16 September 2024

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

Half Year Results for the period to 30 June 2024

Solid trading performance in mixed underlying markets, in line with July update

Keywords Studios, the international provider of creative and technology-enabled solutions to the global video games and entertainment industries, is pleased to announce its unaudited half-year results for the six months to 30 June 2024. The results are presented in US Dollars as the Group moved to US Dollars as its presentational currency as of 1 January 2024, with the previous period re-presented accordingly.

Financial Overview:

Results for the six-months ended 30 June

H1 2024

H1 2023

Change

Group revenue

$440.4m

$413.3m

+6.6%

Organic revenue growth

(1.9)%

Adjusted EBITDA

$77.8m

$83.3m

(6.6)%

Adjusted EBITDA margin

17.7%

20.2%

EBITDA*

$15.4m

$65.3m

(76.4)%

Adjusted operating profit

$57.4m

$63.5m

(9.6)%

Adjusted operating profit margin

13.0%

15.4%

Operating profit / (loss)*

$(18.7)m

$31.7m

Adjusted earnings per share

49.77c

59.92c

(16.9)%

Earnings / (loss) per share*

(38.82)c

19.93c

Adjusted cash conversion rate

31.0%

30.5%

Net (cash) / debt

$102.4m

$12.4m

* EBITDA, Operating profit and Earnings per share were impacted by a several exceptional items including expenses associated with the Transaction (as defined below) and the re-organisation of Globalize, which together amounted to $47m

Finance and Strategic Highlights:

· Group revenue up 7% to $440m (H1 2023: $413m), reflecting acquisitions, with organic growth of -2%

· Adjusted operating profit of $57m (H1 2023: $64m), impacted by the moderation of growth, and the timing of the realisation of savings from cost programmes underway, with margins of 13%

· Adjusted free cash flow⁶ of $16m (H1 2023: $18m) and adjusted cash conversion of 31% (H1 23: 31%), which is traditionally H2 weighted due to the timing of working capital

· Net debt of $102m (FY 2023: $75m), primarily reflecting deferred consideration payments

· Spend from larger strategic partner relationships continued to grow well during the first half

· Good traction with clients with our AI-led product solutions across Globalize and Engage

· Restructuring of the go-to-market approach in Globalize set out at the full year results is progressing well

· Continued disciplined acquisition strategy, with three acquisitions agreed year-to-date

Current trading and outlook

· We remain confident in delivering good overall revenue growth in 2024

· Performance expected to improve in the second half as the sector starts to emerge from the slower content creation trends that are currently dampening industry spend and therefore Keywords' growth

· Continue to actively manage costs, with a broad range of actions expected to support margins

· Remain confident in the Group's long-term growth trajectory and ability to outperform the market

· Continue to have an active pipeline of acquisition opportunities

Recommended final cash acquisition of Keywords and dividend

· On 3 July 2024, the boards of Keywords and Houting UK Limited ("Bidco") (a newly formed company indirectly wholly-owned by EQT's BPEA Fund VIII ("EQT"), and equity co-investors (i) CPP Investments (acting through its wholly-owned subsidiary CPPIB PHI4) and (ii) Rosa Investments), reached an agreement on the terms of a recommended final cash acquisition of the entire issued and to be issued ordinary share capital of Keywords by Bidco for a price of £24.50 per share (the "Transaction").

· EQT's offer of £24.50 per share followed numerous previous unsolicited proposals from EQT and represents a significant increase from their initial proposal.

· The offer values the entire issued and to be issued ordinary share capital of the Group at approximately £2.1 billion on a fully diluted basis.

· In line with the terms of the Transaction, the Keywords Board have not declared an interim dividend.

· On 30 August 2024, Keywords shareholders voted in favour of the Transaction and all applicable anti-trust approvals have been granted, or applicable waited periods (as relevant) have expired.

· The Scheme of Arrangement is expected to become effective on the 23 October with the trading of the shares expected to be cancelled on 24 October 2024.

Bertrand Bodson, Chief Executive Officer of Keywords Studios, commented:

"Keywords delivered solid growth in the first half despite the current mixed market backdrop. This has resulted in lower activity levels across the industry, as clients recalibrated their operations and game portfolios, and meant that our organic growth was lower than originally anticipated, as flagged in July.

We continued to make good progress against our strategy, enhancing our leading position in the market whilst expanding the use of technology within our business and on behalf of clients. We have begun to see the results of actions we have taken on costs and expect to see a pick-up in activity levels as we move into 2025.

The Transaction represents an exciting new chapter for the business as we continue our journey. There is no question that the long-standing support we received as a public company provided the fuel for our growth over the last ten years, and we wanted to take this opportunity to thank all of the shareholders who have supported us since we listed on AIM in 2013 with just €16m of revenue, many of whom are still on the shareholder register."

For further information, please contact:

Keywords Studios

Giles Blackham

Director of Investor Relations

+44 7714 134 681

gblackham@keywordsstudios.com

Deutsche Numis

Nomad & Joint Corporate Broker

Stuart Skinner / Will Baunton

+44 20 7260 1000

MHP Group

Financial Communications

Katie Hunt / Eleni Menikou / Charles Hirst

+44 7884 494 112 / +44 20 3128 8100

keywords@mhpgroup.com

Barclays

Joint Corporate Broker

Tom Macdonald / Stuart Jempson

+44 20 7029 8000

About Keywords Studios (www.keywordsstudios.com)

Keywords Studios is a global provider of creative and technology-enabled solutions to the video games and entertainment industries. Established in 1998, and now with over 70 facilities in 26 countries strategically located in Asia, Australia, the Americas, and Europe, it provides services across the entire content development life cycle through its Create, Globalize and Engage Divisions to a large blue-chip client base across the globe.

Keywords Studios has a strong market position, providing services to 24 of the top 25 most prominent games companies and contributing to over 70% of the 2023 Game Awards winners. Across the games and entertainment industry, clients include Activision Blizzard, Bandai Namco, Bethesda, Electronic Arts, Epic Games, Konami, Microsoft, Netflix, Riot Games, Square Enix, Supercell, Take-Two, Tencent and Ubisoft. Recent titles worked on include Starfield, Baldur's Gate 3, Diablo IV, Hogwarts Legacy, Elden Ring, Fortnite, Valorant, League of Legends and Clash Royale. Keywords Studios is listed on AIM, the London Stock Exchange regulated market (KWS.L).

The Group reports a number of alternative performance measures (APMs) to present the financial performance of the business which are not GAAP measures as defined by International Financial Reporting Standards (IFRS). The Directors believe these measures provide valuable additional information for the users of the financial information to understand the underlying trading performance of the business. In particular, adjusted profit measures are used to provide the users of the financial statements a clear understanding of the underlying profitability of the business over time. For full definitions and explanations of these measures and a reconciliation to the most directly referenceable IFRS line item, please refer to the APMs section at end of the statement.

¹	Organic revenue at constant exchange rates is calculated by adjusting the prior year revenues, adding pre-acquisition revenues for the corresponding period of ownership, and applying the 2023 foreign exchange rates to both years, when translating studio results into the euro reporting currency.
²	EBITDA comprises Operating profit as reported in the Consolidated statement of comprehensive income, adjusted for amortisation of intangible assets, depreciation and impairment, and deducting bank charges. Adjusted EBITDA comprises EBITDA, adjusted for share-based payments expense and costs of acquisition and integration.
³	Adjusted operating profit consists of the Operating profit as reported in the Consolidated statement of comprehensive income, adjusted for share-based payments expense, costs of acquisition and integration, and amortisation of intangible assets.
⁴	The Adjusted earnings per share comprises the Adjusted profit after tax divided by the non-diluted weighted average number of shares as reported. The Adjusted profit after tax comprises the Adjusted profit before tax, less the Taxation expense as reported in the Consolidated statement of comprehensive income, adjusted for the tax impact of the adjusting items in arriving at Adjusted profit before tax.
⁵	The Adjusted cash conversion rate is the Adjusted free cash flow as a percentage of the Adjusted profit before tax.
⁶	Adjusted free cash flow is a measure of cash flow adjusting for capital expenditure that is supporting growth in future periods (as measured by capital expenditure in excess of maintenance capital expenditure).

CEO Statement

Keywords delivered solid growth in the first half of the year against a mixed market backdrop. The industry continues to recalibrate, a process that started in 2023, and that we had anticipated would continue through much of the first half of 2024.

Our Create division continues to deliver incredibly high-quality work for our clients and has grown strongly over the past three years. During the first half, our game development business in particular was impacted by the cancellation of several large full development projects, and a number of other projects being delayed or re-scoped in light of clients' budget constraints. This meant a more muted performance from a Division that has been a key growth driver for the business, and therefore was scaling for further growth, impacting both organic growth and operating margins.

As expected, Globalize continues to be impacted by the lower activity levels in the market, which has put pressure on both revenues and margins. In response to this, earlier this year, we announced a restructuring to enhance our go-to-market approach and improve efficiency and collaboration, to ensure that we continue to deliver world class services to our world class clients. The changes have regrettably led to the departure of a number of our valued colleagues across a range of geographies and I would like to thank everybody who has been impacted by these changes for all that they have done for Keywords.

In Engage, it has been very pleasing to see a strong performance in the Division in the period, across both marketing and player engagement with these two service lines returning to organic growth in a difficult market. This is a result of both our strategy of embedding technology into our player engagement business and the transition to a more solutions-based offering within our marketing business. This performance was delivered without yet seeing the meaningful pick-up in activity that we anticipated would flow through after the strikes in Hollywood ended. This is taking longer to materialise than any market participant envisaged and whilst we are seeing improvements, at this stage these are more gradual than a step change in activity.

Whilst our short-term results have not been as strong as we would have liked, we continue to make good progress against our long-term strategy. We have seen good revenue growth from our largest clients with whom we are building strategic partnerships and are ensuring that our business development efforts are tailored accordingly. We have continued to expand our technology offering by further developing our client solutions such as Helpshift, Mighty and Kantan, as well as more deeply integrating technology into our workflows. We have also signed agreements with a number of technology businesses that will enable us to act as an implementer of their technology on behalf of clients across game development services, audio, and trust and safety.

M&A

A key part of our strategy continues to be focused on enhancing our market position by consolidating a fragmented market. During the first half, the Group completed the acquisition of Robot Circus, a small game development studio in Australia, that will form part of our Tantalus group and support growth in Asia. Post period end we added Bright White, a small UK design business which supports our innovation plans, and Wushu Studios, a large UK game development studio. We continue to have an active pipeline of opportunities and are excited about the potential value we can add to the Group as we continue our long-standing and successful M&A strategy.

Recommended final cash acquisition by EQT

On 3 July 2024, the boards of Keywords and Houting UK Limited ("Bidco") (a newly formed company indirectly wholly-owned by EQT's BPEA Fund VIII ("EQT"), and equity co-investors (i) CPP Investments (acting through its wholly-owned subsidiary CPPIB PHI4) and (ii) Rosa Investments), reached an agreement on the terms of a recommended final cash acquisition of the entire issued and to be issued ordinary share capital of Keywords by Bidco for a price of £24.50 per share. EQT's offer of £24.50 per share followed numerous previous unsolicited proposals from EQT and represents a significant increase from their initial proposal. The offer values the entire issued and to be issued ordinary share capital of the Group at approximately £2.1 billion on a fully diluted basis. On 30 August 2024, Keywords shareholders voted in favour of the Transaction and all applicable anti-trust clearances have been received or applicable waiting periods (as relevant) have expired. The Scheme of Arrangement is expected to become effective on the 23 October with the trading of the shares expected to be cancelled on 24 October 2024.

Outlook

The Group has seen spend from larger clients continue to grow well during the first half, and anticipates some recovery from the US entertainment strikes in H2, reinforcing our confidence in an improved second half performance, although further delays and project scope reductions are still expected to temper H2 organic growth.

We continue to actively manage costs, taking a broad range of cost actions, including the restructuring of the go-to-market approach in Globalize set out at the full year results, and expect margins to improve as the impact of the cost savings programmes and pick-up in volumes flow through.

The Board remains confident in the Group's long-term growth trajectory and ability to outperform the market.

Bertrand Bodson

Chief Executive Officer

Divisional Review

Create

Create combines Game Development and Art Services to deliver a range of content production services to clients and partners globally. It represents around 4,500 people across four continents.

	H1 2024	H1 2023	Change
Revenue $m	205.0	175.5	16.8%
Organic Revenue growth %			1.1%
Adjusted EBITDA $m	46.6	45.7	2.0%
Adjusted EBITDA margin %	22.7%	26.0%

H1 2024 Performance

Create saw strong revenue growth with total revenues up by 17% to $205m (H1 2023: $176m) driven by acquisitions completed in 2023. Organic Revenue, which excludes the impact of acquisitions, was more muted, growing by 1% against a tough comparative period (H1 2023: Organic growth of 22%), due to several large project cancellations and delays. The Division continued to enhance its cross-studio collaboration during H1 and saw good growth in a number of studios including Climax, which expanded into a third UK location, and Hardsuit Labs, which was acquired in H1 23.

Adjusted EBITDA in Create grew 2% to $47m in H1 2024 (H1 2023: $46m), with the 23% Adjusted EBITDA margin lower than the previous period (H1 2023: 26%) due to lower than planned utilisation rates resulting from cancellations and delays as we held on to our talent in order to maintain capacity ahead of the anticipated future ramp up in demand.

During H1 we welcomed Robot Circus, a small Australian game development studio, that will support the expansion of Tantalus in Asia, and in August we completed the acquisition of Wushu Studios, a UK game development studio with 160 people, which offers services across the full development and co-development spectrum to AAA clients.

Globalize

Globalize brings together our Audio, Testing and Localization businesses to create a global provider with around 4,500 people across five continents.

	H1 2024	H1 2023	Change
Revenue $m	139.0	156.9	(11.4)%
Organic Revenue growth %			(11.9)%
Adjusted EBITDA $m	21.6	29.5	(26.8)%
Adjusted EBITDA margin %	15.5%	18.8%

H1 2024 Performance

Globalize continues to be impacted by lower activity levels in the market, with revenues falling by 11% to $139m. Organic Revenue, which excludes the impact of acquisitions, fell by 12%.

As highlighted previously, Localization and Localization QA continues to experience challenging trading conditions, but we have seen good performance from our Media & Entertainment businesses driven by some of our accessibility offerings despite the slow ramp-up in Hollywood. There was no impact from the Interactive Performers strike in H1, and even if it persists for the duration of the year, it is not expected to have a material impact on performance.

Adjusted EBITDA was $22m (H1 2023: $30m), with Adjusted EBITDA margins of 16%, lower than H1 2023 (19%). Margins were impacted by the lower activity levels with pricing continuing to be a focus for clients. As announced earlier in the year we are in the process of re-organising parts of our Globalize Division to enhance its go-to-market-offering, drive efficiencies and ensure we can offer best-in-class services to our clients in an evolving market. The timing of this process means that the cost savings are expected to be felt in H2.

Engage

Our Engage Division brings together our Marketing Services and Player Engagement businesses to create a holistic offering focused on attracting, retaining and supporting fans across the video games and entertainment industries, encompassing around 3,000 people across three continents.

	H1 2024	H1 2023	Change
Revenue $m	96.4	80.9	19.2%
Organic Revenue growth %			8.7%
Adjusted EBITDA $m	9.6	8.1	18.5%
Adjusted EBITDA margin %	10.0%	10.0%

H1 2024 Performance

Engage saw strong growth during the period, with revenues up by 19% to $96m (H1 23: $81m) driven by a combination of the positive impact of prior year acquisitions and Organic Revenue growth, which grew 9% during the period.

The positive performance was felt across both Player Engagement and Marketing, with particularly strong growth in Player Engagement, driven by the unique end-to-end customer support solution we can now provide to clients following the integration of the Helpshift technology into our offering. We did not see a meaningful pick-up in activity in Hollywood during the period but expect a gradual improvement as we move through the year.

Adjusted EBITDA of $10m was 18% higher than H1 2023 ($8m) driven by the higher revenues, with the Adjusted EBITDA margin of 10% in line with the prior year period.

Financial and operating overview

As announced on 28 June 2024, the Group changed its presentational currency from euro to US Dollar with effect from 1 January 2024 and therefore the results set out below are presented in US Dollars for the first time, with the prior year period re-presented accordingly.

Revenue

Revenue for H1 2024 increased by 7% to $440m (H1 2023: $413m). This performance included the impact of acquisitions in 2023. Organic Revenue growth (which adjusts for the impact of acquisitions) was -2%. This was impacted by ongoing challenges in Globalize and a more muted performance in Create, partially offset by strong performance in Engage. Further details of the trading performances of each of the Divisions are provided in the Divisional Review.

Gross profit and margin

Gross profit in H1 2024 was $152m (H1 2023: $157m) representing a reduction of 3%. The gross margin of 34.5% was below H1 2023 (37.9%) due to lower than planned utilisation rates in Create and Globalize.

Operating costs

Adjusted operating costs increased by 1% to $74m (H1 23: $73m), reflecting good cost control across a larger Group which meant that these costs represented 16.9% of revenue compared to 17.7% in H1 2023.

EBITDA

EBITDA of $15m was below H1 2023 ($65m), primarily due to the impact of one-time expenses associated with the Transaction fees and the restructuring of Globalize which together amounted to $47m. Adjusted EBITDA of $78m compared with $83m for H1 2023. The Adjusted EBITDA margin in H1 2024 of 17.7% was lower than H1 2023 (20.2%), reflecting the lower gross margin.

Net finance costs

Net finance costs of $7m were in line with H1 2023. A $3m increase in interest costs relating to the drawdown on the RCF was offset by a positive foreign exchange impact of $3m.

Alternative performance measures (APMs)

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

	H1 2024 $m	H1 2023 $m
Share-based payments expense	13.0	10.2
Costs of acquisition and integration	49.3	7.9
Amortisation of intangible assets	13.7	13.8
Foreign exchange and other items	0.3	3.1
Total	76.3	35.0

A total of 2.56m options were granted under incentive plans in H1 2024. This, together with grants from previous years, has resulted in a non-cash share-based payments expense of $13m in H1 2024 (H1 2023: $10m).

Costs associated with the acquisition and integration of businesses amounted to $49m (H1 2023: $8m), mainly due to the Transaction related costs of $32m and costs linked to severance and the restructuring of Globalize of $15m, with the balance of the costs relating to acquisition activity. Amortisation of intangible assets were flat at $14m.

Foreign exchange and other items were flat (H1 2023: loss of $3m), with the unwinding of discounted liabilities on deferred consideration of $2m and realised foreign exchange gains. Keywords does not hedge foreign currency exposures in relation to net current assets. While more material movements in foreign exchange can be impactful on revenues and expenses, the net impact on the Group's results of movements in exchange rates and the foreign exchange gains and losses incurred during the year mainly relate to the effect of translating net current assets held in foreign currencies.

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

Operating Profit / (Loss)

Operating loss of $19m in H1 2024, compared to an operating profit of $32m in H1 2023, was primarily due to the impact of one-off expenses linked to the Transaction and the restructuring of Globalize. Adjusted operating profit, which adjusts for the items described in the APMs section above was $57m, slightly behind H1 2023 ($64m). Adjusted operating profit margin of 13.0% was impacted by the lower growth impacting utilisation and was behind the 15.4% margins achieved in H1 2023 as the timing of cost savings actions mean that their benefit is only expected to be fully realised in H2.

(Loss) / Profit before taxation

Loss before tax of $25m in H1 2024 compared to profit before tax in H1 2023 of $25m. Adjusted profit before tax, which adjusts for the items described in the APMs section above was $51m, lower than H1 2023 ($60m). This primarily reflects a reduction in the Adjusted profit before tax margin to 11.6% from H1 2023 of 14.6% due to lower Adjusted Operating margins.

Taxation

The tax charge reduced to $6m from $9m in H1 2023, largely reflecting the reduction in the Profit before tax (excluding Transaction fees, that are largely non tax deductible). After adjusting for the items noted in the APMs section above and the tax impact arising on these items, the Adjusted effective tax rate for H1 2023 was 22.5%, slightly above the rate of 21.8% in H1 2023.

(Loss) / Earnings per share

Basic loss per share of 38.82c was lower than the H1 2023 earnings per share of 19.93c, primarily reflecting the Loss after tax experienced in the period. Adjusted earnings per share, which adjusts for the items noted in the APMs section above and the tax impact arising on these items was 49.77c compared to 59.92c in H1 2023, with Adjusted profit after tax lower and the basic weighted average number of shares higher than the previous year.

Cash flow and net debt

	H1 24 $m	H1 23 $m	Change $m
Adjusted EBITDA	77.8	83.3	(5.5)
MMTC and VGTR	(10.7)	(17.9)	7.2
Working capital and other items	(22.5)	(23.9)	1.4
Capex - property, plant and equipment (PPE)	(17.4)	(20.4)	3.0
Capex - intangible assets	(2.3)	(1.4)	(0.9)
Payments of principal on lease liabilities	(7.3)	(7.3)	0.0
Operating cash flows	17.6	12.4	5.2
Interest paid	(6.1)	(2.6)	(3.5)
Free cash flow before tax	11.5	9.8	1.7
Tax	(5.7)	(8.6)	2.9
Free cash flow	5.8	1.2	4.6
M&A - acquisition spend	(24.0)	(93.1)	69.1
M&A - acquisition and integration costs	(8.8)	(3.2)	(5.6)
Cash proceeds, where EBT shares were utilised for the exercise of share options	3.3	0.3	3.0
Funding of EBT	(5.4)	(5.4)	-
Dividends paid	(1.8)	(1.6)	(0.2)
Shares issued for cash	3.9	1.6	2.3
Underlying increase / (decrease) in net cash / (debt)	(27.0)	(100.2)	73.2
FX and other items	(0.9)	0.8	(1.7)
Increase in net cash / (debt)	(27.9)	(99.4)	71.5
Opening net cash / (debt)	(74.5)	87.1
Closing net cash / (debt)	(102.4)	(12.3)

The Group generated Adjusted EBITDA of $78m in H1 2024, a reduction of $6m from H1 2023. There was a $7m reduction in respect of the amounts due for Multi-Media Tax Credits (MMTCs) and Video Game Tax Credits (VGTRs), lower than H1 2023 ($18m), which benefitted from receipts of credits due in Q2 2023 being deferred into Q3 2023. In general, MMTCs and VGTRs are subsidies that are recognised as work is performed but are typically paid in the second half of the following year. Other working capital saw an outflow of $23m, a $1m change from H1 2023, mainly due to foreign exchange movements.

Investment in property, plant and equipment reduced by $3m to $17m (H1 2023: $20m) due to H1 2023 being impacted by the requirement to invest in new sites required to exit Russia. In addition, we incurred $2m of capitalised research and development costs as we developed our technology platform. Property lease payments of principal of $7m were in line with the prior year period.

Operating cash flows of $18m were $6m ahead of H1 2023 ($12m), primarily due to the change in working capital and the reduced capex during the period.

There was a $3m reduction in cash tax paid to $6m (H1 2023: $9m) due to minor year on year variations in timing of tax deposits and final settlements of liabilities. Net interest payments, which largely relate to interest from drawdowns on the Revolving Credit Facility ("RCF"), were $6m compared to $3m in H1 2023.

This resulted in Free cash flow of $6m, ahead of H1 23 ($1m). Adjusted free cash flow, which adjusts for capital expenditure that is supporting growth in future periods was $16m in H1 2024, behind H1 2023 ($18m). The Adjusted cash conversion rate of 31.0% was slightly ahead of H1 2023 (30.5%).

Cash spent on acquisitions totalled $33m, of which $24m was in respect of the cash component of prior year acquisitions and $9m was in relation to acquisition and integration costs. This was $64m lower than the spend in H1 2023 due to the timing of acquisitions.

This resulted in an increase in net debt of $27m in H1 24, leading to closing net debt of $102m (Dec 2023: net debt $75m).

Balance sheet and liquidity

The Group funds itself primarily through cash generation and a syndicated RCF. In July 2023, the Group put in place a new RCF of $400m that matures in July 2027, replacing the previous €150m facility. The new RCF includes an accordion option to increase the facility up to $500m and an option to extend the term by a further one-year period (both subject to lender consent). Group borrowings under the RCF are subject to two financial covenants, minimum interest cover of 4x and maximum net leverage of 3x, that are calculated in accordance with the facility agreement.

The Group entered the year with a strong balance sheet and deployed $29m of cash in the period to support its value accretive M&A programme and share purchases on behalf of the Employee Benefit Trust. As such at the end of H1 2024, Keywords had net debt (excluding IFRS 16 leases) of $102m (31 December 2023: net debt of $75m) and undrawn committed facilities of $268m. The undrawn facilities, together with ongoing cash generation leaves us well placed to continue to execute on our M&A programme.

Capital Allocation

In line with the terms of the Transaction, the Board is not declaring a dividend for the period ending 30 June 2024.

During the first half of the year the Group used the Employee Benefit Trust to undertake market purchases of Company shares amounting to $5m.

2024 Guidance

We remain confident in delivering good overall revenue growth in 2024, with performance expected to be second half weighted as the sector starts to emerge from the slower content creation trends that are currently dampening industry spend and therefore Keywords' growth. We continue to closely manage costs and are taking a broad range of cost actions and expect margins to improve as the impact of the cost savings programmes and pick-up in volumes flow through.

Rob Kingston

Chief Financial Officer

Condensed interim consolidated statement of comprehensive income

	Note	Unaudited Half Year 30 Jun 24 $ 000	Unaudited Half Year 30 Jun 23 Re-presented $ 000	Audited Year 31 Dec 23 Re-presented $ 000
Revenue from contracts with customers	5	440,428	413,274	842,609
Cost of sales		(288,425)	(256,743)	(519,696)
Gross profit		152,003	156,531	322,913
Share-based payments expense		(13,022)	(10,177)	(23,743)
Costs of acquisition and integration	6	(49,330)	(7,876)	(29,424)
Amortisation of intangible assets	10	(13,743)	(13,771)	(28,150)
Total of items excluded from adjusted profit measures		(76,095)	(31,824)	(81,317)
Other administration expenses		(94,642)	(93,017)	(192,339)
Administrative expenses		(170,737)	(124,841)	(273,656)
Operating (loss)/profit		(18,734)	31,690	49,257
Financing income	7	1,997	165	666
Financing cost	7	(8,517)	(6,789)	(13,453)
(Loss)/profit before taxation		(25,254)	25,066	36,470
Taxation		(5,629)	(9,407)	(16,226)
(Loss)/profit after taxation		(30,883)	15,659	20,244

(Loss)/profit attributable to:
Owners of the parent		(30,883)	15,659	20,244

Other comprehensive income
Items that will not be reclassified subsequently to profit or loss
Actuarial (loss)/gain on defined benefit plans		(200)	(160)	17

Items that may be reclassified subsequently to profit or loss
Exchange (loss)/gain in net investment in foreign operations		(6,789)	1,201	4,026
Exchange (loss)/gain on translation of foreign operations		(3,133)	6,745	6,116
Tax related to items taken to other comprehensive income		1,731	-	1,337

Total comprehensive (expense)/income for the period		(39,274)	23,445	31,740

Total comprehensive (expense)/income attributable to:
Owners of the parent		(39,274)	23,445	31,740

		$ cent	$ cent	$ cent
Earnings per Share
Basic earnings per ordinary share	8	(38.82)	19.93	25.65
Diluted earnings per ordinary share	8	(38.19)	19.20	25.31

Condensed interim consolidated statement of financial position

	Note	Unaudited At 30 Jun 24 $ 000	Unaudited At 30 Jun 23 Re-presented $ 000	Audited At 31 Dec 23 Re-presented $ 000
Non-current assets
Intangible assets	10	681,672	624,354	697,772
Right of use assets	10	42,006	48,131	46,362
Property, plant and equipment	10	57,111	58,191	55,458
Deferred tax assets		40,237	33,311	36,155
Investments		187	190	193
		821,213	764,177	835,940
Current assets
Cash and cash equivalents		29,941	47,632	66,083
Trade receivables	11	98,039	103,345	99,275
Other receivables	11	113,098	98,185	91,992
Corporation tax recoverable		7,043	6,392	6,614
		248,121	255,554	263,964
Current liabilities
Trade payables		15,525	16,081	15,780
Other payables	14	169,130	175,100	172,168
Corporation tax liabilities		27,793	26,224	29,895
Lease liabilities	17	14,880	16,762	15,302
		227,328	234,167	233,145
Net current assets		20,793	21,387	30,819
Non-current liabilities
Other payables	14	16,642	21,067	13,251
Employee defined benefit plans		5,185	3,913	4,448
Loans and borrowings	15	132,329	59,997	140,618
Deferred tax liabilities		15,504	17,138	11,378
Lease liabilities	17	33,430	37,186	36,549
		203,090	139,301	206,244
Net assets		638,916	646,263	660,515
Equity
Share capital	12	1,044	1,153	1,155
Share capital - to be issued	12	354	2,849	349
Share premium	12	64,163	64,906	64,956
Merger reserve	12	342,171	347,573	352,504
Foreign exchange reserve		(19,810)	(33,376)	(31,180)
Shares held in Employee Benefit Trust ("EBT")		-	(1,050)	(7,251)
Share-based payments reserve		92,144	79,580	90,005
Retained earnings		158,850	184,628	189,977
Total equity		638,916	646,263	660,515

Condensed interim consolidated statement of changes in equity
	Share capital $ 000	Share capital - to be issued $ 000	Share premium $ 000	Merger reserve $ 000	Foreign exchange reserve $ 000	Shares held in EBT $ 000	Share-based payments reserve $ 000	Retained earnings $ 000	Total equity $ 000
At 01 January 2023 (Re-presented)	1,139	2,462	56,795	330,645	(41,322)	-	73,786	170,690	594,195
Profit for the period	-	-	-	-	-	-	-	15,659	15,659
Other comprehensive income	-	-	-	-	7,946	-	-	(160)	7,786
Total comprehensive income for the period	-	-	-	-	7,946	-	-	15,499	23,445

Contributions by and contributions to the owners
Share-based payments expense	-	-	-	-	-	-	10,177	-	10,177
Cash proceeds arising from share-based payments	5	-	1,543	-	-	4,380	(4,383)	-	1,545
Company funded acquisition of shares	-	-	-	-	-	(5,430)	-	-	(5,430)
Dividends	-	-	-	-	-	-	-	(1,561)	(1,561)
Acquisition-related issuance of shares	9	387	6,568	16,928	-	-	-	-	23,892
At 30 June 2023 (Re-presented)	1,153	2,849	64,906	347,573	(33,376)	(1,050)	79,580	184,628	646,263
Profit for the period	-	-	-	-	-	-	-	4,585	4,585
Other comprehensive income	-	-	-	-	2,196	-	-	1,514	3,710
Total comprehensive income	-	-	-	-	2,196	-	-	6,099	8,295
Contributions by and contributions to the owners
Share-based payments expense	-	-	-	-	-	-	13,566	-	13,566
Cash proceeds arising from share-based payments	-	-	36	-	-	(4,380)	5,576	-	1,232
Company funded acquisition of shares	-	-	-	-	-	(1,821)	(8,717)	-	(10,538)
Dividends	-	-	-	-	-	-	-	(750)	(750)
Acquisition-related issuance of shares	2	(2,500)	14	4,931	-	-	-	-	2,447
At 31 December 2023 (Re-presented)	1,155	349	64,956	352,504	(31,180)	(7,251)	90,005	189,977	660,515
Change in functional currency (of the Company)	(119)	5	(4,771)	(14,922)	21,292	(227)	(1,258)	-	-
At 01 January 2024	1,036	354	60,185	337,582	(9,888)	(7,478)	88,747	189,977	660,515
Loss for the period	-	-	-	-	-	-	-	(30,883)	(30,883)
Other comprehensive expense	-	-	-	-	(9,922)	-	-	1,531	(8,391)
Total comprehensive expense	-	-	-	-	(9,922)	-	-	(29,352)	(39,274)
Contributions by and contributions to the owner
Share-based payments expense	-	-	-	-	-	-	13,022	-	13,022
Cash proceeds arising from share-based payments	5	-	3,978	-	-	-	3,294	-	7,277
Dividends	-	-	-	-	-	-	-	(1,775)	(1,775)
Company funded acquisition of shares	-	-	-	-	-	7,478	(12,919)	-	(5,441)
Acquisition-related issuance of shares	3	-	-	4,589	-	-	-	-	4,592
At 30 June 2024	1,044	354	64,163	342,171	(19,810)	-	92,144	158,850	638,916

Condensed interim consolidated statement of cash flows

Cash flows from operating activities	Note	Unaudited Half Year 30 Jun 24 $ 000	Unaudited Half Year 30 Jun 23 Re-presented $ 000	Audited Year 31 Dec 23 Re-presented $ 000
(Loss)/profit after taxation		(30,883)	15,659	20,244
Income and expenses not affecting operating cash flows
Depreciation and impairment - property, plant and equipment	10	14,720	11,769	31,225
Depreciation and impairment - right of use assets	10	10,008	8,422	17,205
Amortisation of intangible assets	10	13,743	13,771	28,150
Taxation		5,629	9,407	16,226
Share-based payments expense		13,022	10,177	23,743
Fair value movements in deferred and contingent consideration	6	1,478	4,668	9,945
Non-cash movements included in costs of acquisition and integration	6	35,188	-	2,899
Unwinding of discounted liabilities - deferred consideration	7	1,940	1,963	3,543
Unwinding of discounted liabilities - lease liabilities	7	862	680	1,562
Interest receivable	7	(265)	(165)	(666)
Fair value adjustment to employee defined benefit plans		536	721	1,243
Interest expense	7	5,280	2,408	6,235
Unrealised foreign exchange (gain) / loss		914	(3,762)	(1,201)

		103,055	60,059	140,109
Changes in operating assets and liabilities
Increase in trade receivables		(853)	(9,994)	(228)
Increase in MMTC and VGTR receivable		(10,675)	(17,917)	(12,159)
Increase in other receivables		(11,049)	(12,397)	(7,672)
(Decrease)/increase in accruals, trade and other payables		(13,725)	2,697	8,206
		(36,302)	(37,611)	(11,853)
Taxation paid		(5,746)	(8,575)	(22,645)
Settlement of deferred and contingent consideration related to continuous employment	14	(1,967)	-	(4,222)
Net cash generated by operating activities		28,157	29,532	121,633

Cash flows from investing activities
Current year acquisition of subsidiaries net of cash acquired	18	(323)	(82,183)	(174,479)
Settlement of deferred liabilities on acquisitions	14	(21,663)	(10,943)	(33,020)
Acquisition of property, plant and equipment	10	(17,443)	(20,350)	(33,204)
Investment in intangible assets	10	(2,294)	(1,428)	(3,305)
Interest received	7	265	165	666
Net cash used in investing activities		(41,458)	(114,739)	(243,342)

Cash flows from financing activities
Cash proceeds, where EBT shares are utilised for the exercise of share-based payments		3,294	323	1,240
Repayment of loans	15	(81,650)	(35,047)	(105,176)
Drawdown of loans	15	74,000	95,000	244,804
Payments of principal on lease liabilities	17	(7,283)	(7,351)	(16,476)
Interest paid on principal of lease liabilities	17	(862)	(680)	(1,562)
Company funded acquisition of shares by EBT		(5,441)	(5,430)	(15,968)
Shares issued for cash	12	3,983	1,222	1,647
Dividends paid		(1,775)	(1,561)	(2,311)
Interest paid		(5,464)	(1,887)	(6,796)
Net cash (used in)/generated by financing activities		(21,198)	44,589	99,402
Decrease in cash and cash equivalents		(34,499)	(40,618)	(22,307)
Exchange gain / (loss) on cash and cash equivalents		(1,643)	911	1,051
Cash and cash equivalents at beginning of the period		66,083	87,339	87,339
Cash and cash equivalents at end of the period		29,941	47,632	66,083

1 Basis of Preparation

Keywords Studios PLC (the "Company") is a company incorporated in the United Kingdom. The Condensed interim consolidated financial statements include the financial statements of the Company and its subsidiaries (the "Group") made up to 30 June 2024.

The interim results for the half year ended 30 June 2024 and the half year ended 30 June 2023 are not audited 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 latest annual audited financial statements of Keywords Studios PLC for the year ended 31 December 2023, which have been filed with Companies House. The report of the auditors on those accounts was unqualified, did not contain any statements under Section 498 (2) or (3) of the Companies Act 2006 and did not contain any matters to which the auditors drew attention without qualifying their report.

The interim financial statements presented in this financial report have been prepared in accordance with International Financial Reporting Standards (IFRS) and the IFRS Interpretations Committee (IFRIC) interpretations that are expected to be applicable to the consolidated financial statements for the period ending 31 December 2024 and the Disclosure Guidance and Transparency Rules of the UK's Financial Conduct Authority.

There have been no changes in the principal risks and uncertainties during the period and therefore these remain consistent with the year ended 31 December 2023 and are disclosed in the Annual Report for that year.

Going Concern Basis of Accounting

After making enquiries, the Directors consider it appropriate to continue to adopt the going concern basis in preparing the interim financial statements. In doing so, the Directors have considered the following:

· The good cash flow performance of the Group through the period;

· The continued demand for the Group's services;

· The ability to operate most of its services in a work from home model where studios are temporarily closed;

· The historical resilience of the broader video games industry in times of economic downturn; and

· The ability of the Group to flex its cost base in response to a reduction in trading activity.

The Directors have also considered the Group's strong liquidity position with net debt of $102.4m as at 30 June 2024, and committed undrawn facilities of $267.7m under the $400m Revolving Credit Facility ("RCF") in place at 30 June 2024.

The Directors have applied downside sensitivities to the Group's cash flow projections to assess the Group's resilience to adverse outcomes. This assessment included a reasonable worst-case scenario in which the Group's principal risks manifest to a severe but plausible level. Even under the most severe case, the Group would have sufficient liquidity and remain within its banking covenants. The Directors have a reasonable expectation that the Company and the Group have adequate resources to continue to operate and meet liabilities as they fall due for the foreseeable future, a period considered to be at least twelve months from the date of these financial statements and therefore the going concern basis of preparation continues to be appropriate.

The Condensed interim consolidated financial statements made up to 30 June 2024 were approved by the Board of Directors on 15 September 2024.

2 Material Accounting Policies

New Standards, Interpretations and Amendments effective 1 January 2024

The following amendments effective for the period beginning 01 January 2024:

· Lease Liability in a Sale and Leaseback (Amendment to IFRS 16); and

· IAS 1 Presentation of Financial Statements (Amendment - Classification of Liabilities as Current or Non-Current, with Covenants).

The Group does not expect these amendments, or any other standards issued by the IASB but not yet effective, to have a material impact on the Group.

New Standards, Interpretations and Amendments not yet effective

There are a number of standards, amendments to standards, and interpretations which have been issued by the IASB that are effective in future accounting periods that the Group has decided not to adopt early. The following amendment effective for the period beginning 01 January 2025:

· Lack of Exchangeability (Amendment to IAS 21, The Effects of Changes in Foreign Exchange Rates)

The Group does not expect this amendment, or any other standards issued by the IASB but not yet effective, to have a material impact on the Group.

Changes in Material Accounting Policies

Except as described in note 3, the accounting policies applied in these interim financial statements are the same as those applied in the Group's most recent annual financial statements as at and for the year ended 31 December 2023.

3 Change in Functional and Presentation Currency

The Group decided to change its presentation currency to US dollars with effect from 01 January 2024. Given the current composition of the Group's activities, this change is expected to reduce the impact of currency movements on reported results. In accordance with IAS 8, Accounting Policies, Changes in Accounting Estimates and Errors, a change in presentation currency is applied retrospectively.

In accordance with the provisions of IAS 21, the Effects of Changes in Foreign Exchange Rates, in respect of changes in presentation currency, financial information has been restated from Euro to US dollars as follows:

· assets and liabilities in non-US denominated currencies were translated into US dollars at the rates of exchange ruling at the relevant balance sheet date;

· non-US dollar income statements and cash flows were translated into US dollars at average rates of exchange for the relevant period;

· share capital, share premium and all other equity items were translated at the historical rates prevailing at 1 January 2013, the date of transition to IFRS, or the subsequent rates prevailing on the date of each relevant transaction; and

· the cumulative foreign exchange translation reserve was set to zero on 1 January 2013, the date of transition to IFRS and this reserve has been restated on the basis that the Group has reported in US dollars since that date.

	Half Year 30 Jun 23	Year 31 Dec 23
Average
Euro	1.08	1.08
Sterling	1.23	1.23
Canadian dollar	0.74	0.74

Period end
Euro	1.09	1.10
Sterling	1.27	1.27
Canada	0.75	0.75

On 01 January 2024, the functional currency of the Company was changed from Euro to US dollars, a change which is applied prospectively. All items were translated using the exchange rate at the date of the change, which resulted in a re-statement of the Share Capital of the Company on 01 January 2024, with the resulting translation difference recorded in the Foreign exchange reserve.

4 Critical Accounting Estimates and Judgements

The Group makes certain estimates and assumptions regarding the future. Estimates and judgements are continually evaluated based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances. In the future, actual experience may differ from these estimates and assumptions.

The judgements, estimates and assumptions applied in these interim financial statements, including the key sources of estimation uncertainty, were the same as those applied in the Group's last annual financial statements for the year ended 31 December 2023. The only exceptions are:

· Tax Liabilities - determined using the estimated annual effective tax rate

· The estimate of tax liabilities which are determined in these interim financial statements using the estimated annual effective tax rate applied to the pre-tax income of the interim period.

5 Segmental Analysis and Revenue from Contracts with Customers

Segmental Analysis

Revenue from external customers	Unaudited Half Year 30 Jun 24 $ 000	Unaudited Half Year 30 Jun 23 $ 000	Audited Year 31 Dec 23 $ 000
Create	204,979	175,489	362,960
Globalize	139,041	156,922	301,628
Engage	96,408	80,863	178,021
	440,428	413,274	842,609
Segment operating profit
Create	46,586	45,718	101,484
Globalize	21,573	29,484	51,709
Engage	9,615	8,123	16,591
	77,774	83,325	169,784
Reconciliation of Segment operating profit
Adjusted EBITDA^	77,774	83,325	169,784
Share-based payments expense	(13,022)	(10,177)	(23,743)
Costs of acquisition and integration	(49,330)	(7,876)	(29,424)
Amortisation of intangible assets	(13,743)	(13,771)	(28,150)
Depreciation - property, plant and equipment	(13,180)	(11,769)	(24,996)
Depreciation - right of use assets	(7,668)	(8,422)	(14,995)
Bank charges	435	380	781
Operating (loss)/profit	(18,734)	31,690	49,257
Financing income	1,997	165	666
Financing costs	(8,517)	(6,789)	(13,453)
(Loss)/profit before taxation	(25,254)	25,066	36,470

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

Revenues are recognised as services are delivered by the relevant producing segment, and while there is significant sub-contracting across production locations around the Group, inter-segment revenues are not significant. Assets and liabilities are not allocated by segment.

One customer was above 10% of revenues in H1 2024, accounting for 21.0% of total revenue (2023: 19.1%), with revenues spread across all divisions and service lines. The increase in concentration is primarily due to the timing of the customer's development and game release cycle.

	Unaudited Half Year 30 Jun 24 $ 000	Unaudited Half Year 30 Jun 23 $ 000	Audited Year 31 Dec 23 $ 000
Geographical analysis of revenues, by production location*
United Kingdom	99,152	67,968	140,417
United States	98,018	82,017	188,514
Canada	77,349	87,620	170,854
Poland	20,474	21,163	44,267
Italy	19,545	19,548	36,843
India	16,465	14,612	30,102
China	15,801	16,218	31,386
Philippines	15,604	9,907	22,239
Australia	14,975	20,014	37,179
Mexico	9,372	7,296	16,814
Other	53,673	66,911	123,994
	440,428	413,274	842,609

he prior year comparatives have been re-classified to align to the current year ranking.

Revenue Expected to be Recognised

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

	At 30 Jun 24 $ 000	At 30 Jun 23 $ 000	At 31 Dec 23 $ 000
Scheduled completion within 1 year	34,917	29,502	63,709
Scheduled completion 1-2 years	-	308	12,085
Scheduled completion 2-5 years	-	102	501
Total undelivered	34,917	29,912	76,295

	Unaudited Half Year 30 Jun 24 $ 000	Unaudited Half Year 30 Jun 23 $ 000	Audited Year 31 Dec 23 $ 000
Geographical analysis of non-current assets from continuing businesses*
United States	368,878	396,336	378,485
United Kingdom	236,830	140,725	241,305
Australia	54,752	53,825	55,338
Canada	50,783	58,553	53,850
Italy	16,566	17,948	17,704
Poland	15,170	17,576	16,436
Switzerland	10,744	10,897	11,071
China	9,705	11,743	10,917
India	8,172	6,232	8,445
France	7,541	8,040	7,991
Other	42,072	42,302	34,398
	821,213	764,177	835,940

he prior year comparatives have been re-classified to align to the current year ranking.

Seasonal Business

Historically the video games industry has been heavily impacted by sales of new releases of games and platforms during the traditional holiday season, including the run up to Thanksgiving in the United States and Christmas in other parts of the world. As with all other service providers to the video games industry, certain of Keywords' service lines typically experience 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 in the second half compared with the first half of each calendar year. More recently, the rise of streaming has shifted the video game industry away from a strict seasonal cycle. In addition, as Keywords continues to build on our platform, and our presence in each stage of the games development cycle increases, the impact of seasonality on our business is reducing over time.

Revenue and Gross profit for the twelve months up to the end of the interim period and comparative information for the prior twelve-month period are presented below, which include the post-acquisition results of acquisitions completed in the relevant period.

	Unaudited Year 30 Jun 24 $ m	Unaudited Year 30 Jun 23 $ m
Revenue	870	786
Gross profit	318	300

Costs of acquisition and integration

	Unaudited Half Year 30 Jun 24 $ 000	Unaudited Half Year 30 Jun 23 $ 000	Audited Year 31 Dec 23 $ 000
Acquisition and integration costs re: current year acquisitions	662	183	3,006
Fair value adjustments to contingent consideration	890	-	334
Deferred consideration related to continuous employment	588	4,668	9,611
Acquisition team and related costs	346	383	640
EQT bid costs	31,617	-	-
Other restructuring - Severance	7,752	1,638	4,203
Globalize restructuring - Right of use assets impairment	2,340	-	2,210
Globalize restructuring - Property, plant and equipment impairment	1,540	-	6,231
Globalize restructuring - Other provisions	3,571	-	2,899
Other	24	1,004	290
	49,330	7,876	29,424

6 Financing Income and Cost

	Unaudited Half Year 30 Jun 24 $ 000	Unaudited Half Year 30 Jun 23 $ 000	Audited Year 31 Dec 23 $ 000
Financing income
Interest received	265	165	666
Foreign exchange gain	1,732	-	-
	1,997	165	666
Financing cost
Bank charges	(435)	(380)	(781)
Interest expense	(5,280)	(2,408)	(6,235)
Unwinding of discounted liabilities - lease liabilities	(862)	(680)	(1,562)
Unwinding of discounted liabilities - deferred consideration	(1,940)	(1,963)	(3,543)
Foreign exchange loss	-	(1,358)	(1,332)
	(8,517)	(6,789)	(13,453)
Net financing cost	(6,520)	(6,624)	(12,787)

7 Earnings per Share

	Unaudited Half Year 30 Jun 24 $ cent	Unaudited Half Year 30 Jun 23 $ cent	Audited Year 31 Dec 23 $ cent
Basic	(38.82)	19.93	25.65
Diluted	(38.19)	19.20	25.31

Earnings	$ 000	$ 000	$'000
(Loss)/profit for the period from continuing operations	(30,883)	15,659	20,244

Weighted average number of equity shares	Number	Number	Number
Basic (i)	79,546,471	78,558,801	78,910,471
Diluting impact of share options (ii)	1,315,883	2,993,709	1,084,796
Diluted (i)	80,862,354	81,552,510	79,995,267

(i) Includes (weighted average) shares to be issued:
	Number	Number	Number
	13,119	106,959	67,827

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

	Number	Number	Number
LTIPs	2,588,384	1,233,865	3,334,569
Share options	501,095	-	450,994
	3,089,479	1,233,865	3,785,563

8 Dividends

The Board has decided not to declare an interim dividend for the period ending 30 June 2024, due to the impending takeover of the Group.

At 30 June 2024, Retained earnings available for distribution (being Retained earnings plus Share-based payments reserve) in the Company were $72.0m. In addition, the Company has amounts included in the Merger reserve of $136.8m that are considered distributable (note 12).

9 Non-current Assets

	Property, plant and equipment Unaudited Half Year 30 Jun 24 $ 000	Right of use assets Unaudited Half Year 30 Jun 24 $ 000	Intangible assets goodwill Unaudited Half Year 30 Jun 24 $ 000	Intangible assets other Unaudited Half Year 30 Jun 24 $ 000	Intangible assets total Unaudited Half Year 30 Jun 24 $ 000
Movement of the carrying value of Non-current Assets
Carrying amount at the beginning of the period	55,458	46,362	594,265	103,507	697,772
Additions	17,443	6,285	-	2,294	2,294
Arising on acquisitions	-	-	383	-	383
Depreciation charge	(13,180)	(7,668)	-	-	-
Amortisation charge	-	-	-	(13,743)	(13,743)
Impairment charge	(1,540)	(2,340)	-	-	-
Exchange rate movement	(1,070)	(633)	(4,611)	(423)	(5,034)
Carrying amount at the end of the period	57,111	42,006	590,037	91,635	681,672

A cash-generating unit ("CGU") is the smallest identifiable group of assets that generates cash inflows that are largely independent of the cash inflows from other assets or group of assets. The CGU's represent the lowest level within the Group at which the associated goodwill is assessed for internal management purposes and are not larger than the operating segments determined in accordance with IFRS 8 Operating Segments. The Board has determined the service lines as CGU's, and Goodwill acquired in business combinations has been allocated to the CGUs that are expected to benefit from business combinations to date.

A summary of the allocation of the carrying value of goodwill by CGU and by segment is presented below:

		Unaudited Half Year 30 Jun 24 $ m	Unaudited Half Year 30 Jun 23 $ m	Audited Year 31 Dec 23 $ m
Create:	Game Development	327	252	328
	Art Services	21	21	21
Globalize:	Functional Testing	16	16	15
	Localization Testing	15	15	15
	Audio	35	36	36
	Localization	19	20	20
Engage:	Marketing	120	129	121
	Player Engagement	37	40	38
		590	529	594

While the Group performs a full assessment of the carrying value of goodwill, intangible assets and other assets on an annual basis, at 30 June 2024 an interim assessment by CGU was made based on the same underlying assumptions used in the last Annual Report, but using updated forecasts and projections. Based on this interim review of the value in use calculations, no impairment is required in the period. The Directors consider that no reasonably probable change in assumptions would result in an impairment.

10 Trade and Other Receivables

	Unaudited At 30 Jun 24 $ 000	Unaudited At 30 Jun 23 $ 000	Audited At 31 Dec 23 $ 000
Trade receivables derived from contracts with customers	101,590	107,659	103,966
Provision for bad debts (i) (ii)	(3,551)	(4,314)	(4,691)
Financial asset held at amortised cost	98,039	103,345	99,275

Accrued income from contracts with customers - gross	32,763	22,377	21,693
Accrued income from contracts with customers - loss allowance	(3,115)	(1,977)	(1,484)
Financial asset held at amortised cost (iii)	29,648	20,400	20,209

Multimedia tax credits/video games tax relief	50,604	46,780	40,938
Prepayments and rent deposits	17,906	15,304	15,854
Tax and social security	7,898	9,574	8,018
Other receivables	7,042	6,127	6,973

Other receivables	113,098	98,185	91,992

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

						Unaudited At 30 Jun 24 $ 000
Provision at the beginning of the period						(4,691)
Amounts written off against provision in the period						1,091
Exchange rate movement						49
Provision at the end of the period						(3,551)

Credit loss experience						1%

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

		Unaudited At 30 Jun 24 $ 000
Credit impaired		(2,535)
Expected credit losses		(1,016)
Provision at the end of the period		(3,551)

(iii) Accrued income from contracts with customers represent mainly contract assets in process and related items. Excluding movements in the provision, the movement in the period comprises transfers in and out as items are accrued and subsequently invoiced to customers, with no significant amounts recognised on the acquisition of subsidiaries. The movements in the provision in the period were additional provisions of $1.5m and movement in expected credit losses of $0.1m, totalling $1.6m.

12 Share Capital

	Issue date	Per share $	Number of ordinary £0.01 shares	Number of ordinary £0.01 shares - to be issued	Share capital $ 000	Share capital - to be issued $ 000	Share premium $ 000	Merger reserve* $ 000

At 1 January 2024 (re-stated)^			79,287,236	13,119	1,036	354	60,185	337,582
Acquisition-related issuance of shares:
Smoking Gun	05/01/2024	19.00	124,221	-	2	-	-	2,358
Waste Creative	19/03/2024	20.77	1,245	-	-	-	-	26
47 Communications	15/04/2024	19.92	87,648	-	1	-	-	1,745
Helpshift	15/05/2024	17.07	27,045	-	-	-	-	460
Acquisition-related issuance of shares			240,159	-	3	-	-	4,589
Exercise of share options			417,848	-	5	-	3,978	-
At 30 June 2024			79,945,243	13,119	1,044	354	64,163	342,171

^As outlined in note 3, balances have been re-translated on 01 January 2024 due to the change in the functional currency of the Company.

* Included in the Merger reserve are amounts of $15.9m (being the premium arising on the share placement in 2015) and $120.9m (being the premium arising on the share placement in 2020), totalling $136.8m, that are considered distributable. At the time of the placements, the proceeds were not allocated to a specific acquisition or specific purpose, and thus these amounts included in the Merger reserve are considered distributable.

13 Share Options

	Share Option Scheme		Long Term Incentive Plan		Salary shares
	Average exercise price in £ per share	Number of options	Average exercise price in £ per share	Number of options	Average exercise price in £ per share	Number of options
At 01 January 2024	18.99	1,358,340	0.01	3,629,433	0.01	842,591
Granted	0.00	-	0.01	1,647,981	0.01	913,602
Lapsed	18.41	(65,145)	0.01	(919,692)	0.01	(51,008)
Exercised	15.57	(354,329)	0.01	(583,955)	0.01	(186,890)
At 30 June 2024	20.45	938,866	0.01	3,773,767	0.01	1,518,295
Exercisable at 30 June 2024	19.55	772,863	0.01	617,907	0.01	-
Weighted average share price at date of exercise	22.08		17.82		n/a
Analysis of Shares Exercised		Number of options		Number of options		Number of options
Exercised via issuance of new shares		196,860		220,988		-
Exercised via utilisation of shares held in EBT		157,469		362,967		186,890
		354,329		583,955		186,890

14 Other payables

	Unaudited At 30 Jun 24 $ 000	Audited At 30 Jun 23 $ 000	Unaudited At 31 Dec 23 $ 000
Current liabilities
Accrued expenses	110,278	73,865	84,972
Payroll taxes	7,606	5,507	5,599
Other payables (ii)	31,345	28,493	33,221
Deferred and contingent consideration (i)	13,920	62,214	40,348
Deferred and contingent consideration related to continuous employment (i)	5,981	5,021	8,028
	169,130	175,100	172,168
Non-current liabilities
Deferred and contingent consideration (i)	16,642	21,067	13,251

Deferred and contingent consideration becomes payable where the purchase agreement includes deferred consideration contingent on both pre-defined profit and / or revenue targets being exceeded. The valuation of contingent consideration is derived using data from sources that are not widely available to the public and involves a degree of judgement (Level 3 input in the fair value hierarchy). Liabilities for deferred consideration are recognised at their fair value on the acquisition date, however where deferred and contingent consideration is also tied to the retention of key staff, these liabilities are considered post-acquisition expenses under IFRS 3, with liabilities for deferred and contingent consideration related to continuous employment accrued over the post-acquisition retention period.

(i) The movements in deferred and contingent consideration during the period were as follows:

	Deferred and contingent consideration Unaudited At 30 Jun 24 $ 000	Deferred and contingent consideration related to continuous employment Unaudited At 30 Jun 24 $ 000
Carrying amount at the beginning of the period	53,599	8,028
Consideration settled by cash	(21,663)	(1,967)
Consideration settled by shares	(3,940)	(652)
Unwinding of discount (note 7)	1,940	-
Accrued liabilities from prior acquisitions (note 6)	-	3,860
Fair value movements in contingent consideration (note 6)	890	(3,272)
Exchange rate movement	(264)	(16)
Carrying amount at the end of the period	30,562	5,981

A 10% movement in expected performance would impact the fair value of deferred and contingent consideration as follows:

Increase / (decrease) in carrying amount	Deferred and contingent consideration Unaudited At 30 Jun 24 $ 000	Deferred and contingent consideration related to continuous employment Unaudited At 30 Jun 24 $ 000
Increase in expected performance - 10%	5,425	-
Decrease in expected performance - 10%	(5,616)	(2,579)

There are no other reasonably probable changes to the assumptions and inputs (including the discount rate) that would lead to a material change to the fair value of the total amount payable.

On an undiscounted basis, at period end the Group may be liable for deferred and contingent consideration ranging from $1.1m to a maximum of $63.3m. The contractual maturities (representing undiscounted contractual cash flows) of the Group's deferred and contingent consideration liabilities were as follows:

	Deferred and contingent consideration Unaudited At 30 Jun 24 $ 000	Deferred and contingent consideration related to continuous employment Unaudited At 30 Jun 24 $ 000
Not later than one year	11,590	9,158
Later than one year and not later than two years	33,121	9,290
Later than two years and not later than five years	-	161
Total undiscounted contractual cash flows	44,711	18,609

(ii) The Group's related party transactions are with key management personnel as disclosed in the Group's Annual Report. There have been no material changes to the Group's related party transactions with key management personnel during the period.

15 Loans and Borrowings and Capital Management

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

			Unaudited At 30 Jun 24 $ 000
Carrying amount as the beginning of the period			140,618
Drawdowns			74,000
Repayments			(81,650)
Exchange rate movement			(639)
Carrying amount at the end of the period			132,329

In 2023, the Group negotiated a new unsecured multi-currency revolving credit facility agreement ("RCF") of US$400m that matures in July 2027. The RCF includes an accordion option to increase the facility up to US$500m and an option to extend the expiry date by a further one-year period (both subject to lender consent). The RCF contains representations, warranties, and financial covenants customary for facilities of this type. Non-compliance with RCF terms could result in lenders refusing to advance funds under the facility or, in the worst case, calling in outstanding loans.

In connection with the financial covenants, the Group is required to comply with and report interest cover and leverage ratios, each half calendar year, calculated in accordance with the lenders' facility agreement. The covenants provide that a leverage measure (Net debt to Adjusted EBITDA ratio) shall not exceed 3.0x and an interest cover measure (EBIT to Net Finance Charges ratio) will be a minimum of 4.0x.

During the period the RCF agreement was amended to align the interest cover ratio to market standards, changing the basis of calculation from EBIT to Net Finance Charges, to Adjusted EBITDA to Net Finance Charges (again with a minimum threshold of 4.0x). Both covenant measures are now calculated on a consistent basis, and both measures are now more closely aligned with the key metrics used to manage the business. Throughout the period, the Group operated well within the revised RCF ratio terms, with Net Debt to Adjusted EBITDA of 0.7x and with Adjusted EBITDA to Net Finance Charges of 17.8x for H1-24.

At the period end the net debt ratio was as follows:
				Unaudited At 30 Jun 24 $ 000
Loans and borrowings				132,329
Less: cash and short-term deposits				(29,941)
Net debt / (net cash) position				102,388
Total equity				638,916
Net debt / (net cash) to capital ratio (%)				16.0%

16 Financial Instruments

During the period there has been no change in the measurement basis of the financial assets and liabilities shown in the Condensed interim consolidated statement of financial position.

17 Lease Liabilities

The Group has entered into leases, across the business, principally relating to property. These property leases have varying terms and renewal rights. Management applies judgement in determining whether it is reasonably certain that a renewal or termination option will be exercised.

The movement in lease liabilities during the current period was as follows:

						Unaudited At 30 Jun 24 $ 000
Carrying amount at the beginning of the period						51,851
Liabilities recognised on new leases in the period						6,285
Modifications to lease liabilities						(1,785)
Unwinding of discounted liabilities - lease liabilities						862
Payment of principal and interest on lease liabilities						(8,145)
Exchange rate movement						(758)
Carrying amount at the end of the period						48,310

The value of leases not yet commenced to which the lessee is committed, which are not included in the lease liability at 30 June 2024, were $nil.

18 Business Combinations

In June 2024, Keywords completed the acquisition of a small game development studio in Australia as it continues to build out its offering there, purchasing 100% of the business. The total purchase consideration for this acquisition was $0.3m.

19 Significant Events

On 3 July, the boards of Keywords and a newly formed company indirectly wholly-owned by EQT's BPEA Fund VIII, reached an agreement on the terms of a recommended final cash acquisition of the entire issued and to be issued ordinary share capital of Keywords for a price of £24.50 per share. EQT's offer of £24.50 per share followed numerous previous unsolicited proposals from EQT and represents a significant increase from their initial proposal. It values the entire issued and to be issued ordinary share capital of the Group at approximately £2.1 billion on a fully diluted basis. On the 30 August, shareholders voted in favour of the Transaction and all anti-trust clearances have now been received or applicable waiting periods have expired. Following the Sanction Hearing which is scheduled on 21 October 2024. Keywords anticipate that the Scheme will become effective on or about 23 October 2024 with the cancellation of trading of Keywords' shares on AIM by 24 October.

20 Events after the Reporting Date

On 13 August 2024, the Group announced that it had acquired Wushu Studios Limited. Wushu was founded in 2017, initially as an original IP studio, before transitioning to a work-for-hire model. Wushu employs c.160 people, with multiple project teams working closely with clients to develop a range of high-quality games. Wushu has grown well despite current market turbulence, with adjusted revenues of approximately £12.5m and an adjusted EBITDA margin in line with Keywords Studios' level adjusted EBITDA of approximately £2.0m expected in the year ending 31 August 2024. The consideration comprises an upfront and earn-out component and is expected to fall within the Group's targeted valuation range. The upfront consideration was paid in cash and funded from the Group's existing revolving credit facility.

Alternative Performance Measures

The Group reports a number of alternative performance measures ("APMs") to present the financial performance of the business, that are not GAAP measures as defined under IFRS. The Directors believe that these measures, in conjunction with the IFRS financial information, provide the users of the financial statements with additional information to provide a more meaningful understanding of the underlying financial and operating performance of the Group. The measures are also used in the Group's internal strategic planning and budgeting processes and for setting internal management targets. These measures can have limitations as analytical tools and therefore should not be considered in isolation, or as a substitute for IFRS measures.

The principal measures used by the Group are set out below:

Organic revenue growth - Acquisitions are a core part of the Group's growth strategy. Organic revenue growth measures are used to help understand the underlying trading performance of the Group excluding the impact of acquisitions. Organic revenue growth is calculated by adjusting the prior year revenues, adding pre-acquisition revenues for the corresponding period of ownership to provide a like-for-like comparison with the current year, and applying the prior year's foreign exchange rates to both years, when translating studio results into the US dollar reporting currency.

Constant exchange rates ("CER") - Given the international nature of the Group's operations, foreign exchange movements can have an impact on the reported results of the Group when they are translated into the Group's reporting currency, the US dollar. In order to understand the underlying trading performance of the business, revenue is also presented using rates consistent with the prior year in order to provide year-over-year comparability.

Adjusted profit and earnings per share measures - Adjusted profit and earnings per share measures are used to provide management and other users of the financial statements with a clear understanding of the underlying profitability of the business over time. Adjusted profit measures are calculated by adding the following items back to the equivalent GAAP profit measures:

• Amortisation of intangible assets - Customer relationships and music licence amortisation commences on acquisition, whereas intellectual property/development costs amortisation commences when the product is launched. These costs, by their nature, can vary by size and amount each year. As a result, amortisation of intangibles is added back to assist with the understanding of the underlying trading performance of the business and to allow comparability across regions and categories.

• Costs of acquisition and integration - The level of acquisition activity can vary each year and therefore the costs associated with acquiring and integrating businesses are added back to assist with the understanding of the underlying trading performance of the Group.

• Share-based payments - The Group uses share-based payments as part of remuneration to align the interests of senior management and employees with shareholders. These are non-cash charges and the charge is based on the Group's share price which can change. The costs are therefore added back to assist with the understanding of the underlying trading performance.

• Foreign exchange gains and losses - The Group does not hedge foreign currency translation exposures. The effect on the Group's results of movements in exchange rates can vary each year and are therefore added back to assist with understanding the underlying trading performance of the business.

Free cash flow measures - The Group aims to generate sustainable cash flow (free cash flow) in order to support its acquisition programme and to fund dividend payments to shareholders. Free cash flow is measured as net cash generated by/(used in) operating activities after capital expenditure, non-cash movements in deferred and contingent consideration related to continuous employment, payments of principal on lease liabilities, interest and tax payments, but before acquisition and integration cash outlay and dividend payments. Adjusted free cash flow is a measure of cash flow adjusting for capital expenditure that is supporting growth in future periods (represented by capital expenditure in excess of depreciation).

Net debt - The Group manages capital by monitoring debt to capital and net debt ratios. Net debt is calculated as loans and borrowings less cash and cash equivalents, and excludes lease liabilities. The debt to capital ratio is calculated as net debt as a percentage of total equity.

The remainder of this section provides a reconciliation of the APMs with the relevant IFRS GAAP equivalent.

Divisional analysis

The following table presents revenue growth by division at both actual exchange rates ("AER") and constant exchange rates ("CER"). Constant exchange rates are calculated by retranslating current year reported numbers at the corresponding 2023 foreign exchange rates, in order to give management and other users of the financial statements better visibility of underlying trading performance against the prior year.

	Half Year 30 Jun 24 Revenue AER $m	Half Year 30 Jun 24 Revenue CER $m	Half Year 30 Jun 23 Revenue AER $m	Half Year 30 Jun 24 Growth AER %	Half Year 30 Jun 24 Growth CER %
Create	205.0	203.9	175.5	16.8%	16.2%
Globalize	139.0	138.3	156.9	(11.4%)	(11.9%)
Engage	96.4	96.5	80.9	19.2%	19.3%
	440.4	438.7	413.3	6.6%	6.2%

Pro forma revenue

Pro forma revenue is calculated by adding pre-acquisition revenues of current year acquisitions to the current year revenue numbers, to illustrate the size of the Group had the acquisitions been included from the start of the financial year.

	2024 Revenue AER $m	2024 Pre-acquisition revenue AER $m	2024 Pro forma revenue AER $m	Year 30 Jun 24 Pro forma revenue AER $m
Create	205.0	-	205.0	392.5
Globalize	139.0	-	139.0	283.7
Engage	96.4	-	96.4	193.5
	440.4	-	440.4	869.7

Organic revenue at constant exchange rates

Organic revenue at constant exchange rates is calculated by adjusting the prior year revenues, adding pre-acquisition revenues for the corresponding period of ownership, and applying the 2023 foreign exchange rates to both years, when translating studio results into the US dollar reporting currency.

	2023 Revenue AER $m	2023 Pre-acquisition revenue AER $m	2023 Like-for-like revenue AER $m	2024 Revenue growth CER $m	2024 Revenue CER $m	2024 Organic revenue growth CER %
Create	175.5	26.2	201.7	2.2	203.9	1.1%
Globalize	156.9	-	156.9	(18.6)	138.3	(11.9%)
Engage	80.9	7.9	88.8	7.7	96.5	8.7%
	413.3	34.1	447.4	(8.7)	438.7	(1.9%)

Adjusted operating costs

This comprises Administrative expenses as reported in the Consolidated statement of comprehensive income, adding back share-based payments expense, costs of acquisition and integration, amortisation of intangible assets, depreciation and impairment, and deducting bank charges.

Calculation		Half Year 30 Jun 24 $ 000	Half Year 30 Jun 23 $ 000	Year 31 Dec 23 $ 000
Administrative expenses	Consolidated statement of comprehensive income	(170,737)	(124,841)	(273,656)
Share-based payments expense	Consolidated statement of comprehensive income	13,022	10,177	23,743
Costs of acquisition and integration	Consolidated statement of comprehensive income	49,330	7,876	29,424
Amortisation of intangible assets	Consolidated statement of comprehensive income	13,743	13,771	28,150
Depreciation - property, plant and equipment	Note 10	13,180	11,769	24,996
Depreciation - right of use assets	Note 10	7,668	8,422	14,995
Bank charges	Note 7	(435)	(380)	(781)
Adjusted operating costs		(74,229)	(73,206)	(153,129)
Adjusted operating costs as a % of revenue		16.9%	17.7%	18.2%

Adjusted operating profit

The Adjusted operating profit consists of the Operating profit as reported in the Consolidated statement of comprehensive income, adjusted for share-based payments expense, costs of acquisition and integration, and amortisation of intangible assets.

Calculation		Half Year 30 Jun 24 $ 000	Half Year 30 Jun 23 $ 000	Year 31 Dec 23 $ 000
Operating (loss)/profit	Consolidated statement of comprehensive income	(18,734)	31,690	49,257
Share-based payments expense	Consolidated statement of comprehensive income	13,022	10,177	23,743
Costs of acquisition and integration	Consolidated statement of comprehensive income	49,330	7,876	29,424
Amortisation of intangible assets	Consolidated statement of comprehensive income	13,743	13,771	28,150
Adjusted operating profit		57,361	63,514	130,574
Adjusted operating profit as a % of revenue		13.0%	15.4%	15.5%

EBITDA

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

Calculation		Half Year 30 Jun 24 $ 000	Half Year 30 Jun 23 $ 000	Year 31 Dec 23 $ 000
Operating (loss)/profit	Consolidated statement of comprehensive income	(18,734)	31,690	49,257
Amortisation of intangible assets	Consolidated statement of comprehensive income	13,743	13,771	28,150
Depreciation - property, plant and equipment	Note 10	13,180	11,769	24,996
Depreciation - right of use assets	Note 10	7,668	8,422	14,995
Bank charges	Note 7	(435)	(380)	(781)
EBITDA		15,422	65,272	116,617

Adjusted EBITDA

Adjusted EBITDA comprises EBITDA, adjusted for share-based payments expense and costs of acquisition and integration.

Calculation		Half Year 30 Jun 24 $ 000	Half Year 30 Jun 23 $ 000	Year 31 Dec 23 $ 000
EBITDA	As above	15,422	65,272	116,617
Share-based payments expense	Consolidated statement of comprehensive income	13,022	10,177	23,743
Costs of acquisition and integration	Consolidated statement of comprehensive income	49,330	7,876	29,424
Adjusted EBITDA		77,774	83,325	169,784
Adjusted EBITDA as a % of revenue		17.7%	20.2%	20.1%

Adjusted profit before tax

Adjusted profit before tax comprises Profit before taxation as reported in the Consolidated statement of comprehensive income, adjusted for share-based payments expense, costs of acquisition and integration, amortisation of intangible assets, foreign exchange gains and losses, and unwinding of discounted liabilities.

Calculation		Half Year 30 Jun 24 $ 000	Half Year 30 Jun 23 $ 000	Year 31 Dec 23 $ 000
(Loss)/profit before taxation	Consolidated statement of comprehensive income	(25,254)	25,066	36,470
Share-based payments expense	Consolidated statement of comprehensive income	13,022	10,177	23,743
Costs of acquisition and integration	Consolidated statement of comprehensive income	49,330	7,876	29,424
Amortisation of intangible assets	Consolidated statement of comprehensive income	13,743	13,771	28,150
Foreign exchange (gain) / loss	Note 7	(1,732)	1,358	1,332
Unwinding of discounted liabilities - deferred consideration	Note 7	1,940	1,963	3,543
Adjusted profit before tax		51,049	60,211	122,662
Adjusted profit before tax as a % of revenue		11.6%	14.6%	14.6%

Adjusted effective tax rate

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

Calculation		Half Year 30 Jun 24 $ 000	Half Year 30 Jun 23 $ 000	Year 31 Dec 23 $ 000
Adjusted profit before tax	As above	51,049	60,211	122,662
Taxation	Consolidated statement of comprehensive income	5,629	9,407	16,226
Effective tax rate before tax on adjusting items		11.0%	15.6%	13.2%
Tax arising on bridging items to Adjusted profit before tax^		5,833	3,733	11,382
Adjusted taxation		11,462	13,140	27,608
Adjusted effective tax rate	Taxation / Adjusted profit before tax	22.5%	21.8%	22.5%

^Being mainly the tax impact of share-based payments expense $2.3m and amortisation of intangible assets $2.8m, with the prior period being mainly the tax impact of share-based payments expense $1.6m and amortisation of intangible assets $2.1m.

Adjusted earnings per share

The Adjusted profit after tax comprises the Adjusted profit before tax, less the Taxation expense as reported in the Consolidated statement of comprehensive income, adjusted for the tax impact of the adjusting items in arriving at Adjusted profit before tax.

The Adjusted earnings per share comprises the Adjusted profit after tax divided by either the basic or diluted weighted average number of equity shares as reported in note 8.

Calculation		Half Year 30 Jun 24 $ 000	Half Year 30 Jun 23 $ 000	Year 31 Dec 23 $ 000
Adjusted profit before tax	As above	51,049	60,211	122,662
Taxation	Consolidated statement of comprehensive income	(5,629)	(9,407)	(16,226)
Tax arising on bridging items to Adjusted profit before tax^		(5,833)	(3,733)	(11,382)
Adjusted profit after tax		39,587	47,071	95,054

		Number	Number	Number
Basic	Note 8	79,546,471	78,558,801	78,910,471
Diluted	Note 8	80,862,354	81,552,510	79,995,267

Adjusted earnings per share
Basic (in cents)		49.77	59.92	120.46
% growth		(16.9%)	(2.6%)	1.1%

Diluted (in cents)		48.96	57.72	118.82
% growth		(15.2%)	(2.8%)	4.3%

Return on capital employed (ROCE)

ROCE represents the Adjusted profit before tax (excluding net interest costs, unwinding of discounted lease liabilities and bank charges, and also adjusted to include pre-acquisition profits of current-year acquisitions), expressed as a percentage of the capital employed. As the Group continues to make multiple acquisitions each year, the calculation further adjusts the Adjusted profit before tax and the capital employed as if all the acquisitions made during each year were made at the start of that year. In order to present the measure consistently, the half year adjusted profits are presented on a rolling 12-month basis.

Capital employed represents Total equity as reported on the Consolidated statement of financial position, adding back employee defined benefit plan liabilities, cumulative amortisation of intangible assets (customer relationships), acquisition-related liabilities (deferred and contingent consideration), together with loans and borrowings, while deducting cash and cash equivalents.

Calculation		Half Year 30 Jun 24 $ 000	Half Year 30 Jun 23 $ 000	Year 31 Dec 23 $ 000
Adjusted profit before tax	As above	51,049	60,211	122,662
Interest received	Note 7	(265)	(165)	(666)
Bank charges	Note 7	435	380	781
Interest expense	Note 7	5,280	2,408	6,235
Unwinding of discounted liabilities - lease liabilities	Note 7	862	680	1,562
Pre-acquisition profits of current period acquisitions		-	1,355	10,427
Adjusted profit before tax including pre-acquisition profit excluding interest for the period		57,361	64,869	141,001
Rolling 12-month adjustment		76,132	69,164	-
Adjusted profit before tax including pre-acquisition profit and excluding net interest		133,493	134,033	141,001


Total equity	Consolidated statement of financial position	638,916	646,263	660,515
Employee defined benefit plans	Consolidated statement of financial position	5,185	3,913	4,448
Cumulative amortisation of intangible assets (customer relationships)		94,469	73,335	84,579
Deferred and contingent consideration	Note 14	36,543	83,281	61,627
Loans and borrowings	Consolidated statement of financial position	132,329	59,997	140,618
Cash and cash equivalents	Consolidated statement of financial position	(29,941)	(47,632)	(66,083)
Capital employed		877,501	819,157	885,704

Return on capital employed		15.2%	16.4%	15.9%

Free cash flow

Free cash flow represents Net cash generated by / (used in) operating activities as reported in the Consolidated statement of cash flows, adjusted for acquisition and integration cash outlay, capital expenditure, net interest paid, payments of principal on lease liabilities and is presented both before and after taxation paid.

Calculation		Half Year 30 Jun 24 $ 000	Half Year 30 Jun 23 $ 000	Year 31 Dec 23 $ 000
Net cash generated by / (used in) operating activities	Consolidated statement of cash flows	28,157	29,532	121,633
Costs of acquisition and integration	Consolidated statement of comprehensive income	49,330	7,876	29,424
Fair value adjustments to contingent consideration	Consolidated statement of cash flows	(890)	-	(334)
Non-cash movements in deferred and contingent consideration related to continuous employment	Consolidated statement of cash flows	(588)	(4,668)	(9,611)
Fair value adjustments to property, plant and equipment	Consolidated statement of cash flows	(1,540)	-	(6,231)
Fair value adjustments to right of use assets	Consolidated statement of cash flows	(2,340)	-	(2,210)
Other fair value movements within cost of acquisition and integration	Consolidated statement of cash flows	(3,571)	-	(2,899)
EQT bid costs	Consolidated statement of cash flows	(31,617)	-	-
Acquisition of property, plant and equipment	Consolidated statement of cash flows	(17,443)	(20,350)	(33,204)
Investment in intangible assets	Consolidated statement of cash flows	(2,294)	(1,428)	(3,305)
Settlement of deferred and contingent consideration related to continuous employment	Consolidated statement of cash flows	1,967	-	4,222
Interest received	Note 7	265	165	666
Interest paid	Consolidated statement of cash flows	(6,326)	(2,567)	(8,358)
Payments of principal on lease liabilities	Consolidated statement of cash flows	(7,283)	(7,351)	(16,476)
Free cash flow after tax		5,827	1,209	73,317
Taxation paid	Consolidated statement of cash flows	5,746	8,575	22,645
Free cash flow before tax		11,573	9,784	95,962

Adjusted free cash flow

Adjusted free cash flow is a measure of cash flow adjusting for capital expenditure that is supporting growth in future periods (as measured by capital expenditure in excess of maintenance capital expenditure).

Calculation		Half Year 30 Jun 24 $ 000	Half Year 30 Jun 23 $ 000	Year 31 Dec 23 $ 000
Free cash flow before tax	As above	11,573	9,784	95,962
Capital expenditure in excess of depreciation:
Acquisition of property, plant and equipment	Consolidated statement of cash flows	17,443	20,350	33,204
Depreciation - property, plant and equipment	Note 10	(13,180)	(11,769)	(24,996)
Capital expenditure in excess of depreciation		4,263	8,581	8,208

Adjusted free cash flow		15,836	18,365	104,170

Adjusted cash conversion rate

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

Calculation		Half Year 30 Jun 24 $ 000	Half Year 30 Jun 23 $ 000	Year End 31 Dec 23 $ 000
Adjusted free cash flow	As above	15,836	18,365	104,170
Adjusted profit before tax	As above	51,049	60,211	122,662
Adjusted cash conversion ratio	Free cash flow before tax and capital expenditure in excess of depreciation, as a % of Adjusted profit before tax	31.0%	30.5%	84.9%

Net debt

The Group manages capital by monitoring debt to capital and net debt ratios. Net debt is calculated as Loans and borrowings (as shown in the Consolidated statement of financial position) less Cash and cash equivalents and excludes Lease liabilities.

Calculation		Half Year 30 Jun 24 $ 000	Half Year 30 Jun 23 $ 000	Year 31 Dec 23 $ 000
Loans and borrowings	Consolidated statement of financial position	132,329	59,997	140,618
Cash and cash equivalents	Consolidated statement of financial position	(29,941)	(47,632)	(66,083)
Net debt position		102,388	12,365	74,535