Equity Research - 19 January 2020 20:03 CET

Embracer Group Reason: Preview of results Company sponsored research Seasonally strong quarter ahead Not rated

 Solid Q3’19/20e expected; however, we adjust… Estimate changes (%)  …estimates due to FF VII, Shenmue III & Biomutant 2019e 2020e 2021e  EV/operational EBIT 17.3x-11.8x for ’19e-‘21e Sales -13.8% 11.5% 5.0% EBIT (rep) -20.4% 17.7% 10.9% Q3’19/20e: sales of SEK 1,535m, Op. EBIT SEK 363m EPS (rep) -21.7% 18.3% 11.4% For Q3’19/20e, we estimate a top line of SEK 1,535m for total y-o-y Source: ABG Sundal Collier growth of 11.2%. On a segment level, we estimate revenues of SEK Share price (SEK) 16/01/2020 7 5 .0 550m from , driven by strong back catalogue sales from Exodus and Kingdom Come: Deliverance as well as the new Software, Sweden release of Shenmue III. For THQ Nordic, we estimate sales of SEK EMBRACB.ST /EMBRACB ST 325m, driven mainly by the release of Genesis on Steam and in combination with strong back catalogue sales from MCap (SEKm) 21,041 Wreckfest. For Coffee Stain, we forecast sales of SEK 60m, mainly MCap (EURm) 1,991.3 driven by Satisfactory, which has claimed a spot on the Epic Game Store Net debt (EURm) -174 top sellers list for several weeks. In terms of Partner Publishing, we forecast sales of SEK 600m, driven by the seasonally strong Sep-Dec No. of shares (m) 281 period, along with stronger than expected sales for F1’19. As such, the Free float (%) 48.2 total contribution from the Games segments amounts to SEK 935m, or Av. daily volume (k) 571.2 61% of total revenues. This should provide strong margins for the quarter, and we forecast a gross margin of 50.1%, contributing to our Next event Q3 report: 19 Feb operational EBIT estimate of SEK 363m, for a margin of 23.6%. Performance Estimate revisions due to FF VII, Shenmue III & Biomutant 900 We lower our revenue estimate for Deep Silver from SEK 625m to SEK 800 550m in Q3’19/20e, mainly due to Shenmue III performing below our 700 600 expectations. Furthermore, as no official release date has been 500 announced for Biomutant, we have pencilled in a release in the next 400 300 financial year instead of Q4’19/20e. Lastly, due to a delay of Square 200 Enixs’ Final Fantasy VII remake, we now pencil in a release in Q1’20/21e 100

instead of Q4’19/20e. See page 3 for more details. 0

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May 18 May May 19 May EV/Op. EBIT 17.3x-11.8x for 2019/2020e-2021/2022e OMX STH PI Based on our updated estimates, Embracer is trading at an 1m 3m 12m EV/operational EBIT of 17.3x-11.8x for 2019/2020e-2021/2022e. This is Absolute (%) 7.1 -3.4 37.1 a discount of 23.1% compared to the 3-year average NTM EV/Op. EBIT. OMX STH PI (%) 3.3 10.9 27.1 It is also a discount of 22.5% compared to the median ‘20e EV/EBIT of Source: FactSet our mid-sized peer group based on FactSet consensus.

Lead analyst: Jesper Birch-Jensen Stefan Knutsson 2019e 2020e 2021e SEKm 2017 2018 2019e 2020e 2021e P/E (x) 61.2 33.4 32.2 Sales 508 5,754 5,157 7,250 7,310 P/E adj (x) 61.2 33.4 32.2 EBITDA 273 1,593 1,837 2,405 2,590 EBITDA margin (%) 53.7 27.7 35.6 33.2 35.4 P/BVPS (x) 3.13 2.86 2.63 EBIT adj 188 575 502 877 915 EV/EBITDA (x) 10.6 8.0 7.4 EBIT adj margin (%) 37.1 10.0 9.7 12.1 12.5 EV/EBIT adj (x) 38.7 22.1 20.9 Pretax profit 182 545 475 852 882 EV/sales (x) 3.76 2.67 2.61 EPS rep 1.76 4.22 1.22 2.25 2.32 ROE adj (%) 5.2 9.0 8.5 EPS adj 1.76 4.22 1.22 2.25 2.32 Dividend yield (%) 0 0 0 FCF yield (%) 1.1 0.2 1.3 Sales growth (%) 68.1 1,033.7 -10.4 40.6 0.8 Lease adj. FCF yld (%) 1.1 0.2 1.3 EPS growth (%) 75.8 140.4 -71.0 83.4 3.5 Net IB debt/EBITDA -1.0 -0.8 -0.8 Source: ABG Sundal Collier, Company data Lease adj. ND/EBITDA -1.0 -0.8 -0.8 Please refer to important disclosures at the end of this report This research product is commissioned and paid for by the company covered in this report. As such, this report is deemed to constitute an acceptable minor non-monetary benefit (i.e. not investment research) as defined in MiFID II.

Embracer Group

Opportunities Risks A large part of the IP portfolio is still not generating any Despite Embracer Group’s broad portfolio, there are risks income, but the pipeline of game launches is strong, associated with larger title releases as they have a including a few AAA titles. Together with a strong relatively large impact on sales right after launch. management with a clear M&A agenda, Embracer Group is Moreover, disappointing releases or reviews could dent well suited for future value-adding acquisitions, which end-customer enthusiasm and hurt the company's could mean securing more IPs and portfolio expansion. finances, especially during the launch period. Delays in The acquisition of further adds new planned and ongoing gaming projects could adversely distribution/publishing channels, an opportunity to reach affect the group’s profitability. Acquiring established but further and wider with the current portfolio and expected temporarily underperforming gaming brands and gradually pipeline, aligning them for additional growth. improving them increases the potential risk of performing below market expectations.

Games segment breakdown, 2018, SEKm Business area breakdown, 2018, SEKm

2,000 3,500 1,800 3,000 1,600 2,500 1,400 1,200 2,000 1,000 1,500 800 1,000 600 400 500 200 0 0 THQ Nordic Deep Silver Coffee Stain Partner Owned titles Publishing titles Physical sales Digital sales Publishing/Film

Sales Sales

Source: ABG Sundal Collier, Company data Source: ABG Sundal Collier, Company data EPS estimate changes, 2019e, SEK EPS estimate changes, 2020e, SEK

2.8 3.4

2.6 3.2

2.4 3.0 2.8 2.2 2.6 2.0 2.4 1.8 2.2 1.6 2.0 1.4 1.8 1.2 1.6

ABGSC FactSet Consensus Mean ABGSC FactSet Consensus Mean Source: ABG Sundal Collier, FactSet Source: ABG Sundal Collier, FactSet Quarterly sales and adj. EBIT, SEKm Company description Embracer Group acquires, develops and publishes PC and 1,800 250 console games for the global gaming market. Its core 1,600 business model consists of acquiring established gaming 200 1,400 brands and gradually improving them. Much of Embracer 1,200 Group’s soul stems from entrepreneur, founder and CEO 150 1,000 Lars Wingefors, who at the age of 16 founded Nordic 800 Games, which we today associate with Embracer Group. 100 600 The game changer came in 2013 when most of today’s brand portfolio was acquired from THQ Inc’s insolvency. At 400 50 200 the start of 2018, the company acquired Koch Media, which focuses on game development and gives Embracer 0 0 Group a larger publishing business. quarterly sales quarterly adj. EBIT Source: ABG Sundal Collier, Company data

19 January 2020 ABG Sundal Collier 2

Embracer Group

Estimate changes

We have slightly lowered our revenue estimate for the Deep Silver segment in Q3’19/20e, from SEK 625m to SEK 550m, mainly due to Shenmue III performing below our expectations.

As no official release date for Biomutant has been announced, we have moved the release from Q4’19/20e into the next financial year. As such, we lower Q4’19/20e revenue for the THQ segment from SEK 450m to SEK 300m. We acknowledge that Biomutant would most likely have had a much larger impact than SEK 150m, but given strong reviews of Darksiders Genesis and solid sales figures on PC, we think that the console release will perform stronger in Q4’19/20e than we originally thought.

Square Enix recently announced that it was pushing back the release of its much- anticipated Final Fantasy VII remake, for which Koch Media is set to handle physical distribution in Europe. The game was initially set to be released in March ’20, but it has now been slated for April ’20. As such, we lower our revenue forecast from SEK 1,000m to SEK 400m in Q4’19/20 for the Partner Publishing segment, and pencil in a Q1’20/21e release.

Lastly, we note that the fact that 2020/2021e looks like being a very strong year for the Partner Publishing segment – with releases like Final Fantasy VII remake, Marvels’ Avengers, 2 and Resident Evil 3 remake - will pressure Embracer’s profitability due to low gross margins in the Partner Publishing segment. Furthermore, profitability in 2020/2021e will be largely be dependent on the success off Embracer’s AAA releases.

ABGSC estimate changes, (SEKm)

Estimate changes (SEKm) Old forecast New forecast Change Net sales 2019/20e 2020/21e 2021/22e 2019/20e 2020/21e 2021/22e 2019/20e 2020/21e 2021/22e Games THQ Nordic 1289.6 1500.0 1700.0 1139.6 1650.0 1850.0 -11.6% 10.0% 8.8% Games Deep Silver 1889.7 1950.0 2050.0 1814.7 1950.0 2150.0 -4.0% 0.0% 4.9% Games Coffee Stain 257.7 300.0 310.0 257.7 300.0 310.0 0.0% 0.0% 0.0% Games Total 3437.0 3750.0 4060.0 3212.0 3900.0 4310.0 -6.5% 4.0% 6.2% Partner Publishing/Film 2544.6 2750.0 2900.0 1944.6 3350.0 3000.0 -23.6% 21.8% 3.4% Group 5981.6 6500.0 6960.0 5156.6 7250.0 7310.0 -13.8% 11.5% 5.0%

COGS -2959.1 -3136.5 -3301.1 -2459.0 -3612.3 -3418.9 -16.9% 15.2% 3.6% Gross profit 3022.6 3363.5 3658.9 2697.8 3637.7 3891.2 -10.7% 8.2% 6.3%

Capitalized costs & other income 981.7 1127.8 1207.6 984.4 1174.5 1293.9 0.3% 4.1% 7.1% Operating costs -2025.8 -2210.0 -2366.4 -1845.2 -2407.0 -2595.1 -8.9% 8.9% 9.7%

EBITDA 1978.6 2281.3 2500.1 1837.0 2405.2 2590.0 -7.2% 5.4% 3.6%

Depreciation & amortization -1348.7 -1536.4 -1675.0 -1335.5 -1528.6 -1675.0 -1.0% -0.5% 0.0%

Operational EBIT 1237.0 1384.5 1515.1 1108.6 1516.2 1605.0 -10.4% 9.5% 5.9% EBIT 629.9 744.9 825.1 501.5 876.6 915.0 -20.4% 17.7% 10.9%

Net financials -26.3 -24.6 -33.1 -26.3 -24.6 -33.1 0.0% 0.0% 0.0% Taxes -164.9 -187.3 -205.9 -131.5 -221.5 -229.3 -20.2% 18.3% 11.4% Net profit 438.7 533.0 586.1 343.7 630.5 652.6 -21.7% 18.3% 11.4%

EPS Basic (SEK) 1.56 1.90 2.09 1.22 2.25 2.32 -21.7% 18.3% 11.4% Net sales growth y-o-y 2019/20e 2020/21e 2021/22e 2019/20e 2020/21e 2021/22e 2019/20e 2020/21e 2021/22e Games THQ Nordic 33.8% 16.3% 13.3% 18.2% 44.8% 12.1% -15.6 pp 28.5 pp -1.2 pp Games Deep Silver 20.3% 3.2% 5.1% 15.5% 7.5% 10.3% -4.8 pp 4.3 pp 5.1 pp Games Coffee Stain n.a. 16.4% 3.3% n.a. 16.4% 3.3% n.a. 0.0 pp 0.0 pp Games Total 40.5% 9.1% 8.3% 31.3% 21.4% 10.5% -9.2 pp 12.3 pp 2.2 pp Partner Publishing/Film -4.8% 8.1% 5.5% -27.3% 72.3% -10.4% -22.4 pp 64.2 pp -15.9 pp Group 16.8% 8.7% 7.1% 0.7% 40.6% 0.8% -16.1 pp 31.9 pp -6.2 pp

Margins 2019/20e 2020/21e 2021/22e 2019/20e 2020/21e 2021/22e 2019/20e 2020/21e 2021/22e Gross margin 50.5% 51.7% 52.6% 52.3% 50.2% 53.2% 1.8 pp -1.6 pp 0.7 pp EBITDA margin 33.1% 35.1% 35.9% 35.6% 33.2% 35.4% 2.5 pp -1.9 pp -0.5 pp Operational EBIT margin 20.7% 21.3% 21.8% 21.5% 20.9% 22.0% 0.8 pp -0.4 pp 0.2 pp EBIT margin 10.5% 11.5% 11.9% 9.7% 12.1% 12.5% -0.8 pp 0.6 pp 0.7 pp Source: ABG Sundal Collier, company data

19 January 2020 ABG Sundal Collier 3

Embracer Group

Pipeline estimates

The key to understanding financial estimates for Embracer lies in evaluating the company’s video game pipeline This is true for its video game development and publishing segments, Deep Silver, THQ Nordic and Coffee Stain, and for its Partner Publishing division, which in turn is based on its partners’ – Square Enix and Capcom to name two – video game pipelines.

Since our most recent update, we have made a few changes to our pipeline estimates. For instance, we have postponed our expected release of Biomutant. We previously expected a release in Q4’19/20e, but as an official release date has not been published yet, we believe that the window has been closed, and we now pencil in Biomutant for a release in Q1’20/21e-Q2’20/21e. Competition initially seemed very fierce in Q1’20/21e due to major releases such as Cyberpunk 2077 and The Last of Us Part II. However, following the postponement of Cyberpunk 2077 to September 20201, we would view a Q1’20/21e release of Biomutant as favourable if the team can get the game ready in time.

One of the largest changes to our pipeline, and financial, estimates comes in the form of Square Enix’s delayed release of its Final Fantasy VII remake. The game was initially for release in March ’20, but is now slated for an April ’20 release2, which moves the game into Embracer’s next financial year.

Lastly, Capcom revealed in mid-December 2019 that it would be releasing a remake of Resident Evil 3 earlier than expected, which is now for release on PS4 and PC on 3 April 20203. We believe that Koch Media will be chosen to handle physical distribution of the game in select European countries, as Koch Media has a long- standing relationship with Capcom, and it handled distribution of the hit release

Resident Evil 2.

Estimated release dates for selected titles Pipeline estimates - ABGSC

Sep-Dec '19 Jan-Mar '20 Apr '20-Mar '21 Games Segment Q3'19/20e Q4'19/20e Q1-Q4'20/21e Shenmue 3 Deep Silver X 2 Deep Silver X (or later) V Deep Silver X Iron Harvest Deep Silver X Spongebob SquarePants: Battle for Bikini Bottom THQ Nordic X Biomutant THQ Nordic X Desperados 3 THQ Nordic X Darksider Genesis (PC & Google Stadia) THQ Nordic X Darksider Genesis (Consoles) THQ Nordic X Destroy All Humans THQ Nordic X Satisfactory Coffee Stain X

Partner Publishing Q3'19/20e Q4'19/20e Q1-Q4'20/21e Final Fantasy VII Remake Partner Publishing X Marvel's Avengers Partner Publishing X Dying Light 2 Partner Publishing X Resident Evil 3 Remake Partner Publishing X Grid Partner Publishing X Doom Eternal Partner Publishing X

Source: ABG Sundal Collier, company data

1 https://www.gamesradar.com/cyberpunk-2077-delayed/ 2 https://www.theverge.com/2020/1/14/21065256/square-enix-delay-date-final-fantasy-vii-remake-marvel- avengers-games 3 PCGamer: Resident Evil 3 remake: Everything we know 19 January 2020 ABG Sundal Collier 4

Embracer Group

New releases and back catalogue

As Embracer expands its portfolio of games, the back catalogue sales will come to play a greater role in the company’s financial results. As such, we have decided to highlight sales estimates in Q3’19/20e for a few key titles that appear to have performed especially well: Metro Exodus, Kingdom Come: Deliverance and Wreckfest. Additionally, we also explore sales figures for new releases in the quarter, specifically: Darksiders Genesis on PC and Shenmue III.

Darksiders Genesis Darksiders Genesis was released on 5 December 2019 on Steam and Google Stadia and has received favourable reviews amongst critics, with a score of 78 on PC.

In terms of owners on Steam, SteamSpy indicate that the game gathered approximately 140k owners during Q3’19/20e. We have not been able to find any sales figures for Darksiders Genesis on Google Stadia, but we note that the Darksiders franchise has historically generated stronger sales on consoles than on PC, which also bodes well for the PlayStation 4, and release in Q4’19/20e. Additionally, Embracer will have received a fee from Google for making Darksiders Genesis available on Google Stadia.

Darksiders Genesis – Steam owners

160,000 146,000 140,000

120,000

100,000

80,000

60,000

40,000

20,000

0

Darksiders Genesis - Steam owners Source: ABG Sundal Collier, SteamSpy, company data

Shenmue III Shenmue III was released on 19 November 2019 on PlayStation 4 and the Epic Games Store. The game gathered mixed reviews amongst critics, with an average Metacritic score of 69 on PC and 68 on PlayStation 4. However, it’s our view that actual fans of the series were very pleased with the game.

In terms of sales, we’re currently not able to track sales generated on the Epic Games Store, however we note that Shenmue III did claim a spot on the Top 20 Sellers list for several weeks. Additionally, Embracer will have received a fee for making the game exclusive to the Epic Games Store. In terms of sales on the PlayStation 4, estimates seem to suggest that the game has gathered approximately 50k players in Q3’19/20e4.

Ultimately, Shenmue III sales seem to have performed below our estimates, which is the reason for us lowering our revenue estimates for the Deep Silver segment.

4 Gamstat: Shenmue III 19 January 2020 ABG Sundal Collier 5

Embracer Group

Metro Exodus Metro Exodus has had a very strong performance since its release on 15 February 2019 and has been the major revenue contributor for the Deep Silver segment during the past three quarters by our estimates, which is why back catalogue sales have outperformed our estimates. Looking at Q3’19/20e, Metro Exodus appears to have generated solid sales figures, as the Sep-Dec period is usually very favourable for videogame sales. Sales, however, will have been aided by promotions and price reductions.

PlayStation4 Estimates for the PlayStation4 version of Metro Exodus suggest that the game has gathered an additional 240k players during Q3’19/20e, bringing total players to 1.06m5. For instance, Metro Exodus was the 14th best-selling game on the PlayStation store in Europe during November, outpacing games like Star Wars Battlefront II, The Outer Worlds and NBA 2K206.

Google Stadia Metro Exodus was one of the games that was available at the launch of Google Stadia, but as mentioned above, we currently do not have any reliable way of tracking sales on Google Stadia. However, we believe that Embracer will have received a fee for making Metro Exodus available on Google Stadia, as well as through sales of the actual game.

Epic Games Store Similarly to Google Stadia, we do not have any reliable figures for sales on the Epic Games Store, however we note that Metro Exodus has claimed a spot on the Top 20 sellers lists for all of Q3’19/20e.

Kingdom Come: Deliverance Kingdom Come: Deliverance, which was developed by , acquired by Embracer on 13 February 2019 and published by Deep Silver, has been one of the major revenue contributors to back catalogue sales for Deep Silver during the past few quarters, by our estimates.

The strong performance seems to have continued during Q’3’19/20e, where the amount of owners on Steam has increased by approximately 120k during the quarter. Once again, these figures will have been aided by price reductions.

Kingdom Come: Deliverance – Steam owners

1,800,000 1,753,000 1,750,000

1,700,000

1,650,000

1,600,000

1,550,000

1,500,000

1,450,000

1,400,000

Kingdom Come: Deliverance - Steam owners Source: ABG Sundal Collier, SteamSpy, company data

5 Gamstat: Metro Exodus 6 https://blog.eu.playstation.com/2019/12/13/call-of-duty-modern-warfare-was-the-most-downloaded- game-on-playstation-store-in-november/ 19 January 2020 ABG Sundal Collier 6

Embracer Group

Additionally, estimates seem to suggest that Kingdom Come: Deliverance has gathered approximately 100k new owners on the PlayStation4 during Q3’19/20e7.

Wreckfest Wreckfest was released on 27 August 2019 on PlayStation 4 and Xbox One and was one of the main contributors to the THQ Nordic segment’s strong performance in Q2’19/20. However, Wreckfest appears to have continued to perform well on PlayStation 4 during Q3’19/20e, where estimates suggests that the game has gathered approximately 134k new players during the quarter8.

7 Gamstat: Kingdom Come: Deliverance 8 Gamstat: Wreckfest 19 January 2020 ABG Sundal Collier 7

Embracer Group

Acquisition of

Embracer announced on 20 December 2019 that it would acquire Malmö based indie development studio Tarsier Studios. The studio consists of approximately 70 employees and have gained renown for success of the original IP , released on PC and consoles in 2017.

Tarsier was established in 2005 and has since grown to become one of the largest indie developers in Sweden. The company focuses on developing adventure games and platform puzzles, primarily for PC and consoles. Since its inception, Tarsier has established strong ties to Nintendo, Sony Interactive and Bandai Namco, which have acted as publishers to Tarsier developed games.

Tarsier is best known for its original IP Little Nightmares, which was developed in- house and published by Bandai Namco – which also owns the IP – on PlayStation, XBOX, PC and Nintendo Switch in 2017. Since the release, Little Nightmares appears to have gathered approximately 800k owners on Steam9 and 820k owners on PlayStation10. At ’19, Tarsier announced that they are developing a sequel, Little Nightmares 2, which will be released during 2020 and published by Bandai Namco.

In the long-term, we like the acquisition of Tarsier, which grants Embracer an experienced team of developers which have a track-record of developing successful IP’s. Once Tarsier has finished developing Little Nightmares 2 for Bandai Namco, we believe the team will go on to work on developing new wholly owned IP’s which can be published by Embracer, thus keeping revenues in-house.

Tarsier Studios: Metacritic scores

Released games Platform Year Metacritic score The Stretchers Sw itch 2019 76 Little Nightmares: Complete Edition Sw itch 2018 79 Little Nightmares: The Depths PS4 2017 62 Little Nightmares PC, PS4, XBOX1 2017 81 Statik PS4 2017 84 LittleBigPlanet PS VITA 2012 88 Rag Doll Kung Fu: Fists of Plastic PS3 2009 68

Average 77 Source: ABG Sundal Collier, Metacritic, company data

In order to acquire 100% of the shares in Tarsier Studios, Embracer agreed to pay SEK 88m in cash along with SEK 11m in Embracer B shares, bringing the total upfront consideration to SEK 99m. In addition, a SEK 44m ten-year earn out will apply for five sellers who will remain as key staff within Tarsier post transaction.

Tarsier Studios: Financial overview, 2012-2018, (SEKm) (SEKm) 2012 2013 2014 2015 2016 2017 2018 Net sales 29.2 25.0 26.6 21.4 26.3 46.8 46.9 EBIT 4.9 1.1 4.2 0.3 0.8 3.3 7.5 Net profit 3.7 0.9 3.3 0.3 0.5 2.5 5.7 y-o-y grow th -14.2% 6.3% -19.7% 23.2% 77.7% 0.3% EBIT margin 17.0% 4.3% 15.6% 1.5% 2.9% 7.0% 15.9% Profit margin 12.7% 3.4% 12.4% 1.2% 2.0% 5.3% 12.3%

Source: ABG Sundal Collier, FactSet, Annual reports, company data

9 SteamSpy: Little Nightmares 10 Gamstat: Little Nightmares 19 January 2020 ABG Sundal Collier 8

Embracer Group

Quarterly overview

Quarterly overview, Q5’15-Q4’19/20e, (SEKm) Quarterly overview (SEKm) Q1'15 Q2'15 Q3'15 Q4'15 Q1'16 Q2'16 Q3'16 Q4'16 Q1'17 Q2'17 Q3'17 Q4'17 Q1'18 Q2'18 Q3'18 Q4'18 Q5'18 Q1'19/20 Q2'19/20 Q3'19/20e Q4'19/20e Games - THQ Nordic 37.6 36.9 40.0 98.4 43.1 52.7 77.9 128.2 81.9 85.6 84.7 255.4 134.5 145.5 124.2 351.9 142.8 185.0 329.6 325.0 300.0 Games - Deep Silver 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 256.5 338.2 251.8 186.7 794.4 373.0 441.7 550.0 450.0 Games - Coffee Stain 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 13.9 97.7 83.0 44.7 60.0 70.0 Partner Publishing/Film 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 241.9 353.8 896.6 828.1 595.6 501.0 443.6 600.0 400.0 Net Sales 37.6 36.9 40.0 98.4 43.1 52.7 77.9 128.2 81.9 85.6 84.7 255.4 632.9 837.4 1272.7 1380.6 1630.5 1142.0 1259.7 1535.0 1220.0

Capitalized w ork 0.0 0.0 1.7 3.3 5.7 7.9 10.2 12.4 13.0 14.3 19.3 32.9 57.6 93.5 102.0 105.9 116.1 131.1 176.6 176.8 183.0 Other operating income 0.0 0.0 1.5 1.5 0.7 2.7 2.7 2.7 0.8 2.1 -2.8 2.7 34.0 29.2 64.3 90.0 115.8 44.9 66.9 107.5 97.6 Total operating income 37.6 36.9 43.2 103.2 49.5 63.3 90.7 143.3 95.7 102.0 101.1 291.0 724.5 960.1 1439.0 1576.4 1862.4 1318.0 1503.2 1819.3 1500.6

COGS -13.1 -9.8 -14.7 -32.5 -13.3 -18.1 -36.7 -50.7 -24.5 -24.3 -29.7 -69.2 -319.9 -465.9 -895.2 -838.3 -741.3 -528.0 -635.1 -765.8 -530.1 Gross profit 24.5 27.1 25.3 65.8 29.8 34.7 41.1 77.5 57.4 61.3 54.9 186.2 313.0 371.5 377.4 542.3 889.2 614.0 624.6 769.3 689.9

Opex -7.1 -7.9 -12.5 -18.4 -13.2 -22.0 -28.7 -31.8 -29.3 -38.0 -36.8 -65.4 -178.8 -287.2 -329.0 -411.8 -502.5 -400.6 -450.0 -506.6 -488.0 Of w hich Other external expenses -7.1 -7.9 -4.7 -15.3 -3.9 -10.0 -13.5 -15.3 -10.7 -15.5 -15.9 -33.1 -74.5 -120.1 -158.2 -223.8 -291.4 -177.5 -191.8 -230.3 -183.0 Personnel expenses 0.0 0.0 -6.8 -5.7 -8.6 -11.6 -14.9 -17.2 -18.0 -20.8 -21.8 -33.5 -104.3 -167.1 -170.8 -188.0 -211.1 -223.1 -258.2 -276.3 -305.0 Other operating expenses 0.0 0.0 -0.9 2.6 -0.6 -0.3 -0.3 0.7 -0.5 -1.7 1.0 1.1 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0

EBITDA 17.4 19.2 16.1 52.3 23.1 23.2 25.4 60.8 41.9 39.7 34.6 156.4 225.8 206.9 214.8 326.4 618.6 389.4 418.1 547.0 482.5

D&A -8.1 -6.7 -6.6 -17.1 -8.8 -9.0 -9.4 -10.2 -10.1 -9.4 -10.6 -54.4 -118.7 -154.4 -124.0 -174.3 -446.6 -308.3 -341.7 -344.1 -341.4

Operational EBIT 12.2 15.4 12.8 38.4 17.6 17.6 19.4 53.7 35.6 34.1 28.1 113.0 125.0 66.9 98.6 194.0 396.1 203.8 240.5 363.0 301.3

EBIT 9.3 12.5 9.6 35.2 14.2 14.2 16.0 50.6 31.9 30.3 24.0 102.0 107.1 52.5 90.8 152.0 172.0 81.1 76.4 202.9 141.1

Non-recurring items 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0

Net financials 0.0 0.0 -0.4 0.0 -0.2 -0.4 -0.4 -1.1 -0.4 -0.4 -0.6 -4.9 -9.2 -3.9 -3.2 -3.6 -9.3 2.0 3.3 -6.0 -7.6

PTP 9.3 12.5 9.2 35.2 14.0 13.8 15.5 49.6 31.5 30.0 23.4 97.1 97.9 48.6 87.5 148.4 162.7 83.1 79.7 196.9 133.5

Taxes -2.3 -3.0 -2.0 -7.1 -3.3 -3.2 -2.9 -11.6 -8.0 -6.8 -4.4 -23.7 -16.9 -15.2 -22.5 -34.2 -59.7 -30.5 -15.1 -51.2 -34.7 Tax rate 24.7% 24.0% 22.0% 20.2% 23.5% 23.3% 18.4% 23.3% 25.3% 22.6% 18.8% 24.4% 17.3% 31.2% 25.7% 23.1% 36.7% 36.7% 18.9% 26.0% 26.0%

Net profit 7.0 9.5 7.2 28.1 10.7 10.6 12.7 38.0 23.5 23.2 19.0 73.4 81.0 33.4 65.0 114.2 103.0 52.6 64.6 145.7 98.8

EPS basic (SEK) 0.12 0.16 0.12 0.47 0.18 0.18 0.21 0.59 0.33 0.32 0.26 0.93 1.03 0.42 0.74 1.32 1.10 0.51 0.23 0.52 0.35 Grow th Q1'16 Q2'16 Q3'16 Q4'16 Q1'17 Q2'17 Q3'17 Q4'17 Q1'18 Q2'18 Q3'18 Q4'18 Q5'18 Q1'19/20 Q2'19/20 Q3'19/20e Q4'19/20e Sales y-o-y 14.7% 42.9% 94.6% 30.3% 89.9% 62.2% 8.8% 99.3% 672.7% 878.8% 1403.1% 440.6% 157.6% 36.4% -1.0% 11.2% -25.2% EBITDA y-o-y 32.5% 20.8% 57.2% 16.3% 81.8% 71.2% 36.4% 157.4% 438.7% 421.1% 521.3% 108.6% 174.0% 88.2% 94.7% 67.6% -22.0% Operational EBIT y-o-y 43.9% 14.2% 50.9% 39.9% 102.8% 93.9% 45.0% 110.6% 251.0% 96.2% 251.2% 71.6% 216.9% 204.5% 143.9% 87.1% -23.9% EBIT y-o-y 52.8% 13.8% 66.9% 43.8% 124.2% 113.3% 50.3% 101.5% 236.2% 73.0% 278.1% 49.1% 60.6% 54.4% -15.8% 33.4% -17.9% Net profit y-o-y 53.1% 11.3% 76.9% 35.2% 119.7% 119.5% 50.1% 93.2% 244.1% 44.1% 241.9% 55.6% 27.2% 57.3% -0.6% 27.6% -4.1% EPS y-o-y 53.1% 11.3% 76.9% 25.8% 83.0% 82.9% 24.5% 57.2% 213.8% 29.2% 180.6% 43.0% 6.9% 22.6% -68.8% -60.8% -67.9% Margins Q1'16 Q2'16 Q3'16 Q4'16 Q1'17 Q2'17 Q3'17 Q4'17 Q1'18 Q2'18 Q3'18 Q4'18 Q5'18 Q1'19/20 Q2'19/20 Q3'19/20e Q4'19/20e Gross margin 65.2% 73.4% 63.4% 66.9% 69.1% 65.7% 52.8% 60.4% 70.1% 71.6% 64.9% 72.9% 49.5% 44.4% 29.7% 39.3% 54.5% 53.8% 49.6% 50.1% 56.5% EBITDA margin 46.3% 52.0% 40.3% 53.1% 53.5% 44.0% 32.6% 47.4% 51.2% 46.4% 40.8% 61.2% 35.7% 24.7% 16.9% 23.6% 37.9% 34.1% 33.2% 35.6% 39.5% Operational EBIT margin 32.4% 41.7% 32.1% 39.0% 40.7% 33.4% 24.9% 41.9% 43.5% 39.9% 33.2% 44.3% 19.8% 8.0% 7.7% 14.0% 24.3% 17.8% 19.1% 23.6% 24.7% EBIT margin 24.7% 33.9% 23.9% 35.8% 32.9% 27.0% 20.5% 39.5% 38.9% 35.5% 28.4% 39.9% 16.9% 6.3% 7.1% 11.0% 10.5% 7.1% 6.1% 13.2% 11.6% Net margin 18.6% 25.7% 17.9% 28.6% 24.8% 20.1% 16.3% 29.6% 28.7% 27.1% 22.5% 28.7% 12.8% 4.0% 5.1% 8.3% 6.3% 4.6% 5.1% 9.5% 8.1%

Source: ABG Sundal Collier, company data

19 January 2020 ABG Sundal Collier 9

Embracer Group

Annual overview

Annual overview, 2013-2021/2022e, (SEKm)

Annual overview (SEKm) 2013 2014 2015 2016 2017 2018 2019/2020e 2020/2021e 2021/2022e Games - THQ Nordic 102.3 178.0 212.9 301.9 507.6 898.9 1139.6 1650.0 1850.0 Games - Deep Silver 0.0 0.0 0.0 0.0 0.0 1827.6 1814.7 1950.0 2150.0 Games - Coffee Stain 0.0 0.0 0.0 0.0 0.0 111.6 257.7 300.0 310.0 Partner Publishing/Film 0.0 0.0 0.0 0.0 0.0 2916.0 1944.6 3350.0 3000.0 Net Sales 102.3 178.0 212.9 301.9 507.5 5754.1 5156.7 7250.0 7310.0

Capitalized w ork 0.0 0.0 8.4 36.2 79.6 475.1 667.5 739.5 855.3 Other operating income 1.8 4.1 5.0 8.7 2.7 333.3 316.9 435.0 438.6 Total operating income 104.1 182.1 226.3 346.8 589.8 6562.4 6141.1 8424.5 8603.9

COGS -31.7 -57.5 -70.1 -118.8 -147.7 -3260.7 -2459.0 -3612.3 -3418.9 Gross profit 70.6 120.5 142.8 183.1 359.8 2493.4 2697.8 3637.7 3891.2

Opex -23.6 -29.4 -51.1 -95.6 -169.5 -1709.3 -1845.2 -2407.0 -2595.1 Of w hich Other external expenses -13.0 -15.2 -28.9 -42.8 -75.2 -868.0 -782.6 -1174.5 -1279.3 Personnel expenses -10.0 -14.2 -22.2 -52.3 -94.1 -841.3 -1062.6 -1232.5 -1315.8 Other operating expenses -0.7 0.0 0.0 -0.5 -0.2 0.0 0.0 0.0 0.0

EBITDA 48.8 95.2 105.1 132.4 272.6 1592.5 1837.0 2405.2 2590.0

D&A -17.1 -27.1 -38.5 -37.4 -84.4 -1018.1 -1335.5 -1528.6 -1675.0

Operational EBIT 48.8 95.2 78.9 108.2 210.8 880.6 1108.6 1516.2 1605.0

EBIT 31.7 68.1 66.6 95.0 188.2 574.4 501.5 876.6 915.0

Non-recurring items 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0

Net financials -1.6 -1.0 -0.6 -2.1 -6.2 -29.2 -26.3 -24.6 -33.1

PTP 30.1 67.1 66.0 92.9 182.0 545.2 493.2 852.0 881.9

Taxes -0.1 -15.0 -14.2 -20.9 -42.8 -148.5 -131.5 -221.5 -229.3 Tax rate 0.4% 22.3% 21.6% 22.6% 23.5% 27.2% 26.7% 26.0% 26.0%

Net profit 30.0 52.2 51.7 71.9 139.2 396.7 343.7 630.5 652.6

EPS basic (SEK) 0.50 0.87 0.86 1.18 1.88 4.22 1.22 2.25 2.32 Grow th 2013 2014 2015 2016 2017 2018 2019/2020e 2020/2021e 2021/2022e Sales y-o-y 74.0% 19.6% 41.8% 68.1% 1033.7% -10.4% 40.6% 0.8% EBITDA y-o-y 95.3% 10.4% 26.0% 106.0% 484.1% 15.4% 30.9% 7.7% Operational EBIT y-o-y 95.3% -17.2% 37.2% 94.9% 317.7% 25.9% 36.8% 5.9% EBIT y-o-y 115.0% -2.3% 42.7% 98.1% 205.2% -12.7% 74.8% 4.4% Net profit y-o-y 74.0% -0.8% 39.1% 93.4% 185.0% -13.4% 83.4% 3.5% EPS y-o-y 74.0% -0.8% 36.5% 59.9% 124.2% -71.0% 83.4% 3.5% Margins 2013 2014 2015 2016 2017 2018 2019/2020e 2020/2021e 2021/2022e Gross margin 69.0% 67.7% 67.1% 60.6% 70.9% 43.3% 52.3% 50.2% 53.2% EBITDA margin 47.7% 53.5% 49.4% 43.8% 53.7% 27.7% 35.6% 33.2% 35.4% Operational EBIT margin 47.7% 53.5% 37.0% 35.8% 41.5% 15.3% 21.5% 20.9% 22.0% EBIT margin 31.0% 38.3% 31.3% 31.5% 37.1% 10.0% 9.7% 12.1% 12.5% Net margin 29.3% 29.3% 24.3% 23.8% 27.4% 6.9% 6.7% 8.7% 8.9% Other metrics 2013 2014 2015 2016 2017 2018 2019/2020e 2020/2021e 2021/2022e EV/Sales 3.7x 2.6x 2.6x EV/EBITDA 10.5x 8.0x 7.3x EV/Operational EBIT 17.3x 12.6x 11.8x EV/EBIT 38.3x 21.9x 20.6x P/E 61.2x 33.4x 32.2x ND/EBITDA -0.2x -0.2x -1.0x -1.9x -1.4x -1.0x -0.8x -0.8x NWC/Sales -9.2% -17.2% -9.1% 0.1% 2.8% 6.0% 4.9% 5.5% ROE 165.2% 66.2% 32.1% 18.9% 10.6% 5.2% 9.0% 8.5% ROIC 248.7% 96.0% 51.9% 35.4% 17.5% 8.0% 12.5% 12.0% ROCE 216.7% 86.0% 39.8% 23.4% 13.6% 6.7% 11.0% 10.6% FCF yield -12.5% -14.6% -34.1% 1.1% 0.2% 1.3% FCF/IC 179.2% 40.7% -34.9% -34.9% -51.3% 4.8% 0.7% 4.7% Source: ABG Sundal Collier, company data

19 January 2020 ABG Sundal Collier 10

Embracer Group

Relative valuation

In order to get a comprehensive overview of the valuation and operational performance of corporations in the video games industry, we compare Embracer across three peer groups of video game developers and publishers: large, mid-sized and mobile. The mobile peer group is included to highlight the valuation and operative performance differences between video game segments.

Valuation and operative performance across peer groups Large developers & publishers Mcap Share price P/E (x) EV/EBIT (x) EV/EBITDA (x) EBIT-margin (%) EBITDA-margin (%) EV/Sales (x) ROIC (%) CAGR '18-'21e Company (SEKm) Ccy SP 2019e 2020e 2021e 2019e 2020e 2021e 2019e 2020e 2021e 2019e 2020e 2021e 2019e 2020e 2021e 2019e 2020e 2021e 2019e 2020e 2021e Sales EBIT

Activision Blizzard 440,308 SEK 573.1 26.8 24.1 20.9 20.4 17.5 14.4 19.0 16.4 13.9 32.7 34.8 20.9 35.1 37.1 38.2 6.7 6.1 5.3 11.1 11.6 12.5 1.3 4.3 Electronic Arts 308,097 SEK 1,055.2 23.2 22.8 20.0 17.6 16.1 13.7 16.1 14.8 12.9 31.0 31.7 20.0 33.7 34.5 35.4 5.4 5.1 4.5 18.0 17.2 18.0 5.9 9.4 Take-Tw o 137,212 SEK 1,210.6 26.3 26.3 21.3 19.2 18.2 14.1 18.1 16.9 13.2 22.4 22.8 21.3 23.7 24.4 23.9 4.3 4.1 3.1 22.2 18.7 19.6 8.8 7.7 Ubisoft 81,265 SEK 679.4 170.1 23.5 17.6 56.9 17.0 12.6 11.8 7.1 6.4 8.7 19.7 17.6 42.1 47.1 45.4 5.0 3.4 2.9 8.8 10.3 Bandai Namco 121,652 SEK 553.4 21.3 19.2 17.8 13.1 11.4 10.2 10.6 9.5 8.6 12.3 13.0 17.8 15.3 15.7 16.0 1.6 1.5 1.4 14.6 14.6 14.3 4.3 10.3 Nintendo 440,712 SEK 3,699.6 23.7 19.0 17.4 15.5 12.1 10.8 15.0 11.8 11.0 23.6 27.1 17.4 24.5 27.7 28.7 3.7 3.3 3.2 14.6 16.3 16.1 4.1 17.1 NCsoft 106,377 SEK 5,162.1 26.5 17.6 11.5 20.8 12.5 6.8 19.2 11.9 6.3 30.8 39.8 12.1 33.4 41.6 12.8 6.4 5.0 1.0 15.6 22.4 21.9 18.0 24.1 NEXON 122,365 SEK 136.2 11.8 15.4 14.4 8.8 7.9 6.6 8.5 7.6 6.2 39.2 40.9 14.4 40.7 42.1 43.9 3.5 3.2 2.7 16.6 12.2 11.4 3.9 6.2 Peer average 219,749 41.2 21.0 17.6 21.5 14.1 11.2 14.8 12.0 9.8 25.1 28.7 17.7 31.1 33.8 30.5 4.6 4.0 3.0 16.1 16.1 16.3 6.9 11.2 Peer median 129,789 25.0 21.0 17.7 18.4 14.3 11.7 15.5 11.9 9.8 27.2 29.4 17.7 33.6 35.8 32.0 4.6 3.7 3.0 15.6 16.3 16.1 5.1 9.9 Embracer Group (ABGSCe) 21,041 SEK 75 61.2 33.4 32.2 17.3 12.6 11.8 10.6 8.0 7.4 21.5 20.9 22.0 35.6 33.2 35.4 3.8 2.7 2.6 8.0 12.5 12.0 8.3 16.8 vs peer average 49% 59% 83% -20% -10% 5% -29% -33% -25% -14% -27% 24% 15% -2% 16% -18% -32% -14% -50% -22% -26% 21% 50% vs peer median 145% 59% 82% -6% -12% 0% -32% -32% -25% -21% -29% 24% 6% -7% 11% -19% -29% -14% -49% -23% -26% 64% 70% Mid-sized developers & publishers Mcap Share price P/E (x) EV/EBIT (x) EV/EBITDA (x) EBIT-margin (%) EBITDA-margin (%) EV/Sales (x) ROIC (%) CAGR '18-'21e Company (SEKm) Ccy SP 2019e 2020e 2021e 2019e 2020e 2021e 2019e 2020e 2021e 2019e 2020e 2021e 2019e 2020e 2021e 2019e 2020e 2021e 2019e 2020e 2021e Sales EBIT

Konami 53,338 SEK 394.4 18.8 16.3 15.1 10.3 8.5 7.4 8.0 6.6 5.8 18.3 20.4 15.1 23.8 26.0 27.3 1.9 1.7 1.6 10.5 11.3 11.2 3.0 6.9 CD Projekt 67,752 SEK 704.9 225.6 13.3 19.4 226.8 8.9 12.4 187.3 8.5 12.7 27.7 73.6 19.4 33.5 77.2 73.8 62.7 6.5 9.4 83.0 146.0 Paradox Interactive 16,463 SEK 155.9 42.3 33.9 28.3 31.1 24.9 20.5 20.9 16.4 13.5 37.2 37.9 28.3 55.4 57.5 59.4 11.6 9.4 8.0 19.7 18.5 Frontier Developments 6,426 SEK 167.3 40.3 39.5 24.5 32.6 31.2 18.5 19.1 17.2 11.7 19.1 19.4 24.5 32.5 35.2 36.0 6.2 6.1 4.2 16.1 14.1 18.8 13.1 16.6 Focus Home Interactive 1,335 SEK 252.0 11.3 10.9 8.2 6.9 7.1 5.1 6.7 7.0 5.3 12.0 12.1 8.2 12.3 12.2 12.9 0.8 0.9 0.7 11.7 20.8 11 Bit Studios 2,370 SEK 1,036.2 42.4 47.6 13.0 31.7 44.6 8.5 26.4 32.2 7.7 36.8 27.6 13.0 44.1 38.2 64.2 11.7 12.3 4.9 23.9 20.6 Code Masters 5,578 SEK 36.9 25.0 19.8 16.7 29.6 18.9 15.0 18.4 13.7 14.3 18.1 22.4 16.7 29.3 31.0 26.0 5.4 4.2 3.7 16.1 42.0 Digital Bros 1,941 SEK 136.1 31.3 17.8 11.8 27.6 13.0 10.0 8.3 3.6 10.0 11.8 11.8 1.0 1.3 1.1 30.7 n.a. Sumo Group 3,006 SEK 23.2 27.4 25.7 22.9 22.2 19.5 16.3 18.8 16.1 13.5 23.0 22.1 22.9 27.2 26.8 26.6 5.1 4.3 3.6 14.1 14.0 15.1 21.2 31.1 Koei Tecmo 31,825 SEK 251.1 27.4 23.1 20.7 21.8 20.4 14.8 26.5 19.0 15.4 30.7 35.0 20.7 33.3 39.5 43.6 7.1 5.9 5.2 10.6 11.7 12.2 10.6 18.3 Square Enix 56,059 SEK 470.2 27.7 21.1 18.7 16.0 11.7 10.0 12.9 9.9 8.9 11.9 14.2 18.7 14.7 16.7 17.1 1.9 1.7 1.5 10.3 12.1 12.5 7.3 28.2 Capcom 27,809 SEK 260.5 21.6 19.2 17.8 16.4 14.2 12.7 14.2 12.2 10.8 23.7 24.9 17.8 27.5 28.9 30.1 3.9 3.5 3.3 13.8 13.9 13.5 0.2 13.1 Peer average 22,825 45.1 24.0 18.1 39.4 18.6 12.6 30.6 14.4 10.9 21.8 26.6 18.1 28.8 35.4 37.9 9.9 4.8 3.9 12.6 12.8 13.9 20.0 32.9 Peer median 11,444 27.5 20.4 18.3 24.9 16.6 12.5 18.6 13.7 11.7 21.0 22.2 18.3 28.4 31.0 30.1 5.2 4.3 3.7 12.2 13.0 13.0 14.6 20.6 Embracer Group (ABGSCe) 21,041 SEK 75 61.2 33.4 32.2 17.3 12.6 11.8 10.6 8.0 7.4 21.5 20.9 22.0 35.6 33.2 35.4 3.8 2.7 2.6 8.0 12.5 12.0 8.3 16.8 vs peer average 36% 39% 78% -56% -32% -7% -66% -44% -32% -2% -22% 22% 24% -6% -7% -62% -45% -34% -36% -2% -14% -59% -49% vs peer median 122% 63% 76% -30% -23.7% -6% -43% -41% -37% 2% -6% 20% 25% 7% 18% -28% -38% -29% -34% -4% -8% -43% -19% Mobile developers & publishers Mcap Share price P/E (x) EV/EBIT (x) EV/EBITDA (x) EBIT-margin (%) EBITDA-margin (%) EV/Sales (x) ROIC (%) CAGR '18-'21e Company (SEKm) Ccy SP 2019e 2020e 2021e 2019e 2020e 2021e 2019e 2020e 2021e 2019e 2020e 2021e 2019e 2020e 2021e 2019e 2020e 2021e 2019e 2020e 2021e Sales EBIT

Com2us 10,836 SEK 890.3 10.7 10.0 8.8 5.3 4.1 3.0 5.1 4.0 2.9 26.8 28.1 8.8 27.6 28.8 29.9 1.4 1.2 0.9 13.6 13.0 13.0 6.8 5.3 Stillfront 9,680 SEK 367.5 22.3 17.0 14.8 17.2 12.8 10.7 13.3 10.3 8.4 30.2 31.8 14.8 39.1 39.6 40.6 5.2 4.1 3.4 28.0 36.1 Zynga 61,094 SEK 64.6 25.1 25.2 20.8 19.4 17.2 13.1 16.7 15.6 11.9 17.2 18.0 20.8 20.0 19.9 22.0 3.3 3.1 2.6 11.1 9.7 11.0 26.3 30.8 G5 Entertainment 1,151 SEK 128.1 16.1 12.5 9.5 12.4 9.6 6.8 4.6 4.4 3.4 5.2 7.2 9.5 14.1 15.6 17.5 0.6 0.7 0.6 2.4 -2.1 Rovio Entertainment 4,144 SEK 51.3 22.5 16.9 12.3 10.9 8.6 5.2 6.1 6.1 4.4 6.9 9.1 12.3 12.3 12.7 15.1 0.7 0.8 0.7 5.4 10.9 Glu Mobile 8,607 SEK 59.0 23.1 25.4 13.9 20.1 8.5 18.6 10.1 8.9 8.4 13.9 9.5 9.0 13.4 1.7 1.4 22.2 37.1 10.7 29.1 Peer average 15,918 20.0 17.8 13.4 13.1 12.1 7.9 9.2 9.8 6.9 15.8 17.1 13.4 20.4 20.9 23.1 2.3 1.9 1.6 12.3 15.0 20.4 13.3 18.4 Peer median 9,143 22.4 16.9 13.1 12.4 11.2 7.6 6.1 8.2 6.4 13.0 13.5 13.1 17.0 17.8 19.7 1.4 1.4 1.1 12.3 13.0 13.0 8.8 20.0 Embracer Group (ABGSCe) 21,041 SEK 75 61.2 33.4 32.2 17.3 12.6 11.8 10.6 8.0 7.4 21.5 20.9 22.0 35.6 33.2 35.4 3.8 2.7 2.6 8.0 12.5 12.0 8.3 16.8 vs peer average 207% 87% 141% 33% 5% 49% 15% -18% 8% 36% 22% 65% 74% 58% 54% 66% 40% 65% -35% -16% -41% -37% -9% vs peer median 173% 97% 145% 39% 13% 54% 73% -2% 15% 65% 54% 67% 109% 87% 80% 166% 89% 134% -35% -3% -8% -5% -16% *Operational EBIT figures for Embracer Group to ease comparison to IFRS 16 peers

Source: ABG Sundal Collier (only for Embracer Group), FactSet, company data

EV/Sales vs. EBIT margin, ‘19e EV/Sales vs. EBIT margin, ‘20e 14x 14x

11 Bit Studios 12x 12x 11 Bit Studios Paradox Paradox 10x 10x

8x Koei Tecmo 8x Frontier Frontier Konami Koei Tecmo

6x 6x EV/Sales '20eEV/Sales EV/Sales '19e EV/Sales Code Masters Sumo Group Sumo Group 4x 4x Capcom Square Enix Square Enix Capcom Embracer Digital Bros Konami 2x Digital Bros 2x Code Masters Embracer Focus Home Focus Home 0x 0x 0% 5% 10% 15% 20% 25% 30% 35% 40% 45% 0% 5% 10% 15% 20% 25% 30% 35% 40% 45% EBIT margin '19e EBIT margin '20e

Source: ABG Sundal Collier (for Embracer), FactSet, company data Source: ABG Sundal Collier (for Embracer), FactSet, company data

19 January 2020 ABG Sundal Collier 11

Embracer Group

Based on FactSet consensus, Embracer is currently trading at an f12m Operational EV/EBIT of approximately 14.4x, which represents a discount of approximately 23.1% compared to the 3-year historical average of 18.7x. Looking at the f12m Adj. P/E, we find that Embracer is currently trading around 23.2x, which corresponds to a discount of 6.1% compared to the 3-year historical average of 24.7x

F12m EV/ Op. EBIT F12m Adj. P/E 40x 50x 100.0% 90.0% 35x 45x 80.0% 60.0% 40x 60.0% 30x 35x 40.0% 25x 30.0% 30x 20.0% 20x 0.0% 25x 0.0% 15x 20x -20.0% -30.0% 15x 23.2 -40.0% 10x 14.4 10x -60.0% -60.0% 5x 5x -80.0% 0x -90.0% 0x -100.0%

Premium/Discount F12m EV/EBIT Avg. EV/EBIT Premium/Discount F12m P/E Avg. P/E

Source: ABG Sundal Collier, company data Source: ABG Sundal Collier, company data

In reviewing Embracer’s f12m EV/EBIT multiples since they became available on FactSet, we find that Embracer has traded mostly in line with its large and mid-sized Western and developer peers.

F12m EV/EBIT, mid-sized Western peers F12m EV/EBIT, large Western peers 60x 40x

35x 50x 30x 40x 25x

30x 20x

15x 20x 10x 10x 5x

0x 0x

Embracer Paradox Frontier 11 Bit Focus Home Embracer Ubisoft Take-Two Activision Blizzard Electronic Arts

Source: ABG Sundal Collier, FactSet, company data Source: ABG Sundal Collier, FactSet, company data

19 January 2020 ABG Sundal Collier 12

Embracer Group

Income Statement (SEKm) Q2 2018 Q3 2018 Q4 2018 Q1 2019 Q2 2019 Q3 2019 Q4 2019e Q1 2020e Sales 837 1,273 1,381 1,631 1,142 1,260 1,535 1,220 COGS -466 -895 -838 -741 528 635 -766 -530 Gross profit 371 377 542 889 1,670 1,895 769 690 Other operating items -200 -132 -266 -543 -1,142 -1,510 -225 -549 EBITDA 171 245 276 346 528 385 545 141 Depreciation and amortisation -119 -154 -124 -174 -447 -308 -342 -344 EBITA 53 91 152 172 81 76 203 141 EO items 0 0 0 0 0 0 0 0 Impairment and PPA amortisation 0 0 0 0 0 0 0 0 EBIT 53 91 152 172 81 76 203 141 Net financial items -4 -3 -4 -9 2 3 -6 -8 Pretax profit 49 88 148 163 83 80 197 134 Tax -15 -23 -34 -60 -31 -15 -51 -35 Net profit 33 65 114 103 53 65 146 99 Minority interest 0 0 0 0 0 0 0 0 Net profit discontinued 0 0 0 0 0 0 0 0 Net profit to shareholders 33 65 114 103 53 65 146 99 EPS 0.38 0.74 1.32 1.19 0.61 0.23 0.52 0.35 EPS Adj 0.38 0.74 1.32 1.19 0.61 0.23 0.52 0.35 Total extraordinary items after tax 0 0 0 0 0 0 0 0 Tax rate (%) 31.2 25.7 23.1 36.7 36.7 18.9 26.0 26.0 Gross margin (%) 44.4 29.7 39.3 54.5 146.2 150.4 50.1 56.5 EBITDA margin (%) 20.4 19.3 20.0 21.2 46.2 30.5 35.5 11.6 EBITA margin (%) 6.3 7.1 11.0 10.5 7.1 6.1 13.2 11.6 EBIT margin (%) 6.3 7.1 11.0 10.5 7.1 6.1 13.2 11.6 Pretax margin (%) 5.8 6.9 10.8 10.0 7.3 6.3 12.8 10.9 Net margin (%) 4.0 5.1 8.3 6.3 4.6 5.1 9.5 8.1 Growth rates Y/Y Q2 2018 Q3 2018 Q4 2018 Q1 2019 Q2 2019 Q3 2019 Q4 2019e Q1 2020e Sales growth (%) 878.8 1,403.1 440.6 157.6 36.4 -1.0 11.2 -25.2 EBITDA growth (%) 323.8 634.8 145.3 114.4 208.2 56.9 97.3 -59.2 EBIT growth (%) 73.0 278.1 49.1 60.6 54.4 -15.8 33.4 -17.9 Net profit growth (%) 44.1 241.9 55.6 27.2 57.3 -0.6 27.6 -4.1 EPS growth (%) 44.1 241.9 55.6 27.2 57.3 -0.6 27.6 -4.1 Adj earnings numbers Q2 2018 Q3 2018 Q4 2018 Q1 2019 Q2 2019 Q3 2019 Q4 2019e Q1 2020e EBITDA Adj 171 245 276 346 528 385 545 141 EBITDA Adj margin (%) 20.4 19.3 20.0 21.2 46.2 30.5 35.5 11.6 EBITA Adj 53 91 152 172 81 76 203 141 EBITA Adj margin (%) 6.3 7.1 11.0 10.5 7.1 6.1 13.2 11.6 EBIT Adj 53 91 152 172 81 76 203 141 EBIT Adj margin (%) 6.3 7.1 11.0 10.5 7.1 6.1 13.2 11.6 Pretax profit Adj 49 88 148 163 83 80 197 134 Net profit Adj 33 65 114 103 53 65 146 99 Net profit to shareholders Adj 33 65 114 103 53 65 146 99 Net Adj margin (%) 4.0 5.1 8.3 6.3 4.6 5.1 9.5 8.1 Source: ABG Sundal Collier, Company data

19 January 2020 ABG Sundal Collier 13

Embracer Group

Income Statement (SEKm) na na 2014 2015 2016 2017 2018 2019e 2020e 2021e Sales na na 178 213 302 508 5,754 5,157 7,250 7,310 COGS na na -58 -70 -119 -148 -3,261 -2,459 -3,612 -3,419 Gross profit na na 121 143 183 360 2,493 2,698 3,638 3,891 Other operating items na na -25 -38 -51 -87 -901 -861 -1,233 -1,301 EBITDA na na 95 105 132 273 1,593 1,837 2,405 2,590 Depreciation and amortisation na na -27 -38 -37 -84 -1,018 -1,335 -1,529 -1,675 Of which leasing depreciation na na 0 0 0 0 0 0 0 0 EBITA na na 68 67 95 188 575 502 877 915 EO items na na 0 0 0 0 0 0 0 0 Impairment and PPA amortisation na na 0 0 0 0 0 0 0 0 EBIT na na 68 67 95 188 575 502 877 915 Net financial items na na -1 -1 -2 -6 -29 -26 -25 -33 Pretax profit na na 67 66 93 182 545 475 852 882 Tax na na -15 -14 -21 -43 -149 -132 -222 -229 Net profit na na 52 52 72 139 397 344 630 653 Minority interest na na 0 -1 0 0 0 0 0 0 Net profit discontinued na na 0 0 0 0 0 0 0 0 Net profit to shareholders na na 52 51 72 139 397 344 630 653 EPS na na 0.87 0.85 1.00 1.76 4.22 1.22 2.25 2.32 EPS Adj na na 0.87 0.85 1.00 1.76 4.22 1.22 2.25 2.32 Total extraordinary items after tax na na 0 0 0 0 0 0 0 0 Leasing payments na na 0 0 0 0 0 0 0 0 Tax rate (%) na na 22.3 21.6 22.6 23.5 27.2 27.7 26.0 26.0 Gross margin (%) na na 67.7 67.1 60.6 70.9 43.3 52.3 50.2 53.2 EBITDA margin (%) na na 53.5 49.4 43.8 53.7 27.7 35.6 33.2 35.4 EBITA margin (%) na na 38.3 31.3 31.5 37.1 10.0 9.7 12.1 12.5 EBIT margin (%) na na 38.3 31.3 31.5 37.1 10.0 9.7 12.1 12.5 Pretax margin (%) na na 37.7 31.0 30.8 35.9 9.5 9.2 11.8 12.1 Net margin (%) na na 29.3 24.3 23.8 27.4 6.9 6.7 8.7 8.9 Growth rates Y/Y na na 2014 2015 2016 2017 2018 2019e 2020e 2021e Sales growth (%) na na na 19.6 41.8 68.1 1,033.7 -10.4 40.6 0.8 EBITDA growth (%) na na na 10.4 26.0 106.0 484.2 15.3 30.9 7.7 EBIT growth (%) na na na -2.3 42.7 98.1 205.3 -12.7 74.8 4.4 Net profit growth (%) na na na -0.8 39.1 93.4 185.1 -13.4 83.4 3.5 EPS growth (%) na na na -1.8 17.0 75.8 140.4 -71.0 83.4 3.5 Profitability na na 2014 2015 2016 2017 2018 2019e 2020e 2021e ROE (%) na na na 66.2 32.1 18.9 10.6 5.2 9.0 8.5 ROE Adj (%) na na na 66.2 32.1 18.9 10.6 5.2 9.0 8.5 ROCE (%) na na na 86.0 39.8 23.4 13.6 6.7 11.0 10.6 ROCE Adj(%) na na na 86.0 39.8 23.4 13.6 6.7 11.0 10.6 ROIC (%) na na na 96.0 51.9 35.4 17.5 8.0 12.5 12.0 ROIC Adj (%) na na na 96.0 51.9 35.4 17.5 8.0 12.5 12.0 Adj earnings numbers na na 2014 2015 2016 2017 2018 2019e 2020e 2021e EBITDA Adj na na 95 105 132 273 1,593 1,837 2,405 2,590 EBITDA Adj margin (%) na na 53.5 49.4 43.8 53.7 27.7 35.6 33.2 35.4 EBITDA lease Adj na na 95 105 132 273 1,593 1,837 2,405 2,590 EBITDA lease Adj margin (%) na na 53.5 49.4 43.8 53.7 27.7 35.6 33.2 35.4 EBITA Adj na na 68 67 95 188 575 502 877 915 EBITA Adj margin (%) na na 38.3 31.3 31.5 37.1 10.0 9.7 12.1 12.5 EBIT Adj na na 68 67 95 188 575 502 877 915 EBIT Adj margin (%) na na 38.3 31.3 31.5 37.1 10.0 9.7 12.1 12.5 Pretax profit Adj na na 67 66 93 182 545 475 852 882 Net profit Adj na na 52 52 72 139 397 344 630 653 Net profit to shareholders Adj na na 52 51 72 139 397 344 630 653 Net Adj margin (%) na na 29.3 24.3 23.8 27.4 6.9 6.7 8.7 8.9 Source: ABG Sundal Collier, Company data

19 January 2020 ABG Sundal Collier 14

Embracer Group

Cash Flow Statement (SEKm) na na 2014 2015 2016 2017 2018 2019e 2020e 2021e EBITDA na na 95 105 132 273 1,593 1,837 2,405 2,590 Net financial items na na -1 -1 -2 -6 -29 -26 -25 -33 Paid tax na na -15 -14 -21 -43 -149 -132 -222 -229 Non-cash items na na 0 0 0 0 0 0 0 0 Cash flow before change in WC na na 79 90 109 224 1,415 1,679 2,159 2,328 Change in WC na na na 7 -26 -30 -294 -0 -89 -3 Operating cash flow na na 112 97 84 194 1,121 1,679 2,070 2,324 CAPEX tangible fixed assets na na 0 0 -3 -5 -140 -52 -73 -73 CAPEX intangible fixed assets na na -36 -71 -157 -305 -1,335 -1,392 -1,958 -1,974 Acquisitions and disposals na na 0 0 0 -91 -1,787 0 0 0 Free cash flow na na 76 27 -76 -207 -2,142 235 40 278 Dividend paid na na 0 0 0 0 0 0 0 0 Share issues and buybacks na na 0 0 0 598 1,448 0 0 0 Lease liability amortisation na na 0 0 0 0 0 0 0 0 Other non cash items na na -56 -22 189 -10 2,381 -600 0 0 Decrease in net IB debt na na na 5 113 381 1,688 -365 40 278 Balance Sheet (SEKm) na na 2014 2015 2016 2017 2018 2019e 2020e 2021e Goodwill na na 0 0 0 0 0 0 0 0 Other intangible assets na na 75 104 229 571 3,707 4,364 4,793 5,091 Tangible fixed assets na na 1 2 4 8 156 207 280 353 Right-of-use asset na na 0 0 0 0 0 0 0 0 Total other fixed assets na na 3 0 0 3 196 196 196 196 Fixed assets na na 78 106 232 582 4,059 4,767 5,269 5,640 Inventories na na 8 13 18 30 323 309 399 402 Receivables na na 26 31 47 90 1,297 1,160 1,631 1,645 Other current assets na na 0 0 0 0 0 0 0 0 Cash and liquid assets na na 18 26 167 627 2,929 2,564 2,604 2,882 Total assets na na 131 175 465 1,329 8,608 8,801 9,903 10,569 Shareholders equity na na 63 92 357 1,114 6,379 6,723 7,353 8,006 Minority na na 0 0 0 0 0 0 0 0 Total equity na na 63 92 357 1,114 6,379 6,723 7,353 8,006 Long-term debt na na 0 0 29 110 918 918 918 918 Pension debt na na 0 0 0 0 0 0 0 0 Convertible debt na na 0 0 0 0 0 0 0 0 Leasing liability na na 0 0 0 0 0 0 0 0 Total other long-term liabilities na na 0 0 0 0 0 0 0 0 Short-term debt na na 0 0 0 0 0 0 0 0 Accounts payable na na 68 84 80 105 1,311 1,160 1,631 1,645 Other current liabilities na na 0 0 0 0 0 0 0 0 Total liabilities and equity na na 131 175 465 1,329 8,608 8,801 9,903 10,569 Net IB debt na na -21 -26 -139 -520 -2,207 -1,842 -1,882 -2,160 Net IB debt excl. pension debt na na -21 -26 -139 -520 -2,207 -1,842 -1,882 -2,160 Net IB debt excl. leasing na na -21 -26 -139 -520 -2,207 -1,842 -1,882 -2,160 Capital invested na na 43 66 218 594 4,172 4,880 5,471 5,846 Working capital na na -33 -40 -15 15 309 309 399 402 EV breakdown na na 2014 2015 2016 2017 2018 2019e 2020e 2021e Market cap. diluted (m) na na na na 797 2,093 4,525 21,041 21,041 21,041 Net IB debt Adj na na -18 -26 -139 -517 -2,011 -1,646 -1,686 -1,963 Market value of minority na na 0 0 0 0 0 0 0 0 Reversal of shares and participations na na 0 0 0 0 0 0 0 0 Reversal of conv. debt assumed equity na na 0 0 0 0 0 0 0 0 EV na na na na 658 1,576 2,514 19,395 19,355 19,078 Capital efficiency na na 2014 2015 2016 2017 2018 2019e 2020e 2021e Total assets turnover (%) na na na 139.0 94.3 56.6 115.8 59.2 77.5 71.4 Working capital/sales (%) na na na -17.2 -9.1 0.1 2.8 6.0 4.9 5.5 Financial risk and debt service na na 2014 2015 2016 2017 2018 2019e 2020e 2021e Net debt/equity na na -0.33 -0.28 -0.39 -0.47 -0.35 -0.27 -0.26 -0.27 Net debt/market cap na na na na -0.23 -0.37 -0.43 -0.09 -0.09 -0.10 Equity ratio (%) na na 48.2 52.3 76.7 83.8 74.1 76.4 74.3 75.8 Net IB debt adj./equity na na -0.28 -0.28 -0.39 -0.46 -0.32 -0.24 -0.23 -0.25 Current ratio na na 0.77 0.83 2.92 7.11 3.47 3.48 2.84 3.00 EBITDA/net interest na na 98.25 177.17 62.47 44.05 54.55 69.77 97.77 78.37 Net IB debt/EBITDA na na -0.22 -0.24 -1.05 -1.91 -1.39 -1.00 -0.78 -0.83 Net IB debt/EBITDA lease Adj na na -0.22 -0.24 -1.05 -1.91 -1.39 -1.00 -0.78 -0.83 Interest cover na na 52.96 106.56 44.82 30.36 17.73 19.05 35.63 27.68 Source: ABG Sundal Collier, Company data

19 January 2020 ABG Sundal Collier 15

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Valuation and Ratios (SEKm) na na 2014 2015 2016 2017 2018 2019e 2020e 2021e Shares outstanding adj. na na 60 60 61 74 94 281 281 281 Fully diluted shares Adj na na 60 60 72 79 94 281 281 281 EPS na na 0.87 0.85 1.00 1.76 4.22 1.22 2.25 2.32 Dividend per share Adj na na 0 0 0 0 0 0 0 0 EPS Adj na na 0.87 0.85 1.00 1.76 4.22 1.22 2.25 2.32 BVPS na na 1.05 1.53 5.83 15.07 67.86 23.95 26.20 28.52 BVPS Adj na na -0.19 -0.21 2.09 7.34 28.43 8.40 9.12 10.38 Net IB debt / share na na -0.3 -0.4 -2.3 -7.0 -23.5 -6.6 -6.7 -7.7 Share price na na na na 11.07 26.42 48.13 74.96 74.96 74.96 Market cap. (m) na na na na 676 1,953 4,525 21,041 21,041 21,041 Valuation na na 2014 2015 2016 2017 2018 2019e 2020e 2021e P/E na na na na 11.1 15.0 11.4 61.2 33.4 32.2 EV/sales na na na na 2.18 3.11 0.44 3.76 2.67 2.61 EV/EBITDA na na na na 5.0 5.8 1.6 10.6 8.0 7.4 EV/EBITA na na na na 6.9 8.4 4.4 38.7 22.1 20.9 EV/EBIT na na na na 6.9 8.4 4.4 38.7 22.1 20.9 Dividend yield (%) na na na na 0 0 0 0 0 0 FCF yield (%) na na na na -9.5 -9.9 -47.3 1.1 0.2 1.3 Lease adj. FCF yield (%) na na na na -9.5 -9.9 -47.3 1.1 0.2 1.3 P/BVPS na na na na 1.90 1.75 0.71 3.13 2.86 2.63 P/BVPS Adj na na na na 5.29 3.60 1.69 8.92 8.22 7.22 P/E Adj na na na na 11.1 15.0 11.4 61.2 33.4 32.2 EV/EBITDA Adj na na na na 5.0 5.8 1.6 10.6 8.0 7.4 EV/EBITA Adj na na na na 6.9 8.4 4.4 38.7 22.1 20.9 EV/EBIT Adj na na na na 6.9 8.4 4.4 38.7 22.1 20.9 EV/cap. employed na na na na 1.7 1.3 0.3 2.5 2.3 2.1 Investment ratios na na 2014 2015 2016 2017 2018 2019e 2020e 2021e Capex/sales na na 20.2 33.1 52.9 61.1 25.6 28.0 28.0 28.0 Capex/depreciation na na 132.6 183.2 427.8 367.6 144.9 108.1 132.8 122.2 Capex tangibles/tangible fixed assets na na 0 0 72.4 60.5 90.2 24.9 25.9 20.7 Capex intangibles/definite intangibles na na 48.1 67.5 68.7 53.5 36.0 31.9 40.8 38.8 Depreciation on intangibles/definite intangibles na na 36.3 36.8 16.3 14.8 27.5 30.6 31.9 32.9 Depreciation on tangibles/tangibles na na 0 0 0 0 0 0 0 0 Source: ABG Sundal Collier, Company data

19 January 2020 ABG Sundal Collier 16

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Analyst certification I/We, Jesper Birch-Jensen, Stefan Knutsson, the author(s) of this report, certify that not withstanding the existence of any such potential conflicts of interests referred to below, the views expressed in this report accurately reflect my/our personal view about the companies and securities covered in this report.

Analyst valuation methods ABG Sundal Collier analysts may publish valuation ranges for stocks covered under Company Sponsored Research. These valuation ranges rely on various valuation methods. One of the most frequently used methods is the valuation of a company by calculation of that company's discounted cash flow (DCF). Another valuation method is the analysis of a company's return on capital employed relative to its cost of capital. Finally, the analysts may analyse various valuation multiples (e.g. the P/E multiples and the EV/EBITDA multiples) relative to global industry peers. In special cases, particularly for property companies and investment companies, the ratio of price to net asset value is considered. Valuation ranges may be changed when earnings and cash flow forecasts are changed. They may also be changed when the underlying value of a company's assets changes (in the cases of investment companies, property companies or insurance companies) or when factors impacting the required rate of return change.

Important Company Specific Disclosure ssss The following disclosures relate to the relationship between ABG Sundal Collier and its affiliates and the companies covered by ABG Sundal Collier referred to in this research report.

Unless disclosed in this section, ABG Sundal Collier has no required regulatory disclosures to make in relation to an ownersh ip position for the analyst(s) and members of the analyst's household, ownership by ABG Sundal Collier, ownership in ABG Sundal Collier by the company(ies) to whom the report(s) refer(s) to, market making, managed or co-managed public offerings, compensation for provision of certain services, directorship of the analyst, or a member of the analyst's household, or in relation to any contractual obligations to the issuance of this research report.

ABG Sundal Collier has undertaken a contractual obligation to issue this report and receives predetermined compensation from the company

covered in this report. w mo

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ABG Sundal Collier is not aware of any other actual, material conflicts of interest of the analyst or ABG Sundal Collier of which the analyst

knows or has reason to know at the time of the publication of this report.

Production of report: 19/01/2020 20:03 CET. All prices are as of market close on 16 January, 2020 unless otherwise noted.

Disclaimer This document has been prepared by ABG Sundal Collier which is the marketing name referring to all or any of ABG Sundal Collier ASA, ABG Sundal Collier AB or ABG Sundal Collier Partners LLP and any of their affiliated or associated companies and their directors, officers, representatives and employees.

This research product is commissioned and paid for by the company covered in this report. As such, this report is deemed to c onstitute an acceptable minor non-monetary benefit (i.e. not investment research) as defined in MiFID II.

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This research report does not, and does not attempt to contain everything material that there is to be said about Embracer Group.

The compensation of our research analysts is determined exclusively by research management and senior management, but not including investment banking management. Compensation is not based on specific investment banking revenues, however, it is determined from the profitability of the ABG Sundal Collier Group, which includes earnings from investment banking operations and other business. Investors should assume that ABG Sundal Collier is seeking or will seek investment banking or other business relationships with the companies in this report. The research analyst(s) responsible for the preparation of this report may interact with trading desk and sales personnel and other departments for the purpose of gathering, synthesizing and interpreting market information. From time to time, ABG Sundal Collier and its affiliates and any shareholders, directors, officers or employees thereof may (I) have a position in, or otherwise be interested in, any securities directly or indirectly connected to the subject of this report, or (II) perform investment banking or other services for, or solicit investment banking or other services from, a company mentioned in this report. ABG Sundal Collier relies on information barriers to control the flow of information contained in one or more areas of ABG Sundal Collier, into other areas, units, groups or affiliates of ABG Sundal Collier.

Norway: ABG Sundal Collier ASA is regulated by the Financial Supervisory Authority of Norway (Finanstilsynet); Sweden: ABG Sundal Collier AB is regulated by the Swedish Financial Supervisory Authority (Finansinspektionen); UK: This report is a communication made, or approved for communication in the UK, by ABG Sundal Collier Partners LLP, authorised and regulated by the Financial Conduct Authority in the conduct of its business. US: This report is being distributed in the United States in accordance with FINRA Rule 1050(f)(3)(B) by ABG Sundal Collier Inc., a FINRA member which accepts responsibility for its content. Research analysts are not registered/qualified as research analysts with FINRA or the NYSE, and are not associated persons of ABG Sundal Collier Inc. and therefore not subject to FINRA Rule 2241, the research analyst conflict rules. Research reports distributed in the U.S are intended solely for “major institutional investors”, as defined under Rule 15a-6 of the Securities Exchange Act of 1934. Each U.S major institutional investor that receives a copy of this research report by its acceptance represents that it agrees it will not distribute this research report to any other person. Any U.S. major institutional investor receiving this report who wishes to effect 19 January 2020 ABG Sundal Collier 17

EmbracerEmbracer Group Group

transactions in any securities referred to herein should contact ABG Sundal Collier Inc., not its affiliates. Further information on the securities referred to herein may be obtained from ABG Sundal Collier Inc., on request.

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19 January 2020 ABG Sundal Collier 18

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ABGSC Research Department

Joint Global Head of Research John Olaisen +47 22 01 61 87 Christer Linde +46 8 566 286 90

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19 January 2020 ABG Sundal Collier 19