Keywords Studios Plc W Keywords Studios Plc O R D

Home , Keywords Studios

K e y Keywords Studios plc w Keywords Studios plc o r d

s Annual Report and Accounts

S t u d i o s

Keywords International Ltd. p l c

Whelan House A n

South County Business Park n u a l

Dublin 18 R e p o

Ireland r t

a n

T: +353 190 22 730 d

A c

F: +353 190 22 774 c o u n t s

2 0 1 3

www. keywordsintl.com 2013 Contacts

Dublin Tokyo Rome Keywords International Ltd. Keywords International Co., Ltd. Keywords Italia Srl “We are well placed to Whelan House 2F Toshin Building Via Tiberio Imperatore 15 South County Business Park 4-33-10 Yoyogi, Shibuya- ku, 00145 Rome Dublin 18 Tokyo 151-0053 Italia take advantage of the Ireland T: +353 190 22 730 T: +81 3 4588 6760 T: +39 06 44 20 25 21 industry’s expected F: +353 190 22 774 F: +81 3 3375 1518 F: +39 06 44 11 92 17 Seattle Montreal Singapore growth and structural Keywords International Inc. Keywords International Corporation Inc. Keywords International Plaza Center 410 St-Nicolas, Suite 600 1557 Keppel Road #03-28 10900 NE 8th Street, Suite 1000 Montréal, QC Singapore 089066 change in 2 014 & 2 015” Bellevue, Seattle, WA 98004 H2Y 2P5 Canada Andrew Day Chief Executive T: +1 425 633 3226 T: +1 514 789 04 04 F: +1 425 633 3228 F: +1 514 843 43 52

Contents

Keywords at a glance 2 Directors’ remuneration Company statement policy report 24 of financial position 32 Chairman’s statement 4 Independent Auditor’s report 26 Company statement of Strategic report 6 changes in equity 33 Consolidated statement The market 8 of comprehensive income 28 Company statement of cash flows 34 Case study: Game localisation 8 Consolidated statement Notes forming part of the Chief Executive’s review 12 of financial position 29 Consolidated financial statements 35 Financial and operating review 16 Consolidated statement Company information 55 of changes in equity 30 Board of Directors 18 Contacts 56 Consolidated statement Directors’ report 19 of cash flows 31 Directors’ remuneration report 22 Designed and produced by fourth qua rter OVERVIEW StrateGiC rePort GovernanCe FinanCial StatementS 1 s n g r , 4 s n

1 e i

e 0 . e p l e t o s 2

i h t i s s r s g a h e n s m o o h i i h t p e e c a e k l l e i

i o c n t R n - f

l u

l e b a n , m R l t a u o e g

d n u

, D a h n e n n p

t u n n A c l p g o o – u w

i a u a w c y l

e m l l b

t s o

t ,

o k y e a

o s a

c e l o a 0 8

i o n c b

s N d 5

a i 4

u 9 T 5 a l t m , o

o 1

s S l n

t 9 1 a s s a n

d g m g o n r c 1 s

i s i o o

n l t n w o l o m e e i y l d n a r e b a m

i a s a h K d i

n r c h t u n d g n r t

d a r o o

l e

t o D f p o e i L t e

c e t s t

t n t r ,

a h . n a n m e i a r l e i r n r e s o

i c l i o

g n i n p l e s . t s i i

c v t m e t r d

n b e n n

s l i r t a t s r a e m a v o e n

u e r r n t n i e i o i p o o

s t s a

s e i r S o

r m p m o i

e a s E l

, G p t o a r a

s p l s m

e .

e p c g t g e a i a d y y o

s v d d r s t i u r n e p h b b e e 2 i u t

s v r o o c d o c t t s a S 1 d

i o d u

o w n n r u e v m c h e r

d d d d y

r t e t t o p u d i i l

s e 5 n n n n l e s n t t n i I K s i w a a M a I b c I a 2 l n o i t m a o m r c . o l f t n i

r n i e h s t r d u f r

r o o f

e w t i y s b e e k w .

e w h t

t w i s i w V At a glance

Keywords is an international technical services provider to the global video games industry, with facilities in Dublin, Tokyo, Rome, Montreal, Seattle, London, Singapore and New Delhi. It has built a strong reputation across its service oﬀerings, which include:

•Localisation •Localisation Testing •Audio •Functional Testing translation and cultural testing that the translated original voice recording, testing for defects and adaption including age and adapted content fits voice over recordings, pre compliance with console rating support across the games context and post production as specifications different platforms well as actor selection and management

DUBlin lonDon Seattle montreal rome toKYo

neW DelHi

SinGaPore

Montreal Dublin (HQ) Rome Singapore • Localisation QA, • Established in 1998 • Amalgamated 20 11 • Started April 2014 Functional QA, • Localisation, Localisation • Localisation & Audio • Localisation, Audio, Localisation QA, Audio Mgmt in Testing • Audio 30+ languages • Established in 2010 and expanded in 2014 through Babel acquisition

Seattle London (Liquid Violet) New Delhi (Babel Media) Tokyo • Established 2012 • Acquired in Jan 2014 • Acquired Feb 2014 • Established in 2010 • Serviced oﬃces for 8, • Audio • Functional QA • Localisation QA, scope to expand to 100 Localisation & Audio • Onsite Localisation QA Localisation

2 Keywords Studios plc – Annual Report 2014 O V E R V I E W

40Providing integrated 12games platforms to a blue 15clients serviced of the 25 9studios providing technical localisation, testing and audio chip client base in over most prominent games services to the global games services across 40 languages 15 countries companies community

The Group provides integrated localisation, testing and audio services across 40 languages and 12 games platforms to a blue chip client base in over 15 countries from its 9 studios on 3 continents. S t r a t e G i C

r e P

As Keywords provides services to the global video games market, o r across all platforms without the risks of game creation, the Company t is ideally placed to take advantage of the key growth drivers for the industry:

•Geographic expansion – •Growth in social media – •Dynamic content trend – •Increased outsourcing – an expansion of in both digital and boxed the trend towards richer the move, by major geographic markets and, games across social and more dynamic publishers, to outsource therefore, the languages media, smartphone content and high quality their technical services

that games content is platforms such as iOS as the complexity and G

standards which require o

localised for and and Android, and the cost of undertaking v high calibre localisation e r

translated into; traditional console and and testing; and these in-house becomes n a

handheld platforms of prohibitive. n C

PlayStation 4, Xbox One, e PlayStation Vita and 3DS, generating more localisation and testing across multiple platforms;

Divisional revenue Keywords clients F i n

split 2013 a n C i a l

S t a t e m e n t S

Localisation Testing 58% Localisation 32% Audio 8% Functional Testing 2%

Keywords Studios plc – Annual Report 2014 3 Chairman’s statement

In this, my ﬁrst, statement as Chairman in the Company’s maiden full year results as a public company following its admission to AIM in July 2013, I would like to set the scene for investors’ own review of the Strategic Report and the other components of these Accounts by outlining my initial view of the Company.

overview which was characterised by an Keywords has a highly motivated and unexpected scaling back in the number skilled team of executives delivering a of next generation launch territories and high calibre service to its international delays to some earlier generation games client base within a fragmented service releases due to the industry’s focus on provider market that is ripe for two major console releases at the very consolidation. The trend for games end of the year. producer s/developers to outsource localisation activities (translation, Following the year end, Keywords localisation testing and functional acquired in January 2014 Liquid Violet testing) and related functions (such as Ltd, a London-based video games voice audio services) continues to gather pace, production services company and in oﬀering good opportunities for organic February Babel Media Ltd, a leading growth. We, therefore, believe that our provider of outsourced video games strategy of harnessing this organic services with operations in Canada growth opportunity, complemented by and India. In March 2014 we started acquisitions to extend the Group’s client operations in Singapore underpinned base, geographical presence and service by demand from Electronic Arts as they lines, will underpin the Group’s chose to outsource translation, audio signiﬁcant growth in the medium to and testing services for South East Asian long term at stable margins. languages to Keywords and we continue to review a number of acquisition We have made considerable progress in opportunities. Adding these businesses line with that strategy, both organically to the Group substantially extends its and through acquisition. In the year capabilities, customer relationships and ended 31 December 2013, we grew geographic reach and we look forward revenue by 14.3% to €16.4m despite a to taking advantage of the synergies transitional period in the games industry that they bring to Keywords.

Keywords timeline 19 98 2004 2005 2009 2010 Keywords founded: Localisation Testing: Video game focus: Key appointment : Oﬃce expansion: by Teresa Luppino Company develops Keywords adopts Andrew Day Moved to new, (ex Italian language localisation testing strategy of focusing appointed CEO expanded premises specialist working at process for video on video game market, New business wins: in Dublin Microsoft) and Giorgio games with a key earning a reputation Gained new strategic Guastalla client, covering for delivering a quality, customers International openings: both functional and tailored service Keywords Montreal linguistic aspects is opened to service simultaneously North America Tokyo facility opened

4 Keywords Studios plc – Annual Report 2014 O V E R V I E W

People and culture Shareholders and dividend looking ahead Keywords has a distinct and strong I would also like to thank shareholders 2014 is expected to be a year of culture which engenders a ‘can do’ for their continued support as we signiﬁcant activity for the games attitude and is founded on the value pursue a strategy which we believe will industry driven by games launches to placed on our people; we trust them and continue to enhance shareholder value support both the fast growing new work hard to empower them to perform and we look forward to sharing an open generation consoles and the existing S t

the best service for each project and and prosperous partnership with our 250m previous generation console r a each client; we have an inclusive style new investors following our IPO. base, in addition to substantial growth t e G

of management, with a flat structure in smartphone gaming. i C and transparent project management In line with its progressive dividend policy, r e P and performance measures; we subject to the retention of funds needed With a leading market and financial o r measure ourselves and our colleagues to fund future growth of the Group’s position, Keywords is well placed to t on the value they contribute to the business and its strategic aims, the Board take advantage of this industry growth organisation. This culture underpins is pleased to recommend a final dividend and we expect it to make strong Keywords’ success by providing the of 0.67p per share which, following the progress, both organically and through flexibility to respond quickly and maiden interim dividend payment of acquisition, in our first full financial effectively to client requirements. 0.33p per share on 28 October 2013, year as a listed company. So I would like to pay tribute to all will make the total dividend for the year of our team – for their support, ending 31 December 2013 1.00p per hard work and commitment. share. Subject to shareholder approval at the Annual General meeting, the final

dividend will be paid on 25 July 2014 G o

Ross K Graham v

to all shareholders on the register at e r

4 July 2014. Chairman n a n C In future years, the Board expects that 7 April 2014 e the interim dividend will be around one third of the total dividend for the year. F i n a n C i 2011 201 2 201 3 2014 a l

Italian integration: US integration: AIM listing: Acquisitions: S t a

Keywords Italia SRL, Keywords Seattle Keywords Studios plc Liquid Violet and Babel Media acquired t e

Rome was integrated incorporated listed on AIM. Flotation m

Singapore established : e raised £28m issuing new n Singapore Studio established with t shares at 123p each. S Electronic Arts as an anchor client Signiﬁcantly strengthened board

#+(00(-, -"2+$,1

Keywords Studios plc – Annual Report 2014 5 Strategic report

Keywords Studios’ strategy is to grow both organically and by acquisition to extend the Group’s client base, market penetration and service lines, where the Group can use its existing expertise, multi-service platform, scale and global reach to generate synergies in a highly fragmented games services industry. The Board believes that there is a clear opportunity for Keywords to extend its existing relationships with many of the major games companies through:

Geographical growth Expanding its global presence, primarily through office expansion thereby increasing headcount and expanding its global client base. In particular, Asia Pacific accounts for three out of the top four video games markets in the world and is projected to be the fastest growing region during the next five years, increasing to $40 billion in 2016 (20 11 : $24 billion) 1 and Spanish speaking South America is a large growth market for video games.

Outsourcing Capturing new blue chip customers who are looking to outsource all their localisation requirements as it has become costly for publishers and developers to deliver games localisation all around the world, on multiple platforms in-house.

Acquisitions Selective acquisitions which generate synergies or extend its client base, geographical penetration or service lines

Adjacent activities Expanding both downstream, into operational support services such as customer services and payment services and upstream, into original games content development, original language audio and motion capture.

1 Global videogame spendin g

90 80 70 60 50 40 30 T o t a 20 l

s p

e 10 n d ,

$ 0 b

n 2010 2011 2012 2013 2014 2015 2016

Asia Paciﬁc EMEA North America Latin America 1 Source: PwC Global Entertainment & Media Outlook 20 12-20 16.

6 Keywords Studios plc – Annual Report 2014 o

Business model would require substantial investment Console and PC games largely follow v e to replicate in-house. a seasonal pattern with titles being r

Keywords is an outsourced services v i published for the holiday period e company providing technical services to W the video games industry globally to The Directors believe that, through this including Thanksgiving and Christmas. assist developers and publishers to capability, Keywords has established Mobile, social and online games do not develop, sell and operationally support an industry reputation for quality. follow this pattern and are not driven their games regardless of the deployment The Company’s unique selling points, by particular release schedules. platform or the genre of the game. including the use of games-specialised native staff for all languages, the ability As Keywords strengthens its original Currently, the business provides to offer their services flexibly on-site at language game production activities translation, audio, localisation testing clients’ premises or in its specialised and including functional testing and original and functional testing services to the secure global studios, its track record of voice recording (which take place earlier video games market across all games delivery of services to many of the most in the game production cycle than platforms including consoles, PCs, the prominent games companies, together localisation services) and the Group internet, mobile phones and tablets. with its integrated localisation, audio and increases its penetration of the mobile testing capabilities, differentiates and social games market, the very S

These services are delivered through a Keywords from its competitors. marked seasonal revenue curve T R number of strategically located facilities experienced until two years ago will A T E

(“studios”) or through the provision of Overall, Keywords provides its essential continue to be oﬀset by greater activity G I C

managed services on client’s premises. services on a variable cost basis to its around the year. R E

blue chip customer base to support P O

Services provided by the various those developers and publishers Low operational gearing has been R Keywords studios are typically through challenging production and will remain a feature of Keywords T differentiated by language mix, and game operation support needs. business. As the Company undertakes scalability, flexibility, price and proximity It works in a highly flexible and efficient acquisitions it is likely that some of to clients. Localisation is not limited manner and its revenues are derived these businesses will operate less to translation into multiple languages; from the provision of these flexibly than Keywords, in which case developers and publishers need to professional services, which are the Directors will explore opportunities take into account the varied cultural, charged largely on a time and to move their operating models closer technical and legal differences of their materials basis. As such, the Group to those of Keywords. global consumers and the quality of is not exposed to the successes and localisation is now viewed as a critical failures of individual game titles. Keywords is not a capital intensive G

factor in the success of a new launch. business but strives to make its people o v

The quantity and quality of game and processes the most productive and e r

The geographical differences require content is the key driver of demand for efficient. During 2013, the Company n a localisation service providers to diligently the Company’s services and, thanks to invested a total of €0.4m in game testing n C consider the target gamers’ age range, the loyalty of its clients, who have consoles, PCs and mobile devices to e gender and linguistic variables as well typically increased the percentage of support its testing activities, the as the cultural and political context of work awarded to Keywords year on year, Company invested a total of €0.4m in the game. As such, Keywords employs the Company has grown rapidly over the 2013. Cash flow is a strong feature games-specialised translators and past five years with minimal investment of the business, generally matching net native speakers who test in-game in business development. income. In 2013, net income excluding content in more than 40 languages, the one-time costs of the IPO amounted giving it a resource base of market The annual business cycle in the industry to €1.9m, generating operational cash leading scale and which its clients varies depending on the market sector. flow of €2.2m.

Delivering a premium service F i n a n C i a

The Company focuses localisation Services: testing Services: audio Services: l

translation of in game text, non language based multi language voice over, t

on quality and delivering a t a premium service audio scripts, language quality functional (core) quality original language voice e m at a competitive price control services and assurance, and localisation recording and related e n

packaging and marketing testing in over 40 languages services t across the following S range of services: materials using native speaking testers

Keywords Studios plc – Annual Report 2014 7 The Market

The global video games market is predicted to grow signiﬁcantly, with PwC forecasting a CAGR of 6.5 per cent, from $65.5 billion in 2 013 to $82.9 billion in 2 01 71. Spending on games software is predicted to grow by solid double digit percentages during the next ﬁve years 2. In 2 013, the market for each of the games platforms was as follows:

The proliferation of games platforms The key drivers of this growth are: 47% of all game players (video and (beyond console and PCs to online, computer games) are women and that social, mobile and cloud-based gaming), A proliferation of games platforms: 68% of games players are 18 years of and monetisation models (beyond although console and PC packaged age or older, demonstrating that the traditional retail sales to in-game games currently represent the majority market has moved well beyond the purchases and advertising and bolt-on of revenues in the video games market, average gamer being a young male. content models) which has been seen they are fast being overtaken by in the industry has resulted in a mobile social and online gaming. Emerging monetisation models: number of key market growth drivers This proliferation of gaming platforms the industry is shifting from the for Keywords; it is taking video gaming has increased accessibility and traditional retail sales of static boxed into new markets both geographically opened up new: games, to new monetisation models and demographically; it is making which include generating revenues • geographical markets, given the content more dynamic and continuous, from in-game purchases of and digitally absence of the requirement for as games developers seek to keep distributed dynamic content, relatively expensive console systems users engaged for longer; and it is advertising and ongoing upgrades or landline based internet underpinning a trend towards which are downloadable and extend connectivity. The development of outsourcing localisation and testing the lifetime value of the game. With mobile gaming in particular has services, as set out below. new content continually produced opened up new geographical markets. by developers to support these While the U.S.A. remains the largest models, games content now evolves video games market in the world, high considerably after its initial launch rates of growth are being seen in and has become richer / more complex developing countries, such as Nigeria, overall. Games content is, therefore, Kenya, India and Vietnam, which have predicted to grow at a faster rate than little history of console or PC gaming. the overall market, whilst the need for • demographic markets, a recent localisation and testing support has survey of the US entertainment extended well beyond the games’ initial software market by the Entertainment sale and towards a requirement for Software Association reveals that of continuing operational support.

Global games market ($ bn) – 201 3/ 20 17 estimate

2013 $bn 26.0 22.5 7.2 9.9 $ 65.6 bn

2017 $bn 31.2 30.3 7.0 14.4 $82.9 bn

Console games Online games PC games Mobile games

1 PwC Global Entertainment & Media Outlook 2013-20 17. 2 Gartner, Market Trends: Gaming Ecosystem goes mobile with new monetization models, 21 November 2012.

8 Keywords Studios plc – Annual Report 2014 o v e r v i e 17 % 47% 68 % 37 % W of games spend is on wireless of all players of gamers are of consumers are and online – expected to are women 18 years of forecast ed to spend overtake console & PC games age or older online by 2017

Trend towards outsourcing: In addition to the long term market The majority of the Group’s competitors As localisation and testing has become drivers outlined above, the console in the video games localisation industry more complex and resource-intensive, launch cycle is an important factor in offer either: due to the proliferation of devices, the growth rate of software sales into (i) translation; or audiences, distribution channels, the console based gaming market. monetisation models and the increased Mainstream console releases generally (ii) translation and audio; or complexity of content, it has become come in generations, and the Nintendo (iii) testing (localisation and functional) less cost effective for publishers to Wii U was the first release of what the and often with limited geographical have sufficient resources for in-house industry terms the eighth generation S T

reach. As such they do not provide the R

localisation and testing and they are of home consoles. This was followed A complete outsourced integration of T E

turning to trusted external providers. in November 2013 with the launch of G

localisation and testing services that the I Given the increased complexity of the Microsoft Xbox One and the Sony C

Group is able to provide internationally. R

getting their products to market, PlayStation 4. Both consoles are E Babel Media which was acquired by P publishers are focusing their resources selling well but are held back by lack O Keywords in February 2014 is regarded R T on devising successful new business of availability in certain territories. by the Directors as the most models whilst aiming to optimise their On 18 March 2014, Microsoft comparable business in terms of spread return on investment by ensuring announced that Xbox One would of services offered and outright focus content is delivered efficiently and be launched in a further 26 countries on the games industry. Beyond these successfully across a growing number in September 2014. services, the wider market for general of games platforms and geographical video games technical services is even markets, underpinning a continued Despite an international and blue chip more fragmented, with no specialised trend towards outsourcing technical client base, technical services for the provider offering a complete video services such as localisation and testing. games industry remains a highly games technical services solution. fragmented market. The Directors

believe the Group is one of very few G o v

international providers of the full range e r

of localisation services – localisation, n a

audio and testing – with a pure focus n C

on the video games industry. e

Key market drivers F i n a n C i

• Proliferation of games • Emerging monetisation • Live operations support: Localisation needs to take a l

platforms: beyond console models: revenues from Need for localisation and account of cultural, age range, S t a

and PCs to online, social, in-game purchases, digitally testing support extended gender, linguistic, technical, t e

mobile and cloud-based distributed dynamic well beyond the games’ political and legal diﬀerences m e

gaming content, advertising and initial sale of global consumers to n t • Opening new geographical ongoing upgrades which • Trend towards outsourcing: attract and maintain players S markets: high rates of extend the lifetime value increased complexity of and quality of localisation is growth in developing of the game getting content to market; a critical factor markets • Growth rate: games content multiple platforms, greater So it is less cost eﬀective for is to grow at a faster rate than geographies and new publishers to suﬃciently the overall market. Keywords monetisation models; resource in-house is dependent on industry developers focused on localisation and testing growth and not reliant on new business models individual client success. and market strategies

Keywords Studios plc – Annual Report 2014 9 Case study: Game localisation Pro Evolution Soccer

Games developed in source language multiply many times by platform, by language, service and over time...

Original language: starts as single title in original language in this case, Japanese

Pro Evolution Soccer

“World Soccer Winning Eleven”: The Japanese version is a localized is a series of football video games version that features local leagues. developed and published by Konami. In 2007, the franchise began to use the Every year, the game is released around name “Winning Eleven: Pro Evolution late September an d/or early October Soccer” for the American market, which with two diﬀerent titles: World Soccer: was later changed to “Pro Evolution Winning Eleven in Japan, and Pro Soccer” in 2008, dropping the “Winning Evolution Soccer in other countries. Eleven” moniker entirely for that region.

10 Keywords Studios plc – Annual Report 2014 English o v e r v i

French e W

Italian

German

Mex Spanish

Spanish S T R

Portuguese A T E G I C

R E

Arabic P O R T Greek

Korean

Swedish G

Turkish o v e r n a n

Russian C e

Brazilian

Chinese

Dutch F i n a n C i a l

CC CC CC S

Languages Platforms Release cycles t a t e m e

Target languages: Audio recording: Tested: n t translated and in select target in all languages S culturally adapted languages. across all target to target languages. platforms.

Keywords Studios plc – Annual Report 2014 11 Chief Executive’s review

2013 was a year in which we invested in the business in the expectation that the next generation console launches, in combination with games development for the installed console base as well as social and mobile platforms would underpin a substantial increase in activity levels during the ﬁnancial year.

overview the compliance costs of being a public The unexpected scale back in the company. The depreciation expense number of next generation launch increased by €0.07m arising from the territories, combined with delays to Group’s continued modest investment some earlier generation games releases in testing equipment. due to the industry’s focus on the two major console releases at the very end Whilst prices for the Company’s services of the year, held margins back in 2013. have mostly remained unchanged However, we are now well positioned during 2013, our investment in to take advantage of this investment; additional capacity ahead of anticipated 2014 and 2015, are expected to be higher levels of activity in the second half periods of significant activity for the of 2013 as well as in start up costs in games industry as it benefits more fully our Managed Services operation in from the new generation of consoles Seattle led to Gross Profit Margins for in line with the growth in the installed the continuing businesses being held base for these devices. back to 34.6% (2012: 38.5%).

Overall, despite the uncertainty in the One-time costs of € 1.40m (2012: nil) industry, we delivered strong revenue were incurred in the year, relating to growth and have made considerable expenses associated with the Group’s progress in line with our strategy to IPO on 12 July 2013. €0.28m of this was expand the Group’s offering both capitalised against the share premium organically and by acquisition. account, with the balance of € 1.12m included in operating expenses. 2013 financial performance highlights The Group reported adjusted profit The Group’s revenues increased by before tax (before IPO expenses, share 14% to €16.39m (2012: €14.34m) during option charges and foreign currency the period. This increase was primarily movements) for 2013 of €2.45m (2012: driven by our largest service line, €2.85m). Statutory profit before tax for Localisation Testing, which grew by the period was €1.16m (2012: €2.74m). 21% whilst Localisation Activities, grew marginally, by 2%, and Audio and The average tax rate on the profit before Functional Testing, grew by 23.3% as taxation (excluding losses before tax) in outlined in more detail in the the period was 14.8% (2012: 13.1%). The operational review. increase is due to higher tax rates in the USA on the Group’s Seattle operations. Operating expenses includes one-time costs relating to the IPO of €1.12m The basic earnings per share, excluding (2012: €nil) and non-cash costs related the one-time costs of the IPO, were 5.28c to share option expenses of €0.07m (2012: 7.30c). Basic earnings per share (2012: €nil). Operating expenses from continuing operations were 2.14c. excluding these two items increased by a total of €0.54m for the period to operational review €3.25m (2012: €2.71m) arising from our During the year, the Group continued to investment in expansion and increased grow its market share and build on its capacity. In particular, this reflected a strong reputation for quality of service €0.19m increase in operating costs in and delivery, from secure facilities, as Montreal and Seattle as we expanded evidenced by an excellent client our Localisation and Testing capacity, retention record and client wins, which and €0.28m incremental costs in the include Blizzard Entertainment, Disney, Company related to the new Board and King and Supercell.

12 Keywords Studios plc – Annual Report 2014 o

Despite a more turbulent than expected titles) all joined our stable of clients Service line extensions v e r

year for the reasons described above, during the year. Keywords has extended its range of v i e

the company performed well in 2013, services to include offering multilingual W growing organically and delivering a Our Audio activities, which account for customer support, meaning that 14% increase in revenues. 8% of Group revenues, grew by 25% to Keywords is the first line of customer €1.25m (2012: €0.99m). This had been support to its clients’ communities of Localisation Testing operations, which a fledgling operation for Keywords and gamers. This service leverages our accounted for 58% of Group revenue, the acquisition of Liquid Violet, in 700 games and language specialised grew by 21% to €9.47m (2012: €7.82m) January 2014, was a significant step in staff and our recruitment pipelines primarily driven by the launch of the new extending the scale and capability of this for similarly profiled individuals. As generation of consoles from Sony and important activity. Voice recordings in games transition through the production Microsoft as well as our newly created video games lie at the richer end of the and launch phases to ongoing live operation in Seattle. Important new content spectrum and are anticipated to operational support, Keywords teams of client contributors to the division be a strong growth activity, given the native language testers can follow the included Disney Interactive, Blizzard capability of the new generation of game into the market, thereby exploiting

Entertainment and Pretty Simple Games. their deep knowledge of all aspects of S consoles to handle larger content loads, T R

During the year, the Company also the game to support players as they A

combined with the expansion of T established a managed services E broadband capacity and that engage with the content. G I operation for a major client in Seattle C

smartphone devices and networks R with the Company managing localisation E

We have also trialled, in 2013, and are P

are becoming more capable of O

testing operations on site at Microsoft. actively promoting in 2014, a service R

managing richer content. T to objectively advise clients on the During the year we tested the majority of adaptation of user interface and Functional Testing remained a small Sony published launch titles for PS4 and user experience ( UI/ UX) design when contributor to Group revenue, all Microsoft published launch titles for globalising their games; a new service accounting for 2% in 2013 but grew Xbox One. Localisation (translation) created through the collaboration of by 17% to €0.35m from €0.30m on activities, which accounted for 32.5% of our Tokyo and Montreal studios. Group revenue, increased revenues the back of new client wins particularly marginally, by 2%, to €5.32m (2012: for higher value platform compliance We intend to continue to extend our €5.23m). Being less exposed to the testing. The acquisition of Babel Media service lines in line with client and console games market than our testing in February 2014, will signiﬁcantly

market demand both through G operations, the translation business extend Keywords’ functional testing o acquisitions and by leveraging the v e derives the majority of its revenues from capability, in which the Group was Group’s existing internal skill sets to r n mobile, social and online games. It saw formerly underrepresented, thus a

develop additional services to take n

improving the balance of the Group’s C an increased volume in mobile games, to market. e which continues to grow strongly, offset portfolio of services in 2014. by some softening in demand from Geographic expansion certain clients in online and social games Overall, the Group has significantly The Group has expanded geographically .King. com (Candy Crush Saga and other extended its range of services, depth of and now has nine studios in three titles), Kixeye (Vega Conflict, Backyard capability and market penetration whilst continents providing full localisation Monsters and others), Supercell adding new geographies organically and services to local and global clients. (Clash of Clans, Hay Day and other through acquisitions, as outlined below. This broad reach has enabled Keywords

Highlights F i n a n C i a l

S t a t e m e % % p € m n 14Increase in 95Revenues derived 1Total. d0ividend0 per share Net ca15sh includ.ing3 net IPO t Group revenues internationally for the year proceeds of € 10.2m S

Keywords Studios plc – Annual Report 2014 13 Chief Executive’s review continued

to extend its localisation services into Our focus with Liquid Violet, which is As we grow, we have continued to invest more than 40 languages across 12 subject to an earn out arrangement, is in the infrastructure to support the larger platforms to clients in over 15 countries. on integrating some back office Group. We expanded our sales support, functions whilst enabling the business growing from one dedicated business Keywords’ 9 studios are strategically to benefit from broader business development executive in 2013 to five located to provide services to key development opportunities as part of individuals in the sales team today, two gaming clusters in locations such as Keywords, given its larger client base. of which joined through the acquisition Tokyo, Montreal, Seattle and London. Early signs of the ability of Keywords to of Babel Media in February 2014. In addition, our newly acquired studio cross sell Liquid Violet services to its Investment in project management, in New Delhi, India (a subsidiary of existing client base are very encouraging. workflow management and financial Babel Media) represents an interesting reporting continues as these tools are opportunity for our Group to explore We have already made good progress rolled out to support all operations in and further develop this location for with the integration of Babel Media’s a centralised and consistent manner, the provision of low cost offshore operations into Keywords. In the early facilitating strong management reporting outsourced activities including functional weeks since acquisition, initial and control. We also continue to invest in testing services as well as a base for restructuring has targeted indirect talent and our growth helps us to retain central services to be provided to the costs and we, have already achieved and attract talent, as candidates can Group such as accounting and payroll annualised savings of $1.0m. see attractive opportunities for career processing services. South America and progression throughout the Group. China are growing markets for games We expect acquisition activity to be a and, as such, also represent attractive feature of the business for the Principal risks and uncertainties markets for the Group to grow into in foreseeable future as the company takes Keywords is a relatively small Group, time. We are, therefore, exploring advantage of its leadership position in operating in a fragmented, evolving options to establish in these territories the market and continues to consolidate industry populated by a number of very in a prudent manner. carefully selected, earnings accretive large global game publishers as well as businesses. As such, Keywords continues many quite small developers. Keywords acquisitions to review a number of acquisition has the objective of becoming the Keywords acquired Liquid Violet and opportunities which, in line with the leading global supplier of localisation, Babel Media in January and February Group’s strategy would bring something testing, audio and other related services 2014 respectively, as previously new to the Group – geographic reach, to the Industry. This background sets the announced. Both acquisitions new complementary services, deeper scene on the type and number of risks have performed in line with our market penetration in particular market which the company faces in pursuing expectations. sectors and new technologies. this objective.

Highlights

2Acquisitions: 3New studios: 5Peak s0taﬀ 0 2014 Are expected to be periods 1. London of signiﬁcant activity 2. New Delhi 3. Montreal

14 Keywords Studios plc – Annual Report 2014 o v e r v i e W

The Principal risks associated with the instance caused by an IT failure or a Current trading and outlook Group’s strategy can be divided into natural disaster in a key location, as the 2014 is expected to be a year of Group experienced and managed signiﬁcant activity for the games industry 1. General business risks for any during the 2011 Tokyo earthquake and as it supports the fast growing new international company tsunami. The Group’s multiple, full generation hardware and the existing 2. Industry related risks service, delivery hubs provide for a good 250m installed console base, as well as S

level of redundancy and supported by the signiﬁcant growth being seen in T 3. Those speciﬁc to the Keywords R A

Group and its strategy a solid business continuity plan and smartphone gaming. We have made a T E comprehensive insurance, the eﬀects solid start to the year, in line with G I C

The principal risks facing the Company of such disasters can be managed. management’s expectations and our R E P

at the present time, as identified by the recently acquired businesses, Liquid O R management and the Board, refer B) Internal risks Violet and Babel Media, are trading well T exclusively to categories 2 and 3; Security: with the change of ownership having they are set out below: The Industry requires the highest been received well by clients of all of standards of security within a Company the businesses. A) External risks offering services such as Keywords. Exposure to large customers: Security breaches may lead to piracy, We have considerably strengthened The Company’s client base principally disruption of clients’ marketing plans, our market position, geographical comprises global game companies loss of competitive edge and could result spread and service offering through whose revenues are in the billions and in compensation claims. Keywords a combination of market share gains, hundreds of millions of dollars. Our top maintains physical and data security organic investment and recent

policies and procedures which are acquisitions, leaving us well placed G

five clients account for 61% of the o v company’s revenues. These companies regularly audited by its larger clients. to take advantage of industry growth e r have exacting standards and demand a and structural change which we expect n a high quality of service. Any failure in this Success of acquisitions: to lead to an increased use of n C regard or breakdown in the relationships Keywords has embarked on an outsourced services. e at the top level could cause considerable acquisition strategy to reinforce its global damage to the business. The potential growth. Managing such acquisitions We, therefore, look forward to making impact is partially mitigated through the successfully and embedding the good progress as we realise the benefits low operational gearing of the Company. Keywords culture will be a crucial of increased scale, of improving ingredient of success. Failure to do utilisation across our business, of the Confidence of the city and investors: so will have adverse consequences such acquisitions made following the year end Keywords floated on AIM in July 2013 as management distraction, disposal and of our 2013 client wins. with an expressed set of objectives of and reduced profit. Whilst middle growing the business organically and by management is relatively inexperienced acquisition. As a new company to the in this regard, this is mitigated by the

world of public markets, maintaining considerable experience within the top F i n

the conﬁdence of investors in what management and across the Board. a n the company is doing is crucial as is C i a performing in accordance with C) Financial risks l

Andrew Day S

Adequate overseas financial controls: t expectations. Should the company lose Chief Executive a t the confidence of investors, the As a business like Keywords grows e m company’s rating will suffer and this rapidly, global financial controls, and e 7 April 2014 n

regular audits need to be in place to t in turn will aﬀect its ability to raise S money for or place shares to pay ensure smooth, timely and accurate for acquisitions. reporting to satisfy the relevant accounting bodies to local branches as Sudden business interruption: well as the Board. The Group is investing Keywords is a global business a nd needs in its ﬁnancial reporting functions to to minimise business interruptions and facilitate strong reporting and be able to continue servicing customers. management control. This threat is largely external, for

Keywords Studios plc – Annual Report 2014 15 Financial and operating review

2013 was a year for transformation for the Group, where it listed on the AIM market and when the latest generation of games console were released by Sony (PS4) a nd Microsoft (Xbox One). It was unprecedented in the games industry for two major console releases to occur within weeks of each other. This resulted in signiﬁcant turbulence in the games industry.

Gross margin operating profit (“eBitDa”) Gross profit for the year was €5.66m EBITDA is a measure of operating profit (a 34.6% margin) against a gross profit used by the Board, which excludes for 2012 of €5.53m (a 38.5% margin). depreciation, share option expenses and one-time costs related to the IPO. Gross margins are subject to significant For 2013 EBITDA was €2.70m or 16.5% variation based on resource utilisation; of revenue compared with €3.01m for effectively a measure of productive 2012 (21% of revenue). versus idle time. At the peak times of the year, during the summer, when Operating expenses, excluding there is little down time the levels of depreciation, increased by €0.45m gross margins are significantly higher from €2.51m to €2.97m following our compared with the quieter months investment in expansion and increased from December to March. This is capacity. In particular, this reflected a particularly noticed in the Testing part €0.19m increase in operating costs in of the business. Montreal and Seattle as we expanded It is against this industry background our Localisation and Testing capacity, that the Group continued to expand its In 2012, the Group achieved higher and €0.28m incremental costs in the geographic spread, with the opening of than normal gross margins compared Company related to the new Board a new operation in Seattle, USA, and with previous years. In particular the and the compliance costs of being continued its growth. Group undertook some large testing a public company. projects in the first quarter, outside the revenue normal production release cycle for net finance costs Revenue for 2013 at €16.4m was 14.3% the games industry. During 2013 there was slight decrease in higher than for 2012 (€14.34m). This net finance expenses to €0.07m (2012: In 2013, the average utilisation rates was an encouraging growth rate, given €0.08m). Foreign exchange losses on across the Group were lower than 2012, the market conditions which prevailed translation were improved slightly to resulting in the lower Gross margin in 2013. €0.10m (2012: €0.11m) due to the achieved. Some of this was due to the weakening of the Canadian Dollar and significant first quarter margins revenue mix the Japanese Yen against the Euro, offset achieved in 2012, and was anticipated, All lines of business increased in 2013, by gains in Sterling against the Euro. but as mentioned above the industry compared with 2012. Localisation and the Group anticipated increased Testing grew by 21% from €7.82m to adjusted profit before tax levels of activity and brought on €9.47m and contributed 58% of Group Adjusted profit before tax is a measure additional testing capacity ahead of the revenue (2012: 55%). This growth was of profitability of the business used by anticipated launch of next generation driven by the next generation Console the Board to measure the more games consoles in November 2013. releases in 2013. meaningful recurring profit generation The actual increased activity took place of the Group. This measure excludes The Console releases had less of an later in the year than anticipated and one-time expenses, such as the impact on the Translation line of at lower than anticipated levels due expenses of the IPO, and also share business, as a significant portion of to fewer launch territories, which option expenses and foreign currency this business is from social and resulted in the Group generating gains or losses. Adjusted profit before mobile games. Translation revenue lower gross margins. tax for 2013 is €2.45m or 15.0% of grew by 2% to €5.33m (2012:€5.23m). revenue compared with €2.85m for A further impact on gross margins The Translation line of business 2012, or 19.9% of revenue. came from the opening of the new contributed 33% of Group revenue operation in Seattle. In the early (2012: 36%). taxation months of the year, operation The average tax rate on the profit Audio grew by 25% to €1.25m (2012: testing resources were taken on and before taxation (excluding losses before €0.99m) and Functional Testing grew by training and familiarisation resulted tax) in the period was 14.8% (2012: 16% from €0.30m to €0.35m. Together in idle time, estimated at €0.10m, 13.1%). The increase in the average tax these lines of business contributed 10% which reduced the Group’s gross rate reflects profits being earned in of Group revenue (2012: 9%). margin by 0.6%. higher taxed jurisdictions, including in

16 Keywords Studios plc – Annual Report 2014 o the Group’s new operations in Seattle events after the reporting period – Gross proﬁt v e where Washington State and US Gross proﬁt is a key measure of the r

On 15 January 2014 the Company v i Federal Tax rates amount to 42% of Groups’ use of resources and its ability e acquired the entire issued share capital W profit earned. of Liquid Violet Limited, a video games to maintain billable resource utilisation voice production services company, Basic earnings per share registered in the UK. Liquid Violet – Overhead costs by location Basic earnings per share for the year, specialises in the management, on The Board monitors the overheads to excluding the IPO expenses, is 5.28c behalf of major video game publishers, ensure the costs in each location are in compared with 7.30c for 2012. Basic of the pre production and post line with the level of business being earnings per share after significant production stages of localised generated. one-time expenses arising from the voice-over assets for incorporation in IPO was 2.14c. the finished games. Under the terms of – Adjusted EBITDA margin the acquisition, which is immediately The Board uses an adjusted measure Cash flow and debt earnings enhancing, Keywords Studios of EBITDA to monitor the performance The Group continues to operate has paid an initial cash consideration of of the Group. This measure excludes without any financing debt. The Group £0.30m with a further £1.3m payable foreign exchange gains or losses, any S generated operating cash of €2.28m for in cash contingent upon Liquid Violet one-time expenses and the cost of T R the year, compared with €1.90m for employee share option awards. A

achieving certain ﬁnancial targets in T E

2012. Investment in ﬁxed assets the three years to 31 March 2016. G I – Adjusted operating proﬁt margin C amounted to €0.39m (2012: €0.39m) R

The Board also uses an adjusted E reflecting ongoing purchases of games On 17 February 2014 the Company P O testing equipment. acquired the entire issued share capital measure of operating profit to monitor R of Babel Media Limited, a company the performance of the Group. This T The issue of new shares in the IPO registered in the UK, together with its measure similarly excludes foreign generated gross proceeds of €11.63m. subsidiary companies. Babel Media is a exchange gains or losses, any one time Expenses related to the IPO amounted leading provider of outsourced video expenses, and the cost of employee to €1.40m, of which €0.28 was games services with operations in the share option awards. capitalised against Share Premium. UK, Canada and India. Under the terms of the acquisition, which is expected to Non-financial performance Cash and cash equivalents increased be materially earnings enhancing in the is measured by: from €3.89m to €15.27m. first year, the Company has paid the – Resource utilisation rates sellers and settled the financing The Board reviews the utilisation rates G

Foreign exchange obligations of Babel to a total of achieved to ensure the Group is making o v

Keywords does not hedge foreign £5.37m. This has been satisﬁed as to the best use of resources, and to e r currency proﬁt and loss translation £2.22m by the issue of 1,516,944 new n

ensure suﬃcient resources, but not a exposures and the Group’s results shares in Keywords Studios at a price n too much, are being deployed. C therefore have been impacted by of 145.994 pence per share (being the e movements in exchange rates. volume weighted average price over – Business wo n/ lost the preceding 5 trading days) and cash The Board reviews the levels of new Dividend amounts to settle indebtedness to business won and lost, and monitors The Company has a progressive a total of £3.15m. the reasons for both, to ensure that the dividend policy, subject to the retention services being oﬀered to the market are of funds needed to fund future growth On 24 March 2014, the Directors appropriately priced and relevant. of the Group’s business and its incorporated Keywords International strategic aims. PTE. Limited, a company registered in Singapore, as part of the Group’s Following its maiden interim dividend continuing geographic expansion, payment of 0.33p per share on 28 and to allow it to service the games F

October 2013, the Board recommends i industry in South East Asia. David O’Connor n a a ﬁnal dividend of 0.67p per share, Chief Financial Oﬃcer n C

which will make the total dividend for i

Key performance indicators a l

the year ending 31 December 2013 We monitor our ﬁnancial performance 7 April 2014 S t

1.00p per share. Subject to shareholder against a number of different a t e approval at the Annual General benchmarks. These are set in m e meeting, the final dividend will be paid agreement with the Board and used to n t on 25 July 2014 to all shareholders on evaluate progress against our strategy. S the register at 4 July 2014. The final proposed dividend will cost an Financial performance is measured by: estimated €0.34m. – Organic revenue growth Revenue growth is measured on In future years, the Board expects that a Studio by Studio basis (by line of the interim dividend will be around one business and overall) against the Board’s third of the total dividend for the year. strategic goal to grow organically.

Keywords Studios plc – Annual Report 2014 17 Directors’ report: Board of Directors

ross Graham (66) andrew Day (50) David reeves (67) Independent Non-Executive Director Group Chief Executive Officer Independent Non-Executive Director and Chairman Andrew has a background in David has spent over 30 years in Ross Graham has extensive executive technology, manufacturing and management roles within multinational and non-executive experience in the business services through corporate companies. He began his career as an technology sector. He worked from development and general management operational research consultant before 1987 to 2003 at Misys plc, a global roles within both publicly quoted and moving overseas with RJ Reynolds financial software product and private companies. Andrew started Nabisco where he worked from 1979 solutions provider. He joined his career in 1983 at Rothmans to 1991, becoming the Marketing Misys as Finance Director upon its International PLC in production Director in 1986 and Worldwide flotation, latterly becoming corporate management. From 1986 to 1993 Marketing Director in 1989. In 1991, development director, where he he had responsibility for corporate David served as the General Manager played a key role in developing and development activities at Britannia and Vice President of Marketing in implementing its acquisition strategy. Security Group PLC, TIP Europe PLC Tokyo for Mitsubishi Shoji JV Technology Ross also held a non-executive and Brent International PLC before Company. David has considerable directorship at Psion plc from 2005 holding the position of Divisional experience in the computer until 2012 when that company was Managing Director at Brent entertainment industry. David was the successfully sold to Motorola Solutions International PLC for six years. Managing Director for Sony Computer Inc. During his time at Psion, he held Andrew was Chief Executive Officer of Entertainment (PlayStation) from 1995 various roles including the senior interactive retail software developer, until his appointment as its Executive independent directorship and chairman Unipower Solutions and Head of Vice President in 1999 and President of the audit and remuneration Retail and CPG for EMEA at NYSE listed in 2003. Throughout his career, David committees. He is currently a advanced analytics business, FICO has developed knowledge of the non-executive director at Wolfson before joining Keywords as its Chief various working styles of European, Microelectronics Plc and was previously Executive Officer in April 2009. American and Asian corporations. senior independent director and the He was appointed to the Board audit committee chairman. Ross David o’Connor (42) of Keywords Studios Limited on qualified as a chartered accountant Group Finance Director 29 May 2013. with Arthur Young in 1969 and was David is a chartered accountant who made a partner of that firm has extensive experience in senior Giorgio Guastalla (45) in 1981. He is a Fellow of the Institute management roles. He has recently Non-Executive Director of Chartered Accountants of England held two positions as Financial Giorgio Guastalla is co-founder of & Wales. Ross was appointed Director Controller for international companies, Keywords. Prior to establishing and Chairman of Keywords prior to including Deecal International Limited Keywords in Ireland in 1998, Giorgio the flotation in July 2013. (latterly named First Data Commercial held various positions in marketing and Services Limited). In his position as IT at Brent International PLC based in Financial Controller, David has had the US, Spain, UK and France. In 2002 experience in creating corporate Giorgio founded Italicatessen Ltd, a financial systems and procedures, company operating in the food sector. leading internal teams and developing Giorgio was CEO of Keywords until sales strategies. In 2012, David became 2009 before concentrating on his a consultant for Baker Tilly Ryan other business interests and moving Glennon, a firm of accountants and to a non-executive director role business advisors in Ireland, before at Keywords Studios. being employed as Group Financial Controller for Keywords in July 2012.

Ross Graham Andrew Day David O’Connor David Reeves Giorgio Guastalla

18 Keywords Studios plc – Annual Report 2014 overvieW StrateGiC rePort GovernanCe FinanCial StatementS 9 . l n 1 d a t d i s g o r e i e c d e t 4 n o e i d n

c 1 n m a

s i t p b . r a 0 e n

a n

c . a

o e d e 2 c r e s l n e a o

d i d a

r 3 e l p t t R t t

c n e n ﬁ n r

r h

e c n s l u t 1 c

s t u o e a a u , i r s a o t c w n

r a h n a a i f 0 e

n o e r s

p s e m d u u o 8 t T a p m r ﬂ u a

y m h o 2 f o h e o

y t l d e

s r u

o 1 . i l

y t m e e o n n

s c r R s

r r l s w c m

d i s e r t o r c a e

l a s t i l

a s a

r n

r e f e e r l t s m ’ c i n a s e v h r s e s h t b d p g o s A o s b p o c r u t e u t e

r i o

e e e a

r m . a n a a r s B o t n r r r c s i r r n r e m a s

s d p t o e o D u p u c e r n

t e r e

p n t e

p o h e o o c D G r n

e A a o C f e

e c n h e a G p x t

T n , h r s C B a

m c I t t

s O m t v e – p

t t e e e s

. h i

r o

c .

s s o r t v o t e

s s o y m e e f c i r i n i r

8 e d

s t s l t A , o t m n i n d t n 5 g h

h e y o o m o

2 e a p e D u - n

t r p e f

R e u

a o t n T 9 c y

h n

u t e & i s g .

s A

e i c t t o u s

t e n .

t t p u r i a c i d e t

a v o m t 1 l e n t

. e r i a o o t i a 7 h o e i c e o r i t g n h

e c

e G x r € t o r i o f m s d i

t h

1 l b

t h c e

b o

a t n

o e

j t

E f m e l v u

d o e G

a a T

d r r n e r p t s r

i , n e r

i y s a b t k o p l u m s C .

i a

n S o t t b m

e o i e e

g s n

r u i r o f o

e c

r l d n a

3 h

t s

s n . o l e i a R h a e

e s

l o n

n n s t o e n s l 1 d n u e l i a u s h . C m

b p

a a d i b p - a

m f r r i v

i f t a m

i r r 0 a

i o h y o e f r

c s c n i s o r e d s , i t t n n f

o a n e i t h e g v 2 c t u m i

r e r o

n y

l n d y ﬁ n w

d s s t o c e o a c i a e p a l e n e

a o

a n - e

d y n s o r y n t o e t u n t n h i e h b A l o r

e s n

i e g i i

r o w p t o c x e m a p i r t A o u

R a

e s h s h r A K i a ﬁ

n e t

3 e

b r c w &

p p t

i e t t o t

e d e

h n

o e y y o

e e d s f 3 e e o t t o f r l a d d e b i i k . t a t n e r g

o m h n r i

o ﬂ t h a p v e

a n h 0 e n

t D g e e n t n s t T a d p o t i

m o t s e t r

i i i a

o s r k o f i .

f h . s n a h

s o a p a n e C p e i r

c B

D e s t s o 3 , n e e m , o T r m a

e r a

d r

i e

o l r t ,

y r i e a r

m e h m 1 . u u l

p e u i n e r

d R c y t a e n h c m n

g a w h t i o

0 d n

o e t h

i h d

l , e c h o g a t n i i o l a e c

s o n r

2 t s e i C i c y t r e T i a e d r e h f

n n e

t t

t a e p n C w p t t o n . e b u n n

y h e u

i u n a d a l r n a

r t s t i

a r a o s s o r f m s m n

n o h d o r p r u i

v t s e o n i o o e c i e c , t t J i p o e t s y

n o

r n r

n c o C ﬁ v

n c ’ t s h f

s l

N d p i t n n e o d

i o C w A o a y l 8 n t

m t m e t

l p

. c t t o r o a o u O s e e h p

n o

o 7 n

o s s i n s r a c e l e v t i t e n

i u m a s m s i t

r a r i t v a r 2 d d a c m C e a p h

n t i e . o i h o

e b r

e e

i d e t c n e r t a e

t c

n t e

i t r i v

a . , 5 h c r e

e e D v

ﬁ d r e u f a d a d

a s t f

n i r a t s l

a p

s h 1 m

k t r h o a t r n o t

t r d e

s o r n a

u e n t d o s

s m o

e € D a

s i n

i i a e v

r e a

o c

e e n g s

o e f

o h i , h e f r h d

i i r o c e n f r t t

t o g h m n a t y s n h h o d

e s e o

n n e n i o

B t m n

s e t , a u

r d a n o a e i l r i

m g w

i a t a

o y

a t s a o r c w b c a

3 r n f a a y m e

e d . k D n

s h

t p c e d a t n e , p i

e h

t t e h a 1 e

s o h o

e y h r n i o r r

n x a d g a a t n r s t l s s g s 0 p w i K

p a m t i d a

f a t r o u

e r E w a

n a l

f r v e n 2 d f a

, n i i s - o n y p e o - i d

i p e y

r G m m u r o o o t c r

l c k c m o n

y m r

e n e

l O s d r e o

1 t

e d e t i q a r s

r n o e s e t e i w o c a e g s e d s g P e e p v

t i n m s e h

I n y p r e t a a

g o d n b . i

o e e t e r

s n l i s h N y h r d o e A d i e a f e r t

r n - o d t . e t

w d e v d e e h t d e a

t o i m a h R r K , t r h e ﬁ e o r d n p t

r 3 u f

n h a

n j g t p r . r m e r s , l a

a f t . e s D

r o s e r 2 e

s e o i

o a t

t f s r c n

n o a e t o

r e t . o o t o

e t i a i e y d f o

i h

e r m p e h p r e n s g h

r f r n e l 2

a t

w t B n h s h p n . t i

t s t t v i

h u e p a o

g r w t t r r a

u a r D h l 1 e d a

t t o e i n e n e

a t

, e

a d l

e e n d n o n 2 o n d a s d . r

n t

g v a i i m r o r f

e 1 e u s i e l 3 e h a a b u h r ﬀ e

s 2 e p s n o l e 8 o t i t

i n t c t n i e e

d t e e g R 3 o i

t i h 1

g e o

e e a a t

ﬁ s

r h 1 d l

s a v g u t o d m l

a c r r r

f t r a l d c 0 s

o c

i t o r w m d

a n o c

e e

l w c o t d t

e w t a i u i l p a t e

, l e o

n 2 a G o e

o t a

e g o n v m n

h v r a

e A l u a e s

r t g

i e s a i

a s

h l j

r t

y o h x n r y h d a t

a p y r

o e y m

t a u e a u n t t , a s a h n

e r s e

e o t s i e

n a o s

& l t u t p t e r a t h

n f

n e t h n b D

p n

e a o i y e

a i n a t

i c

s v e r i t d t b n y

o c a h

d t n M n g e o t c n r n h

f e r i e B e t

n o o r r a r o i e

u a

e o

o a t

e t r s

n i , a l

e e l a p

. x b n o c r a i d s

9 a o c o h o o i r t

d a d s

h i s d a d s r e

p h

p a

p m h t n 2 o t t ,

G a t

t p r e d e e y s c s n h p

o h e . t g

v C e s

e u e r r t e p

f r t t u c o B e o

m s e n e i o s a n

s u n

s n s

e e m o r

a t m o r w R s

n ﬁ s p o i n

r o h e

r e e i d s i r t a r

t r l

d t o r e a

e c l u d v t a p o t e o

t u

o n r e e t a o d h i e n o e o e e p - e n

i w i n e t h e d c a a f G r o e n t

t l t f t h s

d d t o r o e e v t r a h

e r n

R e s p e e i e r

s e

i s n u s c e a h

m c t m o a s p n a e n n e c t c e n e

. e

r i

i h t

g t d p l d e a i c e d d n n

’ o

p i i m o

a s y s w o t r

g d

d r h n

p o s r r e c i d m o n i r

m r n

r v i i A n o n t

i 7 r e s i i r i r n a t C t d i s

o r e

s n e e a s t o o

l s i t m m r s d a r ’ g f s a g e s A i t e 6 i e a a D e e n e s d t r o r .

o d n s p .

t e & n N i C n

n e o n i a o f p y ﬁ a n o n o h g

h e

l d e e s r e t i

m e

x i o

0 . n a o 3 3 t e B e r t t r h i t s a i h l t

i i o f n u o r h

s a B

b n s c

w t r e

p e d f , t p o n i 3 t e s 1 1

r t

e h t t c

v i c e b a

n e y o s e p m a m e t o t s

l t e i o i h a o u a o 2 e c 0 0 C d e i t

n r l p r o v h

e r e r

e l o i s

r e

r t l ,

l t u i o f t t

a m v w p

t d d m t n r e d h 2 2 r a c i

p S o o

e i d a

e o G d o T K

c u n

t a d n a r t

d o a f

o e

r o x t n ﬀ f e

o t y n n r r

c k r d g s g n d m

w n s y o o r n a f o s o

d s h e n c n

R o e a s c d s

i o o e e f r n e e o e i a a a s ,

r e a

n i e s o

t a n

e t d

e m i n

t t a l ,

e i h l n r

e s

s s a r

b b o c n n

c a p s r

e d

v s l t a o r o d s

d a a o t s s

t t , a i s d i

, t p n a o t e o e d p d d i e m u d c e t e e e r l i o f l b

s p y r r

r n c n c g v i u n

m m r n g a i c r r k a i i p D p l e s e m i h y e l o e c

h u a h o s a

n a e e t o r u s l o o d a e e m t i n d u r a o m

t a m n

t i i f a m v

d o s u t r u s s

R p l e n t t t C i , a c c c i

o t i r e e n o l o r n o n u u r

e a o

o t t a

g r r l r i l o o r a i r w e c c c l o e k

t u t e e p a r r

h c u e B o e t C r D p n A p i B d A R m a e B i u c p i e e t n r

t f o C l i v

s n w i c

r e c p e e i s o o

D D p r l s o

n d s

d v m e d m e

o p v a e e e e e e e e e e r r s e v r r i o n a n A e p s p e r l

i i i o ﬁ a h o

a e o o u o e

a n p 1 1 h b p

r n h h h h h h h h h h h o o n a o h e e e h o n e T C & 3 f a C T D A I P N D T G r T T D T D T w a s c o F ﬁ r h T k u a c 3 T D a T l A T r r T R t F Directors’ report continued

Internal controls and risk management The Board has overall responsibility for the Group’s system of internal controls. The system is designed to manage, rather than eliminate the risk of failure to achieve business objectives, and can only provide reasonable assurance against material misstatement or loss.

The Directors believe that the Group has internal control systems in place appropriate to the size and nature of the business. The key elements are: • Group Board Meetings, at a minimum of eight times per year, with reports from and discussions with senior executives on performance and key risk area in the business • Monthly ﬁnancial reporting, for the Group and for each subsidiary, of actual performance compared to budget and the prior year • Annual budget setting • A deﬁned organisational structure with appropriate delegation of authority.

The Board also receives a report from the external auditor on matters identiﬁed in the course of the statutory audit.

Substantial shareholdings At 30 December 2013, the Company had been notiﬁed, in accordance with the Disclosure and Transparency Rules, of the following interests in its ordinary share capital:

Name Shares % P.E.Q Holdings Limited 11,978,736 29.9 Andrew Day 5,325,028 13.2 Schroder Investment Management 4,827,500 12.1 Artemis Investment Management 3,250,000 8.1 Liontrust Asset Management 2,845,087 7.1 Legal & General Investment Management 2,700,000 6.7 Investco Perpetual 2,281,302 5.7 Hargrave Hale 1,315,939 3.3

Future developments Important events since the ﬁnancial year end are described on page 4 of the Overview and future developments are described in the strategy section of the Strategic report on pages 14 & 15.

People and organisation Keywords is, and always has been, dependent on the quality and commitment of its entire staﬀ to provide and maintain the high levels of services expected by the Group’s clients.

The average headcount reached 371 for 2013 with peak employment of 511 in September 2013. Keywords permanent staﬀ compliment averaged 110 during 2013. This permanent headcount is supplemented with employees on short term contracts as activity changes throughout the year.

The Group continues to give full and fair consideration to applications for employment made by disabled persons, having regard to their respective aptitudes and abilities. The policy includes, where practicable, the continued employment of those who may become disabled during their employment and the provision of training and career development and promotion, where appropriate. The Group has continued its policy of employee involvement by making information available to employees on matters of concern to them. Many employees are stakeholders in the Company through participation in share option schemes and a long-term performance share plan.

Corporate responsibility Keywords seeks to be a socially responsible Group which has a positive impact on the communities it operates in. By the nature of the business, we employ a diverse workforce, with many nationalities. No discrimination is tolerated, and we endeavour to give all employees the opportunity to develop their capabilities. We provide an excellent working environment, the latest technology and appropriate training.

20 Keywords Studios plc – Annual Report 2014 o

Statement of Directors’ responsibilities v e r

The Directors are responsible for preparing the Annual Report & Accounts. v i e W Company law requires the Directors to prepare financial statements for each financial year. Under that law the Directors have prepared the Group and Company financial statements in accordance with International Financial Reporting Standards (“IFRS”) as adopted by the European Union (“EU”).

Under company law the Directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the Company and the Group and of the profit or loss of the Group for that period. The Directors are also required to prepare financial statements in accordance with the rules of the London Stock Exchange for companies trading securities on the Alternative Investment Market.

In preparing these ﬁnancial statements the Directors are required to: • Select suitable accounting policies and then apply them consistently; • Make judgements and estimates that are reasonable and prudent; S t

• State whether IFRS as adopted by the EU have been followed, subject to any material departures disclosed and explained in r a t

the Group and Company ﬁnancial statements respectively; and e G i C

• Prepare the ﬁnancial statements on a going concern basis, unless it is inappropriate to presume that the Company will r e

continue in business. P o r The Directors are responsible for keeping adequate accounting records that are sufficient to show and explain the Company’s t transactions and disclose with reasonable accuracy at any time the financial position of the Company and the Group and to enable them to ensure that the financial statements and the Directors’ remuneration report comply with the Companies Act 2006. They are also responsible for safeguarding the assets of the Company and the Group and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.

The Directors as at the date of this report, whose names and functions are listed in the Board of Directors on page 18, conﬁrm that: • So far as any Director is aware, there is no relevant audit information of which the Company’s auditors are unaware; and

• The Director has taken all the steps that he or she ought to have taken as a director in order to make himself/ herself aware G o

of any relevant audit information and to establish that the Company’s auditors are aware of v e r

that information. n a n

This conﬁrmation is given and should be interpreted in accordance with the provisions of section 418 of the Companies C Act 2006. e

Website publication The Directors are responsible for ensuring the annual report and the financial statements are made available on a website. Financial statements are published on the Group’s websites in accordance with legislation in the United Kingdom governing the preparation and dissemination of financial statements, which may vary from legislation in other jurisdictions. The maintenance and integrity of the Group’s websites is the responsibility of the Directors. The Directors’ responsibility also extends to the ongoing integrity of the financial statements contained therein.

By Order of the Board F i n a n C i a l

David O’Connor S t a

Company Secretary t e m e

7 April 2014 n t S

Keywords Studios plc – Annual Report 2014 21 Directors’ remuneration report

Dear fellow shareholder, It is my pleasure to present the ﬁrst Directors’ remuneration report for the period ended 31 December 2013.

It is my hope that you ﬁnd this a clear and comprehensive report and I look forward to hearing the views of our investors on the information presented here over the coming months. We will carefully monitor emerging practice in this area as well as guidance from investor representative groups.

We operate a simple remuneration structure made up of base salary and beneﬁts, a bonus plan and share option scheme, and a long-term incentive plan, which provide a clear link between pay and our key strategic priorities. the Board of Directors The Board of Directors has a duty to act in the best interests of their shareholders when determining remuneration. It has a responsibility to promote the long-term success of the company while also considering the employees, suppliers, customers and other external factors which may be impacted by remuneration decisions.

Executive Directors will be responsible for developing and implementing remuneration strategy for the Group. Non-Executive Directors will be responsible for constructively reviewing and contributing to this strategy. . the remuneration Committee The members of the Remuneration Committee are Giorgio Guastalla (committee Chairman), David Reeves and Ross Graham. The members are all Non-Executive Directors.

The remit of the Committee is primarily to determine and agree with the Board the framework or broad policy for the remuneration of the Company’s Executive Directors, and if required by the Board, the Senior Management of the Group.

Non-Executive Directors, who are the members of the remuneration committee, should oversee Executive remuneration. The remuneration of the Chairman of the Board is determined by the Remuneration Committee (excluding the Chairman himself). The remuneration of the Non-Executives is a matter for the Executive member of the Board in conjunction with the committee Chairman.

No Director or Senior Manager is involved in any discussion or decision about his own remuneration.

The Remuneration Committee consists of Non-Executive Directors all of whom are independent with no personal ﬁnancial interest, other than as shareholders, in the decisions of the Committee. The remuneration committee secretary will be the company human resource manager. By invitation, other members of the Board may attend the Committee’s meetings. meetings The Remuneration Committee is planned to meet at least three times a year. In the period from the formation of the Group in July 2013 and the reporting date, the remuneration committee met on two occasions.

Directors’ emoluments and pension contributions The Company was incorporated on 29 May 2013. The aggregate remuneration for the Directors of the Company, for service in all capacities during the period since incorporation was €197,965 (2012: €nil). The remunerations of individual Directors were as follows.

2013 2012 Salary Share Salary Share or fees Bonus Pension Options Total or fees Bonus Pension Options Total €€€€€ €€€€€ Andrew Day 62,500 ––9,005 71,505 ––––– David O’Connor 47,500 ––5,260 52,760 ––––– David Reeves 26,407 –––26,407 ––––– Giorgio Guastalla 24,070 –––24,070 ––––– Ross Graham 23,223 –––23,223 ––––– 183,700 ––14,265 197,965 –––––

22 Keywords Studios plc – Annual Report 2014 o

Directors’ interest in shares v e r

The interests of each person who was a director of the Company as at 31 December 2013 (together with interests held by his v i e

or her connected persons) were: W

2013 2012 Number Number Giorgio Guastalla (1) 10,780,862 – Andrew Day 5,296,573 – David Reeves 16,260 – David O’Connor 12,195 – Ross Graham – – 16,105,890 –

(1) Giorgio Guastalla’s indirect shareholding arises out of his 90% holding in P.E.Q. Holdings Limited.

The outstanding awards granted to each director of the Company are as follows. S t r a

Long Term Investment Plan t e

Start of year Awarded Vested Lapsed End of year Vesting G i

number number number number number date C

r e

Andrew Day – 86,593 ––86,593 12 July 2016 P o

David O’Connor – 65,811 ––65,811 12 July 2016 r t 152,404 152,404

Share Option Plan Start of year Awarded Vested Lapsed End of year Vesting number number number number number date Andrew Day – 21,167 ––21,167 12 July 2015 – 21,167 ––21,167 12 July 2016 – 21,168 ––21,168 12 July 2017 63,502 63,502 G o

David O’Connor – 4,490 ––4,490 12 July 2015 v e r

– 4,490 ––4,490 12 July 2016 n a

– 4,490 ––4,490 12 July 2017 n C 13,470 13,470 e 76,972 76,972

Awards of shares will vest on the dates shown. In the event that a director ceases to be an employee of the Group for reasons other than death, retirement, redundancy, injury, ill-health or disability before the vesting date, then the rights to the award will lapse, unless the Remuneration Committee recommend otherwise.

Awards are not subject to further performance conditions once granted. transactions with Directors

During the year, there were no material transactions between the Company and the Directors, other than their emoluments. F i n a n

All transactions between the Group and the Directors are set out in the notes to the ﬁnancial statements, including Note 22 C i a

on related party transactions. l

S t a t e m e n t S

Giorgio Guastalla Chairman of the Remuneration Committee

7 April 2014

Keywords Studios plc – Annual Report 2014 23 Directors’ remuneration policy report

The Committee reserves the right to make any remuneration payments and payments for loss of oﬃce, notwithstanding that they are not in line with the policy set out below, where the terms of the payment were agreed (i) before the policy came into eﬀect or (ii) at a time when the relevant individual was not a director of the Company and, in the opinion of the Committee, the payment was not in consideration for the individual becoming a director of the Company. For these purposes “payments” includes the Committee satisfying awards of variable remuneration and, in relation to an award over shares, the terms of the payment are “agreed” at the time the award is granted.

The Remuneration Committee determines the Company’s policy on Executive Directors’ and if required, senior management remuneration. The objectives of this policy are:

• To reward Executive Directors and senior management in a manner that ensures that they are properly incentivised and motivated to perform in the best interests of shareholders.

• To provide a level of remuneration required to attract and retain high calibre executive directors and senior management.

• To encourage value creation through consistent and transparent alignment with the agreed company strategy.

• The Remuneration Committee takes into account the performance of the individual, comparisons with peer company companies and reports from external independent consultants. The experience of the individual and his/ her level of responsibility are also taken into account.

• Ensuring the total remuneration packages awarded to Executive Directors comprise of both performance-related and non-performance-related remuneration, designed to motivate the individual, align interests with shareholders and comply with corporate governance best practice.

• To ensure that any remuneration awarded is deserved and is aligned to the shareholders’ interests. remuneration components Various remuneration components are combined to ensure an appropriate and balanced remuneration package that reﬂects the business unit, the employee’s position in the company and professional activity as well as market practice.

The remuneration components are comprised of the following elements:

• Fixed remuneration (basic salary)

• Performance-based remuneration (variable salary)

• Pension schemes

• Other beneﬁts

• LTIP (long-term incentive plan)

For Non-Executive Directors there is only one component, a base fee.

Basic salaries and benefits Basic salaries should initially be determined to reflect first the role and the responsibility of the individual within that role while also upholding the principle of paying no more than is necessary.

The basic salaries of Executive Directors and senior management are reviewed annually having regard to personal performance, company performance, signiﬁcant changes in their responsibilities and competitive market practice.

Any increases in basic salary should be disclosed and justiﬁed.

24 Keywords Studios plc – Annual Report 2014 o

Performance bonus v e r

Under current arrangements, which will be reviewed annually by the Remuneration Committee, Executive Directors and senior v i e

management are eligible to participate in a bonus scheme. The bonus amount is a percentage of salary ranging from 20% to W 50%, which is subject to the attainment of speciﬁc targets set for each individual. The portion of bonus earned in any one year depends on the Remuneration Committee’s assessment of each individual’s performance and the overall performance of the company against predetermined turnover and proﬁtability targets for the year.

Performance targets are weighted 80 per cent towards the Company’s ﬁnancial performance and 20 per cent towards personal performance. The Remuneration Committee will review targets and the weighting of performance measures each year.

The bonus may not exceed the agreed percentage of the ﬁxed salary, which level can only be achieved at a weighted target achievement of 100 per cent. Furthermore, the bonus will be cancelled at a weighted target achievement of less than 80 per cent.

Pension entitlements S

The company does not operate any pension scheme or make pension provision for Non-Executive Directors. At the discretion t r of the remuneration committee the Executive Directors and senior management may participate in a pension scheme a t e facilitated by the Company. G i C

r e

Beneﬁts P o

During the period since incorporation, the Company did not contribute to any Employment related beneﬁts. r t

Share options Share option programmes are in place for permanent members of staﬀ, including the Senior Management. The focus of the share option programmes is to retain and create long-term shareholder value. The intention of such grants is to ensure value creation and fulﬁlment of the company’s long-term goals. long term incentive Plan (ltiP) The purpose of the LTIP is to incentivise delivery against total shareholder return. Share awards further the alignment of executives’ and shareholders’ interests. G

LTIP grants can be made annually to a range of senior employees across the company. Awards are made in the form of share o v options which vest subject to performance conditions. Performance conditions are measured over three ﬁnancial years and e r are not retested. Conditions are reviewed annually. n a n C leaver treatment e Fair treatment will be extended to departing executives. Executives who resign or are dismissed for cause are, by default, not eligible for an annual bonus if they have left or are under notice at date of payment, and forfeit all LTIP shares.

At the Committee’s discretion good leavers (normally including such circumstances as retirement, death, disability, and redundancy) may be eligible for an annual bonus for the proportion of the bonus year served. However performance will be tested in line with the normal performance schedule. F i n a n C i a l

S t a t e m e n t S

Keywords Studios plc – Annual Report 2014 25 Independent Auditor’s report To the Members of Keywords Studios PLC

We have audited the financial statements of Keywords Studios plc for the year ended 31 December 2013 which comprise the Group and Parent Company Statements of Financial Position, the Group and Parent Company Statements of Comprehensive Income, the Group and Parent Company Statements of Cash Flow, the Group and Parent Company Statements of Changes in Equity and the related notes. The financial reporting framework that has been applied in their preparation is applicable law and International Financial Reporting Standards (IFRSs) as adopted by the European Union and, as regards the Parent Company financial statements, as applied in accordance with the provisions of the Companies Act 2006.

This report is made solely to the Company’s members, as a body, in accordance with Chapter 3, Part 16 of the Companies Act 2006. Our audit work has been undertaken so that we might state to the Company’s members those matters we are required to state to them in an auditor’s report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the Company and the Company’s members as a body, for audit work, for this report or for opinions we have formed.

Respective responsibilities of Directors and Auditor The Directors are responsible for preparing the annual report and the financial statements in accordance with applicable law and regulations.

Company law requires the Directors to prepare financial statements for each financial year. Under that law the Directors have elected to prepare the Group and Company financial statements in accordance with International Financial Reporting Standards (IFRSs) as adopted by the European Union. Under company law the Directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the Group and Company and of the profit or loss of the Group and Company for that period. The Directors are also required to prepare financial statements in accordance with the rules of the London Stock Exchange for companies trading securities on the Alternative Investment Market.

In preparing these financial statements, the Directors are required to: • select suitable accounting policies and then apply them consistently; • make judgements and accounting estimates that are reasonable and prudent; • state whether they have been prepared in accordance with IFRSs as adopted by the European Union, subject to any material departures disclosed and explained in the financial statements; • prepare the financial statements on the going concern basis unless it is inappropriate to presume that the company will continue in business.

The Directors are responsible for keeping adequate accounting records that are sufficient to show and explain the company’s transactions and disclose with reasonable accuracy at any time the financial position of the company and enable them to ensure that the financial statements comply with the requirements of the Companies Act 2006. They are also responsible for safeguarding the assets of the Company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.

Website publication The Directors are responsible for ensuring the annual report and the financial statements are made available on a website. Financial statements are published on the company’s website in accordance with legislation in the United Kingdom governing the preparation and dissemination of financial statements, which may vary from legislation in other jurisdictions. The maintenance and integrity of the company’s website is the responsibility of the Directors. The Directors’ responsibility also extends to the ongoing integrity of the financial statements contained therein.

Our responsibility is to audit and express an opinion on the financial statements in accordance with applicable law and International Standards on Auditing (UK and Ireland). Those standards require us to comply with the Auditing Practices Board’s (APB’s) Ethical Standards for Auditors.

26 Keywords Studios plc – Annual Report 2014 OVERVIEW STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS . 7 e 2 t ; n , a f 4 v n i e i

1 r o e i 0 u p b 2 n

k e t t y t U r u

o t o a e o

e n n t p

p s

h a h e t e o t c a e R r i

c l y s . p o h s a a r t b 6 i o i p h u

w r

a 0 e d n t d f r i r u r f 0 n u

e o E d A a t a 2 o f

/ u t ; p – t e r s

k ’ s a c o s c a h

y u l n t . r A d e u

n p

y u y a s r a

s s

u l o b t e ; o s e o p

i . a i r e i r a d d i c d n d

r c m r o

e n u s e f a u f . n o

t t d a d S q p

a S e C ; w p n

n e R

t n s t r 6 a o m e i w F

I f d 0 n o d

s r 6 w u n e 0 a e C h o d t 0

q r e

t r 2 i h s a 0

w e a e h t o t

a t y w 2 d P h e

c c r

e t t t a s i

d e e o A

K e f c s

f S r c s o

h i s o b A t R t .

n n

g r

r e t e F r s i f i s a e I n t o i

u w n e o d d t p i

t n p h

r a r s u n t ’ n e e d e e i o p a r o u a C

n c R h w ; m

r r t ’ o R

p c a m

e . s c u F o e a r o r

s r

s m d ’ c i , c o o t e C

y o n a a f o p u

n i r

t n h

n t e u C t q a c e i o m e

d a f

f e h o d e

h t n e t e r r p r r o t m

i e r

o o h r f o r G e t e a 6 i m

h D n

t p o c d

h 0 p u o e i a e c t e s e s e t ’ r

e 0 q h a C r w d

s r h

n y t e

i h 2

t t a t l

t v n

o f n r h i i i

n a n

o a d o i s y w c w e w

r e i l e d

p n r a r v e A p l s w e e

n a

t n a

e m o r

r m s c s y a a s t r i P o e p e a t

o i r n e b n t n p e s

i i t o s p t

e a C o t

f r r o

d e p n a i e h t d e p g n p r t t e e r e a

i a e e n h a m p t

f h c t o y

n p

i e R

t n n x

c m

y f r g b c e i h l

c c t e e m a l h o e r n e i t i t

t i

t a o i P e g p p

b p y a o

s w w t x s

e C p e n w b n

e t

i e t s

e o

e e k

i o l t

v l

n t h a l e n c r e v t d r r a a n d

r n o

o e r i h t n p i e r f

o e a h t n e t i c

d o r S a

m n a a a e p n e ; ) n a s s s y

d f r i e o t t r e e s

a e r b a h p t n b

s e

t t r i h e n n o

n u d t o

e i t s

t o n a n ’ f f

d e e i i r b c d n o y o t

t o u f p o c n u d p t a e n s

i b e a

m m

o a

u t

A u l b v

m e e

e n d e i c t s n d o a m t t i a i a n y e

r v e r u e

i e i r e s e r r a a d

h r y c r t

a e t c t t v ’

d p o i G t i r i o u d s

f s s h s s b s t s n e n

g o u

i a t e r a e e l l r n

e i t u

e i a s v r l e q n

a a r o t a h

n n i i u e

v t d t t n p p e e e a t

p a i m c c v r o

c n a t i r f i o f p i a h f

e s e

t n n o

e m t S g h t o r n a t r t

o r e

c a

a a

e s , l i e r

p l s s r a e s t s e d n n

e h t t r t t O o i i D r a m a a e a t

f f

e n

t p

r n n s o

f p r i D

h g a f d e a s l o y y e e o d

e o a

c n B f

n c l e o

r a

n n n i 3 r

w i e n f s s m m v m n s t a

t a a i i a

i e 1 t c o a S i

e e e o n r e ( h c t e p p

r t t r 0 n

e n w n d f c u c e h l n a a b u 2 e i g n t h o a

o m m t t

u e o a a h i s t f r n L h r a s s

: : n o o t c a i m

h n n o i m

l l e o i t l t c h n n n C C o f e h w f e e

a a c U

t b t e a o a o o i i o

n t t r

b i i i s 4 r h a n n f e p

o n c c i n o n

n n e t m t

r n n n i 1 o o o i i u

n t i n n n o d t t s a e e

d e

f 0

a r r a a o p p o p l S p e c v s e M e

n n

2 i n r o 2

a a u i

a n n o o o r

v r r v a e p i i i

d l

i o o d a a i f P f G P c q n i i e e a r r e r c h o

i t D e n r s

s n t l

r e c r n n h u u p u n e e e e e c a t e

p r i i e e a b

1 u d l e a o o o e o r h h h h h a r e e

d p p u w a t c t t t t 3 r E e

c n e i o n n r n • W • • • • O I M • • • S A O I D M i T I 7 f f Consolidated statement of comprehensive income

Years ended 31 December 2013 2012 Note € €

Revenues 4 16,386,991 14,342,949 Operating costs (10,721,956) (8,817,284) Gross profit 5,665,035 5,525,665

Costs of Initial Public Offering (1,123,566) – Share option expense (70,755) – Other administration expenses (3,246,276) (2,710,903

Administrative expenses (4,440,597) (2,710,903)

Operating profit 5 1,224,438 2,814,762 Financing income 6 59,335 50,470 Financing cost 6 (125,710) (126,542) Profit before taxation 1,158,063 2,738,690 Tax expense 7 (393,720) (410,597) Profit for the year 764,343 2,328,093 Other comprehensive income: Exchange gains / (losses) on translation of foreign operations 84,591 (86,726) Total comprehensive income for the year attributable to the owners of the parent 848,934 2,241,367

Earnings per share Note Euro cent Euro cent

Basic earnings per Ordinary share (Euro cent) 9 2.14 7.30 Diluted earnings per Ordinary share (Euro cent) 9 2.12 7.30

The notes on pages 35 to 54 form an integral part of these consolidated financial statements.

On behalf of the Board

Andrew Day David O’Connor Director Director

7 April 2014

28 Keywords Studios plc – Annual Report 2014 OVERVIEW STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS 9 ) 2 € 2 – – – – 8 7 8 9 4 8 2 3 5 8 7 8 4 4 2 5 1 8 3 9 0 0 0 0 8 4 8 2 2 7 2 0 2 0 4 1 7 1 6 4 4 3 5 2 0 2 6 3 8 8 6 2 1 , , , , , , , , , , , , , , , 0 1 1 0 0 0 7 5 7 2 2 2 2 0 1 2 2

6 0 8 9 9 0 0 1 8 9 9 9 0 9 7 t r ( s r 7 4 4 4 9 5 0 1 1 3 8 7 1 0 e t , , , , , , , , o b 6 1 7 1 3 6 7 6 n p m e e e R c

l m e a e D t

u 1 n a 3 t n

s A d

) l n e – 3 €

9 4 5 5 5 6 2 6 2 1 8 7 4 5 9 8 7 7 3 3 a d i 1 c n 6 3 9 1 1 0 8 5 5 5 6 5 8 2 6 8 3 4 0 0 l c 0 e o

0 6 5 4 4 5 7 8 7 8 4 4 5 6 5 9 6 5 4 4 p 2 n

, , , , , , , , , , , , , , , , , , , , s i r s a 2 0 4 0 3 6 0 0 8 4 4 3 5 5 0 7 9 3 8 8 a o t n 2 7 7 0 1 0 0 1 6 2 0 2 5 7 1 4 9 1 1 i e i i Y f d 3 3 1 0 3 5 8 6 6 5 4 2 2 2 4 8 8

, , , , , , , , , , ( u e 1 1 1 6 5 8 1 7 8 8 t s S h 1 1 1 1 1 1

T s

. d o r s t o n w p e y

e l m e 9 0 2 3 4 5 6 7 8 K t e 1 2 1 1 1 1 1 1 1 o t a N a t i s

l c a i c n n a n a i f

d n e . t 4 a ﬁ 1 d

i 0 l f 2 o

l s i r n o p o

c A

t e 7

s n e n o h r

o d f e r n o a

n t o r o B a

C ’ m p e r

l O h

o t a t e

d r c i y t g e v b e r

a i t e a n D D i u t s n s i a s

o m f r

t o d d f n

e e 4 s i s e 5 r s

m e e t o i t o p s v t i n t h i r

e s t l i u e i t e l a d 5 t u i q s r e l a n b 3 i a

e v a e v

e a

i b r s i d o R s d l d u

a e s e t

m i s i B n s t l n e s q s

g e e

d l g a i s e g a e s e e a e

x l

t l e

n s n e s s i i s t n R p h d a t v m b l

v b h a

e t a i e a n r T o

n l e

e l

a l u s

a n n r n f i t s y e y y i v a b h v s b a v a b l

4 i n a o t t t i o t s o c n a s o i a s a i i

i c

a m p e 1 i o e t

r e e x e f e

y i s l a

m y l p D , u u e c

c 0 t s r p E d r

p R a r e y d a a

t t a r

e r s q q a e 2 t t e n n p r p r

O p c e w r p r h n t u n n r o l

e e a

o y a a

t e e r r n g c e

e e e t t l l l e e e r i i e e n - r c i g r r r e e r r r

e h b p o p a a a a e p r d d

n e r r r d r u s t a a a o e t t t h h r o r e a a A t n t e o i u u n a o e r

q h h h h h o o o o r r D A 7 S O T w O S M F O C T C T R T C T E S C T S N P C Consolidated statement of changes in equity

Foreign Share Share Share Merger Exchange option Retained capital premium reserve reserve reserve earnings Total equity €€€€€€€

Balance at 1 January 2012 188 ––24,989 – 4,119,761 4,144,938 Total comprehensive income for the year –––(86,726) – 2,328,093 2,241,367 Dividends paid (Note 10) –––––(375,482) (375,482)

Balance at 31 December 2012 188 ––(61,737) – 6,072,372 6,010,823 Total comprehensive income for the year –––84,591 – 764,343 848,934 Share option expense (Note 18) ––––70,755 – 70,755 Dividends paid (Note 10) –––––(781,127) (781,127) Shares Issued (Note 17) 464,594 11,530,689 ––––11,995,283 Share issuance cost capitalised – (281,052) ––––(281,052) Merger Reserve arising on Group reconstruction (Note 17) ––(370,069) –––(370,069) Balance at 31 December 2013 464,782 11,249,637 (370,069) 22,854 70,755 6,055,588 17,493,547

30 Keywords Studios plc – Annual Report 2014 OVERVIEW STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS 1 ) ) ) ) ) ) ) ) ) ) 3 € 2 – – – – – 0 6 0 5 5 0 2 2 6 0 7 3 9 2 9 7 7 7 1 1 7 2 7 5 8 7 8 8 4 1 0 5 6 9 1 9 0 3 8 0 4 4 7 4 8 5 9 4 4 5 8 3 4 2 5 8 0 9 6 0 2 1 , , , , , , , , , , , , , , , , , , , 0 0 6 0 0 5 5 5 5 8 5 2 9 8 0 7 8 0 2 2 2

5 8 5 9 0 4 7 7 4 5 7 2 9 1 2 6 9 2 5 t r ( ( r 3 5 8 3 3 7 1 1 6 1 4 1 2 8 3 8 e , , , , ( ( ( ( ( ( ( ( o b 3 3 2 1 p m e e R c

l e a D

u 1 n 3 n

A d ) ) ) ) ) ) ) ) e – 3 €

0 7 4 8 9 8 3 0 0 4 9 6 1 5 7 5 9 5 6 1 4 0 9 6 d 1 c n 9 2 0 3 2 3 6 1 4 7 2 2 3 0 5 8 9 8 6 8 1 8 6 2 l 0 e

6 1 1 1 9 3 4 6 3 4 7 4 3 2 7 7 5 0 5 2 2 4 5 3 p 2

, , , , , , , , , , , , , , , , , , , , , , , , s r s 2 9 9 1 0 3 4 3 1 9 8 9 4 4 2 3 8 2 3 6 5 8 0 7 a o 1 5 5 1 7 9 8 9 8 5 4 3 0 6 7 9 3 9 2 8 2 7 7 4 i e ( ( Y d 4 4 8 1 3 7 3 2 2 7 2 3 1 6 3 2 3 , , , , , , , , ( ( ( ( ( u 9 1 3 1 2 1 1 5 t ( S 1 1 1

s d r o s w y e w e 2 6 6 0 7 5 5 2 2 8 6 7 K t 1 1 1 1 1 1 1 1 o N o ﬂ h s a c f o

s t w o l f n

s h e s i e t a i c v

i g t e m c v r n i r a a t

e t s e e a g r s s n e y r s i

e a n e t e t f t i e r i i e

e o c t l p m

i i y e s

s n a g o p v s g b f i

i e s a s n l s a s n t t a s o i s g u

e i

e n t t b e c s a i e l i i n i q d n

i t d n f t a n i e a h t s i t

n i l e e

i t d v i i e

) e n c i v l

x v b g c v i g i v x i n d e n i e a f i t a

m i t e n

e e t a t c

v n t t i f

f y c

i c c b c t f d s e a d a a s

o n a

u a r

t a a e a t

g p

s s q i r

v a n g g e s e t n g t

g e e r e e e n l s o n

a s n d u o i i r n n e l i n i

t s ( p i t t b i h a t

s t o n e h p t c n r a

a a f s / o l

t s a e

, s v s e

a u n r a r s i y l o e a g l y y n

e c t e i n v a e e e e a n l

v a

i n r i b b t v s d )

i c v

v n a e p ) d t i n e e u i t t t e n n n i n e d e d d i s p e i f o s

n r u p s r a r

q a e i e d

s e e x

o a n o r i n q a o

r e l p i p y a c e a e d d

r d d e a

e m m m h e

e i i e h c x x

c e r d e e s p h p

p e e d o o o p s v v r

h d e n

e h c x v v a i s

r r r f f x c c

t e o i i c e a o o o s s r e f f f e a r

a e a n o o n

n n s c o t r r e e d r n t

e a

i a

d c p r s s s n c c a a o o ( s ( p u p x x

c n

i i r i n n n n n

u e e i i i t t u u / s a a a w w w d e

o o s r r e s c t t

d h h h s s i i t a

p d

i o o o e e e e s n f t t f t t s s s s s e n e n l l l i i i o i e e c s s s s n n a a s s a f f f

o a a a g s s a

i i a a a a g e

e e e e t m e e e c c c i m m r n i e

r r r h h h h e e e e u u r r r h d o f e o i t t t o r r r o r a c p s s s s u e e s a a a r q q o c v t c c c c c t c e e e s i e e a a a h a a c c r h h h o n n n s n n n n n n S S I I A I I I I F I N C C N C D S N C A I C D I I D C P C Company statement of ﬁnancial position

Years ended 31 December 2013 2012 Note € € Non-current assets: Investment in Subsidiaries 21 5,735,481 – 5,735,481 – Current assets: Other receivables 14 1,898,008 – Cash and cash equivalents 15 10,722,542 – 12,620,550 – Total assets 18,356,031 – Equity: Share capital 17 464,782 – Share premium 11,249,637 – Merger reserve 5,312,892 Share option reserve 18 70,755 – Retained earnings 897,418 – Total equity 17,995,484 – Current liabilities Corporation tax liabilities 22,650 – Other payables 20 337,897 – 360,547 – Total equity and liabilities 18,356,031 –

The notes on pages 35 to 54 form an integral part of these consolidated financial statements. The financial statements were approved and authorised for issue by the Board on 7 April 2014.

On Behalf of the Board

Andrew Day David O’Connor Director Director

7 April 2014

32 Keywords Studios plc – Annual Report 2014 OVERVIEW STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS 3 ) )

l 3 y a 5 1 2 7 9 2 4 t i t 8 5 7 5 0 2 9 u o 4 T q 4 7 4 0 6 0 8 1 , , , , , , , e 0 5 0 5 1 6 4 2 2

9 7 9 8 5 5 1 t r 9 9 2 1 0 3 , , , , ( ( o 7 1 1 5 p e 1 1 R

l a u )

s n d – 9 7 8 g e n 1 0 2 n n i A i 4 6 0 n a , , , – r t

a 7 6 4 e c e l R 9 5 5 p 8

1 0 , ( s 1 o i y d t u i t S

s e n –– 5 5 v u o d r i 5 5 r t e 7 7 o p s , , o e q

w 0 r 0 e y 7 r 7 e a e K h

S n i

r e ––– ––– 2 2 e v r g 9 9 s r e 8 8 e s , , e M 2 r 2 e 1 1 3 3 , , g 5 5 n a )

e 2 9 7 m r a u 3 5 8 i h h 6 0 6 , , , S m e 9 1 0 c r 4 8 3 p

2 2 5 f , , ( 1 1 1 1 o t

l e €€€€€€ ––– –––– – –– –––––– –––– –––––– –––––– –––––– a 2 2 r t i a 8 8 n p h 7 7 a , , S c 4 4 e 6 6 4 4 r r a a e e m y y

e e e h h t t t

) r r ) 7 2 3 o o 8 a 1 f f 1 1

0 0 t e e e d t e 2 2 2

t e o m m s r r 1 s o n i o o ) )

N e e l 0 ( c c N ) o

0 0 a 2 b b (

t n n 7 n 1 1 y i i i g

e 1 m m o p n

r e e i s e e i e e t t t a e a v v s n n i i t i c c c c o o

e u r s s o e e u s N N a p n r n n t ( ( a N D D t

x s (

e e a e s

J d d e 1 1

o h h v i i

n d r c e e 3 3 1 p a a n

o r r e p p t t t e o c u s

i p p a a a t e u s s s e

r s s r m m p

d d i

e e e s m r o o o i p n n c c c

s c c e e e u

n n n e e e l l g r r r d d o o a a a r i i a a l l l r a a a t t v v e i i a a a h h h G o o D S S M S T T B D B B C Company statement of cash ﬂows

Years ended 31 December 2013 2012 Note € €

Cash flows from operating activities Profit after tax 1,054,027 – Income and expenses not affecting operating cash flows Share option expense 18,423 – Share Issuance expense 1,123,566 – Interest receivable (14,175) Income tax expense 22,650 – Changes in operating assets and liabilities Increase in other receivables (1,898,008) – Increase in trade and other payables 337,897 – Income taxes paid – – Net cash provided by operating activities 643,380 – Cash flows from investing activities Interest received 6 14,175 – Net cash provided by investing activities 14,175 – Cash flows from financing activities Dividends paid 10 (156,609) – Issue of share capital 17 11,625,214 – Share issuance expense 5 (1,404,618) Net cash provided by financing activities 10,063,987 – Increase in cash and cash equivalents 10,722,542 – Cash and cash equivalents at beginning of year – –

Cash and cash equivalents at end of year 15 10,722,542 –

34 Keywords Studios plc – Annual Report 2014 OVERVIEW STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS l 5 , e . y a e e 3 l e t h t p i g . n h c t o 4 s i s t i a f y

t l u r e 4 l n n d n

r s d e 1 l i e g i t n f e l f a d o d . s 1 o d t n m a

o c p c e e a i 0 n e i r d s n a o h 0 i o e n r

i a n

e u o e

t t

s n t n t n d 2 l t l t 2 i o n r

a i n o o h n G

c i w p p e n h i

n o a

a c t e t a c

n n

n i l e s l a y t t n n

p o

r t u t s u o e i u

I t i B n r t i s e g l a e p c u m t a

h r i p t e r o t e a i . o

S p t t a a

e t p a o e h u b n o o p b a a m

r u R d t . s m

s d

t r o

o A v m t i u a a c e c n , t

o u . l n g e l I

E i e u G n d n o

l d a f

r t c R d o n o e n P

d a

n s

n l o v m i l r o a e i o e n o c h n a e f a a i a A s r

e l A e s G e e

e e

u t J r a t

c t c

b a n t a h i h l

f h r l e e e y i i h

A n e s u h e e e t t i B t n a v e e r

r t a m

s a r o

u “ s t

s l n T

r o

h i

a G w t t a

n h y a

m m y e l n e d h m t

n r l a n . i

i c t s e i s s T t

i 3 r n

T e o b s

r o p b o A i

n s

e K s L

o e e d

. e

b i c a g e i .

i i e i t r

n t F u n u t a l S t s e ’ c – t r f

b e 3 a s d

d U i l i

s n c 3 i h e

l c a , s

i a i a r o e t c R l a c a d p

l e t 1 i e a i 1 r o b

r l

c 1 r r g l a e

l e d

t n F t a n m

r t i n h r 0 o u I 0 n p e g c g u a 0 r o t n s n . i m

e e

b n i

o p o e

c n s i a b e 2 f f

p s i t n d s n e 2

, n o r

i 0 n c

o v h s e i t s n o

n e i a t i

i o y o t i e y n d c t e g r a o h e u

t m i n

a l n t n g o d o

r n r

e i m

r r t

c c s u I e a e i d a n e a h p t c n o t n a

e i h a a e

i h r i d a t

u g

i a r L t

n f u d n t b n p

e n t t t c t e n

f i u y t h e g a

r f

i n n s l e n i e a o u u f c i o e d

S u i n h o l y t

T n n e

h m r e p a

a a o h d e f d

t s t c a o

e t t 3 c

. i

a a n d e e e b

e e n t s s a J I s m s w r t a

t s d y m 2 c n

n d e r

’ d

t e t p g p . i I a

i o b n s r e a e a t l

i e s e

b s o e 1 h e p

e e m n m r 1 o

d t t u c a o

s t s t d t i a i e r m c

h e i d h

s i e

r u

o a D £ a a r r d t , n s n q t n r n o w v t d

s p o i d v n

t i c i

o p d f e c a e a n p a y r l u

a r o m o a c a r a 1

r l

n e i

r e u

r w e

r e e a r n o u

e e o

t s h s e

a t 3 s

a e L w g e d y

s t e G g

h e K )

s a e

s s i e

t e n l r l y

t p e b n t h y n h i n s n n

s d d

o e c i a n i h t i e i a t a e a n o d t u

s r e t o r n

r i i e t i t I l t e n i n

d I ) l

n n f o

s K t n a i

t o c u t h o d e r

t a n e i i . e

e . c u S a p n s f n t o a h

a o

a b i n o r

n s b e c i u n h r a d

d u s d g

r n t e

y s y m a g a n n e

e b a g e r . r n i i i e o o F e e s a

u s w l a s c a r o v a I e

n e t o n t s p i r

L i c a o

i s i a b i p

t , i d l e ,

l o e n t n t a f l b t m l e d a g c c y d i s

d a h o e

s r l i a w c r c B h u e h p

a t . e a m m a r n r s s t e m s b y i r )

e e d i i o s a n e b T e S s l

a l e i ” n d d h o a

r t f r f d L v

a e i n h b m

e . e m h f a i i e f s A a

s l c u e e d t

d l e n

d u l n I r

t s o

K n r o b

t s ) u o , K

s I r r

e e i i S i

c u i ”

s u e t g

e c e

n s

y s a t r .

n a l C

e d e t l t r y

R U s s e n s

a s m

e p u e a e n r c i s d

h e e

r a l g e S a s h n h t s a e

F e r s t i e l d e e e i

o u q I

e a s o e t e t l a p h t d

s s s r r i

a n h

a v

s c r n

n o c

v s s h i n t

‘ o i t t f m h s b i a n a e l

e e s t

o 2

c r i g a t e t s a

a d u o

d m t n r d a t r h s t ( f o e a

t e

o a n t r e 3

r i

c f d e n w p g f r

a a e c a G a n ) t f i u u o s s

n i d e m e a r s u “ o i r 3 y i

e o i s r t e a o h e e o ,

h i t t

s p C o b

f o n e

r e h e r t h h o n s c r o e m

i e n w h

s t b

t v f e 1

s t t s t n d f f o h t

c o n

p f e p

e b K i y w s t R , t l u a e i

2 a a e 0 h

l t

e e r c g o d e n s

o A s o y t , a t r f . e t F n

t I i l

p o

3 m

n 9 t a I ( e t u e d y a

s u . s s i h e e , t t a

( s e o i K e d a

c “ e e t r t s

e n 3 o t d

s l e t c a h v h a ( c 3 o s a , r 1

h d l d e c e l h

l t t a c y s s u e e n e r o t e a r n y a ’ d

n . e t l

e 1 l 1 i o 3 t c

i e e a

s r t u r i l b n r i

f n r , o

r e e t r r

b l h a

e o h t a r

i c 0 0 r h s e t

t e d n t

f r p s o n o l o a s d e a a e u

e v m t y

i r i

r s o a p 2 n d e 9 r n i m

t f d s o r i o , w

t a u e e c l r e

e h i w O t n e o r a n f t o a k e n m n

o m i d

y b s

y e 1 d t i c h

y u t T . n

e c o m n r c u i

r o u

n , l o

e i U a i n l l e o e

i e t n s s d 3 h . e n

e s n n e m d h o f t s q

f r a t d r i t o i v h

s a e s f r m

r e

f f n e

i e K t

s o i d n b c e t M a t e

e ( i r t i y

s e v t

t t b r

i n n o

e a r y i r e

e f d a a e t

a i u t

e m c n l c

l h y y

c s i a u p r

e e c i t 9 t e l a i h e o n C r t i h l e s o n s t a t r e e a c t o n e

e n a t v

d e t a e

d 2 x

h a i a

f d f

r a

m P p

A a n c s u i

s s n e p e a u i m f t

s C

t h

e s n n a i d n ) r m p t n t o r

. n i c n

c e s o e

t n x s n c e i s ” i L s t

p e d

n r f

n u r

l r e o

e s e o , e s e o o c n e n l l i y n a o

o m d o t

i i m i i e

i r

m i o

u a o i d u

e m p r d

m r i t c n

t r h a a

n o t d i o a l i s g c o r a c e m

r h n

e t c d E d n c e s t a

o n s s

n o c n o t a

n a t L r s

i c e n r i i f l a

n p h

o d i

e s t a a

e l u h a

e h , d n n l e t C a h

o i e

t s s e a m a i t c t S

l i

e r u r e a s

t e s e e t c p

g e , a d

a y n o i i s t

t i i a s a h i t r r o h S a r i b m n a e a c y

q e t r h t r

i i

e t a h s b n t d n l a n p h o

i n i m u t p w x

o y o t t c e h s c a r h i n

g o p r a d f d e a p o y r n s t r

o c o P e e ” t e y i a d S w r t n n

n l i f

a d t

e n

r e u e p

o t s n u p e l

n b

, l t y

d r a a e e a

r u s r t e a g n e e e r s m F g e a s i g a o e a n n a

a a r a n p v

o r i h p t a e

r d m r o o s

n . e n e r n e c i h ﬁ i n

h n o n o I I i d a p s i c o u g t t s t n i f c c n

s t

e e h h o f r w a e

o t w I n

r t p

t i w o m

, e t t t l , t p

c m n o r e a n e i n g y n n t n

t C h p t e e c t t y i n i r u t t o e a s o

p t u a e a n

e e t

u n r h a n e o c s

d p e m o t

c u i

n c n u a g o s o

i p r d e s r o n G

n o e e

e n K l x n t

r i d m I r e i

n i e s t a o r e o

i i a

n f p o e d n s a

o t a r h . t d

t a t e e t b f

e y F

r f i , s t e i e i h t a c

d o i h

p n C s u G s a u u

s i i

o s o a

w h

s e t “ f t s

s b f c h s

e c

f u a e a

e d

i n

t d “ e n h l o

w t d l d n

m p y i

e e

h s m e o d o r n o

r r b A r o i c e d o y h u a e o

o t a e e r t

r r e

y n a l e i n a s s a t h a

L i o l

t o t o d x t t

c n m t c e e

c v h

G q t s a e f a t c w e g b R a p ) a

l h

r t

e a t n n

a e C a t n n

n a i c e K i n b v w ( f c r i

r m l d e n n s n a

p i h f e i

B o

r r h n o e p h 3 n

d p a d y a u o

e a i i e t

o d a a n l a

b c i n a r n

a m S h i l t d o ( y s y l e u 1 r

e e t i r t i o f i h m s v i t p t

a e a n e m n

h c t f

o m f o o

A o e t a i a n c n p L 0 o K t

i u a a e t I n f o a r e t

s u o r c a f

r r e

b m h l o n s t t r

d ( i i d o o

a c s a

t s a

h f 2 t y t y

n h x s s

e C o a r d e

e e a c

s a g i , e f n e

n n i s a n n y s

a n i p d d r p c p a t

o t i

n d

r E

r y r o o e l l p s r s

l r a

t w n

n e

a i i o h

e b n r e e a

i s a n p . e n a

a y e a t r G a f s i m e o t t e e n S d c m d t e

” u

a d d

a h t

F v h n o

o e e t u e J p r t m r h e g r s i

t f e c t a a s o

s f p m n o

o t s l e s s

u u p o s a r

i e r

d s o n a o e a

n e l a

a s a t t n d d n r o t C

a o y 8 r l e

a C

m ﬁ t h r i i h e n B i a l

h e

e d a e t l l i

n S I S t

, m d c a o t r o o i t t d u n a u s d o d s

e i h a h

G n f e s i a e s s h n o o t f i h o c o c f

a s

t a t

r n n c s s s t e o e i s s t n

n C e g e

s s s o i h a u c h d d

s y t o a n a f o C e h s

n a f u d t i s d d d t i t t a f f h t

s i r r n

i n m n n r

n c

i g q

t e r r r i s t l t a c i n t e e o s , d o h e a r n i

o o a a

i r d e a s n

t a

c r a s s e g e o o r n

h o o o o n e

e i n n r n o e r r i e h s d d e g w t s e b p h e c a c a e P m a u o e s S e e i f i f r

t B r w w w e c o o

e w

s h r o h n n o n

w p i i n s o m p s b n u u t o e t f r t d d e e e y y y m e t

r m m a

l l

e e c p h r

a a

t c e n h o n u a o s e e o r f e e e t t o n n s h h h h o o r u h a a e e h h o n n n m T B T F W N 2 B N 1 K N c a t o b f T b S S T c I K T K I a n c U A a v t s w C v r O c i r o i Notes forming part of the consolidated ﬁnancial statements continued

2 Signiﬁcant accounting policies continued On consolidation, the results of overseas operations are translated into euro at rates approximating to this ruling when the transactions took place. All assets and liabilities of overseas operations are translated at the rate ruling at the reporting date. Exchange differences arising on translating the opening net assets at opening rate and the results of overseas operations at actual rate are recognised in other comprehensive income and accumulated in the foreign exchange reserve.

Exchange differences recognised in profit or loss in Group entities’ separate financial statements on the translation of long-term items forming part of the Group’s net investment in the overseas operation concerned are classified to other comprehensive income and accumulated in the foreign exchange reserve on consolidation.

On disposal of a foreign operation, the cumulative exchange differences recognised in the foreign exchange reserve relating to that operation up to the date of disposal are transferred to the consolidated statement of comprehensive income as part of the profit or loss on disposal.

Revenue recognition Revenue is recognised, net of sales taxes, when the service is rendered. When projects are in progress at the period end, revenue is recognised to the extent that services have been provided.

Share based payments The Company issues equity settled share-based payments to certain employees and Directors under a share options plan and a long term incentive plan (“ LTIP”).

The fair value determined at the grant date is expensed on a straight line basis over the vesting period, based on the Company’s estimate of shares that will eventually vest and adjusted for the effect of non-market-based vesting conditions. At each reporting date, the Company revises its estimate of the number of equity instruments expected to vest as a result of the effect of non-market based vesting conditions. The impact of the revision of the original estimates, if any, is recognised in profit or loss such that the cumulative expense reflects the revised estimate, with a corresponding adjustment to equity reserves. The Company has no legal or constructive obligation to repurchase or settle the options in cash.

Where share-based payments are issued to employees of subsidiary companies, the annual cost of the option is expensed in the subsidiary company, with a corresponding increase in capital contribution from the Company. This annual cost is recorded as an increase in the Company’s cost of investment in that subsidiary.

Share option plan These are measured at fair value, taking into account market vesting conditions but not non-market vesting conditions on the grant date using a Black-Scholes option pricing model which calculates the fair value of an option by using the vesting period, the expected volatility of the share price, the current share price, the exercise price and the risk free interest rate. The fair value of the option is amortised over the vesting period, with one third of the options vesting after two years, one third after three years, and the balance vest after four years. The only vesting condition is continuous service. There is no requirement to revalue the option at any subsequent date. The charge that is recognised is adjusted to reflect failure to vest due to non-achievement of a non-market vesting condition but not failure to vest due to the non-achievement of a market vesting condition.

LTIP An alternative share plan was introduced to give awards to Directors and staff, subject to outperforming the Numis Small Cap (excluding Investment Trusts) index in terms of shareholder return over a three year period. There are three different award levels; one third of the share options vest if the company shall exceed the Total Shareholder Return of the Numis Small Cap Index by not less than 10%, two thirds if the shareholder return exceeds by over 20% and 100% of the share options if the shareholder return exceeds by over 30%.

These are measured at fair value, taking into account market vesting conditions but not non-market vesting conditions, at the date of grant, measured by using the Monte Carlo binomial model. The charge that is recognised is adjusted to reflect failure to vest due to non-achievement of a non-market vesting condition but not failure to vest due to the non-achievement of a market vesting condition.

36 Keywords Studios plc – Annual Report 2014 OVERVIEW STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS 7 g 3 s n e 3 0 e e % r i r i e n s s t 3 0 e h h i i 4 . . t e r

e t t e a t h

i 1 r 3 0 s e d l o f t e h i 0 a l

d a s t e 3 1

o p e

2 e b s e e e s

’ g t a e l e t e r d h a

h a h e o r p i a r t n a

h t g t

h l n s

d o

t s u a h t e d

y f e a

e x r s t – p r e f

f e i e o h

e h , b t o e

e h . o e r t

t t

s m c o h t

e t

v e

t s t s s a

d s n . o e G l r

t e i d h e e t

a e a e i d ( c a s e e t i r s a

o n l i

t e e v c i i

s t u t i i n l g

x m i o l i s c s i l m h e e n o a

a i n d a n t t s d

t l s a c n s

p t

h e e b i u e n

e r a n : n n u t n A l y i e r n

v t

f r

a i

u o e a o d o f i e x b – h

o f n l s e

s e e

o c . q f

u o a c

s ) y c l

t m e e

t e n h h

d t l l

e o n t

c t e t

c i a u

d g r n e i e p

e e r r

a t

n d h

d n e r n v v e o e s h i h e s e u i t d i n

l e t a

e , n d g t o v e e o c

e t r e i u e n

v t r s b r a n m t n e n n r i s t r i o

v i i d o a o a o

p c p t a t s t a n e

a e r e r o

u y f t

e m p a y r t e s n . t c m e e d n m s t i f e x t d a S p u i l b u h f o v a e

i e

h o o b a t r

d c x n n r i s c i t t

o o t e ( g c r w b

t g u

f o e a i

u d

l r / e c r n

f a s a r t d e n c o o h i r t a o

o a d e l i n

e l

t o o n . n

r n r

u n y

i e s h b

y n t . h y r t f l u t m a e a r i w t o l t

c u

s b t

a e

e r n

o y h a n t t g n

s s r

: c i r o n m h d e a g i o g

t e e m c n x l u i t r e e e u e n c i o i K e c

i i s l n s e r

m f

o a i t v p o g t

o m f d a i s t h d b s c

e a u l c o

e o r e n p e

i s e c f o p

l t e a e m g r i h a

e t

i s a a b o g r a b s t

e a b t a i n

e h s

n a d c e i

m h i

e l n a l l c i t e a m s d i t ) i i n c e e e

c s n v l w x b

s i

b y s a r a e

r n n a a

b , n l a o r t r r e

a i s c n a

e b a n a

o s f

a , r

d c a a r i

e s o i f e t n t e

c h l

s v e a o . e e s s i e

i o

u e t e

s e e f t s

r d w f c s d i h t d n

s t s n

d g s W b e n a b t i p o o

a n e

s e

l s n s o i e . n c ( h n n e

i t d t i u e d r a y r t / i g i a e a t u t e w e

i n i l

y a l

s v e o t o b m v a y e h o s r r e n

f o o l l n r i e s w b

e a :

l p l o r r e e

t g i t o s s e v

d a

a i h t m e G v a h e a s t

e b n i e r r

n y p e e a

f r f l t c g a l c g i o t i i h a r i d s f r r e

e e s i o

a h i r t o r v e i t e e s a

f e

b v t h l v o g

l c n i t h e

d s e p

a e t w h e a t e c e

n r o

n h

a i w

i t n a i r i s e t l

n i a c

n a n

u c x m

s s a e

y i l i

i i o d o h n s o n s

e e e t e

x a r s f e i s t a

n r h r t t d

s e e r e

a t p t n d e a

h d x

v t e i t r l o r p t e

t a d w

o h n e n

h e

m a w m p f e h t s o u c g t d n s

o e e

g r u t

r b

d v i s l n e w t p o

h s p n l u n . e

r m b e n i o

e t e o c t a i x e o a r i

u m h e s a

t u

i r r d e y e s x s h r r t

s i

a f n i t e s e p r o i r ; e m t e

n t i t u p e t s e i a

r t u a e c v r n l

a h

e i a t t

t h t n , w o t a a f c i m

e p w a a a i p a g

t e e

i G

y t t

a l r

n e s g c r v l r o o ,

h e n n s

e a

, s ) n

d i m y n n e r l l

e d l n n e u c o l d r l s l t i e e

s s a i i e

f e t e e r o n h p o h a t . m r

n a

y t

x e e e

h t a i u c b r i n a i u h i w r

e e s

e f t w

a t c

d d t s f f e m

c h

r t l

s y n x r e n w t d n e d e h f t

e i i n e

e l

a m d a u e b o h t r t a b a l t s s e

e c r u i i o a t o

r i a t h d e n c o a C

p l

o t p r

o u h n

n t i e c n o t

p s d e n w c

i i . x e a e

s r

c s i i

i r s e t t h b w s m w t f s e s a m t e n c e n h

i i y

m r

n i i m

s e t m a o

r c n e

i t

o t n a e s

i o o s a i g r i

e W n i t i ’ w l

c i n o h s l l e

r c

. o s f l

e e

c i

i t t .

g e m o a

c t p s n i a g c s v y s h i , o i

t d i m e d r a i l

b e e c

o o p

e i y u e l r a , s u n f d e l e l s y s

r h n a

i p c e g t

c c r l W i d i u r s f o e t b s n a r o

l t d y n n a

p e

d r e x t r p n . e

s e

n o

l e e o a f r i

u r n

s u t l e r n t r o e f n p e a r s t e r ;

e e s r v h

i u b G r i

a o t r i r n t n a

h p g o

y e o e

t d e a n o l e

o o G e

e ;

t m m j e e g a a y r e

e t l n e e f v c t n c o

t a

u l u u t

f e h n r s e

t i n l o a t i o n n a a e i h m o a d e s s e i i t t c r l x

r d

o s m

i t

l i c i

p c a l d r a a n c t s h a h d , w t

s e e p c

a t r a n t

t a

e i i v t t a d e h t b a

s c n e l e

e r t

c d t t n d i d m v a n t e c

i n i i i c r n s e w

n a h a r m e n p x

l u

i l l i l

e o a

i h i j

t o i c n t i i o e

o l a l

d o e s m s

e a o b a

c h e r i c d a o i a r b e c u n o e t t i b b n v b m p l d

t f r e e c

t s p

i a i m

i i e

b p

e g a f u i p a w d a a m r a h s a r i

e u

s o i s r i i

o o s

d l p n t d s d l l r

f f p

x r d h o h i e p u e b t v

s m s a w

t n e r i t e o p i t s c i i o t e o e

n m e o o i u x p v t

r u i

r q e o e

a d d

e s e

f t o u p i e d

t e i a d e r r a r n n u o c o a n e i

i n q s t e e d

i c

e n n n n a h l t e s r q i l t t

c d l a c d e r

n p e s s i

y e t e

e a a w r a f

a e h l o o s e a c d

o m

i e i d e i a i i u G e t r a e

s r

b i a s s s n

e n

T e

t t c

f r t a e s s m s i c t d c h r t

i i i b t

n i

b d l u p u d t t . e e d o d l e e d m o

e u r c t e m

n e l n e i a s

n n

d s a d r i a

n e e t i t d s n a t n

n h s

o s o . l s n e a s s a m b t p

b g g e c t n e a s s i t

a a t

f t i e n i s i a

a c n

n a

d e e

e n f n t a o n

s s d o o I a i h r l f e i e t t s n a s

u p n e e s

a t s i c f s x n a t s c c d o .

a a r e i u o l n

o h a c l s n

a s

a d t o u r

s s c a a f f e e e e t t e t l a u o l s r e

i d a m n x x t n a

t d c c r t

a r r o d n t c i i ﬁ l f

o o x

n G i n c a p o e o e a a t i n

s c e o d l l o n

e d n s m n l i f i e o

p t t t v e t t n a e c r ,

t c i e n n s

t t a a t l u

d d

n a t a , d a

i i r a f n l l t l y d h o n n g e i

e n n o c e t n a l t t i p d d y i m o s a t n

m t t i i i i m u d v e o e e t o

t g c a g n n s e e e t a i g i x u o i a

f e e s r i

a e c r n l u r l i s r r n n i

w i

t i h s s w r r t n n r i n m e s s i i

e s d i e i i i t e f m m d s i

a e m

o r r p r e e s

e m

t i

i d e e e a n - d a r l d d S f f l y v

d e e e s p e e e u r c e i e e i p u v o f f v n e e n l o

r a i o h t t t o a n i i p f f p i i m n r t e f n c a r o v h h h r r q s b o o c a p n i g a a a f i o o a o n e e e r a d t t t i t a d u o r a i r r s c h i i a o t h t t a e h m n a i s d I N G G C O B • P P • • • • I P 2 D F D s s T s r D t c D a G l f c c h a Notes forming part of the consolidated ﬁnancial statements continued

2 Signiﬁcant accounting policies continued Where it is not possible to establish the recoverable amount of an individual asset, the impairment test is carried out on the asset’s cash generating unit (i.e. – the lowest group of assets in which the asset belongs for which there are separately identifiable cash flows).

Impairment charges are included in the administrative expenses line item in the consolidated statement of comprehensive income.

Financial assets Loans and receivables These assets are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. They arise principally through the provision of services to customers (e.g. trade receivables), but also incorporate other types of contractual monetary asset. They are initially recognised at fair value plus transaction costs that are directly attributable to their acquisition or issue and are subsequently carried at amortised cost using the effective interest rate method, less provision for impairment.

The Group’s receivables comprise trade and other receivables and cash and cash equivalents in the statement of financial position.

Trade receivables, which principally represent amounts due from customers, are initially recognised, thereafter, are recognised at amortised cost. An estimate for doubtful debts is made when there is objective evidence that the Group will not be able to collect amounts due according to the original terms of receivables. Bad debts are written off when identified.

Cash and cash equivalents includes cash in hand, deposits held at call with banks and other short term highly liquid investments with original maturities of three months. Where cash is on deposit with maturity dates greater than three months, it is disclosed as short-term bank deposits.

Share capital Financial instruments issued by the Group are treated as equity only to the extent that they do not meet the definition of a financial liability. The Group’s ordinary shares are classified as equity instruments.

Financial liabilities Trade payables and other short-term monetary liabilities are initially recognised at fair value and subsequently carried at amortised cost using the effective interest method.

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

3 Critical accounting estimates and judgements The preparation of consolidated financial statements under IFRS requires the Directors to make estimates and judgements that effect the application of policies and reported amounts.

The areas requiring the use of estimates and critical judgements that may significantly impact the Group’s earnings and financial position are revenue recognition in respect of accrued income and computation of income taxes. Estimates and judgements are continually evaluated and are based on historic experience and other factors including expectations of future events that are believed to be reasonable. Actual results may differ from these estimates and assumptions.

Accrued income Judgement is required in respect of the amount of accrued income recognised at the reporting date. The amount of accrued income is determined based on an assessment of the expected amount of unbilled time costs in respect of work commenced prior to the close of a particular year end that will be invoiced to customers after that year end date.

38 Keywords Studios plc – Annual Report 2014 OVERVIEW STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS . 9 s 3 € 2 m 9 5 3 1 0 e e 1 t o t s 4 8 9 4 3 v 0 4 r i s r m a e e n f 9 5 1 4 7 2 t 1 , , , , , r

d e v a o h n s e i 0 a f . t c 2 3 9 0 9 g o m e d t

s i

2 o

r t n

i v t a 4 9 9 2 2 x e m

r v u n t o i t r e c t r r s r g a r n c 3 9 2 8 2 g e x e o k a

, , , a . t a t i o s c e

e e e b

a n x r a , s e 4 7 5 i s t p t u a e S x i e d r

a m e

g n e 1 x

s d t p v t E m e s e u g

n s n o s - e a c t u

i o f i f

s l l n m e e e a t r n i m p a e

o p e c n i m i g t

D o a u p o i

u s

o l r u h i n

e i s c t g h i 1 n

s n t l s

c c s

o f e h i 3 , n C n e s o e

u n n r i

h c i o T

t o v n A d

u a t g d e T . o e e e

e r o

y i s – n 3 € n i t .

8 9 5 9 1 n t r d t h e c g d r h i t

1 d o t c

s c e l n t a 3 8 9 6 9 i t a l

u i n e 0 c

t e t e v t i g f u u

3 9 9 6 9 p 2 c p p b d u s h

n , , , , , h i s e a a

n o n d r r i

i s t a u

r c e s 9 5 4 6 6 d

R i e t t m a i o o e c

i d l v d p 4 6 2 4 8 i . o e .

d a m r h b p s l d Y a e r

r n o s u r d

l r 4 3 2 3 3 l

e n

i p , , , , t r l c w a a n s p

i u e e i

c e

a l e - 9 5 1 6 t t p o w

e r e t u r d c p t

a S w

d 1 e s y L

o s d a u e s

u t f a n s

t e r d e l

o u e e f

d s r t d l a d c u a s m

c i r

p m e h f n e c n r u i

a t v n e x o r n n

i s

a t n u h d g

i o a e t e o

m w a g d

i d l u c m t

t r n n t

y a e e o n d u n a o d n a e i e t i a o r e a i

e f c l i i

i g r n

, b e

t f K m t - h i r

d u u a d o d s g u a t d t

a t

t n

c d o i e a e i q

n d l s s

n s e f / n

i o s t f e d l b a e a t h i e o

d e d m r

e u c i a n o r

c r v s i

s n t u m d c t l e m e p u o o s e i d a n n

n i a l e o r

e u s i c b i e t

n m e o

e g i L s d , g t p i l e

b n

y v i a g t m d r e f r t a d

a s a e n a b , d x i c s e o e n l r o o t e

w t a

a e n u t r . n i a - m r d j c . o

t p r l s

u i

) ’ d

r o

8 p o r e p t i a d

i v r c i x . m p x p t n o l t

o r

u n m g e d S e s e c c a a u i c l c t p e e e o m

a t 9

s n R h e e s .

i a v a r o s p p t s l c t i l r o r F t

i r s s a i t 1 I

m t r e t u a c G

e e m e s

n e r b d e € n G s s u r r o h t c

i r

s o s a o g c i u e p e n o e n u t d e r e e o t c w s i

e d l n

t d e g c a d u

n h a f u f x e d i g r u u r

r t n s n j ,

a e o

o o n e c i m l

u o u

f u l r

s w u s

a n - c a s d s s a o m o e e e e

d v e m

y , s d e e n . e e r s n c a h t i e

r n r t h

4 r e i g a e n t e a

. r u r o % t

a e e a

e e

r y l n o

s d f e 2 y f 0 s t e s i i d n g h t g f p s n t a a n e i € m a o 1 t n

n e l i

i r

c e a n ,

t i e u o )

i a

n o a i t l j m d n

, n i u d i p s y n

t e s

t o u m m

s e a a e i s d e n a b a

i h s c e i l

s t

a m 3 q v f i t

h t d h t l o . i

€

i a

c t t e

d p n t

o f r d

n s

: , 3 o o s h n n u t c e n s t u o n t o p a e v o i t 2

i € e t

i a - i r d r

n e n o r s a v t e : n r 1 s a . y d l e i r l

p o o e t w e t d u

u a s r 2

e 0

i i j r r e o , e t

y G t s g b n v 1 l 2 p

o v r

m e s p m i i d

( a

n t

f i n f t n l a

0 t n e

e g e f r i y l i h v r e i e c o m

e o 0 t 2 s e i h m e t o d

n u g ( r r e o e

t a d t g f

6 s

r s

d r s

e a v a

u i e a b d f n

g s s l 2 o

t e i s ’ u e p e s d i , g m o n t o

r d c r s e n e s . a

r p p e

i 2 n n s 9

r s

a e m i e a u t n t . s

x d e h u a r i t 5 o r e r

e n

s t a s h s o n

e 2 c i e r t T c

1 a

s r h h

e c e t t

e n r € u r n o s

t x r s €

t g c T A n n

c :

n h a

o e y o

i n p w G a e l a i d . n u t e s s o

r o . k e c e t v i t

i i e o o t a

s n r

f n t n g g m r i l t a e c

a r

s i m

p t

r e n

i g m n a o a a e o e n a n h e h a g

i c

d t i

r o d t s t m e a o i s e t n S m s b i c

f m i c s

e l p i n

r d e s a s n t g t n d t r m r l u r c n y e o a m s i n a u e h e c p a a s e a s l

e s

4 r e e i

c c o t n o i . c e o o h e n r i o

s s h n r a w n i p r g

o r n a a

i t 3

n t T s m D i a e

a f u

n u r i

u n g s f j n m n € e a u

s o F

i i h c o n

u e s n r e

t o

t s

o m . r t u r – u h e i t

e c e – l t o s o o a

i d a n d e a n t d c

i b l r

f s e l r g g t d i

n a o b v t u t a e

o c e d n o g l

e f c v

A i e r i u n t w i c n a c a r a

s i g c y i m g r e r i

t r s n l i s e c o e e w p l s a t r o ) n y i j i

i a

i n e i o e n a g u e c o t t p t l n i S d s t a i L o e u v i s

t b

e s

c F

t c

r t l t p s n q a p

o r

t m e a e

i a e u – e o D s a a

e n n a o c e T t e r

c r i e

n e e l i d u r e

i s . l l r e h r l n T p n s u

o h m t t

m d

h e

t e s n o h i n a e a l

s m

e t

o o L s T a t a t

i n n e y u Q i

a e t p

x o

a i i x n n

r t o

: a s i g l m e e s o

x l b A c d t

n t o

n t a m p e a

a i a n i o o n e 2

i g e a a i

i r n

n s t t a

n n f e a g – t

u m m t

t t t l n o o 1 g s

n l s

i n i o u d i i u a s e n e o i a s i i e e o a a e i u

i i u t p 0 t i e l a o c l s e r t e i o o t r i t

o e r d i s s u

g g i c i c m f h t

2 i i n t a n a a r n l t c

d t l l i ( e e m r i g o a a l e d G c e s m

n c S C i c e f r l c

s v e o c a a u n u s s e

o n i n n i e u l i o m o o v u d o t e i e e e c c c n t f n p u c e o l a a a c c g f F L L A s f l m o e c u c e h x h h o o w u o e h h n r n e n r t I L A l L F R • • • • 4 M 3 I T d e i c T M f A A T T O t Notes forming part of the consolidated ﬁnancial statements continued

4 Segmental analysis continued Geographical analysis of revenues by jurisdiction Analysis by geographical regions is made according to the Group’s operational jurisdictions. This does not reflect the region of the Group’s customers, whose locations are worldwide. Years ended 31 December 2013 2012 € € Ireland 10,904,474 10,882,112 Japan 1,208,392 2,412,747 Italy 345,884 662,764 Canada 1,128,720 385,326 United States 2,799,521 – Total revenues 16,386,991 14,342,949

Geographical analysis of non-current assets from continuing businesses Years ended 31 December 2013 2012 € € Ireland 452,958 357,277 Canada 106,360 84,101 Japan 11,602 23,575 Italy 28,939 24,837 United States 556 614 600,415 490,404

5 Operating proﬁt Operating profit is stated after charging: Years ended 31 December 2013 2012 € € Depreciation 272,470 198,267 Costs of Initial Public Offering 1,123,566 –

One-time costs of €1,404,618 (2012: €nil) were incurred as in the Company’s IPO. €281,052 (2012: €nil) of these costs were capitalised against the share premium account. Years ended 31 December 2013 2012 € €

Auditors’ remuneration Audit services – Parent company and Group audit 38,000 20,000 – Subsidiary companies audit 20,000 – Non-audit services – Accounting and Taxation compliance 14,962 2,500 – Corporate finance fees related to IPO 205,101 – 278,063 22,500

40 Keywords Studios plc – Annual Report 2014 OVERVIEW STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS 1 ) ) ) ) ) ) f x 4 € € € 2 2 2 – – – 8 2 0 0 0 1 3 3 8 4 2 0 6 7 9 7 o a 1 1 1

t 7 7 0 7 7 0 0 8 8 6 4 9 9 9 9 9 t

0 0 0 4 r 5 0 6 4 4 8 4 1 2 9 5 7 5 8 5 6 2 2 2 1 n , , , , , , , , , , , , , , , , e 0 e 3 6 9 0 0 6 8 0 8 2 6 3 0 9 0 8 t 2 . f

1 1 7 2 1 9 5 5 0 1 2 8 1 2 1 3 s t m r r r ( ( ( a r

3 1 1 3 4 6 4 7 e e e n e , ( ( ( t o t i b b b o 2 f p i a m m m t e t o e e e c r R S c c c i

l p l e e e d

a f a D D D s

u i o u 1 1 1 n r

3 3 3 t n d

u i j A d d d n

v ) ) ) ) ) ) i e e e – u e 3 3 3 € € € – –

0 0 7 0 3 0 0 4 5 0 1 3 0 2 5 5 5 d d d d 1 1 1 s c o n n n 2 2 0 1 9 0 6 7 2 5 5 2 5 0 3 3 7 l 0 0 0 n o e e e i

7 2 0 7 2 7 0 0 7 3 7 4 6 7 3 3 3 p 2 2 2

, , , , , , , , , , , , , , , , , s s s h s r r r s t a 3 6 4 2 0 9 9 4 1 5 8 1 3 6 8 8 6 t

a a a i o 9 6 2 2 2 5 5 3 0 2 5 7 9 6 4 5 6 i

e e e e n ( ( ( i Y Y Y d g 3 1 2 1 1 3 3 2 1 2

h , ( ( ( t u n i T 1 i t f

t . S

o n e s r s e d p r s

u l o e o a . r w u H d p y

y d e e s i ) K s d m e n i r % e o n a r o r 3

f a c

r 2 p i

p e : n e r

2 o m h i s m 1 t t i o

0 p o y C n

t 2 : i ( o m l

h C

i s t

e i d b % w t x e a w 3 e o i

x l n l 2 t

a e r

t o t e f

h g o a

r t

s n t f i r K a l a e i a

o f

U s

P i s g d f

e a m n n o

h i e . r l o t a x ) i

l r p i a f h a

s n

t i v t n

n s d

a s € d n n

o f

n i n i : n e s t o t o i s a i r 2 i o o

c t n i r t e i

y 1 t g a u c s e d i c s n 0 f x n i o n i s a d r i e 2 a t c d ( e t r s

d e c i s e

f p i u r 7 a e j r x

o o u d 2

t j u e l o o n m j

e 0

n , l s t

C s s o d

e O 4 a a a d r n a r r e n P s 5 e

h e I e o e l e a t

h i s f 0 i d

s t , f t , r e e n r

i c s r l , 1 a e p r e a s d n e r b 6

v € o i g u d v

n o e a

t 0 o n . l s o c i c n o

o c i p 0

i r a

h a e n t u o 2 i d t n r u g n

c s

d d

i e t y

a n n

x e e t l i d x e e r s c d e a n n r k a e b a o a s e t h d A

i i a r h m t a

- a t t c

a I

t r

n s d

o o n w i e n r e l u o a e n c

r j n s o t i i e e h e

e m c

e l t m r o o n l

b n s n

f i r o e

r e

a o a u / a i c o d n f a s b a n ) m c i

f s d t r e p i e n

u r e s o e i s n a

s f e e s

o i d y e a t t s r e

t m e t

o s r i a t

a n c e s r n s r g e o n e m b s s u t n v s e

a a i e x c n t t e h C o m i n r i i i f e o

t c r o e

i f f a b

p n c s l

r a t d r o

i g h t i r r s m o o x e e n n

r t r o p i u i e x I s r i r r r

o u x g e e

e e e p a c d f n

g t a ( b

e p p c

s e

w g e d

f h t f e t

t n n n s r u s f

f v e m h m

e g i c i e i v i o n n o e t a

s i

r t r o

s a a g e o

o o s l h n d c

o o c r x

r x s r

y e h a i s

i e

t s c c h n ’ s t n t t n a i c c a a x u t i e c o o e g x x c o

n t n t n e e p r t

x a f c

r n

a y e h

i c i a a t ﬁ n f

a h

r a h u e t t x o a e e c a d n d

t d a

j s t i a

r o i f r e e t e

x o o a r

h n e b e a e e x n u

r n

c c n r n s t t r o s o s r c w r a i r

t a a

g t o c e r p c e l e e n n f i i i t G m m m t e

k d r r c l

f c e T F P s e m a v h e a a t o o r f m e e n a e r e e e t s a r w p o e g

f c

c t n n e s i e u a o r e e r f x i i h h h o o o o n n n n T P L U E I L T H 8 I E T P C I P N 7 F I F B F 6 C T D d Notes forming part of the consolidated ﬁnancial statements continued

9 Earnings per share Years ended 31 December 2013 2012 Euro cent Euro cent Basic 2.14 7.30 Diluted 2.12 7.30

2013 2012 € € Profit for the period from continuing operations 764,343 2,328,093

Number Number

Denominator (weighted average number of equity shares) Basic 35,778,042 31,902,332 Diluted 36,062,393 31,902,332

10 Dividends 2013 2012 Per share Total Per share Total Euro cent € Euro cent € Interim 842.00 124,518 2,538.00 375,482 Final 3,379.00 500,000 –– Interim 0.39 156,609 –– Dividends paid to shareholders 4,221.39 781,127 2,538.00 375,482

In November 2012, Keywords International Limited distributed €25.38 per share, based on the shares in issue at that time, or, €375,482 in total, as an interim dividend for 2011.

In May 2013, Keywords International Limited distributed €8.42 per share, based on the shares in issue at that time, or €124,518 in total, as a special dividend for 2011.

In June 2013, Keywords International Limited distributed €33.79 per share, based on the shares in issue at that time, or €500,000 in total, as a final dividend for 2012.

In October 2013 Keywords Studios plc distributed its maiden dividend of Stg0.33p / €0.39c per share, based on the shares in issue at that time, or €156,609, as an interim dividend for 2013.

The Directors’ recommend a final dividend in respect of the financial year ended 31 December 2013 of Stg0.67p per Ordinary share, to be paid on 25 July 2014 to shareholders who are on the register at 4 July 2014. This dividend is not reflected in these financial statements as it does not represent a liability at 31 December 2013. The final proposed dividend will reduce shareholders’ funds by an estimated €337,554.

42 Keywords Studios plc – Annual Report 2014 OVERVIEW STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS 3 . ) l 4 3 € € 2 2 2 – – – – a 1 6 7 5 5 5 0 9 9 5 0 0 9 1 t 1 1 1 2 0

0 1 1 3 0 0 0 3 3 5 9 9 7 o 0 0 0 4 T 0 2 2 9 3 9 2 8 8 8 6 7 4 2 2 2 d 1 , , , , , , , , , , , s 0 n 8 3 1 4 6 9 9 0 3 4 0 d 2 a

r 7 2 1 3 2 2 9 9 6 2 t r r r ( r 2 4 6 3 1 4 1 1 3 3 0 o e e e , , , , o 2 b b b w

1 6 6 1 p y m m m s e e e e e e R c c c

l g K e e e

a a f D D D

u p o 1 1 1

3 3 3 n s

n r A d d d o )

e e e t o – e 3 3 3 t € €

0 9 2 2 6 5 0 0 1 0 6 1 9 4 5 4 0 2 t d d d r n r 1 1 1 c n n n c e u 7 5 7 2 0 0 7 2 0 8 0 6 1 0 9 0 9 5 l 0 0 0 o t e e e i e

5 3 3 8 9 7 7 8 5 7 4 p 1 2 9 1 1 4 2 2 2 m

, , , , , , , , , , , , , , , p n r s s s i p r r r r s i 8 0 7 4 4 4 1 4 5 e 0 9 4 5 5 9 a a a u ( o u r D f 2 7 1 5 2 9 9 0 7 i 1 7 1 3

e e e

, q Y Y Y r d 2 7 7 3 4 1 1 n e e , ,

c u u i o d 8 8 t f i f o t n S f

a O a

s : r d 2 e r 1 n o 0 u w 2 y ( m

e ) ) e c e €€€ K d l 5 1 3 8 3 5 1 r R n

a p 3 2 8 6 8 8 5 ’ a

s w 4 8 4 8 6 2 4 s s t , , , , , , , r f r o 9 3 4 5 9 5 9 e o o i t t s 0 6 1 8 4 1 3 u d c ( ( 2 5 3 3 9 p u , e t r m 1 i S o

D C

s e d r h t o

n w i

y d e e K

d f u o l

c s r n i

o : s t i

g c y e n i r n i a w D o p

l l e m o v i f o t f

C e

e n h e h t e t

t e

s s r i e m o r d f

p p u i l n m c o u i o n t i c

q a

r ) n e s e o

r i n t : o s d u a t n e s c o n m e i e n t e r y a e i r a

’ o s s p s D l n t t t s

r n s s o p s s m g i n e t t o o o t o n t s s i m c c p a a c c

3 l r

. o o e d t t e ) t t 2

m 1 c c r u f n n

s p i 1 d l n n i s o 0

e e o d d c e e 0 , o c t D

t n 2 i t

e e n r i 2 s f t y t m m i s t t 2

r m ( e t a y y o o r m n

a a 1

m e e l l o c i r a a s u b e e d

l 0 g n t b e e L p p c a b

s r r e a a e s 2

l m m

r v m n o d d a d s e y m o d d u a p e c s ﬀ e a r f e e n g o e n r

d l n n n

c f a s s n

o c c k a a o s s a e f a a m

y i

e a a u

o a e r l e r t n t a n n i c n s s y t b b W t e n a g e a D a D

o o n

P S r e e f r o p e s l i i

a a i i i a

n e e t t J e s k r l 1 e b a r r m i i r

1 u t s r

r r

i r

a n e 3 a a n s r e d d 1 3 e o a a n c e y e l l

2 1 a t p r e v t o u t d d t e e o a h a h h h r o n K P S T I A A C A A 1 G A O G S S S S 1 T T A C T Notes forming part of the consolidated ﬁnancial statements continued

12 Property, plant and equipment continued Computers and Office, furniture software and equipment Total €€€

Accumulated depreciation At 1 January 2012 330,409 45,710 376,119 Charge 187,344 10,923 198,267 At 31 December 2012 517,753 56,633 574,386 Currency Revaluation (6,796) (2,474) (9,270) Transfer (11,738) 11,738 – Charge 248,546 23,924 272,470 At 31 December 2013 747,765 89,821 837,586

Net book value As at 31 December 2012 431,935 58,469 490,404 As at 31 December 2013 461,666 138,749 600,415

13 Trade receivables Years ended 31 December 2013 2012 Group € € Customers 1,384,750 1,463,056 Provision for bad debts (Note 23) (81,288) (65,808) 1,303,462 1,397,248

14 Other receivables As of 31 December 2013 2012 Group € € Accrued Income 209,743 231,997 Prepayments 215,364 231,965 Other receivables 295,427 158,750 Other tax and social security 104,721 7,580 Restricted cash (Note 22) 300,196 – Related party receivable (Note 22) – 247,021 Corporation tax receivable – 29,989 1,125,451 907,302

As of 31 December 2013 2012 Company € € Intercompany receivables (Note 22) 1,483,464 – Restricted cash (Note 22) 300,196 – Prepayments 31,139 – Other receivables 8,340 – Other tax and social security 74,869 – 1,898,008 –

44 Keywords Studios plc – Annual Report 2014 OVERVIEW STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS 5 4 € € € 2 2 – – – 8 8 1 8 9 5 5 1 1 8 8 8 8 6 2 8 0 0 4 1 1 5 5 5 5 0 2 2 1 , , , , , 0 d 5 5 5 6 2 2 e

, 0 0 3 5 9 t s n e r h 5 5 2 6 8 s , , , c o o b i e

1 2 3 p a r r t t c e e e c e c o

b b R u

a l n p r

m m a t n 1 e e e u

s c c a f 2 b n e e n

c 1 o

n D D

o n A h 2 s 1 1 c a . c – 3 3 e 3 3 € € –– –– –– i e c

7 7 6 6 0 5 4 9 2 2 o f f r

1 1 r c n h 0 0 6 3 3 6 8 4 9 9

. l o o

0 0 a h

s s 5 5 7 1 4 5 7 5 p 7 7 e 2 2 s s ’ w c h

, , , , , , , , , , e

i A A r , u s p s 8 8 2 1 9 0 9 2 4 4 l

a h s o u 1 1 2 2 4 7 9 5 i a 1 1 y h h w r v S o d 1 5 5 5 1 2 1 7

, , , , , r a l r u n 2 3 5 0 0 t a n G o i o S

1 1 1 1

, n i d e . s s m r d

h d h m r t t O e e

o o t n e i o 2 n r w t

3 y t m h r i t e ) 3 a m

, o L

K € i ,

8 8 2 3 7 2 l n 1 r e n 8 8 1 1 5 8 a a 0 e p o 1 1 5 2 7

r n h i , , , 9 ( , t t d h o

4 0 4 i t 1 a r e

t 9 7 6 r t 3 e i a

n 3 4 o t r a n a p m e r i h r e t L e h r

t t l g s c r

n a s I n u s

i n f e

s e l 3

o t n i a 1 d s

t a r 0 o e

a d 2 d o ) t

. h e n 7 7 0 1 2 3 a y o w r c t u n 9 9 0 8 3 1 i y d

e a s

r t s 7 7 0 0 3 4 e s e y , , , , , , e i

u t n K

r i t 1 4 4 0 1 2 I

a r f p a 1 1 3 0 3 s h 1 ( u o u

1 9 0 S

t d , , , f m o s

r a 8 1 0 o r r

h o 3 4 t e s m G i

w d e l y h w e r

t e o i t a h i t K h

h s w

f e s o t

r n i o y

p a s o r i s e h t o a e s c d p

n d i u e a e n r e d d t s h t h o r

s s t a

n O h n n

h d i n o s t d d d o

0 i e s a c e e e e h m 0 t c u i w l e

l s u u u

0 s r , s s s a e

o e a n s

t i s s s 1 c g

p i i i

v y h h e

i n e e u t d o c c h h h t i t a h o e a a

u c c c a t r m l h

e e u u e a a a

t c t e q s s G e e e

r 7 7 x

a q s s

l w i e e e 9 9

1 1 1 s s

e o e e t t h 6 6 p 0 0 0 i i r

e t . . .

h d . h v

s s r 2 2 u s s s s f s y 0 0 0 o ’

a o o t t t 1 1 t s o i d i i i n o i £ £ £ r d

r d h

i r 0 0 p p r s s s o . . t a

i s o g g g o e e e G r u o o o i

i e r 0 0 t t t

c t r r r d d a p p p p e

€ S S € S e

a . e

d o e m p e e e k k f f f f f p l f h e

n n

p d r p t d d d m

n n s o o o o o

n h

o o e e

n o i i a a e a t e e n r 3 k k k o s s s s s e t t

a h i , v t r b b h t a f . h c c t 1 n n n i e e e e e

t l 3 t r r r r r o

m a 3 h

a a a o 0 u u t g f f e

r a a 1 a a a a a k k r r s m m e 1 2 b b b t n

r r t t t n e r o

r r h o 0 i h h h h h i n n

d r 0 s s a a o y

b r e e

i 2 p a a S S S S S s a o

p y d a 2 t t m m m

n n t a p r n

t b b r r r d a y n y y y y y n a a o

o o y l h h o o s d

l r r r r r t e e e M c t t m e

c c a m m t

c t t t u

a a a a a u s a a o S S C

J e o p p r e d e e J u u l p

e n t t t e r s i i

n n n n n i f r r c a r e u u i i i i i r r r

h h 2 8 h e o 8 d d

t m p t a

u s s f o o o o o d d d d d e n n n n

e e 7 6 5 r r r n r r n r r s t o a a t e n h h h h c s h o o o o s I S M O O O A 1 S A O 1 G M C S C C S 1 G O O b a O a T o Notes forming part of the consolidated ﬁnancial statements continued

17 Shareholder’s equity continued On 10 July 2013, Keywords Studios issued 8,130,081 new shares of 1p each for £1.23 per share, raising £10m / €11.625m in gross cash for the Group. Keywords Studios plc was admitted to the Alternative Investment Market (AIM) of the London Stock Exchange. Share trading commenced on 12 July 2013.

Reserves The following describes the nature and purpose of each reserve within owner’s equity:

Reserve Description and purpose Retained earnings Cumulative net gains and losses recognised in the consolidated statement of comprehensive income Foreign exchange reserve Gains or losses arising on retranslation of the net assets of the overseas operations into euro. Share premium The Share Premium account is the amount received for shares issued in excess of their nominal value, net of share issuance costs Share option reserve The Share option reserve is the credit arising on share based payment charges in relation to the Company’s share option schemes. Merger reserve The merger reserve was created following the Group reconstruction, when Keywords Studios plc acquired the Keywords International Limited group of companies.

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

2013 2012 € € Share Option Scheme expense 43,079 – Share Option Scheme – LTIP expense 27,676 – 70,755 –

Of the total share option charge, €24,582 relates to Directors of the Company as at 31 December 2013.

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

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

2013 2012 Average exercise Number of Average exercise Number price in £ per share options price in £ per share of options Outstanding at the beginning of the year –––– Granted 1.20 762,775 –– Lapsed –––– Exercised –––– Outstanding at the end of the year 1.20 762,775 –– Exercisable at the end of the year ––––

46 Keywords Studios plc – Annual Report 2014 OVERVIEW STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS . r 7

4 r o o s , 2 – – – – – –

t e n p 1

0 s b t o 0 4 a ) i d 2 e t 2 e : 1 m C p e p e 0 k s

l 0 u r . l f o 1 r t y s l 2

2 s i N ( e f

0 o

a t o a t u

h o l y h o r 2 e l t n l t s o l p i m o i m c t 0 u

e n i J v p

e o c S 2 r

e f m o

e e

e 1 p s r o h e y r f R s

i l

t t f m l l 1

p a

r a

u a f e

m J i

d 6 n e y o

u e

e t u 2 e e h e n r 1

s 0 h 7 t 1 t h t r n i N a h 1 5 2 0

3 t

t A a

e r 2

1 0

a 0 e r . o , e – s e e e 3 r s –– –– –– –– –– –– 0 2 t

e 3 0 o h r y o s d

% % % v 2 1 r i n g c t

t c f a 2 2 2 l

y i

c 0

o 7 . . 5 2 0 o a 9 l , h o r 2 i . r

p 2 i e g y

d s

1 1 1 1 0 e e r 3 l e u

t r s 0 . . p

s J x s r e n t y

0 e f

i u e e p

t e e 6 1 a o J

i a e i 2

p o 1 p 3 o n e 3

w m n s

w d l

2 1 g i r

y m f £ a r

l i a u a s a r c 1 a t 3 r o t n o t

o r u i p

n g f e

s e J S t 1

r o

v r e y o e t m s m 0 e i

c A x e

2 e 6 i t r t o d r 2 o 5 e b A 1 1 p r

s e p p

c t f r .

o 0

e o e o m w u e

t d m 2

d e g w l

b l

u l o

b s o y e a o

3 y i b n s t A r l r

e ’ n

o f f m s t a . s e

a K u t i o e 7 7 e

J o l

s i e n v n 0

i r t t 3 3 h p l r o c r a e

c i 2 t 2 c e e

0 0 . p t

b r r e a , , f v b 1 e l p d 1 a o j m i

a e 2 2 D

o o o s l e m :

£ x e

b i l 9 9

t m m u s y s 1 g e f i 0 c u i A

3 3

h o r N

s a 3 s o w 2 s . e

r e

. e i f n f t r o a 1 e

o l e f 1 x l e a a r a b 0 c e

e £

. w i l o

h t w t g r f 8 m f e

t 0

b s

n p 5 o r h d s £ a i

n a

t o d .

2 3 a s a e

d , e i

e o

r t s 1 n

y s n o c 4 n g 9 0 e i e t a

n a r i d l r o 2

a a 5 v l c 5 e

i o t e e r e r s a i e e t 2 o –– –– –– –– c s 2 1 1

r s x t r r s

, s e e

, i t a s e r a 0 0 e l a a v r o x c 4 n . .

i d u r h r t n e r p a o b e 5 0 0 s

e e e

e c y

e o o v u r x t

r i 2

e h n t e e o d

d l t e e l s a i t s

n r

a g e i

i e a p d p e s

n p

a r t : : c a 7 c t

d g r n £ D o i n s r r o s s

a a i 3 r m n g a r

n e o e t u

e e i o w w j 0 e a o e

c v x , t d s

p t 0

v d h

e o o d l l e a l l 2 e t g n s c d o A l l s 2

i a

a s o r 9

n o e i 0 o o d r n n e i i h e t p f f h r 3

n c t

a a 2 u

u d c h r

, e l a e e s s p t t t o r e . y n e

a i d l l e h a a w o f a a a

x a 6 t v v

e e u b

t a o t J e e e

h a 1

s 3

s g a r r o

s s n t e t 0 h t e 1 1

e 1 n a a

o f a f v a i

u e o 2 i 0 0 i t 1 b t l r

r r t d

h o

b g

2 2 l y a g

a a l

l d l o

n s e a s t s y y e e e d o s u n u a l l

h J t u y y n u d m

c n c

t a n

t 6 u u

r , J J d o a r o 2 f l c d e e o

i 1 s a s

i e t a a 1 e r e t e 2 2 h h c t s 0 n O

t t p

e c

t d o p 1 1

t . n 2 o y

t y u n

i o u e a i o

g g o n

o p t

b c y

n n i

) l d e h l e n n e s n t o u p x e i i t r m o o i r £ d u a o

c r

c a r r e o ( J o i i t

a r

t r m t a

) e s r n d

r d d t t u u d i l g a e o f e D t g e 2 h £ e

n e e t e

n n G l d d i ( y n e e n s

c i s o t t

i n h 1 i i d i

i o

y o e e f y r e c ) o m

n n e e t d d m s e n g

d i h s s r c h

o a a e h p s e e h t a m s c i

t e

t c a n t r r t t t i e e

s r h

u r r

o s d t n w e S f a

g g f t f s n n r n

e -

p a e i

t s m s u n f e a

e f o a a i o v

O k n c n s l r e e f

b e

i e r r s i d e c t r r r o n . c r e T l a

s p r

r l g g g d o

d n

e u r e e a

m s i p t t a l e d e e b o

n p d o x s s e v o o a e u

i u i n w w i x

h g B a f n t e b e e e

t v n n i

l t

e i

n o e t e s w i l d s e c a , s s e

i r

r o o e

t e e b r c d y i i e h y y c p n n e a e e m t d d t t e a h t r e e h h G n t t n r i l t i

i i t

l g g o o h t t h i e e v l l p p f i i i h

p o e e t s o i i t t e s a a t t t

D t t a

a t t x

o o c o x

o b c

e r r

c c

h s a a t t p p n r a a l e e e v a

i n e e t e e e l l l d

e e

a e

e a

i r o o n v o

v v g g

n i

f t r i e o o p p

A e c s e h h I

e t

t e a a

t e n n r t t v v a s f 7 5 x x o . s

l h n i i r

) a r m g h t s a n f f l e e e 3 7

T a d d d

b a i s d d

r d d n

n e u n e o o h r e 0 7 . i i a e d e e r 8 n e e

n n , , e e e s y m

a t t s p e t t d o e s s t s s d : e e g g 5 a a m S 2 2 i i r r r

l l n t r o t t c c h h t t n i i e t l f 2 l a a u c c 2 w i e 9 6 c a o g -

l o ,

s s

g g e e s n r r a a r r f i a p v i i 1 t t 3 7 e e k c t t

t n n r 4 e e a e e p p p

e e r e e o 8 0 y l l s x u u r e e i v n v l l e i o p

5 x x x x m o h h a e 2 G L W A E R E A D E O E O A L A W 1 D A n 3 ( e 2 T ( o T M D p Notes forming part of the consolidated ﬁnancial statements continued

18 Share options continued The options were valued using a Monte Carlo binomial model using the following inputs: 2013 2012 Weighted average share price (£) 1.23 – Weighted average exercise price (£) 0.01 – Average expected life 3 years – Expected volatility 36.12% – Risk free rates 0.5% –

Expected volatility was determined by calculating the historical volatility of two similar listed companies over the previous 3 years. The expected life used in the model has been adjusted based on management’s best estimate, for the effects of non-transferability, exercise restrictions and behavioural considerations.

As any dividends earned are to be re-invested into the business the impact of dividends has been ignored in the calculation of the LTIP share option charge.

The weighted average remaining contractual life of the options outstanding at 31 December 2013 was 2 years 6 months (2012: nil). All of the outstanding options can be exercised at £0.01 over a 4 year period.

19 Trade payables As of 31 December 2013 2012 Group € € Suppliers 503,634 701,197 503,634 701,197

20 Other payables As of 31 December 2013 2012 Group € € Accrued expenses 277,179 346,952 Payroll taxes 137,461 118,711 Other payables 392,713 14,945 Related party payable (Note 22) 9,242 – 816,595 480,608 Company Accrued expenses 21,503 – Payroll taxes 16,133 – Other payables 300,261 – 337,897 –

48 Keywords Studios plc – Annual Report 2014 OVERVIEW STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS 9 . n 4 I d € € € 2 2 2 – – – – – s

n 3 1 1 f . 1 1 1 e g e 1 2 2 y o 0 0 0 t 4 i

r s n 3 0 0 2 2 2 n 1 i , , , s e o 0 a

s t m d 0 7 7 e , i l 2 t p a

d s 5 4 4 y L t o r

a r d l n 2 2 n

m y y y y y c o H o i a

a e l w o n n n n n . p r r r w n p a h o a a a a a e e e e C y Q

t s t

o . b b b R I

i p p p p p s e

m d e l t t E f e m m m . K a o n a h a m m m m m n

e e e o P i

t u

c c c a C s

n o o o o o . f

d n e e e f , l m r u r t C C C C C n e y D D D b o a

e o

n t

A f t i r n g g g g g 1 1 1 h d f a o . l – n 3 3 3

a 3 3 3 % € € € – – n n n n n e

2 9 1 2 8 2 I m s i i i i i f f f e

1 1 1 o i c n p 9 m t r 4 2 3 4 8 4 b l o o o . 0 0 0 s d d d d d

r L a h u n 2 0 3 1 4 2

p 2 2 2 s s s t 9 a a a a a m

d , , , , , , l n o e o a e A A A r r r r r r l s 2 r a o 9 7 2 9 3 5

T T T T N T D

o o a n 6 5 8 3 i m g C d

d h d w 6 7 o e n e , , i i e t e s y u t

t n 5 5 t h a d i e t a t t S

n d w K n l n S m

s a

i e o d r a l

t d o

h L c e n f

r : t a

s i

l d t

i y l f o t s a o a r

i t

s w c e t a n i a u n t I h w n e i o d n

p n n o l g i o y i i g c a s

a t e i i r o d e e c r

m t i r

d s i i v n n % % % % % t g o K

b i o e r . r

L a n r p 0 0 0 % 0 0 a i F

n t m o d e a t

o f i 0 0 0 9 0 0 s n a r n s o u h o e L r w

o g 1 1 1 v a 9 P s 1 1 e

o y e n

y m n s a e t

i t e r e g s e n e d m K a I e l n

s i t h o

p y o t s a c d

n e e l

b c d H

r g a

2 0 8 0 1 3 S r / a o e

a d n n 1 1 9 1 1 1

l f i o b Q H d . o

r s

i 0 0 9 0 0 0 e 3 o . t w

n E n 2 e u . 2 2 1 2 2 2 1 a h y o a

e ------r Q i 1 P d

d .

0 t e i f

i s 9 2 5 1 5 5 u , 0 E t s o v d 2 p t K i .

0 1 0 1 0 0 3

r 2 i r e e o u e P ------r

i o y t

t 1 r a s q r , v c 6 2 3 0 8 9 e a c b

a s 0 p p n e

d D 2 I 2 1 a 3 1 2

b y a d 2 e b

e i d

h b l i r t

r m

e i c a o i m s e e d h s p e h m t a c e

b i

n c t f e s w L w .

e o a

m o e , l m D

n e n C g D d e o

e e s r c , e 1 a r t e

d 1 i u s a e e t 7 3 s o l s i t g l

s i 3 h

2 e a t s D

m a

i n n

e i c t v e m i t a r

t d o i

n i 0 L a f S K h t

e k L n s

a A e l 3 a

o a T s I s c

r a a o d

i d d p y l b t

d n . l g a o r d o n

n h e e s t a e a l e a A p n n t t t r m

r i r t a a b n s i y i i e s . I l n I a l

i o r o o

o d s p t n n r a e d c w t f l a o o s u

l n C r t e a e n a i

C U i J C I I U o b o h i t

e b

t n s y e i e i a

r c d H d i r e i

c m d e h o n e i a r i s m r

l t i t i r Q h

a y . e . b c a t L a d a t e r

i n d t i E

t u r e I . r s s

n r n o s s h a d t P i I

d o :

h e c i p n f s s g e t c s ’ D

s l u n i

e a c e o s e l d s p

S b o a r f w l

a i c

e e d

u 0

e a t b e a t t y s o t n i e y r i 0 o t n a t a

i n i a a n

r s r u a d

l l 1 c s , a , m s p a i d l o i o a e p a G e l l e r e S

r a 8 s t

i p r e L i p

a t b

g r c t r o a . 3

d t . r t

s s

I t a m a a c n o m

2 s

n s i d n l i o o s e e i f t i e a o s n r r e a a € n e d i d n

i I C C L i

o i c b

h r a e f

u r

e l l l l t e

o y s s t c - i e r n h r a a o a a a a r e t t G n r i x

b n e s e

c d s , i s c n n n n

a a e

d s a d u n o e i

n d d d a n e o o o o y y i e p s s o e i i i i s d . s

e s t t e e e w e l y t p t t t t g h e e t t t r i n

r r e b r

t r n i i i n m n t

o a a a a p

t i s a

e i a a S

f u s e o a a o x m n n n n r

i i t d e m m m i h r

c m S p p o r r r r i i i % p E C a t i a

s g n L

l i

t i e L L L

e e e e e

l 0 x

l n r e d d t t t t . a r g g n e L i t % s a e 0 a

t r

a e n n n

e e t n n n n I o n n o h t 0 s I I I I I

i i m i 1 h f a t t t n e e e e , h

t t

l M 9 n y o c r s s s

a a f s s s s s

w w T i s o

s e v , n , p l l i i

e s s s n e i e

. r o d d d d d o o t d e n s n

l l e e t v l e e e r r r r r a O l l n a v d d a m e u r r

s t t t o R I a o

o l t o o o o o t i o o p h e e n i n l l e e a a a r r t i f f s t t e t S s i r

t i i e a w w w w w c c c a a

r e i i i e t m e n a d e e e y y y y y t t l l l n m e o 2 1 v t p m m e o a e e e e W e a a a a h d h h h i i o o o h t t t n n D T T I T I O C 2 I K K K K K N K I S 2 C t T L a c T M I L Notes forming part of the consolidated ﬁnancial statements continued

22 Related parties and shareholders continued The Company paid the following amounts to Mr. Giorgio Guastalla, Director of the Company, and shareholder of P.E.Q Holdings Limited, in respect of rent on premises occupied by the employees of the Group in Dublin.

2013 2012 € €

Operating expenses Rental payment 18,000 18,000

The Company entered into a deed of undertaking and indemnity on 8 July 2013 with Mr. Andrew Day, CEO and Director of the Company related to possible liabilities which might arise due to the restructuring of the Group prior to its IPO on 12 July 2013. As part of this deed of undertaking and indemnity, Mr. Day deposited £250,000 as security for the Company. This is included as Restricted Cash in Other Receivables of the Company. This amount is repayable to Mr. Day on 8 January 2016 if no liability arises in that period. There is a corresponding liability included in Other Payables.

The details of key management compensation (being the remuneration of the Directors) are set out in Note 11.

As at 31 December 2013 and 2012, the Company had amounts receivable from its subsidiaries, amounting to €1,483,464 (2012: €nil) relating to intergroup trading activities.

23 Financial instruments and risk management Interest rate risk Interest rate risk is the risk that the value of financial instruments will fluctuate due to changes in market interest rates. The Group’s income and operating cash flows are substantially independent of changes in market interest changes. The management monitors interest rate fluctuations on a continuous basis and acts accordingly.

Where the Group has a significant amount of surplus cash, it will invest in higher earning interest deposit accounts.

As described in Note 17, the Company raised €11.625m in cash through an IPO with the strategy of making acquisitions of suitable companies. The proceeds, net of share issuance costs, are held in short term deposits and demand accounts, to be used in acquisitions, as required. Note 25 includes information on the events since the reporting date, which include the use of some of the funds on hand.

Due to interest rate conditions, the interest rates for short term deposits are at similar levels to those achieved for longer terms. The Group is not unduly exposed to market interest rate fluctuations, and no interest rate sensitivity analysis has been presented as a result.

Credit risk Credit risk arises when a failure by counterparties to discharge their obligations could reduce the amount of future cash inflows from financial assets on hand at the reporting date.

The Group closely monitors the activities of its counterparties and maintains regular contact which enables it to ensure the prompt collection of customers’ balances.

The Group’s main financial assets are cash and cash equivalents as well as trade and other receivables and represent the Group’s maximum exposure to credit risk in connection with its financial assets. Trade and other receivables are carried on the statement of financial position net of bad debt provisions estimated by the Directors based on prior year experience and an evaluation of prevailing economic circumstances.

Whenever possible and commercially practical the Group invests cash with major financial institutions in each jurisdiction where it operates. The Group periodically monitors the credit rating and stability of these institutions.

50 Keywords Studios plc – Annual Report 2014 OVERVIEW STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS 1 s 5 e e € 2 2 n – 6 2 8 3 0

c u 1 g n l 3 4 6 0 9 i 0 d 4 n n a

a n a 8 2 5 8 1 2 t

i e 1 h , , , , , a o

s . r t l i n 0

d a 4 4 1 5 8 t a s d a 2 o i e o

t n r i r f e 8 5 1 6 8 .

e i e s t

b t n o s a t r s o

i v s h 1

o c f

o t . h t o a k

M r a t t o

. s s p n

n p n n n

a e h g p e i l e e e

u e e o i a e t u f n e r a u R s r i

y i m m b a l d

m r d u d a

s r h i

a o

s e u s c d a n e g u e d r n e t o i h e e a t n b h n i t g e a t s

i p t

t s m n l n

i i r a n d e x l b r A o n f

i m n i

a o n

e i e u c

s i s – f

f e b 3 €

m – t

3 8 8 0 8 y t

s h h e s u 1 n

o a c a s ’ t t d 0 0 8 8 8 c b i b l

i m

0 d s l b

s o n f r p e x l

s i 4 8 4 2

p 5 s 2 e o a

, , , , , o t f e t t o y e u e a e s v d : n

a e r 5 5 5 1 c 9

n m v e o o

o s h s e n a 9 6 1 8 i n s 9 p d r e e t 2 h i r

l t d

- s g d d w t i 2 1

e : i

G l

e 1 n n m n u

o m s n e v g a l a t n n i a l e a o e r t o

c o w t n e r , a - o

, i

o h o

t t t n l a o f s o f h

p t d l l

n r s t s

. e e l l

i d ) o u s

r r s w e e r l o n a t u d

i i t a

o f o d o g

. y

p s l e t

n o s r t n ) s r

i s

i r w s

n e d a e € a e 1 i w n

G e e r a y n i

i a

t e h

t k i l 2 h g e

e h i o l i e e p l i s h 2 c t t e 0 d e €€€ t K i e n i c

2 4

, h c l s r 1 u b r n m e a i a m b t n d 2

7 n 7

d a

r a a a s 0 e

i h

a i h

o e 2 o

4 t 4 o o y i l y e , , e 2 c

s c l t e s c g d r ( C

w 2

b a 3 9

s e n

a g e e c r , n u g n t t € p o i 2 0 r 3 i

d a

d n n t t e e a

t : n a l O i

9 i 0 1 t n n n a a o t l , d d e h i 2 e

i d e P

e t f e 0 a r

I N h c n 1

t b

t 1 e h

s u a

e g 2

i o c x

e e e

0 e b

r d s x n n n

e r n

s . i h

2 m u n h i a

p ) e e a

I ( t t

n e

t l i e

y o n o i

r c t u . . s o a c d f

b r e 3 g b d y t n o a t s c o i c e

n e o i h

c 1 r G n

t € a t m p u n e t t

i d e l

i t

t d s n 0 r

: a l e r h e G o e

i n u c i

t e l n r r e 2 o d 2 c l

w i l t n

s r h a f r b

u € a i u

a e 8 1 2 a t s r l c o r e t e t

a g l f i c e a i e e 6 d 4 0 l e r a e

o D u l h l l

n n

c T p p g l s r t i a e 4 2 2 i b c d i

, ,

e b ( i

r 1 a a d o o n

t . n m t v r j v 3 7 a m n o r w c m 3 i y i n n a a 5

t e a

a v a

u 0 9 r

r p e i e w t a a d s t k g

9 t h c

h o 3 t 3 o c h

e a

o t , , m a n o e g 0 n r s t ,

i n

, s m i c n g e i t t

h 1 e

1 s n h

u e n k e i a a 5

e e n t s e i e n D o s i r t

w c u

h r h 7 t s

g s e t

n s o m u n t 1 d t s e

t 9 e e

s s l e f d n % u s b o a 3 n i t w a h € d h

r n u t

e o o 0 i s n t e i f t t

i k a e

i l w e t y e a h t i 1 a i

r s o t s a s f r o

u i i t

t m b t

p i a s c b p

y n e e

t r f s

r i d e x n n

f s

a n c

t n y d h n i . i l d e t k y i l e t e u e

l ) l u

t l e a a c s e a w p h i d s i o s e e

e x p

n t d g s i a n n c i o

r n t n h m h e

p e s u a

r r e p a

. s e n t

€ e w

a n u

s r o a r y h

u a

: a g

r y g e r a t t e c d l o e e c i d w s r l d p 2 n n

a u r h s i i

t e G n n h e

o l a y f w w 1 b t

c l n t s

e r

G n a n e l r d f t a . r

n i

o a e r n s s i i 4 e o l s o a u r a a e r o r 2

d t d n t s w l o f e

6 (

s h e

a u a h e e a c

r t

s h e o 4

e v s t t d i v c , s f m s l

t i 0 s t

n a r

’ r

u o m i a e l t r t s , 3 a l a i r o 7

n t e e r e i a p

i s

o t a a

e e a o e 8 s e

y m 8 s i c l t l e n i f g u ,

r w o l s v r d n

h s e i

o n b b , n c l t n o 1 e s e t e p s i n r e o r i i

e u r i a

b a t r f e 1 v n 9 s x h e o a

t i i n e n c t v

t h g n a h

n o € s

G i s e r l 1

c i

t i e

d € i e

, l t

n s f m f o

l e

f d o e o s r u

c n

y t e r f a e 1 h i b a t e l r o c

o s t n p a

t e

e , u u a t o d

u o c h

€

e a f e r a

a e t

n g e t g m h 3 s

d r h n

e r e f

n r d t e l s t

t r t u d t e

n 2 r t n e s e 1

a i i d

l y o e a i a i l e u t f e f

l d

r o n e 1 e m l . k 0 r e n s o u t n n b r a

i o s o s e h o e a e f n t n s 0 e o h b 2 t

t h c t i t

e t r r a t n e

r v t h

n t a o

i w s a 2 s r u f m s s e e

w g r t

I e

p g b i i e

i s

v n

g t n b

r , i o e r p s a e f

e e e s n u e l e

a a x e u h % y y y s t e e x v s d d e o e c b a h c

o s c c c a h a h h

o 0 b a c m a t i i i e b a s a e

t h t t e l l l

n i c a i

d i t

1 r r - d d e t i o r

l m e r

s c

m c t t o o o a

r r r d a m i , r e c c

p n t h

f a

e x a a k s h y a

f e e p p p k

n i k e

o y a n n a e t h

k c s e t s f i

w o f

n n t s s o c c t k h h a

i i g

f s s s i s b i i

t t h

’ ’ ’ e a r t t i o a

r s p e r t

t n n r

i a o n n

n o g a a r

a p p p p

i o w o i t

y t

p D r g t d

n a D y

d n i e y y p v c u u u u y

e i i n n n y y y y n a

e e c r y t n 1 e d g i e m

c s s e o t o o o o 1 i e i c c c c t r o o i a r d f i s d n i i r r r r e 3 f n o d a n a f b g m F 3 a p v

n n n n

d e o p a s s

e t d g e c l i a e t e i i e i G a a f G c G e G e t t o e e e e i u r r s r

s l

e r r v v a i h r r r r r

u a r a t u a r l r m a r e

c l o e e e e e e e e e t

r r r r i t c r o o e p 3 t q c q r t s u o h u s

e e r r i r x h h h h h h h h h i o u u u u a e n n T C R L T T L I C C U P C P A A T 2 T G A T c T c e c c s T T a c d i T Notes forming part of the consolidated ﬁnancial statements continued

23 Financial instruments and risk management continued The following are the contractual maturities (representing undiscounted contractual cash flows) of the Group’s and Company’s financial liabilities:

Group Year ended 31 December 2013 Total Within 1 year 1-2 years 2-5 years €€€€ Trade payables 503,634 503,634 –– Other accounts payable 671,507 671,507 ––

Year ended 31 December 2012 Total Within 1 year 1-2 years 2-5 years € €€€ Trade payables 701,197 701,197 –– Other accounts payable 361,897 361,897 ––

Company Year ended 31 December 2013 Total Within 1 year 1-2 years 2-5 years €€€€ Other accounts payable 321,764 321,764 ––

Year ended 31 December 2012 Total Within 1 year 1-2 years 2-5 years €€€€ Other accounts payable ––––

24 Operating lease commitments The Group maintains a portfolio of leased properties. The terms of property leases vary from country to country, although they all tend to be tenant repairing with rent reviews every 2 to 5 years and some have break clauses.

The total future value of the minimum lease payments is due as follows:

Group 2013 2012 € € Not later than one year 553,465 617,198 Later than one year and not later than five years 1,629,476 1,793,215 Later than five years 498,477 788,249 2,681,419 3,198,661

52 Keywords Studios plc – Annual Report 2014 OVERVIEW STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS 3 ) 5 l € € 3 6 7 5 7 4 4 7 7 8 8 s n a i t i 5 9 9 9 3 7 1 1 1 2 1 s

4 g h e c 1 2 2 9 3 4 0 8 8 4 5 a 1 d s , , , , , , , , , , , n

s h i n 0 e t a s t 5 9 9 2 1 7 3 8 8 7 9 o d i a 2 r c

s a 9 6 6 1 6 3 1 9 9 1 2 e e

o i t

e n ( w l t e r i s

t 3 9 2 2 2 t x d

f , , , a i c o s

s i e i o e n i v l 1 1 1 t

p e

i n n o g c i o s e

r c , i v n t i s e a R t

i i e i o e

t r v l j l s

s s r d r a e n i a i b

y e t e e s u a a u n r n

i s c m n u m f

e q

e a i d n f s a i g t c e n p p A o g e a n a n

x b a i

– f

m e l c e v y o t

c o a l d e s e b a o i i g p

p h a g

n h n u

i d

e i e s h a c v t

o o n h o

, b i a r s s t

a e a

i a

d d

t o f n h G x , d i y e

i u e l o e o t t l d l d

v i

e n

, S e a o s

e u t h i o t d t t i c s m t i i u i i n t

l e S d i

n e r e c e m a s

i d i s r r a o i s v a

L m i e u d g u

u u w r r r e

t i d h q y o q o g a i e o n c e e s l

w f t a L

a a K w ,

h M i c u n e y t

s n l i a V o e h e o

o e t h f K

n b t d u m

p f b i

o l

o a u g o g u o e

r r e t t B t n n q

h i e

i c i G t f i n n .

c d L w v i s e

o e e u n n

r f v o i l g e

h i d r a e o m o a

t n

s g

g s r i t t l s h

i i r t e e f s f a p r n p s

e r t n e i o i o o e l

a g e

n r o s p y a c s y n s c h i n p

i a

s g c a o

e c w .

d h i e n

r n e t e , t s i s a d t o e a p s a a

e a n e r e i a r l t r s h l e r c

t r a t g

c s t a n

a a r s e e h i a

t l e e i d e s l

n n

s s

’ e i e y n e o

e e e l i d p d l y c u a m

g p i e i i V e

s b s

t a v

d u o s a o r a d d i e t e i s r s i e y

t e t n k s d a u e s i G a h : r a n M

r r e

p s c q i a r l i e

e e t e e a r o w e L m n i h n

n u e m t . t

o b o , r e

l n e i n e m

K n e a l i l e t h l g o

e e i t o

e i t a s B a U f

i v e t

h o . a b a . e e m t a t b s s e w s

b r

o e h l l

l a h t d e l 3 d t h

e t i i . t . a

e g e

i m s c e

n n i i n 1 6 d w h i r c

n n t a g l i

d t e i a

£ 1

e i

n e d

e l u h n r p n 0 n r n r i n a d i e . p c i c

i a q

i l

2 r e

u o e n a t i t t

m c s i i

s a h ’ r e h i f q e n r l u a o h e

t d d n i b e

p l c w k c c r a t q n

e y e

n o o p r o o r u , a b i c I s l c u t

s y o

i n t a p a f i u s o i n a g y a r

p g t r a

a d , i y o o s a a n m M h i s i e i m p d

n r s

G e t t a i t i , r a m

m i

h d d

a n h t 1 r r i f i , L e r G

t e p u s p m e t

i a i y s s 3 n a o s o a o

t t q o

f a f u s n n m e b a p t e w i a e d c e t o C

l n n

a l q a o

o u t b I a a

d a i

a m n d 0

l h c o o t s o p . e i C t t n e

s i c t s

e p 0 a o n t p e

i h i d r

s a a

n s V m e t a t e 0 h

t n r

M a e , n o , e

u i e e r t t

, s o i a

h t

i l e l e c 0 d o , h d x q t r e c i 4 i r i

h m e t d y c

e l d 0 e t e K

e v t

h r 1 t

o o i 4 s u f n r l t a p b 3 s t e d f l ’

s o U 0 h d i e

r 1 i o a q e f

f w a £

e t

s i p

s s c t 2 n

m e e a n 0 s r e i o

w s l s r f B L e u -

a e n o a l o i v

2 d r y l l h h e

b i o

a t f f e r o r c n t c t s

o m l

t b e p b s

y a h r f r

e t a u c o o o f n a r t u n h l a

e i n n n s o e i e f i G u v t s a

e a o o v

a t

i i h n i e n n o l i i

r c m

l o i v t g t u e s n c

s e e c

e , o o p i e b t e

v e b

a i i o a c n n o e k c h l b r n e i u e a t r s u t t r l h d y i

t u v a e

i t l o i i e s

o t u

t e , t F J i e q e d i r l e p

p c l s s r

s t

a s t o

d w

r r K c E o i i a d t - r 7 5 r u e i e r b a v i m e e a b e n d l v n

u u e i r U

t e

e h h 1 1

a e d p h

r a d

e o d f r g t e q q s s s y e e i h n m t i s t p o o

e u r 5 a i n n t o n e c c a a t r a p r a

a x x h h a a o r o h a t F h D A O F C C T G P 2 A O A P O t T i p o T g e U c m t T e Notes forming part of the consolidated ﬁnancial statements continued

25 Events after the reporting date continued The book value of the net assets acquired is as follows: € Property plant and equipment 678,076 Trade receivables 499,512 Other receivables 714,516 Multimedia tax credit receivable 1,200,172 Bank overdraft (677,785) Trade and other payables (4,377,693) Finance leases (76,628) Total (2,039,830) Fair value of consideration paid 2,686,057 Goodwill (4,725,887)

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

Fair value of consideration payable € Shares issued 2,686,057 2,686,057

Incorporation of Keywords International Pte. Limited On 24 March 2014, the Directors incorporated Keywords International Pte. Limited, a company registered in Singapore, as part of the Group’s continuing geographic expansion, and to allow it to service the games industry in South East Asia.

54 Keywords Studios plc – Annual Report 2014 OVERVIEW STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS . . 5 r y . t r d s m 5 t e l k e l i i r d l l e r u e ) e r : n 0 i r r . d s 9 a a e ’ a e s h o . b g A 4 o 0 o g o t a

K d s 3 s i a c o 1 w l m d u s n r

a C m 2 b n l t h t a , o y w ‘ o d i l n , f 6 r i i s 0 U

n u

a h t f o t F i o e c uk u e o a £ y ( a b

d a t n ( . d e

8 o y o

m d e t a p r o c e

n i y l o

t c n

c t f o

i . ,

a i y

t r i r r a l o d h o e t l v f

a 0 a d u u t r y y F

, o r y u n o i 0 l

l l e s t

e t d c e o b v

c a g b a o t s n o

y . 0 e h n i C h i . n i o w i

c s x k h o t

b ) s e t

t s

G c e h r

R c a

i s n e v s 3 p g i u a i a b e u x t c r h k

i e e o

i e s

6 .

s m i r e u t l r c n e o t i t e 4 i r r c c m w . r 0 l i n e r i o

o g d u r

h r 8

w 7 d

e e u m m .

R m a a r m h h 4 h , a a a e

v o r

u o p p o e a o s U p d T r t l t t m u 6 i 4 t 3 u

t h r

u t g y r q e o u a d a

h +

e , 0 h s

t a t

o t . a T

e h h r e f

r m s n . s

t u a o 8 6 7 e n a r

e c q c n s n m . n h

c r a y 0 n t a i u o

y r t r n n 4 –

S h o o p i . e e

o n r n 2 6 3 w A e o S l d t

y a . a

t a n c n r y b

n n e

u t v

n o o p i i c t t o 9 r

d a e n c w e @ s c 5 i t c s t

3 r h

t e s f r

h a u n t 1 0 t e e a o n y p e t n n i

n s s u e e o a c o f w r l 0 s e c F e i e i v A e k g g s R

r r s

e n a c

o 7 i 3 i

t s a n g v o i y u r r e C r , o

u t

e s u o c m s o 1

y n a

i a u

– r n

y e B a s p

d t 8 9 x r d o

n e e t e m a c o i s a t

t s 0 r y s e t e

e d g i

, t u

m r h c h t i o m r u

d r i c a o p r m e t s e r n 0 7

e o

r l h d t

n o r A i 0 r a r -

s d s c s l h B n n p

a a e o

a u o r t r e p y o e

r i

r o s u t s e l t p

u u i w e n

– 0

h o h m l i a t n 0 m

e u

d t a o y v a . , o r v h

q p a

h l l f t a

y a f t 4 n

p o s n s e o e o l t c t e s p e n a l

s e c

o 2 o s u s f r i a o c s C 0

n e K . n

s d p n . g r h o 3 y

y o

p n

s i c e e h K i e y i c w i o n r e o a

i n 0

i l

r o n p

l 2 i h

p e , , t r r K

a n

u e a s i w a r C , U e t h u w s f r a

a g t

d o

a r r r

r f y y s

a d m p r e

£ a d 0 s g s i d

u l o c m

i r a b S r

U s r

o r e t

d u w i – y

e e e w d

o g o

d a

e m l

c i f o C e h 1 t e

t c n e a u

o r a s l t e

a h o o r i w

i – o r h b c

d d d d M u m e n

s a e n w h e e v s

S e

w n v o

s e t t l l l y

t a

h i e

– o g o i l

r h e t F s r

, n n

a s y a l n i

n y i o e i s a r h h t r r a s w

y t

n s t t c

n r o o o l

g i r l t .

r e h a e

t f

e c u o p ’ a a e L u e f h u )

h e a m f d o

n a n o t y

n f m s i d l m o s o

e t

h s h h b

c e

i l

f i s t u u i r . i s h c u t l r c b s

e e

n r n o e o h o i e h f

a a e e e e m p h o i e F R

e a m m s v i e u f o l

s o i l t a r 9 l r t i r

t k p a

e r e

r r r

r e c r i m p i u r s g t 0 r n p e p n o i t y r l t o s l e s e b c a c w e g 9 e v s e e a e

m a a a u a u

m t p r c l a e i o h o l e f s t l s 3 g y v o h h e o y e u y e y y u l l u e a s a r f 3 . h i

h v v x x h h a o e h h e h h o o o e r R e f u o n h a D I S S C A S H w C p B i s o c r W 3 s s y f c e s R ( m 5 c w J A u p t w T h B T B s B e a c l K : t n i n r s a i o n y e e r c i o v r r

k a t t s

o r i a u t o

c u c a e n

r t i e . v s d a o e i o t u

n s h t r r m i y r u i d n s Y s s e

l d j

m i

t c P a i e l

u . i a a h s c r l A l o n s

i L c

y a d o t i e n h l e t a o l A s

e o

n i L f o

f y d t p i i

c a r . n

s o s

w g

) r t

w h e

c r e t s e , r e e a r g h n e c t o e . r m a i e

e c d e e g

e r u n e f i a t P p n u

i m o d g r c

a n e d s d v t l o

c y n c t o n d

t a r e . i e n h o n t n r o o l e d e a e e s r s n s e h i r c c a v a d a d s a h n k u

n p

i a s

s o

s s r m t

a r

u m

r y

s n e E y v a a t s r h e e m a t p i d

y ( o y r y a d h t

o e

a e b o x l r

e c S l o .

k a g n t d s a o a i v s v

n c n k r e n n t y n o i

N d i i

i D s c e m s p

o v n

u t p r c h a s e r

e a a U a e i r l e v n x i u e

T d r n o e I e t e s a R o k r p c u h u v d h

E a t c a h

e d

n r a u 2 d

v o

t i e m o t i l e c c t

t t

u t h e s r i

s a o

o r 2 7 e l a

v c i

q e

r n c n r u S c t

t e r i o r l o t r m

i i S y r

h u l a c

h r d

H t M f a l U e h e a

o a u o t n n e d h g a e o

U t f t e

v r i o r s e o s f o

a y o f T c n y n a 2 l

d o P e o

o f i e e

k n

h t y S r r i 1 e e t d r s h y t

u a i W t f i

m e

s y

r s e o

r b C t

S t g t v s r o n

e n

n a n

u u t t e i

i o r r s o

g v d s a e s n d e d r W E a u s e a l i s

r i r a s a i n o e 3 u & e o n r y

d P S r o o y t p e d r a t n i l

A r o

e g n v

a A g i o L k h t e g e D y y

b s L R r p e t n n n i o l o a

a y s m

i t

n i m a o h c s n k e i g t l e h l t h r n L u a r c

r i r B c h a x i o o

u d e e g i t

. a e e i k

t s a e a o

a w w t m t w a S e i R y a w o q g e i o c i i s m u t r

c u o d d d

e r

r a i d f e e w i n r e f B B W o O O r u h d r r e e i i m g p p a a l o p

e o n e d d e n n w a u

e n n a e o w t t e c M B R D V C A R V y i i w u D D e e a e a e e e 4 5 1 o h n n h h o o o i h o o n w M K C 3 L Beck a • • • • • • • • • R C T S T A B S D R B 5 B L 2 L m T b a s s y a m g r n i d r l i o e u k f B o

r s k e y n s r B * g

) i n e a ) n d * d r n

a t ) ) P n P r a e

i ) a r r o n e o t p L s r s t h t s i o o e y a d e L c s c c n e m

t t r r r

u r m e r ) n x r y c e e m c c t e r o i a e o i i i b i r r r o f E a e K P

n e e S i a s t d u n

L f i n s

f a i r r a s

C L t H T i i a k h m s U i D

T q y e t e a n d v s u o

( O n L s l L Y c c d e Q Q l

c u S D D C v e r l R a e i e n o a e d i q

e t t s 7 4 L L s a o d i n r k e e e d h d a 7 f

o r h i a n k t D C S t : : e e e r

e e A l u t e ’ v 2 2 c f c a n c

n t i

e a c

i e l i

t n A v v v a

S u y : : e e e s e s e e r M M i i i

r t o t e a

o a t e r n t p n O R e S W S l r r R t t t n c c

l n p e e o a r

s d u i i 4 2 s u u S t t r d n i o H G a n h m e t e 1 1 1 f f

c I c u u u P d d o p

e c o u i i o n n n

f f p S

S C C r e d

o h P n u o c c c f f y

l I l a s e s g

u i g t C e e J a a n n a f f 8

m e E o W W o W E s ’ G H i d

t r l l o e e e r r r

d d a n r F

a x n S a R d S e o 1 o 4 i o

n s r r i i x x x a m

e A A O C o n n n n n n n o e a E w n o p e c r

n s

p t i o t C t e E E E o o t w i t K o e n n i n n n n i o o o o o o o a

f e p i f f

- - - r i i i i v b h s l d d d r n c o a g c u L S l l l l f f r a i i i i i t c s e d d d d d d d i i

P w s r n n n o n e e i l l a i e m P G l m o x n b b b b v v v d m s g u l l

e u e e n n n n n n n i o r r o o o o H h h C C D e n o u i a a a i u u u u r e o n a r o l D 0 0

o q o i h h o o o o o o o

N G C N N ( G D ( ( 1 A L L D T ( 6 8 S B F M C D N N ( * R L D R C p L S D L D W 8 L D A S 7 D T B L Company information continued

PROTECT YOURSELF Identity theft If you are offered unsolicited Tips for protecting your shares in the investment advice, discounted shares, company: a premium price for shares you own, • Ensure all your certificates are kept or free company or research reports, in a safe place or hold your shares you should take these steps before electronically in CREST via a nominee. handing over any money: • Keep correspondence from us and • Get the name of the person and Capita in a safe place and destroy organisation contacting you. any unwanted correspondence by • Check the Financial Services Register shredding. at http:// www. fca. org. uk/ to ensure • If you change address, inform Capita they are authorised. in writing or update your address • Use the details on the FCA Register online via the shareholder portal. to contact the firm. If you receive a letter from Capita regarding a change of address but • Call the FCA Consumer Helpline on have not moved, please contact 0800 111 6768 if there are no contact them immediately. details on the Register or you are told they are out of date. • Consider having your dividend paid directly into your bank. This will • Search our list of unauthorised firms reduce the risk of the cheque being and individuals to avoid doing intercepted or lost in the post. If you business with. change your bank account, inform Capita of the details of your new REMEMBER: if it sounds too good to account. You can do this by post or be true, it probably is! online via the shareholder portal. If you use an unauthorised firm to buy • If you are buying or selling shares, or sell shares or other investments, you only deal with brokers registered will not have access to the Financial and authorised to carry out that Ombudsman Service or Financial type of business. Services Compensation Scheme ( FSCS) • Be wary of phone calls or e-mails if things go wrong. purporting to come from us or Capita asking you to confirm personal details REPORT A SCAM or details of your investment in our If you are approached about a share shares. Neither we nor Capita will scam you should tell the FCA using ever ask you to provide information the share fraud reporting form at in this way. http:// www. fca. org. uk/ scams, where you can find out about the latest investment scams. You can also call the Consumer Helpline on 0800 111 6768.

If you have already paid money to share fraudsters you should contact Action Fraud on 0300 123 2040.

56 Keywords Studios plc – Annual Report 2014 Contacts

Contents

Keywords at a glance 2 Directors’ remuneration Company statement policy report 24 of financial position 32 Chairman’s statement 4 Independent Auditor’s report 26 Company statement of Strategic report 6 changes in equity 33 Consolidated statement The market 8 of comprehensive income 28 Company statement of cash flows 34 Case study: Game localisation 8 Consolidated statement Notes forming part of the Chief Executive’s review 12 of financial position 29 Consolidated financial statements 35 Financial and operating review 16 Consolidated statement Company information 55 of changes in equity 30 Board of Directors 18 Contacts 56 Consolidated statement Directors’ report 19 of cash flows 31 Directors’ remuneration report 22 Designed and produced by fourth qua rter K e y Keywords Studios plc w Keywords Studios plc o r d

s Annual Report and Accounts

S t u d i o s

Keywords International Ltd. p l c

Whelan House A n

South County Business Park n u a l

Dublin 18 R e p o

Ireland r t

a n

T: +353 190 22 730 d

A c

F: +353 190 22 774 c o u n t s

2 0 1 3