1 April 2016

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

Acquisition of Mindwalk

-      Expansion into China and further increases scale of services to the buoyant Art creation market

Keywords Studios, the international technical services provider to the global video games industry, today announces that it has entered into an agreement to acquire the business and assets of Mindwalk Studios Inc and Mindwalk Studios Ltd (together "Mindwalk", the "Sellers") for a total consideration of $5.5 million. Mindwalk is based in Beijing and provides outsourced art creation services to the video games industry internationally.

The acquisition of Mindwalk is in line with Keywords' strategy of growing both organically and by acquisition, and is anticipated to complete, subject to certain conditions being fulfilled, no later than 30th June 2016. 

Founded in 2004, Mindwalk's studio in Beijing gives Keywords access to Chinese game developers and publishers and a cost efficient base for the provision of art services to clients in North America, Europe and the Far East. The strength of Mindwalk's client base, which includes Electronic Arts, Microsoft, Zenimax and Sony is testament to its approach to becoming integral to its clients' asset creation pipelines.  The addition of Mindwalk, will increase Keywords' capacity in the fast growing and higher margin art creation market by about 30% adding 150 artists to Keywords' existing 500 artist employees and contractors, and provides access to the Chinese market for video game art talent which is the largest in the world.

Michael Gagnon and Ashley Liu, Mindwalk's President and CEO and the rest of the founding team, will continue to manage the business of Mindwalk while also assisting the Group to identify and exploit strategic opportunities in China.

Under the terms of the acquisition, which is expected to be earnings enhancing during 2016, Keywords is paying a total consideration of approximately $5.5 million to the Sellers for the net assets and goodwill of the business. This is being satisfied by $3.9m in cash, $0.5 m of which is deferred until the 3^rd anniversary of acquisition, funded from the Group's existing resources. The remainder is being satisfied by the issue of 513,189 new ordinary shares in Keywords, which will be issued to the Sellers on the second anniversary of the completion of the acquisition.

In the year ended 31 December 2015, the Mindwalk business generated revenues of $4.2m (2014: $2.7m) and underlying pre-tax profit of $0.8m (2014: $0.4m). Good further growth is expected in 2016.

Andrew Day, Chief Executive of Keywords, commented:

"The acquisition of Mindwalk significantly enlarges the scale of our art services business line, giving us greater penetration of this attractive market and represents our first significant move into the fast growing Chinese market.   

"In combination with our start-up operation in Shanghai, Mindwalk will provide the Group with a solid platform from which to grow a full suite of video game services in China, serving Chinese game developers and publishers both domestically as they localise their games for international markets, as well as international developers and publishers looking to market their games in China.

"A significant base in China will also enable us to expand the use of cost effective locations to support our international customer base, with the combination of our art creation capabilities in North America and our lower cost operation in India having already been well received by many of our customers.

"We warmly welcome Mindwalk's highly talented team and collaborators to the growing Keywords family and we look forward to continuing to build upon its excellent reputation and loyal client base."

Ashley Liu, CEO of Mindwalk Studios commented:

"We are delighted to be joining the Keywords group at this exciting point in our continuing development. We look forward to working with our new colleagues to widen our service offerings to existing and new clients. The team that has made Mindwalk the success it is will continue to grow and prosper while gaining access to increased career opportunities that come with being part of a larger and well-funded international company. We are committed to building a business that provides quality services to clients and a great environment for employees."        

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About Keywords Studios (www.keywordsstudios.com)

Keywords Studios is an international technical services provider to the global video games industry. Established in 1998, and now with facilities in Dublin, Rio de Janeiro, Montreal, Portland, Mexico City, Los Angeles, Seattle, Tokyo, Singapore, New Delhi, Pune, Rome, Milan, Barcelona, Madrid, Shanghai, Manila and London, it provides integrated art creation, localisation, testing, audio and customer care services across 50 languages and 14 games platforms to a blue chip client base in more than 15 countries.  It has a strong market position, providing services to 21 of the top 25 most prominent games companies, including Microsoft, Supercell, King, Namco Bandai, Sony, Konami, Electronic Arts, 2K, and Square Enix. Recent titles worked on include Tom Clancy's The Division, Halo 5: Guardians, Batman: Arkham Knight, Street Fighter V, Rise of the Tomb Raider, Clash Royale, Mobile Strike. Keywords is listed on AIM, the London Stock Exchange regulated market (KWS.L). 

About Mindwalk Studios (www.mindwalkstudios.com)

Mindwalk Studios is a leading video game art and animation services provider based in Beijing, China. With over a decade in business, the studio engages with the gaming industry's top-tier developers on a varied range of beloved global properties across all major platforms.

A pioneer in integrated development, Mindwalk has amassed a vast expertise distinguishing itself with "high touch" services based on a lean and agile organization. Excellence with process, workflow, project management, and resource planning is in its DNA.