Accountants of England & Wales.
Andrew Day (aged 49) – Group Chief Executive Officer
Andrew Day has a background in technology, manufacturing and business services through corporate
development and general management roles within both publicly quoted and private companies.
Andrew started his career in 1983 at Rothmans International PLC in production management. From1986 to 1993 he had responsibility for corporate development activities at Britannia Security Group
PLC, TIP Europe PLC and Brent International PLC before holding the position of Divisional Managing
Director at Brent International PLC for six years. Andrew was Chief Executive Officer of interactive
retail software developer, Unipower Solutions and Head of Retail and CPG for EMEA at NYSE listed
advanced analytics business, FICO before joining Keywords as its Chief Executive Officer in April
2009.
David O’Connor (aged 42) – Group Financial Director
David O’Connor is a chartered accountant who has extensive experience in senior management
roles. He has recently held two positions as Financial Controller for international companies,
including Deecal International Limited (latterly named First Data Commercial Services Limited). In
his position as Financial Controller, David has had experience in creating corporate financial systems
and procedures, leading internal teams and developing sales strategies. In 2012, David became a
consultant for Baker Tilly Ryan Glennon, a firm of accountants and business advisors in Ireland,
before being employed as Group Financial Controller for Keywords in July 2012.
David Reeves (aged 66) – Independent Non-Executive Director
David Reeves has spent over 30 years in management roles within multinational companies. He
began his career as an operational research consultant before moving overseas with RJ Reynolds
Nabisco where he worked from 1979 to 1991, becoming the Marketing Director in 1986 andWorldwide Marketing Director in 1989. In 1991, David served as the General Manager and Vice
President of Marketing in Tokyo for Mitsubishi Shoji JV Technology Company. David has considerable
experience in the computer entertainment industry. David was the Managing Director for Sony
Computer Entertainment (PlayStation) from 1995 until his appointment as its Executive Vice
President in 1999 and President in 2003. Throughout his career, David has developed knowledge ofthe various working styles of European, American and Asian corporations. He was appointed to theBoard on 29 May 2013.
Giorgio Guastalla (aged 44) – Non-Executive Director
Giorgio Guastalla is co-founder of Keywords. Prior to establishing Keywords in Ireland in 1998,
Giorgio held various positions in marketing and IT at Brent International PLC based in the US, Spain,21

UK and France. In 2002 Giorgio founded Italicatessen Ltd, a company operating in the food sector.
Giorgio was CEO of Keywords until 2009 before concentrating on his other business interests andmoving to a non-executive director role at Keywords Studios.
Senior Management
Giacomo Duranti (aged 39) – Chief Operating Officer
Giacomo Duranti joined Keywords International Limited in 2000 as a project manager after his
computer science studies at the University of Rome “La Sapienza”.
He managed the Rome office of Keywords Italia SRL following its incorporation in 2001 for five
years, maintaining its profitability and a steady growth throughout that period.
Giacomo returned to the Dublin office in 2006 as the Localisation Manager for the office and was
instrumental in the development of Keywords’s video game localisation service lines to include
audio and functional QA and assist in the Group’s international presence to Asia and North America.
Shortly thereafter, Giacomo was appointed Chief Operating Officer coordinating all production
departments within the Group.
12.

REASONS FOR ADMISSION AND USE OF PROCEEDSThe Directors consider that Admission will be an important step in the Group’s development, will
enhance its profile and standing within its market place and will assist the growth of its business.
In addition, broadening the Group’s shareholder base through admission to trading on AIM gives theGroup the capacity, if required, to raise further capital to support its strategic objectives assuitable opportunities arise.
The Placing will also provide the Selling Shareholders with a partial realisation of their investmentin the Company, which will provide additional liquidity, with a free float of 44.0 per cent. of theissued share capital of the Company following Admission.
The net proceeds from the Placing of the New Shares will raise up to £8.6 million which theCompany intends to invest as follows:•

New Business Activities: In continuing to expand its localisation services to new activities
such as operational support services or payments services and analytics or move into original
games content development.

•

Geographical Growth: In expanding its global presence, primarily through office expansion
thereby increasing headcount and expanding its global clients.

•

Outsourcing: In capturing new blue chip customers who are looking to outsource all theirlocalisation requirements.

•

Acquisitions: Towards selective acquisitions which generate synergies and/or opportunities
to expand into adjacent entertainment markets such as online gambling and e-learning.

13.

DIVIDEND POLICYThe Directors recognise the importance of dividend income to Shareholders and intend to adopt a
progressive dividend policy. This policy will be subject to the retention of funds needed to fundfuture growth of the Group’s business and its strategic aims.
All of the Ordinary Shares will rank pari passu for the payment of dividends. Dividends have been
paid by Keywords in respect of the financial years 2011 and 2012 and a dividend is expected to be
proposed by Keywords Studios at the time of the Group’s preliminary results for the year to
31 December 2013.
14.

THE PLACING

The Placing comprises an offer of up to: (i) 8,130,081 New Shares to be issued by the Company
raising proceeds of approximately £8.6 million (assuming that the Placing is fully subscribed and netof commissions, fees and expenses); and (ii) up to 14,627,023 Sale Shares to be sold by the Selling
Shareholders for an aggregate amount of approximately £18.0 million (assuming that the Placing isfully subscribed and net of commissions, fees and expenses). The Company will not receive any
proceeds from the sale of the Sale Shares being sold by the Selling Shareholders (all of which will
be paid to the Selling Shareholders after deduction of placing commissions and stamp duty).
22

Assuming that the Placing is fully subscribed, the New Shares will represent approximately 20.3 percent. of the issued ordinary share capital of the Company immediately following Admission and will
rank pari passu in all respects with the Existing Ordinary Shares including the right to receive
dividends and other distributions thereafter declared, made or paid. The Selling Shareholders haveundertaken that the Sale Shares will be sold fully paid and with full title guarantee.
Pursuant to the Placing Agreement, Numis has conditionally agreed with the Company and the
Selling Shareholders, on and subject to the terms set out therein, to use its reasonable endeavours
to procure investors to acquire Placing Shares at the Placing Price. The Placing is conditional, interalia, upon the Placing Agreement becoming unconditional and not being terminated in accordancewith its terms and Admission taking place.
The VCT Placing Shares will be admitted to trading on AIM on 12 July 2013. The CREST accounts for
the VCT Placing Shares will be credited prior to the CREST accounts for the New Shares (excluding
the VCT Placing Shares) so that VCT Placees investing as part of the VCT Placing will be able tobenefit from tax advantages pursuant to the rules of the VCT Scheme.
Allocations under the Placing will be determined by Numis following consultation with the Company.
A Placee’s allocation (excluding a VCT Placee) may consist of Sale Shares or New Shares or a
combination of the two. A VCT Placee allocation will only consist of New Shares to comply with the
VCT Scheme.
None of the Placing Shares have been marketed to or will be made available in whole or in part tothe public in conjunction with the application for Admission.
The Company, the Directors, the Selling Shareholders and the Founders have, under the Placing
Agreement, given warranties (which, so far as the Directors, the Selling Shareholders and Founders
are concerned, are limited in terms of the amount of liability save in certain circumstances), in
favour of Numis. In addition, the Company and, subject to certain limitations, the Selling
Shareholders have given Numis a commercial indemnity on a joint and several basis.
The Placing Agreement may be terminated by Numis (at its absolute discretion) in certain specified
circumstances prior to Admission, including, inter alia, if an event occurs or a matter arises prior
to Admission which renders any of the warranties untrue or incorrect in any material respect or in
the event of force majeure arising. Numis has been granted a warrant to subscribe for Ordinary
Shares representing one per cent. of the Company’s issued ordinary share capital immediately
following Admission (of which 50 per cent. will be at a strike price equal to the Placing Price withthe remaining 50 per cent. at a strike price equal to 1.25 x the Placing Price) at any time within
five years following Admission.
On Admission, the Directors directly and indirectly will hold in aggregate 10,715,460 Ordinary
Shares, representing approximately 26.8 per cent. of the Company’s Enlarged Share Capital
immediately following Admission (assuming that the Placing is fully subscribed).
On Admission, at the Placing Price, the Company will have a market capitalisation of approximately£49.2 million (assuming that the Placing is fully subscribed).
Further details of the Placing Agreement are set out in paragraph 17.1 of Part IV of this document.
The terms and conditions which apply to persons making an offer to acquire Placing Shares in
the Placing are set out in the appendix to this document.
15.

LOCK-IN AND ORDERLY MARKET ARRANGEMENTS

Selling Shareholders
The Selling Shareholders are expected to hold 17,275,309 Ordinary Shares representing
approximately 43.2 per cent. of the Enlarged Share Capital immediately following Admission(assuming that the Placing is fully subscribed). The Selling Shareholders and Founders haveundertaken with the Company (subject to certain exceptions) not to dispose of any interest in any
such Ordinary Shares until the first anniversary of Admission (the “Relevant Date”).
The parties have further undertaken to observe certain orderly market restrictions with respect tothe disposal of such Ordinary Shares in the period of 12 months following the Relevant Date.
Further details of the Selling Shareholders lock-in and orderly marketing arrangements are set out
in paragraph 17.3 of Part IV of this document.

23

Management
The Directors who, in aggregate, following Admission, are expected to hold 10,715,460 Ordinary
Shares, representing approximately 26.8 per cent. of the Enlarged Share Capital immediately
following Admission (assuming that the Placing is fully subscribed), have undertaken with theCompany (subject to certain exceptions) not to dispose of any interest in any of their Ordinary
Shares until the Relevant Date. The parties have further undertaken to observe certain orderly
market restrictions with respect to the disposal of such Ordinary Shares in the period of 12 months
following the Relevant Date.
Further details of the management lock-in and orderly marketing arrangements are set out inparagraph 17.3 of Part IV of this document.
16.

CORPORATE GOVERNANCE

The Directors recognise the importance of, and are committed to, high standards of corporate
governance. Although compliance with the UK Corporate Governance Code is not compulsory for AIM
companies, the Directors intend to apply the principles insofar as they consider them appropriate
for a public company of Keywords Studio’s size whose securities are traded on AIM, taking into
account the recommendations contained in the QCA Guidelines.
The Board comprises five Directors, two Executives and three Non-Executives, and reflects a blendof different experiences and backgrounds. The roles of Chairman (which is a non-executive position)
and Chief Executive have been split by the Board and there is a clear division of responsibility
between the two. The Board considers Ross Graham and David Reeves to be independent incharacter and judgement.
The Company has established an Audit Committee that, with effect from Admission, will be initiallycomprised of Ross Graham and David Reeves. It is intended that Ross Graham will be the Chairmanof this Committee. The Audit Committee will meet at least twice a year and is responsible forreviewing the integrity of the financial statements of the Group, the Group’s compliance with legal
and regulatory requirements, and the adequacy and effectiveness of the Group’s internal financial
controls and risk management processes including the extent to which internal audit review isrequired. It will review the external auditors’ performance and independence and makerecommendations to the Board on the appointment of the auditors.
The Company has established a Remuneration Committee that, with effect from Admission, will be
initially comprised of Ross Graham, David Reeves and Giorgio Guastalla, of which Ross Graham willbe the Chairman. The Committee will meet at least twice a year and is responsible for determining
and reviewing with the Board the policy for the remuneration of the Executive Directors and suchother members of the executive management it is designated to consider. Within the terms of theagreed policy, it shall determine the total individual remuneration of the Executive Directors. The
Remuneration Committee shall also approve the design of, and determine targets for, any
performance related pay schemes, review the design of any share incentive plans, determine theawards to the Executive Directors and determine the policy for, and scope, of pension arrangements
for each Executive Director.
The Board will comply with Rule 21 of the AIM Rules relating to directors’ dealings and will also takeall reasonable steps to ensure compliance with that rule by the Group’s applicable employees. The
Company has adopted a code on dealing in securities of the Company and will take all reasonable
steps to ensure compliance by the Directors and relevant employees in due course.
The Board will hold regular meetings at which financial and other reports will be considered and,
where appropriate, voted on.
17.

ADMISSION, SETTLEMENT AND DEALINGS

Application has been made to the London Stock Exchange for the Enlarged Share Capital to be
admitted to trading on AIM. It is expected that Admission will become effective and dealings, fornormal settlement, will commence at 8.00 a.m. on 12 July 2013. This date and time may change.
It is expected that, subject to the satisfaction of the conditions to the Placing Agreement, thePlacing Shares will be registered in the names of the Placees subscribing for, or purchasing, themand issued either:

24

(a)

in certificated form, where the Placee so elects, with the relevant share certificate expected
to be dispatched by post, at the Placee’s risk, by 19 July 2013; or(b)in CREST, where the Placee so elects and only if the Placee is a “system member” (as definedin the CREST Regulations) in relation to CREST, with delivery (to the designated CREST
account) of the Placing Shares subscribed for, or purchased, expected to take place at
7.00 a.m. on 12 July 2013 (in respect of the VCT Placing Shares) and 8.00 a.m. 12 July 2013(in respect of the New Shares (excluding the VCT Placing Shares)).

CREST is a paperless settlement procedure enabling securities to be evidenced otherwise than by acertificate and transferred otherwise than by a written instrument. The Articles permit the holdingof Ordinary Shares under the CREST system. The Company has applied for the Ordinary Shares to be
admitted to CREST with effect from Admission. Accordingly, settlement of transactions in Ordinary
Shares held in uncertificated form following Admission will take place within the CREST system.
CREST is a voluntary system and the holders of Ordinary Shares who wish to receive and retain sharecertificates will be able to do so.
All Placing Shares will be issued payable in full at the Placing Price. It is intended that, if
applicable, definitive share certificates in respect of the Placing Shares will be distributed by
19 July 2013 or as soon thereafter as is practicable. No temporary documents of title will be issued.
All documents or remittance sent by, or to a place, or as a Shareholder may direct, will be sent
through the post at their risk.
Pending the dispatch of definitive share certificates (as applicable), instruments of transfer will becertified against the Company’s register of members.
The International Securities Identification Number or “ISIN” for the Ordinary Shares is
GB00BBQ38507.
For a description regarding the restrictions on resale and transfer that are applicable to theOrdinary Shares acquired by investors outside of the UK, see the Appendix to this document.
18.

EMPLOYEE SHARE PLANS

The Board considers employee share ownership to be an important part of its strategy for employee
incentivisation and will establish the Share Plans, further details of which are set out inparagraph 11 of Part IV of this document.
Options will be granted to certain of the Directors and other senior management under the SharePlans on Admission. Employees may be granted awards under the Share Plans in the future at thediscretion of the Remuneration Committee.
Awards granted under the Share Plans to be satisfied by newly issued Ordinary Shares are limited in
total to 5 per cent. of the Company’s issued share capital from time to time.
19.

RELATIONSHIP AGREEMENT

Upon Admission, assuming that the Placing is fully subscribed, P.E.Q. will have an interest in
29.9 per cent. of the Enlarged Share Capital. P.E.Q. and the Founders have entered into a
Relationship Agreement with the Company under which P.E.Q. has the right to appoint and remove
a director to the Board for as long as it holds in excess of 15 per cent. of the Enlarged Share Capital.
P.E.Q. has agreed to exercise its right as a Shareholder so as to ensure that the Company is capableof carrying on its business independently of P.E.Q. In addition, P.E.Q. and the Founders have agreed
with the Company certain non-compete covenants for a period of five years from the date P.E.Q.
ceases to be a Shareholder. A summary of the Relationship Agreement is set out in paragraph 17.5
of Part IV of this document.
20.

THE TAKEOVER CODE

On Admission, the Takeover Code will not apply to the Company. However, with effect from30 September 2013, proposed changes to the Takeover Code will become effective and will apply
from that date to all companies which are subject to the Takeover Code, which will include theCompany by reason of having its registered office in the UK and being admitted to trading on AIM,
notwithstanding that its central management and control will remain outside the UK and in Dublin.

25

Rule 9 of the Takeover Code provides that where any person acquires, whether by a single
transaction or series of transactions over a period of time, an interest in shares which (taken
together with shares in which persons acting in concert with him are interested) carry 30 per cent.
or more of the voting rights of a company, that person is normally required by the Panel to make ageneral offer, in cash, to the shareholders of that company to acquire the balance of the equity
share capital (whether voting or non-voting) and any other class of transferable security carrying
voting rights of the company at the highest price paid by that person or any person acting in concert
with him in the previous twelve months.
Rule 9 of the Takeover Code further provides that, inter alia, where any person who, together withpersons acting in concert with him, is interested in shares which in aggregate carry not less than
30 per cent., but does not hold shares carrying more than 50 per cent., of the voting rights of acompany and such person, or any persons acting in concert with him, acquires an interest in any
other shares in the company which increases the percentage of shares carrying voting rights inwhich he is interested, such person is normally required by the Panel to make a general offer incash, to all shareholders of that company to acquire the balance of their equity share capital(whether voting or non-voting) and any other class of transferable security carrying voting rights of
the Company at the highest price paid by that person, or any person acting in concert with him, inthe previous twelve months.
If the Takeover Code were to apply on Admission the Directors, the Selling Shareholders (P.E.Q. andAndrew Day) and the Founders would be deemed to be acting in concert for the purposes of the
Takeover Code (the “Concert Party”).
Whenever a group acting in concert is interested in shares which together carry 30 per cent. or
more of the voting rights in a company but does not hold shares carrying more than 50 per cent. ofsuch voting rights, an offer obligation will arise if an interest in any other shares carrying voting
rights is acquired from non-members of the group. When the group holds shares carrying over 50 per
cent. of the voting rights in a company, no obligations normally arise from acquisitions by any
member of the group. However, the Panel may regard as giving rise to an obligation to make anoffer the acquisition by a single member of the group of an interest in shares sufficient to increase
the shares carrying voting rights in which he is interested to 30 per cent. or more, or if he is alreadyinterested in 30 per cent. or more, which increases the percentage of shares carrying voting rights
in which he is interested.
The members of the Concert Party, the number of Ordinary Shares held by them at the date of thisdocument, the percentage of Ordinary Shares held by them at the date of this document together
with the percentages of Ordinary Shares held by them: (i) immediately following Admission;(ii) assuming the Options are fully exercised; and (iii) assuming all Options and Warrants are fully
exercised are set out below:

P.E.Q. Holdings Ltd(1)Andrew Day
David O’Connor
Ross Graham
David Reeves
Giorgio Guastalla
Giacomo Duranti
Marco De Sanctis
Total

Number of
Ordinary
Shares at
date of thisdocument

Percentage
of issued
Ordinary
Shares at thedate of thisdocument

23,957,472
7,944,860
—
—
—
—
—
—

75.1
24.9
—
—
—
—
—
—

Percentage
of Enlarged
Share Capital

Percentage
of Enlarged
Share Capitalassuming the
Options are
fully exercised

Percentage
of Enlarged
Share Capitalassuming all
the Optionsand Warrants
are fully
exercised

29.9
13.2
0.0
—
0.0
—
—
—

29.5
13.4
0.2
—
0.0
—
0.5
0.3

29.2
13.3
0.2
—
0.0
—
0.5
0.3

55555 55555 55555 55555 55555
31,902,332

100

43.2

44.0

43.5

aaaaa aaaaa aaaaa aaaaa aaaaa(1) The Founders are shareholders in P.E.Q. Holdings Ltd (with Giacomo Duranti’s and Marco De Sanctis’ respective
shareholdings (each a 5 per cent. shareholder in P.E.Q.) being held for them on trust by Giorgio Guastalla). Giorgio
Guastalla, one of the Founders and a 45 per cent. shareholder in P.E.Q., is a director of P.E.Q. and the Company. Teresa
Luppino, a Founder is a 45 per cent. shareholder in P.E.Q..

26

Each of Andrew Day, David O’Connor, Giacomo Duranti and Marco De Sanctis are to be granted the
Options under the Share Plans on Admission.
For the purposes of Rule 9 of the Takeover Code, and on the basis of the disclosure above, the Panelhas confirmed that, upon the future exercise of any of the Options, neither a mandatory offer toShareholders nor any further consent from the Panel or Shareholders will be required. However, it
is assumed that such Concert Party will be in existence following 30 September 2013 when the
Takeover Code will apply to the Company and that were further options under the Share Plans
granted to Andrew Day, David O’Connor, Giacomo Duranti or Marco De Sanctis or any other Concert
Party member (including Giorgio Guastalla and Teresa Luppino and the other Directors) and suchmember of the Concert Party were to exercise those options and be issued with Ordinary Shares,
then for the purposes of Rule 9 of the Takeover Code a mandatory offer to Shareholders may berequired unless the consent of the Panel and Shareholders was obtained to the waiver of Rule 9prior to the grant of the options.
In the event that the maximum potential shareholding resulting from the exercise of the Options
exceeds 50 per cent. of the total voting rights of the Company, the potential controllers of theCompany may acquire further interests in shares without incurring any further obligation under
Rule 9 to make a general offer. It is not currently anticipated that the 50 per cent. threshold will
be reached.
21.

TAXATION

Information regarding certain taxation considerations for corporate, individual and trustee
shareholders in the United Kingdom is set out in paragraph 15 of Part IV of this document.
22.

VCT INVESTORS

Advance assurance is being sought from HM Revenue and Customs that the Company is a “qualifying
holding” for the purpose of investment by VCTs but there can be no guarantees at this stage that
this assurance will be forthcoming.
The continuing status of the Ordinary Shares as a qualifying holding for VCT purposes will be
conditional, inter alia, on the Ordinary Shares being held as a “qualifying holding” for VCT purposes
throughout the period of ownership.
Neither the Company nor the Directors give any warranty, representation or undertaking that any
VCT investment in the Company will remain a qualifying holding. The Company cannot guarantee orundertake to conduct its business following Admission, in a way to ensure that the Company willcontinue to meet the requirements of a VCT Scheme. VCTs considering making a qualifying VCTinvestment are recommended to seek their own professional advice in order that they may fully
understand how the relief legislation may apply in their individual circumstances.
Prospective investors should be aware that the Sale Shares acquired by VCTs will not be a qualifying
holding for VCT purposes. It is intended that so far as is practicable, VCT investors will be allocated
VCT Placing Shares. Prospective investors should not, however, invest on the basis of receiving such
relief.
23.

SELLING AND TRANSFER RESTRICTIONS

The distribution of this document and the Placing in certain jurisdictions may be restricted by law.
Persons into whose possession this document comes should inform themselves about and observe
any restrictions on the distribution of this document and the offer of Ordinary Shares, including
those in the paragraphs that follow. Any failure to comply with these restrictions may constitute anoffer to buy any of the Ordinary Shares to any person in any jurisdiction to whom it is unlawful tomake such an offer or solicitation in such jurisdiction.
No action has been or will be taken in any jurisdiction that would permit a public offering for saleof the Ordinary Shares, or possession or distribution of this document or any other offering or
publicity material relating to the Ordinary Shares, in any country or jurisdiction where action forthat purpose is required, other than in the United Kingdom. The Ordinary Shares may not be offeredor sold, directly or indirectly, and neither this document nor any other offering material or
advertisements in connection with the Ordinary Shares may be distributed or published, in or fromany country or jurisdiction except under circumstances that will result in compliance with any
applicable rules and regulation of any such country or jurisdiction.
27

23.1 United Kingdom
In the UK, members of the public have not been invited to participate in and are not eligible
to take part in the Placing. Invitations to participate in the Placing have been limited at all
times: (i) to persons reasonably believed by the Company to be investment professionals
within the meaning of paragraph (5) of Article 19, or to be certified high net worth individuals
within the meaning of paragraph (2) of Article 48 or to be high net worth companies orunincorporated associations within the meaning of paragraph (2) of Article 49, or to becertified sophisticated investors within the meaning of paragraph (1) of Article 50, or to be
self-certified sophisticated investors within the meaning of Article 50A, of the Financial
Services and Markets Act 2000 (Financial Promotion) Order 2005 (S1 2005/1529) (all such
persons together being referred to as “Relevant Persons”); and (ii) to persons who are
qualified investors within the meaning of section 86(7) of FSMA. Any investment activity towhich this document relates will only be available to, and will only be engaged in with
Relevant Persons. Any person who is not a Relevant Person should not act or rely on thisdocument or any of its contents.
No Ordinary Shares have been offered or sold or will be offered or sold to persons in the UK
prior to publication of this document except in circumstances which have not resulted in anoffer to the public in the UK within the meaning of section 102B of the FSMA.
23.2 Overseas investors
This document does not constitute or form part of any offer or invitation to sell or issue, or
any solicitation of any offer to purchase or subscribe for, any Placing Shares: (i) in any
jurisdiction in which such offer, invitation or solicitation is not authorised; (ii) in any
jurisdiction in which the person making such offer, invitation or solicitation is not qualified to
do so; or (iii) to any person to whom it is unlawful to make such offer, invitation orsolicitation or invitation. The distribution of this document and any accompanying documents,
and the offer of the Placing Shares may be restricted by law. Persons into whose possession
this document and any accompanying documents come must therefore inform themselves
about and observe any such restrictions. Any failure to comply with these restrictions may
constitute a violation of the securities laws of any such jurisdiction. In particular, nodocument may be distributed, forwarded to or transmitted in, into or from the United States,
Australia, Canada, Japan, South Africa or the Republic of Ireland or to any US person. Any
person within the United States and any US person who obtains a copy of this document must
disregard it.
No public offering of the Placing Shares is being made in any jurisdiction. No action has beenor will be taken by the Company or Numis that would permit the offer of the Placing Sharesor possession or distribution of this document or any accompanying documents in any
jurisdiction where action for that purpose is required.
The offer of the Placing Shares has not been, nor will it be, registered under the Securities
Act, or with any securities regulatory authority of any state or other jurisdiction of the UnitedStates. In addition, the Company has not been, and will not be, registered under theInvestment Company Act, and investors will not be entitled to the benefits of that Act. The
Placing Shares may not be offered, sold, pledged or otherwise transferred or delivered within
the United States or to, or for the account or benefit of, any US person. In connection with
the Placing, the Placing Shares are being offered and sold only outside the United States to,and for the account or benefit of, non-US persons in “offshore transactions” within themeaning of, and in reliance on the exemption from registration provided by, Regulation S
under the Securities Act.
24.

FURTHER INFORMATIONYour attention is drawn to the further information set out in Parts II to IV of this document,
including the risk factors set out in Part II. You are advised to read the whole of this document.

28

PART IIRISK FACTORSIn addition to all other information set out in this document, the following specific risk factors
should be considered carefully by potential investors in evaluating whether or not to make an
investment in the Company. The investment described in this document may not be suitable forall those who receive it. Before making a final decision, investors who are in any doubt areadvised to consult their stockbroker, bank manager, solicitor or accountant or otherindependent professional adviser authorised under the FSMA who specialises in advising on theacquisition of shares and other securities in the United Kingdom.
You should carefully consider the risks described below and ensure that you have read thisdocument in its entirety before making a decision to invest in the Company.
Investing in Ordinary Shares involves a high degree of risk. Prospective investors shouldcarefully consider all the information in this document, including the risk factors, set out in thisPart II before investing in Ordinary Shares. Additional risks and uncertainties not presently
known to the Company and the Directors (or that the Company and the Directors currently
consider to be immaterial) may also adversely affect the Group’s business, operations andfinancial condition. If any events or circumstances giving rise to any of the following risks,
together with possible additional risks and uncertainties of which the Company and the
Directors are currently unaware or which the Company and the Directors consider not to bematerial in relation to the Group’s business, actually occur, the Group’s business, financial
condition and results of future operations could be materially and adversely affected. In suchcircumstances, the value of the Ordinary Shares could decline due to any of these risks
occurring and investors could lose part or all of their investment in the Company. In particular,
the Company’s performance may be affected by changes in market or economic conditions andin legal, regulatory and tax requirements.
There can be no certainty that the Company will be able to implement successfully the strategy
set out in this document. No representation, whether express or implied, is or can be made as
to the future performance of the Group and there can be no assurance that the Company willachieve its objectives.
The risks listed below do not necessarily comprise all those faced by the Group and are notintended to be presented in any order of priority.
Risks relating to the Group and its business
The Group may not sustain its growth
The Group’s operating results could fluctuate as a result of a number of factors, many of which arebeyond its control. These factors include, amongst others: (i) the growth rate of the video games
market; (ii) general economic conditions that impact the video games industry; (iii) difficulties inattracting suitably qualified staff; and (iv) an increase in competitive pricing pressures within themarkets in which the Group operates; (v) the loss of key customers; and (vi) games developers andpublishers retaining and expanding their in-house localisation capabilities.
The Group operates in a competitive environment
The Group may face significant competition, including from domestic and overseas competitors who
may have: (i) greater capital and other resources; (ii) more superior brand recognition than theGroup; or (iii) more aggressive pricing policies. There is no assurance that the Group will be able tocompete successfully in such a competitive marketplace although the Directors believe that theGroup does enjoy key differences compared to its competitors. The Directors believe that the Groupis the only existing platform agnostic, multi-lingual, internationally integrated player in the global
video games localisation and testing market which offers an end-to-end service, rather thanfocusing solely on just one part of the localisation process. There is a risk therefore that newCompetitors could develop challenging the Group’s status. In addition, the Directors believe that
the Company has a strong reputation for delivery and high quality of service all of which allow it
and the Group to actively compete in the marketplace and were such standards not to be
maintained there is a risk that the Group’s reputation and competitiveness will suffer.

29

Dependence on key staff/senior management
The successful operation of the Group will depend partly upon the performance and expertise of its
current and future senior management including the Group’s global heads, functional leaders,project managers and senior linguists and testing leads. Keywords relies heavily on its employees
working on a flexible or freelance basis during periods of high demand. Consequently, the Company
will be dependent on a relatively small number of permanent staff most notably its CEO Andrew Day
and COO, Giacomo Duranti, its heads of offices and project managers to establish and maintain therelationship with its customers. Although Andrew Day and Giacomo Duranti are named herein as the
key management of the Company, the heads of the Group’s offices are also important to theoperation of the Group’s business.
No Limitations of liability
Some of the Company’s framework agreements with its customers do not contain limitations on the
Company’s liability. Liability may arise in relation to, inter alia, claims by third parties for breachof intellectual property rights, breach of confidentiality provisions (including the dissemination of
information relating to to-be-released video games), breach of a customer’s secure network towhich the Company is granted access or a material delay in performing the services under acustomer contract. The Company has in place an insurance policy which provides professional
indemnity coverage up to the amount of €6,500,000 per claim.
Termination of contracts
While the Company is not aware of any client that may wish to terminate a customer frameworkcontract, many of the contracts can be terminated on one months’ notice by the client and should
any such contracts be terminated, the Company would lose the benefit of the contract.
Profitability
The profitability of many of the Company’s direct competitors is not publically available
information and so it is difficult to assess the Group’s relative profitability. Two competitors that
do publish relevant results are the Japanese listed companies Poletowin Pitcrew Holdings Inc.,(parent of Pole to Win Company Ltd.,) and Digital Hearts Co. Ltd. These competitors’ respective
results do provide a broad indication as to the level of industry operating margins and profitability,
which are both broadly in line with those of the Company. Whilst the Company’s profitability ishelped by its culture of stringent cost control and efficient staffing, the Group has seen its grossmargin reduce as it seeks to incentivise larger developers and publishers to outsource all theirlocalisation to the Group and as localisation has increasingly accounted for a greater proportion of
the Group’s revenues.
Dependence on key customers
The Company has chosen to focus on establishing close relationships with the larger games
publishers as evidenced by its working with 15 of the top 25 games companies according to Gartner.
In 2012 the Company’s four largest customers accounted for approximately 50 per cent. ofrevenues, the Group’s top ten customers accounted for almost 75 per cent. of its total revenue andits largest customer accounted for almost 17 per cent. of revenues. The Company is therefore
dependent on maintaining strong customer relationships with these key customers and on theperformance of those customers, while the loss of any such customers may have a material adverse
effect on the Group’s revenue. The amount of work that each customer requires in each year canalso vary significantly and most companies do not provide a guaranteed amount of work. With
respect to those companies that do provide a consistent work stream, projects can sometimes bedelayed which consequently impacts on the Company.
Increased outsourcing of localisation services is uncertain
The trend towards outsourcing for localisation services by games developers and publishers has
contributed to the growth of the Company and its profitability as the market for localisation
services to games developers and publishers increases. Although the Group’s normal growth rate has
been achieved by increasing its market share of the existing outsourced business, one of theCompany’s strategies is to target outsourced localisation services from the large games companies.
However, there are still some large developers and publishers who are not convinced by the trend
towards outsourcing. In the event that video games publishers service their localisation needs
in-house this will likely adversely affect the Group as the total amount of work available to thevideo games localisation industry will decrease. This is in-turn likely to lead to increased
30

competitive pressures within the industry. There can be no assurance therefore that growth will beachieved from gaining outsourced work through new customers on top of existing outsourced
business. However, the Group’s growth strategy also focuses on increasing its market share ofexisting outsourced business.
Security and confidentiality
The Company, particularly in its localisation testing activities, has access to highly confidential
material. Whilst the Company maintains high security levels, any security breach by the Company,
or a perception of risk of security breach by the Company, could have a material adverse effect on
the Company and its business.
Market growth may not be sustained
The global video games market has seen consistent growth for many years, aided by the cyclicalnature of the platforms in the industry. Whilst long-term predictions are not a guarantee, industry
commentators predict that the market will continue to grow as sophisticated electronic devices
continue to penetrate the market worldwide. The increasingly sophisticated structure of theplatforms and complex systems will likely lead to an increase in the need for localisation services,to the advantage of the Company. There is, however, a risk to the Company that trends may
reverse.
Substantial Shareholders
Following Admission (and assuming that the Placing is fully subscribed) P.E.Q. shall own
approximately 29.9 per cent. of the Enlarged Share Capital and Andrew Day shall holdapproximately 13.2 per cent. of the Enlarged Share Capital. If the Takeover Code were to apply on
Admission the Directors, P.E.Q. and the Founders would be deemed to be acting in concert for the
purposes of the Takeover Code (the “Concert Party”). Such Concert Party would, in aggregate, beinterested in 43.2 per cent. of the Enlarged Share Capital, assuming that the Placing is fully
subscribed. P.E.Q. shall also have the right to appoint a director to the Board for so long as it holds
in excess of 15 per cent. of the Enlarged Share Capital of the Company. As a result, P.E.Q. will beable to exercise substantial control over a number of matters requiring shareholder approval,
including, but not limited to, amendments to the Articles, approval of reverse takeovers or
disposals. Upon Admission, P.E.Q. will enter into the Relationship Agreement as detailed inparagraph 17.5 of Part IV of this document.
General litigation risks
All industries are subject to legal claims, with and without merit. The Company may become
involved in legal disputes in the future. Defence and settlement costs can be substantial, even withrespect to claims that have no merit. Due to the inherent uncertainty of the litigation process,there can be no assurance that the resolution of any particular legal proceeding will not have amaterial effect on the Company’s financial position or results of operations.
If the Group is unable to maintain a high level of customer service, customer satisfaction anddemand for the Group’s services could suffer
The Group believes that its future revenue growth depends on the Group’s ability to provide
customers with a quality service that not only meets the Group’s stated commitments, but meetsand exceeds customer service expectations. If the Group is unable to provide customers with quality
service, it could face customer dissatisfaction leading to decreased overall demand for its services,and loss of revenue. In addition, the Group’s inability to meet customer service expectations may
damage its reputation and could consequently limit its ability to retain existing customers andattract new customers. This could adversely affect the Group’s ability to generate revenue andnegatively impact its operating results.
The Group’s translations are subject to customer and regulatory scrutiny
The translations (both written and audible) provided by the Group enter the public domain and are
subject to regulation as to age and cultural appropriateness. Although no claims have been brought
against the Group by customers or regulatory authorities in relation to its translations nor are the
Directors aware of any such claims having been brought against any of its competitors, there is arisk of such claims being brought in the future.

31

Any failure of the physical infrastructure or services of the Group could lead to significant costs
and disruptions that could reduce revenues, harm the Group’s business reputation and have amaterial adverse effect on financial results
The operation of the Group’s business depends on providing customers with highly reliable services
which relies upon the Group’s infrastructure and equipment. Consequently, the Group must protect
its infrastructure and equipment located at the Group’s premises. If the Group fails to meet its
customers’ performance requirements or to protect the infrastructure, it may lose customers
and/or may become liable to them for damages. To mitigate this risk, the Group carries businessinterruption insurance and has an actively managed business interruption plan which includes being
able to switch services between its various service centres.
The Group has service level commitment obligations with substantially all of its customers in which
it provides various guarantees regarding levels of service. The Group may not be able to meet theselevels of service in the event of service interruptions due to equipment damage in the Group’s
operational localisation and testing centres or other factors. If the Group fails to provide the levelsof service required by its customer the customer may be entitled to receive a return of a portion of
their fees and/or may seek to terminate their relationship with the Group. In addition, the Group’s
inability to meet its service level commitments may damage its reputation and could reduce theconfidence of the Group’s customers in its services, impairing its ability to retain existing customers
and attract new customers.
Additional responsibilities and commitments of Directors
The Non-Executive Directors have, and may have in the future, additional professional
responsibilities and as such, may experience conflicts of interest and demands on their time to thepossible detriment of the Group.
The Group may fail to successfully implement its expansion strategies
As set out in Part I of this document, the Company intends to carry out certain expansion strategies.
The Group’s growth and future success will be dependent to some extent on the successful
completion of such expansion strategies proposed to be undertaken by the Group and thesufficiency of demand for the Group’s services. The execution of the Group’s expansion strategies
may also place a strain on its managerial, operational and financial reserves. Should the Group failto implement such expansion strategies or should there be insufficient demand for the Group’s
services, the Group business operations, financial performance and prospects may be adversely
affected.
Entry into other activities
It is anticipated in the future that the Company’s management may wish to explore other possible
adjacent markets to the video game localisation market. This would for example, include
multilingual customer support to the video games market, potential services connected with theonline gambling market, and payments and analytics services. Any material expansion of theCompany’s range of services is likely to come through acquisitions or joint ventures which inevitably
brings with it an element of risk.
Growth management and integration of future acquisitions
To the extent that suitable opportunities arise and are identified, the Group may expand its
business through the acquisition of companies and services from third parties. There can be noassurance that the Group will identify suitable acquisitions or opportunities, obtain the financing
necessary to complete and support such acquisitions or acquire businesses on satisfactory terms.
Also there can be no certainty that any business acquired by the Group will prove to be profitable.
In addition, the acquisition and integration of independent companies is a complex, costly andtime-consuming process involving a number of possible problems and risks which could have amaterial adverse effect on the results of operations or financial condition of the Group. This
includes possible adverse effects on the Group’s operating results, diversion of management’s
attention, failure to retain personnel, failure to maintain customer service levels, disruption torelationships with customers and other third parties. There are also risks associated withunanticipated events or liabilities and difficulties in the assimilation of the operations,
technologies, systems, services and products of the acquired companies.

32

The Group’s insurance may not be adequate to cover all losses
Whilst the Group maintains insurance that it considers adequate in terms of scope, with liability
limitation levels which exceed the required coverage levels set out in all agreements with its
customers, there are limitations on the total coverage for all aspects of the insurance policies,
including for professional indemnity claims. The Group will be responsible for any claims over andabove the coverage limits and for any claims which are not covered by the Group’s insurance
policies.
Currency fluctuations
The Group’s policy is not to enter into any currency hedging transactions.
As a consequence of the international nature of its business, the Group is exposed to risks
associated with changes to foreign currency exchange rates in relation to its business. While theGroup is domiciled in the Republic of Ireland and presents its financial statements in Euros, theCompany invoices its customers in their local currencies (Euros, US dollars, Canadian dollars orYen). Consequently, and in the absence of the Company hedging foreign exchange movements,
transactions by the Group or volatility in exchange rates could result in fluctuations in the
Company’s financial results. The most significant recent effect on the Group in terms of exchange
rate translation risk has been in relation to the weakness of the Yen since the start of 2013, which
has reduced Euro based revenues and profits from the Company’s Japanese business. Sterling-based
investors in the Company will also face exchange rate translation risk, given that the Company
reports in Euros.
Tax Residence
It is intended that the Company will have its place of effective management in the Republic of
Ireland and so be treated as tax resident in the Republic of Ireland for both Irish and UK tax
purposes. In the event that the place of effective management should instead be or be treated as
being in the United Kingdom, adverse tax consequences could arise.
General risks relating to an investment in the Ordinary Shares
GeneralAn investment in the Ordinary Shares is only suitable for investors capable of evaluating the risks(including the risk of capital loss) and merits of such an investment and who have sufficient
resources to sustain a total loss of their investment. An investment in the Ordinary Shares should beseen as long-term in nature and complementary to investments in a range of other financial assets
and should only constitute part of a diversified investment portfolio. Accordingly, typical investors
in the Company are expected to be institutional investors, private client fund managers and privateclient brokers, as well as private individuals who have received advice from their professional
advisers regarding investment in the Ordinary Shares and/or who have sufficient experience toenable them to evaluate the risks and merits of such an investment themselves.
Economic conditions and current economic weakness
Any economic downturn either globally or locally in any area in which the Group operates may havean adverse effect on the demand for the Group’s services.
The markets in which the Group offers its services are directly affected by many national andinternational factors that are beyond the Group’s control.
Conditionality of the Placing
The Placing is conditional upon, among other things, Admission. In the event that any condition towhich Admission is subject is not satisfied or, if capable of waiver, waived, then the placing will not
be implemented.
No prior market for the Ordinary Shares
Before Admission, there has been no prior market for the Ordinary Shares. Although application has
been made for the Ordinary Shares to be admitted to trading on AIM, an active public market may
not develop or be sustained following Admission.

33

VCT
Advance assurance is being sought from HM Revenue and Customs that the Company is a “qualifying
holding” for the purpose of investment by VCTs but there can be no guarantees at this stage that
this assurance will be forthcoming.
The qualifying status for VCT purposes will be contingent upon certain conditions being met by both
the Company and the relevant VCT investor. Neither the Company nor the Company’s advisers give
any warranties or undertakings that VCT qualifying status will be available or that, if initiallyavailable, such status will not be subsequently withdrawn. Should the law regarding the VCT
Scheme change then any qualifying status previously obtained may be lost.
Circumstances may arise (which may include the sale of the Company) where the Directors believethat the interests of the Company are not best served by acting in a way that preserves VCTqualifying status. In such circumstances, the Company cannot undertake to conduct its activities ina way designed to secure or preserve any such status claimed by any Shareholder.
If the Company does not employ the proceeds of a VCT’s share subscription for qualifying purposes
within twenty-four months, the funds invested by the VCT would be apportioned pro rata and its
qualifying holding would be equal to the VCT’s funds that had been employed for qualifying trading
purposes within the above time limits. Any remaining element of the VCT’s investment would
comprise part of its non-qualifying holdings.
The information in this document is based upon current tax law and practice and other legislation
and any changes in the legislation or in the levels and bases of, and reliefs from, taxation may
affect the value of an investment in the Company.
If the Company or any qualifying subsidiary ceases to carry on the business outlined in thisdocument or acquires or commences a business which is not insubstantial to the Company’s
activities and which is a non-qualifying trade for VCT Scheme purposes, this could prejudice thequalifying status of the Company (as referred to above) under the VCT Scheme at any time that a
VCT is an investor in the Company. This situation will be monitored by the Directors with a view topreserving the Company’s qualifying status but this cannot be guaranteed.
Share price volatility and liquidity
Following Admission, the market price of the Ordinary Shares may be subject to wide fluctuations
in response to many factors, including stock market fluctuations and general economic conditions orchanges in political sentiment. This may substantially affect the market price of the Ordinary Shares
irrespective of the progress the Group may make in terms of developing and expanding its services
or its actual financial, trading or operational performance. These factors could include theperformance of the Group, purchases or sales of the Ordinary Shares (or the perception that thesame may occur, as, for example in the period leading up to the expiration of the restrictions
contained in certain lock-in and orderly marketing arrangements), legislative changes and market,
economic, political or regulatory conditions or price distortions resulting from limited liquidity in
the Company’s shares. The share price for publicly traded companies, particularly those at an earlystage of development, such as the Company, can be highly volatile. Admission to AIM should not betaken as implying that a liquid market for the Ordinary Shares will either exist, develop or besustained following Admission. Active, liquid trading markets generally result in lower pricevolatility and more efficient execution of buy and sell orders for investors. The liquidity of asecurities market is often a function of the volume of the underlying shares that are publicly heldby unrelated parties. If a liquid trading market for the Ordinary Shares does not develop, the priceof the Ordinary Shares may become more volatile and it may be more difficult to complete a buy
or sell order even for a relatively small number of such Ordinary Shares.
Substantial sales of Ordinary Shares
There can be no assurance that certain Directors or other Shareholders will not elect to sell their
Ordinary Shares following the expiry of the lock-in and orderly marketing arrangements, details of
which are set out in paragraph 15 of Part 1 of this document, or otherwise. The market price ofOrdinary Shares could decline as a result of any such sales of Ordinary Shares or as a result of theperception that these sales may occur. In addition, if these or any other sales were to occur, theCompany may in the future have difficulty in offering Ordinary Shares at a time or at a price it
deems appropriate.

34

There is no guarantee that the Company’s Ordinary Shares will continue to be traded on AIM
The Company cannot assure investors that the Company’s Ordinary Shares will always continue tobe traded on AIM or on any other exchange. If such trading were to cease, certain investors may
decide to sell their shares, which could have an adverse impact on the price of the Ordinary Shares.
Additionally, if in the future the Company decides to obtain a listing on another exchange in
addition or as an alternative to AIM, the level of liquidity of the Ordinary Shares traded on AIM could
decline.
Investment in AIM traded securities
The Ordinary Shares will be traded on AIM rather than admitted to the Official List of the UK Listing
Authority. AIM is designed primarily for emerging or smaller companies to which a higher investment
risk tends to be attached than to larger or more established companies. The rules of AIM are lessdemanding than the rules for companies admitted to the Official List and an investment in shares
traded on AIM may carry a higher risk than an investment in shares admitted to the Official List. In
addition, the market in shares traded on AIM may have limited liquidity (as stated above therefore),making it more difficult for an investor to realise its investment on AIM than to realise aninvestment in a company whose shares are admitted to the Official List. Investors should therefore
be aware that the market price of the Ordinary Shares may be more volatile than that of shares
admitted to the Official List, and may not reflect the underlying value of the Company. Investors
may, therefore, not be able to sell at a price which permits them to recover their original
investment and they could lose their entire investment in the Company.
Issuance of additional Ordinary Shares
Although the Group’s business plan does not involve the issuance of Ordinary Shares other than inconnection with the Placing, it is possible that the Company may decide to issue, pursuant to a
public offer or otherwise, additional Ordinary Shares in the future at a price or prices higher orlower than the Placing Price. An additional issue of Ordinary Shares by the Company, or the public
perception that an issue may occur, could have an adverse effect on the market price of Ordinary
Shares and could dilute the proportionate ownership interest, and hence the proportionate votinginterest, of Shareholders. This will particularly be the case if and to the extent that, such an issueof Ordinary Shares is not effected on a pre-emptive basis or Shareholders do not take up their rights
to subscribe for further Ordinary Shares structured as a pre-emptive offer.
Dividends
The Director’s intend to adopt a progressive dividend policy. However, there can be no assurance
that the Company will declare dividends or as to the level of any dividends. The approval of thedeclaration and amount of any dividends of the Company is subject to the discretion of thedirectors of the Company (and, in the case of any final dividend, the discretion of the Shareholders)at the relevant time and will depend upon, among other things, the Group’s earnings, financial
position, cash requirements and availability of distributable profits, as well as the provisions of
relevant laws and/or generally accepted accounting principles from time to time.
Application of the proceeds from the Placing may not increase the Company’s profits orOrdinary Share price
There is no guarantee that the use of net proceeds described in paragraph 12 of Part I of thisdocument will result in the Group making profits. The funds from the Placing will enable the Groupto strengthen its market position but the Group’s profitability is reliant upon increased growth inrevenues whilst maintaining relatively low capital expenditures and fixed overhead costs.

35

PART IIISECTION A
ACCOUNTANT’S REPORT ON KEYWORDS STUDIOS PLC
BDO LLP
55 Baker Street
LondonW1U 7EUThe Directors
Keywords Studios plc
Philips HouseSouth County Business Park
Dublin 18
Ireland
9 July 2013
Numis Securities Limited
The London Stock Exchange Building
10 Paternoster Square
LondonEC4M 7LT
Dear Sirs

Keywords Studios plc (the “Company”)
Introduction
We report on the financial information set out in Section B of Part III. This financial information has
been prepared for inclusion in the admission document dated 9 July 2013 of Keywords Studios plc(the “Admission Document”) on the basis of the accounting policies set out in note 2 to the financial
information. This report is required by paragraph (a) of Schedule Two of the AIM Rules for
Companies and is given for the purpose of complying with that paragraph and for no other purpose.
Responsibilities
The directors of Keywords Studios plc are responsible for preparing the financial information inaccordance with International Financial Reporting Standards as adopted by the European Union.
It is our responsibility to form an opinion on the financial information and to report our opinion toyou.
Save for any responsibility arising under paragraph (a) of Schedule Two of the AIM Rules for
Companies to any person as and to the extent there provided, to the fullest extent permitted by
the law we do not assume any responsibility and will not accept any liability to any other person for
any loss suffered by any such other person as a result of, arising out of, or in connection with thisreport or our statement, required by and given solely for the purposes of complying with Schedule
Two of the AIM Rules for Companies consenting to its inclusion in the Admission Document.
Basis of opinion
We conducted our work in accordance with Standards for Investment Reporting issued by the
Auditing Practices Board in the United Kingdom. Our work included an assessment of evidence
relevant to the amounts and disclosures in the financial information. It also included an assessmentof significant estimates and judgements made by those responsible for the preparation of thefinancial information and whether the accounting policies are appropriate to the entity’s
circumstances, consistently applied and adequately disclosed.

36

We planned and performed our work so as to obtain all the information and explanations which we
considered necessary in order to provide us with sufficient evidence to give reasonable assurance
that the financial information is free from material misstatement whether caused by fraud or otherirregularity or error.
Our work has not been carried out in accordance with auditing or other standards and practices
generally accepted in the United States of America or other jurisdictions outside the United
Kingdom and accordingly should not be relied upon as if it had been carried out in accordance withthose standards and practices.
OpinionIn our opinion, the financial information gives, for the purposes of the Admission Document, a trueand fair view of the state of affairs of the Company as at 31 May 2013 in accordance with
International Financial Reporting Standards as adopted by the European Union.
Declaration
For the purposes of Paragraph (a) of Schedule Two of the AIM Rules for Companies we areresponsible for this report as part of the Admission Document and declare that we have taken all
reasonable care to ensure that the information contained in this report is, to the best of ourknowledge, in accordance with the facts and contains no omission likely to affect its import. Thisdeclaration is included in the Admission Document in compliance with Schedule Two of the AIM
Rules for Companies.
Yours faithfully

BDO LLP
Chartered Accountants

BDO LLP is a limited liability partnership registered in England and Wales (with registered number
OC305127).

37

SECTION B
HISTORICAL FINANCIAL INFORMATION ON KEYWORDS STUDIOS PLC
STATEMENT OF FINANCIAL POSITION

Note

Current assets
Cash and cash equivalents

As of
31 May
2013
£

10
5555
10
aaaa

Total assets
EquityShare capital3

Total equity and liabilities

10
5555
10
aaaa

NOTES TO THE FINANCIAL INFORMATION
1.

Basis of preparation

The financial information provided is for the Keywords Studio plc (the “Company”) for the period
from the date of incorporation (29 May 2013) to 31 May 2013.
The financial information has been prepared in accordance with International Financial ReportingStandards, International Accounting Standards and interpretations (collectively IFRS) issued by theInternational Accounting Standards Board (IASB) as adopted by the European Union (“adopted
IFRSs”). In the current year the Company has adopted all of the new and revised standards andinterpretations issued by the IASB and the International Financial Reporting Interpretations
Committee (IFRIC) of the IASB, as they have been adopted by the European Union, that are relevant
to its operations and effective for accounting periods beginning on 1 January 2012.
New standards, interpretations and amendments not yet effective
The following new standards, interpretations and amendments are effective for annual periods
beginning on or after 1 January 2013:
IFRS 10 Consolidated Financial Statements;
IFRS 12 Disclosure of interests in other entities
IFRS 13 Fair Value Measurement;
Disclosures – Offsetting Financial Assets and Liabilities (Amendments to IFRS 7);
Offsetting Financial Assets and Financial Liabilities (Amendments to IAS 32) (effective for annual
periods beginning on or after 1 January 2014);
IFRS 9 Financial Instruments (effective for annual periods beginning on or after 1 January 2015);
The Company is currently assessing the impact, if any, that these standards will have on thepresentation of its consolidated results.
None of the other new standards, interpretations and amendments, which are effective for periods
beginning after 1 January 2012 and which have not been adopted early, are expected to have amaterial effect on the Group’s future financial statements.
2.

Significant accounting policies

Financial Assets
The Company classifies its financial assets depending on the purpose for which the asset
was acquired. The Company has not classified any of its financial assets as held to maturity oravailable-for-sale financial assets. The Company does not hold any financial assets at fair value
through profit and loss.

38

Cash and cash equivalents includes cash in hand, deposits held at call with banks and other shortterm highly liquid investments with original maturities of three months or less. Where cash is on
deposit with maturity dates greater than three months, it is disclosed within other receivables.
Share Capital
Ordinary shares are classified as equity and are stated at the proceeds received.
3.

Shareholder’s Equity

Share Capital
As of
31 May2013
NumberShare capital comprises £0.01 shares as follows:
Authorised
Issued and paid up
4.

1,000
1,000

Post balance sheet events

On 8 July 2013, the Company increased its authorised share capital and acquired the entire issued
share capital of Keywords International Limited by issuing 31,901,332 ordinary shares of £0.01 eachto the holders of the ordinary shares in Keywords International Limited. Prior to this share swap,
Mr Andrew Day, a director of the Company and Keywords International Limited, has agreed to enter
into a deed of indemnity as described in paragraph 4.9 of Part IV of the Admission Document.

39

SECTION CACCOUNTANT’S REPORT ON KEYWORDS INTERNATIONAL LIMITEDBDO LLP
55 Baker Street
LondonW1U 7EUThe Directors
Keywords Studios plc
Philips HouseSouth County Business Park
Dublin 18
Ireland
9 July 2013
Numis Securities Limited
The London Stock Exchange Building
10 Paternoster Square
LondonEC4M 7LT
Dear Sirs

Keywords International Limited and its subsidiary undertakings(together, the “Group”)
Introduction
We report on the financial information set out in Section D of Part III. This financial information has
been prepared for inclusion in the admission document dated 9 July 2013 of Keywords Studios plc(the “Admission Document”) on the basis of the accounting policies set out in note 2 to the financial
information. This report is required by paragraph (a) of Schedule Two of the AIM Rules for
Companies and is given for the purpose of complying with that paragraph and for no other purpose.
Responsibilities
The directors of Keywords Studios plc are responsible for preparing the financial information inaccordance with International Financial Reporting Standards as adopted by the European Union.
It is our responsibility to form an opinion on the financial information and to report our opinion toyou.
Save for any responsibility arising under paragraph (a) of Schedule Two of the AIM Rules for
Companies to any person as and to the extent there provided, to the fullest extent permitted by
the law we do not assume any responsibility and will not accept any liability to any other person for
any loss suffered by any such other person as a result of, arising out of, or in connection with thisreport or our statement, required by and given solely for the purposes of complying with Schedule
Two of the AIM Rules for Companies consenting to its inclusion in the Admission Document.
Basis of opinion
We conducted our work in accordance with Standards for Investment Reporting issued by the
Auditing Practices Board in the United Kingdom. Our work included an assessment of evidence
relevant to the amounts and disclosures in the financial information. It also included an assessmentof significant estimates and judgements made by those responsible for the preparation of thefinancial information and whether the accounting policies are appropriate to the entity’s
circumstances, consistently applied and adequately disclosed.

40

We planned and performed our work so as to obtain all the information and explanations which we
considered necessary in order to provide us with sufficient evidence to give reasonable assurance
that the financial information is free from material misstatement whether caused by fraud or otherirregularity or error.
Our work has not been carried out in accordance with auditing or other standards and practices
generally accepted in the United States of America or other jurisdictions outside the United
Kingdom and accordingly should not be relied upon as if it had been carried out in accordance withthose standards and practices.
OpinionIn our opinion, the financial information gives, for the purposes of the Admission Document, a trueand fair view of the state of affairs of the Group as at 31 December 2010, 2011 and 2012 and of its
profits, changes in equity and cash flows for the years then ended in accordance with International
Financial Reporting Standards as adopted by the European Union.
Declaration
For the purposes of Paragraph (a) of Schedule Two of the AIM Rules for Companies we areresponsible for this report as part of the Admission Document and declare that we have taken all
reasonable care to ensure that the information contained in this report is, to the best of ourknowledge, in accordance with the facts and contains no omission likely to affect its import. Thisdeclaration is included in the Admission Document in compliance with Schedule Two of the AIM
Rules for Companies.
Yours faithfully

BDO LLP
Chartered Accountants

BDO LLP is a limited liability partnership registered in England and Wales (with registered number
OC305127).

41

SECTION DHISTORICAL FINANCIAL INFORMATION ON
KEYWORDS INTERNATIONAL LIMITEDCONSOLIDATED STATEMENT OF COMPREHENSIvE INCOME
For the year ended 31 December
Note

2010
€

2011
€

2012
€

4

5,618,565

10,292,280

14,342,949(3,207,585)
5555(5,347,743)
5555(8,817,284)
5555

5555

5555

5555

5,192
(29,145)

27,085(10,905)

50,470(126,542)

5555

5555

5555

5555

5555

5555

12,189

—

—

—
5555

24,9895555(86,726)5555

367,691aaaa

2,136,580
aaaa

2,241,367
aaaa

0.89
0.03

5.27
—

5.82
—

Revenues
Operating costs
Gross profit
Administrative expenses

2,410,980(1,974,241)

Operating profit

5

Financing income
Financing cost

6
6

Profit before taxation
Tax expense

7

Profit for the year from continuing operations
Profit for the year from discontinued
operations

436,739

412,786(57,284)
355,502

18

Other comprehensive income:Exchange gains/(losses) on translation offoreign operations
Total comprehensive income for the year
attributable to the owners of the parent
Earnings per share
Basic continuing (Euro cents)
Basic discontinued (Euro cents)

4,944,537(2,492,232)
2,452,305

2,468,485(356,894)
2,111,591

5,525,665(2,710,903)
2,814,762

2,738,690(410,597)
2,328,093

8

42

CONSOLIDATED STATEMENT OF CHANGES IN EqUITY
Sharecapital€Foreign
Exchangereserve€

Retainedearnings€

Total
equity€127—

1,951,600

1,951,727——

355,502355,502————

12,189(301,310)

12,189(301,310)

Net Comprehensive income for the year——

66,381

66,381Dividends paid
Issue of share capital

—
61

—
—

(7,436)—(7,436)
61

5555

5555

5555

5555

—
—

24,989—2,111,591(2,375)2,136,580(2,375)

5555

5555

5555

5555

—
—

(86,726)—

2,328,093(375,482)

2,241,367(375,482)

5555
188
aaaa

5555
(61,737)
aaaa

5555
6,072,372
aaaa

5555
6,010,823
aaaa

Balance at 1 January 2010
Total comprehensive income for the year:
Total comprehensive income fromcontinuing operations
Total comprehensive income fromdiscontinued operations
Distribution of discontinued operations

Balance at 31 December 2010188

Total comprehensive income for the year
Dividends paid
Balance at 31 December 2011188

Total comprehensive income for the year
Dividends paid
Balance at 31 December 201243—

24,9892,010,545

4,119,761

2,010,733

4,144,938

STATEMENT OF FINANCIAL POSITION
As of 31 December

Non-current assets
Property, plant and equipment
Other non-current assets

Note

2010
€

2011
€

2012
€

10
11

174,469
238,100

297,816
238,100

490,404
—

5555

5555

5555

707,722347,739
936,860

1,241,438
466,905
3,262,632

1,397,248
907,3024,397,674

5555

5555

5555

5555
2,404,890
aaaa

5555
5,506,891
aaaa

6,702,224
5555
7,192,628
aaaa

188
—
2,010,545

188
24,9894,119,761

188(61,737)
6,072,372

5555
2,010,733
5555

5555
4,144,938
5555

5555
6,010,823
5555

250,395
43,78999,973662,722
307,960
391,271

701,197—
480,608

5555
394,1575555
2,404,890
aaaa

5555
1,361,953
5555
5,506,891
aaaa

5555
1,181,805
5555
7,192,628
aaaa

412,569

Current assets
Trade receivables
Other receivables
Cash and cash equivalents

12
13
14

1,992,321

Total assets
EquityShare capital
Foreign Exchange Reserve
Retained earnings
Total equity
Current liabilities
Trade payables
Corporation Tax liabilities
Other payables

15
16
17

Total equity and liabilities

44535,916

4,970,975

490,404

CONSOLIDATED STATEMENT OF CASH FLOWSFor the year ended 31 December
2010
€

2011
€

2012
€

Cash flows from operating activities
Profit after tax from continuing operations
Profit after tax from discontinued operations

355,502
12,1892,111,591—

2,328,093—

Adjustments to reconcile net income to net
cash provided by operating activities(see below)
Income taxes refunded/(paid)

171,636
1,077

591,320(92,723)

321,832(748,546)

5555

5555

5555

5555

5555

5555

(194,527)——(199,948)—(82,093)(390,855)(505,585)
—

509
5555
(194,018)
5555

—
5555
(282,041)
5555

—
5555
(896,440)5555(7,436)
61(2,375)—(375,482)—(138,108)5555(145,483)
5555

—
5555
(2,375)
5555

—
5555
(375,482)
5555

5555
936,860
aaaa

5555
3,262,632
aaaa

5555
3,892,089
aaaa

Note

Net cash provided by operating activities

540,404

Cash flows from investing activities
Acquisition of property, plant and equipment
Acquisition of short term investments
Acquisition of subsidiary, net of cash acquired
Proceeds from sale of property, plantand equipment
Net cash used in investing activities
Cash flows from financing activities
Dividends paid
Issue of share capital
Distribution of cash in connection withdisposal of subsidiary
Net cash used in financing activities
Increase in cash and cash equivalents
Cash and cash equivalents at beginning of year

200,903735,957

Cash and cash equivalents at end of year

2,610,188

2,325,772
936,860

1,901,379

629,457
3,262,632

ADJUSTMENTS TO RECONCILE NET INCOME TO NET CASH PROvIDED BY OPERATING ACTIvITIESFor the year ended 31 December

Income and expenses not affecting operating
cash flows
Depreciation
Loss on disposal of fixed assets

2010
€

2011
€

2012
€

128,821
37,19879,008—198,267
—

5555

5555

5555

57,284356,894

410,597(89,976)(165,585)
33,519101,865—
68,510(353,721)(6,862)(30,209)521,221
24,989—(155,810)(59,550)(112,757)
127,811(86,726)—5555
171,636aaaa

5555
591,320aaaa

5555
321,832
aaaa

166,019

Income tax expense
Changes in operating assets and liabilities
Increase in trade receivables
Increase in unbilled revenue
Decrease/(increase) in other receivables
Increase in trade and other payables
Increase/(decrease) in foreign exchange reserve
Discontinued operations movement in working capital

45

79,008198,267

NOTES TO THE FINANCIAL INFORMATION
1.

Basis of preparation

The consolidated financial information presents the results of the Keywords International Limited
and its subsidiaries (the “Group”) as if they formed a single entity. The financial information
provided is for the Group’s three financial years ended 31 December 2010, 2011 and 2012.
The financial information has been prepared in accordance with International Financial ReportingStandards, International Accounting Standards and interpretations (collectively IFRS) issued by theInternational Accounting Standards Board (IASB) as adopted by the European Union (“adopted
IFRSs”). In the current year the Group has adopted all of the new and revised standards andinterpretations issued by the IASB and the International Financial Reporting Interpretations
Committee (IFRIC) of the IASB, as they have been adopted by the European Union, that are relevant
to its operations and effective for accounting periods beginning on 1 January 2012.
New standards, interpretations and amendments not yet effective
The following new standards, interpretations and amendments are effective for annual periods
beginning on or after 1 January 2013:
IFRS 10 Consolidated Financial Statements;
IFRS 12 Disclosure of interests in other entities
IFRS 13 Fair Value Measurement;
Disclosures – Offsetting Financial Assets and Liabilities (Amendments to IFRS 7);
Offsetting Financial Assets and Financial Liabilities (Amendments to IAS 32) (effective for annual
periods beginning on or after 1 January 2014);
IFRS 9 Financial Instruments (effective for annual periods beginning on or after 1 January 2015);
The Group is currently assessing the impact, if any, that these standards will have on thepresentation of its consolidated results.
None of the other new standards, interpretations and amendments, which are effective for periods
beginning after 1 January 2012 and which have not been adopted early, are expected to have amaterial effect on the Group’s future financial statements.
2.

Significant accounting policies

Basis of Consolidation
Where Keywords International Limited has the power, either directly or indirectly, to govern thefinancial and operating policies of another entity or business so as to obtain benefits from its
activities, it is classified as a subsidiary. Intercompany transactions and balances between Group
companies are therefore eliminated in full.
Business Combinations
The consolidated financial information incorporates the results of business combinations using thepurchase method. In the consolidated balance sheet, the acquiree’s identifiable assets, liabilities
and contingent liabilities are initially recognised at their fair values at the acquisition date. The
results of acquired operations are included in the consolidated income statement from the date on
which control is obtained.
Foreign Currency
Transactions entered into by Group entities in a currency other than the currency of the primaryeconomic environment in which they operate (there “functional currency”) are recorded at therates ruling when the transactions occur. Foreign currency monetary assets and liabilities aretranslated at the rates ruling at the reporting date. Exchange differences arising on theretranslation of unsettled monetary assets and liabilities are recognised immediately in profit orloss, except for foreign currency borrowings qualifying as a hedge of a net investment in a foreign
operation, in which case exchange differences are recognised in other comprehensive income andaccumulated in the foreign exchange reserve along with the exchange differences arising on theretranslation of the foreign operation.

46

Exchange gains and losses arising on the retranslation of monetary available for sale financial assets
are treated as a separate component of the change in fair value and recognised in profit or loss.
Exchange gains and losses on non-monetary available for sale financial assets form part of theoverall gain or loss recognised in respect of that financial instrument.
On consolidation, the results of overseas operations are translated into euro at rates approximating
to this ruling when the transactions took place. All assets and liabilities of overseas operations,
including goodwill arising on the acquisition of those operations, are translated at the rate ruling at
the reporting date. Exchange differences arising on translating the opening net assets at opening
rate and the results of overseas operations at actual rate are recognised in other comprehensive
income and accumulated in the foreign exchange reserve.
Exchange differences recognised profit or loss in Group entities’ separate financial statements on
the translation of long-term items forming part of the Group’s net investment in the overseas
operation concerned are classified to other comprehensive income and accumulated in the foreignexchange reserve on consolidation.
On disposal of a foreign operation, the cumulative exchange differences recognised in the foreignexchange reserve relating to that operation up to the date of disposal are transferred to theconsolidated statement of comprehensive income as part of the profit or loss on disposal.
Revenue Recognition
Revenue is recognised, net of sales taxes, when the service is rendered. When projects are in
progress at the period end, revenue is recognised to the extent that services have been provided,
but which are unbilled.
Share Based Payments
Where equity settled share options are awarded to employees, the fair value of the options at
the date of grant is charged to the consolidated statement of comprehensive income over thevesting period. Non-market vesting conditions are taken into account by adjusting the number of
equity instruments expected to vest at each reporting date so that, ultimately, the cumulative
amount recognised over the vesting period is based on the number of options that eventually
vest. Non-vesting conditions and market vesting conditions are factored into the fair value of theoptions granted. As long as all other vesting conditions are satisfied, a charge is madeirrespective of whether the market vesting conditions are satisfied. The cumulative expense is
not adjusted for failure to achieve a market vesting condition or where a non-vesting condition
is not satisfied.
Where the terms and conditions of options are modified before they vest, the increase in the fairvalue of the options, measured immediately before and after the modification, is also charged tothe consolidated statement of comprehensive income over the remaining vesting period.
Income Taxes and Deferred Taxation
Provision for income taxes is calculated in accordance with the tax legislations and applicable tax
rates in force at the balance sheet date in the countries in which the Group companies have been
incorporated.
Deferred tax assets and liabilities are recognised where the carrying amount of an asset or liability
in the consolidated balance sheet differs from its tax base, except for differences arising on:lll

the initial recognition of goodwill;
the initial recognition of an asset or liability in a transaction which is not a businesscombination and at the time of the transaction affects neither accounting or taxable profit;andinvestments in subsidiaries and jointly controlled entities where the Group is able to control
the timing of the reversal of the difference and it is probable that the difference will notreverse in the foreseeable future.

The amount of the asset or liability is determined using tax rates that have been enacted or
substantively enacted by the reporting date and are expected to apply when the deferred tax
liabilities/(assets) are settled/(recovered).

47

Deferred tax assets and liabilities are offset when the Group has a legally enforceable right to offset
current tax assets and liabilities and the deferred tax assets and liabilities relate to taxes levied by
the same tax authority on either:ll

the same taxable group company; ordifferent group entities which intend either to settle current tax assets and liabilities on a net
basis, or to realise the assets and settle the liabilities simultaneously, in each future period
in which significant amounts of deferred tax assets or liabilities are expected to be settled or
recovered.

Dividend Distribution
Final dividends are recorded in the Group’s financial information in the period in which they areapproved by the Group’s shareholders. Interim dividends are recognised when paid.
Property, Plant and Equipment
Property, plant and equipment comprise computers, leasehold improvements, and office furnitureand equipment, and are stated at cost less accumulated depreciation. Carrying amounts arereviewed on each balance sheet date for impairment. Where the carrying amount of an asset isgreater than its estimated recoverable amount, it is written down immediately to its recoverable
amount.
Depreciation is calculated to write off the cost of fixed assets on a straight line basis over the
expected useful lives of the assets concerned. The principal annual rates used for this purpose are:
%
33.33
10.00
over the length of the lease

Computers and Software
Office furniture and equipment
Building and leasehold improvements

Subsequent expenditures are included in the assets carrying amount or recognised as a separate
asset, as appropriate, only when it is probable that future economic benefits will flow to the Groupand the cost of the item can be measured reliably. All other repairs and maintenance are charged
to the income statement during the financial period in which they are incurred.
Gains and losses on disposals are determined by comparing proceeds with carrying amount and areincluded in the consolidated statement of comprehensive income.
Goodwill
Goodwill is capitalised as an intangible asset with any impairment in carrying value being charged
to the consolidated statement of comprehensive income. Where the fair value of identifiable assets,
liabilities and contingent liabilities exceed the fair value of consideration paid, the excess iscredited in full to the consolidated statement of comprehensive income on the acquisition date.
Impairment
Impairment tests on goodwill and other intangible assets with indefinite useful economic lives areundertaken annually at the financial year end. Other non-financial assets are subject to annual
impairment tests whenever events or changes in circumstances indicate that their carrying amount
may not be recoverable. Where the carrying value of an asset exceeds its recoverable amount(i.e. – the higher of value in use and fair value less costs to sell), the asset is written down
accordingly.
Where it is not possible to establish the recoverable amount of an individual asset, the impairment
test is carried out on the asset’s cash generating unit (i.e. – the lowest group of assets in which theasset belongs for which there are separately identifiable cash flows). Goodwill is allocated on initialrecognition to each of the group’s cash generating units that are expected to benefit from thesynergies of the combination giving rise to the goodwill.
Impairment charges are included in the administrative expenses line item in the consolidated
statement of comprehensive income, except to the extent they reverse gains previously recognisedin the consolidated statement of comprehensive income. An impairment loss recognised for goodwill
is not reversed.

48

Financial Assets
The Group classifies its financial assets depending on the purpose for which the asset was acquired.
The Group has not classified any of its financial assets as held to maturity or available-for-salefinancial assets. The Group does not hold any financial assets at fair value through profit and loss.
Loans and Receivables
These assets are non-derivative financial assets with fixed or determinable payments that are notquoted in an active market. They arise principally through the provision of services to customers(e.g. trade receivables), but also incorporate other types of contractual monetary asset. They are
initially recognised at fair value plus transaction costs that are directly attributable to theiracquisition or issue and are subsequently carried at amortised cost using the effective interest rate
method, less provision for impairment.
The Group’s receivables comprise trade and other receivables and cash and cash equivalents in thebalance sheet.
Trade receivables which principally represent amounts due from customers are carried at fair valueless an estimate made for bad and doubtful debts based on a review of all outstanding amounts at
the year-end. An estimate for doubtful debts is made when there is objective evidence that theGroup will not be able to collect amounts due according to the original terms of receivables. Bad
debts are written off when identified.
Cash and cash equivalents includes cash in hand, deposits held at call with banks and other shortterm highly liquid investments with original maturities of three months. Where cash is on depositwith maturity dates greater than three months, it is disclosed as short-term bank deposits.
Share Capital
Financial instruments issued by the Group are treated as equity only to the extent that they do notmeet the definition of a financial liability. The Group’s ordinary shares are classified as equity
instruments.
Financial Liabilities
Trade payables and other short-term monetary liabilities are initially recognised at fair value andsubsequently carried at amortised cost using the effective interest method.
Fair Value Measurement Hierarchy
IFRS 7 requires certain disclosures which require the classification of financial assets and financial
liabilities measured at fair value using a fair value hierarchy that reflects the significance of the
inputs used in making the fair value measurement (see note 21). The fair value hierarchy has thefollowing levels:(a)

Quoted prices (unadjusted) in active markets for identical assets or liabilities (Level 1);(b)

Inputs other than quoted prices included within Level 1 that are observable for the asset or
liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices) (Level 2); and(c)

Inputs for the asset or liability that are not based on observable market data (unobservable
inputs) (Level 3).

The level in the fair value hierarchy within which the financial asset or financial liability iscategorised is determined on the basis of the lowest-level input that is significant to the fair value
measurement. Financial assets and financial liabilities are classified in their entirety into only oneof the three levels.
Long-Term Liabilities
Long-term liabilities are those liabilities that are due for repayment or settlement in more thantwelve months from the balance sheet date.
Provisions
Provisions, which are liabilities of uncertain timing or amount, are recognised when the Group has
a present obligation as a result of past events, if it is probable that an outflow of funds will be
required to settle the obligation and a reliable estimate of the amount of the obligation can be
made.

49

Leased Assets
Where substantially all of the risks and rewards of ownership are not transferred to the Group(“operating lease”), the total rental payables are charged to the consolidated statement ofcomprehensive income on a straight-line basis over the term of the lease.
3.

Critical accounting estimates and judgements

The preparation of consolidated financial information under IFRS requires the Directors to makeestimates and judgements that effect the application of policies and reported amounts.
The areas requiring the use of estimates and critical judgements that may significantly impact theGroup’s earnings and financial position are revenue recognition in respect of accrued income andcomputation of income taxes. Estimates and judgements are continually evaluated and are based on
historic experience and other factors including expectations of future events that are believed tobe reasonable. Actual results may differ from these estimates and assumptions.
Accrued Income
Judgement is required in respect of the amount of accrued income recognised at the balance sheet
date. The amount of accrued income is determined based on an assessment of the expected amountof unbilled time costs in respect of work commenced prior to the close of a particular year end thatwill be invoiced to customers after that year end date.
Income Taxes
The Group is subject to income tax in several jurisdictions and judgement may be required indetermining the provision for income taxes. During the ordinary course of business, there aretransactions and calculations for which the ultimate tax determination may be uncertain. As aresult, the Group recognises tax liabilities based on an understanding of taxation legislation inparticular jurisdictions and any related estimates of whether taxes and/or interest will be due. This
assessment relies on estimates and assumptions and may involve a series of complex judgments
about future events. To the extent that the final tax outcome of these matters is different than theamounts recorded, such differences will impact income tax expense in the period in which suchdetermination is made.
4.

Segmental analysis

Management considers that the Group’s activity as a single source supplier of Localisation andLocalisation Testing Services constitutes one operating and reporting segment, as defined under
IFRS 8.
Management review the performance of the Group by reference to group-wide profit measures andthe revenues derived from four main service groupings:
l

l

l

l

Localisation – Localisation services relate to translation and cultural adaptation of in-gametext and audio scripts across multiple game platforms and genres.
Localisation Testing – Localisation Testing involves testing the linguistic correctness andcultural acceptability of computer games.
Audio – Audio Services relate to the audio production process for computer games andincludes script translation, actor selection and talent management through pre-production,
audio direction, recording, and post-production, including native language QA
Functional Testing – Functional Testing relates to quality assurance services provided togame producers to ensure games function as required.

There is no allocation of operating expenses, profit measures, assets and liabilities to individual
product groupings. Accordingly the disclosures below are provided on an entity-wide basis.
The activity is reported in a manner consistent with the internal reporting provided to the chief
operating decision-maker. The chief operating decision maker has been identified as the executive
management team made up of the Chief Executive Officer and the Finance Director.

50

Revenue by line of business
For the year ended 31 December

Localisation Testing
Localisation
Audio
Functional Testing

2010
€

2011
€

2012
€

4,280,892
846,390491,283—

6,212,807
3,300,592
778,881—7,820,445
5,229,733
993,581299,190

5555
Unallocated Operating costs
Gross profit
Unallocated Administrative expenses

14,342,949(3,207,585)
5555(5,347,743)
5555(8,817,284)
5555

5555

5555

5555

5,192
(29,145)

27,085(10,905)

50,470(126,542)

5555

5555

5555

5555
355,502aaaa

5555
2,111,591
aaaa

5555
2,328,093
aaaa

436,739

Financing income
Financing cost
Profit before taxation
Tax expense

412,786(57,284)

Profit for the year from continuing operations

5555

10,292,280

2,410,980(1,974,241)

Operating profit

5555

5,618,565

4,944,537(2,492,232)
2,452,305

2,468,485(356,894)

5,525,665(2,710,903)
2,814,762

2,738,690(410,597)

The number of customers who individually accounted for more than 10% of the total revenue of thegroup during the years ended 31 December 2010, 2011 and 2012, and the aggregate revenue fromthese customers, are set out below.

Customer 1 (Localisation, Localisation Testingand Audio)
Customer 2 (Localisation and Localisation Testing)Customer 3 (Localisation)
Customer 4 (Localisation, Localisation Testingand Audio)
Customer 5 (Localisation and Localisation Testing)

2010
€

2011
€

2012
€

705,660
1,088,390—

1,327,478
2,219,103—

3,282,274
2,368,554
1,919,239

1,230,097
880,192————

Geographical Analysis of Revenues by Jurisdiction
Analysis by geographical regions is made according to the Group’s operational jurisdictions. This
does not reflect the region of the Group’s customers, whose locations are worldwide.
For the year ended 31 December
2010
€

2011
€

2012
€

IrelandJapan
Italy
CanadaUnited States

5,078,711
539,854———

8,875,801
1,261,110
155,369——

10,882,112
2,412,747
662,764
385,326—

Total Revenues

5555
5,618,565
aaaa

10,292,280

5555
aaaa

14,342,949

51

5555
aaaa

Geographical Analysis of Non-current assets from Continuing Businesses
As of 31 December

IrelandJapan
Italy
CanadaUnited States

2010
€

2011
€

2012
€

174,469————

212,046
46,703
14,68024,387—357,277
84,101
24,837
23,575614

5555
174,469aaaa

5555
297,816aaaa

5555
490,404
aaaa

The Geographical Analysis of non-current assets excludes the loan to Italicatessen Limited, a relatedcompany. See notes 11 and 19 for further details.
5.

Operating profit

Operating profit is stated after charging:
For the year ended 31 December

Directors’ compensation:
Short-term benefits of Directors
Pension Costs

2010
€

2011
€

2012
€

352,596
127,053

318,729
130,445

321,300
114,9095555
479,649aaaa

5555
449,174aaaa

5555
436,209aaaa

For the year ended 31 December

Auditors’ remuneration
Audit services
Parent company and Group audit
Non-audit services
Accounting and Taxation compliance

6.

2010
€

2011
€

2012
€

7,767

9,725

22,50012,4865555
20,253
aaaa

4,107
5555
13,832
aaaa

2,500
5555
25,000aaaa

Financing income and costs
For the year ended 31 December

Finance income
Interest received
Foreign Exchange Gains
Finance cost
Bank charges
Foreign Exchange Losses
Net financing (expense)/income

52

2010
€

2011
€

2012
€

5,192
—

14,86912,21650,470
—

5555
5,192
5555

5555
27,0855555

5555
50,4705555(5,909)(23,236)(10,905)—(13,578)(112,964)

5555(29,145)5555(23,953)aaaa

5555(10,905)5555
16,180aaaa

5555(126,542)
5555(76,072)aaaa

7.

Taxation
For the year ended 31 December

Current income tax
Income tax on profits
Income tax on profits of subsidiary operations
Previous year taxes

2010
€

2011
€

2012
€

56,632652—

356,214680—

337,405
46,39126,8015555
57,284
aaaa

5555
356,894aaaa

5555
410,597
aaaa

The tax charge for the year can be reconciled to accounting profit as follows:
For the year ended 31 December

Profit before tax
Expected tax charge based on the standard rate oftaxation in Ireland at 12.5% (2011: 12.5%; 2010: 12.5%)
Higher rates of current income tax in overseas
jurisdictions
Losses incurred in overseas jurisdictions
Higher rates of current income tax on passive income
Close Company Surcharge
Effects of other timing differences
Total tax charge

2010
€

2011
€

2012
€

412,7865555

2,468,485
5555

2,738,690
5555

51,598308,561

342,336

—
—
1,731
—
3,955

680
43,224
5,091
485(1,147)32,76349,012
6,308—(19,822)5555
57,284
aaaa

5555
356,894aaaa

5555
410,597aaaa

The majority of profits arise in Ireland. The Group’s subsidiaries are located in different
jurisdictions and are taxed on their residual profit in those jurisdictions.
Deferred tax is not considered significant to the group, and no deferred tax asset or liability isrecorded.
8.

Earnings per share

Given the Group reconstruction on 8 July 2013 (see note 23), it is not practicable to calculateearnings per share in accordance with IAS 33. Accordingly, illustrative earnings per share has been
calculated using the expected number of shares in issue immediately after the flotation:
For the year ended 31 December

Basic – Continuing
Basic – Discontinued

Profit for the year from continuing operations
Profit for the year from discontinued operations

Denominator - basic
Weighted average number of equity shares

53

2010
Euro cents

2011
Euro cents

2012
Euro cents

0.89
0.03

5.27
—

5.82
—

aaaa

aaaa

aaaa

2010
€

2011
€

2012
€

355,502
12,1892,111,591—

2,328,093
—

aaaa

aaaa

aaaa

2010
Number

2011
Number

2012
Number

40,032,413

40,032,413

40,032,413

aaaa

aaaa

aaaa

9.

Employee benefits

Total staff costs comprise the following:
For the year ended 31 December

Salaries and related costs

2010
€

2011
€

2012
€

2,944,988
aaaa

4,314,307
aaaa

6,129,835
aaaa

For the year ended 31 December
2010
Number

2011
Number

2012
Number

37
7

130
13

201
16

5555
44
aaaa

5555
143
aaaa

5555
217
aaaa

Computers
and software

Officefurniture andequipment

Assets indiscontinued
business

Total

€

€

€

€

267,866
100,874——

137,865
21,057(51,207)—

256,967
72,596(22,354)(307,209)

662,698
194,527(73,561)(307,209)

5555

5555

5555

5555

5555

5555

5555

5555

5555
949,688aaaa

5555
115,102
aaaa

5555
—
aaaa

5555
1,064,790
aaaaComputers
and software

Officefurniture andequipment

Assets indiscontinued
business

Total

€

€

€

€

193,736
69,429——37,431
14,890(13,500)—

178,275
44,502(22,354)(200,423)

409,442
128,821(35,854)(200,423)

5555

5555

5555

5555

5555

5555

5555

5555

5555
517,753
aaaa

5555
56,633
aaaa

5555
—
aaaa

5555
574,386
aaaa

74,130105,575
233,416
431,935

100,434
68,89464,40058,46978,692———

253,256
174,469
297,816
490,404

aaaa

aaaa

aaaa

aaaa

Average number of employees
Operations
General and administration

10.

Property, plant and equipment

Cost
At 1 January 2010
Additions
Disposals
Disposal of discontinued businessAt 31 December 2010
Additions
Acquired through business combinations
Disposals
At 31 December 2011
Additions
At 31 December 2012

Accumulated depreciation
At 1 January 2010
ChargeDisposals
Disposal of discontinued businessAt 31 December 2010
ChargeDisposals
At 31 December 2011
ChargeAt 31 December 2012
Net book value
As at 1 January 2010
As at 31 December 2010
As at 31 December 2011
As at 31 December 2012

368,740
197,553
2,407(4,875)563,825
385,863

263,165
72,119(4,875)
330,409
187,34454

107,715
2,395——
110,110
4,992

38,821
6,889—
45,71010,923

—
—
—
—
—
—

—
—
—
—
—

476,455
199,948
2,407(4,875)673,935
390,855

301,986
79,008(4,875)376,119
198,267

11.

Other non-current assets
As of 31 December

Related party receivable (note 19)

12.

2010
€

2011
€

2012
€

238,100
5555
238,100
aaaa

238,100
5555
238,100
aaaa

—
5555
—
aaaa

Trade receivables
As of 31 December

Customers

13.

2010
€

2011
€

2012
€

707,7225555
707,722aaaa

1,241,438
5555
1,241,438
aaaa

1,397,248
5555
1,397,248
aaaa

Other receivables
As of 31 December

Related party receivable (note 19)
Accrued Income
Prepayments
Other receivables
Corporation Tax Receivable
Other Tax and Social Security

14.

2010
€

2011
€

2012
€

35,081
165,585
105,097
31,205—
10,771

1,392
172,447
187,70383,272—22,091

247,021
231,997
231,965
158,750
29,9897,580

5555
347,739
aaaa

5555
466,905
aaaa

5555
907,302aaaa

Cash and cash equivalents
As of 31 December

Cash at bank
Bank deposits
Short term bank deposits

2010
€

2011
€

2012
€

533,784
403,076—

2,044,882
1,217,750—

1,235,561
2,656,528
505,5855555
936,860
aaaa

5555
3,262,632
aaaa

5555
4,397,674
aaaa

Short term bank deposits relate to cash on deposit with maturity dates greater than three months.
15.

Shareholders’ Equity

Share Capital
As of 31 December

Share capital comprises €0.01269738 sharesas follows:
Authorised
Issued and paid up

55

2010
Number

2011
Number

2012
Number

10,000,000

10,000,000

10,000,000

14,797aaaa

14,797aaaa

14,797aaaa

A reconciliation of the movement in issued shares is below:

Number of shares in issue:
At 1 January
Share placing
At 31 December

At 1 January
Share placing
At 31 December

2010
Number

2011
Number

2012
Number

10,0004,797

14,797—

14,797—5555
14,797aaaa

5555
14,797aaaa

5555
14,797
aaaa

2010
€

2011
€

2012
€

127
61

188
—

188
—

5555
188
aaaa

5555
188
aaaa

5555
188
aaaa

Distribution of Dividend
In June 2010, the Group distributed €0.50 per share or €7,436 in total, as a final dividend for 2009.
In June 2011, the Group distributed €0.16 per share or €2,375 in total, as a final dividend for 2010.
In November 2012, the Group distributed €25.38 per share or, €375,482 in total, as an interim
dividend for 2011.
In May 2013, the Group distributed €8.42 per share, or €124,518 in total, as a special dividend for
2011.
In June 2013, the Group distributed €33.79 per share, or €500,000 in total, as a final dividend for
2012.
Reserves
The following describes the nature and purpose of each reserve within owner’s equity:
Reserve

Description and purpose

Retained earnings

Cumulative net gains and losses recognised in the consolidated
statement of comprehensive income

Foreign Exchange Reserve

Gains or losses arising on retranslation of the net assets of theoverseas operations into euro.

16.

Trade payables
As of 31 December

Suppliers

17.

2010
€

2011
€

2012
€

250,395
5555
250,395
aaaa

662,7225555
662,722aaaa

701,1975555
701,197
aaaa

Other payables
As of 31 December

Accrued expenses
Payroll Taxes
Other payables

56

2010
€

2011
€

2012
€

46,12453,849—279,663
100,725
10,883346,952
118,711
14,9455555
99,973
aaaa

5555
391,271aaaa

5555
480,608aaaa

18.

Acquisitions and Disposals

Year ended 31 December 2012
None
Year ended 31 December 2011
On 18 May 2011 the Group entered into an assets purchase agreement with Keywords Italia Srl, acompany which had partial common ownership with Keywords International Limited.
The Group paid a consideration of €130,000 in cash in May 2011 based on the market value of thecompany at the time. No further contingent consideration is payable in respect of this acquisition.
Details of the identifiable assets and liabilities acquired from subsidiaries, purchase considerationand goodwill are as follows:Book value
prior toacquisition€

Property, plant and equipment
Trade receivables
Other receivables
Tax refunds
Cash and cash equivalents
Trade payables
Accruals
Other payable

2,407
179,995
54,82027,27747,907(161,693)(9,479)(11,234)5555
130,000
5555
130,000
aaaa

Net identified assets
Cash consideration
Goodwill—
aaaa

Year ended 31 December 2010
On 9 December 2010, the Group entered into an agreement to distribute its interest in Italicatessen
Limited to P.E.Q. Holdings Limited, a company incorporated in the Republic of Ireland, as part of agroup restructuring. P.E.Q. Holdings is the current majority shareholder of Keywords International
Limited.
This transfer has been treated as a distribution. The total profit of €12,189 earned to the date oftransfer is included in the consolidated statement of comprehensive income as profit fromdiscontinued operations.
The Group did not receive any consideration for this transfer. No further contingent considerationis receivable in respect of this transfer.
Book value
prior toacquisition€

Property, plant and equipment
Stock
Trade receivables
Cash
Trade payables
Accruals
Other payables

106,786
213,007464,413138,108(231,064)(27,090)(362,850)

5555
301,3105555(301,310)
aaaa

Net identified assets
Loss on disposal of subsidiary

57

19.

Related parties and shareholders

Parties are considered to be related if one party has the ability to control the other party or
exercise significant influence over the other party’s making of financial or operational decisions, orif both parties are controlled by the same third party.
Italicatessen Limited is related by virtue of a common significant shareholder.
The following transactions arose with Italicatessen Limited, which provides canteen services to
Keywords International Limited. Moreover, Italicatessen is a related party debtor at each year end
because of an outstanding loan from Keywords International Limited of €238,100 and reimbursable
charges paid by Keywords International Limited on behalf of Italicatessen Limited. There is nointerest payable on this loan and it is of no fixed duration.
As of 31 December

Operating expenses
Canteen Charges
The following are year-end balances:
Italicatessen Limited
Total related party debtors

2010
€

2011
€

2012
€

12,798aaaa

15,047aaaa

28,522aaaa

261,8235555
261,823aaaa

239,492
5555
239,492aaaa

247,0215555
247,021aaaa

The Directors do not owe any amounts to the Group as at 31 December 2012. Mr. Giorgio Guastalla
owed the Group €1,782 at 31 December 2011 and €11,232 at 31 December 2010. Ms. Teresa
Immaculata Luppino owed the Group €nil at 31 December 2011 and €126 at 31 December 2010.
Keywords International Limited paid the following amounts to Mr. Giorgio Guastalla in respect ofrent on premises occupied by the employees of the Group in Dublin.

Operating expenses
Rental payment

2010
€

2011
€

2012
€

18,000aaaa

18,000aaaa

18,000aaaa

The Group owed its majority shareholder, P.E.Q. Holdings Limited the amount of €1,782 at
31 December 2011 and this was repaid in full during 2012.
The details of key management compensation (being the remuneration of the Directors) are set out
in note 5.
A director was granted a beneficial interest of up to 24.9 per cent. of the share capital of Keywords
International Limited.
20.

Subsidiaries

Details of the Group’s subsidiaries as at 31 December 2012 are set out below:

Name

Country ofincorporation

Date ofincorporation/acquisition

Proportion of
voting rights
and ordinary
share capital
held

Keywords International Co. Limited
Keywords International Corporation Inc.
Keywords Italia Srl.
Keywords International Inc.

Japan
Canada
Italy
United States30-11-2010
22-12-2010
18-05-2011
26-09-2012

100%
100%
100%
100%

21.

Nature ofbusiness

Trading Company
Trading Company
Trading Company
Trading Company

Financial Instruments and risk management

The Group is exposed to a variety of financial risks, which result from its financing, operating andinvesting activities. The objective of financial risk management is to contain, where appropriate,
exposures in these financial risks to limit any negative impact on the Group’s financial performanceand position. The Group’s financial instruments are its cash, trade and other receivables, related58

party debtors, accounts payable and accrued expenses. The main purpose of these financial
instruments is to raise finance for the Group’s operation. The Group actively measures, monitorsand manages its financial risk exposures by various functions pursuant to the segregation of duties
and principles. The risks arising from the Group’s financial instruments are credit risks and market
price risks, which include interest rate risk, currency risk and equity price risk. The risk
management policies employed by the Group to manage these risks are discussed below.
Interest rate risk
Interest rate risk is the risk that the value of financial instruments will fluctuate due to changes inmarket interest rates. The Group’s income and operating cash flows are substantially independentof changes in market interest changes. The management monitors interest rate fluctuations on acontinuous basis and acts accordingly.
Where the Group has generated a significant amount of cash, it will invest in higher earning interest
deposit accounts. These deposit accounts are short term with fixed interest rates, and so the Groupis not unduly exposed to market interest rate fluctuations, and no interest rate sensitivity analysis
has been presented as a result.
Credit Risk
Credit risk arises when a failure by counterparties to discharge their obligations could reduce theamount of future cash inflows from financial assets on hand at the balance sheet date.
The Group closely monitors the activities of its counterparties and regular contact which enables it
to ensure the prompt collection of customers’ balances.
The Group’s main financial assets are cash and cash equivalents as well as trade and otherreceivables and represent the Group’s maximum exposure to credit risk in connection with its
financial assets. Trade and other receivables are carried on the balance sheet net of bad debt
provisions estimated by the Directors based on prior year experience and an evaluation of prevailing
economic circumstances.
Whenever possible and commercially practical the Group invests cash with major financial
institutions in each jurisdiction where it operates. The Group periodically monitors the credit rating
and stability of these institutions.
The ageing of trade and other receivables that are past due but not impaired can be analysed asfollows:

As at 31 December 2010
As at 31 December 2011
As at 31 December 2012

Total

Not past
due

1-2 months
overdue

More than
2 months
past due

€

€

€

€

707,722
1,241,438
1,397,248

291,495
775,577
1,009,472

416,227
181,467
199,583—
284,394
188,193

The above balances relate to customers with no default history.
A provision for doubtful debtors is included within trade receivables that can be reconciled asfollows:

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

2010
€

2011
€

2012
€

—
—
—

—
54,246—54,246
11,562
—

5555
—
aaaa

5555
54,246aaaa

5555
65,808aaaa

Related party receivables of €261,823, €239,492 and €247,021 were not past due at 31 December
2010, 2011 and 2012 respectively.
Currency Risk
Currency risk is the risk that the value of financial instruments will fluctuate due to changes inforeign exchange rates.

59

The foreign exchange risk arises for the Group where assets and liabilities arise and are held inoverseas subsidiaries in a currency other than the euro and to a lesser extent where individualGroup entities enter into transactions denominated in currency other that their functional currency.
The Group’s policy, where possible, is for group entities to manage foreign exchange risk at a local
level by matching the currency in which revenue is generated and the expenses incurred and by
settling liabilities denominated in their functional currency with cash generated from their own
operations in that currency. In order to monitor the Group’s exposure to foreign exchange risk, theboard receives a monthly analysis of the major currencies held by the Group, and of liabilities duefor settlement and expected cash reserves.
The Group’s policy is not to enter into any currency hedging transactions.
Liquidity Risk
Liquidity risk arises from the Group’s management of working capital and the financial charges on
its debt instruments.
The Group’s policy is to ensure that it will have sufficient cash to allow it to meet its liabilities
when they become due.
The following are the contractual maturities (representing undiscounted contractual cash flows) of
the Group’s financial liabilities:
Total€

Within 1 year€

1-2 years€

2-5 years€

Year ended 31 December 2010
Trade payables
Other accounts payable

250,395
46,124

250,395
46,124————

Year ended 31 December 2011
Trade payables
Other accounts payable

662,722290,546

662,722290,546————

Year ended 31 December 2012
Trade payables
Other accounts payable

701,197
361,897

701,197
361,897————

Total financial assets and liabilities
The fair value together with the carrying amount of the financial assets and liabilities shown in thebalance sheet are as follows:
2010

Cash and cash equivalents
Trade Receivables
Other assets
Trade payables
Other payables

22.

2011

2012

Fair
value
€’000

Carrying
amount
€’000

Fair
value
€’000

Carrying
amount
€’000

Fair
value
€’000

Carrying
amount€’000

936,784
707,722469,971(250,395)—

936,784
707,722469,971(250,395)—

3,262,632
1,241,458
495,211(662,722)(10,883)

3,262,632
1,241,458
495,211(662,722)(10,883)

4,397,674
1,397,248
637,768(701,197)(14,945)

4,397,674
1,397,248
637,768(701,197)(14,945)

Operating Lease Commitments

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

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

60

2010
€

2011
€

2012
€

240,000
960,000
1,060,000

476,928
1,695,861
1,114,421

498,784
1,550,529
788,2495555
2,260,000
aaaa

5555
3,287,210
aaaa

5555
2,837,562
aaaa

23.

Post balance sheet events

In May 2013 the Group incorporated a new holding company, Keywords Studios Limited in the United
Kingdom. On 8 July 2013, the shareholders of Keywords International Limited swapped their sharesin Keywords International Limited for shares in Keywords Studios plc. As a result, this company isconsidered the ultimate parent of the Group. Prior to this share swap, Mr Andrew Day, a director of
the Company and Keywords International Limited, has agreed to enter into a deed of undertaking
and indemnity as described in paragraph 4.9 of the Part IV of the Admission Document.
In May 2013 the Group paid a further dividend of €124,482 in respect of 2011.
In June 2013 the Group paid a final dividend of €500,000 in respect of 2012.
24.

Contingent liabilities

Management is not aware of any contingencies that may have a significant impact on the financial
position of the Group.

61

PART IVADDITIONAL INFORMATION1.

RESPONSIBILITYThe Company, (whose registered office appears on page 4 of this document) and the Directors(whose names and functions appear on page 4), accept responsibility for the information containedin this document. To the best of the knowledge and belief of the Company and the Directors eachof which has taken reasonable care to ensure that such is the case, the information contained inthis document is in accordance with the facts and does not omit anything likely to affect the importof such information.
2.

THE COMPANY AND THE GROUP

2.1

The Company was incorporated in England and Wales on 29 May 2013 under the 2006 Act asa private company limited by shares with the name Keywords Studios Limited and theregistered number 8548351. The Company is domiciled within the United Kingdom.

2.2

In order to satisfy certain requirements in connection with Admission, the Company wasinserted as a new parent company of the Group by way of a share for share exchange withthe shareholders of Keywords International Limited on 8 July 2013.

2.3

The Company was re-registered as a public limited company under the 2006 Act on 8 July
2013 with the name Keywords Studios plc.

2.4

The liability of the members of the Company is limited to the amount paid up or to be paid
up on their shares. The principal legislation under which the Company operates is the 2006
Act.

2.5

The registered office of the Company is at 8 Clifford Street, London, W1S 2LQ(+44 (0)207 851 6000) and will remain so on Admission. The head office of the Company is at
Whelan House, South County Business Park, Leopardstown, D18, Dublin, Ireland (+353 190 22 730).

2.6

The Company’s website address, at which the information required by Rule 26 of the AIM
Rules for Companies can be found, is www.keywordsstudios.com.

2.7

The Company has interests held directly or indirectly in the following subsidiaries:

Company nameCountry ofincorporation

Keywords International Limited
Keywords Italia S.R.L.
Keywords International Company Limited
Keywords International Corporation, Inc.
Keywords International, Inc.
KW Studios Limited

Republic of Ireland
Italy
Japan
CanadaUnited States
England and Wales

Percentage ofissued share capitalor interest held

100
100
100
100
100
100

2.8

The principal activity of the above companies is that of the provision of outsourced services,
specifically localisation, localisation testing, audio management and functional testing
services to the video games market and in the case of Keywords International Company
Limited (Japan), with an additional emphasis on Asian languages.

2.9

All the above subsidiaries and associated undertakings operate in their country ofincorporation.

3.

SHARE CAPITAL OF THE COMPANY

3.1

The issued share capital of the Company as at incorporation on 29 May 2013 was 1,000
ordinary shares of £0.01 each, which was issued to the persons and in the proportions as set
out below:

62

Number ofOrdinary Shares

Shareholder

P.E.Q. Holdings Limited(1)Andrew Day(2)

3.2

751
249

(1)

The Founders hold their respective interests in the capital of the Company through their holdings in P.E.Q.
(which, in the cases of Giacomo Duranti and Marco De Sanctis are held on trust for them by Giorgio Guastalla).

(2)

Giorgio Guastalla held the legal title to these Ordinary Shares as trustee for Andrew Day pursuant to a trust
deed dated 21 June 2012.

The following changes in the share capital of the Company have taken place between 29 May
2013 and the date of this document:
3.2.1 On 5 July 2013 the 249 Ordinary Shares held by Giorgio Guastalla on trust for Andrew
Day were transferred to Andrew Day upon termination of the trust deed dated 21 June2012 between Andrew Day and Giorgio Guastalla.
3.2.2 On 8 July 2013, the Company issued in aggregate 31,901,332 ordinary shares of £0.01
each to P.E.Q. and Andrew Day, the shareholders in Keywords International, in
connection with the share for share exchange referred to in paragraph 2.2 above, inthe proportions set out below:
Number of
Ordinary Shares

Shareholder

P.E.Q. Holdings Limited(1)Andrew Day(1)

23,956,721
7,944,611

The Founders hold their respective interests in the capital of the Company through their holdings in
P.E.Q. (which, in the cases of Giacomo Duranti and Marco De Sanctis are held on trust for them by
Giorgio Guastalla).

3.2.3 By ordinary and special resolutions passed on 8 July 2013:(i)the Company adopted the Articles;(ii)

conditional upon Admission, the Directors were authorised, for the purposes ofsection 551 of the 2006 Act to allot relevant securities of the Company:(A)

up to an aggregate nominal amount of £81,300.81 in respect of the
Placing;(B)

up to an aggregate nominal amount of £20,016.21 in respect of the SharePlans;(C)

up to an aggregate nominal amount of £4,003.24 in respect of theWarrants;(D)otherwise than pursuant to sub-paragraph (A) to (C) above, up to an
aggregate nominal value of £81,300.81;

such authorisation expiring on the date of the next annual general meeting of theCompany;(iii)

the Directors were authorised, conditional on Admission and subject to thepassing of the resolutions summarised in paragraphs 3.2.3(i)-(ii) above(“s.551 Resolution”), to allot equity securities for cash up to 186,627.07
Ordinary Shares pursuant to the s.551 Resolution as if section 561(1) of the 2006
Act did not apply to such allotments, such authorisation expiring on the date of
the next annual general meeting of the Company.

3.3

The number of Existing Ordinary Shares is 31,902,332. The Company will, pursuant to thePlacing (and in accordance with the terms of the Placing Agreement), allot 8,130,081 Ordinary
Shares at the Placing Price, conditionally upon Admission. Accordingly, immediately following
Admission the issued share capital of the Company will increase to £400,324 divided into
40,032,413 Ordinary Shares.

3.4

The proposed issue of the New Shares pursuant to the Placing will be carried out by virtue ofthe authorities contained in paragraph 3.2.3(ii)(A) above.

3.5

The Placing Shares will, following allotment, rank pari passu in all respects with the Ordinary
Shares including the right to receive all dividends and other distributions hereafter declared,
paid or made on the Ordinary Share capital of the Company.
63

3.6

The holders of Existing Ordinary Shares will be diluted by the issue of the Placing Shares. The
effect of the issue of the Placing Shares (assuming that the Placing is fully subscribed byparties who are not holders of Existing Ordinary Shares) will be that holders of Existing
Ordinary Shares at the date of this document will own 43.2 per cent. of the Enlarged Share
Capital following Admission.

3.7

Save as disclosed in this Part IV, as at the date of this document:
3.7.1 no share or loan capital in the Company or of any member of the Group is under option
or is the subject of an agreement, conditional or unconditional, to be put under option;
3.7.2 no share or loan capital of the Company has been issued, or is now proposed to beissued, otherwise than fully paid;
3.7.3 there are no shares in the capital of the Company which do not represent capital;
3.7.4 no person has any preferential subscription rights for any share capital of the Company;
3.7.5 no commissions, discounts, brokerages or other special terms have been granted by theCompany in connection with the issue or sale of any share or loan capital of the Company;
3.7.6 the Company does not hold any of its own Ordinary Shares as treasury shares and noneof the Company’s subsidiaries hold any Ordinary Shares;
3.7.7 the Company has no convertible debt securities, exchangeable debt securities or debt
securities with warrants in issue; and3.7.8 there are no acquisition rights or obligations over the unissued share capital of theCompany and there is no undertaking to increase the share capital of the Company.

4.

DISCLOSURE OF INTERESTS

Directors’ and Others’ Interests
4.1

As at the date of this document and immediately following Admission, the interests (within
the meaning of sections 820 to 855 of the 2006 Act) of the Directors (including Connected
Persons) in the issued share capital of the Company (all of which are beneficial unlessotherwise stated) currently and as they are expected to be immediately following the Placing(assuming that the Placing is fully subscribed) and Admission are as follows:
As at the date ofthe document

Directors

Andrew Day
David O’Connor
Giorgio Guastalla
Ross Graham
David Reeves
(1)

4.2

Numberof Existing
Ordinary Shares

7,944,860—
10,780,862(1)——Immediately following thePlacing and Admission

Percentage
of Existing
Ordinary Shares

Number of
Ordinary Shares

Percentage
of Enlarged
Share Capital

24.9
—
33.8
—
—

5,296,573
12,1955,390,431—
16,260

13.2
0.0
13.5
—
0.0

This figure represents the indirect shareholding that Giorgio Guastalla holds in the Company by virtue of his
45 per cent. shareholding in P.E.Q.. P.E.Q. is a 75.1 per cent. shareholder in the Company as at the date ofthis document.

On Admission, the Company will grant to Andrew Day and David O’Connor awards under the
Share Plans, as described in paragraph 11 of this Part IV. Under the LTIP, such award willcomprise the grant of Options over 86,593 Ordinary Shares to Andrew Day and over
65,811 Ordinary Shares to David O’Connor, exercisable at any time between the third and theseventh anniversaries of the date of Admission (subject to the conditions referred to inparagraph 11.2 of this Part IV) at an exercise cost of nominal value per Ordinary Share. Under
the Share Option Plan, such award will comprise the grant of Options over 57,152 Ordinary
Shares to Andrew Day and over 13,470 Ordinary Shares to David O’Connor, exercisable at any
time between the third and the seventh anniversaries of the date of Admission (subject to theconditions referred to in paragraph 11.1 of this Part IV) at an exercise price for Andrew Dayof 123 pence per Ordinary Share representing the Placing Price and at an exercise price forDavid O’Connor of 111 pence per Ordinary Share representing a 10 per cent. discount to thePlacing Price. It is intended that the Remuneration Committee will resolve to grant awards toother senior management and employees soon after Admission.
64

4.3

Save as disclosed in this paragraph 4 of this Part IV, no Director has at the date of thisdocument (or will have at Admission) any option over any shares in the Company.

4.4

Save as disclosed in this paragraph 4 of this Part IV, none of the Directors nor any Connected
Persons has any interest in the issued share capital of the Company or of any of its
subsidiaries or will at Admission have any such interest.

Major Shareholders
4.5

As at the date of this document and immediately following the Placing (assuming that the
Placing is fully subscribed) and Admission the following persons will be interested, directly or
indirectly, jointly or severally, in 3 per cent. or more of the Company’s issued share capitalor exercise or could exercise control over the Company:
As at the date ofthe document
Numberof Existing
Ordinary Shares

P.E.Q. Holdings Ltd(1)Andrew Day
Cazenove Capital Management
Artemis Investment
Management Limited
Legal & General Investment
Management Ltd
Old Mutual Asset Management(UK) Ltd.
Liontrust Investment Partners LLP
Invesco Asset Management Limited(1)

Immediately following
Admission

Percentage
of Existing
Ordinary Shares

Number of
Ordinary Shares

Percentage
of Enlarged
Share Capital

23,957,472
7,944,860
—

75.1
24.9
—

11,978,736
5,296,573
5,100,000

29.9
13.2
12.7

—

—

3,250,000

8.1

—

—

2,700,000

6.7

—
—
—

—
—
—

2,415,000
1,800,000
1,700,000

6.0
4.5
4.2

The Founders are shareholders in P.E.Q. (with Giacomo Duranti’s and Marco De Sanctis’ respective
shareholdings being held on trust for them by Giorgio Guastalla).

4.6

The Ordinary Shares held by the Shareholders set out at paragraph 4.5 above rank pari passu
with the Existing Ordinary Shares and, in particular, have no different voting rights than otherexisting Shareholders.

4.7

Other than as disclosed in paragraph 4.5 of Part IV of this document, the Directors are notaware of any person or persons who, directly or indirectly, have at the date of this document
or will immediately following Admission have an interest in the Company which represents
3 per cent. or more of the issued share capital or voting rights, or who at the date of thisdocument, or who directly or indirectly jointly or severally, exercise or could exercise,control over the Company.

4.8

Neither the Directors nor any of the Shareholders listed in paragraph 4.5 above have different
voting rights to other Shareholders.

Charge to Taxation
4.9

In relation to the prior acquisition of shares in Keywords International Limited by Andrew Day
when he became a director of that company, the restructuring of the Group described in thisdocument (in particular involving the creation of a parent undertaking that will have a UK
permanent establishment) may trigger a liability on the part of the Group and also Mr Day toadditional employment related taxation and national insurance contributions (together“ERT&NI”). Andrew Day has agreed to co-operate with the Company in determining the extent
of any additional ERT&NI liability, the time periods for payment of such liabilities, including
taking into account any payment of tax on account which may be set off against such ERT&NI
liability. In order to reaffirm his willingness to co-operate, Andrew Day has agreed to depositwith the Company £250,000 (out of the proceeds of his Sale Shares) (the “Deposit”) as security
for the Company in respect of and on the basis that such monies may be directed towards any
such ERT&NI liability of the Company on terms agreed with the Company pursuant to a deed ofundertaking and indemnity entered into on 8 July 2013 between the Company and Andrew Day,and further, Andrew Day has agreed under that agreement to indemnify and to hold harmless theCompany and the Group from and against any such additional ERT&NI (other than employer’s

65

national insurance contributions) in excess of the payment on deposit of £250,000, up to a
maximum liability amount of £250,000. The Deposit or the balance thereof shall be released toAndrew Day at the expiry of the period of 30 months from 8 July 2013, with a corresponding
increase in the maximum liability amount under the agreement to indemnify. It is anticipatedthat upon the extent of the ERT&NI liability being determined, which in any event is consideredby the Directors not to be material in the context of the Group, appropriate disclosure will bemade in the accounts of the Company for the relevant year at such time of determination.
5.

SELLING SHAREHOLDERS

5.1

Subject to Admission occurring, certain Shareholders (the “Selling Shareholders”) are sellingup to 14,627,023 Ordinary Shares in aggregate pursuant to the Placing.

5.2

The following table sets out the interests of each Selling Shareholder and Connected Persons
as at the date of this document and as they are expected to be immediately following
completion of the Placing (assuming that the Placing is fully subscribed) and Admission:
As at the date ofthe document

Directors

P.E.Q. Holdings Ltd(1)Andrew Day(1)

Immediately following
Admission

Numberof Existing
Ordinary Shares

Percentage
of Existing
Ordinary Shares

Number of
Ordinary Shares

Percentage
of Enlarged
Share Capital

23,957,472
7,944,860

75.1
24.9

11,978,736
5,296,573

29.9
13.2

The Founders are shareholders in P.E.Q. (with Giacomo Duranti’s and Marco De Sanctis’ respective
shareholdings being held on trust for them by Giorgio Guastalla).

6.

DIRECTORS’ SERVICE AGREEMENTS AND LETTERS OF APPOINTMENT

6.1

Set out below are summary details of the service agreements and letters of appointment
entered into between the Company and the Directors:
6.1.1 Executive Directors
Andrew Day (Chief Executive Officer) entered into a service agreement with theCompany on 8 July 2013 to act as Chief Executive Officer. The date upon which
Mr Day’s continuous employment commenced is 1 March 2009. His appointment isterminable on six months’ notice by either party.
Mr Day’s salary is €125,000 per annum. Mr Day may be paid such discretionary bonusfrom time to time as shall be determined by the Remuneration Committee. Mr Day isalso eligible to participate in the LTIP.
David O’Connor (Chief Financial Officer) entered into a service agreement with theCompany on 8 July 2013. The date upon which Mr O’Connor’s continuous employment
commenced is 17 July 2012. His appointment is terminable on three months’ notice byeither party.
Mr O’Connor’s salary is €95,000 per annum. Mr O’Connor may be paid such discretionary
bonus from time to time as shall be determined by the Remuneration Committee.
Mr O’Connor is also eligible to participate in the LTIP.
6.1.2 Non-Executive Directors
Ross Graham (Non-Executive Chairman) entered into a letter of appointment with theCompany on 8 July 2013. The appointment will (subject to Admission) continue for an
initial period of 12 months, although it is terminable earlier in various specified
circumstances and in any event by either party on three months notice. The annual fee
payable to him is £40,000.
David Reeves (Non-Executive Director) entered into a letter of appointment with theCompany on 29 May 2013. The appointment will (subject to Admission) continue for an
initial period of 12 months, although it is terminable earlier in various specified
circumstances and in any event by either party on three months notice. The annual fee
payable to him is £38,400 plus an additional £1,000 per day in the event that Mr Reeves
works for the Company more than 3 days per calendar month.

66

Giorgio Guastalla (Non-Executive Director) entered into a letter of appointment with
the Company on 29 May 2013. The appointment will (subject to Admission) continue
until terminated by the Company. P.E.Q. has a contractual right pursuant to theRelationship Agreement (detailed in paragraph 17.5 of Part IV) to nominate and haveappointed one Director to the Board. The first such Director is Giorgio Guastalla. The
annual fee payable to him is £35,000.
6.2

As at the date of this document, the Company does not contribute to any pension nor
provides any other benefits to the Directors. The Company may decide to establish and/or
contribute to a pension and provide other benefits as the Remuneration Committee shalldetermine for the benefit of certain directors and employees of the Group.

6.3

There are no contracts providing for benefits upon the termination of employment of any
Director.

6.4

Save as disclosed in paragraph 6.1 none of the Directors has a service agreement with theCompany that has been entered into or varied within six months prior to the date of thisdocument or which is a contract which expires or which is determined by the Company
without payment of compensation (other than statutory compensation) after more than one
year.

6.5

Save for any payments to the Directors on termination in lieu of notice, no benefits on
termination are payable by the Company.

7.

ADDITIONAL INFORMATION IN RELATION TO THE DIRECTORS

7.1

The Directors, in addition to their directorships of the Group, are or have been a member of
the administrative, management or supervisory bodies, or directors or partners of thefollowing companies or partnerships within the five years prior to the publication of thisdocument:

7.2

Name

Current directorships

Former directorships

Andrew Day

None

None

David O’Connor

None

None

Giorgio Guastalla

Italicatessen Limited
P.E.Q. Holdings Limited

None

Ross Graham

Coinflint Residents Association Limited
Wolfson Microelectronics Plc
Loch Tay Central Salmon Fishings
LimitedPsion Plc
Acambis Plc

David Reeves

Midgarth Residents Company Limited
David Reeves Consulting LimitedSense, The National Deaf Blind andRubella Association
Autistica

Sony Computer Entertainment
Europe Limited
Psygnosis Holdings PLC
Psygnosis Licensing Limited
Psygnosis Limited
Sony Computer Entertainment UK
LimitedPlaystation.com (Europe) LTD.
Sony Network Entertainment Europe
LimitedBigbig Studios Limited
Evolution Studios Limited
Recruitment Realisations Limited
MWP Realisations Limited

Save as disclosed at paragraphs 7.3 and 7.4, no Director has:
7.2.1 any unspent convictions relating to indictable offences;
7.2.2 ever had a bankruptcy order made against him or entered into any individual voluntaryarrangements with his creditors;
7.2.3 been a director of a company which has been placed in receivership, compulsory
liquidation, creditors’ voluntary liquidation or administration, or been subject to acompany voluntary arrangement or any composition or arrangement with its creditors67

generally or any class of its creditors, whilst he was a director of that company, or
within the twelve months after he ceased to be a director of that company;
7.2.4 been a partner in any partnership which has been placed in compulsory liquidation oradministration or been the subject of a partnership voluntary arrangement whilst he
was a partner in that partnership, or within twelve months after he ceased to be apartner in that partnership;
7.2.5 had any asset belonging to him made the subject of a receivership or been a partner ofa partnership whose assets have been placed in receivership whilst he was a partner at
the time of, or within twelve months preceding, such receivership; and7.2.6 received any official public criticism and/or sanction by any statutory or regulatory
authority (including any recognised professional body); or
7.2.7 ever been disqualified by a court from acting as a director of a company or from acting
in the management or conduct of the affairs of any company.
7.3

David Reeves was a director of Recruitment Realisation Limited and its associated company
MWP Realisation Limited in 2010 when such companies were placed into administration. The
assets (and employees) were then sold as part of a pre-pack acquisition. Both companies havesubsequently been placed into creditors voluntary liquidation.

7.4

Ross Graham was a non-executive director of each of EXY Group PLC when it was placed into
administration in 2005, and of Vecta Software Corporation Limited when it was placed into
administration in 2006. Both companies were subsequently placed into liquidation.

7.5

Save as disclosed in this document, no Director has had any interest in any transaction which
is or was unusual in its nature or conditions or is or was significant to the business of theCompany and its subsidiaries during the current or immediately preceding financial year or
which was effected by the Company or any of its subsidiaries during an earlier financial year
and remains in any respect outstanding or unperformed.

7.6

Save as disclosed in this document, none of the Directors nor members of their family holds
a related financial product whose value in whole or part is determined directly or indirectly
by reference to the price of the Ordinary Shares.

7.7

There are no outstanding loans granted by the Company to any Director nor has any guarantee
been provided by the Company for the benefit of any Director.

7.8

Save as disclosed in this document, there are no actual or potential conflicts of interest between
the duties of the Directors to the Company and their respective private interests or other duties.

8.

EMPLOYEES

8.1

The Group employed on average 44 people during the financial year ended 31 December
2010, 143 people during the financial year ended 31 December 2011, and 217 people during
the financial year ended 31 December 2012. As at the date of this document the Group had
225 employees (inclusive of temporary, contract and flexitime employees). Note that the
Directors do not include freelancers within their headcount.
In the year to 31 December 2012, the Group employed on average 217 employees as follows:

Category of Activity

Number ofpermanent
employees

Number of
temporary/contract/
flexitime employees

Geographic
location

39
19
11
4
7
6
2
—

90
1
4
16
2
12
3
1

DublinDublinDublinMontreal
Rome
Tokyo
Tokyo
Tokyo

5555
88
aaaa

5555
129
aaaa

Testing
Localisation (translation)
Admin
Testing
Localisation (translation)
Testing
Localisation (translation)
Admin
Total:

68

In the year to 31 December 2011, the Group employed on average 143 employees as follows:

Category of Activity

Number ofpermanent
employees

Number of
temporary/contract/
flexitime employees

Geographic
location

22
14
8
5
5
6
2
–

66
–
3
1
3
8
–
–

DublinDublinDublinMontreal
Rome
Tokyo
Tokyo
Tokyo

5555
62
aaaa

5555
81
aaaa

Testing
Localisation (translation)
Admin
Testing
Localisation (translation)
Testing
Localisation (translation)
Admin
Total

In the year to 31 December 2010, the Group employed on average 44 employees as follows:

Category of Activity

Number ofpermanent
employees

Number of
temporary/contract/
flexitime employees

Geographic
location

15
4
6
4

14
1
–
–

DublinDublinDublin
Tokyo

5555
29
aaaa

5555
15
aaaa

Testing
Localisation (translation)
Admin
Testing
Total:
9.

SIGNIFICANT INVESTMENTS

Save as disclosed in this document, there have been no significant investments by the Company or
any of its subsidiaries in the three years covered by the historical financial information up to thedate of this document.
10.

SUMMARY OF THE ARTICLES AND PROTOCOL

ProtocolThe Company has adopted on 21 June 2013 a protocol governing the procedure and conduct ofmeetings of the Board of the Company (the “Protocol”) and references in the Articles to ‘Protocol’
are to the Protocol. The Protocol requires the Board to use best endeavours and take all necessary
steps to ensure, inter alia, that annual general meetings, general meetings, committee meetings,
and board meetings shall be held in the Republic of Ireland.
Objects
Pursuant to section 31 of the 2006 Act, the objects for which the Company is established are
unrestricted and the Company has full power and authority to carry out any object not prohibitedby law.
ArticlesThe Articles in the form which has been adopted by the Company conditional on Admission containprovisions to the following effect:10.1 Variation of class rights and class meetings
Whenever the share capital of the Company is divided into different classes of shares, all or
any of the rights attached to any class may be varied or abrogated in such manner (if any) as
may be provided by those rights or (in the absence of any such provision) either with theconsent in writing of the holders of not less than three-quarters in nominal value of the issued
shares of that class or with the authority of a special resolution passed at a separate general
meeting of the holders of the shares of that class.

69

A separate meeting for the holders of a class of shares shall be convened and conducted asnearly as possible in the same way as a general meeting pursuant to these Articles, except
that:
10.1.1 no member, other than a director, shall be entitled to notice of it or to attend suchmeeting unless he is a holder of shares of that class;10.1.2 no vote may be given except in respect of a share of that class;10.1.3 the quorum at the meeting other than an adjourned meeting shall be two persons
holding or representing by proxy at least one-third in nominal value of the issued
shares of that class and at an adjourned meeting the quorum shall be one person
holding shares of that class or his proxy; and every holder of shares of the class shall,
on a poll, have one vote in respect of every share of the class held by him;
10.1.4 every holder of shares of the class shall, on a poll, have one vote in respect of every
share of the class held by him; and10.1.5 a poll may be demanded by a member present in person or by proxy and entitled tovote at the meeting and on a poll each member shall have one vote for every share ofthat class of which he is the holder.
10.2 Convening general meetings
10.2.1 An annual general meeting shall be held in every year as the annual general meetingof the Company (and specified as such in the notice convening the meeting), at suchtime (within a period of not more than fifteen months after the holding of the last
preceding annual general meeting) and place as may be determined by the Board.
10.2.2 Without prejudice to the Articles and the requirement under the 2006 Act to convene
an annual general meeting in each year, the Board may convene a general meeting
whenever it thinks fit. A general meeting shall also be convened on such requisition,or in default may be convened by such requisitionists, as provided by sections 303 to
305 of the 2006 Act and no business shall be transacted at such meeting except thatstated by the requisition or proposed by the Board in accordance with the Protocol.
10.2.3 The Company shall determine the time, being no more than 48 hours before the time
fixed for the meeting, by which a person must be entered on the register of members
in order to be entitled to attend or vote at a general meeting.
10.3 Ownership threshold and change of control
The Articles do not prescribe any ownership threshold above which Shareholder ownershipmust be disclosed. There are no provisions in the Articles which would have the effect ofdelaying, deferring or preventing a change of control of the Company.
10.4 Alteration of capital
The Company, by special resolution, may reduce its share capital, any capital redemption
reserve fund or any share premium account in any manner and with, and subject to, any
incident authorised, and consent required, by law.
10.5 Transfer of shares
10.5.1 Shares may be held in uncertificated form and uncertificated shares may betransferred in accordance with the rules, procedures and practices of the relevant
system and the Uncertificated Securities Regulations. Subject to the provisions of the
Uncertificated Securities Regulations, the transferor shall remain the holder of theshare transferred until the name of the transferee is entered in the register ofmembers of the Company in respect of it.
10.5.2 Transfers of shares in certificated form may be effected by an instrument in writing,in any usual form or in any other form approved by the directors. The instrument oftransfer shall be executed by or on behalf of the transferor and, unless the share is
fully paid, by or on behalf of the transferee.

7010.5.3 Subject to the Articles, the Board may, in its absolute discretion and without giving areason, refuse to register the transfer of a certificated share or the renunciation of arenounceable letter of allotment unless it is:(i)in respect of a share which is fully paid;(ii)

in respect of a share on which the Company has no lien;(iii)

in respect of only one class of shares;(iv)

in favour of a single transferee or renouncee or not more than four joint
transferees or renouncees;(v)

duly stamped or duly certificated or otherwise shown to the satisfaction of theBoard to be exempt from stamp duty (if required); and(vi)

delivered for registration to the registered office of the Company or such otherplace as the Board may decide, accompanied by the certificate for the sharesto which it relates (except in the case of a transfer of a share, for which a
certificate has not been issued, by a person in respect of whom the Company is
not required by the 2006 Act to complete and have ready for delivery a sharecertificate, and except in the case of a renunciation) and any other evidence as
the Board may reasonably require to prove the title to such share of thetransferor or person renouncing and the due execution by him of the transfer or
renunciation or, if the transfer or renunciation is executed by some otherperson on his behalf, the authority of such person to do so.

10.5.4 If the Board refuses to register any such transfer or renunciation (relating to either
certificated or uncertificated shares) the Company shall, within two months after thedate on which the instruction relating to such transfer or renunciation was received by
the Company, send notice of the refusal to the transferee or renouncee.
10.6 Restrictions on voting, dividends and transfer of default shares
10.6.1 If a member or any person appearing to be interested in shares in the Company has
been duly served with a notice under section 793 of the 2006 Act and is in default in
supplying to the Company the information required in respect of the shares to which
the notice relates (“default shares”) within fourteen days after the service of such
notice, (the “direction notice”) the restrictions set out in articles 8.6.2 and 8.6.3
shall apply.
10.6.2 The default shares shall not confer on the member concerned any entitlement toattend or vote, either personally or by proxy, at a general meeting or class meetingof the Company.
10.6.3 Where default shares represent at least 0.25 per cent. of the class of sharesconcerned, the holder of the default shares shall not be entitled in respect of thedefault shares:(i)to receive any dividend or other distribution;(ii)

the member shall not be entitled to elect, pursuant to the Articles orotherwise, to receive shares instead of a dividend; and/or(iii)

to transfer or agree to transfer the default shares unless the transfer is an
exempt transfer.

For this purpose, an “exempt transfer” is a transfer of shares pursuant to an
acceptance of a takeover offer (within the meaning of section 974 of the 2006 Act); atransfer in consequence of a sale made through the London Stock Exchange or any
investment exchange selected by the Company outside the United Kingdom on which
any shares are normally traded; or a transfer which is shown to the satisfaction of theBoard to be made in consequence of a sale in good faith of the whole of the beneficial
interest in the shares to a person who is unconnected with the member and with anyother person appearing to be interested in the shares.
The terms of a direction notice shall cease to have effect seven days following due
compliance, to the satisfaction of the directors, with the notice under section 793 of71

the 2006 Act, or if the transfer of any default shares is by way of an approved
transfer, but only in respect of the default shares which are transferred.
10.7 Pre-emption rights
Rights of pre-emption are to be governed by the provisions of the 2006 Act and accordingly
the Articles do not prescribe any rights of pre-emption in relation to offers for subscription of
Ordinary Shares.
10.8 Redemption and conversion
The Ordinary Shares are not redeemable or convertible.
10.9 Participation in profits and assets
10.9.1

Subject to the superior rights of any other class or classes of shares that are, or may
be, issued by the Company, the rights and restrictions attaching to the Ordinary
Shares as regards participation in the profits and assets of the Company are as
follows:(i)

any profits which the Company may determine to distribute in respect of any
financial year shall be distributed among the holders of the Ordinary Sharespro rata according to the amounts paid up or credited as paid up on suchshares held by them respectively; and(ii)

the capital and assets of the Company on a winding-up or other return ofcapital shall be applied in repaying to the holders of the Ordinary Shares theamounts paid up or credited as paid up on such shares and subject thereto
shall belong to and be distributed according to the number of such shares heldby them respectively.

10.10 Entitlement to dividends
Except as otherwise provided by the Articles or the rights attached to, or the terms of issueof shares:(i)a dividend shall be declared and paid according to the amounts paid up (otherwise thanin advance of calls) on the nominal value of the shares on which the dividend is paid;
and

(ii)

dividends shall be apportioned and paid proportionately to the amounts paid up on thenominal value of the shares during any portion or portions of the period in respect ofwhich the dividend is paid, but if any share is issued on terms that it shall rank for
dividend as from a particular date, it shall rank for dividend accordingly.

10.11 Voting
10.11.1 On a show of hands, every member present in person has one vote, each authorised
person appointed by a corporate Shareholder has one vote and every proxy present
has one vote, unless he has been appointed by more than one member and has been
instructed by one or more of those members to vote for the resolution and by one ormore others to vote against it, in which case he has one vote for and one voteagainst the resolution.
10.11.2 In the case of a poll every member has one vote for every share held by him and his
voting rights may be exercised by one or more proxies.
10.11.3 These voting rights are subject to any rights or restrictions as to entitlement to voteand to any suspension or abrogation of voting rights pursuant to the Articles.
10.12 Dividends
10.12.1 The Company may, by ordinary resolution, declare dividends but no such dividend
shall exceed the amount recommended by the directors. The directors may fromtime to time pay such interim dividends as appear justified by the financial positionof the Company.

72

10.12.2 The directors may deduct from any dividend or other moneys payable to any person
or, in respect of a share, all such sums as may be due from him to the Company inrelation to the shares of the Company.
10.12.3 All unclaimed dividends may be invested or otherwise made use of by the directors
for the benefit of the Company until claimed. Any dividend which has remained
unclaimed for a period of twelve years after having been declared or become due forpayment shall be forfeited and shall revert to the Company.
10.13 Directors
10.13.1 Number of directors
Unless otherwise determined by the Company by ordinary resolution, the number of
directors shall not be fewer than two. The Company may from time to time byordinary resolution fix a maximum number of directors and from time to time varythat maximum number.
10.13.2 Shareholding qualification
A director is not required to hold any shares in the Company. A director who is nota member of the Company shall nevertheless be entitled to receive notice of and toattend and speak at all general meetings and class meetings.
10.13.3 Directors’ remuneration and expenses(i)Remuneration paid to the directors (other than executive directors) for theirservices as officers of the Company shall not exceed in aggregate £300,000 per
annum or such larger amount as the Company may by ordinary resolution
determine. Any such remuneration shall be distinct from any salary,
remuneration or other amounts payable to the director pursuant to any otherprovision of the Articles.
(ii)

A director who, at the request of the board, goes or resides abroad, makes a
special journey or performs a special service on behalf of or for the Company
may be paid such reasonable additional remuneration (whether by way ofsalary, bonus, commission, percentage of profits or otherwise) and expenses,
as the board acting through a duly authorised board committee may decide.

(iii)

The Company may also pay or repay to any director all travelling, hotel andother expenses reasonably and properly incurred in attending and returningfrom meetings of the directors or any committee of the directors or general
meetings of the Company or separate meetings of the holders of any class ofshares or debentures in the Company.

(iv)

The directors may establish and/or contribute to any pension, retirement or
superannuation scheme or fund and may pay or agree to pay pension,
retirement, superannuation benefits, annuities and other emoluments to (or toany person in respect of) any person who is or was at the time a director or
officer or employee of the Company or any associated company, for his benefit
or for the benefit of any member of his family. The directors may alsoestablish and/or contribute to any death and/or disability scheme for the
benefit of any person who is or was at the time a director or officer or
employee of the Company or any associated company or for the benefit of any
member of his family.

10.13.4 Interests and conflicts(i)
The directors are empowered pursuant to section 175 of the 2006 Act toauthorise any matter which would or might otherwise constitute a breach of
the duty of a director to avoid a situation in which he has, or can have, aninterest that conflicts, or possibly may conflict, with the interests of theCompany. Any such authorisation shall be subject to such conditions orlimitations as the directors may determine, whether at the time such
authorisation is given or subsequently, and may be terminated by the directors
at any time. Neither the director in question nor any other interested director

73shall be counted in the quorum at the meeting at which the matter isconsidered or vote on any resolution concerning any such authorisation.
(ii)

A director, notwithstanding his office, may be or become a director or otherofficer of, or hold any place of profit in, or act in a professional capacity for,or otherwise be interested in, any company in which the Company may beinterested.

(iii)

Where a director has, or can have, an interest that conflicts, or possibly may
conflict, with the interests of the Company or his duties to the Company andthe matter constituting such conflict has been authorised by the directors orby the Company or is otherwise permitted by the Articles, subject to the terms
on which any authorisation has been given:(a)the director in question need not disclose to, or use for, the benefit of
the Company any information relating to the relevant matter which heobtains or has obtained otherwise than as a director or employee of theCompany and in respect of which he owes a duty of confidentiality to aperson other than the Company;(b)the director in question shall not, unless otherwise agreed, be liable toaccount to the Company for any profit, remuneration or other benefit
realised by him as a consequence and no contract, transaction or
arrangement relating to the relevant matter shall be liable to be
avoided on the grounds of his conflict of interests or duties; and(c)the director in question need not attend meetings of the Board relating
to the relevant matter.

10.13.5 Alternate directors(i)A director (other than an alternate director) may appoint any other director or
any person approved for that purpose by the board and willing to act, to be hisalternate by notice in writing delivered to the secretary at the registeredoffice of the Company, or in any other manner approved by the board. Every
person acting as an alternate director shall be an officer of the Company, shallalone be responsible to the Company for his own acts and defaults and shallnot be deemed to be the agent of the director appointing him. The
appointment of an alternate director automatically terminates: (i) if his
appointor terminates the appointment; or (ii) on the happening of any event
which, if he were a director, would cause him to vacate the office of director;or (iii) if his appointor ceases for any reason to be a director otherwise thanby retiring and being re-appointed at the same general meeting.
(ii)

An alternate director is entitled to receive notice of meetings of the directors
and committees of which his appointor is a member and to attend and, inplace of his appointor, to vote and be counted for the purpose of a quorum at
any such meeting at which his appointor is not personally present andgenerally to perform all functions as a director of his appointor in his absence.

(iii)

An alternate director may be paid or repaid by the Company such expenses asmight properly have been paid or repaid to him if he had been a director but
shall not in respect of his office of alternate director be entitled to receive
any remuneration from the Company except such part of his appointor’s
remuneration as his appointor may direct by notice in writing to the Company.

10.13.6 Vacation of office
A director shall cease to be a director on the happening of any of the following
events:(i)he becomes prohibited by law from acting as a director, or shall cease to be adirector by virtue of any provision of the 2006 Act, the Articles or any otherapplicable law or regulation;(ii)

he gives notice of his wish to resign;74

(iii)

he becomes bankrupt or he makes any arrangement or composition with his
creditors generally or applies to the court for an interim order in connection
with a voluntary arrangement under any legislation relating to insolvency;(iv)

a registered medical practitioner who is treating him gives a written opinion to
the Company stating that he has become physically or mentally incapable ofacting as a director and may remain so for more than three months;(v)

he and his alternate (if any) are absent from meetings of the directors for thegreater of six consecutive months without the consent of the directors and the
directors resolve that his office be vacated;(vi)

he is removed from office as a director by notice in writing signed by not lessthan three quarters of all his co-directors, (without prejudice to any claim fordamages which he may have for breach of any contract between him and theCompany);(vii)

he only held office as a director for a fixed term and such term expires; or(viii) in the case of a director who holds executive office, his appointment to suchoffice is terminated or expires and the board resolves that his office bevacated.
10.13.7 Retirement by rotation
At each annual general meeting one-third of the directors or, if the number of
directors is not three or a multiple of three, the number nearest to and exceeding
one-third shall retire from office. If there are fewer than three directors, one
director shall retire from office. Subject to the 2006 Act, the directors to retire byrotation shall be those who have been longest in office since their last appointment
or reappointment but, as between directors who were appointed or reappointed on
the same day, those to retire shall (unless they otherwise agree among themselves)
be determined by lot.
10.13.8 Appointment(i)
The Company may by ordinary resolution appoint any person who is willing to
act and is permitted by law to do so to be a director. Without prejudice
thereto, the directors have power at any time so to do, but so that the total
number of directors shall not thereby exceed any maximum number fixed byor in accordance with the Articles.
(ii)

No person, other than a director retiring (by rotation or otherwise), shall be
appointed or re-appointed a director at any general meeting unless: he isrecommended for appointment by the board; or not less than seven (7) nor
more than forty two clear days before the date appointed for the meeting, a
notice executed by a member (other than the person to be proposed) qualified
to vote at the meeting has been given to the Company at the registered officeof the Company of the intention to propose such person for appointment or
re-appointment, stating the particulars which would, if he were so appointed
or re-appointed, be required to be included in the Company’s register of
directors, accompanied by a notice executed by that person of his willingness
to be appointed or re-appointed.

10.13.9 Proceedings of directors(i)
The quorum necessary for the transaction of the business of the directors may
be fixed from time to time by the directors and unless so fixed at any othernumber shall be two.
(ii)

Questions arising at any meeting of the directors shall be determined by amajority of votes. In the case of an equality of votes the chairman of themeeting shall not have a second or casting vote.

(iii)

A resolution in writing signed by such number of the directors as are for thetime being entitled to vote on that resolution shall be as effective as a
resolution duly passed at a meeting of the directors.

75

10.13.10 Restrictions on voting(i)A director shall not vote on, or be counted in the quorum in relation to, any
resolution of the board or of a committee of the board concerning any
contract or arrangement or any other proposal to which the Company is or is
to be a party and in which he has an interest (otherwise than by virtue of his
interests in shares or debentures or other securities of, or otherwise in or
through, the Company):

(ii)

(a)

relating to the giving of any security, guarantee or indemnity to him in
respect of money lent or obligations incurred by him or by any otherperson at the request of or for the benefit of the Group;(b)

relating to the giving of any security, guarantee or indemnity in respectof a debt or obligation of the Group for which he himself has assumed
responsibility in whole or in part under a guarantee or indemnity or by
the giving of security;(c)relating to, or in the context of, an offer of securities by the Group inwhich he is or may be entitled to participate as a holder of securities orin the underwriting or sub-underwriting of which he is to participate;(d)relating to another company in which he does not have to his knowledge
an interest in shares (as defined in sections 820 to 825 of the 2006 Act)
representing one per cent. (1 per cent.) or more of either any class ofthe equity share capital, or the voting rights in, such company;(e)relating to an arrangement for the benefit of employees of the Group
which does not award him any privilege or benefit not generally
awarded to the employees to whom such arrangement relates;(f)

concerning insurance which the Company proposes to maintain orpurchase for the benefit of directors or for the benefit of persons
including Directors; or(g)in respect of which the interest of the director cannot reasonably be
regarded as conflicting.

A director shall not be counted in the quorum present at a meeting in relation
to any resolution on which he is not entitled to vote.

10.13.11 Borrowing powers(i)
The directors may exercise all the powers of the Company to borrow or raisemoney and mortgage or charge all or any part of its undertaking, property andassets (present and future), and uncalled capital, and subject to the 2006 Act,to create and issue debentures, other loan stock and other securities, whether
outright or as collateral security for any debt, liability or obligation of theCompany or of any third party.
(ii)

The directors shall restrict the borrowings of the Company and exercise all
voting and other rights or powers of control exercisable by the Company inrelation to its subsidiary undertakings (if any) to procure (as regards subsidiary
undertakings, in so far as they are able) that the aggregate principal amountat any one time outstanding in respect of moneys borrowed by the Company
and all of its subsidiary undertakings (if any) (other than intra-Groupborrowing) shall not at any time, without the previous sanction of an ordinary
resolution of the Company, exceed an amount equal to two times the grossasset value of the Group (pursuant to the Articles).

10.13.12 Indemnity and insurance(i)Subject to the 2006 Act and any other provision of English law, but without
prejudice to any indemnity to which he may be otherwise entitled every
director, alternate director or former director (and every director, alternate
director or former director of the Group) shall be entitled to be indemnified
out of the assets of the Company against all costs and liabilities incurred by76him in relation to any proceedings or any regulatory investigation or action
which relate to anything done or omitted or alleged to have been done oromitted by him as a director or alternate director; to have funds provided tohim by the Company to meet expenditure incurred or to be incurred by him in
defending himself in any proceedings (whether civil or criminal) or inconnection with an application for relief (as defined in section 205(5) of the2006 Act) or in an investigation, or against action proposed to be taken, by aregulatory authority or to receive such assistance from the Company as will
enable any such person to avoid incurring such expenditure, where suchproceedings, application, investigation or action are in connection with any
alleged negligence, default, breach of duty or breach of trust by him in
relation to the Company or any associated company of the Company, to beindemnified out of the assets of the Company against all costs and liabilities
incurred by him in relation to any of the Company’s activities as trustee of an
occupational pension scheme (as defined in section 235(6) of the 2006 Act).
(ii)

Subject to the 2006 Act, the board may purchase and maintain insurance atthe expense of the Company for the benefit of any person who is or was at any
time a director, alternate director or secretary or other officer or employee ofany body corporate of the Group or in which the Company has or had aninterest whether direct or indirect or who is or was at any time a trustee ofany pension fund or employee benefits trust in which any employee of any
such body corporate is or has been interested indemnifying such person against
any liability which may attach to him or loss or expenditure which he may
incur in relation to anything done or alleged to have been done or omitted to
be done as a director, officer, employee or trustee.

10.14 Untraced shareholders
The Company shall be entitled to sell, at the best price reasonably obtainable at the time ofsale, the shares of a member or the shares to which a person is entitled by transmission if,
during a period of twelve years at least three cash dividends in respect of those shares havebecome payable and no dividend in respect of those shares during that period has been
claimed and within a further period of three months following the date of advertisements
giving notice of its intention to sell such shares placed after the expiry of the period of
twelve years, the Company, so far as the directors are aware, has not received any
communication from such member or person entitled by transmission to the share. If theshare is listed or dealt in on any stock exchange the Company must also give notice to thatexchange of their intention to sell. The Company shall account to the person entitled to theshare for the net proceeds of the sale.
11.

EMPLOYEE SHARE PLANS

11.1 Share Option Plan
11.1.1Introduction
On or around the time of Admission the Company will adopt the Share Option Plan.
The Company intends to grant options to Andrew Day and David O’Connor as well as
to Giacomo Duranti and Marco De Sanctis under the Share Option Plan on Admission
with an exercise price equal to the Placing Price for Andrew Day and with an
exercise price equal to 111 pence (being a 10 per cent. discount to the Placing Price)for each of David O’Connor, Giacomo Duranti and Marco De Sanctis. Employees may
be granted options under the Share Option Plan in the future at the discretion of theRemuneration Committee.
The principal terms of the Share Option Plan are summarised below.

11.1.2

Eligibility
Any employee (including an Executive Director) of a member of the Group may be
selected for participation at the discretion of the Remuneration Committee,
provided they are not prevented from being granted options by the AIM Rules or any
other applicable code.

7711.1.3

Dilution limit
No options may be granted which would result in the total number of Ordinary Sharesissued or required to be issued to satisfy the aggregate of any options/awards
granted under the Share Plans to exceed 5 per cent. of the issued share capital of
the Company at that time.

11.1.4

Grant of options
Options may be granted within the period of forty-two days commencing on:(i)the date of adoption of the Share Option Plan;(ii)

any day on which the Company releases its results for any financial period; or(iii)

the date of commencement of employment of the relevant employee.

Options may also be granted at any other time when the Remuneration Committee
determines that circumstances are exceptional so as to justify the grant of an
option.
No option may be granted more than ten years after the adoption of the Share
Option Plan.
11.1.5

Exercise priceAn option will be granted at a price which represents a discount to the middle
market quotation of an Ordinary Share as derived from AIM on the dealing day
before the option is granted of not more than 10 per cent. and where the option isto subscribe for new shares the price cannot be less than the nominal value of sucha share. Any options granted within six months of Admission will be granted at a
price which represents not less than the amount which equates to a 10 per cent.
discount of the Company’s share price at Admission.

11.1.6

Performance conditions and vesting
Options will generally only be exercisable on or after the respective vesting date(s),which will be as to one third after two years from the date of grant, a further one
third after the third year of the date of grant and the final one third which will befour years from the date of grant of the option except where a different date(s) isdetermined by the Remuneration Committee. Options will then lapse if not exercised
within seven years of grant (or such shorter period as is determined by the
Remuneration Committee).
Options may also be granted subject to the attainment of specified performance
conditions (to be determined prior to grant by the Remuneration Committee
following consultation with the Company’s nominated adviser).
The Remuneration Committee may vary or waive a performance condition incircumstances in which it reasonably considers that such condition is no longer a fairmeasure of performance provided that any new performance condition will be no
more or less difficult to satisfy that the original condition was intended to be.
Exercise of an option is conditional upon the agreement of the optionholder to put
the Company (or other relevant accountable person) in funds to satisfy any liability
to tax (including employee’s national insurance contributions and, if so determinedby the Remuneration Committee when granting the option, employer’s national
insurance contributions).

11.1.7

Early vesting on cessation of employment
Options may be exercised where the optionholder’s employment ceases because ofdeath, injury, ill-health, disability or redundancy. Where employment is terminatedfor some other reason, options will lapse unless the Remuneration Committee
permits the optionholder to exercise them. In such situations, the Remuneration
Committee may reduce the number of shares over which the option is exercisable
pro rata based on the proportion of the vesting period that has elapsed.

78

11.1.8

Takeover, demerger and winding up
In the event of a takeover or winding up of the Company, options shall typically
become exercisable. In such case the Remuneration Committee may reduce thenumber of shares over which the option is exercisable pro rata based on the
proportion of the vesting period that has elapsed and the extent to which theperformance target (if any and as amended if considered necessary) has beensatisfied.
The Remuneration Committee may also determine that options shall vest upon ademerger or similar event affecting the value of the Ordinary Shares to the extent
permitted by the Remuneration Committee.
On a takeover the acquiring company and the Remuneration Committee may insteadagree that options are “rolled over” into equivalent options over shares in theacquiring company.

11.1.9Variation of capitalIf the Company’s share capital is varied by way of capitalisation, rights issue,
sub-division, consolidation or reduction or otherwise then the Remuneration
Committee may make appropriate adjustments to the exercise price and/or thenumber or description of shares under option provided that (except in the case of acapitalisation issue) the Remuneration Committee has been independently advisedthat such adjustments are fair and reasonable.

11.1.10 Amendment and termination
The Board may at any time amend any of the terms of the Share Option Plan or
options granted under it in any respect provided that no alteration which would
materially and adversely affect the subsisting participants may be made without
the prior consent of the majority of such participants (by number of shares underoption) except for certain minor amendments to benefit the administration of theplan, to take account of a change in legislation or to obtain or maintainfavourable tax, exchange control or regulatory treatment for optionholders or for
the Group.
11.2 LTIP
11.2.1Introduction
On or around the time of Admission the Company will also adopt the LTIP. The
Company intends to grant options to Andrew Day and David O’Connor as well as tocertain of the Founders being Giacomo Duranti and Marco De Sanctis under the LTIP
on Admission with an exercise price equal to the nominal value of the shares subject
to option. The Company intends to also grant awards under the LTIP to other senior
management as will be determined by the Remuneration Committee soon after
Admission.

11.2.2

Principal terms of the LTIP
The principal terms of the LTIP are as set out above in respect of the Share Option
Plan (substituting “award” for “option”) except that, unlike in the case of an option
granted under the Share Option Plan, the price payable by the employee to acquire
the shares pursuant to an LTIP award once it has vested may be lower than themarket value of the shares at the time of grant of the award. Such LTIP award may
take the form of:(i)an option to acquire Ordinary Shares exercisable for nominal consideration;(ii)

an award of Ordinary Shares, subject to restrictions, or a promise of Ordinary
Shares; or(iii)

any other form which the Remuneration Committee considers has asubstantially similar economic purpose or effect.

In addition, there is a three year vesting criteria based on the total shareholder
return (“TSR”) of the Company measured against the Numis Small Cap Index79

ex Investment Trusts (“NSCI”) such that one third vests if TSR exceeds NSCI by 10 per
cent., two thirds vest if TSR exceeds NSCI by 20 per cent. and all awards vest if TSR
exceeds NSCI by 30 per cent..
12.

LITIGATIONNo member of the Group is or has been engaged in any governmental, legal or arbitration
proceedings which may have, or have had during the Group’s twelve months preceding the date ofthis document, a significant effect on the Group’s financial position or profitability and the
Directors are not aware of any such proceedings which are pending or threatened by or against any
member of the Group.
13.

WORKING CAPITALThe Directors, having made due and careful enquiry, are of the opinion that, taking into accountthe estimated net proceeds of the Placing receivable by the Company, the working capital available
to the Group will be sufficient for its present requirements, that is for at least the next twelve
months from the date of Admission.
14.

SIGNIFICANT CHANGE IN FINANCIAL OR TRADING POSITION

14.1 Save as disclosed in Part I and in the post balance sheet event details set out in Section D ofPart III there has been no significant change in the financial or trading position of the Groupsince 31 December 2012, the date to which the historical financial information of Keywords
International Limited and its Subsidiaries, as set out in Section D of Part III, was prepared.
14.2 Save as disclosed in the post balance sheet events set out in Section B of Part III there has
been no significant change in the financial or trading position of Keywords Studios since
31 May 2013, its date of incorporation.
15.

TAXATION

15.1 Introduction
The following paragraphs are intended as a general guide based on current legislation, HMRC
practice and Irish Revenue Commissioners’ practice as at the date of this document regarding
the tax position of Shareholders who are resident or ordinarily resident in the UK for tax
purposes and who beneficially hold their shares as investments (otherwise than under anindividual savings account (“ISA”)).
The following paragraphs do not constitute tax advice and are intended only as a generalsummary. The information applies only to Ordinary Shares held as capital assets and does not
apply to all categories of Shareholders, such as dealers in securities, trustees, insurancecompanies, collective investment schemes and Shareholders who have, or who are deemed tohave, acquired their Ordinary Shares in connection with an employment contract with theCompany or as an office holder. Any Shareholder who is in doubt as to their tax position, or
who is subject to tax in a jurisdiction other than the United Kingdom or Ireland, is strongly
recommended to consult their professional advisers.
The Company
15.2 Tax Residence
Whilst the Company has been incorporated in the UK, its policy is to conduct its affairs insuch a way as to be regarded as resident for tax purposes in the Republic of Ireland. It is theintention of the Directors to continue to conduct the Group’s affairs in a way that ensuresthat the Company is resident in Ireland.
15.3 Dividend Withholding Tax
Dividends paid by the Company are generally subject to dividend withholding tax (“DWT”) at
the standard rate of income tax (currently 20 per cent.) unless the Shareholder is within oneof the categories of exempt Shareholders referred to below. Where DWT applies, theCompany is responsible for withholding DWT at source and forwarding the relevant payment
to the Irish Revenue. For DWT purposes, a dividend includes any distribution made by the80Company to its Shareholders, including cash dividends, non-cash dividends and additional
shares taken in lieu of a cash dividend.
DWT is not payable where an exemption applies provided that the Company or a relevant
qualifying intermediary (the qualifying intermediary from whom the dividend is received(“Relevant Qualifying Intermediary”)) has received all necessary documentation required by
the relevant legislation from the Shareholder prior to payment of the dividend.
Provided certain procedural matters are complied with, certain non-Irish resident
Shareholders (both individual and corporate) are entitled to an exemption from DWT. In
particular, a non-Irish resident Shareholder is not subject to DWT on dividends received fromthe Company if the Shareholder is: (i) an individual Shareholder resident for tax purposes ineither a member state of the European Union or in a country with which Ireland has a double
tax treaty that is either signed or in force, and the individual is neither resident nor ordinary
resident in Ireland; or (ii) a corporate Shareholder that is not resident for tax purposes in
Ireland and which is ultimately controlled, directly or indirectly, by persons resident in eithera member state of the European Union (apart from Ireland) or in a country with which Ireland
has a double tax treaty that is either signed or in force and that entity is not under thecontrol, whether directly or indirectly, of persons that are not so resident; or (iii) a corporate
Shareholder resident for tax purposes in either a member state of the European Union (apartfrom Ireland) or a country with which Ireland has a double tax treaty that is either signed orin force provided that the corporate Shareholder is not under the control, whether directly or
indirectly, of a person or persons who is or are resident in Ireland; or (iv) a corporate
Shareholder that is not resident for tax purposes in Ireland and whose principal class of shares(or those of its 75 per cent. parent) is substantially and regularly traded on a recognized stock
exchange in Ireland, a member state of the European Union (apart from Ireland) or in acountry with which Ireland has a double tax treaty that is either signed or in force or on suchother stock exchange approved by the Minister for Finance; or (v) a corporate Shareholderthat is not resident for tax purposes in Ireland and is wholly owned, directly or indirectly, by
two or more companies where the principal class of shares of each is substantially andregularly traded on a recognised stock exchange in Ireland, a member state of the European
Union (apart from Ireland) or in a country with which Ireland has a double tax treaty that iseither signed or in force or on such other stock exchange approved by the Minister for
Finance, and provided that, in all cases noted above, the Shareholder has made theappropriate declaration to the Company or the Relevant Qualifying Intermediary prior to
payment of the dividend.
UK Tax Resident Shareholders
15.4 UK Taxation of Dividends
An individual Shareholder who is resident (for tax purposes) in the UK and who receives a
dividend paid by the Company will currently be entitled to receive a tax credit equal to 1/9thof the cash dividend. The individual will be taxable upon the total of the dividend and therelated tax credit (the “gross dividend”) which will be regarded as the top slice of theindividual’s income. An individual Shareholder who is not liable to income tax at a rate
greater than the basic rate (currently 20 per cent.) will pay tax on the gross dividend at thedividend ordinary rate (currently 10 per cent.). Accordingly, the tax credit will be treated assatisfying the individual’s liability to income tax in respect of the dividend and there will be
no further tax to pay. It should be noted however that there is no right to claim any
repayment of the tax credit from HMRC.
To the extent that the gross dividend (taken together with other taxable income) exceeds theindividual’s threshold for the higher rate of income tax the individual will, to that extent, pay
tax on the gross dividend at the dividend upper rate (currently 32.5 per cent.). A UK resident
individual Shareholder who is liable to tax at the additional rate will be liable to tax on the
gross dividend at the rate of 37.5 per cent. After taking into account the 10 per cent. tax
credit, a higher rate tax payer will have further income tax to pay at the rate of 22.5 percent. on the gross dividend (equivalent to 25 per cent. of the dividend received). An
additional rate taxpayer will have further income tax to pay at the rate of 27.5 per cent. on
the gross dividend (equivalent to 30.55 per cent. of the dividend received).

81

A Shareholder which is a company resident (for tax purposes) in the United Kingdom andwhich receives a dividend paid by the Company will not in most circumstances be liable tocorporation tax or income tax on the dividend.
Trustees of discretionary trusts are liable to account for income tax at the dividend trust
rate, currently 37.5 per cent. of the gross dividend (equivalent to 30.55 per cent. of thedividend received).
United Kingdom pension funds and charities are generally exempt from tax on dividends
which they receive but are not entitled to claim repayment of the tax credit.
As stated above, under current Irish taxation legislation, dividends paid by the Company may
be subject to DWT, although, provided the relevant procedural matters are complied with, an
exemption from DWT may be available in respect of dividends paid to Shareholders that are
tax resident in the UK.
If dividends should be paid after deduction of DWT, then UK tax resident individual
Shareholders may be able to claim a tax credit for all or part of such DWT withheld incomputing their liability to UK income tax on the dividends.
15.5 UK Taxation of Capital GainsTo the extent that a Shareholder acquires Ordinary Shares allotted to him, the Ordinary
Shares so allotted will, for the purpose of tax on chargeable gains, be treated as acquired on
the date of allotment. The amount paid for the Ordinary Shares will generally constitute thebase cost of a Shareholder’s holding.
A disposal or deemed disposal of Ordinary Shares by a UK resident Shareholder may give rise
to a chargeable gain (or allowable loss) for the purposes of UK capital gains tax (“CGT”)(where the Shareholder is an individual or a trustee of a settlement) or UK corporation tax on
chargeable gains (where the Shareholder is within the charge to UK corporation tax),
depending on their circumstances and subject to any available exemption or relief.
As regards an individual Shareholder or trustees of settlements, the principal factors that will
determine the extent to which a gain will be subject to CGT are: (i) the extent to which herealises any other capital gains in the tax year of assessment in which the gain arises; (ii) the
extent to which he was incurred capital losses in that or any earlier tax year or assessmentand (iii) the level of annual allowance of tax-free gains in the tax year of assessment in which
the disposal takes place.
Subject to the availability of any such exemptions, reliefs and/or allowable losses, a disposalof Ordinary Shares by UK resident (or ordinarily resident) individuals, trustees and personal
representatives will generally be subject to CGT at the rate of 28 per cent. Individuals whose
taxable income for the year in question is less than the upper limit of the basic rate income
tax band are subject to CGT at the rate of 18 per cent., except to the extent that theaggregate of their total taxable income and gains (less allowable deductions) in that year
exceeds the upper limit of the basic rate income tax band. Any such excess over the upper
limit is subject to CGT at the rate of 28 per cent.
Subject to the availability of any exemptions, reliefs and/or allowable losses, a disposal of
Ordinary Shares by companies subject to UK corporation tax will generally be subject to
UK corporation tax at the prevailing rate of up to 23 per cent. Indexation allowance may beavailable to reduce any chargeable gain arising on such disposal but cannot act to create orincrease a chargeable loss.
15.6 UK Stamp duty and stamp duty reserve tax (“SDRT”)
No stamp duty or SDRT will arise on the allotment and issue of New Shares.
Currently dealings in Ordinary Shares will normally be subject to stamp duty or SDRT. The
transfer on sale of Ordinary Shares will usually be liable to ad valorem stamp duty, at the rateof 0.5 per cent. (rounded up, if necessary, to the next multiple of £5) of the amount or valueof the consideration paid. Stamp duty will normally be paid by the purchaser or transferee of
the Ordinary Shares. An unconditional agreement to transfer Ordinary Shares will normallygive rise to a charge to SDRT, at the rate of 0.5 per cent. of the amount or value of the82consideration payable for such shares, but such liability will be cancelled, or any SDRT paid
refunded, if the agreement is completed by a duly stamped instrument of transfer within
six years of the date of the agreement or, if the agreement was conditional, the date on
which the agreement became unconditional. SDRT will normally be the liability of thepurchaser or transferee of the Ordinary Shares.
Under the CREST system for paperless share transfers, no stamp duty or SDRT will arise on atransfer of shares into the system, unless the transfer into CREST is itself for consideration inmoney or money’s worth, in which case a liability to SDRT will arise, usually at the rate of
0.5 per cent. of the amount or value of consideration given. Transfers of shares within CREST
are generally liable to SDRT at the rate of 0.5 per cent. of the amount or value of theconsideration payable rather than stamp duty, and SDRT on relevant transactions settled
within the system or reported through it for regulatory purposes will be collected andaccounted for to HMRC.
The above statements are intended to be a general guide to the current stamp duty and SDRT
position. Certain categories of person are not liable to stamp duty or SDRT and others may beliable at a higher rate as mentioned above or may, although not primarily liable for the tax,
be required to notify and account for it. Special rules apply to agreements made by market
intermediaries and to certain sale and repurchase and stock borrowing arrangements.
Agreements to transfer shares to charities will not give rise to a liability to stamp duty or
SDRT.
The Government has announced its intention to abolish stamp duty on shares quoted on
growth markets such as the Alternative Investment Market and the ISDX Growth Market. It is
expected (subject to the outcome of consultations) that this will be in force from April 2014.
16.

MANDATORY BIDS, SQUEEZE-OUT AND SELL OUT RULES RELATING TO ORDINARY SHARES

16.1 Mandatory bid
16.1.1 With effect from 30 September 2013 (when certain amendments are implemented
within the Takeover Code) the Company shall become subject to the Takeover Codedue to being a public company with its registered office in the United Kingdom. Under
the Takeover Code, if an acquisition of Ordinary Share were to increase the aggregate
holding of the acquirer and any parties acting in concert with it to Ordinary Sharescarrying 30 per cent. or more of the voting rights in the Company, the acquirer and,depending on the circumstances, its concert parties (if any) would be required (except
with the consent of the Panel on Takeovers and Mergers) to make a cash offer for theOrdinary Shares not already owned by the acquirer and its concert parties (if any) ata price not less than the highest price paid for Ordinary Shares by the acquirer or its
concert parties (if any) during the previous twelve months.
16.1.2 A similar obligation to make such mandatory cash offer would also arise on theacquisition of Ordinary Shares by a person holding (together with its concert parties,
if any) Ordinary Shares carrying at least 30 per cent. but not more than 50 per cent.
of the voting rights in the Company if the effect of such acquisition were to increase
the percentage of the aggregate voting rights held by the acquirer and its concert
parties (if any).
16.2 Squeeze-out rules
Under the 2006 Act, if a person who has made a general offer to acquire Ordinary Shares (the“offeror”) were to acquire, or contract to acquire, 90 per cent. of the Ordinary Shares which
are the subject of such offer within four months of making its offer, the offeror could thencompulsorily acquire the remaining 10 per cent. The offeror would do so by sending a notice
to outstanding Shareholders telling them that the offeror will compulsorily acquire their
Ordinary Shares and then, six weeks later, executing a transfer of the outstanding Ordinary
Shares in the offeror’s favour and paying the consideration to the Company, which would holdthe consideration on trust for outstanding Shareholders. The consideration offered to thoseShareholders whose Ordinary Shares are compulsorily acquired under the 2006 Act must, ingeneral, be the same as the consideration that was available under the general offer.

83

16.3 Sell-out rules
16.3.1 The 2006 Act gives minority Shareholders a right to be bought out in certain
circumstances by a person who has made a general offer as described inparagraph 16.2 above. If, at any time before the end of the period within which thegeneral offer can be accepted, the offeror holds, or has agreed to acquire not lessthan 90 per cent. of the Ordinary Shares, any holder of Ordinary Shares to which thegeneral offer relates who has not accepted the general offer can, by a written
communication to the offeror, require it to acquire that holder’s Ordinary Shares.
16.3.2 The offeror is required to give each Shareholder notice of his right to be bought out
within one month of that right arising. The offeror may impose a time limit on therights of minority Shareholders to be bought out, but that period cannot end less than
three months after the end of the acceptance period. If a Shareholder exercises his
rights, the offeror is entitled and bound to acquire those Ordinary Shares on the termsof the offer or on such other terms as may be agreed.
17.

MATERIAL CONTRACTS

The following contracts (not being contracts entered into in the ordinary course of business) havebeen entered into by the Company or another member of the Group within the two years
immediately preceding the date of this document or which are expected to be entered into shortly
after Admission and which are, or may be, material or contain a provision under which any memberof the Group has an obligation or entitlement which is material in the context of the Group as at
the date of this document.
17.1 The Placing Agreement
The Placing Agreement contains, inter alia, the following terms:
l

l

l

l

l

l

l

the Company and each of the Selling Shareholders appoints Numis as its or his agent
and Numis agrees to use its reasonable endeavours to procure subscribers for the New
Shares and purchasers for the Sale Shares at the Placing Price;
the obligations of Numis are conditional, inter alia, upon: (i) the VCT Placing Shares
having been credited to the relevant CREST accounts by 7.00 a.m. on the date of
Admission; and (ii) Admission occurring on or before 8.00 a.m. on 12 July 2013 or suchlater time and/or date, not being later than 8.00 a.m. on 26 July 2013, as the Company
and Numis may agree;
subject to Admission:(i)the Company shall pay Numis: (A) a corporate finance fee of £235,000; and (B) acommission at the rate of 4.0 per cent. of the value of the New Shares at the
Placing Price; and(ii)

each Selling Shareholder shall pay Numis a commission at the rate of 4.0 per
cent. of the value of that Selling Shareholder’s Sale Shares at the Placing Price;

the Company has agreed to grant Numis a warrant to subscribe for Ordinary Shares
representing 1 per cent. of the Enlarged Share Capital in accordance with the terms of
the Warrant Instrument;
subject to certain restrictions the Company shall pay all the costs and expenses(including any applicable VAT) of and incidental to the Placing including the fees andcosts of legal advisers incurred by Numis and printing, filing and distribution charges;
the Company, the Directors, the Selling Shareholders and the Founders have each given
warranties in favour of Numis. The liability of the Directors, the Selling Shareholders
and Founders is limited in terms of the amount of the liability save in certain
circumstances;
In addition, the Company and, subject to certain limitations, the Selling Shareholders
have given Numis, its affiliates, associates and connected persons and their respective
directors, officers, partners, members, agents and employees a commercial indemnity
on a several basis relating to certain losses and liabilities which may be incurred by84

such persons in the performance by Numis of its obligations and services renderedpursuant to the Placing;l

Numis has the right to terminate the Placing Agreement prior to Admission in certain
circumstances, including:(i)in the event of certain force majeure events or other events involving certain
material adverse changes relating to the Company; and(ii)

in the event of a material breach of the warranties or undertakings in the Placing
Agreement.

The Selling Shareholders have agreed to pay any stamp duty and/or stamp duty reserve
tax arising on the sale of their respective Sale Shares.
17.2 The Nominated Adviser and Broker Agreement
On 8 July 2013 the Company, the Directors and Numis entered into an agreement pursuant towhich Numis has agreed to act as nominated adviser and broker to the Company following
Admission as required by the AIM Rules. Numis shall provide, inter alia, such independent
advice and guidance to the Directors of the Company and the Company as they may requirefrom time to time as to the nature of their responsibilities and obligations to ensurecompliance by the Company on a continuing basis with the AIM Rules for Companies. The
Company has agreed to pay Numis a retainer fee as well as payment of any disbursements andexpenses reasonably incurred by Numis in the course of carrying out its duties as nominatedadvisor and broker. The agreement is terminable on one month’s notice given by either Numisor the Company. The agreement also contains provisions for early termination in certain
circumstances and an indemnity given by the Company to Numis in relation to the provision
by Numis of its services under the agreement.
17.3 Lock-in Agreements
Selling Shareholders
The Selling Shareholders and Founders have undertaken with the Company (subject to certain
exceptions) not to dispose of any interest in any of their Ordinary Shares until the firstanniversary of Admission (the “Relevant Date”).
The parties have further undertaken to observe certain orderly market restrictions withrespect to the disposal of such Ordinary Shares in the period of 12 months following theRelevant Date.
Management
The Directors have undertaken with the Company (subject to certain exceptions) not todispose of any interest in any of their Ordinary Shares until the Relevant Date. The parties
have further undertaken to observe certain orderly market restrictions with respect to thedisposal of such Ordinary Shares in the period of 12 months following the Relevant Date.
17.4 Warrant Instrument
By deed poll dated 8 July 2013 the Company has created the Warrants. The Warrants are
exercisable as to: (i) 200,162 Warrants at a price per Ordinary Share equal to the Placing
Price and (ii) as to 200,162 Warrants at a price per Ordinary Share equal to 154p
(representing 1.25 x the Placing Price), and shall be valid for a period of five years.
17.5 Relationship Agreement
P.E.Q. and the Founders have entered into a relationship agreement with the Company on
8 July 2013 (the “Relationship Agreement”). Pursuant to the Relationship Agreement P.E.Q.
has agreed, for as long as it holds not less then 15 per cent. of the entire issued share capitalof the Company, to exercise its rights as a Shareholder at all times, and to procure that its
connected parties who may also be Shareholders exercise their rights at all times, so as toensure that the Company is capable of carrying on its business independently of P.E.Q. or any
control P.E.Q. or its connected parties may otherwise be able to exercise on the Company. In
particular, P.E.Q. has undertaken, and has agreed to procure that its connected parties

85

undertake, that it will not do or omit to do anything which would render the Company
unsuitable for admission to listing on AIM including, inter alia, voting on any resolution tocancel the admission to trading on AIM of the Ordinary Shares. Moreover, P.E.Q. hasundertaken to ensure, so far as it is able to, that all transactions, relationships andagreements entered into between P.E.Q. or its connected parties and the Company or any of
its subsidiaries, following Admission are on arms’ length terms and on a normal commercial
basis. In addition, P.E.Q. and the Company have agreed, amongst other things, that it will not
and will procure that Giorgio Guastalla, its first nominated representative Director on the
Board, will not participate in the deliberations of the Board in relation to any proposal toenter into any commercial arrangements with P.E.Q. or its connected parties. P.E.Q. and theFounders have given non-compete undertakings to the Company whilst P.E.Q. is a Shareholder
and for a period of five years from the date P.E.Q. or its connected parties cease to be a
Shareholder and for a period of one year in the case of Marco De Sanctis and Giacomo
Durantis (notwithstanding the termination of the Relationship Agreement).
17.6 Share Exchange Agreement
Keywords Studios was inserted as the holding company of the Group pursuant to the terms ofa share for share exchange agreement dated 8 July 2013 entered into by and between:(i) P.E.Q.; (ii) Giorgio Guastalla (in his capacity as trustee for Andrew Day) (together with
P.E.Q., the “Subsidiary Shareholders”); and (iii) the Company (the “Share Exchange
Agreement”).
Pursuant to the Share Exchange Agreement, the Subsidiary Shareholders exchanged theirshares in Keywords International Limited in consideration for Ordinary Shares in the Company.
The percentage holdings of the Subsidiary Shareholders in each of Keywords International
Limited and the Company was maintained (24.9 per cent. and 75.1 per cent. for Giorgio
Guastalla (in his capacity as trustee for Andrew Day) and P.E.Q. respectively). Stamp duty
exemption has been applied for in relation to the Share Exchange Agreement from the Irish
Stamp Duty Office.
17.7 Shareholders’ Agreement and related deed of Termination
Keywords, P.E.Q., Andrew Day and the shareholders of P.E.Q. (the “SA Parties”) entered intoa shareholders agreement on 21 June 2012 to regulate aspects of the relationship between
Keywords and the SA Parties (the “Shareholders’ Agreement”). The SA Parties have enteredinto a deed of termination dated 8 July 2013, pursuant to which the Shareholders’ Agreement
will terminate automatically upon Admission. The Shareholders’ Agreement related to theusual rights of pre-emption, drag and tag-along rights and a ratchet mechanism for AndrewDay.
17.8 Deed of Undertakeing and Indemnity granted by Andrew Day in favour of the Company
entered into on 8 July 2013, referred to and more particularly described in paragraph 4.9 ofthis Part IV of this document.
18.

RELATED PARTY TRANSACTIONS

Save as set out in: (i) note 4 to the Financial Information on Keywords Studios PLC in Section B ofPart III of this document; (ii) note 19 to the Financial Information on Keywords International Limited
and its Subsidiaries in Section D of Part III of this document; (iii) paragraph 17.5 (Relationship
Agreement) of Part IV of this document; and (iv) paragraph 17.8 (Deed of Undertaking and Indeminty
granted by Andrew Day to the Company) of Part IV of this document; as far as the Directors areaware there have been and currently there are no agreements or arrangements between the Groupand individuals or entities that may be deemed to be related parties during the financial periods
ended 31 December 2010, 31 December 2011 and 31 December 2012 and the period 1 January to 8
July 2013 (being the latest practicable date prior to the publication of this document).
19. SOURCES OF INFORMATIONThe Directors confirm that, where information in this document has been sourced from a third
party, this information has been accurately reproduced and that, so far as the Directors are awareand are able to ascertain from the information published by that third party, no facts have been
omitted which would render the reproduced information inaccurate or misleading.

86

20.

OTHER INFORMATION

20.1 The financial information relating to Keywords Studios plc and Keywords International
Limited, set out in Sections B and D of Part III of this document, do not comprise statutory
accounts within the respective meanings under the relevant Irish Companies Act and ofsection 434(3) of the Companies Act 2006.
20.2 The auditor of Keywords International Limited for the financial years ended 31 December
2010 and 2011 was Cooney Carey Accounting Limited, of The Courtyard, Carmanhall Road,
Sandyford, Dublin 18, Ireland (a member firm of the Institute of Chartered Accountants in
Ireland). Cooney Carey Accounting Limited have made reports on such statutory accounts of
the Company for such period which were unqualified.
20.3 The auditor of Keywords International Limited for the financial year ended 31 December 2012
was BDO (a member firm of the Institute of Chartered Accountants in Ireland), of Beaux Lane
House, Mercer Street Lower, Dublin 2, Ireland. The auditor of Keywords Studios for the period
from the date of incorporation to the date of this document was BDO LLP of 55 Baker Street,
London W1U 7EU (a member firm of the Institute of Chartered Accountants in England andWales).
20.4 The Company’s accounting reference date is 31 December.
20.5 Numis has given and not withdrawn its written consent to the issue of this document with theinclusion in it of references to its name in the form and context in which they appear.
20.6 BDO LLP, as the reporting accountant, has given and not withdrawn its written consent to theinclusion of its reports in sections A and C of Part III of this document in the form and context
in which they are included.
20.7 Other than contractual arrangements with employees and consultants and payments in theordinary consultants and payments in the ordinary course of business, and save as set out inthis document, no person (excluding those professional advisers disclosed in this document
and trade suppliers) has:
20.7.1 received, directly or indirectly, from the Company within the twelve months
preceding the date of this document;
20.7.2 entered into contractual arrangements to receive, directly or indirectly, from theCompany on or after Admission, any of the following:(i)fees, totalling £10,000 or more;(ii)

securities in the Company with a value of £10,000 or more calculated byreference to the Placing Price; or(iii)

any other benefit with a value of £10,000 or more at the date of Admission.

20.8 The total costs and expenses of, and incidental to, the Placing and Admission payable by theCompany are estimated to amount to £2.1 million (excluding Value Added Tax).
20.9 The Ordinary Shares are in registered form and, following Admission, will be capable of being
held in uncertificated form through CREST as permitted by the Articles. Settlement of the
Placing will, at the option of Placees, be within CREST and Ordinary Shares will be delivered
into the CREST account of the VCT Placees at 7.00 a.m. on 12 July 2013 and for all other
Placees of the New Shares (excluding the VCT Placing Shares) at 8.00 a.m. on the 12 July
2013. No temporary documents of title will be issued. Definitive share certificates for Placees
not settling through CREST will be despatched by the Registrars on or before 19 July 2013.
Prior to the despatch of such certificates, transfers will be certified against the register ofmembers of the Company held by the Registrar.
20.10 So far as the Directors are aware, there have not, in relation to any member of the Group,
been:
(a)

any significant recent trends in production, sales, inventory, costs and selling prices
between the end of the last financial year of the Company and the date of thisdocument; or

87

(b)

any known trends, uncertainties, demands, commitments or events that are reasonably
likely to have a material adverse effect on the Company’s prospects for at least thecurrent financial year; or(c)any exceptional factors which have influenced the Company’s activities.

20.11 There have been no public takeover bids made by third parties in respect of the Company’s
issued share capital which have occurred during the last financial year or the current financialyear.
20.12 Numis is arranging for the Placing Shares to be placed with institutional and other investors.
The arrangements for the payment for the Placing Shares to Numis and during the period prior
to completion of the Placing relating to monies received by Numis from such investors are set
out in the placing letters sent to such investors.
20.13 Numis is registered in England and Wales as a private limited company under the Companies
Act 1985 with number 02285918 and is a subsidiary of Numis Corporation Plc which is amember of the London Stock Exchange and is authorised and regulated by the Prudential
Regulation Authroity and Financial Conduct Authority. Its registered office is at
10 Paternoster Square, London EC4M 7LT.
20.14 The Placing Price of 123 pence per Ordinary Share represents a premium of 122 pence overthe nominal value of £0.01 per Ordinary Share.
20.15 There are no investments to be made by the Company or any member of the Group in the
future in respect of which firm commitments have been made.
20.16 There has been no significant change in the trading of financial position of the Group since
31 December 2012 (being the date to which the last audited accounts of the Group wereprepared).
20.17 There are no restrictions on the free transferability of the securities.
20.18 There are no arrangements, known to the Company, the operation of which may at a
subsequent date result in a change of control of the Company.
20.19 There are no environmental issues that may affect the Group’s utilisation of its tangible fixed
assets.
20.20 The Company is not dependent on any patents or licences, industrial, commercial or financial
contracts or new manufacturing processes in anyway which may materially affect theCompany’s business or profitability.
21.

AVAILABILITY OF THIS DOCUMENT

A copy of this document is available free of charge during normal business hours on any week day(excluding Saturdays, Sundays and public holidays) at the offices of Numis Securities Limited, at The
London Stock Exchange Building, 10 Paternoster Square, London EC4M 7LT, and shall remain
available for at least one (1) month after the date of Admission. A copy of this document is alsoavailable for download at the Company’s website, www.keywordsstudios.com.
Dated: 9 July 2013

88

APPENDIXTERMS AND CONDITIONS OF THE PLACING
1.

INTRODUCTION

These terms and conditions apply to persons making an offer to acquire Placing Shares under the
Placing. Each person to whom these conditions apply, as described above, who confirms his
agreement to Numis and the Company to acquire Placing Shares under the Placing (an “Investor”)
hereby agrees with Numis and the Company to be bound by these terms and conditions as being theterms and conditions upon which Placing Shares will be sold (in the case of the Sale Shares) or
issued (in the case of the New Shares) under the Placing. An Investor shall, without limitation,
become so bound if Numis confirms to such Investor: (i) the Placing Price; and (ii) its allocation ofPlacing Shares under the Placing.
Upon being notified of the Placing Price and its allocation of Placing Shares in the Placing, an
Investor shall be contractually committed to acquire the number of Placing Shares allocated tothem at the Placing Price and, to the fullest extent permitted by law, will be deemed to haveagreed not to exercise any rights to rescind or terminate or otherwise withdraw from suchcommitment. Dealing may not begin before any notification is made.
The Selling Shareholders have undertaken that the Sale Shares will be sold fully paid and with fulltitle guarantee. The Company has undertaken that the New Shares will, when issued, be fully paidup, free from all encumbrances, and rank pari passu with all other Ordinary Shares. An Investor’s
allocation (excluding a VCT Placee) may consist solely of Sale Shares or solely of New Shares or a
combination of both Sale Shares and New Shares. A VCT Placee allocation will only consist of New
Shares to comply with the VCT Scheme.
The Company acknowledges that the law regarding the VCT Scheme states that no more than
£5 million can be raised in total from VCTs, investments under the Enterprise Investment Scheme or
the Corporate Venturing Scheme and investments that count as state aid in any 12 month period
ending with the issue of the relevant holding and recognises that the consequence of a breach is apotential loss of VCT status. The Company confirms that the amount raised in the 12 month period
up to and including the date of Admission in total from VCTs (including, for the avoidance of doubt,
VCT Placees), investments under the Enterprise Investment Scheme or the Corporate Venturing
Scheme and state aid sources (including, but not limited to, those sources of funding listed in
Annex 3 of the AIC technical guidance on Investment Limits Condition dated July 2012) does notexceed £5 million. The Company undertakes to notify all VCT Placees should it subsequently becomeaware that it did receive any non-disclosed state aided risk capital investment or grant in the
12 month period up to and including the date of Admission.
2.

AGREEMENT TO ACQUIRE PLACING SHARES

Conditional on Admission occurring and becoming effective by 8.00 a.m. (London time) on 12 July
2013 (or such later time and/or date (being not later than 8.00 a.m. (London time) on 26 July 2013)
as the Company and Numis may agree) and on the Placing Agreement not previously being
terminated in accordance with its terms; and (ii) the confirmation mentioned under paragraph 1
above, an Investor agrees to become a member of the Company and agrees to acquire Placing
Shares at the Placing Price. The number of Placing Shares acquired by such Investor under the
Placing shall be in accordance with the arrangements described above.
3.

PAYMENT FOR PLACING SHARES

Each Investor undertakes to pay the Placing Price for the Placing Shares acquired by such Investor
in such manner as shall be directed by Numis. In the event of any failure by an Investor to pay as
so directed by Numis, the relevant Investor shall be deemed hereby to have appointed Numis or any
nominee of Numis to sell (in one or more transactions) any or all of the Placing Shares in respect ofwhich payment shall not have been made as so directed and to have agreed to indemnify on demand
Numis in respect of any liability for UK stamp duty and/or stamp duty reserve tax arising in respectof any such sale or sales.

89

4.

REPRESENTATIONS AND WARRANTIES

By receiving this document, each Investor and, to the extent applicable, any person confirming his
agreement to acquire Placing Shares on behalf of an Investor or authorising Numis to notify an
Investor’s name to the Registrars, is deemed to acknowledge, agree, undertake, represent andwarrant to each of Numis, the Registrars and the Company that:
4.1

the Investor has read this document in its entirety and acknowledges that its participation in
the Placing shall be made solely on the terms and subject to the conditions set out in thisAppendix, the Placing Agreement and the Articles. Such Investor agrees that these terms andconditions and the contract note issued by Numis to such Investor represent the whole andonly agreement between the Investor, Numis and the Company in relation to the Investor’s
participation in the Placing and supersedes any previous agreement between any of suchparties in relation to such participation. Accordingly, all other terms, conditions,representations, warranties and other statements which would otherwise be implied (by law
or otherwise) shall not form part of these terms and conditions. Such Investor agrees thatnone of the Company, Numis nor any of their respective officers or directors will have any
liability for any such other information or representation and irrevocably and unconditionallywaives any rights it may have in respect of any such other information or representation;

4.2

if the Investor is a natural person, such Investor is not under the age of majority (18 years ofage in the UK) on the date of such Investor’s agreement to acquire Placing Shares under the
Placing and will not be any such person on the date any such offer is accepted;

4.3

neither Numis nor any person affiliated with Numis or acting on its behalf is responsible foror shall have any liability for any information, representation or statement contained in thisadmission document or any supplementary admission document (as the case may be) or any
information previously published by or on behalf of the Company or any member of the Groupand will not be liable for any decision by an Investor to participate in the Placing based onany information, representation or statement contained in this admission document orotherwise;

4.4

the Investor has not relied on Numis or any person affiliated with Numis in connection withany investigation of the accuracy of any information contained in this document or theirinvestment decision;

4.5

in agreeing to acquire Placing Shares under the Placing, the Investor is relying on thisadmission document or any supplementary admission document (as the case may be) and not
on any other information or representation concerning the Group, the Placing or the Placing
Shares. Such Investor agrees that neither the Company nor Numis nor their respective
officers, directors or employees will have any liability for any such other information or
representation and irrevocably and unconditionally waives any rights it may have in respectof any such other information or representation;

4.6

save in the event of fraud on its part (and to the extent permitted by the rules of the FCA),
neither Numis nor any of its directors or employees shall be liable to an Investor for any
matter arising out of the role of Numis as the Company’s nominated adviser and broker orotherwise, and that where any such liability nevertheless arises as a matter of law each
Investor will immediately waive any claim against Numis and any of its directors andemployees which an Investor may have in respect thereof;

4.7

the Investor has complied with all applicable laws and such Investor will not infringe any
applicable law as a result of such Investor’s agreement to acquire Placing Shares under the
Placing and/or acceptance thereof or any actions arising from such Investor’s rights andobligations under the Investor’s agreement to acquire Placing Shares under the Placing and/or
acceptance thereof or under the Articles;

4.8

all actions, conditions and things required to be taken, fulfilled and done (including theobtaining of necessary consents) in order: (i) to enable the Investor lawfully to enter into,and exercise its rights and perform and comply with its obligations to acquire the Placing
Shares under, the Placing; and (ii) to ensure that those obligations are legally binding andenforceable, have been taken, fulfilled and done. The Investor’s entry into, exercise of its
rights and/or performance under, or compliance with its obligations under this Placing, does90

not and will not violate: (i) its constitutive documents; or (ii) any agreement to which theInvestor is a party or which is binding on the Investor or its assets;
4.9

that it understands that no action has been or will be taken in any jurisdiction by theCompany or Numis or any other person that would permit a public offering of the Placing
Shares, or possession or distribution of this document, in any country or jurisdiction where
action for that purpose is required; and that, if the Investor is in a member state of theEuropean Economic Area which has implemented the Prospectus Directive (“Relevant
Member State”), it is: (i) a legal entity which is authorised or regulated to operate in thefinancial markets or, if not so authorised or regulated, its corporate purpose is solely toinvest in securities; (ii) a legal entity which has two or more of: (a) an average of at least
250 employees during the last financial year; (b) a total balance sheet of more than
€43,000,000; and (c) an annual net turnover of more than €50,000,000, in each case as shownin its last annual or consolidated accounts; (iii) otherwise permitted by law to be offered andsold Placing Shares in circumstances which do not require the publication by the Company ofa prospectus pursuant to Article 3 of the Prospectus Rules or other applicable laws; or (iv) inthe case of any Placing Shares acquired by an Investor as a financial intermediary, as thatterm is used in Article 3(2) of the Prospectus Rules, either:
4.9.1 the Placing Shares acquired by it in the Placing have not been acquired on behalf of,nor have they been acquired with a view to their placing or resale to, persons in any
Relevant Member State other than qualified investors, as that term is defined in the
Prospectus Rules, or in circumstances in which the prior consent of Numis has been
given to the placing or resale; or
4.9.2 where Placing Shares have been acquired by it on behalf of persons in any Relevant
Member State other than qualified investors, the placing of those Placing Shares to it is
not treated under the Prospectus Rules as having been made to such persons;

4.10 to the fullest extent permitted by law, the Investor acknowledges and agrees to thedisclaimers contained in this document and acknowledges and agrees to comply with theselling restrictions set out in this document;
4.11 the Ordinary Shares have not been and will not be registered under the US Securities Act, or
under the securities legislation of, or with any securities regulatory authority of, any state orother jurisdiction of the United States or under the applicable securities laws of Australia,
Canada, Japan, the Republic of Ireland or the Republic of South Africa or where to do so may
contravene local securities laws or regulations;4.12 except as provided in paragraph 4.13 below, the Investor is not a person located in the UnitedStates and is eligible to participate in an “offshore transaction” as defined in and inaccordance with Regulation S and the Placing Shares were not offered to such Investor bymeans of “directed selling efforts” as defined in Regulation S;
4.13 where the Investor is a US person as defined in Regulation S, it is an “accredited investor”,
as defined in Rule 501(a) under Regulation D, and is acquiring the Placing Shares either for:(i) its own account; (ii) for the account of one or more “accredited investors” for which it isacting as duly authorised agent; or (iii) a discretionary account or accounts as to which it hascomplete investment discretion and the authority to make, and does make, the statements
contained herein;
4.14 it is acquiring the Placing Shares for investment purposes only and not with a view to any
resale, distribution or other disposition of the Placing Shares in violation of the US Securities
Act or any other U.S. federal or applicable state securities laws;
4.15 the Placing Shares may not be offered, resold, pledged or otherwise transferred except(a)(i) in an offshore transaction meeting the requirements of Rule 903 or Rule 904 ofRegulation S; (ii) pursuant to an effective registration statement under the US Securities Act;or (iii) pursuant to an available exemption from the registration requirements of the
US Securities Act; and (b) in accordance with all applicable securities laws of the states of theUnited States and any other jurisdictions. Each Investor agrees to, and each subsequent
holder is required to, comply with, and notify any purchaser of the Placing Shares from it of,
the resale restrictions referred to in this Appendix, if then applicable;

914.16 upon the issuance of the Placing Shares, and until such time as the same is no longer required
under applicable requirements of the US Securities Act or applicable state securities laws, allcertificates representing Placing Shares, if any, and all certificates issued in exchange
therefor or in substitution thereof, shall bear the following legend:“THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE UNITEDSTATES SECURITIES ACT OF 1933 (THE “ACT”) OR ANY STATE SECURITIES LAWS. THE HOLDERHEREOF, BY PURCHASING SUCH SECURITIES, AGREES, FOR THE BENEFIT OF THE COMPANY,
THAT SUCH SECURITIES MAY BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED,
ONLY: (I) TO THE COMPANY; (II) OUTSIDE OF THE UNITED STATES IN ACCORDANCE WITHREGULATION S UNDER THE ACT, IN COMPLIANCE WITH ALL APPLICABLE LAWS AND
REGULATIONS; (III) WITHIN THE UNITED STATES PURSUANT TO AN EXEMPTION FROMREGISTRATION UNDER THE ACT, IN COMPLIANCE WITH ALL APPLICABLE STATE SECURITIESLAWS; OR (IV) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT, AND
IN COMPLIANCE WITH ALL APPLICABLE STATE AND OTHER SECURITIES LAWS AND, IN ANY CASE,
UPON THE SUBMISSION TO THE COMPANY OF SUCH EVIDENCE AS MAY BE SATISFACTORY TO
THE COMPANY TO THE EFFECT THAT ANY SUCH TRANSFER WILL NOT BE IN VIOLATION OF THE
ACT AND APPLICABLE STATE AND OTHER SECURITIES LAWS AND, IN THE CASE OF SECURITIESBEING SOLD UNDER (III) OR (IV) ABOVE, UPON THE DELIVERY TO THE COMPANY OF AN OPINION
OF COUNSEL OF RECOGNIZED STANDING, IN FORM AND SUBSTANCE REASONABLY
SATISFACTORY TO THE COMPANY, THAT REGISTRATION IS NOT REQUIRED FOR SUCH
TRANSFER”;
provided that, if securities are being sold under (II) above, and provided that the Company isa “foreign issuer” within the meaning of Regulation S under the US Securities Act at the timeof sale, any such legend may be removed by providing a declaration to the Company in suchform as the Company may prescribe from time to time; and provided further, that, if any
such securities are being sold under (III) or (IV) above, such transfer of securities will berecognised by the Company only upon the submission to the Company of such evidence as may
be satisfactory to the Company to the effect that any such transfer will not be in violation of
the US Securities Act and applicable state and other securities laws and, the legend may beremoved upon delivery to the Company of an opinion of counsel of recognized standing, inform and substance reasonably satisfactory to the Company, to the effect that such legend is
no longer required under applicable requirements of the US Securities Act or state securities
laws;
4.17 the Placing Shares are “restricted securities” within the meaning of Rule 144(a)(3) under the
US Securities Act and the Investor undertakes to notify any transferee to whom it
subsequently offers, reoffers, resells, pledges or otherwise transfers the Placing Shares of theforegoing restrictions on transfer;4.18 the Company is not obliged to file any registration statement in respect of resales of the
Placing Shares in the United States with the U.S. Securities and Exchange Commission or withany state securities administrator;
4.19 the Company, and any registrar or transfer agent or other agent of the Company, will not be
required to accept the registration of transfer of any Placing Shares acquired by the Investor,
except upon presentation of evidence satisfactory to the Company that the foregoing
restrictions on transfer have been complied with;
4.20 the Investor has not been solicited by any form of “general solicitation” or “generaladvertising” (as those terms are used in Regulation D) including advertisements, articles,
notices or other communications published in any newspaper, magazine or similar media or
broadcast over radio or television, or in connection with any seminar or meeting to which theInvestor was invited by any such general solicitation or general advertising, and the Investor
has not become aware of any advertisement in printed media of general and regular paid
circulation or on radio, television or other form of telecommunication or any other form ofadvertisement (including electronic display or the Internet) or sales literature with respect tothe acquisition of the Placing Shares;
4.21 the Investor invests in or purchases securities similar to the Placing Shares in the normal
course of its business and it has such knowledge and experience in financial and business92

matters as to be capable of evaluating the merits and risks of an investment in the Placing
Shares;4.22 the Investor has conducted its own investigation with respect to the Company and the Placing
Shares and has had access to such financial and other information concerning the Company
and the Placing Shares as the Investor deemed necessary to evaluate the merits and risks ofan investment in the Placing Shares, and the Investor has concluded that an investment in the
Placing Shares is suitable for it or, where the Investor is not acting as principal, for any
beneficial owner of the Placing Shares, based upon each such person’s investment objectives
and financial requirements;
4.23 the Investor or, where the Investor is not acting as principal, any beneficial owner of the
Placing Shares, is able to bear the economic risk of an investment in the Placing Shares for anindefinite period and the loss of its entire investment in the Placing Shares;
4.24 there may be adverse consequences to the Investor under United States and other tax laws
resulting from an investment in the Placing Shares and the Investor has made suchinvestigation and has consulted such tax and other advisors with respect thereto as it deems
necessary or appropriate;4.25 the Investor is not a resident of Australia, Canada, Japan, the Republic of Ireland or theRepublic of South Africa and acknowledges that the Placing Shares have not been and will not
be registered nor will a prospectus be prepared in respect of the Placing Shares under the
securities legislation of Australia, Canada, Japan, the Republic of Ireland or the Republic ofSouth Africa and, subject to certain exceptions, the Placing Shares may not be offered orsold, directly or indirectly, in or into those jurisdictions;4.26 the Investor is liable for any capital duty, stamp duty and all other stamp, issue, securities,
transfer, registration, documentary or other duties or taxes (including any interest, fines or
penalties relating thereto) payable outside the UK by it or any other person on the acquisition
by it of any Placing Shares or the agreement by it to acquire any Placing Shares;
4.27 in the case of a person who confirms to Numis on behalf of an Investor an agreement toacquire Placing Shares under the Placing and/or who authorises Numis to notify such
Investor’s name to the Registrars, that person represents and warrants that he has authority
to do so on behalf of the Investor;
4.28 the Investor has complied with its obligations in connection with money laundering andterrorist financing under the Proceeds of Crime Act 2002, the Terrorism Act 2000 and the
Money Laundering Regulations 2007 and any other applicable law concerning the preventionof money laundering and, if it is making payment on behalf of a third party, that satisfactoryevidence has been obtained and recorded by it to verify the identity of the third party as
required by the Money Laundering Regulations 2007 and, in each case, agrees that pending
satisfaction of such obligations, definitive certificates (or allocation under the CREST system)in respect of the Placing Shares comprising the Investor’s allocation may be retained at
Numis’ discretion;
4.29 the Investor is not, and is not applying as nominee or agent for, a person which is, or may be,mentioned in any of sections 67, 70, 93 and 96 of the Finance Act 1986 (depository receipts
and clearance services);
4.30 the Investor has complied with and will comply with all applicable provisions of FSMA withrespect to anything done by the Investor in relation to the Placing in, from or otherwise
involving the UK;
4.31 if the Investor is in the UK, the Investor is a person: (i) who has professional experience inmatters relating to investments falling within article 19(5) of the Financial Services andMarkets Act 2000 (Financial Promotion) Order 2005 (as amended or replaced) (the “Order”);or (ii) a high net worth entity falling within article 49(2)(a) to (d) of the Order, and in allcases is capable of being categorised as a Professional Client or Eligible Counterparty for the
purposes of the FCA Conduct of Business Rules (all such persons together being referred to as“relevant persons”);
4.32 if the Investor is in the European Economic Area (“EEA”), the person is a “Professional
Client/Eligible Counterparty” within the meaning of Annex II/Article 24 (2) of MiFID and is not93participating in the Placing on behalf of persons in the EEA other than Professional Clients or
persons in the UK and other member states (where equivalent legislation exists) for whom theInvestor has authority to make decisions on a wholly discretionary basis;4.33 in the case of a person who confirms to Numis on behalf of an Investor an agreement toacquire Placing Shares under the Placing and who is acting on behalf of a third party, that theterms on which the Investor (or any person acting on its behalf) are engaged enable it tomake investment decisions in relation to securities on that third party’s behalf without
reference to that third party;
4.34 Numis is not making any recommendation to the Investor or advising the Investor regarding
the suitability or merits of participation in the Placing or any transaction the Investor may
enter into in connection with the Placing or otherwise. The Investor is not Numis’ client inconnection with the Placing and Numis will not be responsible to any Investor for providing
the protections afforded to Numis’ clients or providing advice in relation to the Placing andNumis will not have any duties or responsibilities to any Investor similar or comparable to“best execution” and “suitability” imposed by the Conduct of Business Sourcebook containedin the Rules of the FCA;
4.35 the exercise by Numis of any rights or discretions under the Placing Agreement shall be within
its absolute discretion and Numis need not have any reference to any Investor and shall haveno liability to any Investor whatsoever in connection with any decision to exercise or not toexercise or to waive any such right and each Investor agrees that it shall have no rights
against Numis or its directors or employees under the Placing Agreement;
4.36 it irrevocably appoints any director of Numis as its agent for the purposes of executing anddelivering to the Company and/or its registrars any documents on its behalf necessary toenable it to be registered as the holder of any of the Placing Shares agreed to be taken up by
it under the Placing and otherwise to do all acts, matters and things as may be necessary for,or incidental to, its acquisition of any Placing Shares in the event of its failure so to do; and4.37 it will indemnify and hold the Company and Numis and their respective affiliates harmlessfrom any and all costs, claims, liabilities and expenses (including legal fees and expenses)
arising out of or in connection with any breach of the representations, warranties,
acknowledgements, agreements and undertakings in this Appendix and further agrees that theprovisions of this Appendix will survive after completion of the Placing.
The Company and Numis will rely upon the truth and accuracy of each of the foregoing
representations, warranties and undertakings.
5.

SUPPLY AND DISCLOSURE OF INFORMATION

If any of Numis, the Registrars or the Company or any of their respective agents request any
information about an Investor’s agreement to acquire Placing Shares, such Investor must promptly
disclose it to them.
6.

MISCELLANEOUS

The rights and remedies of Numis, the Registrars and the Company under these terms and conditions
are in addition to any rights and remedies which would otherwise be available to each of them andthe exercise or partial exercise of one will not prevent the exercise of others.
On application, each Investor may be asked to disclose, in writing or orally to Numis:
6.1

if he is an individual, his nationality; or

6.2

if he is a discretionary fund manager, the jurisdiction in which the funds are managed orowned.

All documents will be sent at the Investor’s risk. They may be sent by post to such Investor at anaddress notified to Numis.
Each Investor agrees to be bound by the Articles (as amended from time to time) once the Placing
Shares which such Investor has agreed to acquire have been acquired by such Investor.
The provisions of this Appendix may be waived, varied or modified as regards specific Investors or
on a general basis by Numis.

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The contract to acquire Placing Shares and the appointments and authorities mentioned herein will
be governed by, and construed in accordance with, the laws of England and Wales. For the exclusive
benefit of Numis, the Company and the Registrars, each Investor irrevocably submits to the
exclusive jurisdiction of the English courts in respect of these matters. This does not prevent an
action being taken against an Investor in any other jurisdiction.
In the case of a joint agreement to acquire Placing Shares, references to an “Investor” in theseterms and conditions are to each of such Investors and such joint Investors’ liability is joint andseveral.
Numis and the Company each expressly reserve the right to modify the Placing (including, without
limitation, its timetable and settlement) at any time before allocations of Placing Shares under the
Placing are determined.

95

Linkway Financial Printers
Typeset & Printed in London (UK) 16218

Keywords Studios Plc
An international technical services provider to the video games industry

Registered in England no: 08548351
Registered office: 8 Clifford Street,
London W1S 2LQ