RNS Number : 7362Z
Keywords Studios PLC
22 September 2015
 



22 September 2015

 

 

 

Keywords Studios plc ("Keywords Studios", "the Group")

 

Half year results for the six months to 30 June 2015

 

Keywords Studios, the international technical services provider to the global video games industry, today provides its half year results for the six months to 30 June 2015.

 

Financial overview:

·     Group revenue, including contribution from acquisitions, increased by 74% to €23.9m (H1 2014: €13.7m)

·     Strong revenue growth of 23% on a pro forma basis*

·     Adjusted profit before tax** up 65% to €2.2m (H1 2014: €1.3m)

Statutory profit before tax of €1.6m (H1 2014: €0.04m)     

·     Adjusted earnings per share** up 63% to 4.29c (H1 2014: 2.63c)

Earnings per share of 3.02c (H1 2014: (0.34c))

·     Net cash of €6.1m (H1 2014: €9.6m) after €1.7m of acquisition consideration and costs

·     11% increase in interim dividend to 0.40p per share (2013: 0.36p)

 

Pro forma revenues calculated as if all acquisitions made prior to 30 June 2015 had been part of the Group during the whole of the six months ended 30 June 2015 and 30 June 2014

** before acquisition and integration expenses of £0.7m (H1 2014: £1.2m), share option charges of £0.1m (H1 2014: £0.05m), amortisation of intangibles of £0.4m (H1 2014: £0.2m) and foreign currency gains of £0.6m (H1 2014: £0.1m)

 

 

Operational overview:

·     Strong first half performance from both acquisitions and the existing business, in line with management expectations for the full year

·     Significant further investment in the development of the business:

Acquisitions of Alchemic Dream (Shawinigan, near Montreal) and Reverb (Rio de Janeiro) in January 2015.

€0.3m invested in new studios in Barcelona and Seattle

Increased staff levels in most locations in line with increased demand for our services

·     Continued gains in market share

Recent titles worked on include: Skylanders Supercharger, Batman: Arkham Knight, Mortal Combat X, Project CARS and Mad Max

New clients include: Oculus VR, Amazon, Gearbox, Fincon and NetMarble

 

Outlook:

·     Outturn for the full year anticipated to be in line with expectations, reflecting:

A return to the summer months being the peak period for the industry after two years of distortion due to the new console launch cycle

The acquisition of Kite Team (Madrid and Mexico City) and Liquid Development (Portland, Oregon) in July and August 2015

Particularly buoyant demand for Art services, where we are already working at capacity despite adding an additional 100 artists to our staff

The benefit of continued new business wins and increased market share

·    Selectively reviewing a strong acquisition pipeline

 

 

Andrew Day, Chief Executive of Keywords Studios, commented:

 

"We have delivered another strong performance for the first six months of the year and are looking forward with confidence to continuing to build our global games services business through both acquisition and organic growth.

 

"Our Art creation business in particular has benefitted from very strong demand in that market. The acquisition of Liquid Development in August this year has both provided additional in-house capacity and has also brought much greater flexibility in resourcing which will allow us to flex up and down with the demands of individual projects in much the same way that we do in our other service lines.

 

"The rhythm of game production and release schedules has returned to a more normal pattern following the disruption caused by the release of new games consoles in November 2013.  As such, we are seeing a return to more traditional trading patterns in our audio, testing and localisation businesses.  This, combined with the benefits of our recent acquisitions, organic investment and client wins leaves us well placed for the second half, with the outturn for the full year anticipated to be in-line with the Board's expectations."

 

 

 

For further information, please contact:

Keywords Studios (www.keywordsstudios.com)

Andrew Day, Chief Executive Officer

Andrew Lawton, Chief Financial Officer

+353 190 22 730

 

Numis (Financial Adviser)

Stuart Skinner / Kevin Cruickshank  (Nominated Adviser)

James Serjeant (Corporate Broker)

 

020 7260 1000

 

MHP Communications (Financial PR)

Katie Hunt / Jade Neal / Ollie Hoare

 

020 3128 8100

 

 

A video of Andrew Day discussing the results will be available from 9.30am via the following link:

 

http://brrmedia.co.uk/event/140318?popup=true

 

 

Notes to Editors

 

Keywords Studios is an international technical services provider to the global video games industry. Established in 1998, it provides integrated art creation, audio, testing, localisation, testing, and customer support services across the games lifecycle in over 50 languages and 14 games platforms to a blue chip client base in more than 15 countries. Keywords Studios now has facilities in Dublin, Rio de Janeiro, Montreal, Mexico City, Los Angeles, Portland, Seattle, Tokyo, Singapore, New Delhi, Pune, Rome, Milan, Barcelona, Madrid and London.  It has a strong market position, providing services to 21 of the top 25 games companies by revenue including (Microsoft, Namco Bandai, Sony, Konami, Electronic Arts, 2K, and Square Enix) and 7 of the top 10 mobile game companies by revenue (including Kabam, Supercell, Zynga and Machine Zone).  Keywords Studios is listed on AIM, the London Stock Exchange regulated market (KWS.L).  For further information please visit: www.keywordsstudios.com

 

 

Report of Management

 

The first half of the financial year has seen the Group grow in size by over 70% having broadened both its service offerings and its geographic locations organically and by acquisition.  Revenue growth of 23%, on a pro forma basis which eliminates the impact of the timing of acquisitions, is particularly pleasing.

 

During the first half, we have continued to make good progress with integrating acquisitions and we have made considerable changes to our management structure to enable us to focus on the growth of each of our six lines of service on a global basis while leveraging our local country infrastructure, market knowledge and country management.  The investment in this structure which draws on management talent from the Group's acquired companies as well as the core business provides the foundations for further acquisitions across service lines and geographies.

 

In addition to the two acquisitions made in January 2015, Reverb and Alchemic Dream, we added Kite Team and Liquid Development to our Group in the third quarter and have invested in organic expansion with our new Art and Localisation Testing studio in Seattle and in our Barcelona Localisation studio.

 

The Group typically experiences higher levels of activity in the second half of the year compared to the first half, with a seasonal peak in activity during its third quarter as publishers prepare games for launch in the pre-Christmas and Thanksgiving holiday period.  This year we have seen a busier January and February than normal as some clients chose to release games in the first quarter of 2015 rather than compete for consumer attention in the busy holiday period. We expect trading patterns in the second half to reflect the more normal seasonal trading patterns in the industry, with peak trading in the summer followed by steadier trading in the last few months of the year. It is also worth noting that both our Art and Customer Support services tend to have smoother trading patterns so we expect continued growth from these activities through the rest of the year.

 

Results for the period

 

Group revenues increased by 74% to €23.9m (H1 2014: €13.7m, restated by €0.6m for multi-media tax credits earned in Canada which are now shown as a deduction against sales, as reported in the Group's annual report for the year ended 31 December 2014).  This increase was driven by a combination of continued growth of existing operations, the contributions of Alchemic Dream and Reverb since their respective acquisition dates in January 2015 and the full six month contributions from our 2014 acquisitions. On a pro forma basis, which eliminates the impact of the timing of acquisitions, the Group achieved revenue growth of 23%.

 

The following commentary provides an overview of the performance of each of our service lines: art creation services, audio services, localisation services, functional testing, localisation testing, and customer support services.

 

Art Creation

 

Our Art Creation service line creates graphical art assets for inclusion in video games including concept art creation, 2D and 3D art asset production and animation.

 

Art Creation services, which started for Keywords in October 2014 with the acquisition of Lakshya, have performed strongly, delivering revenues of €2.8m which represented 12% of Group sales in the first half of the current financial year. This service line has grown aggressively in this period, with Lakshya more than doubling its sales compared to last year on a pro forma basis (H1 2014 pro forma: €1.2m). We anticipate that this trend will continue through the second half, further supported by the acquisition of Liquid Development in August this year.

 

Audio Services

 

Our Audio service line provides multi language voice-over, original language voice recording and related services.

 

Including both Binari Sonori and Liquid Violet, the sales of Audio services grew by 62% in the period to €2.3m (H1 2014: €1.4m) or by 21% on a pro forma basis (H1 2014 pro forma: €1.9m).  We experienced delays to certain audio projects during the first half, which are expected to result in a higher growth rate in the second half than the pro forma growth achieved in the first half of the year.

 

Localisation

 

Our Localisation service line provides translation of in-game text, audio scripts, cultural, and local adaptation, accreditation, packaging and marketing materials.

 

The Localisation activities have grown by 71% to €7.8m (H1 2014: €4.6m), largely due to last year only including part contributions from Binari Sonori and Babel Media. On a pro forma basis, Localisation revenues have grown by 25% (H1 2014 pro forma: €6.2m) partly due to higher than normal activity levels in the first quarter of the current financial year. Localisation services accounted for a constant s share of Group revenue (H1 2015: 33%, H1 2014: 33%), reflecting the broader range of services the Group now delivers.

 

Functional Testing

 

Our Functional Testing service line provides quality assurance including the discovery and documentation of game defects and testing to verify the game's compliance with console manufacturers' specifications.

 

Functional testing revenues increased by 3% to €2.5m (H1 2014: €2.4m) but decreased by 16% on a pro forma basis (H1 2014 pro forma: €3.0m) following a particularly strong performance in the comparative period which benefitted from two significant projects early in the year. The performance for the full year is anticipated to be significantly better on a comparative basis, with a greater weighting of sales in the second half reflecting a return to more usual seasonal trading patterns.

 

Localisation Testing

 

Our Localisation Testing service line identifies out of context translations, truncations, overlaps, spelling, grammar, age rating issues, and tests for console manufacturer compliance requirements in over 30 languages using native speakers.

 

The Group's reliance on Localisation Testing which accounted for 29% (H1 2014: 39%) of Group revenues during the first half continued to reduce as planned.  The service line performed strongly, with sales having increased by 28% to €6.8m (H1 2014: €5.3m) or by 20% on a pro forma basis (H1 2014 pro forma: €5.7m) partly due to higher than normal levels of activity in the first quarter of 2015 in support of games that were launched in that quarter rather than in the traditional launch window of November/December.

 

Customer Support

 

Our Customer Support service line provides multi-lingual, cost effective and flexible customer care services including managing communities of gamers across all forms of social media, within the games themselves and on the official game forums.

 

The acquisition of Alchemic Dream in January has established customer support and community management as part of the Group's offering and this service line contributed €1.7m of sales in the first half, which accounted for 7% of Group sales.  On a pro forma basis, this represented a 22% increase on the prior period (H1 2014 pro forma: €1.4m). In this period the sales derived from Alchemic Dream's core offering which is in the process of being extended to include customer support services staffed from existing Keywords studios in key locations such as Tokyo, Singapore, Dublin and Montreal, which will support continued growth.

 

During the period a regional management reporting structure has been introduced, with the regional segments as follows: Europe 39% (H1 2014: 45%), Americas 43% (H1 2014: 48%), Asia 18% (H1 2014: 7%). The increase in Asia in the period is primarily due to the acquisition of Lakshya, based in India.

 

The gross profit margin of 34.4% (H1 2014: 32.1%) was stronger than last year reflecting a combination of improved margin across the core services which were in place in the comparative period last year and the addition of the higher margin, art creation service line.

 

Operating expenses increased in the first half of the year to €6.0m (H1 2014: €3.1m) reflecting the costs of the acquired entities. As a proportion of sales, operating expenses were 24.9% (H1 2014: 22.4%).  

 

One-off costs of acquiring and integrating the newly acquired companies of €0.7m (H1 2014: €1.2m) were incurred in the period.  Included in net finance costs are foreign exchange gains of €0.6m (H1 2014: €0.1m) in the first half of the current year which is primarily due to the US dollar, Canadian dollar and sterling all strengthening against the euro.

 

Adjusted profit before tax and acquisition-related costs, share option charges, amortisation of intangibles and foreign currency movements for the first half of the current financial year was €2.2m (H1 2014: €1.3m).  After these items, the Group reported a profit before tax for the period of €1.6m (H1 2014: €0.04m). 

 

The estimated tax in the period is €0.13m (H1 2014: €0.18m) which is made up of income tax on operations for the period of €0.31m which is offset by deferred tax.  The tax is calculated for all of Keywords' entities, across all geographies which have generated profits during the period, after taking into account any tax losses brought forward is calculated.

 

Adjusted earnings per share (before tax and acquisition-related costs, share option charges, amortisation of intangibles and foreign currency movements) were €4.29c (2014: €2.63c).  Basic earnings per share from continuing operations were €3.02c (2014: €(0.34)c). 

 

As the Group has entered into its seasonally busy second half and, therefore, the point at which it has its maximum cash requirement for the year, there was a net outflow of cash from operations in the period. The net outflow for the period from operations was €0.6m, which was a significant reduction on the outflow of €3.1m in the same period last year.  In the period, the Group made two acquisitions with a net cash outflow on consideration of €1.0m (H1 2014: €6.6m) and an additional €0.7m (H1 2014: €1.2m) in acquisition and integration costs. Investment in fixed assets amounted to €0.8m (H1 2014: €0.4m) reflecting in particular the cost of setting up new facilities in Barcelona and Seattle and funding the rapid growth of Lakshya. Additionally €0.8m was spent in acquiring 400,000 KWS Group shares for the Employee Benefit Trust ("EBT").

 

 

DIVIDENDS

 

The Board is pleased to announce an 11% increase in its interim dividend payment, in line with its progressive dividend policy.  The interim dividend of 0.40p per share will be paid on 23rd October 2015 to shareholders on the register on 2nd October 2015.  The interim dividend payment will absorb approximately €0.3m of cash resources.

 

 

Strategy

 

Our strategy remains focussed on continuing to grow the Group both organically and through acquisition by executing on opportunities to consolidate our fragmented markets and to extend the range of technical services we offer. By broadening the services provided to video game developers and publishers from the very early concept stages through to the post launch, live operations phases, Keywords aims to be the leading scale provider of services at all stages in the games lifecycle to its global customer base.

 

We have made good progress so far this year, in line with our strategy, undertaking four acquisitions which have extended our geographic reach (especially in Latin America) and provided an entry point into customer services and further strength in our Audio, Localisation and Art services lines in particular. We are continuing to review a number of interesting acquisition opportunities that could further extend our service offering and operating territories.

 

 

CURRENT TRADING AND OUTLOOK

 

The rhythm of game production and release schedules has returned to a more normal pattern following the disruption caused by the release of the new game consoles in November 2013.  As such, we expect trading patterns in our audio, testing and localisation businesses in the second half to reflect the more normal seasonal trading patterns in the industry, with peak trading in the summer followed by steadier trading in the last few months of the year.  This combined with the benefits of our first half acquisitions, organic investment and client wins leaves us well placed for the second half, with the outturn for the full year anticipated to be  in line with the Board's expectations.

 

Our new management structure, which draws on managerial talent both from the pre-existing business and from acquisitions is bedding in well and is already demonstrating its strength in executing and embedding acquisitions, driving cross selling opportunities and seeding our service lines into our established studios around the world.

 

The continued proliferation of content in the video games market in terms of the growth in size of individual games; the increase in the richness of the content (graphic and audio quality); and quantity of games, particularly in the mobile games arena; and the move to games as a service with its inherent, perpetual content additions will continue to drive growth opportunities for our business.  This will be supplemented by continued innovations in games platforms and peripherals.  Virtual reality in particular is starting to create work for us and we have been at the leading edge of this innovation in our Art services businesses as well as our testing operations.

 

As we continue to grow our market position to become the "go to" supplier for games services across the lifecycle, we remain confident of making further good progress organically. Acquisitions will also remain an important part of our growth strategy, as we continue to selectively add businesses that fit with our culture and bring new services, new geographies or increased market strength to our Group.

 

Interim consolidated statement of comprehensive income



 Unaudited

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Audited



 26 weeks ended

26 weeks ended

52 weeks ended



30 Jun 2015

30 Jun 2014

31 Dec 2014


Note






Revenues

4

23,908,383

         13,718,126

         37,293,179






Other operating costs


(16,182,967)

(9,898,177)

(25,980,943)

Multimedia tax credits


487,392

589,917

1,413,038






Gross profit


8,212,808

4,409,866

12,725,274






Other administration expenses


(5,959,075)

(3,067,672)

(7,566,240)

Share option expense


(135,841)

(54,069)

(156,000)

Costs of acquisition and integration


(695,564)

(1,175,351)

(1,461,054)

Amortisation of intangible assets


(383,710)

(150,711)

(467,786)






Administrative expenses


(7,174,190)

(4,447,803)

(9,651,080)






Operating profit/(loss)


1,038,618

(37,937)

3,074,194






Financing income

6

658,032

138,673

516,028

Financing cost

6

(141,767)

(64,748)

(154,662)






Profit before taxation


1,554,883

35,988

3,435,560

Tax expense

7

(126,389)

(180,174)

(1,215,373)






Profit/(loss) for the period


1,428,494

(144,186)

2,220,187






Other comprehensive income:





Exchange gains/(losses) on translation of foreign operations


1,034,112

20,399

(287,970)

Total comprehensive income for the year attributable to the owners


2,462,606

(123,787)

1,932,217






Earnings per share


Euro cent

Euro cent

Euro cent

Basic earnings per ordinary share (Euro cent)

9

3.02

(0.34)

4.94

Diluted earnings per ordinary share (Euro cent)

9

2.99

(0.34)

4.93

 

The notes on pages 12 to 25 form an integral part of these consolidated financial statements.

 

 

Interim consolidated statement of financial position



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 26 weeks ended

 26 weeks ended

52 weeks ended



30 Jun 2015

30 Jun 2014

31 Dec 2014


Note

 €

Non-current assets





Property, plant and equipment


3,013,597

2,057,619

2,760,906

Goodwill

11

16,488,482

11,979,548

14,710,709

Intangible assets

12

3,019,336

2,808,578

2,966,537

Deferred tax assets


1,459,802

-

812,889



               23,981,217

               16,845,745

            21,251,041

Current assets





Trade receivables


8,452,062

4,712,115

6,203,352

Other receivables


6,622,335

5,469,894

5,644,086

Cash and cash equivalents


6,138,724

9,550,633

11,013,977

Short-term investments


1,417,824

524,074

258,866



               22,630,945

               20,256,716

            23,120,281

Total assets


               46,612,162

               37,102,461

            44,371,322






Equity





Share capital

10

553,083

551,146

551,146

Share premium


18,542,387

24,209,555

18,542,387

Merger reserve - restructuring


(370,069)

(370,069)

(370,069)

Merger reserve - acquisitions


5,946,916

-

5,667,168

Foreign exchange reserve


768,996

43,253

(265,116)

Treasury shares held for EBT


(803,586)

-

-

Share option reserve

13

362,596

124,824

226,755

Retained earnings


8,612,778

5,517,635

7,666,617

Total equity


               33,613,101

               30,076,344

            32,018,888






Current liabilities





Trade payables


2,109,338

1,985,110

2,322,061

Other payables


7,783,498

4,989,083

6,880,839

Corporation tax liabilities


31,655

51,924

542,983

Deferred tax liabilities


20,989

-

-



                 9,945,480

                 7,026,117

              9,745,883

Non-current liabilities





Other payables


1,218,550

-

1,218,550

Deferred tax liabilities


1,835,031

-

1,388,001



                 3,053,581

                             -  

              2,606,551

Total equity and liabilities


               46,612,162

               37,102,461

            44,371,322

The notes on pages 12 to 25 form an integral part of these consolidated financial statements.

 

Interim consolidated statement of changes in equity




Merger

Merger

Foreign

Treasury

Share




Share

Share

reserve

reserve

exchange

shares held

option

Retained

Total


capital

premium

restructuring

acquisitions

reserve

for EBT

reserve

earnings

Equity












Balance at 1 January 2014

464,782

11,249,637

(370,069)

-

22,854

-

70,755

6,055,588

17,493,547











Profit for the period

-

-

-

-

-

-

-

(144,186)

(144,186)

Other comprehensive income

-

-

-

-

20,399

-

-

-

20,399

Share option expense (note 13)

-

-

-

-

-

-

54,069

-

54,069

Dividends paid (note 8)

-

-

-

-

-

-

-

(393,767)

(393,767)

Shares issued for cash (note 10)

48,944

7,292,750

-

-

-

-

-

-

7,341,694

Shares issued upon acquisitions

37,420

-

-

-

-

-

-

-

37,420

Merger reserve arising on group










acquisitions

-

-

-

5,667,168

-

-

-

-

5,667,168







-




Balance at 30 June 2014

551,146

18,542,387

(370,069)

5,667,168

43,253

-

124,824

5,517,635

30,076,344











Profit for the period

-

-

-

-

-

-

-

2,364,373

2,364,373

Other comprehensive income

-

-

-

-

(308,369)

-

-

-

(308,369)

Share option expense (note 13)

-

-

-

-

-

-

101,931

-

101,931

Dividends paid (note 8)

-

-

-

-

-

-

-

(215,391)

(215,391)











Balance at 31 December 2014

551,146

18,542,387

(370,069)

5,667,168

(265,116)

-

226,755

7,666,617

32,018,888











Profit for the period

-

-

-

-

-

-

-

1,428,494

1,428,494

Other comprehensive income

-

-

-

-

1,034,112

-

-

-

1,034,112

Share option expense (note 13)

-

-

-

-

-

-

135,841

-

135,841

Dividends paid (note 8)

-

-

-

-

-

-

-

(482,333)

(482,333)

Treasury shares ring-fenced for EBT

-

-

-


-

(803,586)

-

-

(803,586)

Shares issued for cash (note 10)

1,937

-

-

279,748

-

-

-

-

281,685







-




Balance at 30 June 2015

553,083

18,542,387

(370,069)

5,946,916

768,996

(803,586)

362,596

8,612,778

33,613,101

 

 

 


 

Interim consolidated statement of cash flows                                                              



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30 Jun 2015

30 Jun 2014

31 Dec 2014


Note






Cash flows from operating activities





Profit/(loss) after tax


1,428,494

(144,186)

2,220,187






Adjustments to reconcile net income to net cash provided by operating activities


(1,069,464)

(2,736,389)

202,302

Income taxes paid


(909,179)

(177,540)

(522,295)

Net cash provided by operating activities


(550,149)

(3,058,115)

1,900,194






Cash flows from investing activities





Acquisition of subsidiaries net of cash acquired

14

(1,044,349)

(6,603,062)

(8,889,170)

Acquisition of property, plant and equipment


(828,436)

(412,335)

(1,252,412)

(Acquisition)/disposal of short term investments


(1,158,958)

(5,568)

259,640

Interest received

6

40,670

26,574

49,405

EBT share purchase


(803,586)

-

-

Net cash used in investing activities


(3,794,659)

(6,994,391)

(9,832,537)






Cash flows from financing activities





Repayment of borrowings in acquired company


-

(2,996,110)

(2,996,110)

Dividends paid

8

(482,333)

-

(609,158)

Shares issued

10

-

7,341,700

7,341,700

Share issuance expenses


(14,175)

-

-

Interest paid

6

(33,937)

(13,020)

(60,681)

Net cash used in financing activities


(530,445)

4,332,570

3,675,751

Decrease in cash and cash equivalents


(4,875,253)

(5,719,936)

(4,256,592)

Cash and cash equivalents at beginning of the period


11,013,977

15,270,569

15,270,569

Cash and cash equivalents at end of period


6,138,724

9,550,633

11,013,977

 

 

Adjustments to reconcile net income to net cash provided by operating activities

 


 Unaudited

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 Audited


 26 weeks ended

 26 weeks ended

 52 weeks ended


30 Jun 2015

30 Jun 2014

31 Dec 2014






Income and expenses not affecting operating cash flows



Depreciation

607,672

294,794

868,308

Intangibles amortisation

383,710

150,711

467,786

Income tax expense

126,389

180,174

1,215,373

Share option expense

135,841

54,069

156,000

Foreign currency revaluation of fixed assets


-

(161,001)

Loss on disposal of fixed assets


-

65,965

Interest received

(40,670)

(26,574)

(49,405)

Share issuance costs

14,175

-

-

Interest paid

33,937

13,020

60,681





Changes in operating assets and liabilities




Increase in trade receivables

(1,671,710)

(2,152,672)

(2,929,983)

Increase in other receivables

(1,112,625)

(2,076,524)

(2,089,814)

Increase in trade and other payables

453,817

806,214

2,598,392

Increase in foreign exchange reserve

-

20,399

-


(1,069,464)

(2,736,389)

202,302

 

 

Notes forming part of the consolidated financial statements

1

Basis of preparation

 

Keywords Studios plc (the "Company" is a company incorporated in the UK. These consolidated financial statements include the financial statements of the Company and its subsidiaries (the "Group") made up to June 30, 2015. The Group was formed on July 8, 2013 when Keywords Studios Plc (formerly Keywords Studios Limited) acquired the entire share capital of Keywords International Limited through the issue of 31,901,332 ordinary shares. 

 

The parent company financial statements present information about the Company as a separate entity and not about its Group.

 

The interim financial statements were approved by the Board of Directors on 21 September 2015.  The interim results for the 26 weeks ended 30 June 2015 and the 26 weeks ended 30 June 2014 are neither audited nor reviewed by our auditors and the accounts in this interim report do not therefore constitute statutory accounts in accordance with Section 434 of the Companies Act 2006.  They do not include all of the information required for full annual financial statements, and should be read in conjunction with the consolidated financial statements of Keywords Studios plc for the year ended 31 December 2014.

 

The consolidated statutory accounts of Keywords Studios for the year ended 31 December 2014 have been filed with the Companies House.  The report of the auditors on those accounts was unqualified, did not contain any statements under s.498 (2) or (3) of the Companies Act 2006 and did not contain any matters to which the auditors drew attention without qualifying their report.

 

The same accounting policies, presentation and methods of computation are followed in these condensed consolidated financial statements as were applied in the Keywords Studio plc latest annual audited financial statements.

 

In the current year the Group has adopted all of the new and revised standards and interpretations 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 January 1, 2013. The adoption of these standards has had no material impact on the financial statements.

 

New standards, interpretations and amendments not yet effective.

 

None of the new standards, interpretations and amendments, which are effective for periods beginning after January 1, 2014, have been adopted. No detailed review of the impact of IFRS 15 has taken place and therefore we are unable to conclude what impact it may have on the Group's future financial statements at this point.

 

 

2

Significant accounting policies

 

There have been no changes to the accounting policies detailed in the 2014 Annual Report. Over the period covered by the Interim Report the company has acquired new companies, resulting in the creation of both Intangible Assets and Goodwill. The accounting policies relating to Intangible Assets and Goodwill are detailed below.

 

 

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 is credited in full to the consolidated statement of comprehensive income on the acquisition date.

 

Intangible Assets

 

Intangible assets, separately identified from goodwill acquired as part of a business combination, are initially stated at fair value. The fair value attributed is determined by discounting the expected future cash flow to be generated from the asset at the risk adjusted average weighted cost of capital appropriate to the intangible asset.

The assets are estimated over their useful life which presently is 5 years starting from date the asset was capitalised.

 

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.

 

The multimedia tax credits received in Montreal on testing services are treated as a deduction against direct costs. The tax claims related to the periods 1 April 2013 to 16 February 2014, and 17 February to 31 December 2014 are in progress. Based on the work done to date, including feedback from the Montreal authorities, we have decreased the estimates of the amount to be received by €334,934 to €3,037,937.

 

Employee Benefit Trust

 

Ordinary Shares purchased by the Employee Benefit Trust on behalf of the Parent Company under the Terms of the Share Option Plan are deducted from equity on the face of the Consolidated Statement of Financial Income. No gain or loss is recognised in relation to the purchase, sale, issue or cancellation of the Parent Company's Ordinary Shares

 

 

3

Critical accounting estimates and judgements

 

There has been no material revisions to the nature and amount of changes in estimates of amounts reported in the annual financial statements 2014 for Keywords International Limited.

 

 

4

Segmental analysis

 

Management considers that the Group's activity as a single source supplier of Technical Services for Video Games 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 and the revenues derived from six main service groupings:

 

·     Art Creation - Art creation services relate to the production of graphical art assets for inclusion in the video game including concept art creation along with 2D and 3D art asset production and animation.

·     Audio - Audio services relate to the audio production process for computer games and includes script translation, actor selection and talent management through pre-production, audio direction, recording, and post-production, including native language Quality Assurance of the recordings.

·     Localisation - Localisation services relate to translation and cultural adaptation of in-game text and audio scripts across multiple game platforms and genres.

·     Functional Testing - Functional testing relates to quality assurance services provided to game producers to ensure games function as required.

·     Localisation Testing - Localisation testing involves testing the linguistic correctness and cultural acceptability of computer games.

·     Customer Support - Customer support relates to the live operations support services such as community management, player support and associated services provided to producers of games to ensure that consumers have a positive user experience.

 

 

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.

 

Activities are 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.

 

 


 Unaudited

 Unaudited

 Audited


 26 weeks ended

 26 weeks ended

 52 weeks ended


30 Jun 2015

30 Jun 2014

31 Dec 2014


 €

 €

 €

Revenue by line of business




Art creation

2,780,401

-

612,486

Audio

2,302,374

1,419,660

5,080,460

Localisation

7,821,793

4,563,258

11,956,656

Functional testing

2,504,002

2,424,758

4,985,834

Localisation testing

6,815,839

5,310,450

14,657,743

Customer support

1,683,974

-

-


23,908,383

13,718,126

37,293,179

 

 

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.

 


 Unaudited

 Unaudited

 Audited


 26 weeks ended

 26 weeks ended

 52 weeks ended


30 Jun 2015

30 Jun 2014

31 Dec 2014


 €

 €

 €





Ireland

4,800,384

4,307,726

9,939,377

Japan

1,386,661

978,156

2,643,895

Italy

4,350,805

1,725,733

6,754,245

Canada

7,761,710

4,650,833

11,066,703

United States

2,259,187

1,859,432

5,838,019

India

2,792,756

-

612,485

Singapore

184,087

15,011

64,939

United Kingdom

176,049

181,235

373,516

Brazil

196,744

-

-


23,908,383

13,718,126

37,293,179

 

Geographical analysis of non-current assets from continuing businesses

 


 Unaudited

 Unaudited

 Audited


 26 weeks ended

 26 weeks ended

 52 weeks ended


30 Jun 2015

30 Jun 2014

31 Dec 2014


 €

 €

 €





Ireland

               353,026

               410,017

               391,166

Japan

                 40,836

                 25,850

                 26,138

Italy

               267,062

               450,808

               316,312

Canada

             1,142,206

               760,762

             1,056,685

United States

               337,633

               238,853

               249,190

India

               822,556

                 88,213

               602,975

Singapore

                 96,294

                 71,219

                 97,288

United Kingdom

                 15,169

                 11,898

                 21,152

Brazil

                   5,516

                        -  

                        -  

Spain

                 13,241

                        -  

                        -  


3,093,539

2,057,620

2,760,906

 

 

 

5             Seasonal business

 

The video games industry, and in particular the console sector of the games industry, is heavily dependent on sales of new releases of games and consoles during the traditional holiday season, including the run up to Thanksgiving in the United States and Christmas in other parts of the world.  As with all other service providers to the video games industry, certain of Keywords Group's service lines typically experiences significantly higher activity as part of this release cycle during the six months from June to November.  This activity drives increased revenues in that period and generates higher Gross Profit margins compared with the other six months.       

 

Revenue for the 52 weeks ended 30th June 2015 totalled €47,483,436 (2014: 52 weeks €23,719,492) and Gross Profit of €16,528,216 (2014: 52 weeks €7,782,555).

 

Please note that within the last 6 months to June 30th, 2015, Keyword's Group has acquired 2 new entities which are also included in the results above.

 

 

6        Financing income and costs

         


 Unaudited

 Unaudited

 Audited


 26 weeks ended

 26 weeks ended

 52 weeks ended


30 Jun 2015

30 Jun 2014

31 Dec 2014


 €

 €

 €





Finance income




Interest received

                 40,670

                 26,574

                 49,405

Foreign exchange gain

               617,362

               112,099

               466,623


658,032

138,673

516,028

Finance cost




Bank charges

              (107,830)

                (51,728)

                (93,981)

Interest expense

                (33,937)

                (13,020)

                (60,681)


(141,767)

(64,748)

(154,662)





Net financing income

516,265

73,925

361,366

 

         

7        Taxation

         


 Unaudited

 Unaudited

 Audited


 26 weeks ended

 26 weeks ended

 52 weeks ended


30 Jun 2015

30 Jun 2014

31 Dec 2014


 €

 €

 €





Current income tax




Income tax on profits

                        -  

                        -  

                   9,478

Income tax on profits of subsidiary operations

               305,283

               180,174

               954,973

Deferred tax

              (178,894)

                        -  

               250,922


               126,389

               180,174

             1,215,373

 

The tax is calculated for all of the Keyword's entities, across all geographies, which have generated profits during the period after taking into account any tax losses brought forward. A number of entities within the group have incurred losses during the period, on which no tax refund has been assumed.

 

 

8        Dividends

                                                                                                                                                                                            


 Unaudited


 Unaudited


Audited


 26 weeks ended


 26 weeks ended


52 weeks ended


30 Jun 2015


30 Jun 2014


31 Dec 2014


Per share

 Total


Per share

 Total


Per share

 Total


Euro Cent

 €


Euro Cent

 €


Euro Cent










Interim









Final

1.03

 482,333


0.84

 393,767


0.84

 393,767

Interim

0.56

 265,599


            -  

          -  


0.46

 215,391

Dividends approved/paid to shareholders

1.59

 747,932


0.84

 393,767


1.30

 609,158

         

In June 2014, Keywords International Limited approved a dividend of Stg 0.67 / €0.84 per share, based on the shares in issue at that time, or €393,767 in total, as a final dividend for 2013. The dividend was paid in July 2014.

 

In September 2014, Keywords International Limited approved a dividend of Stg 0.36 /€0.46per share, based on the shares in issue at that time, or €215,391 in total, as an interim dividend for 2014. The dividend was paid in October 2014.

 

The Directors' recommended a final dividend in respect of the financial year ended December 31, 2014 of Stg0.74p/ €1.03 per Ordinary share, or €482,333 to be paid on June 26, 2015 to shareholders who are on the register at June 5, 2015.

 

The Directors' recommend an interim dividend of £0.40 /€0.56 per share in respect of the financial year ended 31 December 2015 to the shareholders who are on the register at October 2nd, 2015.  The dividend is not reflected in the financial statements as it does not represent a liability at 30 June 2015. The interim dividend will reduce shareholders' funds by an estimated €265,599.

 

 

9        Earnings per share


 Unaudited

 Unaudited

 Audited


 26 weeks ended

 26 weeks ended

 52 weeks ended


30 Jun 2015

30 Jun 2014

31 Dec 2014






Euro cent

Euro cent

Euro cent

Basic

2.96

                    (0.34)

4.94

Diluted

2.92

                    (0.34)

4.93






 €

 €

 €

Profit for the period from continuing operations

             1,398,376

              (144,186)

             2,220,187









Denominator (weighted average number of equity shares)

Number

Number

Number

Basic

           47,247,519

           42,758,232

           44,955,503

Diluted

           47,828,755

           42,758,232

           45,064,294

 

 

10      Shareholder's equity

         

Share capital




Shares




At 1 January 2014

 40,032,413

 464,782

Ordinary Shares of £0.01 issued on acquisition of Babel Media Limited

   1,516,944

   18,525

Ordinary Shares of  £0.01 issued on acquisition of Binari Sonori S.R.L

   1,555,650

   18,895

Placing of ordinary Shares of  £0.01 on the market

   4,000,000

   48,944

At 30 June 2014

 47,105,007

 551,146

No share issues for the period

              -  

          -  

At 31 December 2014

 47,105,007

 551,146

Issued 158,250 @ £0.01 - Binari Sonori earn out

      158,250

     1,937

At 30 June 2015

 47,263,257

 553,083

 

 

On February 17 2014 the Group issued 1,516,944 of 1p shares which formed part of the consideration for the acquisition of Babel Media Limited.

 

On May 9 2014 the Group issued 1,555,650 of 1p shares which formed part of the consideration for the acquisition of Binari Sonori S.R.L.

 

On May 9 2014 the Group placed 4,000,000 of 1p shares into the market at a value of £1.50 (€1.83) per share.

On 19th January 2015 the Group issued 158,250 of 1p shares for the earn out agreement with Binari Sonori.

 

 

 

11           Goodwill

 

Group









Liquid Violet Limited

Babel Media Limited

Binari Sonori Srl

Lakshya Digital Private Limited

Alchemic Dream

Reverb

Total


Cost and net book value








At 1 January 2014

-

-

-

-

-

-

-

Recognised on acquisition of a subsidiary

937,719

4,206,114

6,835,657

-

-

-

11,979,490

At 30 June 2014

937,719

4,206,114

6,835,657

-

-

-

11,979,490

Recognised on acquisition of a subsidiary

105,135

168,562

794,772

1,662,750

-

-

2,731,219

At 31 December 2014

1,042,854

4,374,676

7,630,429

1,662,750

-

-

14,710,709

Recognised on acquisition of a subsidiary

-

-

-

79,942

  457,102

  282,994

820,038

Revaluation adjustment

   173,541

   657,923

               -  

   144,900

       1,553

   (20,182)

957,735

At 30 June 2015

1,216,395

5,032,599

7,630,429

1,887,592

458,655

262,812

16,488,482

 

 

During 2014, an initial assessment of the Liquid Violet, Babel Media Limited and Binari Sonori Srl acquisitions was completed as at 30 June 2014, which resulted in the recognition of goodwill. Under IFRS 3 "Business Combinations", there is a 12 month period within which the acquisition accounting and calculation of goodwill can be completed, as a result, further adjustments in the period to 31 December 2014 arose, as set out above.

 

During the period goodwill arose on the acquisition of Alchemic Dream Inc. and Reverb Localização - Preparação de Documentos Ltda.

 

The goodwill is tested for impairment on an annual basis. The impairment test will be performed as part of the year end process and any adjustment required reported in the annual report.

 

 

12           Intangible assets - customer relations

 

Group








Liquid Violet Limited

Babel Media Limited

Binari Sonori Srl

Lakshya Digital Private Limited

Alchemic Dream

Total


Cost







As at 1 January 2014

            -  

            -  

            -  

          -  

          -  

            -  

Additions

    203,770

    964,287

 1,791,281

          -  

          -  

 2,959,338

As at 30 June 2014

    203,770

    964,287

 1,791,281

          -  

          -  

 2,959,338

Additions

            -  

            -  

            -  

 474,985

          -  

    474,985

As at 31 December 2014

    203,770

    964,287

 1,791,281

 474,985

          -  

 3,434,323

Additions

            -  

            -  

            -  

          -  

 214,485

    214,485

Revaluation Adjustment

      33,909

    145,022

            -  

   41,393

     3,436

    223,760

As at 30 June 2015

    237,679

 1,109,309

 1,791,281

 516,378

 217,921

 3,872,568








Amortisation and impairment







As at 1 January 2014

            -  

            -  

            -  

          -  

          -  

            -  

Amortisation charge

      18,680

      72,322

      59,709

          -  

          -  

    150,711

As at 30 June 2014

      18,680

      72,322

      59,709

          -  

          -  

    150,711

Amortisation charge

      20,376

      96,434

    179,128

   21,137

          -  

    317,075

As at 31 December 2014

      39,056

    168,756

    238,837

   21,137

          -  

    467,786

Amortisation charge

      23,771

    110,930

    179,130

   51,638

   19,977

    385,446

As at 30 June 2015

      62,827

    279,686

    417,967

   72,775

   19,977

    853,232








Net book value







As at 30 June 2014

    185,090

    891,965

 1,731,572

          -  

          -  

 2,808,627

As at 31 December 2014

    164,714

    795,531

 1,552,444

 453,848

          -  

 2,966,537

As at 30 June 2015

    174,852

    829,623

 1,373,314

 443,603

 197,944

 3,019,336

 

Customer relationships are amortised over 5 years from the point of acquisition on a straight line basis.

 

13           Share options

 

In July 2013, at the time of the IPO, the Company put in place a Share Option Scheme and a Long Term Incentive Plan ("LTIP"). The charge in relation to these arrangements is shown below, with further details of the schemes following:

 


 Unaudited

 Audited

 Unaudited


 26 weeks ended

 52 weeks ended

 26 weeks ended


 30th Jun 2015

 31st Dec 2014 

 30th Jun 2014






Share Option Scheme Expense

                 59,528

                 65,945

                 54,069

Share Option Scheme - LTIP Expense

                 76,313

                 90,055

                        -  


               135,841

               156,000

                 54,069

 

 

Of the total share option charge, €19,898 relates to Directors of the Company as at June 30, 2015. (2014: €66,078). 

 

Share option scheme

 

Share options are granted to certain Directors and permanent employees. The exercise price of the granted options is equal to the market price of the shares at the time of the award of the options. The Company has no legal or constructive obligation to repurchase or settle the options in cash.

 

Movements in the number of share options outstanding and their related weighted average exercise prices are as follows:

 

Short term incentive plan scheme

30 Jun 2015

31 Dec 2014


Average exercise price in £ per share

Number of options

Average exercise price in £ per share

Number of options

Outstanding at the beginning of the period

1.20

642,286

1.20

              762,775

Granted

1.58

1,059,040

                       -  

                       -  

Lapsed

1.20

               (18,684)

1.20

             (120,489)

Exercised

                        -  

                       -  

                       -  

                       -  

Outstanding at the end of the period

1.44

1,682,642

1.20

              642,286






Exercisable at the end of the period

                        -  

                       -  

                       -  

                       -  

 

 

There were 1,059,040 options granted during the period and 18,684 lapsed due to staff leaving.

 

All 1,682,642 options were granted at an average exercise price of £1.44. All options were granted to either employees or Directors of the Group. Of the total options granted, 207,868 are exercisable from July 12, 2015 to July 11, 2020, 207,867 are exercisable from July 12, 2016 to July 11, 2020, 207,867 are exercisable from July 12, 2017 to July 11, 2020, 353,014 are exercisable from May 31, 2017 to May 31, 2022, 353,013 are exercisable from May 31, 2018 to May 31, 2022 and 353,013 are exercisable from May 31, 2019 to May 31, 2022.

 

 

Long term incentive plan scheme

 

An alternative share plan was introduced to give awards to Directors and staff subject to outperforming the Numis Small Cap (excluding Investment Trusts) index in terms of shareholder return over a three year period. A total of 865,766 (2014: 376,226) nil price (1p) options are available to vest to Directors and to selected employees on the basis of the number of options they are entitled to. 

Movements in the number of share options outstanding and their related weighted average exercise prices are as follows:

 


30 Jun 2015

31 Dec 2014


Average exercise price in £ per share

Number of options

Average exercise price in £ per share

Number of options

Outstanding at the beginning of the period

0.01

              376,226

0.01

    392,037

Granted

0.01

              489,540

0.01

      50,000

Lapsed

                        -  

                       -  

0.01

     (65,811)

Exercised

                        -  

                       -  

                       -  

             -  

Outstanding at the end of the period

0.01

              865,766

0.01

    376,226






Exercisable at the end of the period

                        -  

                       -  

                       -  

             -  

 

On January 6 2015, 101,060 options were granted at an exercise price of £0.01. All options were granted to either employees or Directors of the Group. The 101,060 options granted are exercisable from January 6, 2018 to January 5, 2022 if the market performance conditions are met as at January 6, 2018.

 

On June 1 2015, 388,480 options were granted at an exercise price of £0.01. All options were granted to either employees or Directors of the Group. The 388,480 options are exercisable from June 1, 2018 to May 31, 2022 if the market performance conditions are met as at June 1, 2018.

 

 

14           Acquisitions

 

Acquisition of Alchemic Dream Inc

 

On January 6, 2015 the Group acquired the entire issued share capital of Alchemic Dream Inc, a company registered in Canada, which specialises in providing live operations support to on-line games for a number of games publishers. The acquisition is in line with the Group's strategy to diversify into the provision of complementary services to the video game market and strengthens the Group's service of games already in production. Additionally the acquisition leverages the Group's existing expertise, locations, scale and global reach to extend the services provided by Alchemic Dream as well as generating synergies.

 

The amounts recognised in respect of the identifiable assets acquired and liabilities assumed are set out in the table below:


Book

Fair Value

Fair


Value

Adjustment

Value






Financial Assets




Fixtures, fittings & equipment

    37,829

      (20,996)

    16,833

Identifiable intangible assets - customer relationships

           -  

     214,493

  214,493

Trade and other receivable

  802,019

    (110,817)

  691,202

Cash and cash equivalents

    37,709

              -  

    37,709

Trade and other payables

 (517,034)

              -  

 (517,034)

Deferred tax liabilities

           -  

      (17,143)

   (17,143)

Total identifiable assets

  360,523

       65,537

  426,060

Goodwill



  457,102

Total consideration



  883,162





Satisfied by:




Cash



  883,162

Less: cash and cash equivalent balances transferred



   (37,709)




  845,453

 

The intangibles assets are to be amortised over their estimated useful lives of 5 years.

 

The main factors leading to recognition of goodwill on the acquisition of Alchemic Dream are the presence of certain intangible assets in the acquired entity which do not value for separate recognition such as the expertise in customer service, reputation within the industry, and, an unidentified proportion representing the balance contributing to profit generation

 

The sale purchase agreement includes a provision for an adjustment to the sales price based on working capital at the acquisition date. Management do not believe any further adjustment to the acquisition is necessary.

 

Alchemic Dream contributed € 1,843,543 revenue and €48,966 profit before tax to the Group between the date of acquisition and the balance sheet date. If the acquisition had been completed on the first day of the financial year, revenue of €1,904,904 would have been contributed to the Group and €60,354 profit before tax before taking into account fair value adjustments of €82,680.

 

Acquisition costs of €397,350 have been charged through the Comprehensive Income Statement.

 

 

Acquisition of Reverb Localização - Preparação de Documentos Ltda

 

On January 18, 2015 the Group acquired 100% of the issued share capital of Reverb Localização - Preparação de Documentos Ltda ("Reverb"), a company registered in Brazil. Reverb provides localisation and audio management services for Brazilian Portuguese for some of the leading games publishers. Reverb Studios was acquired to widen the scope of the Group's services business and to extend the Group's client base.

 

The amounts recognised in respect of the identifiable assets acquired and liabilities assumed are set out in the table below:

 


Book

Fair Value

Fair


Value

Adjustment

Value






Financial Assets




Cash and cash equivalents

 17,006

              -  

   17,006

Total identifiable assets

 17,006

              -  

   17,006

Goodwill



 282,994

Total consideration



 300,000





Satisfied by:




Cash



 200,000

Deferred consideration



 100,000

Total consideration transferred



 300,000









 

Cash consideration



 200,000

Less: cash and cash equivalent balances transferred



  (17,006)




 182,994

 

The main factors leading to recognition of goodwill on the acquisition of Reverb are the presence of certain intangible assets in the acquired entity which do not value for separate recognition such as the expertise in sound recording and localisation, reputation within the industry, and, an unidentified proportion representing the balance contributing to profit generation.

 

Reverb contributed €207,120 revenue (including €10,377 of intercompany sales subsequently billed onwards) and €89,972 profit before tax to the Group between the date of acquisition and the balance sheet date. If the acquisition had been completed on the first day of the financial year, revenue of €235,311 would have been contributed to the Group and €95,203 profit before tax.



 

 

 

 

15

 

Events after the reporting date

                                                

Acquisition of Kite Team

 

On July 16, 2015 the Group acquired 50% of the issued share capital of Kite Team, a company registered in Spain, which specialises in providing cost effective and flexible customer care services to video game publishers. The acquisition is in line with the Group's strategy to diversify into the provision of complementary services to the video game market and strengthens the Group's service of games already in production.

Under the terms of the acquisition, which will be immediately earnings enhancing, consideration of €500k in cash has been paid to the sellers for a 50% share with a further consideration of €295k being payable based on certain criteria.

 

KWS Group has the right to acquire the remaining 50% of the shares for a total maximum total consideration of €2,300,007 in cash or shares. The mix of consideration is at the discretion of Keywords Studios.

The book value acquired of net assets is as follows:

 


Book


Value


Financial Assets


Property, plant and equipment

    321,658

Trade and other receivable

    377,292

Cash and cash equivalents

    117,138

Trade and other payables

   (290,680)

Long term loan

   (624,794)

Total identifiable liabilities

     (99,386)

Less non-controlling interest

      49,693

KWS share of total identifiable liabilities

     (49,693)

Goodwill

    811,922

Total consideration

    762,229



Satisfied by:


Cash

    500,007

Deferred consideration

    262,222

Total consideration transferred

    762,229



Net cash outflow arising on acquisition


Cash consideration

    500,007

Less: cash and cash equivalent balances transferred

   (117,138)


    382,869

 

 

At the date of authorisation of these financial statements a detailed assessment of the fair value of the identifiable net assets has not been completed.  Information on the revenue and impact on profit due to this acquisition has not been disclosed as it is impracticable to do so at this point in time.

 

 

Acquisition of Liquid Development LLC

 

On August 20, 2015 the Group acquired 100% of the issued share capital of Liquid Development, a company registered in USA, which specialises in providing out-sourced art services for the video games industry.

 

The acquisition is in line with the Group's strategy to diversify into the provision of complementary services to the video game market and strengthens the Group's service of games already in production. Additionally the acquisition leverages the Group's existing expertise, locations, scale and global reach to extend the services provided by Liquid Development as well as generating synergies.

 

Under the terms of the acquisition, which will be immediately earnings enhancing, a total consideration of USD $9.0m in cash and shares will be paid to the sellers.

At the date of authorisation of these financial statements the purchase price allocation process has not been completed. However, there is an expectation that the majority of the purchase price will be allocated against goodwill and intangibles.

 


Book


Value




Total consideration

  8,016,944



Satisfied by:


Cash

  5,365,287

Equity instruments (1,074,440 shares of the parent company)

  2,413,200

Deferred consideration

    238,457

Total consideration transferred

  8,016,944

 

At the date of authorisation of these financial statements the purchase price allocation process has not been completed. However, there is an expectation that the majority of the purchase price will be allocated against goodwill and intangibles.

 


This information is provided by RNS
The company news service from the London Stock Exchange
 
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