T R U L Y
I M M E R S I V E
K E Y W O R D S S T U D I O S P L C
2 0 2 1 A N N U A L R E P O R T A N D A C C O U N T S
O V E R V I E W
WELCOME
S T A R T N E W
C A M P A I G N ?
YES
NO
O U R P U R P O S E
1
2
0
2
S
T
N
U
O
C
C
A
D
N
A
T
R
O
P
E
R
L
A
U
N
N
A
C
L
P
S
O
I
D
U
T
S
S
D
R
O
W
Y
E
K
We bring to life digital content that entertains,
connects, challenges, and educates people worldwide
At Keywords Studios, we bring passion to every pixel, every
project, every aspect of technology and media. Working hand
in hand with our clients, our diverse group of digitally native
Keywordians provide technology-enabled solutions that turn
extraordinary ideas into great interactive content.
We’re on a mission to be the world’s most trusted partner in
technical and creative solutions for the video games industry
and beyond. We will be a sustainable business that positively
contributes to the environment and our communities across
the globe.
Welcome to our open and evolving world that brings your
stories to life!
B E R T R A N D B O D S O N
C H I E F E X E C U T I V E O F F I C E R
Overview
02 2021 highlights
03 Company overview
04 Meet the new Keywordian
05 Chairman’s statement
Investment case
07
Strategic report
10 Chief Executive Officer’s review
15 Market opportunity
16 Our business model
20 Our strategy
22 Key performance indicators
25 Service line review
34 Our people, our culture
37 Responsible business report
People (including DE&I)
Client
Planet
Community
Governance
Non-financial information
39
42
43
47
48
50
statement
51
Section 172(1) statement
53 Financial and operating review
57 Principal risks and uncertainties
Governance
59 Board of Directors
61 Chairman’s introduction
62 Corporate governance
66 Audit Committee report
69 Director’s remuneration report
82 Report of the Nomination Committee
84 Report of the ESG Committee
86 Director’s report
88 Statement of Directors' responsibilities
Financial statements
89
94
95
96
Independent Auditor’s report to the
members of Keywords Studios plc
Consolidated statement of comprehensive
income
Consolidated statement of financial
position
Consolidated statement of changes in
equity
97 Consolidated statement of cash flows
98 Notes forming part of the consolidated
financial statements
126 Company statement of financial position
127 Company statement of changes in equity
127 Company statement of cash flows
128 Notes forming part of the Company
financial statements
Supplementary information
132 Alternative performance measures
138 Key disclaimers
138 Company information
STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSSUPPLEMENTARY INFORMATION
TRULY IMMERSED
MEET THE KEYWORDIANS
01
PR ISCILA DE FREITAS CAIADO ALMEIDA
STU DIO HEA D FOR BR AZIL
TE RESÓ PO LIS, BR AZIL
LEVEL
72
1
2
0
2
S
T
N
U
O
C
C
A
D
N
A
T
R
O
P
E
R
L
A
U
N
N
A
C
L
P
S
O
I
D
U
T
S
S
D
R
O
W
Y
E
K
P R I S C I L A
S K I L L S :
M O T I VAT I N G
G A M E G E N R E :
A C T I O N -A D V E N T U R E
S T R E N G T H :
C O M M U N I C AT I O N –
I T ' S K E Y T O B U I L D I N G
T R U S T, A N D W I T H T R U S T
W E C R E AT E B E T T E R
R E L AT I O N S H I P S
K E Y W O R D S H I G H L I G H T:
D E F I N I T E LY T H E P E O P L E
I W O R K W I T H E V E R Y D AY.
T E A M AW E S O M E ! M U I T O
F O R T E ! ( W H I C H M E A N S
" V E R Y S T R O N G " )
E N E R G Y:
M O R E G A M E A C C E S S I B I L I T Y,
I N C L U S I V I T Y A N D
T E C H I N N O VAT I O N
I'm proud of growing our
team in Brazil to be the
best in the region
STRATEGIC REPORTGOVERNANCEOVERVIEWFINANCIAL STATEMENTSSUPPLEMENTARY INFORMATION
2021 HIGHLIGHTS
D E L I V E R I N G
A N O T H E R W I N N I N G
P E R F O R M A N C E
FINANCIAL
REVENUE
€512.2m
ADJ UST ED EBITDA*
€110.1m
BASIC EARNINGS PE R
SHARE
45.16c
* Alternative performance measures
** Interim dividend only
21
20
19
+37.1%
21
20
19
+48.4%
Margin 21.5% (2020: 19.9%)
21
20
19
+48.9%
€512.2m
O RGAN IC RE VE NU E GROWTH *
€373.5m
€326.5m
19.0%
€110.1m
PR O FI T BEFOR E TAX*
€74.2m
€57.6m
45.16c
30.32c
15.23c
€48.0m
ADJUST ED EAR NI NGS P ER
SH ARE*
89.24c
21
20
19
+19%
21
20
19
+47.7%
21
20
19
+46.5%
19.0%
11.7%
15.5%
EBITDA*
€85.7m
21
20
19
+28.3%
Margin 16.7% (2020: 17.9%)
€48.0m
€32.5m
€17.4m
ADJUSTED PROFIT BEFORE
TAX*
€86.0m
21
20
19
+56.4%
Margin 16.8% (2020: 14.7%)
89.24c
60.93c
48.78c
TOTAL DIVIDEND PER
SHARE
2.15p
21
20
19
+56.5%
€85.7m
€66.8m
€43.4m
€86.0m
€55.0m
€40.9m
2.15p
–
0.58p**
The Group reports certain alternative performance measures (APMs) to present the financial performance of the business which are not GAAP measures as defined by International Financial Reporting Standards (IFRS). The Directors believe these measures
provide valuable additional information for the users of the financial information to understand the underlying trading performance of the business. In particular, adjusted profit measures are used to provide the users of the financial statements with a clear
understanding of the underlying profitability of the business over time.
For full definitions and explanations of these measures and a reconciliation to the most directly referenceable IFRS line item, please see pages 133 to 137.
02
1
2
0
2
S
T
N
U
O
C
C
A
D
N
A
T
R
O
P
E
R
L
A
U
N
N
A
C
L
P
S
O
I
D
U
T
S
S
D
R
O
W
Y
E
K
OVERVIEWSTRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSSUPPLEMENTARY INFORMATION
COMPANY OVERVIEW
Seattle
Chicago
Dublin HQ
Liverpool
03
STUDIOS IN
23 COUNTRIES
74
Vancouver
Mexico City
Austin
Orlando
New Orleans
Ottawa
Montreal
Raleigh
Quebec City
Leamington Spa
Newcastle
Portsmouth
Bucharest
Brighton
Berlin
London
Katowice
Service lines
Art Services
Marketing Services
Game Development
Audio Services
Functional Testing
Localization
Localization Testing
Player Support
Beijing
Yanjiao
Dalian
1
2
0
2
S
T
N
U
O
C
C
A
D
N
A
T
R
O
P
E
R
L
A
U
N
N
A
C
L
P
S
O
I
D
U
T
S
S
D
R
O
W
Y
E
K
Saint Jerome
T H E M I S S I O N
Los Angeles
Portland
It’s our mission to be the world’s
leading technical and creative
solutions platform for the video
games industry and beyond.
Welcome to our open and
evolving world.
Keywords Studios now has 74 studios, in over
40 cities, across 23 different countries worldwide.
We provide a full set of integrated services,
combining a presence that is local to our clients
in key gaming clusters with good access to skilled
talent pools across five continents.
São Paulo
Rio de Janeiro
Madrid
Barcelona
Paris
The Hague
Volgograd
Saint Petersburg
Hamburg
Krakow
Milan
Rome
Melbourne
New Delhi
Pune
Bangalore
Chengdu
Zhengzhou
Singapore
Yogyakarta
Tokyo
Manila
Taipei
Shanghai
Kunshan
AVE R AGE NUMBER OF
E MP LOYEES IN 2021
9,493
STRATEGIC REPORTGOVERNANCEOVERVIEWFINANCIAL STATEMENTSSUPPLEMENTARY INFORMATION
04
1
2
0
2
S
T
N
U
O
C
C
A
D
N
A
T
R
O
P
E
R
L
A
U
N
N
A
C
L
P
S
O
I
D
U
T
S
S
D
R
O
W
Y
E
K
MEET THE NEW KEYWORDIAN
Q C O N G R AT S B E R T R A N D !
C A N Y O U T E L L U S A B O U T
W H AT F I R S T AT T R A C T E D
Y O U T O T H I S R O L E ?
Keywords presented such an interesting
opportunity to someone with my background and
it felt like the perfect match for me and my skillset.
Over the years, I have spent much of my career
leading on broader digital transformations, most
recently at Novartis, and I have been fortunate
enough to drive growth strategies across
businesses of scale.
When I look at a business, I always look to join
one that has strong underlying assets and that
is certainly the case with Keywords. It has great
foundations as a proven market leader that
supplies almost all of the major developers in a
sector that has huge growth potential.
That would be exciting enough but, on top of that,
I believe the quality of the platform that’s been
built, and its attractiveness to potential partners
and acquisition targets, provides the Group with a
clear opportunity to continue to grow its services
and scale in a global market for which service
provision remains highly fragmented.
Put together, these offer a hugely exciting
opportunity and I'm looking forward to leading the
Group's ambitious team to deliver an ever more
compelling proposition for the buoyant video
games market, and beyond.
Q W H AT A R E T H E S K I L L S
A N D E X P E R I E N C E S Y O U
B R I N G T O K E Y W O R D S ?
What I bring to Keywords is a global outlook,
experience of developing strategic partnerships,
and the ability to drive the business forward while
leveraging technology. I know the Board was
keen to bring in an outside perspective to the
business and to make a hire that matched their
ambitions and I truly believe in their outlook for
this incredible organisation.
While I have no direct video games experience,
I have multiple years of digital transformation,
technology, media and social experience. In
addition, the Group already has over 10,000
passionate gamers and a strong team of industry
experts in senior positions across the business
and I really believe that my diverse experiences
will help to bring a fresh perspective to the Group,
as well as a strong strategic focus on leading
Keywords to deliver an ever more compelling
proposition for this buoyant market, and beyond.
them get to market with their ever-advancing
intellectual property to meet the exacting
standards of video gamers today.
Third, while Keywords already has scale with over
10,000 talented people across the business, there
are clear opportunities to build on the Group’s
strong platform to continue to drive significant and
sustainable growth.
Q W H AT D O Y O U S E E A S
T H E K E Y O P P O R T U N I T I E S
F O R T H I S B U S I N E S S ?
Growing this business through selective acquisitions
remains an integral part of the Keywords strategy and
we continue to see an opportunity to build out our
scale in Game Development which has strong growth
prospects and is still undersized relative to what
our customers spend on Game Development. We also
want to continue to build out our marketing capabilities
where our current offering only provides about a third
of the services that our clients need in this area.
We have amazing, talented people at Keywords
and there has never been demand like there is
today for our talent. So, we are looking at how we
can continue to be a magnet for talent, what we
can do to enhance career journeys at Keywords
and how we can elevate the right people across
our service lines to help propel us forward.
Finally, we are also keen to explore some adjacent
market opportunities – we have already started
building an internal Media & Entertainment
Dubbing and Subtitling capability and there may
be opportunities to build on this through M&A as
the broader entertainment industries increasingly
converge with the video games industry’s models.
We are also looking at how we could support
developments in e-learning and the metaverse, as
well as other areas, where we see a clear overlap
between our skillset and service line capabilities.
Q W H AT A R E Y O U R
I N I T I A L I M P R E S S I O N S
O F K E Y W O R D S ?
Elsewhere, we are always on the look-out for good
quality businesses in our other service lines. A good
example of this was the AMC Art acquisition in 2021,
which gave us access to the talent pool in Romania
and the potential to expand into Player Support and
Testing in that country. We’re constantly looking for
businesses and people who are like-minded and
share our drive and when it feels right we’re really
happy to bring them into our Keywords family.
While it is still very early days, I have spent
much of my time meeting people across the
business, visiting studios around the world
and speaking to our clients and it has made a
few things abundantly clear. First, Keywords
is full of incredibly talented, experienced and
entrepreneurial leaders who have a serious
passion for video games and a clear desire to take
this business forward.
Q&A
Second, the Group is in an enviable market
leading position, in a high growth industry that
continues to move towards external service
provision. Keywords has an impressive base of
long-standing clients, with almost all the leading
publishers and developers relying on us to help
The business is fortunate to already work with
23 of the top 25 publishers. This allows us to build
strategic partnerships with them, as we have a
place at the table from which we can create and
capture more value together.
Digital transformation is also a clear opportunity,
and we are keen to explore technologies that we
can bring in to make our services more efficient
and deliver additional value for our customers, as
well as to expand our services.
B E R T R A N D B O D S O N
C H I E F E X E C U T I V E O F F I C E R
STRATEGIC REPORTGOVERNANCEOVERVIEWFINANCIAL STATEMENTSSUPPLEMENTARY INFORMATION
CHAIRMAN’S STATEMENT
Keywords staff of some 10,000
have very much put their collective
"shoulder to the wheel"
T H E
G E N ER A L
R O S S G R A H A M C H A I R M A N
L E V E L 7 4
X P 8
05
1
2
0
2
S
T
N
U
O
C
C
A
D
N
A
T
R
O
P
E
R
L
A
U
N
N
A
C
L
P
S
O
I
D
U
T
S
S
D
R
O
W
Y
E
K
This, my ninth Chairman's
statement since Keywords’
IPO in July 2013, looks back on
another year of strong results
and delivery on our strategy,
and looks forward to one of re-
energisation with new ambition.
The increase in revenues to €512.2m represented
actual growth of 37.1% and Organic Revenue
growth of 19.0%. Adjusted EBITDA grew 48.4%
versus 2020, albeit assisted by a low level of
costs as a result of COVID-19. While the final
Adjusted PBT margin of 16.8% benefitted from
these reduced costs, it nonetheless evidences our
medium to long-term margin expectations of c.15%
is very achievable.
The Group completed six high quality acquisitions
in Australia, UK, Romania, and the US in 2021,
extending its scale and capabilities to Game
Development, Art Creation and Marketing, in
line with our strategy to become the external
provider of choice across all our service lines for
our global client base and giving the Group Pro
Forma Revenue of €528.5m as it exited 2021 (2020:
€409.2m).
In the context of the Group’s ongoing strong
financial performance we are recommending a final
dividend of 1.45p, giving a total dividend of 2.15p
for the full year (having suspended our dividend
programme in 2020).
Following the early retirement for health reasons
of Andrew Day, I would like to express the Board’s
gratitude to all of Keywords’ Senior Management
Team for ensuring that the Group continued
to deliver exceptional results in 2021 and for
Page 1/2
OVERVIEWSTRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSSUPPLEMENTARY INFORMATION
CHAIRMAN’S STATEMENT CONTINUED
enabling a smooth transition to the appointment
of Bertrand Bodson as the Group’s new CEO in
December 2021. In Bertrand, the Group has a new
CEO whose talents, expertise and leadership skills
are uniquely tailored to take Keywords forward for
the next phase of its remarkable journey. Indeed,
it is testimony to the unparalleled positioning of
Keywords in the video games world that we have
been able to attract someone of Bertrand's calibre.
My fellow Non-Executive Directors also deserve
my thanks for their support in directing the
business during the transition to a new CEO, and
ensuring we had an effective CEO recruitment
process. In addition, we have recruited two new
Non-Executive Directors in anticipation of the
retirements of David Reeves (Senior Independent
Director and Chair of the Remuneration
Committee) at the next AGM and of Giorgio
Guastalla, the Keywords founder, as announced
recently. In Marion Sears, who is going to take
over the role of Chairman of the Remuneration
Committee, and Neil Thompson we have, I believe,
found two exceptional Directors who will be well
able to provide the necessary support to the
Executives. When David Reeves stands down at
the next AGM, Charlotta Ginman will be appointed
as Senior Independent Director; she has served
with distinction on the Keywords Board for four
years and is Chair of the Audit Committee. On
behalf of the Board, I would like to thank David for
his considerable contributions to the Group and
to Giorgio; without him and his wife Teresa there
would not be a Keywords. Given the changes
to the Board during the year, the Board has
requested, and I have agreed, that I extend my
chairmanship by a year beyond a nine-year term,
with the view to retiring at the 2023 AGM.
In a year when we have seen the transition of
CEOs, the Keywords staff of some 10,000 have
also very much put their collective "shoulder
to the wheel". My thanks go to each and every
Keywordian who has supported the business in
the last 12 months.
In October 2021, an Executive Summit took place
which was designed to act as a celebration of
the achievements of Keywords over the last few
years and to re-calibrate the strategic direction
of the business. We were fortunate that Bertrand
was able to attend the Summit and have his first
taste of the culture, talent and ambition within
the Senior Management Team. A further strategy
conference is planned in the near future to build
on the actions from the Executive Summit and to
act as a springboard for Bertrand’s vision on how
the business should evolve.
As the Group continues to grow, Bertrand and
the executive team will be focussed on driving
operational efficiency, making better use of
technology in the way services are delivered, and
establishing a more strategic relationship with the
major publishers, our clients.
Having completed his first 100 days at the helm
of Keywords, Bertrand has already earned
the respect of staff and customers alike. He is
incredibly excited and enthused by the prospects
for, and opportunities available to, the business
and I share that enthusiasm. These opportunities
are not limited to the video games industry,
where Keywords now has a pivotal role in the way
services are delivered, but also in adjacent markets
where “gamification” know-how and expertise in
effectively delivering content to multiple markets
can have a real influence.
Indeed, I believe that Keywords has really only
just started its remarkable story and will continue
to go from strength to strength as it builds
on its strong platform to grow organically and
by acquisition.
Since the year end Sonia Sedler, our COO, has
left the business and her role on the Board for
personal reasons. Having joined the business as
COO during the COVID-19 pandemic, Sonia became
joint interim CEO with Jon Hauck at short notice
when Andrew Day retired early. We are grateful
for her contribution and she leaves with our best
wishes for the future.
Summary
We have a strong and energized leadership team
in place and are well positioned to continue to
execute on our clear opportunities in the buoyant
video games market, as we capitalize on the
Group's unique full service platform, powered by
our incredibly talented team of Keywordians. Our
strong balance sheet will enable us to continue
to execute on a healthy pipeline of acquisition
opportunities, complementing our ongoing
organic growth.
W E A R E F O C U S E D
O N T H E F U T U R E
R O S S G R A H A M C H A I R M A N
Page 2/2
06
1
2
0
2
S
T
N
U
O
C
C
A
D
N
A
T
R
O
P
E
R
L
A
U
N
N
A
C
L
P
S
O
I
D
U
T
S
S
D
R
O
W
Y
E
K
OVERVIEWSTRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSSUPPLEMENTARY INFORMATION
INVESTMENT CASE
07
T H E P E R F E C T P A C K
Strengthened platform in a growth market
Keywords is better placed than ever to continue to capture
an increasing share of our growing market, by deepening our
relationships with customers who already trust us with their
high value intellectual property, having significantly extended
our services and geographical reach during the year.
Page 1/2
01
02
03
04
A C C E S S T O
A D Y N A M I C
G R O W T H M A R K E T
M A R K E T
L E A D I N G
P O S I T I O N
S T R O N G
G R O W T H
R E C O R D
We operate in a US$180bn industry,
growing at an 8-9% CAGR. Within this,
spend on our services is estimated at
circa US$35bn, of which only US$11bn is
externalised, leaving us with a substantial
opportunity for growth. Our focus on
content means we are platform agnostic
and well positioned to take advantage
of the opportunities presented by next
generation consoles, mobile gaming,
cloud streaming, AR/VR, and the
metaverse. The increasing sophistication
of video games and the development of
new platforms all add to the complexity
of the market, which drives demand for
larger, professional, specialist external
providers, such as Keywords, in a highly
fragmented supplier market.
As a digitally native company providing
technology-enabled solutions, Keywords
has a market-leading position as the
only global provider of fully integrated
creative and technical services to the
global video games industry. With an
industry reputation for quality, reliability
and flexibility, our scale and reputation
mean we are well placed to take
advantage of the trend for customers to
move to more collaborative partnerships
with fewer, larger suppliers.
We continue to deliver strong organic
revenue growth as we benefit from
both the growth in the video games
industry and the trend towards greater
use of our services. In addition, we have
successfully completed 56 acquisitions
since IPO. The six acquisitions completed
in 2021 further bolstered our capabilities,
particularly in Game Development,
Marketing and Art services, while
bringing us ever closer to our customers
around the world.
O P P O R T U N I T Y
T O G R O W
F U R T H E R
Having made further progress in
extending the Group’s client base, market
penetration, geographic footprint and
service lines, we are looking to unlock
the significant potential for increased
cross-pollination of our service lines
and geographic locations. This would
include taking advantage of our dual-
shore capabilities, which enable us to
be close to our customers and provide
services from lower cost studios, as we
increasingly become a strategic partner
to our customers.
1
2
0
2
S
T
N
U
O
C
C
A
D
N
A
T
R
O
P
E
R
L
A
U
N
N
A
C
L
P
S
O
I
D
U
T
S
S
D
R
O
W
Y
E
K
STRATEGIC REPORTGOVERNANCEOVERVIEWFINANCIAL STATEMENTSSUPPLEMENTARY INFORMATION
INVESTMENT CASE CONTINUED
08
05
06
Page 2/2
A S T R O N G B U S I N E S S M O D E L
A D J A C E N T M A R K E T P O T E N T I A L
Keywords’ flexible resourcing and charging
model, with charges levied for time or output,
combined with relatively low working capital
and capital expenditure requirements, support
our ability to grow the business while also
achieving strong underlying cash conversion.
Our business model also provides an
opportunity to invest in the exciting video
games market, without the risk of exposure
to the successes or failures of individual
game titles.
Our expertise in providing technical solutions
to the video games industry is already sought
after in adjacent markets such as film and
television, and Keywords is well placed to
deliver this.
Video games represent the pinnacle of
interactive digital content. Our mastery of this
most interactive of content forms positions us
well as other forms of content continually seek
ways to be more interactive and engaging.
07
08
T R U S T E D P A R T N E R
A C Q U I S I T I O N P R O G R A M M E
We are a trusted partner to leading companies around the world, with a
leading market position, providing services to 23 of the top 25 games companies
and all 10 of the top 10 mobile games publishers by revenue, including:
Keywords continues to consider selective
acquisitions in line with its objective to become
the “go to ” technical and creative solutions
provider for the video games industry and
beyond. Since its IPO in June 2013, the Group
has successfully made 56 acquisitions which
have significantly extended its geographic
reach, capacity and expertise.
The Directors maintain a healthy pipeline
of selected acquisition candidates which
are considered value enhancing where they
enlarge the Group’s client base, market
penetration and/or service lines and where
the Group can use its existing expertise, multi-
service platform, scale and global reach to
generate synergies and increase profitability.
1
2
0
2
S
T
N
U
O
C
C
A
D
N
A
T
R
O
P
E
R
L
A
U
N
N
A
C
L
P
S
O
I
D
U
T
S
S
D
R
O
W
Y
E
K
STRATEGIC REPORTGOVERNANCEOVERVIEWFINANCIAL STATEMENTSSUPPLEMENTARY INFORMATION
TRULY IMMERSED
MEET THE KEYWORDIANS
09
DIE TRICH QUEMADO
RE GIONAL D IRECTOR FOR SOU THEAST ASIA
MA NILA , PHILIPPI NES
LEVEL
55
1
2
0
2
S
T
N
U
O
C
C
A
D
N
A
T
R
O
P
E
R
L
A
U
N
N
A
C
L
P
S
O
I
D
U
T
S
S
D
R
O
W
Y
E
K
D I E T R I C H
S K I L L S :
P R O G R E S S I O N
G A M E G E N R E :
F I R S T P E R S O N S H O O T E R S
S T R E N G T H :
PA S S I O N F O R G A M E S – I A M
P R O U D O F H O W M Y R O L E I S
H E L P I N G O U R S E R V I C E L I N E S
S U P P O R T O U R C L I E N T S .
P R O D U C T K N O W L E D G E
A N D E X P E R I E N C E I S V I TA L
T O T H E S U C C E S S O F A L L
O F O U R E M P L O Y E E S
K E Y W O R D S H I G H L I G H T:
G R O W I N G O U R M A N I L A
S T U D I O T O O V E R 1 , 0 0 0
E M P L O Y E E S A N D G E T T I N G
O U R F I R S T C E R T I F I C AT I O N
F O R G R E AT P L A C E T O W O R K
W I S D O M S :
F O C U S O N G O A L S , N E V E R
G I V E U P, Y O U C A N A LWAY S
PA U S E , TA K E A S T E P B A C K
O R R E S PAW N , A N D H AV E
L O T S O F F U N
I see Keywords as
progressive in adapting
and aligning itself to
an ever-evolving video
games industry
STRATEGIC REPORTGOVERNANCEOVERVIEWFINANCIAL STATEMENTSSUPPLEMENTARY INFORMATION
CHIEF EXECUTIVE OFFICER’S REVIEW
I am delighted to have joined
Keywords at a time when the
business is performing so well
T H E
T A C T I C I AN
B E R T R A N D B O D S O N C E O
L E V E L 4 6
X P < 1
10
1
2
0
2
S
T
N
U
O
C
C
A
D
N
A
T
R
O
P
E
R
L
A
U
N
N
A
C
L
P
S
O
I
D
U
T
S
S
D
R
O
W
Y
E
K
The Group has delivered strong
organic growth, driven by
high levels of demand for our
services, and further extended
our capabilities, reach and scale
through selective acquisitions.
While it is early days for me as a Keywordian,
I have spent a great deal of my time meeting
people across the business, visiting studios
around the world and speaking to our clients and
it has made a few things abundantly clear.
First, Keywords is full of incredibly talented,
experienced and entrepreneurial leaders who have
a serious passion for video games and a clear
desire to take the business forward.
Second, the Group is in an enviable market leading
position, in a high growth industry that continues
to move towards external service provision and
for which access to talent is becoming ever more
critical. Keywords is proud to count almost all the
leading publishers and developers as its clients
and proud also that these longstanding clients put
their trust in Keywords to get their ever-advancing
content to market and to meet and exceed the
exacting standards of video gamers today.
Third, while Keywords already has scale with over
10,000 talented people across the business there
are clear opportunities to capitalise on the Group's
unique full service platform to continue to drive
significant and sustainable growth.
Page 1/5
OVERVIEWSTRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSSUPPLEMENTARY INFORMATION
CHIEF EXECUTIVE OFFICER’S REVIEW CONTINUED
11
1
2
0
2
S
T
N
U
O
C
C
A
D
N
A
T
R
O
P
E
R
L
A
U
N
N
A
C
L
P
S
O
I
D
U
T
S
S
D
R
O
W
Y
E
K
I’ll come on to set out some initial thoughts on
ways in which we can continue to deliver an
ever-more compelling proposition globally for our
partners in the buoyant video games market, and
adjacent content industries, and to invest in the
platform and our people to build further on the
Group's successful organic and acquisitive growth
track record.
We are very mindful of the tragic events in
Ukraine, which we are deeply saddened by and
our thoughts are with all those affected. While
we have no operations in Ukraine, our US Game
Development business, Sperasoft, continues
to operate from Russia but entirely focused on
critical work for non-Russian clients. In parallel,
and in close partnership with our clients, we
have been actively looking at relocating work to
other locations across the Group, benefiting from
our global footprint (including in Poland, across
Europe, and the Keywords network more broadly).
We are monitoring the situation very closely, and I
will come on to provide more detail on our support
for both our people and others that have been
affected in the region. Our colleagues across the
region are all valued members of Keywords and
our priority is to do all that we can to support our
people, and freelancers, wherever they are located,
while contributing to wider humanitarian efforts in
the region.
The Group has started 2022 well, with strong
demand across all of our service lines. We are
very confident in the Group's opportunity for
growth as we continue to capitalise on our clients’
focus on selecting the right external services
provider, increased expenditure on content
creation in a growing video games market, and
our ability to increase our market share both
through organic growth and the execution of
our acquisition strategy.
Excellent growth supported by a buoyant
video games market
Keywords delivered a strong performance in
FY2021, with revenues up by 37.1% to €512.2m.
Organic Revenue for the Group, which excludes the
impact of acquisitions and currency movements,
grew by 19.0% in 2021 (FY 2020: 11.7%), with
all service lines performing well against the
comparative period. This strong performance
reflects the high levels of demand for all service
lines, driven by the buoyant video games market,
the industry's focus on new content creation,
the continued trend in the industry towards
external service provision supported by a softer
comparative in the first half of 2020 when the
Group experienced disruption to our services at
the earlier stages of the COVID-19 pandemic. The
Group’s strong organic growth was complemented
by contributions from the six acquisitions we
completed through the year.
While all of our service lines experienced growth,
our Marketing and Game Development service
lines delivered exceptional growth, of 151.1% and
73.6% respectively, reflecting strong organic
performances (33.7% and 16.0% respectively)
complemented by contributions from acquisitions.
These service lines have been a particular focus
of our acquisition strategy in recent years and, as
they have a significant role at the earlier stages of
a video game’s development cycle, have benefitted
through the year from the industry returning
to focus on creating new content to keep its
expanding player base engaged in exciting new
games. The performance by each service line is
set out in more detail later in this review.
The Group's Adjusted PBT increased by 56.4%
to €86.0m, representing a 2.1% pts improvement
in margin to 16.8%. This reflected operational
leverage and continued good cost control, and the
benefit of reduced costs due to COVID-19, primarily
relating to remote working and reduced property,
travel and business development costs, which we
expect to return with the anticipated easing of
restrictions in 2022, alongside further investment
in our platform and people.
The strength and breadth of our platform is
enabling us to capitalise on increased demand
for our services due to a number of key trends
in our market:
Our robust business model has ensured this
profit performance translated into strong cash
generation, with €92.3m of Adjusted Free Cash
Flow (FY 2020: €53.4m) representing a 107.3%
Adjusted Cash Conversion rate in the period
(FY 2020: 97.2%). This demonstrates the strong
cash-generating characteristics of the business
and provides the Group with further resources to
continue to invest in the business and fund our
acquisition strategy.
We are exceptionally proud of the efforts of our
talented Keywordians who have worked tirelessly
throughout this period to support our clients
while continuing to deliver the excellent quality of
service for which we are known.
Delivering on our strategy
The continued buoyant demand for video games,
our clients' renewed focus on content creation and
the impetus for external service provision have
only accentuated the opportunities afforded by
our strategy.
In a fragmented market characterised by
predominantly local, single-service providers,
Keywords continues to build its market-leading
services platform and cement its position as
the partner of choice for games publishers and
developers when looking for global reach and deep
expertise in video games. This, together with the
scale to deliver the quality, flexibility and security
of service required to meet high levels of demand
for ever more sophisticated and immersive
content, differentiates Keywords from its
competitors. We continue to leverage the unique
breadth of our platform by bringing the right
combination of capabilities to support customers'
individual objectives, enabling us to cross-sell a
broader range of our services.
– The industry’s focus returning to content
creation in 2021, having had to concentrate
on the monetisation of existing content due
to production constraints across the industry
in the earlier stages of the pandemic
– The number of players and amount of game
play having expanded during the pandemic
– The shift towards “Games as a service”,
which requires ongoing content expansion to
continuously deepen the gaming experience
and extend the lifespan of a game, creating
higher levels of continuous activity
– The launch and subsequent maturing of the
next generation games consoles, PlayStation
5 and Xbox Series X/S. While the launch of
the new consoles has been held back by
supply constraints, we are seeing a refresh
of the entire console-based gaming sector
after a seven-year run of the PS4 and Xbox
One console generation, which we expect
to result in an enlarged market for video
games content over the coming years and an
associated demand for new content creation
– Further development of new and existing
video games streaming platforms increasing
demand for both content generation and
ongoing in game support
We continue to invest in the business, both
organically and through targeted acquisitions to
position the Group as an increasingly strategic
partner to our clients and as the “go to” provider
to the video games industry across our service
lines and key geographies.
Page 2/5
OVERVIEWSTRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSSUPPLEMENTARY INFORMATION
CHIEF EXECUTIVE OFFICER’S REVIEW CONTINUED
12
1
2
0
2
S
T
N
U
O
C
C
A
D
N
A
T
R
O
P
E
R
L
A
U
N
N
A
C
L
P
S
O
I
D
U
T
S
S
D
R
O
W
Y
E
K
During the year, we have invested in new
studios in Bangalore and Manila, as well as in
two new studios in second-tier cities in China,
and refurbished some of our sites while the
studios have been quieter, to support our growth
today and into the future. We have upgraded
and expanded studios in a number of locations
including Quebec, Austin, Los Angeles and Tokyo
and brought together certain studios where
consolidation into one, larger space made sense, in
Los Angeles and Milan. We also agreed leases for
new, expanded facilities in Katowice, Warsaw and
Ottawa that will support expansion in the current
financial year.
We are also delighted to have welcomed six new
businesses to the Keywords family in 2021. Heavy
Iron Studios, Tantalus, Climax Studios and Wicked
Witch add substantial scale and capabilities to our
Game Development service line as well as reach
into, and access to talent in, the US West Coast
and Australia. AMC adds significant expertise to
Art Creation and a new presence in Romania for
the Group, from which we can access a new talent
pool and build out our other service lines. We
have also continued to enhance our Marketing
service line, which we split out as a standalone
service line for the first time at the interim results
in September, having completed the acquisition
of Waste Creative, a London-based studio, at the
end of the year. Waste Creative brings expertise
in strategy and creative production services,
including player community management, for
mobile video game creators, which will help us
meet the growing demand from our clients for
games as a service marketing support with a
focus on community growth and fan retention. We
continue to actively review a healthy pipeline of
further acquisition opportunities.
Evolving our strategy
One of the things that attracted me to Keywords
was the Board’s vision for the business; I share its
plan to grow the platform on a global scale and I
believe Keywords has huge potential in the video
games industry, and that it can also operate just
as effectively in many adjacent content sectors.
I am privileged to have joined a business that has
such strong foundations in that it is already a
proven market leader with unrivalled scale, reach
and range of capabilities across its 74 studios in
23 countries. It also already supplies almost all of
the major developers in a sector that has huge
growth potential.
The quality of the platform that has been built,
and its attractiveness to potential partners and
acquisition targets, provides the Group with a clear
opportunity to continue to grow its services and
scale in a global market for which service provision
remains highly fragmented.
I'm looking forward to leading the Group's
ambitious team to deliver an ever more compelling
proposition for the buoyant video games market,
and beyond.
As part of my first 100 days programme in the
business, I have been looking at how we build on
the Group’s incredibly strong foundations to take it
forward to new levels of scale and success.
Right at the start of this process, I brought 60
leaders from across the business together as part
of my induction, to ensure we drive the evolution
of the strategy together. Working closely with
them, we have launched five workstreams across
the business to kickstart the process for taking
Keywords to the next level, as follows:
1. Strategic partnerships: As we enter 2022,
Keywords has over 900 clients and 23 of
the top 25 publishers are our customers.
Moving forward, we will look to build on these
relationships so we can create and capture
more value together. To do this, we will ascertain
the areas in our service line offering that are
currently missing so we can continue to build
the platform of choice for our clients and learn
how Keywords can be an increasingly attractive
strategic partner which should in turn enable us
to capture more value. Also, we are re-examining
our various “customer propositions” to ensure
a proper correspondence between the services
we can provide and the value customers
should expect.
2. Technology: We will explore how to deploy the
right tools and technology to enable our studios
to continue to enhance their performance so
that they can bring more value to our clients,
while at the same time ensuring our internal
operational structures can scale to support
Keywords’ growth ambitions.
3. Adjacent markets: We continue to examine
opportunities in adjacent sectors and our
work in the broader media and entertainment
sector with Netflix and others has increased
accordingly. We will continue to review
opportunities that supplement our growth in
video games to ensure we take advantage of
the increasing convergence of content and
leverage our mastery of this most interactive
of all mediums, as gamification is increasingly
seen as a route to delivering content in a more
engaging way for a whole range of applications
including education, retail and construction, and,
of course, for the many potential applications in
the metaverse.
4. One Keywords: Keywords has a unique and
entrepreneurial culture and is full of highly
talented, driven people across many different
geographies. It remains vital that we retain
this core of “One Keywords” that will help us
to keep growing. So, we are looking at how we
can preserve this entrepreneurial culture, while
continuing to build an operational backbone
that supports the growth of the business
into the future thereby enabling us to take
advantage of all the different skill sets across
the business.
5. Talent: In 2021, we grew the number of people
in this business to over 10,000 at the end of the
year, which makes it clear that this business is
able to attract talented people. Our employee
net promoter score (eNPS) increased to 42 last
year (from 22 in 2020), demonstrating high
levels of engagement and satisfaction. Despite
this, there has never been demand like there
is today for talent in this industry. As such, we
are looking at how we can continue to be an
attractive destination for talent, what we can do
to enhance career journeys at Keywords and
how we can elevate the right people across our
service lines to help propel us forward.
We will provide a further update on our progress
with these five strategic work streams, as well as
some of the outcomes, at our Capital Markets Day
in London this Summer (8 June 2022).
Page 3/5
OVERVIEWSTRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSSUPPLEMENTARY INFORMATION
CHIEF EXECUTIVE OFFICER’S REVIEW CONTINUED
Evolving our ways of working
Responsible business
Our remote working capabilities remain highly
effective, enabling us to support customers for
as long as remote working is needed, and where
returning to studios is not feasible. As restrictions
lift around our geographies and, having consulted
those who really matter– our Keywordians – we
are now adopting a hybrid model of offering
vibrant, engaging and safe studio space, while
also enabling our people to work securely and
constructively from home.
There remains a clear role for physical studios
for the Group, particularly to support a strong,
collaborative culture and enhance the exchange of
creative ideas, for training, and in our Testing and
Audio service lines, where certain clients continue,
for reasons of security, to prefer a studio-based
service. We have, therefore, continued to invest
in new studios and to refurbish some of our sites
while the studios have been quieter, to ensure our
studios remain attractive places for our people to
come together.
Commitment to improving
diversity across the video
games industry
We remain committed to conducting our business
responsibly and operating to the highest levels of
honesty, integrity and ethical conduct.
Having set out in 2020 our five priority areas
of People (including DE&I), Customer Centricity
& Innovation, Communities and the Planet,
underlined by Corporate Governance and Business
Ethics, we have continued to make progress with
these in 2021.
We have received a rating of ‘A’ (on a scale of AAA-
CCC) in our 2021 MSCI ESG Ratings assessment,
which has improved from BBB previously. This
rating, which analyses our resilience to long-
term, industry material environmental, social and
governance risks, was pleasing but clearly shows
there is more we can do if we are to become a
leader within the industry.
Leading this work is our ESG Committee and we
were pleased to announce in 2021 that in addition
to Bertrand Bodson, both of our most recently
appointed Non-Executive Directors, Marion Sears
and Neil Thompson, have joined the Committee,
bringing strong expertise and experience to this
important area of focus for the Group.
The gender diversity of our business is a focus
for the Board and we monitor appointments by
gender. The diversity of our Board changed in
2022 due to changes to the Board’s composition.
Following the departure of Sonia Sedler, female
directors now represent 25% of the Board but
this percentage will rise to 29% when David
Reeves retires at the forthcoming AGM and we
will continue to consider diversity as part of our
decision making in any future appointments.
We have also shown our commitment to improving
diversity across the video games industry by
entering into a partnership with Women in Games
in 2021, which sees Keywords help power their
500 strong Ambassador programme across
52 countries, allowing us to be more active in
addressing the underrepresentation of women in
our industry. Women in Games is a not-for-profit
organisation founded in 2009, with the mission to
identify and effect the lasting change needed to
bring about full gender equality, equity and parity
of opportunity within the gaming sector and to
encourage more women to consider games and
eSports as a career.
With this partnership now established, we have
a number of planned initiatives to leverage our
global platform and client relationships in 2022
and beyond to enhance and accelerate the
popular ambassador initiative, enabling it to
scale through additional projects and research,
events, exclusive materials and services for
Women in Games ambassadors.
Following the quantification of our greenhouse
gas emissions for the first time in 2020, in 2021 we
have developed the Group's first Environmental
Policy covering our energy and recycling practices.
The policy will help further develop our Sustainable
Studios programme and support our studios in
their efforts to minimise energy usage and to
reduce, recycle and reuse wherever possible.
As we look to achieve net zero carbon emissions,
we recognise these initiatives for Sustainable
Studios will take time. Therefore, we will initially
offset our carbon impact with credits towards the
Ntakata Mountains REDD+ project, which protects
forests. The revenue earned from the sale of
certified carbon credits is paid directly to forest
communities in Tanzania, empowering them to
manage their own development needs.
We continue to work hard to make Keywords
a great place to work, with some of our
initiatives recognised through accolades such
as Manila having been certified by Great Place
To Work® Philippines, Keywords being named
among Ireland’s 150 Best Employers for 2021
and a number of our UK studios winning UK
GamesIndustry.biz Best Places To Work Awards
during the year. Since the year end, we were
delighted that Keywords Studios in Mexico has
been awarded the Socially Responsible Company
(SRC) badge.
We also launched various initiatives to help
support colleagues, including through COVID-19
vaccine clinics which, for instance, have provided
vaccines for colleagues and their families in India,
support for colleagues impacted by the hurricane
in New Orleans, including re-housing some of our
colleagues, and through the hardship fund that
we launched at the beginning of the pandemic to
support colleagues experiencing financial hardship
as a result of COVID-19.
Following recent events, supporting our people
as the humanitarian crisis unfolds in Ukraine is
our top priority. We have established an employee
hardship fund to provide support to the small
number of colleagues directly impacted by
this crisis.
Page 4/5
13
1
2
0
2
S
T
N
U
O
C
C
A
D
N
A
T
R
O
P
E
R
L
A
U
N
N
A
C
L
P
S
O
I
D
U
T
S
S
D
R
O
W
Y
E
K
OVERVIEWSTRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSSUPPLEMENTARY INFORMATION
CHIEF EXECUTIVE OFFICER’S REVIEW CONTINUED
We are also doing all that we can to provide
broader support to those affected by the tragic
situation in Ukraine. We have boosted our
corporate social responsibility (CSR) fund to €250k,
which we will dedicate to humanitarian causes
in support of Ukraine. We are also creating jobs
for refugees as they move into neighbouring
countries, and we are providing support at the
Ukrainian border through the donations of
essential items.
Further updates will be made on the progress we
are making against our five priority areas at our
Capital Markets Day later this year.
Outlook
Trading in the first quarter has started well,
and we continue to see strong demand across
all of our service lines. We expect the Group’s
trading momentum in the second half of 2021
to continue through 2022, with the increased
flow of content to our later stage service lines
alongside further strong demand for our earlier
stage services such as Game Development, Art
Creation and Marketing.
Financial strength to
invest in our platform
The underlying video games market remains
buoyant, with 2022 expected to be a particularly
strong year for new game launches, as
developers and publishers look to capitalise on
higher player numbers and create ever more
sophisticated content to engage players in their
games for longer.
While we are not immune to the inflationary
pressures and competition for talent being seen
in some of our earlier stage services lines, we
are well positioned to continue to attract skilled
professionals due to the unrivalled, sustained
variety of exciting work we do for our clients and
the opportunities for career advancement and
working internationally we are able to offer, and
we will continue to take account of our costs as we
agree projects with our clients, who are well aware
of the industry-wide talent challenge.
Our flexible hybrid working model is now well
established across all of our service lines and 70+
locations, and with the lifting of restrictions around
the world, we will see studios reopen and the
previously experienced limitations in some service
lines removed. We are encouraged by the number
of Keywordians returning to studios around the
world and look forward to seeing levels increase in
the months to come.
Notwithstanding the situation in Russia, given
the strong underlying trading across the Group
aided, in part, by favourable currency movements,
we are confident of delivering a performance
for the full year towards the top end of current
market expectations.
As we continue to build our platform, we are
actively reviewing acquisitions that would add
expertise, particularly in Game Development and
Marketing, access to talent or technology, while
retaining an interest in adjacent markets such as
media and entertainment, which are increasingly
converging with video game development
technology and marketing strategies.
The Board is confident Keywords remains well
placed to continue its rapid growth and in its
long-term success thanks to its strong position in
a buoyant video games market, its increasingly
sought after 10,000-people strong resource base,
its robust business model with a diversified range
of services that are well balanced across the
video games development cycle, and the financial
strength to invest in our platform and people to
build further on the Group's successful organic and
acquisitive growth track record.
B E R T R A N D B O D S O N
C H I E F E X E C U T I V E O F F I C E R
14
1
2
0
2
S
T
N
U
O
C
C
A
D
N
A
T
R
O
P
E
R
L
A
U
N
N
A
C
L
P
S
O
I
D
U
T
S
S
D
R
O
W
Y
E
K
Page 5/5
OVERVIEWSTRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSSUPPLEMENTARY INFORMATION
MARKET OPPORTUNITY
Resilient and growing
Consumer spending on video games has remained
resilient with 2021 marking the industry’s biggest
year yet. Even after delivering 20% growth in
2020, games industry analysts Newzoo estimate
2021 will still have grown by 1.4% year on year.
Looking forward, Newzoo forecast an overall
industry growth CAGR of 8.7% (previously 9.4%)
with revenue forecast to increase to $218.8bn by
2024 (Source: Newzoo Global Games Market, for
the period 2019-2024 issued in January 2022).
Keywords has continued to experience strong
demand given the content “deficit” created
between the expansion in game playing in 2020-
2021 and the rate of content development. Added
to the well-publicised delays in AAA content, we
believe the pent-up demand for new content
will result in sustained demand for our services
in 2022 as publishers and developers continue
to focus on content production to capture the
increased player engagement.
Increasing trend to external partnerships
Keywords is benefitting from both a structural
trend to external partnerships from video games
publishers and developers and the ongoing
consolidation of the services industry, which it
continues to lead.
The video games industry has traditionally been
highly vertically integrated with most production
activity still conducted in-house by major publishers
and developers. As the market continues to grow
and becomes ever more complex, games publishers
and developers are increasingly seeking to avoid
expanding their own teams and a higher proportion
of work is being entrusted to third party service
companies like Keywords.
The video games publishing cycle requires
significant and skilled resources to deliver ever
expanding complex projects to a tight timeline.
This is resulting in a trend towards increasing
partnerships at a more strategic level which
benefits Keywords as the market’s leading provider
of scale. This includes a growing demand for co-
development and full game development services,
and we are investing to match that demand and
continue to increase our market share.
So far, much of the external services in the industry
has been undertaken on a tactical basis, meaning
the video games service provider market remains
highly fragmented. This in turn provides an
opportunity for the selective consolidation of this
part of the industry, which Keywords continues
to lead. This consolidation in turn brings benefits
of scale, enabling us to achieve operational
synergies through more efficient use of resources,
leveraging tools and technologies and leading
innovation in the industry.
As the only service provider of scale with depth and
breadth in all areas, Keywords is uniquely placed
to support our customers’ needs with a balanced
business across multiple different technology-
enabled services and geographies. This is proving
a virtuous circle, as a key part of the attraction
for acquisition targets is the desire to be part of
a larger group with access to a wider customer
base and service offering. It also means we are
increasingly benefitting from our scale relative to
competitors as we further consolidate our market
and are able to respond flexibly to increasingly
large-scale projects from our customers.
Addressable market
Following work completed with the research
company IDG, we now see a maximum addressable
market for video game content for Keywords,
excluding the domestic China market, of ~US$35bn.
External service providers account for ~US$11bn of
this work today, or circa one third of the market.
The total addressable market is expected to grow
broadly in line with industry growth; however,
within this, IDG forecast the trend towards external
providers to grow closer to 10% as the level of
technical support needed increases. With both
game development and art & marketing remaining
the most internalised services, IDG expect these
areas to see the most growth for external service
providers in the coming years.
Game Development, our largest service line,
has the largest addressable market with an
estimated value of ~$17bn. Less than 20% of game
development services are supplied by external
service providers.
Art & Marketing, which together account for almost
20% of our revenues, is estimated to be valued
at over US$8bn, with just ~40% of these services
currently supplied by external service providers.
At the Keywords Capital Markets Day this summer,
we will provide further granularity on this overall
addressable market, the opportunities we see and
market dynamics across key service lines.
Adjacent market opportunities are increasing too,
as video game technologies are also being used
in other markets including e-learning, film and
TV. The demand from content providers to make
their content ever more interactive, impactful and
engaging continues to grow.
Keywords is uniquely positioned to support
interactive content of any type through the
skills and experience it has accrued in the most
interactive of all content markets – video games.
Keywords is uniquely
placed to support our
customers’ needs.
GLOBAL GA MES REVENUES
FORECASTED TO REACH $219BN
BY 2024
24
21
20
19
$218.8bn
$180.3bn
$177.8bn
$144.4bn
MARKET OPPORTUNITY
$35bn
Art & Marketing – 23%
Game Development – 49%
EXTERNAL SERVICE PROVIDER S
$35bn
External service
providers – $11bn
15
1
2
0
2
S
T
N
U
O
C
C
A
D
N
A
T
R
O
P
E
R
L
A
U
N
N
A
C
L
P
S
O
I
D
U
T
S
S
D
R
O
W
Y
E
K
OVERVIEWSTRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSSUPPLEMENTARY INFORMATION
OUR BUSINESS MODEL
16
Creating value and growth through
O P E R A T I O N A L
E F F I C I E N C Y
At Keywords, we are using our passion for games, technology and
media to create a global, integrated services platform of scale for
video games and beyond.
By working as their external development partner, we enable
leading content creators and publishers to leverage our expertise
and capacity across the lifecycle of interactive content.
Our business model in brief
0 1
W H A T W E D O
G A M E D E V E L O P M E N T C Y C L E
0 2
C R E A T I N G
V A L U E F O R
S T A K E H O L D E R S
0 3
B A R R I E R S
T O E N T R Y
See pg_17
See pg_18
See pg_19
1
2
0
2
S
T
N
U
O
C
C
A
D
N
A
T
R
O
P
E
R
L
A
U
N
N
A
C
L
P
S
O
I
D
U
T
S
S
D
R
O
W
Y
E
K
STRATEGIC REPORTGOVERNANCEOVERVIEWFINANCIAL STATEMENTSSUPPLEMENTARY INFORMATION
OUR BUSINESS MODEL CONTINUED
17
0 1
W H A T W E D O
G A M E D E V E L O P M E N T C Y C L E
Keywords’ presence in each stage of the games development
cycle creates multiple opportunities for cross-delivery and
revenue growth, with the below services offered by Keywords:
Service line integration
Art Services
Marketing Services
Game Development
Audio
Functional Testing
Localization
Localization Testing
Player Support
05
06
04
03
1
2
0
2
S
T
N
U
O
C
C
A
D
N
A
T
R
O
P
E
R
L
A
U
N
N
A
C
L
P
S
O
I
D
U
T
S
S
D
R
O
W
Y
E
K
01
02
01
02
03
P R E - P R O D U C T I O N
Concept art, level design and
game design.
E A R LY- S TA G E G A M E
D E V E L O P M E N T
L AT E R - S TA G E G A M E
D E V E L O P M E N T
Co-development, programming,
art production, cinematics/visual
effects, audio production, original
language voice production,
engineering, development quality
assurance, game demo trailers,
music scoring, sound design,
story writing.
Functional testing, text
localization, audio localization,
localization testing, player
research, game porting, music
branding and strategy.
04
L A U N C H
Certification testing, official
game trailers, soundtrack
publishing, marketing services
and customer acquisition.
05
06
O N G O I N G L I V E
O P E R AT I O N S
S U P P O R T
Customer support, community
management, data analytics,
payments processing, game
analytics, social integration
and customer retention.
N E W C O N T E N T
F O R G A M E S
Game extensions, level expansions,
art, audio, testing, localization
and marketing.
STRATEGIC REPORTGOVERNANCEOVERVIEWFINANCIAL STATEMENTSSUPPLEMENTARY INFORMATION
OUR BUSINESS MODEL CONTINUED
18
1
2
0
2
S
T
N
U
O
C
C
A
D
N
A
T
R
O
P
E
R
L
A
U
N
N
A
C
L
P
S
O
I
D
U
T
S
S
D
R
O
W
Y
E
K
0 2
C R E A T I N G V A L U E
F O R S T A K E H O L D E R S
S H A R E H O L D E R S
C U S T O M E R S
E M P L O Y E E S
– Consistent track record of delivering revenue and
profit growth.
– Access to a structural revenue growth opportunity
driven by industry growth and a trend towards
external services.
– Keywords’ involvement across the video games
cycle means that we can provide an end to end
solution for our global customers.
– Match customer requirements with a combination
of on-demand and dedicated service facilities.
– Proven disciplined M&A track record to consolidate
– Wide geographic reach to talent and a flexible
a fragmented global supplier base.
resource model.
– Opportunity to invest in the exciting video games
– Multiple opportunities for cross-selling and
market, without the risk of exposure to the successes
or failures of individual game titles.
revenue growth.
– Keywords provides employees with an excellent
and sustainable variety of work.
– Good career advancement opportunities both
within and across our eight service lines.
– Opportunities to work on the leading global game
titles with diverse passionate games colleagues.
CAGR IN A DJU STED EPS SIN C E 2014*
C USTOME R S USI NG TH RE E O R MO R E S E RVI CES
(UP FROM 3 0 CU STOMERS IN 2014)
AVER AGE NUMBER OF EMPLOYEES
(UP FROM 978 IN 2014)
40%
133
* Before acquisition and integration expenses, share option charges, amortisation of intangibles, and foreign currency effects.
9,493
STRATEGIC REPORTGOVERNANCEOVERVIEWFINANCIAL STATEMENTSSUPPLEMENTARY INFORMATION
OUR BUSINESS MODEL CONTINUED
19
S C A L E A N D
F L E X I B I L I T Y
Large customers need large reliable
suppliers with flexible resourcing to
match their needs, allowing scaling up
and down to meet demand, mirroring
the seasonality of games production.
R E P U TAT I O N
F O R Q U A L I T Y
At the heart of our culture is our
commitment to quality, reliability
and integrating with our customers’
processes, promoting long-term
customer relationships.
K N O W L E D G E
A N D E X P E R T I S E
Our talented people have deep games-
specific knowledge and experience,
enabling them to add value to our
customers’ games at all stages in the
development lifecycle.
0 3
B A R R I E R S T O E N T R Y
G L O B A L
P R E S E N C E
Provides access to the best talent and
enables us to deliver projects across
studios in multiple time zones, allowing
seamless 24-hour turnarounds while
remaining close to our customers.
T E C H N O L O G Y
Necessity of regular investment in
technology and security makes it
difficult for smaller suppliers to compete.
The importance of resilience and
security is shown through in our robust
IT infrastructure.
F I N A N C I A L
S T R E N G T H
Our strong financial performance
and position gives our customers
reassurance of resilience in their supply
chain, and is part of our attraction to
businesses we acquire.
1
2
0
2
S
T
N
U
O
C
C
A
D
N
A
T
R
O
P
E
R
L
A
U
N
N
A
C
L
P
S
O
I
D
U
T
S
S
D
R
O
W
Y
E
K
STRATEGIC REPORTGOVERNANCEOVERVIEWFINANCIAL STATEMENTSSUPPLEMENTARY INFORMATION
OUR STRATEGY
To cement our position as the
“go to” technical and creative
services provider for the
global video games industry
and beyond.
The key pillars of our strategy
are to grow organically and by
acquisition to extend the Group's
service capacity, capabilities
and geographical reach in
order to serve our client base
better across all platforms, key
geographies and languages,
with a full range of services
and solutions.
By investing in expanding
capacity, capability and
technology across our multi-
service global platform, we
are increasingly becoming a
strategically important partner
to our customers who require a
service provider of our scale and
flexibility in an otherwise highly
fragmented market.
As we develop positions of scale
within our chosen markets, our
focus moves to new areas where
we see opportunities to expand
through a mixture of organic and
acquisitive growth.
20
1
2
0
2
S
T
N
U
O
C
C
A
D
N
A
T
R
O
P
E
R
L
A
U
N
N
A
C
L
P
S
O
I
D
U
T
S
S
D
R
O
W
Y
E
K
Strategic pillars
BUILDING OUR
PLATFORM
SELECTIVE ACQUISITIONS
AND INTEGRATION
ORGANIC GROWTH
AND CROSS SELLING
Progress in 2021
– We continued to grow our service lines, as we cement our position
as the “go to” provider in each of our respective sets of services.
Progress in 2021
– Completed six acquisitions during the year, adding to our existing
scale and capabilities in game development, marketing and art.
– Our largest service line, Game Development, benefitted from
further organic expansion of studios, as well as the geographic
expansion into Australia.
– These acquisitions are being integrated within the service lines as
well as within the country and regional management structures
and within our global finance, accounting, HR and IT functions.
– Expanded the reach of our art capabilities with an acquisition in
Romania that also gives Keywords the potential to access talent
for our testing and Player Support service lines.
– Expanded our presence into Australia with two acquisitions in
Melbourne that provide access to important talent pools.
Progress in 2021
– Organic Revenue grew by 19.0% in 2021 (2020: 11.7%).
– Strong organic growth performance given the continued
disruption from COVID-19 and the resulting disruption to content
production in the industry.
– Strong growth across all service lines, reflecting high levels of
demand for our services, driven by the buoyant video games
market and the industry's focus on new content creation.
– Made good progress with integrating prior period acquisitions,
– Continued to expand our client relationships by making good
– Expanded and grew our global testing capabilities in new facilities
which are making good contributions to the Group.
(Pune and Bangalore) and existing locations in Katowice and Mexico
City, improving further our access to important talent pools.
– COVID-19 highlighted the continued resilience of our platform, with
~9,000 Keywordians working from home at the end of 2021.
progress with cross-selling our services. In 2021, the number of
clients buying three or more services from us increased once
again, to 133 from 120 in 2020.
Priorities in 2022
– In 2022, we will continue to build and enhance our platform so
we are increasingly a strategically important partner to our
customers.
Priorities in 2022
– The Group’s acquisition programme continues to be an important
strategic pillar and we anticipate that 2022 will again contain a
number of acquisitions.
– Increased focus on building out common standards for each
– Aim to continue the pace of acquisitions, investing between €50m
service line.
to €100m per year.
– Marketing services should see further acquisition opportunities, as
we continue to widen the range of services and capabilities we can
offer and expand the geographies we cover.
– Additionally, we see opportunities for selective acquisition in art
and adjacent markets such as media and entertainment.
– We anticipate a further gradual return to the office in 2022, while
engaging with customers and employees on retaining a mix to
these new ways of working where security and productivity
considerations allow.
– 2022 will also see investment as we develop our platform to
service our clients' projects across our expanding multi-service
global platform.
– Our service lines are ever developing and will continue to make
selective acquisitions that further enhance and extend each
service line’s capabilities in 2022, particularly in Marketing, Art and
Game Development.
– We are mindful of the integration challenges and therefore aim to
spread acquisitions across our existing geographies and across
service lines to avoid management overstretch.
– Keywords will continue to develop and invest in technologies
that support the services we provide to game developers and
game publishers.
– Following considerable success expanding into the key global
video games markets, geographical expansion remains a lower
priority driver in 2022 as we continue our focus on enhancing our
capabilities in regions where we already have a presence.
Priorities in 2022
– Organic growth remains our priority focus and we expect to grow
faster than the market for our services as we benefit from the
industry's move towards external service provision and capture
market share.
– Building strategic partnerships with our clients, so that we can
create and capture more value together.
– Reviewing our customer propositions.
– Looking to benefit from a continued increase in demand for new
content following COVID-19 disruption and the new console cycle.
– Cross-selling within our services is vital and we have continued
to see noticeable growth in the number of customers that are
benefitting from the use of three or more of our services, a key
reflection of our “relevance” to customers.
Measures of our success
8
5
service lines, up
from two in 2009
continents in which we
have operations. We now
have 39% of our people in
North America and South
America, 30% in Europe and
31% in Asia and Australia
9,493
average number of
employees in 2021
Measures of our success
€126m
6
maximum
consideration for
acquisitions in 2021
acquisitions completed
in 2021. All are
successfully being
integrated into our
platform
56
Measures of our success
19.0%
1,017
acquisitions since
IPO from 2020
Organic Revenue
growth
customers in 2021,
up from 968 in 2020
133
customers using three
or more service lines.
Up 11% from 2020
OVERVIEWSTRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSSUPPLEMENTARY INFORMATION
TRULY IMMERSED
MEET THE KEYWORDIANS
21
A DA M RUSH
QA PARTNERSHIP MANAGER
MONT REAL , C ANADA
LEVEL
64
1
2
0
2
S
T
N
U
O
C
C
A
D
N
A
T
R
O
P
E
R
L
A
U
N
N
A
C
L
P
S
O
I
D
U
T
S
S
D
R
O
W
Y
E
K
A D A M
S K I L L S :
VERSATILITY
G A M E G E N R E :
R O L E - P L AY I N G
S T R E N G T H :
C L I E N T C E N T R I C I T Y – T H E
M O R E W E C A N A L I G N O U R
P R O C E S S E S T O A PA R T N E R ,
T H E E A S I E R I T I S F O R U S T O
F E E L L I K E A N E X T E N S I O N
O F T H E I R O R G A N I S AT I O N ,
A N D T H E E A S I E R I T I S
F O R K E Y W O R D S T O G R O W
W I T H T H E M
K E Y W O R D S H I G H L I G H T:
I ’ M I M M E N S E LY P R O U D
O F T H E G R O W T H O F O U R
G L O B A L B E TA T E S T I N G
N E T W O R K T H AT WA S
L A U N C H E D M O R E T H A N 1 0
Y E A R S A G O . T H I S T E A M
C O N T I N U E S T O C O M P L E T E
C O M P L E X C L I E N T R E Q U E S T S
W I T H S U C C E S S F U L B E TA
I N I T I AT I V E S
E N E R G Y:
A S A N AV I D G A M E R , I T
F E E L S AW E S O M E T O B E
B E H I N D T H E C U R TA I N O N
W H AT I S C O M I N G N E X T
What gets me out of bed
in the morning is solving
a partner's problems
STRATEGIC REPORTGOVERNANCEOVERVIEWFINANCIAL STATEMENTSSUPPLEMENTARY INFORMATION
KEY PERFORMANCE INDICATORS
22
We monitor our financial performance against
a number of different benchmarks and these
are set in agreement with the Board.
Page 1/2
REVENU E GR OW T H
01
ORGAN IC RE VE N UE GR OWTH
02
GR OSS MARGIN
03
37.1%
19.0%
39.1%
04
ADJUSTED OPER ATING COSTS
AS A % OF REVENUE
17.6%
21
20
19
37.1%
14.4%
30.2%
21
20
19
19.0%
11.7%
15.5%
21
20
19
39.1%
38.0%
36.8%
21
20
19
17.6%
18.1%
19.2%
Reasons for choice
Reasons for choice
Reasons for choice
Reasons for choice
Quantifies the growth in revenue from
our operations on a reported basis.
Due to the number of acquisitions the
Group makes and because it integrates
them quickly, this provides the most
meaningful measure of underlying
revenue growth without the distortion
of foreign currency movements.
The Board believes this to be a consistent
measure of trading performance.
The Board monitors overheads to ensure
the operating costs of the Group are
in line with the level of business being
generated.
How we calculate
How we calculate
How we calculate
How we calculate
Increase year on year in reported
revenue.
Calculated by adjusting the prior year
revenues, adding pre-acquisition
revenues for the corresponding period
of ownership to provide a like-for-like
comparison with the current year,
and applying the prior year’s foreign
exchange rates to both years.
Revenues from services supplied to
customers less cost of sales, as a
percentage of revenue.
Administration expenses before
non-operating costs, including share-
based payments expense, costs of
acquisition and integration, amortisation
and impairment of intangible assets,
depreciation, non-controlling interest and
deducting bank charges, expressed as a
percentage of revenue.*
Objectives
Objectives
Objectives
Objectives
The Group aims for continued revenue
growth and development.
The Group aims to achieve Organic
Revenue growth ahead of market growth.
The Group aims for gross margins in line
with historic norms.
The Group will continue to seek to control
these costs closely and in line with the
level of business being generated.
* In order to present the measure consistently year-on-year, the impact of COVID-19 government subsidies claimed and where relevant, investment income is also excluded.
1
2
0
2
S
T
N
U
O
C
C
A
D
N
A
T
R
O
P
E
R
L
A
U
N
N
A
C
L
P
S
O
I
D
U
T
S
S
D
R
O
W
Y
E
K
OVERVIEWSTRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSSUPPLEMENTARY INFORMATION
KEY PERFORMANCE INDICATORS CONTINUED
23
1
2
0
2
S
T
N
U
O
C
C
A
D
N
A
T
R
O
P
E
R
L
A
U
N
N
A
C
L
P
S
O
I
D
U
T
S
S
D
R
O
W
Y
E
K
Page 2/2
ADJ UST ED EBIT DA M AR GIN
05
06
ADJUST ED PRO F IT
BE FORE TAX MARGI N
07
ADJUST ED CASH
CO N VE R SION R ATE
GROWTH IN ADJUSTED EPS
08
21.5%
16.8%
107.3%
46.5%
21
20
19
21.5%
19.9%
17.6%
21
20
19
16.8%
14.7%
12.5%
21
20
19
107.3%
97.2%
80.2%
21
20
19
46.5%
24.9%
7.2%
Reasons for choice
Reasons for choice
Reasons for choice
Reasons for choice
Provides an indication of how we are
performing both internally and relative
to our peers.
The Board believes this to be a
consistent measure of trading
performance, aligned with the
interests of our shareholders.
Measures operating cash generation
and our capacity to pay dividends,
service debt and fund acquisitions.
Reports the underlying profit growth
generated on a per share basis,
demonstrating the value being
created for shareholders.
How we calculate
How we calculate
How we calculate
How we calculate
Comprises EBITDA (operating profit,
adjusted for amortisation and impairment
of intangible assets, depreciation, while
deducting bank charges) adjusted
for share-based payments expense,
costs of acquisition and integration and
non-controlling interest, as a percentage
of revenues.*
Comprises profit before taxation
adjusted for share-based payments
expense, costs of acquisition and
integration, amortisation and
impairment of intangible assets, non-
controlling interest, foreign exchange
gains and losses, and unwinding of
discounted liabilities.*
Adjusted free cash flow before tax as
a percentage of the adjusted profit
before tax. The calculation is described
in more detail on page 137.
The Adjusted profit after tax comprises
the Adjusted profit before tax, less
the tax expense as reported on the
Consolidated statement of comprehensive
income, further adjusted for the tax
arising on the bridging items to Adjusted
profit before tax.
The Adjusted earnings per share
comprises the Adjusted profit after tax
over the non-diluted weighted average
number of shares as reported in note 8.
Objectives
Objectives
Objectives
Objectives
The Group aims to increase margins
through operational efficiencies.
The Group aims for margins in line
with historic norms.
Cash generation and working capital
management will remain a key focus.
The Group aims for continued growth
in Adjusted earnings per share.
* In order to present the measure consistently year-on-year, the impact of COVID-19 government subsidies claimed and where relevant, investment income is also excluded.
OVERVIEWSTRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSSUPPLEMENTARY INFORMATION
TRULY IMMERSED
MEET THE KEYWORDIANS
24
MA NV ENDR A SHUKUL
CE O, L AKSHYA DIGI TAL
GU RG AON , IN DIA
LEVEL
75
1
2
0
2
S
T
N
U
O
C
C
A
D
N
A
T
R
O
P
E
R
L
A
U
N
N
A
C
L
P
S
O
I
D
U
T
S
S
D
R
O
W
Y
E
K
M A N V E N D R A
S K I L L S :
DEVELOPMENT
G A M E G E N R E :
A D V E N T U R E
S T R E N G T H :
P O S I T I V I T Y I S A K E Y
E L E M E N T T O H O W W E
C O N D U C T O U R B U S I N E S S
A N D M A N A G E T H E T E A M .
A P O S I T I V E AT T I T U D E
H E L P S M E F I N D S O L U T I O N S
K E Y W O R D S H I G H L I G H T:
C O N T I N U I N G T O E X PA N D
O U R P R E S E N C E I N I N D I A A N D
W O R K I N G T O WA R D S M A K I N G
I N D I A T H E B A C K B O N E O F
K E Y W O R D S ’ G R O W T H
E N E R G Y:
C R E AT I N G T E A M S
A N D N E W B U S I N E S S E S
Keywords gives me
the independence to do
what I think is right for
the business
STRATEGIC REPORTGOVERNANCEOVERVIEWFINANCIAL STATEMENTSSUPPLEMENTARY INFORMATION
SERVICE LINE REVIEW
G A T E W A Y
T O G R O W T H
All our service lines grew well during 2021, despite the ongoing impact of
the pandemic and the operational challenges it continues to present.
The following table provides a summary of our revenues by service line,
with growth rates on a reported and Organic Revenue growth basis.
Revenue
Art Creation*
Marketing*
Game Development
Audio
Functional Testing
Localization
Localization Testing
Player Support
Total
% of 2021
Group revenue
9.6%
9.0%
27.1%
12.0%
18.1%
9.9%
5.3%
9.0%
100.0%
2021
Revenue
€m
49.3
46.2
138.9
61.3
92.7
50.8
27.1
45.9
512.2
2020
Revenue
€m
Change
from 2020
%
2021 Organic
Revenue growth
%
2021 Pro Forma
Revenue
€m
2021 Average
number of
operational staff
by service line
38.9
18.4
80.0
47.2
78.5
45.4
23.3
41.8
373.5
26.7%
151.1%
73.6%
29.9%
18.1%
11.9%
16.3%
9.8%
37.1%
24.4%
33.7%
16.0%
27.4%
17.2%
12.2%
16.7%
12.7%
19.0%
50.9
52.4
147.4
61.3
92.7
50.8
27.1
45.9
528.5
1,309
189
1,396
245
2,996
382
646
1,702
*The prior year comparatives have been re-classified to separately report Marketing services, previously reported within the Art Creation service line.
25
1
2
0
2
S
T
N
U
O
C
C
A
D
N
A
T
R
O
P
E
R
L
A
U
N
N
A
C
L
P
S
O
I
D
U
T
S
S
D
R
O
W
Y
E
K
SELECT LEVEL
ART CREATION
26
MARKETING
27
GAME DEVELOPMENT
28
AUDIO
29
FUNCTIONAL TESTING
30
LOCALIZATION
31
LOCALIZATION TESTING
32
PLAYER SUPPORT
33
STRATEGIC REPORTGOVERNANCEOVERVIEWFINANCIAL STATEMENTSSUPPLEMENTARY INFORMATION
SERVICE LINE REVIEW CONTINUED
26
Art Creation
Our Art Creation service line creates graphical
art assets for video games including concept
art creation, 2D and 3D art asset production
and animation.
FY 2021 performance
Art Creation performed well with revenues up
by 26.7% to €49.3m (FY 2020: €38.9m). Organic
Revenue, which excludes the impact of currency
movements and acquisitions, grew by 24.4% for
Art Creation, following a continuation of strong
underlying client demand across all art studios.
This strong performance was driven by
exceptional growth in India where the studios
were able to effectively manage the increased
demand by rapidly hiring new talent, something
that is not as easily replicated in other markets.
In other territories, our North American studios
also benefitted from remote working and
the ability to extend remote teams through
freelancers and sister studios, which enabled
studios to meet the increased demand in
the market.
We have continued to expand this service
line, with the addition of two new studios in
second-tier cities in China and new studios in
Bangalore and Manila, which provide us with
additional access to talent to support the work
for our clients.
In August, we added the Group’s first presence
in Romania through the acquisition of AMC. AMC
is a long-established, high-quality specialist art
studio servicing both US and European clients
and we believe it will add significant expertise and
experience to this service line, as well as access to
an attractive market for talent in Romania.
The market opportunity and outlook
Art Creation operates in a large addressable
market, which remains highly fragmented.
Increasingly, clients seek partners who are able
to deliver higher value solutions through more
creative, technical, and managed services.
Our clients’ needs also continue to evolve and
we expect the demand for real-time 3D art to
grow through the year ahead and beyond.
While it is very early days we expect that the
development of the metaverse will drive even
more demand for digital and related content and
we are committed to helping our clients navigate
through this opportunity.
This year, we have already seen many more cross
studio and cross-service line collaborations and
we expect Art Creation to continue to deliver
strong growth in 2022 with our global platform
positioning Keywords in a strong position to scale
up to meet continued buoyant client demand.
1
2
0
2
S
T
N
U
O
C
C
A
D
N
A
T
R
O
P
E
R
L
A
U
N
N
A
C
L
P
S
O
I
D
U
T
S
S
D
R
O
W
Y
E
K
% OF GROUP REVENUE FOR THE YEAR
9.6%
2021 REVENUE
€49.3m
21
20
+26.7%
€49.3m
€38.9m
2021 ORGANIC REVENUE GROWTH
24.4%
2021 PRO FORMA REVENUE
€50.9m
AVER AGE OPER ATIONAL STA FF
1,309
OVERVIEWSTRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSSUPPLEMENTARY INFORMATION
SERVICE LINE REVIEW CONTINUED
27
Marketing
Following its recent growth and scale within the
Group, Marketing was reported as a standalone
service line for the first time at the interim results in
September 2021, so this represents its maiden year
as a separately reported service line.
Marketing services includes PR
and full brand campaign strategies,
game trailers and marketing art
and materials, which we are building
through acquisitions, and subsequent
organic growth.
During the year, we continued to add scale to our
Marketing services line through the acquisition
of Waste Creative, a digital creative marketing
agency based in London. The studio expands our
mobile marketing capabilities in player acquisition
and retention, community management and rapid,
high quality content creation.
FY 2021 performance
FY 2021 was a transformational year for our
Marketing service line. Revenues grew by 151.1%
to €46.2m (FY 2020: €18.4m) in 2021 following a
period of fantastic growth. On an organic basis,
which excludes the impact of currency movements
and acquisitions, revenues were up 33.7% during
the year.
The service line performed exceptionally well
despite the absence of in-person events and a
more limited number of game launches due to
delays. In 2021, Marketing also benefited from
the successful integration of the acquisitions of
Maverick Media and g-Net, now the two largest
studios in the service line, and Indigo Pearl, which
was completed in the second half of 2020.
The market opportunity and outlook
Having transformed the scale of our Marketing
services business, it has already become the
provider of choice for games publishers and
developers looking for a partner with deep
specialist expertise in the sector, a broad range of
the services that will enable the success of their
games, and the global reach to execute across
different time zones and cultures.
In a highly fragmented industry, this scale and
reach will provide real competitive advantage as
we bring together more of our services to meet
our client’s objectives. As many of the marketing
services help clients at the very early stages of
game development, when concepts are being
developed and positioned for greenlighting, our
marketing colleagues also have the opportunity
to offer and cross-sell other Keywords’ services,
as appropriate, at the outset for new titles.
An extensive range of marketing services are
currently provided in this fragmented market
both internally and externally from key art, trailer
creation, advertising, PR, branding, campaign
management, influencer marketing and social
media management through to marketing
analytics and community management. So, while
2021 represented a transformational year in
building out our Marketing services platform, there
is a substantial opportunity to build further, so we
will continue to seek to grow the business through
selective acquisitions in order to enable us to
provide a full suite of services at scale and across
different time zones.
We expect Marketing will continue to grow
strongly in FY 2022, albeit with growth rates
moderating from the exceptionally high levels
of growth seen in 2021.
1
2
0
2
S
T
N
U
O
C
C
A
D
N
A
T
R
O
P
E
R
L
A
U
N
N
A
C
L
P
S
O
I
D
U
T
S
S
D
R
O
W
Y
E
K
% OF GROUP REVENUE FOR THE YEAR
9.0%
2021 REVENUE
€46.2m
21
20
+151.1%
€18.4m
€46.2m
2021 ORGANIC REVENUE GROWTH
33.7%
2021 PRO FORMA REVENUE
€52.4m
AVER AGE OPER ATIONAL STA FF
189
OVERVIEWSTRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSSUPPLEMENTARY INFORMATION
SERVICE LINE REVIEW CONTINUED
28
Game Development
Our largest service line, Game Development,
provides external development services to game
developers and publishers including full game
development, co-development, porting and
general software engineering consultancy.
FY 2021 performance
Game Development increased revenues by 73.6%
to €138.9m (FY 2020: €80.0m). This increase partly
reflected contributions from acquisitions made in
2021, including Heavy Iron, Tantalus, and Climax,
with Wicked Witch having been acquired at the
very end of the year. Game Development remains
our largest service line with 16 studios in nine
countries and over 1,500 developers.
Organic Revenue (which excludes the impact of
currency movements and acquisitions) grew by
16.0% driven by the renewed focus on content
creation, meaning strong demand for our services
around the world despite the curtailment of our
usual tradeshow-centric, business development
activities. With game lifecycles now extending
through downloadable content and live – ops and
the next generation of consoles now maturing
following the late 2020 release, there is an ever-
increasing variety of opportunities for our Game
Development studios.
While our ability to meet demand is constrained
by a challenging recruitment climate, we were able
to continue to recruit skilled professionals who
are attracted to the range of high profile, exciting
projects we work on for our clients.
In FY 2021, we completed the acquisition of four
high quality businesses to grow and diversify our
Game Development offering further:
– Heavy Iron – based in Los Angeles, California,
the industry veteran’s team of 43 developers
has provided full game development, co-
development, live operations and porting
services for the video games industry
since 1999.
– Tantalus – a leading and prolific developer
of high quality, multi-platform titles based
in Melbourne, Australia which provides
us with access to a new talent pool and
offers an excellent entry point into the
Australian market for further expansion
in the Pacific region, both organically and
through acquisitions.
– Climax – one of the longest established game
development businesses in the UK, offering
full game development, co-development,
porting and technical consulting services to
some of the world’s largest games publishers
through a team of 109 talented developers.
– Wicked Witch – our second acquisition in
Melbourne, Australia, Wicked Witch is a
73-person video game development studio
which has an established track record
in video game and graphic application
development on a range of platforms
including PC, mobile, PlayStation, Xbox
and Switch.
1
2
0
2
S
T
N
U
O
C
C
A
D
N
A
T
R
O
P
E
R
L
A
U
N
N
A
C
L
P
S
O
I
D
U
T
S
S
D
R
O
W
Y
E
K
The market opportunity and outlook
Game Development is our largest addressable
market. The market is growing strongly and, of all
of the Group’s service lines, this market has the
lowest proportion of external service provision.
There is a high level of demand for talented
developers and our studios will remain focused on
recruitment and retention throughout 2022.
We remain a highly attractive prospect for game
developer talent, who recognise the opportunities
that Keywords provides for a sustainable variety of
exciting work, as well as good career advancement,
including the option to work across our expanding
international footprint, and to be part of a strong
culture amongst like-minded, games-passionate
colleagues. Given the strong demand for talent,
we expect to see some wage inflation and we will
continue to take account of our cost structure as
we agree each project with our clients, who are only
too aware of the talent challenge themselves.
Our US Game Development business, Sperasoft,
is the only studio within Keywords to operate in
Russia with locations in St Petersburg, Volgograd
and Moscow. Revenues from these studios are
entirely from non-Russian clients. We continue
to monitor the situation closely and in close
partnership with our clients, we have been actively
looking at relocating work to other locations
across the Group, benefiting from our global
footprint (including in Poland, across Europe, and
the Keywords network more broadly).
Demand remains very strong and we entered
2022 with a higher than normal level of confirmed
revenue, so we expect continued growth for Game
Development during the year as we use our global
platform to enable the business to service as
much of that demand as possible.
As previously communicated, Game Development
remains an area of particular focus in our M&A
programme, where we continue to assess companies
that provide access to strong pools of talent to help
support the fast pace of organic growth.
% OF GROUP REVENUE FOR THE YEAR
27.1%
2021 REVENUE
€138.9m
21
20
+73.6%
€138.9m
€80.0m
2021 ORGANIC REVENUE GROWTH
16.0%
2021 PRO FORMA REVENUE
€147.4m
AVER AGE OPER ATIONAL STA FF
1,396
OVERVIEWSTRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSSUPPLEMENTARY INFORMATION
SERVICE LINE REVIEW CONTINUED
29
Audio
Our Audio service line provides multi language
voice-over, original language voice recording, music,
sound design, accessibility and related services to
the video games and film and TV industries.
FY 2021 performance
The market opportunity and outlook
Audio revenues rose by 29.9% in the period to
€61.3m (FY 2020: €47.2m), with Organic Revenue,
which excludes the impact of currency movements
and acquisitions, increasing by 27.4% compared to
FY 2020.
Despite the challenges presented by the global
pandemic and the need for our studios to adapt to
various lockdowns and changes in local health and
safety guidelines, our Audio services business saw
a strong performance in 2021. This performance
was delivered across all the studios and the
business was able to expand through the addition
of new clients and the growth of all its core
services (subtitling, accessibility, dubbing, voice
over, audio post and music).
Our music management services, sound design
and sound effects businesses have continued to
grow, as did our work in subtitling and dubbing
of film and TV content where we serve clients
such as Netflix, as well as many of the other key
streaming providers, which have invested heavily
in their original content strategy which helped to
drive higher demand for our services.
Our Audio services business has started 2022
well, with high levels of demand for our studios
continuing into the first quarter. Our ability to
produce industry leading quality for our clients
means Keywords remains the partner of choice
for video games clients seeking partners who
can support them on all of their audio needs.
We expect the streaming platforms to continue
to drive strong demand for our Audio services
line too.
Beyond the near term, we expect our Audio
business to continue to be in high demand
and the market remains highly fragmented
in terms of service provision, with clients and
voice actors favouring professional, high quality
sound studios for optimal voice recording. This
represents an opportunity for us to grow our
market share organically, as well as make select
acquisitions over time, as we seek to expand into
new geographies to meet the growing demand,
as audio content increases for both console and
mobile games.
1
2
0
2
S
T
N
U
O
C
C
A
D
N
A
T
R
O
P
E
R
L
A
U
N
N
A
C
L
P
S
O
I
D
U
T
S
S
D
R
O
W
Y
E
K
% OF GROUP REVENUE FOR THE YEAR
12.0%
2021 REVENUE
€61.3m
21
20
+29.9%
€61.3m
€47.2m
2021 ORGANIC REVENUE GROWTH
27.4%
2021 PRO FORMA REVENUE
€61.3m
AVER AGE OPER ATIONAL STA FF
245
OVERVIEWSTRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSSUPPLEMENTARY INFORMATION
SERVICE LINE REVIEW CONTINUED
Functional Testing
Functional Testing is our second largest service line
and provides quality assurance, including discovery and
documentation of game defects and testing to verify
the game’s compliance with hardware manufacturers’
and distribution platforms’ specifications, as well as test
automation tools and services, crowd-based and focus
group testing solutions.
FY 2021 performance
The market opportunity and outlook
Functional Testing revenues increased by 18.1% to
€92.7m (FY 2020: €78.5m) and Organic Revenue,
which excludes the impact of currency movements
and acquisitions, increased by 17.2%. The growth
was supported by a weaker comparative in H1
2020 which was particularly disrupted at the early
stages of the COVID-19 pandemic. Demand for our
Functional Testing services improved as we moved
through the year, as this service line started to
benefit more fully from content flowing to the
later stage service lines in the second half of 2021,
following the industry’s return to focus on new
content creation in the first half of 2021.
We have built out our Functional Testing
operations over time, beyond Montreal, to
include Tokyo, New Delhi, Singapore, Katowice,
Saint Jerome (Canada), Mexico City and Seattle,
giving us a well-diversified production base, with
“follow the sun” time zones and some lower cost
production sites.
Our strong relationships with clients and the
optimisation of capacity across these studios
enabled the Functional Testing business to meet
growing demand and it was pleasing to see
volumes in studios across Poland, India and Mexico
double in 2021.
As the newer generation of consoles mature,
the industry’s drive to create new content for
this generation is expected to increase further,
something that will continue to benefit our
Functional Testing business which operates at the
later stages of the game development cycle.
In 2022, we expect our global footprint with
studios in the key locations for talent around the
world will continue to appeal to our clients, as we
are able to offer flexible solutions depending on
our customer needs, timelines and budgets.
We remain a leading player in this large and
growing area of the market that is seeing an
accelerating trend towards external service
provision. Our scale, flexibility, geographical
spread and proven robustness, even in the most
challenging of circumstances, positions us well
as games companies continue to increase the
proportion of functional testing that they work
with external providers on.
We expect to deliver continued growth into 2022
as more content flows to our later stage service
lines following the return to new content creation
in 2021 and as we see more new content being
launched during the year.
30
1
2
0
2
S
T
N
U
O
C
C
A
D
N
A
T
R
O
P
E
R
L
A
U
N
N
A
C
L
P
S
O
I
D
U
T
S
S
D
R
O
W
Y
E
K
% OF GROUP REVENUE FOR THE YEAR
18.1%
2021 REVENUE
€92.7m
21
20
+18.1%
€92.7m
€78.5m
2021 ORGANIC REVENUE GROWTH
17.2%
2021 PRO FORMA REVENUE
€92.7m
AVER AGE OPER ATIONAL STA FF
2,996
OVERVIEWSTRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSSUPPLEMENTARY INFORMATION
SERVICE LINE REVIEW CONTINUED
Localization
Our Localization service line provides translation of in-
game text, audio scripts, cultural and local adaptation,
accreditation, packaging and marketing materials
in over 50 languages. It includes our proprietary
technologies for content management, machine
translation, crowd sourcing and workflow management.
FY 2021 performance
The market opportunity and outlook
Localization revenues were up 11.9% to €50.8m
(FY 2020: €45.4m) and Organic Revenue, which
excludes the impact of currency movements
and acquisitions, was up by 12.2%. This reflected
a higher level of demand for our Localization
services as we moved through the year, as this
service line started to benefit more fully from
content flowing to the later stage service lines in
the second half of 2021, following the industry’s
return to focus on new content creation in the first
half of 2021.
In October, we announced that Romina
Franceschina joined Keywords to lead our
Localization service line, bringing more than 20
years’ experience in the localization industry and
in delivering operational excellence and innovation,
across a number of industries.
In 2021, Localization launched KantanStream, a
crowd-sourced machine translation management
platform that combines artificial intelligence and
our global community of professional translators
to deliver the speed and flexibility of machine
translation with the quality only native speakers
can deliver.
Localization’s strong relationships with clients
and exceptional output saw it receive awards
from Tencent and Yozoo for being the best audio
services provider and the business also won
the Best Localization and QA Provider at Star
Awards 2021.
The Localization market remains highly
fragmented and characterized by most
competitors being single language providers
without the scale to deliver simultaneous multi-
jurisdictional localization projects for our global
video games customer base.
Our clients are increasingly looking to Keywords
for a more streamlined and distributed production
process so internal innovation to introduce
workflow efficiencies and automation will be a key
area of focus for Localization.
Clients are already adopting our game asset
management system, XLoc, which in turn ensures
we are ever more integrated into their workflows.
Combining the market leading expertise we have
built up in localization over the past 20 years,
with proprietary software tools, like XLoc, and
artificial intelligence (AI) and machine learning
(ML) technology from Kantan, will enable us
to effectively manage a greater volume of
content for our clients, at a greater speed,
and in more languages.
We expect to deliver continued growth into 2022
as more content flows to our later stage service
lines following the return to new content creation
in 2021, alongside the underlying momentum in
a video games market that is producing an ever
increasing level of content, that is localised to a
greater degree, for communities of video game
players that reside in every corner of the world.
31
1
2
0
2
S
T
N
U
O
C
C
A
D
N
A
T
R
O
P
E
R
L
A
U
N
N
A
C
L
P
S
O
I
D
U
T
S
S
D
R
O
W
Y
E
K
% OF GROUP REVENUE FOR THE YEAR
9.9%
2021 REVENUE
€50.8m
21
20
+11.9%
€50.8m
€45.4m
2021 ORGANIC REVENUE GROWTH
12.2%
2021 PRO FORMA REVENUE
€50.8m
AVER AGE OPER ATIONAL STA FF
382
OVERVIEWSTRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSSUPPLEMENTARY INFORMATION
SERVICE LINE REVIEW CONTINUED
32
Localization Testing
Our Localization Testing service line identifies out of
context translations, truncations, overlaps, spelling, grammar,
age rating issues, geopolitical and cultural sensitivities, and
console manufacturer compliance requirements in
over 30 languages using native speakers.
FY 2021 performance
The market opportunity and outlook
Localization Testing revenue increased by 16.3%
to €27.1m (FY 2020: €23.3m). On an organic
basis, which excludes the impact of currency
movements, Localization Testing was 16.7% higher
compared to FY 2020.
As in the case of Functional Testing, Localisation
Testing started to benefit more fully from content
flowing into our later stage services in H2 2021,
following the industry’s return to focusing on
new content generation in H1 2021 after the
disruption to game production cycles caused by
the pandemic in 2020.
Localization Testing benefitted from improvements
to its global resourcing market, an increasingly
flexible team structure and a higher proportion
of work being shared across multiple studios
in different geographies, which aided capacity
and enabled the service line to meet heightened
demand in a timely, flexible manner.
In this service line, we continue to develop our
operations in Tokyo, Singapore, Katowice, Milan,
Dublin, Montreal and Ottawa, which gives us the
scale, breadth of languages, multi-location and
time zone operations, and resourcing agility to
enable it to offer a flexible, high quality and cost-
effective service which is difficult for competitors
to replicate.
With our offering well established as a leading
global player, we expect the Localization Testing
service line to benefit from the strong underlying
market, a continued rise in external service
provision, and an increased flow of content to
our later stage services in 2022. We are already
receiving ever larger opportunities from our
clients who recognise Keywords as a global
partner of choice.
1
2
0
2
S
T
N
U
O
C
C
A
D
N
A
T
R
O
P
E
R
L
A
U
N
N
A
C
L
P
S
O
I
D
U
T
S
S
D
R
O
W
Y
E
K
% OF GROUP REVENUE FOR THE YEAR
5.3%
2021 REVENUE
€27.1m
21
20
+16.3%
€27.1m
€23.3m
2021 ORGANIC REVENUE GROWTH
16.7%
2021 PRO FORMA REVENUE
€27.1m
AVER AGE OPER ATIONAL STA FF
646
OVERVIEWSTRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSSUPPLEMENTARY INFORMATION
SERVICE LINE REVIEW CONTINUED
Player Support
Our Player Support service line provides multi-lingual,
cost effective and flexible customer care services,
including managing communities of gamers across
all forms of social media, within the games themselves
and on the official game forums, ensuring our
customers have a safe player environment.
FY 2021 performance
The market opportunity and outlook
Player Support increased revenue by 9.8% to
€45.9m (FY 2020: €41.8m) and Organic Revenue,
which is on a constant currency basis, by 12.7%.
Player Support growth is expected to continue in
2022, with the benefit of an expanded client base
and more diverse services.
Player Support brought on a significant number
of new clients and continued to strengthen its
services in areas such as social media, quality
control and consulting. It has continued to
grow revenues from its social media services in
particular, which have a high level of synergy with
the Group’s Marketing Studios. For instance, our
acquisition of Waste Creative in December 2021
provides particular opportunities for synergies
with Player Support due to its focus on player
community management and retention for mobile
video game creators. Together, our services offer a
compelling and highly differentiated proposition to
our clients who are ever more focused on keeping
gamers happy and engaged with their games.
Our remote working arrangements have continued
to prove highly effective, enabling us to seamlessly
support clients across the world without any
disruption, and Player Support has above industry
average levels of employee retention, with the
strength of its culture also borne out in a strong
employee net promoter score.
As gaming becomes ever more social, our capacity
to moderate user generated content is becoming
critical for our clients. In this context, social
media is expected to continue its progression in
2022, while adding trust & safety services to our
unique offer will address increasing demand from
our clients.
Having launched consulting services in 2021, we
plan to support more of our clients with this, to
help them shape how customer support can be
better integrated to their upcoming games and be
supported by the most relevant tools available.
Keywords’ deep games knowledge and focus,
combined with its global footprint, means we
remain the most appropriate cultural fit for our
clients for these services.
Our capacity to recruit from more countries will
improve our recruitment pipeline and enable us to
help our clients scale in their desired languages,
while our machine translation engine, Kantan,
provides an effective and efficient tool to support
people-driven services.
33
1
2
0
2
S
T
N
U
O
C
C
A
D
N
A
T
R
O
P
E
R
L
A
U
N
N
A
C
L
P
S
O
I
D
U
T
S
S
D
R
O
W
Y
E
K
% OF GROUP REVENUE FOR THE YEAR
9.0%
2021 REVENUE
€45.9m
21
20
+9.8%
€45.9m
€41.8m
2021 ORGANIC REVENUE GROWTH
12.7%
2021 PRO FORMA REVENUE
€45.9m
AVER AGE OPER ATIONAL STA FF
1,702
OVERVIEWSTRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSSUPPLEMENTARY INFORMATION
OUR PEOPLE, OUR CULTURE
34
O U R P E O P L E – A T T H E C O R E
O F W H A T W E D O
Our culture acts as the glue that binds all
Keywordians around the world together –
relaxed, creative, professional and humble with
a focus on doing the very best we can for our
clients through each and every project they
entrust to us.
Our people
At Keywords, an average of 9,493 full time
equivalent employees make up our international,
digital-first, diverse and multicultural team and we
are well balanced across our three regions; 39% in
North and South America, 30% in Europe and 31%
in Asia and Australia. The number and diversity
of people and skills in our workforce allows us to
be well placed to deploy these skills across the
industry to meet all of our customers’ needs.
Our continued growth and reputation for
consistently delivering good quality service,
on highly agile engagements, to demanding
deadlines, is testament to the Keywords culture,
and the skills and commitment of our talented and
games-passionate employees and collaborators.
We are proud of the passion, commitment and
professionalism of this valuable resource of
Keywordians who help to contribute to most of
the world’s leading video games. Our smooth
transition to remote and flexible working during
COVID-19 demonstrated the continued resilience
of all Keywordians and we would like to thank
everyone involved for their incredible contribution
to the continued success of the Group.
Keywords Rule of 9
At Keywords, we encourage our people to engage with
each other not only across our studios but across
our regions and global network. Through knowledge
sharing, online community spaces and open plan
offices, we encourage our colleagues to be the very
best at what they do. At the heart of our culture are
our operating principles, the “Keywords Rule of 9”.
1 Communication
We communicate openly and in a timely fashion.
We do not hide things from colleagues or clients
and we avoid office politics.
2 Project Focus
We focus on projects, delivering the best we can
for the benefit of each and every product we touch.
3 Client Centricity
We act as an extension of the client’s organisation, moulding
our processes and procedures to fit their requirements
while sharing our knowledge of best practices.
4 Empowerment
We empower our people to perform to the best of
their ability by providing them with the resources
and environment to do their jobs and the tools to
track and measure their performance.
5 Passion for Games
We are passionate about games and are proud of
our role in helping to deploy them and we play an
active role in the wider industry.
6 Client Intimacy
We love our clients (all of them) and want the best
for them at all times.
7 Positivity
We have a “can do” attitude and rise to the challenge
of solving our clients’ problems.
8 Flexibility
We recognise the importance of flexibility and actively
embrace it despite the obvious challenges. Flexibility
is why we exist at all. Without it, clients would perform the
tasks we do themselves.
9 Learning & Growing
We learn at every opportunity and grow ourselves
through experience, training and tackling new challenges.
Working with our customers
Supporting our communities
We are fortunate to be able to count 23 of the
top 25 global games developers and all of the top
10 mobile games publishers by revenue as our
valued customers. These companies expect the
highest level of service and our diverse capabilities
allow us to satisfy our customers’ needs every
time. Increasingly, these customers prefer to
externalise multiple services to one provider, and
this is where we are uniquely positioned to meet
their expectations.
Through our studios across 23 countries, we place
the support of our local communities, including
our employees, at the heart of what we do. In
order to do more to support good causes across
the communities that we are a part of, we have
set aside an annual central fund of €250,000
under the Keywords Cares initiative. Throughout
2021, Keywordians with the support of Keywords
Cares raised funds of over €26,500 and supported
various local community and employee-led events.
Year on year, we find ourselves more embedded
with these clients, having access to their
development environments and integrated
further into their workflows.
Joining the Keywords family
We are a highly acquisitive business and have
strict criteria for our acquisition targets, by
far the most important of these being cultural
fit. Before acquiring an acquisition target we
complete detailed due diligence that ensures
the seamless integration of the new studio and,
most importantly, our new colleagues. From day
one, we want them to feel part of the Keywords
family, while, at the same time, appreciating the
history and richness that the new studio brings to
Keywords. One mark of our integration success is
that over half our senior management team joined
us through acquired companies.
Our people, with their drive and talent, make
Keywords the global service provider that it is
today, and it is essential for us that we continue
to foster a unique and diverse culture, which
includes welcoming new faces and ensuring they
feel just as supported and welcomed as their more
established colleagues.
Diversity, Equality and Inclusivity
As a multi-cultural business serving a global
gaming community, we naturally thrive on
diversity, celebrate uniqueness and collaborate
as a team. We encourage all Keywordians to
learn more about LGBTQIA+ communities and
support an environment of self-expression
through our Global Diversity Equality & Inclusivity
(DE&I) Council.
As part of this, celebrating Pride is an annual
summer tradition at Keywords. While many
parades remained cancelled around the world due
to COVID-19 restrictions, the festivities were not
forgotten at Keywords. We encouraged our teams
to show their colours throughout the year and our
local HR and studio management teams organised
activities in June to raise awareness among
Keywordians and beyond.
To increase local awareness, our studio in Manila
organised a contest to create a background for
Teams calls. The winner, Alyzza Jeanne Naguit,
said of her creation (shown below): “This art shows
that different people can celebrate and be united
when celebrating Pride Month.”
1
2
0
2
S
T
N
U
O
C
C
A
D
N
A
T
R
O
P
E
R
L
A
U
N
N
A
C
L
P
S
O
I
D
U
T
S
S
D
R
O
W
Y
E
K
OVERVIEWSTRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSSUPPLEMENTARY INFORMATION
OUR PEOPLE, OUR CULTURE CONTINUED
Many of our studios around the world changed
their logos on websites and social media
channels to raise awareness for Pride and here
are some examples:
35
1
2
0
2
S
T
N
U
O
C
C
A
D
N
A
T
R
O
P
E
R
L
A
U
N
N
A
C
L
P
S
O
I
D
U
T
S
S
D
R
O
W
Y
E
K
Bernadette Belle Wu Ong’s cape grabbed the
attention of the fashion world in 2021 but did you
know that the costume’s powerful message has
been hand-painted by a Keywordian? Our Player
Support Agent Paulo Pilapil Espinosa and designer
Arwin Meriales worked on the design together
with Paulo hand-painting the words.
On International Women’s Day, Electric Square held
a 200km walking challenge to help raise money for
RISE (Refuge, Information, Support and Education), a
domestic abuse charity based in Brighton and Hove.
Mindfulness
This is an area that has been more important
than ever over the last year due to COVID-19
restrictions to people's personal and professional
lives. Electric Square was awarded Gold in the
Mind’s Workplace Wellbeing Index 2020–2021,
given their achievements in successfully
embedding mental health into their policies and
practices, while demonstrating a long-term and
in-depth commitment to staff mental health.
Sachin Gulia, from our Lakshya Gurgaon team
took a step back to reflect on the past year
and decided to break the monotony of staying
at home with an adventurous expedition on
his bicycle from Meerut (Uttar Pradesh) to Leh
(Ladakh) covering more than 1,000km to reach
an altitude of almost 12,000 feet.
Rhys Lloyd, Head of Studio at Descriptive Video
Works, highlighted in an industry article that as the
video game industry takes steps toward inclusivity,
audio description is the next step on this journey
and calls out accessibility as one of the defining
trends of 2021. Rhys is featured on page 38.
Great Place to Work
Keywords Studios in Manila has been certified
in 2021 by Great Place To Work® Philippines, in
recognition of their great employee experience.
Dietrich Quemado, our Manila studio head is
featured on page 9, where he talks about this
achievement and his passion for games.
In Ireland, Keywords was named among Ireland’s
150 Best Employers for 2021 while a number of
our UK studios (Studio Gobo, Indigo Pearl, d3t and
Electric Square) were also big winners in the UK
GamesIndustry.biz Best Places To Work Awards.
Supporting the fight against COVID-19
Keywordians in India organised a COVID-19
Vaccination Camp for all its employees from
Lakshya and Babel at our Gurgaon Studio in
June 2021. In total, around 200 people were
vaccinated, including our support staff, security,
housekeeping, and their family members. The
camp was organised in association with C K Birla
Hospital, Gurgaon.
Lakshya has remained committed to keeping
the safety of its staff the utmost priority and
have continued to work remotely. Many of our
employees moved to their hometowns to take
care of loved ones and continued to work from
there. Today, our employees work seamlessly from
multiple cities across India, this could not have
been possible without our IT, office administration,
and production teams who rose to the COVID-19
and work from home challenge.
Staying connected
In 2020, Keywords started a partnership with our
art studios to create a series of gratitude e-cards,
allowing Keywordians to send personalised thank
you e-cards to other Keywordians for their help
and continued support. In 2021, over 4,500 e-cards
were sent globally, almost double the prior year,
with kind thoughts and thank you messages
keeping our people connected while apart.
With the migration to working from home, team
outings and seasonal events have unfortunately
remained on hold in most locations. To keep
connected, a number of our studios hosted
employee-exclusive webinars and invited people
from around the Group to join in as well.
OVERVIEWSTRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSSUPPLEMENTARY INFORMATION
OUR PEOPLE, OUR CULTURE CONTINUED
In our Mexico studio, the weekly “State of the
Union” floor meetings moved online, as the
team recognised the continued importance
of sharing what is going on across Keywords
as well as building a sense of community
with acknowledgments of outstanding
performance, celebrating birthdays and warmly
welcoming newcomers.
2021 was Keywords’ first full year on Instagram
and we shared lots of personal moments and
office insights from our studios, including our first
ever global drawing event for all Keywordians,
no matter if they worked at an art studio or just
sketched for fun. Follow us for 2022 insights:
@keywordsstudiosfamily
Community and charitable activities
Winters in North India can be tough for the
underprivileged, so our studios there helped the
less fortunate in and around Delhi. By teaming
up with A Giggles Welfare Organization (a non-
governmental organisation), we distributed
blankets to women and children at the Don Bosco
Ashalayam orphanage.
Our Keywords team in Montreal participated in
a food drive in March 2021, with volunteer drivers
picking up packages of food and toiletries in their
neighbourhoods, while teammates collected
and sorted donations for redistribution to those
in need.
36
1
2
0
2
S
T
N
U
O
C
C
A
D
N
A
T
R
O
P
E
R
L
A
U
N
N
A
C
L
P
S
O
I
D
U
T
S
S
D
R
O
W
Y
E
K
In the Philippines, our studio organised a money,
toy and food donation drive for paediatric cancer
patients staying at Bahay Aruga, a shelter for
patients being treated in hospitals around Manila.
For Earth Day 2021, our team in Montreal
contributed 100 computer monitors to Insertech
Angus’ hardware donation campaign, helping
support Insertech efforts to provide work experience
to young people struggling to find employment.
A 24-hour football tournament was organised by
our team at Keywords’ Headquarters in Dublin
to raise money for Irish Motor Neurone Disease
Association with Nord Anglia International School
Dublin kindly offering their football pitches free of
charge for this event.
Keywords Player Support team in Manila
gave their time, energy and hearts to help
192 families in the Philippines that were hit by
typhoon Ulysses. The team visited the families
to distribute food items and toiletries as well as
second-hand clothes.
Gaming for good
The biggest gaming tournament of the year,
Extra Life featured 23 Keywordian gamers from
around the world, who streamed over 135 hours
of gameplay, raising almost US$6,000 for the
Children’s Miracle Network of hospitals.
MONE Y R AIS ED FOR THE KIDS
$5,849
N UMBE R OF KE YWORDIANS
JO I NI NG OUR T EAM
23
F RO M VARIOUS LO CATIONS IN
8 countries
TH ANK YOU TO OVER 1 ,0 0 0 VIE WER S
WHO EN COUR AGE D US AND L EFT
DON ATI ON S .
In September, Keywords held a Solidarity Cup
online gaming tournament for employees across
Asia Pacific, attracting support from our studios
in Manila, Singapore, Tokyo, Taipei, China, India,
Australia, Indonesia and Korea. A total of US$5,000
was collected from participating studios and was
used to buy medical supplies for Sardjito Hospital
in Indonesia. In addition to the medical supplies,
over US$2,000 was donated to UNICEF – Indonesia
from a combination of employee donations and
Keywords Cares matching.
After being involved with Grads In Games for
a number of years, d3t became the headline
sponsors for the 2020-2021 academic year, an
initiative that helps graduates kick-start their
careers in the video games industry.
Keywords Studios in Italy held informative
meetings with young students’ parents on the use
of video games by children and teenagers that
provided useful tips to parents on how to protect
their children from some pitfalls and dangers with
in-game open chats. The studio also supported
disadvantaged students by helping them to
prepare for their eighth-grade exams.
OVERVIEWSTRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSSUPPLEMENTARY INFORMATION
RESPONSIBLE BUSINESS REPORT
37
Keywords conducts its business to the highest
standards of honesty, integrity and ethical conduct.
UN SD Gs
Ensure healthy lives and
promote well-being
Ensure inclusive and
equitable quality education
and promote lifelong
learning opportunities for all
Achieve gender equality
and empower all women
and girls
Promote sustained, inclusive
and sustainable economic
growth, full and productive
employment and decent
work for all
Industry, innovation
and infrastructure: Build
resilient infrastructure,
promote inclusive
and sustainable
industrialization and
foster innovation
Reduce inequality within
and among countries
Climate action:
Take urgent action to
combat climate change
and its impacts
1
2
0
2
S
T
N
U
O
C
C
A
D
N
A
T
R
O
P
E
R
L
A
U
N
N
A
C
L
P
S
O
I
D
U
T
S
S
D
R
O
W
Y
E
K
Progress in 2021
We at Keywords have always been committed to conducting
our business responsibly, operating to the highest standards of
honesty, integrity and ethical conduct. We take our wider corporate
responsibility seriously and are conscious of the role our business
plays in our communities and in the impact our business has on the
environment. We are very proud of the thousands of Keywordians,
across 23 countries of operations, for upholding the highest
standards and behaving in accordance with our “Keywords Rule of
9” as we engage and grow with our work colleagues, our customers
and our communities.
As more investor attention falls on this critical aspect of business,
so we at Keywords are working to bring to the fore the existing
behaviours and characteristics of our business that already make
us a great place to work, a business that cares for its people, its
communities and the environment and a business that recognises
there is much more we could and should be doing.
In 2021, we established an Environmental, Social and Governance
(ESG) Committee, which meets quarterly and provides regular
updates to the Board on progress. Details of the membership
and activities in the year can be found on page 84. The ESG
Committee has identified a number of performance metrics in each
of our priority areas to measure our progress and we believe by
fully embedding these into our business strategy we can build
a more robust and sustainable business for all our stakeholders
(shareholders, employees, customers, suppliers and community
participants). While recognising there is more work to be done, the
ESG Committee believes a solid base has been established and looks
forward to reporting on the progress in each of our priority areas.
The ESG Committee also builds on materiality assessment work
that our senior managers and the Board carried out in 2020. That
process included a materiality workshop, as part of our Executive
Summit, providing the Board and senior managers with the
opportunity to identify and debate matters of material importance
to them based on potential impacts to the business and its
stakeholders. This was supplemented by a responsible business
employee survey, where we sampled a representative group of
Keywordians to get their views and understand what is important
to them. This process identified our five Responsible business
priorities of People (including Diversity, Equality & Inclusivity (DE&I)),
Client, Community, and the Planet underpinned by Governance.
We also mapped our priority areas to the UN SDGs (United
Nations sustainable development goals) as set out in each of the
priority areas.
During 2021, we made good progress on our priority areas, with
highlights including:
– Employee NPS score increasing to 42 from 22 in 2020, and
positive employee survey feedback
– Health and wellbeing supported ongoing COVID-19 assistance,
and more mental health initiatives
– Partnership with Women in Games Ambassador programme
– Planet: Environmental policy, Sustainable Studios, Carbon offset,
Task Force on Climate-related Financial Disclosures (TCFD)
– MSCI ESG Rating improved to A from BBB
OVERVIEWSTRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSSUPPLEMENTARY INFORMATION
TRULY IMMERSED
MEET THE KEYWORDIANS
38
RH YS L LOYD
STU DIO HEA D AT DESCRIPTI VE VIDEO WORKS
VAN CO UVER, C ANADA
LEVEL
58
1
2
0
2
S
T
N
U
O
C
C
A
D
N
A
T
R
O
P
E
R
L
A
U
N
N
A
C
L
P
S
O
I
D
U
T
S
S
D
R
O
W
Y
E
K
R H Y S
S K I L L S :
ACCESSIBILITY
AND IN CLUSION
G A M E G E N R E :
S P O R T S
S T R E N G T H :
L E A R N I N G A N D G R O W I N G
– S I N C E I B E G A N W O R K I N G
I N A C C E S S I B I L I T Y, I H AV E
L E A R N E D A T R E M E N D O U S
A M O U N T F R O M M Y
C O L L E A G U E S A N D T H E
A U D I E N C E W E S E R V E .
A S A C O M PA N Y, W E A R E
C O N S TA N T LY I N N O VAT I N G
A N D S P E A R H E A D I N G
C H A N G E S I N T H E
A C C E S S I B I L I T Y I N D U S T R Y
K E Y W O R D S H I G H L I G H T:
P R O V I D I N G L I V E A U D I O
D E S C R I P T I O N F O R T H E
T O K Y O O LY M P I C S A N D
PA R A LY M P I C S , W H I C H L E D
T O N B C W I N N I N G A N AWA R D
F O R B E S T L I V E D E S C R I P T I O N
F R O M T H E A M E R I C A N
C O U N C I L O F T H E B L I N D
E N E R G Y:
I H AV E T H E O P P O R T U N I T Y
T O W O R K W I T H A N
I N C R E D I B L E T E A M T H AT I S
D E D I C AT E D T O B R I D G I N G
T H E A C C E S S I B I L I T Y G A P F O R
P E O P L E W H O A R E B L I N D O R
L O W V I S I O N
We regularly hear from
our audience how Audio
Description makes a
meaningful difference
in their life, and it’s a
privilege to do this
STRATEGIC REPORTGOVERNANCEOVERVIEWFINANCIAL STATEMENTSSUPPLEMENTARY INFORMATION
RESPONSIBLE BUSINESS REPORT CONTINUED
39
P E O P L E
( I N C L U D I N G D E & I )
People are our largest and most
valuable asset. We value them;
we trust them and we work with
them to support their passion to
provide the best service for each
project and customer.
UN SD Gs
Ensure healthy lives and
promote well-being
Ensure inclusive and equitable
quality education and promote
lifelong learning opportunities
for all
Achieve gender equality and
empower all women and girls
Promote sustained, inclusive and
sustainable economic growth,
full and productive employment
and decent work for all
Reduce inequality within
and among countries
1
2
0
2
S
T
N
U
O
C
C
A
D
N
A
T
R
O
P
E
R
L
A
U
N
N
A
C
L
P
S
O
I
D
U
T
S
S
D
R
O
W
Y
E
K
As a multicultural business, we thrive on diversity,
celebrate uniqueness and collaborate as a team
whether we are physically together in one of our
70+ studios around the world or working together
virtually. We continually challenge ourselves to
ensure that we provide a working environment
that treats people with dignity and respect,
free from discrimination and with fair and equal
opportunities. The key areas of focus are: health
& safety, employee engagement, training and
development and diversity, equality and inclusivity.
Health & Safety
Since the start of the COVID-19 pandemic,
our priority has been the health, safety and
wellbeing of all Keywordians, reinforcing our
ongoing commitment to providing a safe and
healthy workplace for all of our employees.
We have worked hard to fully comply with all
enhanced national legislation on health and
safety requirements, while providing information,
education and training to those returning to an
office environment.
COVID-19 has also brought new pressures around
working from home, resulting in the potential for
an increase in mental health issues. In response
to mental health and overall wellness, we
increased the awareness of Employee Assistance
Programmes (EAP) at our larger locations and
other locations have arranged programmes
locally. Examples of some of these included guest
speakers on mental health awareness and various
team or online events that encourage activeness
and mindfulness, such as dance lessons and
virtual yoga. Many of our EAP providers also
offer online courses to help build resilience and
personal development in areas of mental health
and wellbeing. We are particularly proud of how
Keywordians around the world have responded
to these challenges to keep everybody safe
while making extra efforts to staying connected
with each other (more detail is set out on
pages 34 to 36).
We welcome employee input into all programmes
and openly share initiatives across the
organisation as we seek to meet the changing
needs of our people. As an example, to provide
some additional support in instances where some
of our colleagues were particularly financially
impacted as a result of COVID-19, we established
our own US$500,000 hardship fund in the earlier
months of the pandemic to support those
experiencing more acute financial issues. To date,
the hardship fund has provided US$75,000 in
support for our staff and families affected by
COVID-19 and other general financial difficulties.
This fund remains active and accessible by all.
EMPLOYEE ENGAGEMENT
SURVEY RESPONSE R ATE
69%
21
20
69%
68%
eNPS
42
21
20
42
22
OVERVIEWSTRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSSUPPLEMENTARY INFORMATION
RESPONSIBLE BUSINESS REPORT CONTINUED
40
P E O P L E C O N T I N U E D
Employee engagement
Our annual employee engagement survey
took place in September 2021 with 6,565 of our
colleagues responding, representing a 69%
response rate (2020: 68%). In response to the
survey feedback in 2020, some of the actions we
took included creating a Health and Wellbeing
Committee, adding further support to CSR
(Corporate Social Responsibility) activities with
the addition of Regional CSR roles, began routine
global messaging from senior executives and
amplified our gratitude e-card programme with the
addition of cultural awareness dates.
We were delighted to see our global employee net
promoter score (eNPS) increasing to 42 from 22 in
2020. We are also pleased to see all global service
lines, support teams and regional eNPS scores
increasing over the prior year. This score is used to
express the strength of the relationship between
Keywords and its employees and is calculated
based on the answer to a simple question: “Would
you recommend Keywords Studios as a good
place to work?” Generally, a score within the
bracket of 10 to 30 is considered good and a score
of 50 is excellent.
The 2021 survey continued with strong themes
of accomplishment and teamwork with 93%
responding that they were proud to be a
member of their team, 93% of our employees
feel Keywords is striving to create a diverse and
inclusive environment for all employees and
92% feel they are treated fairly in the workplace.
Areas for improvement for 2022 relate to more
opportunities for career development and
growth (similar to 2020), more support around
mental health and wellbeing and easier access
to information and policies. The top three most
important workplace benefits were compensation
and salary, flexible work/life balance and being
recognised and valued. We have set up focus
groups for 2022 to examine the results of the
survey and to propose initiatives to further
improve overall employee engagement. The
survey results were also reviewed by the ESG
Committee and key themes were discussed and
considered when determining initiatives and
metrics for 2022.
The survey also sought feedback on working
environments and whether employees felt
productive in their roles, knowing that for many,
this meant a work from home arrangement.
82% of people expressed a positive response,
compared to 77% in 2020.
1
2
0
2
S
T
N
U
O
C
C
A
D
N
A
T
R
O
P
E
R
L
A
U
N
N
A
C
L
P
S
O
I
D
U
T
S
S
D
R
O
W
Y
E
K
OVERVIEWSTRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSSUPPLEMENTARY INFORMATION
RESPONSIBLE BUSINESS REPORT CONTINUED
41
P E O P L E C O N T I N U E D
We believe there is clearly a role for physical studios for the Group,
particularly to allow for the exchange of creative ideas, training and
development, healthy social interaction by peers and where the
added security environment and highly specialised set-ups of our
testing and audio studios are so important. Post COVID-19, we see
the future as a hybrid of creating vibrant, engaging and safe studio
space while also enabling people to work securely and productively
from home where this can be facilitated.
Training and development
We value our people; we trust them and work to support their
passion to provide the best service for each project and each
customer. However, there is always more that can be done to invest
in our people and we continue to focus on making improvements
with training and development, benefit schemes and career
planning. Across Keywords, we provide training and development
programmes appropriate to the service line and the professional
disciplines involved therein. With so many staff working from home
due to the COVID-19 pandemic, our Montreal team has continued
to enhance the online learning hub, Keywords Academy Canada,
which allows employees to provide access to learning materials,
book courses and view monthly topics of interest. Internationally,
we use LinkedIn Learning to provide employees around the world
with access to hundreds of courses online in their local language.
We continue to partner with local institutes and professional bodies
with online and in-person management development and skills
programmes throughout the Keywords Group.
Diversity Equality & Inclusivity
In 2020, we created a Global Diversity Equality & Inclusivity (DE&I)
Council as we recognised that we could do more to drive this
agenda and evolve our approach at a global, regional and local
level in order to have a positive impact on people’s everyday lives.
During 2021, the Council focused on projects around education, HR
support, community, and communication. These included piloting
Affinity Groups and the partnership with Women in Games. We
are piloting unconscious bias training for individuals in hiring roles
and are taking steps to redact job applications to further ensure
unbiased assessment of potential candidates at the start of the
recruitment process.
In 2021, the Group was composed of 25% women, 74% men and 1%
non-binary/not disclosed (2020: 26%/74%), this ratio is mainly due
to the higher proportion of males in some parts of our business.
Our support functions have a more equal split of women and men
(44% and 56%, respectively). We recognise that the video games
industry traditionally attracts more male than female employees;
therefore, a continuing focus going forward will be to look at
opportunities to highlight Keywords, and the gaming industry as a
whole, as an attractive career choice for women. Following changes
to Board composition during the year, 25% of Board executives are
now female.
Keywords is fully committed to initiatives and activities that
encourage women to pursue a career in video games, and to help
address the underrepresentation of women in our industry. As
part of this, in August 2021, Keywords Studios announced a new
partnership with Women in Games, to help power their over 600
strong ambassador programme under the heading, “Ambassador
Programme Powered by Keywords”.
1
2
0
2
S
T
N
U
O
C
C
A
D
N
A
T
R
O
P
E
R
L
A
U
N
N
A
C
L
P
S
O
I
D
U
T
S
S
D
R
O
W
Y
E
K
Partnership with Women in Games
Women in Games is a not-for-profit organisation
founded in 2009 with the mission to identify and effect
the lasting change needed to bring about full gender
equality, equity and parity of opportunity within the
gaming sector and to encourage more women to
consider games and eSports as a career.
Its Individual Ambassador Programme, which was
founded in 2016, brings together individuals, industry
and educators under one umbrella, all focused on
diversifying and strengthening the sector. In 2022, we
will leverage our global platform and client relationships
to enhance and accelerate the Ambassador
programme, while working closely with Women in
Games on a number of projects, events and initiatives.
OVERVIEWSTRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSSUPPLEMENTARY INFORMATION
RESPONSIBLE BUSINESS REPORT CONTINUED
42
C L I E N T
Our clients and their projects
are at the heart of everything
we do at Keywords and we are
focused on continually improving
the engagement and experience
of our clients when interacting
with Keywords. We always seek
to better understand our clients’
needs so that we can fully meet
their expectations for each and
every project.
UN SD Gs
Promote sustained, inclusive and sustainable
economic growth, full and productive employment
and decent work for all
Build resilient infrastructure, promote inclusive
and sustainable industrialization and foster
innovation
1
2
0
2
S
T
N
U
O
C
C
A
D
N
A
T
R
O
P
E
R
L
A
U
N
N
A
C
L
P
S
O
I
D
U
T
S
S
D
R
O
W
Y
E
K
We are fortunate to be able to include the majority of the top global
games publishers and developers as our clients. These companies
expect the highest levels of service and confidentiality. At the heart
of our culture is our commitment to quality, reliability and integrating
with our customers’ processes which, when combined, promotes
long-term, sustainable relationships. Continuing to create and
maintain the right culture is core to Keywords’ future sustainability
and is embedded in our operating principles, the “Keywords Rule of 9”.
We encourage all Keywordians to embrace these principles, as we
will always do the very best we can for our customers and those
with whom we interact.
Our top five customers account for 30.0% (2020: 29.1%) of the
Company’s revenues, with 133 customers using three or more
service lines, up from 120 in 2020. In 2021, we launched a more
involved feedback survey with our customers through a customer
net promoter score (NPS) survey with an overall customer NPS of
30 (a score of between 30-70 is considered “great” by Retently).
The survey highlighted that quality was the number one reason for
choosing Keywords over other providers.
Information technology
As a global business providing services for the video gaming
and media industries, Keywords relies heavily on technology.
It is critical that this technology environment can continue to
operate effectively, efficiently and securely. To ensure this is
the case, Keywords has a dedicated Information Security &
Privacy department which reports on the Group’s’ security
posture to the Audit Committee at least twice a year. In 2021,
an independent third party also conducted a detailed review of
the current information security environment at Keywords and
the department’s future plans.
The department follows a comprehensive global Information
Security & Privacy framework with policies, guidelines and
procedures, covering industry best practices that all studios
must adhere to.
This framework incorporates compliance checks to ensure that
our studios meet the Keywords standard security requirements.
Supplementary penetration tests are also executed as required,
in addition to external compliance assessments and audits
performed by our third-party customers on an ongoing basis.
The activities include:
– Managing the Security & Privacy framework
– Monitoring of Keywords Studios’ information systems
and infrastructure
– Security & Privacy incident management
– Raising employee awareness
– Client Security & Privacy assessments
– Testing of internal privacy and security controls
Several studios hold and maintain, or are in the process of acquiring,
information security and privacy-related certifications, including, but
not limited to: Trusted Partner Network (TPN), Supplier Security and
Privacy Assurance (SSPA), Payment Card Industry Data Security
Standard (PCI-DSS), System and Organization Controls 2 (SOC-2),
Netflix Post Partner Program (NP3).
Each service line is constantly developing and using technology to
improve client service and drive internal productivity. An example
of this is in Localization, where we plan to build an increasingly
differentiated offering. This combines the market-leading expertise
we have built up in localization over the past 20 years, with
proprietary software tools, such as XLoc, and recently acquired
Artificial Intelligence (AI) and machine learning (ML) technology
from Kantan, which enables us to manage a greater volume of
digital content for our clients. We are also developing the Kantan
technology to provide more efficient multi-language capabilities in
our Player Support business.
OVERVIEWSTRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSSUPPLEMENTARY INFORMATION
RESPONSIBLE BUSINESS REPORT CONTINUED
43
P L A N E T
We are committed to minimising
our impact on the planet and
recognise the importance of
meeting globally recognised
corporate responsibility
standards. As a responsible
employer, we are responding
to the demands of our people
to build a sustainable business
model, mainly through the impact
of our studio configurations and
business travel activities.
UN SD Gs
Take urgent action to combat
climate change and its impacts
1
2
0
2
S
T
N
U
O
C
C
A
D
N
A
T
R
O
P
E
R
L
A
U
N
N
A
C
L
P
S
O
I
D
U
T
S
S
D
R
O
W
Y
E
K
The project was recently recognised with the
award for “Innovation in nature conservation
– land management” from the United Nations
Development Programme (UNDP) and the
International Union for Conservation of Nature
(IUCN). Additional information on Carbon Tanzania
and the great work it does in forest conservation
in the Ntakata Mountains can be found here:
www.carbontanzania.com
We accept that in a global organisation our
people will need to travel. However, in 2020 and
2021, as a result of the COVID-19 pandemic, our
business travel was greatly reduced. We increased
our usage of collaborative tools such as video
conferencing and will endeavour to retain these
practices to a greater degree post the pandemic.
When we do return to travelling, we will continue
to encourage everybody to fly economy and use
public transport where practical.
Sustainable studios
We developed the Group's first Environmental
Policy in 2021, covering our energy and recycling
practices. The policy will help further develop our
Sustainable Studios programme and support
our studios in their efforts to minimise energy
usage and to reduce, reuse and recycle wherever
possible. As part of this, Keywords has started its
first environmental assessment of all studios to
create a baseline and a proactive guide towards
next actions and goals.
In addition to these local initiatives to reduce
energy usage and our environmental impact, in
the UK and Italy a number of our studios have
moved to 100% renewable electricity and more
are expected to follow in 2022 once their existing
commitments finish.
Sustainable Studios will help to reduce our carbon
emissions but we recognise these initiatives
take time. Therefore, in our 2021 Employee
Engagement Survey we asked staff their preferred
method to minimise our environmental impact in
the near-term and 70% chose forest protection.
As a result, Keywords offset its 2020 carbon
impact with 4,715 credits (2020 emissions +
10%) towards the Ntakata Mountains REDD
project which protects forests. The revenue
earned from the sale of these certified carbon
credits is paid directly to forest communities in
Tanzania, empowering them to manage their
own development needs. We believe this project
is a good match for Keywords given its focus on
the education of women and improved health in
the community.
OVERVIEWSTRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSSUPPLEMENTARY INFORMATION
RESPONSIBLE BUSINESS REPORT CONTINUED
44
P L A N E T C O N T I N U E D
S u s t a i n a b l e s t e p s
Our future sustainable steps
with the environmental side
of Environmental, Social and
Governance (ESG) are evolving
and will centre around the four
main pillars of the Task Force
on Climate-related Financial
Disclosures (TCFD).
UN SDGs
Ensure healthy lives and promote well-being
Ensure inclusive and equitable quality education
and promote lifelong learning opportunities for all
Promote sustained, inclusive and sustainable
economic growth, full and productive employment
and decent work for all
1
2
0
2
S
T
N
U
O
C
C
A
D
N
A
T
R
O
P
E
R
L
A
U
N
N
A
C
L
P
S
O
I
D
U
T
S
S
D
R
O
W
Y
E
K
This section sets out Keywords' reporting
against the TCFD requirements. As an Alternative
Investment Market (AIM) listed company, we are
not currently required to report against TCFD, but
we have endeavoured to provide the information
set out under the guidelines, to give a high level of
information and transparency to our stakeholders,
as to our governance, strategy, risks and targets
for climate related impacts.
Governance
Over the course of 2020, the Board recognised,
and discussed, the increasing importance of
ESG matters for our stakeholders. The Board
acknowledged the need to have a clear focus on
its impact on resources and the environment. To
support this undertaking and to have a clear focus
on the area of ESG, in 2021 Keywords established
an ESG Committee. Further details of the ESG
Committee can be found on page 84.
In addition to our ESG committee, we have
established a Responsible Business (RB)
Committee comprising of Jon Hauck along with
senior regional executives, to inform the Board as
well as implement and support Group initiatives
such as Sustainable Studios and the DE&I Council.
Keywords recognises that to embed responsible
business and environmental initiatives agreed
by the committees, a clear link to our local
studios must be in place to enable these to be
successfully implemented. To support this, we
are currently establishing CSR representatives
in each of our three regions to ensure initiatives
rolled out are fully embedded locally. These
representatives will report both to their regional
directors and through HR, while communicating
their findings and recommendations to the RB
Committee. The longer-term objective is to have
regionally led RB initiatives being supported by
the senior leadership.
One of the first actions of the RB committee
in 2021 was to develop the Group’s first
Environmental Policy covering measures to cut
greenhouse gas (carbon) emissions, energy,
waste, and other environmental impacts. Through
our Sustainable Studios programme, we will be
looking to roll out the Environmental Policy and
embed it across the business in 2022. Going
forward, this policy will be used as a basis for
all Keywords studios to ensure they work on
introducing environmental initiatives to conserve
natural resources and reduce our emissions.
In 2020, ESG factors were introduced into the
Chief Financial Officer's non-financial objectives
across five categories, each weighted 6% of the
overall bonus opportunity, including Management
Accounts, ESG Internal Control Framework, Internal
Control Framework, Treasury Management
Function, and Financial Systems. In 2021, the CFO’s
non-financial objectives remained the same and
included ESG, with each weighted 6%.
Strategy
The video games industry has a relatively
low carbon footprint compared to other “harder
to abate” sectors but Keywords is committed
to playing its part in minimising its impact on
the environment. Sustainability is a core focus
for Keywords, as it is for all the studios across
our regions.
OVERVIEWSTRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSSUPPLEMENTARY INFORMATION
RESPONSIBLE BUSINESS REPORT CONTINUED
45
P L A N E T C O N T I N U E D
S u s t a i n a b l e s t e p s
In 2020, to establish which ESG issues where
most material to our business, we worked
with an independent third party to carry out a
materiality assessment with our senior team and
the Board. This assessment was supplemented
by a Responsible business employee survey to
understand their views and what is important to
them. Once complete, this process identified our five
Responsible business priorities of People (including
DE&I), Client, Community and the Planet underpinned
by Governance. For further details on our
Responsible business priorities, please see page 37.
Climate change has been classified as an emerging
risk for the Company, and shall continue to be
monitored closely; however, with our minimal risks
from the impacts of climate change, as well as
our own smaller carbon footprint, it is considered
by the Board as secondary to our social policies.
2021 has demonstrated the ongoing issues of
discrimination and harassment that exist within
the gaming industry, and combating inequality and
discrimination remains Keywords’ primary goal.
Although this may be the case, Keywords is still
committed to reviewing how best it can reduce its
climate impact. As part of our Sustainable Studio
programme, we have started to assess all our
studios to gain a better understanding of our
energy consumption and other greenhouse gas
emitting activities. Once this has been completed,
we will have a comprehensive view of our emissions
across the business, with a view to building a plan to
reduce our environmental impacts. This transition
plan will consist of near-term and longer-term plans
to support us in reaching our goal of achieving net
zero carbon emissions ahead of 2050. Led by our
Chief Administration Officer, this groundwork will be
used to develop specific initiatives to monitor our
progress on reducing our climate impacts.
From the current data we have, the largest
considerations are our energy consumption from
purchased electricity and business travel. Last year
was the first time we captured data and reported
on our emissions, which showed that the majority
of our emissions are covered by Scope 2, purchased
electricity. To reduce our energy usage in this area,
our strategy over the next few years is to transition
electricity contracts on our premises to green or
renewable tariffs. A number of our UK studios have
switched to renewable tariffs in 2021 and feasibility
investigations are being conducted for several other
properties. In regions where local renewable power
is not available, we are looking into cross-border
power purchase agreements.
For properties under landlord managed services,
we will look to transition leases over time to
more energy efficient buildings, where landlords
already procure electricity from renewable sources.
As part of this process, we have established
a policy that outlines the requirements that
all new property locations must meet certain
environmental standards.
Keywords will also look to offset any remaining
emissions where it is not operationally possible
to eliminate emissions completely. For 2020
emissions, Keywords employees chose to offset
our carbon impact through credits from the
Ntakata REDD+ project in Tanzania, which helps
to limit deforestation.
1
2
0
2
S
T
N
U
O
C
C
A
D
N
A
T
R
O
P
E
R
L
A
U
N
N
A
C
L
P
S
O
I
D
U
T
S
S
D
R
O
W
Y
E
K
In addition to our Group-wide ambition, we
encourage initiatives at the studio level to minimise
energy usage, reduce and recycle waste, and to use
the most efficient communication and collaboration
tools to eliminate unnecessary travel. When we do
travel, we fly economy (where flights are shorter
than six hours), we do not have company cars
and encourage the use of public transport, where
practical, for all our colleagues. Going forward we
will look to capture our emissions from business
air travel.
The pandemic has forced us to adopt far more
virtual meetings, significantly cutting down on
our business travel. We intend to, where possible,
maintain this system so as to travel only when it is
necessary. Due to almost all roles within Keywords
being fully able to complete their work from home,
as evidenced during the pandemic, Keywords should
prove fully resilient to any climate-related events
facing the business, with only a limited number
of studios needing more complex plans to ensure
the security of server infrastructure or computer
hardware. Going forward, Keywords will look to
expand the data captured to report against Scope 3
emissions associated with working from home and
purchased goods and services..
Risk management
At this point Keywords does not believe the
effects of climate change present a significant
direct material risk to Keywords beyond the
general global impacts that will be felt across
society. Our near totally digital operations give us
high levels of flexibility to respond to any extreme
weather event that could render our properties,
our sole source of operations, unusable. The
COVID-19 pandemic has proven the speed and
efficiency with which our colleagues can switch
our operations to working from home with minimal
disruption to our output. Such a transition could
be implemented again with relative ease should
climate risks reach a significant enough level as to
present a risk to working from our offices.
We anticipate our biggest area of risk is our
server facilities and computer hardware which are
housed in our premises. The growing challenges
of climate-related weather events, particularly
flooding and wildfires, presents an emerging
risk to the safety of our operations with the
potential for loss or damage to vital hardware.
Keywords locations known to be at risk will look
to conducting a review into how best to secure
any onsite hardware to minimise any potential
disruption, with any findings being used to update
the existing disaster recovery plans already in
place across our locations.
OVERVIEWSTRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSSUPPLEMENTARY INFORMATION
RESPONSIBLE BUSINESS REPORT CONTINUED
46
1
2
0
2
S
T
N
U
O
C
C
A
D
N
A
T
R
O
P
E
R
L
A
U
N
N
A
C
L
P
S
O
I
D
U
T
S
S
D
R
O
W
Y
E
K
Beyond the threats to Keywords directly,
secondary impacts from the effects of climate
change on other industries could represent a
potential issue for the Group. The semiconductor
shortage that has impacted the global
economy throughout 2021 has demonstrated
the vulnerability of existing supply chains
to unexpected disruptions – this is likely to
continue into the future. Keywords, like many
other businesses in our sector, had challenges
to source some key pieces of hardware amid
the competition for semiconductors. While we
expect the current situation to alleviate in 2022,
it represents an example of potential issues
our industry could face in the future. Such risks
will be assessed and reviewed by the Board to
ensure contingency plans are in place, and that
Keywords’ operations are able to continue with
minimal disruption.
We recognise that investors are increasingly
looking at the climate standards and policies
of potential investment opportunities, and
customers, many of whom are looking to minimise
the emissions in their own supply chains, may
seek out suppliers who can offer a “greener”
service. However, the Company does not consider
climate change to be of significant risk to the
demand for our own products and services.
Conversely, we do not expect it to increase
demand either, as we see limited climate-related
growth opportunities in external services to the
video games market.
Any risks deemed significant enough to the
business are communicated to the Board who
come to a determination as to whether the risk
presents a material threat. If the risk is deemed to
do so, a mitigation/contingency plan is formulated,
then implemented in the regions deemed to be
at risk. A guidance system will be put into place
to advise colleagues on the best practices to
minimise these climate impacts.
Climate-related risks are factored into our risk
assessments, which is reviewed throughout the
year. Any new risks are included and monitored
to ensure the plans remain effective and ensure
the safety of both our colleagues and business.
Financial risks are taken into consideration
by our existing top-down and bottom-up risk
management processes each year, details of
which can be found on page 57 of our Principal
risks and uncertainties section.
Metrics and targets
In line with the Streamlined Energy and Carbon
Reporting (SECR) disclosure, Keywords undertook
its second formal review of the Group’s global
energy usage, resulting in the identification,
assessment and measurement of our energy and
greenhouse gas (GHG) emissions.
We have used the GHG Protocol Corporate
Accounting and Reporting standard (revised
edition) and emission factors from the UK
Government’s GHG Conversion Factors for
Company Reporting 2021 and International Energy
Agency (IEA) conversion factors for non-UK
electricity to calculate the below disclosures. As
well as absolute emissions figures, the information
is presented as an intensity ratio against Scope
1 and Scope 2 emissions only, an index of both
employee numbers and our revenue in €m. These
figures were calculated from data available to the
Group and extrapolated to take account of smaller
or mixed tenant locations.
This year we have reported on Scope 3 emissions
(WTT and T&D) related to the combustion of
fuels and operation of facilities under Scope 1
and in relation to the purchase of electricity,
Scope 2. In 2020, these Scope 3 emissions were
combined with our Scope 1 and 2 reporting but
for transparency this has now been split out
as a separate line, and our previously reported
2020 Scope 1 and 2 figure has therefore changed.
In addition, the 2020 Global energy figure has
increased slightly due to improved data capture.
GHG emissions data
Current Reporting Year –
1 October 2020 to
30 September 2021
Comparison Reporting Year –
1 October 2019 to
30 September 2020
Tonnes of CO2e
Scope 1 – Combustion of fuels and operation of facilities (Scope 1)
Scope 2 – Emissions from purchase of electricity, heat, steam,
and cooling purchased for own use (Scope 2)*
Total emissions under Scope 1 and 2
UK and
offshore
1
184
185
Total
Global
200
3,411
3,611
Scope 3 – Transmission & Distribution (T&D) and Well to Tank (WTT)
related to our scope 1 and scope 2.
69
1,226
UK and
offshore
0
161
161
38
Total
Global
244
3,746
3,990
938
* Includes emissions only from the use of electricity.
In 2021, our global Scope 1 and 2 emissions (location based) were 3,611 CO2e, UK emissions accounted
for 185 tonnes of CO2e, representing 5% of global emissions
Energy consumption (MWh)
Scope 1 – Energy consumption from the combustion of fuels
and operation of facilities
Total Scope 2 – Energy consumption from purchase of electricity,
heat, steam, and cooling purchased for own use (Scope 2)*
Total Energy consumption
Energy 2021
Energy 2020
UK and
offshore
Total
Global
UK and
offshore
Total
Global
6
1,053
2
1,313
865
871
9,793
10,846
690
692
10,245
11,558
Total energy consumption – includes all activities for which the company is responsible, as Scope 1 and 2.
The energy consumption is calculated using electricity purchased (kWh) and fuel volumes converted to
kWh using the UK government GHG Conversion Factors for Company Reporting, presented in MWh.
In 2021, our global energy consumption was 10,846 MWh, the UK energy represented 8% of our global
energy consumption.
Intensity ratio (tonnes of CO2e per unit)
Ratio of carbon emissions to employees
Ratio of carbon emissions to revenue (€m)
2021
0.40
7.6
2020
0.49
11.0
Many of our studios remained less occupied during 2021 and therefore we believe that neither 2020
nor 2021 would be an accurate baseline to measure our carbon emissions. Nonetheless, in 2022 our
Sustainable Studios initiative will focus on driving our environmental commitment forwards, by identifying
practical changes that we can implement and set measurable business targets against, helping us deliver
our long-term ambition to reach net zero carbon emissions ahead of the UK Government’s target of 2050.
OVERVIEWSTRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSSUPPLEMENTARY INFORMATION
RESPONSIBLE BUSINESS REPORT CONTINUED
47
C O M M U N I T Y
Here at Keywords, we encourage
community involvement and
supporting good causes
throughout our local studios.
UN SD Gs
Good health and well-being: Ensure healthy lives
and promote well-being for all at all ages
Reduced inequalities: Reduce inequality
within and among countries
Gender equality: Achieve gender equality
and empower all women and girls
Climate action: Take urgent action to combat
climate change and its impacts
1
2
0
2
S
T
N
U
O
C
C
A
D
N
A
T
R
O
P
E
R
L
A
U
N
N
A
C
L
P
S
O
I
D
U
T
S
S
D
R
O
W
Y
E
K
In order to do more to support good causes
across the communities that we are a part of,
we have set aside an annual central fund of
€250,000 under the Keywords Cares initiative.
This can be applied to match funds raised for
community outreach and charitable initiatives
by our local teams around the world. In this way,
we hope to encourage even more support for our
local communities.
In 2021, we were delighted again to see so many
Keywordians giving their time and energy in
support of the numerous initiatives that so
many of us feel strongly about, whether it’s local
charities, not-for-profit programmes, educational
initiatives or community outreach programmes.
Keywords Cares has also extended its matching
programme to include Keywords Cares Plus that
allows for a more rapid support process in the
event of a natural disaster or humanitarian crisis.
Some of the many proud examples of our
community efforts during the year are set out in
more detail on pages 34 to 36.
Supporting communities
– Keywordians volunteered significant hours
in an effort to help our neighbours.
– Uniting and inspiring, making
communities stronger.
– Ensuring player safety and wellbeing, our
Player Support Agents and Community
Managers have reported hundreds of
online threats.
– Raised funds for various community needs.
Celebrating cultures
–
70+ international holidays observed,
including National Day, Diwali, International
Women’s Day, Chinese New Year, Revolution
Day, Independence Day, Day of National
Unity and many more.
– Honouring the backgrounds of our
teams located across 23 countries
and five continents.
–
70+ studios supporting diversity
and inclusivity.
Annual Global Charity Event – our 5th
year participating in Extra Life, gaming
for a good cause.
– Children's Miracle Network Hospitals
raise funds and awareness for 170
member hospitals that provide 32 million
treatments each year to children across
the US and Canada.
– Donations stay local to fund critical
treatments and healthcare services,
paediatric medical equipment and
charitable care.
– Keywords Studios fundraisers joined us
from Canada, the US, Mexico, Germany,
France, Italy and the UK.
– Over 1000 views.
– 200 + hours of gameplay.
– Fundraising efforts are captured in
our overall numbers above.
R AISED BY EMPLOYEES
FOR CHARITY
€26,500
(2020: €46,000, 2019: €29,000)
STUDIOS SUPPORTED
LOCAL SCHOOLS AND
EDUCATION NEEDS
5
STUDIOS SUPPORTED
GREEN INITIATIVES IN THEIR
STUDIOS AND COMMUNITIES
4
STUDIOS SUPPORTED
DIVER SITY AND INCLUSIVITY
PROGR AMMES , TO IMPROVE
THE QUALITY OF LIFE FOR
MARGINALISED COMMUNITIES
4
STUDIOS SUPPORTED
EMERGENCY RELIEF MEASURES ,
RELATED TO NATUR AL
DISASTER S AND COVID-19
4
OVERVIEWSTRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSSUPPLEMENTARY INFORMATION
RESPONSIBLE BUSINESS REPORT CONTINUED
48
G O V E R N A N C E
Our business strategy is aligned
to our Responsible business
priorities and the expectations of
our key stakeholders, as outlined
in our Code of Business Conduct
(the “Code”).
UN SD Gs
Decent work and economic growth: Promote sustained,
inclusive and sustainable economic growth, full and
productive employment and decent work for all
Industry, innovation and infrastructure: Build resilient
infrastructure, promote inclusive and sustainable
industrialization and foster innovation
1
2
0
2
S
T
N
U
O
C
C
A
D
N
A
T
R
O
P
E
R
L
A
U
N
N
A
C
L
P
S
O
I
D
U
T
S
S
D
R
O
W
Y
E
K
This Code provides the basic foundations which
guide our ethical conduct at Keywords, setting the
highest standards of behaviour and respecting the
dignity of others. We are committed to conducting
our business responsibly and operating to the
highest standards of honesty, integrity and ethical
conduct. We recognise the value of good corporate
governance in every part of the business and have
adopted the Quoted Companies Alliance (QCA)
Corporate Governance Code, which is appropriate
for the size and maturity of our business.
Ethics: The Group is committed to the highest
levels of integrity, accountability and the
prevention of bribery and corruption. In 2020,
we refreshed our Code of Business Conduct,
and published it on the Company website in 12
languages. We also engaged with an external
compliance software vendor to help with the
ongoing training and awareness of our anti-
bribery and corruption policy, in addition to other
policies and eLearning activities. In 2018, we
adopted a whistleblowing policy that has been
rolled out globally. This policy allows all colleagues,
wherever they are, to raise any concerns
about possible financial or other irregularities
confidentially. During 2021, two whistleblowing
disclosures were reported (2020: none), which
were all fully investigated and are being resolved.
Human rights: At Keywords, we do not tolerate
any form of modern slavery or human trafficking
in any part of our business. In 2017, the Board
adopted a Modern Slavery Policy and our annual
Modern Slavery Statement is published on the
Company website. We operate to international
standards and principles, including the
International Bill of Human Rights, the UN’s Guiding
Principles on Business and Human Rights, the
International Labour Organization’s Declaration
on Fundamental Principles and Rights at Work
and the Children’s Rights and Business Principles.
The Group continues to make all reasonable
endeavours to ensure all employees and agents
within our supply chains are not subject to any
form of forced, compulsory/bonded labour or
human trafficking through our Modern Slavery
Policy and the accompanying Supplier Code
of Conduct.
Data privacy: Keywords is committed to
processing data in accordance with its
responsibilities under applicable data protection
legislation, and has created the Keywords
Privacy Framework, based on the General Data
Protection Regulation (GDPR). This framework is
constantly updated to take into account other
applicable privacy regulations, and it applies to
all of its subsidiaries regardless of geographical
location or service line. We regard the lawful and
correct processing of personal information by the
Company as very important to our successful
operations and for maintaining confidence
between our clients and ourselves.
OVERVIEWSTRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSSUPPLEMENTARY INFORMATION
RESPONSIBLE BUSINESS REPORT CONTINUED
49
G O V E R N A N C E C O N T I N U E D
M&A: We are a highly acquisitive business and
have strict criteria for our acquisition targets, by
far the most important being cultural fit. Before
acquiring an acquisition target we complete
detailed due diligence and all acquisitions are
approved by the Board prior to completion. We
have a tried-and-tested integration process
and detailed integration plans tailored to each
company, with the involvement of those who
will implement it. This is designed to ensure a
seamless integration of the new studio and most
importantly, our new colleagues, so that from day
one, they feel like part of the Keywords family and
adopt our Group policies.
Tax governance: The Group takes a balanced
approach to the management of its tax affairs and
has a tax policy which is approved by the Board.
Our overall strategy is to meet our tax obligations
and ensure that long-term shareholder returns are
responsibly optimised by structuring our business
and transactions in a tax efficient manner, while
taking into account reputational factors. Tax risks
are regularly reviewed by the Board and the Audit
Committee. The Group’s approach in relation to the
management of tax issues is to ensure that:
– we comply with all applicable laws, disclosure
requirements and regulations in the
territories in which we do business;
– all tax positions adopted are adequately
and fairly disclosed in tax filings;
– we have an open and transparent working
relationship with the relevant tax authorities
around the world;
– where disputes arise with tax authorities,
we seek to reach a resolution as soon as
possible in an open and constructive manner;
– where considered appropriate, the Group
takes advice from professional firms;
–
tax risks are appropriately managed in
accordance with the tax policy; and
– our tax planning is aligned with the Group’s
commercial and business activities and
the tax treatment of business transactions
is optimised.
1
2
0
2
S
T
N
U
O
C
C
A
D
N
A
T
R
O
P
E
R
L
A
U
N
N
A
C
L
P
S
O
I
D
U
T
S
S
D
R
O
W
Y
E
K
OVERVIEWSTRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSSUPPLEMENTARY INFORMATION
RESPONSIBLE BUSINESS REPORT CONTINUED
50
N O N - F I N A N C I A L
I N F O R M A T I O N S T A T E M E N T
Our non-financial information statement is
set out below on environmental matters,
social and employee matters, respect for
human rights, and anti-corruption and anti-
bribery. Details of our business model can
be found on pages 16 to 19, and our principal
risks are on pages 57 to 58. Our Modern
Slavery Policy and Code of Business Conduct
can be found on our website.
Reporting requirement
Policies and standards which govern our approach
Page reference
Environmental matters
Environmental Policy
Page 43 Responsible business
Social and employee matters
Code of Business Conduct
Page 20 Our strategy
Recruitment policy
Employee handbook
Diversity and equal opportunity
Grievance policy
Employee assistance programme
Health & safety policy
Data protection
Supplier Code of Conduct
Modern Slavery Policy
Respect for human rights
Anti-bribery and corruption
Anti-bribery and corruption policy
Whistleblowing
Fraud policy
Sanctions policy
Business model
Description of principal risks
and impact of business activity
Non-financial key
performance indicators
Pages 34 to 36 Our people, our culture
Pages 37 to 49 Responsible business
Page 48 Responsible business
Page 48 Responsible business
Pages 66 to 68 Audit Committee
Pages 16 to 19 Business model
Page 37 Responsible business
Pages 57 to 58 Principal risks and uncertainties
Page 20 Our strategy
Pages 37 to 49 Responsible business
1
2
0
2
S
T
N
U
O
C
C
A
D
N
A
T
R
O
P
E
R
L
A
U
N
N
A
C
L
P
S
O
I
D
U
T
S
S
D
R
O
W
Y
E
K
OVERVIEWSTRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSSUPPLEMENTARY INFORMATION
RESPONSIBLE BUSINESS REPORT CONTINUED
51
S E C T I O N 1 7 2 ( 1 ) S T A T E M E N T
The Directors have acted in a way that they
consider, in good faith, would be most likely
to promote the success of the Company for
the benefit of its members as a whole, in line
with Section 172 of the Companies Act 2006.
This section of the Strategic report describes how the Directors
continue to have regard for:
–
–
–
–
–
the likely consequences of any decision in the long term;
the interests of the Company’s employees;
the need to foster the Company’s business relationships with
suppliers, customers and others;
the impact of the Company’s operations on the community
and the environment;
the desirability of the Company maintaining a reputation for
high standards of business conduct; and
–
the need to act fairly as between members of the Company.
The Directors are fully aware of these duties and responsibilities,
and have set out below how they are fulfilling those duties
in respect of each of their key stakeholders. In line with our
Responsible business report (more detail on pages 37 to 49), the
Board identifies the Group’s key stakeholders as its shareholders,
employees, customers, suppliers and community participants, and it
is committed to effective engagement with these stakeholders.
Shareholders
Our Annual General Meeting (AGM) is an important part of effective
shareholder communication, with all shareholders having the
opportunity to hear from the Company and ask questions. The
Board welcomes the opportunity to engage with our shareholders,
typically providing a brief update presentation at each AGM and
with all Directors available to answer questions. In 2021, the Board
was unfortunately unable to permit its shareholders to attend the
AGM in person due to COVID-19 restrictions. As the Company’s
articles of association were amended at the 2020 AGM to enable
“hybrid meetings” (with some attendees in a physical location and
others attending by electronic means), the Board was able to invite
shareholder participation via videoconference. For the 2022 AGM, the
Board hopes to welcome our shareholders back to meet in person
but will maintain the ability for shareholders to participate remotely,
to ensure maximum opportunity for participation and engagement.
The Company also intends to increase the audience of the Capital
Markets Day by broadcasting these events to selected stakeholders
in order to encourage greater engagement.
Understanding that some of our employees experienced
considerable economic pressure because of the pandemic, the Board
is proud to have supported the establishment of a hardship fund
to support our employees who needed additional financial support.
Further details of this initiative can be found on page 40.
The ESG Committee, established in 2021, will be responsible for
closely monitoring the interests of our workforce on a continuous
basis. Further details of our priorities relating to our people are
discussed in the ESG Committee report on page 84, and details of
the initiatives already in place across the Group are presented on
pages 37 to 49.
Throughout the year, the CEO, CFO and COO meet with
shareholders, with the wider Board receiving regular updates
following these engagements. Additionally, both the Senior
Independent Director and the Chair have met, and will continue to
meet, with institutional shareholders to discuss updates on the
Group, including strategy, remuneration and other key issues that
are vital to these stakeholders in the future. An example would be
the emerging importance to some stakeholders of environmental,
social and governance (ESG) factors.
Employees
The Board receives regular updates in relation to employees, in
addition to the results from the Group’s global employee survey
(further details on page 39) and, acknowledging that remuneration
is an important matter for our people, the Directors requested an
update on pay equality. Additionally, the Group holds a series of
annual strategy days and, as the Board is in attendance, it is able
to get both formal and informal instant feedback from the senior
management team, in addition to discussing strategic development
in an open, collaborative forum. Due to COVID-19, the Board was
unable to engage with the Group’s employees in its normal manner
during 2021, but have resumed visits to key Keywords locations
in 2022.
Customers
The Board regards strong engagement with our customers and
building long-term strategic relationships, by developing an intimate
understanding of their evolving needs and understanding their
challenges, as critical to the success of the Company. During the
year, the Board received updates from senior management on key
customers via its regular business reviews. Prior to COVID-19, the
CEO and selected members of the Board normally met existing
and potential clients at the key video games events (e.g. E3, DICE,
GDC, XDS, Gamescom, Tokyo Games Show) to seek their input and
gauge their current and future requirements. The CEO and COO also
regularly meet with key customers to strengthen relationships and
communicate our deep expertise, the flexibility afforded by our scale
and ability to provide a multi-service line platform.
During the year the Group formally adopted a Sanctions Policy in
respect of its customer relationships, documenting its commitment
to complying with the economic and trade sanctions laws and
regulations of the United Nations, European Union, United States
of America, United Kingdom and Office of Foreign Assets Control
(OFAC), as well as all applicable sanctions laws and regulations in
the jurisdictions in which the Group operates (Sanction Regulations).
The minimum standards that the Group must comply with to meet
the obligations set out in the Sanctions Policy include:
1
2
0
2
S
T
N
U
O
C
C
A
D
N
A
T
R
O
P
E
R
L
A
U
N
N
A
C
L
P
S
O
I
D
U
T
S
S
D
R
O
W
Y
E
K
OVERVIEWSTRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSSUPPLEMENTARY INFORMATION
RESPONSIBLE BUSINESS REPORT CONTINUED
52
S E C T I O N 1 7 2 ( 1 ) S T A T E M E N T
C O N T I N U E D
–
screening customers against Sanction Regulations using
a compliance solution offered by a reputable third party
service provider;
– prohibiting or restricting business activities or transactions
with customers, or commencing customer relationships,
that the Group believes may violate applicable Sanction
Regulations, whether directly or indirectly; and
– blocking or rejecting business activities or transactions with
customers where the Group is obligated to do so under
applicable Sanction Regulations.
Suppliers
The Board recognises the important role that our suppliers play in
helping us deliver our services, as this group comprises individual
contractors in addition to a range of support service suppliers. In
respect of our broader base of suppliers, the Board has developed,
and regularly reviews, a Supplier Code of Conduct, complemented
by the adoption of a Modern Slavery Policy since 2017. Engagement
with our suppliers is primarily managed by the COO and important
matters are brought to the attention of the Board as they arise.
Community participants
The Board recognises the need to increase our community engagement
and to support the communities that we are part of. With this in mind,
Keywords has pledged up to €250,000 per year to match funds raised
for community outreach and charitable initiatives so that we can
continue to support our local communities (further details on page 47).
Decision making
We set out below the interim dividend and new marketing service
line as examples of principal decisions where the Directors have
had regard to the matters set out in Section 172(1)(a)–(f) and the
interests of our key stakeholder groups (named above) when
discharging their duties. Principal decisions are those regarded to be
material to the Group’s strategy.
Interim dividend
Marketing service line
Following a period of robust growth and increased profitability
and cash generation, and reflecting the Board’s confidence in the
future, the Board was pleased to declare an interim dividend of
0.70p per share which was paid to shareholders on 29 October
2021. This represented an increase of 20.7% on the 2019 interim
dividend. Owing to the uncertain global economic situation in 2020,
no dividends were declared during 2020. The Board’s progressive
dividend policy seeks to reflect the Group’s continued growth in
earnings and strong cash generation, balanced with the need to
retain the resources to fund growth opportunities, in line with
our strategy.
To support each dividend approved by the Board, detailed updates
are received from senior management relating to financial resilience,
performance outlook and external views, and the Board has an
opportunity to discuss those and other stakeholder considerations.
The Board receives regular updates on investor relations and invites
questions from shareholders. The Board considered that while
shareholders have not communicated to the Company a preference
to receive dividends, or otherwise, many shareholders do require
our continuation of the dividend policy. In addition, there are a
number of employee shareholders (as a result of the Company’s
wider workforce remuneration policy to align remuneration with
the Company’s long-term success), and the Board considers those
as also having an expectation of receiving dividends. Overall, the
Board sees the implementation of a progressive dividend policy as
an important element of the Company’s future success and, having
regard to the considerations noted above, determined that re-
commencing the payment of dividends was in the best interests of
its shareholders and wider stakeholders.
During 2021, the Board supported a proposal from the management
team to report Marketing as a standalone service line, following its
recent growth and scale within the Group, and to focus on building
the service line both through acquisitions and organic growth.
The Marketing services sector is particularly fragmented, given
the range of services provided both internally and externally
from key art, trailer creation, advertising, PR, branding, campaign
management, influencer marketing and social media management
through to marketing analytics and community management.
The Board recognised that establishing a highly specialised video
games Marketing services business would better position Keywords
as the partner of choice for our games publisher and developer
customers who are interested in a reliable supplier with global reach
and deep expertise.
The Board decided to respond to the needs of our customers and
enhance our value proposition as a multi-service line platform,
which supports the Group’s long-term strategy communicated
to shareholders, and creates long-term value for them. With the
acquisitions of g-Net and Maverick Media, now the two largest
studios in the Marketing service line, Keywords has a considerably
expanded platform from which to further build the breadth of our
capabilities, organically and through selective acquisitions.
For our employees within the Marketing service line, this
development has provided a valuable opportunity for them to
create stronger relationships with existing customers and foster
relationships with other Keywords customers. The resulting
volume and variety of work offers an opportunity for personal and
professional development, as well as development opportunities
for individuals supporting the new service line, and ultimately
recognises the excellent work of all our colleagues within the
Marketing service line.
1
2
0
2
S
T
N
U
O
C
C
A
D
N
A
T
R
O
P
E
R
L
A
U
N
N
A
C
L
P
S
O
I
D
U
T
S
S
D
R
O
W
Y
E
K
OVERVIEWSTRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSSUPPLEMENTARY INFORMATION
FINANCIAL AND OPERATING REVIEW
Resilient performance
in a period of significant
disruption
T H E
M A T H EM A T I C IA N
J O N H A U C K C F O
L E V E L 4 8
X P 2 0 , 0 0 0
53
1
2
0
2
S
T
N
U
O
C
C
A
D
N
A
T
R
O
P
E
R
L
A
U
N
N
A
C
L
P
S
O
I
D
U
T
S
S
D
R
O
W
Y
E
K
ORGANIC REVENUE GROWTH
+19.0%
REVENUE (€M)
€512.2m
+37.1%
Revenue
Revenue for 2021 increased by 37.1% to €512.2m
(2020: €373.5m). This growth was supplemented
by the full year impact of acquisitions in 2020 and
the acquisitions made in 2021, but offset by the
impact of currency movements, particularly the
weakening of the US dollar in the second half of
the year.
Organic Revenue growth (which adjusts for the
impact of currency movements and acquisitions)
was up 19.0% (H1: 22.9%, H2: 15.5%, 2020: 11.7%).
This was driven by a robust performance across
all service lines, against a comparative period
where, in H1 2020, certain service lines were more
severely held back at the early stages of COVID-19,
particularly in our Testing and Audio businesses.
Further details of the trading performances
of each of the service lines are provided in the
CEO Review.
Page 1/4
OVERVIEWSTRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSSUPPLEMENTARY INFORMATION
FINANCIAL AND OPERATING REVIEW CONTINUED
Gross margin
Gross margin in 2021 was €200.1m (2020: €141.8m)
representing an increase of 41.1%. The gross
margin improved by 1.1% pts to 39.1% (2020:
38.0%) driven by certain cost savings as a result
of working from home measures and the revenue
shortfalls in the early stages of the pandemic in
the prior year, particularly in our Testing, Audio
and Localization service lines that held back
margins in 2020.
Operating costs
Adjusted operating costs increased by 33.1% to
€90.0m (2020: €67.6m), reflecting a larger Group,
but reduced to 17.6% of revenue versus 18.1% in
2020. This reduction was driven by continued
good cost control, together with reductions in
certain costs due to COVID-19, primarily resulting
from remote working and lower travel, business
development and marketing costs.
Adjusted EBITDA
Adjusted EBITDA increased 48.4% to €110.1m
compared with €74.2m for 2020. The Adjusted
EBITDA margin in 2021 reflects the improved
revenue noted above and this, combined with
the benefit of ongoing reduction in certain costs
due to COVID-19, resulted in an improvement in
Adjusted EBITDA margin of 1.6% pts to 21.5%
(2020: 19.9%).
Net finance costs
Net finance costs reduced by €6.2m to €2.4m
(2020: €8.6m), largely driven by a €8.1m swing in
the net foreign exchange loss which is described
in more detail below. Underlying interest costs on
bank debt (excluding IFRS 16 interest, deferred
consideration discount unwind, bank charges and
foreign exchange) remained in line with the prior
year at €1.0m (2020: €1.0m).
Alternative performance measures (APMs)
The Group reports a number of APMs to present
the financial performance of the business which
are not GAAP measures as defined by IFRS.
The Directors believe these measures provide
valuable additional information for the users of the
financial information to understand the underlying
trading performance of the business. In particular,
adjusted profit measures are used to provide the
users of the accounts a clear understanding of the
underlying profitability of the business over time.
A breakdown of the adjusting factors is provided
in the table below:
Share-based payments expense
Acquisition and integration costs
Amortisation and impairment
of intangible assets
COVID-19 government
subsidies claimed
Foreign exchange and
other items
2021
€m
16.4
8.0
2020
€m
15.4
2.6
13.7
8.8
–
–
38.1
(9.2)
4.9
22.5
1.58m of options were granted under the Share
Option Scheme and Long-Term Incentive Plan in
2021. This, together with grants from previous
years, has resulted in a non-cash share-based
payments expense of €16.4m in 2021 (2020:
€15.4m). The increase is largely due to an increase
in the fair value charge for the more recent grants
compared to previous years reflecting the increase
in the share price.
One-off costs associated with the acquisition and
integration of businesses amounted to €8.0m
(2020: €2.6m). This includes a one-off charge
for fair value movements in respect of deferred
consideration of €5.6m that is required to be taken
through the profit and loss account (and therefore
the cash outlay is €2.4m). Amortisation and
impairment of intangible assets charge increased
by €4.9m to €13.7m (2020: €8.8m), reflecting the
recent increased levels of acquisition activity.
Foreign exchange and other items amounted to
a net charge of zero (2020: €4.9m). This includes
€1.9m for the unwinding of discount liabilities on
deferred consideration (2020: €0.1m) offset by a
net foreign exchange gain of €2.0m (2020: €6.1m
loss). Keywords does not hedge foreign currency
exposures. The effect on the Group’s results of
movements in exchange rates and the foreign
exchange gains and losses incurred during the
year mainly relate to the effect of translating net
current assets held in foreign currencies.
A more detailed explanation of the measures used
together with a reconciliation to the corresponding
GAAP measures is provided in the APMs section at
the end of the statement.
Profit before taxation
Profit before tax increased by €15.5m (+47.7% year
on year) to €48.0m (2020: €32.5m). Adjusted Profit
Before Tax, which adjusts for the items described
in the APMs section above increased by €31.0m
(+56.4% year on year) to €86.0m compared with
€55.0m in 2020. This represents an improvement
in Adjusted profit before tax margin of 2.1% pts
to 16.8% (2020: 14.7%). This is above the Group’s
historical margin delivery of between 14% and 15%
and partly reflects the short-term benefit from
certain costs savings as a result of COVID-19 noted
earlier that are not expected to continue.
Taxation
The tax charge increased by €2.9m to €13.9m
(2020: €11.0m), largely reflecting the increase in the
profit before tax of the business. After adjusting
for the items noted in the APMs section above and
the tax impact arising on the bridging items, the
Adjusted Effective Tax Rate for 2021 was 21.6%
compared with the rate of 21.5% in 2020.
Earnings per share
Basic earnings per share increased by 48.9% to
45.16c (2020: 30.32c), reflecting the increase in
the statutory profit after tax of 58.9%, partially
offset by an 6.7% increase in the weighted average
number of shares reflecting the full year impact
of the 10.5% equity placing in May of 2020. Fully
diluted earnings per share, reflecting the impact
of unvested share options, increased by 49.7% to
42.98c (2020: 28.71c).
Adjusted earnings per share, which adjusts
for the items noted in the APMs section and the
tax impact arising on the bridging items above,
was 89.24c, representing an increase of 46.5%
(2020: 60.93c).
Page 2/4
54
1
2
0
2
S
T
N
U
O
C
C
A
D
N
A
T
R
O
P
E
R
L
A
U
N
N
A
C
L
P
S
O
I
D
U
T
S
S
D
R
O
W
Y
E
K
OVERVIEWSTRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSSUPPLEMENTARY INFORMATION
FINANCIAL AND OPERATING REVIEW CONTINUED
55
Cash flow and net debt
Cash flow statement
Adjusted EBITDA
MMTC and VGTR
Working capital and other items
Capex – property, plant and equipment (PPE)
Capex – intangible assets
Payments of principal on lease liabilities
COVID-19 employment support subsidies
Operating cash flows
Net Interest paid
Free cash flow before tax
Tax
Free cash flow
M&A – acquisition spend
M&A – acquisition and integration costs
Investment income
Dividends paid
Shares issued for cash
Underlying increase / (decrease) in net cash / (debt)
FX and other items
Increase in net cash / (debt)
Opening net cash / (debt)
Closing net cash / (debt)
2021
€m
110.1
(4.5)
11.3
(19.4)
(0.3)
(10.0)
-
87.2
(2.7)
84.5
(23.9)
60.6
(63.1)
(2.4)
–
(0.6)
5.3
(0.2)
2.9
2.7
102.9
105.6
2020
€m
74.2
0.6
(2.2)
(13.9)
(0.3)
(8.2)
9.2
59.4
(1.6)
57.8
(4.5)
53.3
(39.9)
(2.3)
1.4
–
111.7
124.2
(3.4)
120.8
(17.9)
102.9
1
2
0
2
S
T
N
U
O
C
C
A
D
N
A
T
R
O
P
E
R
L
A
U
N
N
A
C
L
P
S
O
I
D
U
T
S
S
D
R
O
W
Y
E
K
This resulted in Free Cash Flow of €60.6m (2020:
€53.3m), an increase of €7.3m on the prior period.
Adjusted Free Cash Flow before tax, which adjusts
for capital expenditure that is supporting growth
in future periods and the COVID-19 government
employment retention subsidies in the prior
year, was €92.3m in 2021, an increase of €38.9m
(+72.8%) on the levels delivered in 2020. This
resulted in an Adjusted Cash Conversion rate of
107.3% (2020: 97.2%). A reconciliation of Free Cash
Flow to Adjusted Free Cash flow before tax is
provided in the Alternative Performance Measures
(APMs) note.
Cash spent on acquisitions totalled €65.5m
of which €63.1m was in respect of the cash
component of both current and prior year
acquisitions and €2.4m was in relation to
acquisition and integration costs.
These items, together with foreign exchange
movements of €2.9m resulted in an increase of net
cash of €2.7m in 2021 (2020: increase in net cash:
€120.8m) and a closing net cash of €105.6m (2020:
net cash €102.9m).
Change
€m
35.9
(5.1)
13.5
(5.5)
0.0
(1.8)
(9.2)
27.8
(1.1)
26.7
(19.4)
7.3
(23.2)
(0.1)
(1.4)
(0.6)
(106.4)
(124.4)
6.3
(118.1)
The Group generated Adjusted EBITDA of €110.1m
in 2021, an increase of €35.9m from €74.2m in
2020. There was a €5.1m decrease in respect
of the amounts due for Multi-Media Tax Credits
(MMTC) that are earned in the year of production
and are collected a year in arrears, and Video
Games Tax Relief (VGTR). Working capital and
other items resulted in an increase of €13.5m
compared to 2020 with working capital increasing
by €6.7m, mainly due to lower accrued income,
while other items improved by €6.8m from
phasing differences.
Investment in property, plant and equipment
amounted to €19.4m (2020: €13.9m), reflecting a
39.60% increase and reflecting a return to more
normal levels of spending following the COVID-19
disruption in the prior period that resulted
in a reduction in both the level of equipment
expenditure and expansionary capex. Property
lease payments of principal of €10.0m were 22.0%
higher than the prior period (2020: €8.2m), mainly
related to acquisitions in the period.
The Group received no COVID-19 government
employment retention subsidies in 2021, resulting
in operating cash flows of €87.2m (2020: €59.4m),
and an increase of €27.8m on 2020.
Net interest payments were €2.7m, an increase of
€1.1m on 2020 as a result of the fees associated
with the refinancing of the Revolving Credit Facility
which is discussed further below. Tax payments
amounted to €23.9m (2020: €4.5m) an increase
of €19.4m on the same period when the Group
benefitted from timing differences that resulted
in fewer payments in the period in respect of
the 2020 tax payable which were subsequently
settled in 2021.
Page 3/4
OVERVIEWSTRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSSUPPLEMENTARY INFORMATION
FINANCIAL AND OPERATING REVIEW CONTINUED
Balance sheet and liquidity
Dividend
The Group funds itself primarily through cash
generation and a Revolving Credit Facility (RCF).
In December 2021, the Group entered into a
new €150m unsecured multicurrency RCF with
a syndicate of four lenders, which replaces the
Company’s previous €100 million secured RCF.
The lender group is made up of Citi Commercial
Bank, Fifth Third Bank, National Association, HSBC
Continental Europe and ING Bank N.V., Dublin
Branch. The new facility is for an initial three-year
tenor to December 2024, with an option to extend
the term by two further one-year periods at the
Company's request, subject to lender consent.
The new RCF has financial covenants that are
consistent with the previous facility and has an
accordion feature that allows it to be increased
by a further €50 million again subject to lender
consent. The RCF is subject to two financial
covenants that are calculated in accordance with
the facility agreement:
Leverage: Maximum Total Net Borrowings to
Adjusted EBITDA ratio of 3 times; and
Interest cover: Minimum Adjusted Operating Profit
to Net Finance Costs ratio of 4 times.
The Group entered the year with a strong balance
sheet, with net cash (excluding IFRS 16 leases)
of €102.9m as at 31 December 2020. Following
€65.5m of cash deployed in the period to support
the Group’s value accretive M&A programme,
at the end of 2021, the Group had net cash
(excluding IFRS 16 leases) of €105.6m and undrawn
committed facilities of €150m.
The Board's progressive dividend policy seeks to
reflect the Group's continued growth in earnings
and strong cash generation, balanced with the
need to retain the resources to fund growth
opportunities, in line with our strategy.
Following the interim dividend payment of
0.70p per share in October 2021, the Board
has recommended a final dividend of 1.45p per
share, which will make the total dividend for
the year ending 31 December 2021, 2.15p per
share, an increase of 10% per annum over the
2018 full year dividend (2018: 1.61p per share).
Subject to shareholder approval at the Annual
General Meeting, the final dividend will be paid
on 17 June 2022 to all shareholders on the register
at 27 May 2022 and the shares will trade ex-
dividend on 26 May 2022. The cash cost of the
final proposed dividend will be an estimated €1.3m,
subject to currency fluctuations.
Guidance for 2022
We have made a good start to the year with
the Organic Revenue growth momentum in the
second half of 2021 flowing into 2022, and total
revenue benefitting from favourable currency
movements compared to 2021.
2021 Adjusted profit before tax margins have
benefitted from certain COVID-19 costs savings
that are not sustainable and are hence expected
to move back towards the 14–15% historical range
during 2022 and the Adjusted Effective Tax rate is
expected to be in line with the 2021 rate of ~21%.
We are anticipating capex in line with 2021 relative
to revenue, reflecting continued expansionary
capex and investment in equipment to support
the new console cycle and an overall Adjusted
Cash Conversion rate of ~80%, representing a
reduction on 2021 as some of the phasing benefits
in 2021 unwind.
Notwithstanding the situation in Russia, given the
strong underlying trading across the Group aided,
in part, by favourable currency movements, we
are confident of delivering a performance for the
full year towards the top end of current market
expectations*.
J O N H A U C K
C H I E F F I N A N C I A L O F F I C E R
* As at 28 March 2022, company compiled analysts' forecasts gave a consensus for FY 2022 of €597m of revenue (range: €587-610m) and €92m of adjusted profit before tax (range: €90-95m).
Page 4/4
56
1
2
0
2
S
T
N
U
O
C
C
A
D
N
A
T
R
O
P
E
R
L
A
U
N
N
A
C
L
P
S
O
I
D
U
T
S
S
D
R
O
W
Y
E
K
OVERVIEWSTRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSSUPPLEMENTARY INFORMATION
PRINCIPAL RISKS AND UNCERTAINTIES
Links to Strategic Pillars:
Trend since last year:
Building
our platform
Selective acquisitions
and integration
Organic growth
and cross selling
Same
Increase
Decrease
57
The principal risks to which the Group is exposed are set out below, together with details of their
potential impact; the likelihood of occurrence (on a scale of 1 to 4, with 4 being the most likely); an
indication of whether the trend in the risk exposure is increasing, decreasing or broadly unchanged
since last year; and the actions taken to mitigate the risk.
Furthermore, once a year in January, we have a special deep dive risk session at the Audit Committee
where we try to analyse current and emerging risks in more detail and link to our overall strategy.
The principal risks associated with the Group’s strategy are divided into:
We operate a top-down and bottom-up approach to risk management, where current and emerging
risks are identified and assessed as part of our Strategy and Budget process, and the results are
reviewed and discussed in detail at the Audit Committee on an ongoing basis throughout the year.
– Those specific to the Keywords Group and its strategy;
–
Industry-related risks; and
– General business risks for any international company.
Group and strategy risks
Risk
Description and Impact
Mitigation
Trend
Risk
Description and Impact
Mitigation
Trend
Unsuitable
acquisition and/
or failure of
integration process
Link to Strategy
Likelihood
Keywords has an active acquisition agenda
to support its strategy of becoming the
“go to” global provider of services to the
video games industry. Selecting the right
acquisitions, managing them successfully
and embedding the Keywords culture is a
crucial ingredient of success. Failure to do
so could result in the business not achieving
the expected financial and operational
benefits and adversely impact growth,
profitability and cash flow.
Since IPO, the Company has involved a broad
panel of senior managers in the acquisition and
integration process, building on the considerable
experience that exists at Board and senior
management level, thus providing further
bandwidth to identify, execute and integrate
acquisitions effectively.
Our dedicated M&A team conducts due diligence
and we use earn-out clauses where appropriate.
Acquisition reports are approved at Board level,
and post-acquisition performance is monitored.
Failure to deliver
services
Link to Strategy
Most of Keywords’ services are of a
time-critical nature with delays or service
delivery failures potentially impacting the
development or launch plans for games or
lost contracts and idle capacity.
Likelihood
Cross
contamination risk
Link to Strategy
As the Group succeeds in delivering multiple
services to the same customers, so the risk
of failure in one service line contaminating
the relationship with the customer across
the other service lines increases.
Timely delivery and the resourcing flexibility to
enable delivery to tight deadlines has been an
integral part of the Company’s modus operandi,
and Keywords’ approach to project management is
applied across the Group.
During 2020, client contracts were reviewed to
enable work from home. In 2021, contracts for new
business included this ability by default (where
appropriate).
Adhering to Keywords’ strong standards of
delivery and efficient communication across service
lines is key to managing this risk.
Likelihood
Client
concentration risk
Link to Strategy
Likelihood
The Group’s client base principally
comprises global game companies whose
revenues are in the billions and hundreds of
millions of dollars. Our top five customers
in 2021 account for 30.0% (2020: 29.1%) of
the Group’s revenues. These companies
have exacting standards and demand a high
quality of service. Any failure in this regard
or breakdown in the relationships at the top
level could cause considerable damage to
the business.
The potential impact is partially mitigated through
the Group’s highly flexible resource base and its
expansion continues to reduce its exposure to
any single large client, with no single customer
accounting for more than 6.5% (2020: 7.5%) of
revenues in 2021.
Failure to
meet market
expectations
Link to Strategy
Likelihood
Keywords floated on AIM in July 2013
with an expressed set of objectives of
growing the business organically and
by acquisition. Should the Company
lose the confidence of investors, this will
affect its ability to raise money for or
place shares to pay for acquisitions.
Inadequate financial
and operational
controls
Link to Strategy
Likelihood
Failure to manage
human resources/
talent effectively
Link to Strategy
Likelihood
Keywords has grown rapidly and it is
important that global financial controls
are in place to ensure smooth, timely
and accurate reporting of financial
results to satisfy our external reporting
obligations as well as the Board.
Failure to accurately report or forecast
financial results through error or fraud
would damage the Group’s reputation.
Keywords employs an average of
9,493 in 74 studios across the Group,
and people management is key to our
performance and service delivery.
Failure to attract, retain or develop high
quality entrepreneurial management
across the business could impact on
the attainment of strategic objectives.
The Group is focused on these areas
with the implementation of globally
managed service lines, management
development and remuneration
programmes, incorporating long and
short-term incentives. But with an
ever-increasing workforce this becomes
more demanding.
The Company makes every effort to communicate
regularly with investors via announcements and face-
to-face contact. This effective communication of the
continued opportunities for growth in the sector, how the
Group continues to execute on its stated strategy and
successfully integrate the businesses it acquires, should
continue to maintain the confidence of its investors.
The Group maintains a good mix of equity and debt
funding which gives it the flexibility and headroom to
invest in the business. During 2021, we successfully
negotiated a new Revolving Credit Facility, improving
liquidity. More details can be found in the Financial and
operating overview on page 56.
The Group has invested and continues to invest in its
financial reporting function and systems to facilitate
strong reporting and management control as it grows.
During 2021, we made new Board appointments, with
further appointments at the senior management levels
to drive our operations.
Keywords’ management structure has been
fundamental to the Group’s success, enabled by
embedding a Group culture that binds the teams
together, with a common purpose and set of standards.
We constantly work to develop and incentivise our
people and to support their passion to perform the
best service for each project and client, with regular
staff surveys undertaken too. In addition, special
emphasis is placed on workplace harmony and the
prevention of any forms of discrimination, harassment,
or malpractice in the workplace, recognising that any
sense of dissatisfaction can be very disruptive.
In 2021, we established a Global Diversity, Equality &
Inclusivity Council, comprising employees who work
closely with senior leaders, to connect DE&I activities
to the broader business strategy. More details of
our survey and DE&I Council can be found in the
Responsible business report on pages 39 and 41.
1
2
0
2
S
T
N
U
O
C
C
A
D
N
A
T
R
O
P
E
R
L
A
U
N
N
A
C
L
P
S
O
I
D
U
T
S
S
D
R
O
W
Y
E
K
OVERVIEWSTRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSSUPPLEMENTARY INFORMATION
PRINCIPAL RISKS AND UNCERTAINTIES CONTINUED
Links to Strategic Pillars:
Trend since last year:
Building
our platform
Selective acquisitions
and integration
Organic growth
and cross selling
Same
Increase
Decrease
58
Industry-related risks
General business risks continued
Risk
Description and Impact
Mitigation
Trend
Risk
Description and Impact
Mitigation
Trend
Non-compliance
with legal and
ethical standards
Link to Strategy
Likelihood
Breaches to
information and
cybersecurity
Link to Strategy
Likelihood
A material failure to comply with
applicable legal and ethical standards
could result in penalties, costs,
reputational harm and damage to
relationships with suppliers and
customers. New standards and
disclosure requirements are evolving
such as in environmental and climate
change reporting.
The Group promotes a culture of “Doing the right thing”
in all activities. Code of Business Conduct guidelines were
rolled out to all studios during 2021 and are supported by
more detailed policies and procedures where needed, and
published on our website. More details are contained in
the Responsible business report on page 48.
Sudden business
interruption
Link to Strategy
Likelihood
The industry requires the highest
standards of security and privacy
within a company offering services
such as Keywords. Cyber attacks
and security breaches, which are
happening with increased frequency
globally, may lead to piracy, disruption
of customers’ marketing plans, loss of
competitive edge and could result in
compensation claims.
The Company uses various third party and proprietary
tools and technologies for process control and
productivity purposes. Continued investment in these
tools is important to ensure the Group’s effectiveness.
Keywords maintains physical and data security and
privacy policies and procedures which are regularly
audited by its larger customers.
A dedicated Information Security team sets policies,
conducts regular penetration testing, monitors activity and
rapidly responds to any incidents that arise. More details are
contained in the Responsible business report on page 42.
1
2
0
2
S
T
N
U
O
C
C
A
D
N
A
T
R
O
P
E
R
L
A
U
N
N
A
C
L
P
S
O
I
D
U
T
S
S
D
R
O
W
Y
E
K
Technology
innovation and
industry disruption
Link to Strategy
Innovations in the gaming industry
continue to evolve, together with new
technologies for automated testing,
machine translation and crowdsourcing
could pose a threat to the Group in the
long term.
The Company is constantly developing technology tools
to deliver its services more effectively and participates
directly with customers in various pilot programmes
for new technologies to keep abreast of the technology
developments. Technology is one of the five strategic
workstreams detailed in the Chief Executive Officer’s
review on page 12.
Likelihood
Negative impact
of regulation on
video games
Link to Strategy
Likelihood
Changes in regulation on video games,
such as those seen in the Chinese
market which imposed curfews on
minors, could result in the delay or
cancellation of video games by our
customers. Requirements to address
responsible gaming in the industry
introduces complexity for our clients.
In relation to the Chinese market, Keywords has limited
revenue exposure to games destined solely for the
Chinese market. In addition, any potential impact
is partially mitigated through the Group’s diverse
geographic revenue base (no single client larger than
6.5% (2020: 7.5%)). Responsible gaming issues arising
during game play can be identified by our Player Support
teams, trained to handle and report safety incidents.
General business risks
Tax credits
withdrawal risk
Link to Strategy
Likelihood
The Company receives multimedia tax
credits (MMTC) in Canada, video games
tax relief (VGTR) in the UK, and Digital
Interactive Media (DIM) tax credits
in the US relating to qualifying costs
in those markets. These tax credit
regimes are designed to promote
growth and investment in the relevant
regions. Any reduction or cancellation
of these tax credits would increase the
cost base of the business and make the
business less competitive.
The Group works closely with regulators and
governments in relation to relevant country tax credits
and has been given no indication that these tax credits
will be removed in the medium term. The Group has
a geographically diversified operating platform and
retains the ability to move to other operating centres if
material changes were made.
Keywords is a global business and needs to
minimise business interruptions and be able
to continue servicing customers. This threat
could be internal, such as a major failure in its IT
systems, but also external, such as the Group
experienced and managed during the 2011
Tokyo earthquake and tsunami or currently with
COVID-19 (see below).
COVID-19: Since 2020, the Group’s production
studios have been impacted by the COVID-19
pandemic, resulting in most of the Group’s
studios either being temporarily closed and/
or operating at reduced capacity. Demand
for the Group’s services has remained robust
throughout the pandemic. The Group has
demonstrated strong resilience and the
ability to quickly move to working from home
arrangements in order to continue servicing our
customers, and have gradually reopened studios
where local restrictions allowed.
The Group’s multiple, full-service delivery hubs
provide for a good level of contingency and,
supported by business continuity plans, the
effects of such disasters can be managed.
COVID-19: During 2020, the Group moved ~9,000
employees to work from home arrangements
which allowed production to continue across
most of the Group’s operations throughout the
pandemic. In certain service lines, alternative
ways of working were introduced to allow
continued service while physical studios are
closed (e.g. remote Audio recording).
As studios have reopened, increased health &
safety protocols and changes to studio layouts
have been introduced to allow for safe working
while social distancing measures are in place.
Further details on how the Group responded
to the challenge posed by COVID-19 is provided
in the Chief Executive Officer’s review section
on pages 10 to 14 and in the Service line review
on pages 26 to 33.
We operate and own assets in a large number
of geographic regions and countries, and, as
a result, we are exposed to a wide range of
political, economic, regulatory, social and tax
environments. Policies or laws in the countries in
which we do business may change in a manner
that may be adverse for us, even those with
stable political environments.
The diversification and spread of activities
geographically mitigate the risk of disruption in
any one location.
We are monitoring the situation in Russia, where
our teams continue to work for non-Russian
clients, with our continuity planning benefitting
from the scale and flexibility afforded by our
global footprint.
The Group transacts in multiple currencies, given
our customers are located globally. Keywords is
therefore exposed to short-term currency risks,
in addition to longer-term risk that could develop
between our functional currency (euro) and our
multiple billing currencies. The Group’s largest
exposure is to the US dollar followed by the
Canadian dollar and sterling.
The Group does not hedge its currency risk
because Keywords’ main movements in
exchange-related gains or losses relate to the
effect of translating net current assets held
in foreign currencies. We also have the ability
to offset adverse foreign exchange currency
movements through increasing prices.
Global political risk
and uncertainty
Link to Strategy
Likelihood
Negative impact
of currency risk
Link to Strategy
Likelihood
Other risks have been classified as emerging risks for the Company, such as climate change and third-
party risk. These are discussed at the Audit Committee and continue to be monitored closely.
The Strategic report was approved by the Board and signed on its behalf by:
B E R T R A N D B O D S O N
C H I E F E X E C U T I V E O F F I C E R
30 March 2022
OVERVIEWSTRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSSUPPLEMENTARY INFORMATION
BOARD OF DIRECTORS
59
C H O O S E
Y O U R P L A Y E R
Team Keywordians
Page 1/2
L
A
R
E
N
E
G
E
H
T
I
I
N
A
C
T
C
A
T
E
H
T
I
I
N
A
C
T
A
M
E
H
T
A
M
E
H
T
L E V E L A G E
X P T E N U R E
C O M M I T T E E
DA
Audit
N
R
E
Nomination
Remuneration
ESG
Committee
Chair
R O S S G R A H A M F C A
I N D E P E N D E N T N O N - E X E C U T I V E
D I R E C T O R & C H A I R M A N
B E R T R A N D B O D S O N
C H I E F E X E C U T I V E O F F I C E R
J O N H A U C K F C A
C H I E F F I N A N C I A L O F F I C E R
D A V I D R E E V E S
S E N I O R I N D E P E N D E N T
N O N - E X E C U T I V E D I R E C T O R
Skills & Experience
Skills & Experience
Skills & Experience
Skills & Experience
Ross has extensive Executive and
Non-Executive experience in the
technology sector. Since retiring from
Misys plc, he has held a number of
Non-Executive directorships including
Psion plc and Wolfson Microelectronics
plc. Ross was appointed Director and
Chairman of Keywords shortly prior to
its IPO in July 2013. Ross creates the
necessary environment for dynamic
Board discussion and has helped elevate
the governance processes without
destroying the entrepreneurial essence
of Keywords.
Bertrand brings deep experience in
driving and executing growth strategies
for international businesses. He was
Chief Digital Officer for Novartis and
previously spent four years as Chief
Digital and Chief Marketing Officer
at Sainsbury’s Argos, leading the
integration of Argos into the Sainsbury’s
store network. Early experience includes
senior roles involved with content-
creation and entertainment at EMI Group,
Bragster (which he co-founded) and
Amazon. He is currently a non-executive
director of Tesco plc and Wolters
Kluwer N.V..
Jon has a wealth of finance, change
management and M&A experience,
having previously held a variety of roles
at Rentokil Initial plc. Over that time he
was responsible for leading a substantial
integration programme and CFO in
North America and from 2015 he held
the role of Group Financial Controller
and Treasurer. Prior to Rentokil Initial, he
worked in PwC’s Assurance practice. Jon
is a Fellow of the ICAEW.
David has over 30 years’ global
experience in management roles within
multinational companies. In 1999, he
was appointed Executive Vice President
of Sony Computer Entertainment
(Europe) and President and CEO in
2003. He brings to Keywords a global
knowledge of growing multinational
companies, experience of the video
game industry, corporate governance
and an understanding of working with
companies to develop global strategies.
David will retire from the Board at
the AGM.
L E V E L 7 4
X P 8
C O M M I T T E E
A N R
L E V E L 4 6
X P < 1
C O M M I T T E E
E
L E V E L 4 8
X P 2
C O M M I T T E E
E
L E V E L 7 5
X P 8
C O M M I T T E E
A N R
1
2
0
2
S
T
N
U
O
C
C
A
D
N
A
T
R
O
P
E
R
L
A
U
N
N
A
C
L
P
S
O
I
D
U
T
S
S
D
R
O
W
Y
E
K
STRATEGIC REPORTGOVERNANCEOVERVIEWFINANCIAL STATEMENTSSUPPLEMENTARY INFORMATION
BOARD OF DIRECTORS CONTINUED
60
C H O O S E
Y O U R P L A Y E R
Team Keywordians
Page 2/2
1
2
0
2
S
T
N
U
O
C
C
A
D
N
A
T
R
O
P
E
R
L
A
U
N
N
A
C
L
P
S
O
I
D
U
T
S
S
D
R
O
W
Y
E
K
L E V E L A G E
X P T E N U R E
C O M M I T T E E
DA
Audit
N
R
E
Nomination
Remuneration
ESG
Committee
Chair
C H A R L O T TA G I N M A N F C A
I N D E P E N D E N T
N O N - E X E C U T I V E D I R E C T O R
G E O R G E S F O R N AY
I N D E P E N D E N T
N O N - E X E C U T I V E D I R E C T O R
M A R I O N S E A R S
I N D E P E N D E N T
N O N - E X E C U T I V E D I R E C T O R
N E I L T H O M P S O N
I N D E P E N D E N T
N O N - E X E C U T I V E D I R E C T O R
Skills & Experience
Skills & Experience
Skills & Experience
Skills & Experience
Charlotta is Chair of the Audit Committee
and has held senior positions in the
investment banking and technology/
telecom sectors. She is a Non-Executive
Director and Chair of the Audit Committee
of two investment trusts, Polar Capital
Technology Trust PLC and Pacific
Asset Trust PLC, as well as Gamma
Communications plc (an AIM listed
company). She is also a Non-Executive
Director of Unicorn AIM VCT PLC, a
venture capital trust, and Boku Inc (an AIM
listed company). As three of Charlotta’s
roles are with investment companies
that require less time to be dedicated
throughout the year, and the rest are AIM
listed entities with less regulatory burden
than a company listed on the main market,
Charlotta has sufficient time to devote to
each of her roles.
Charlotta will succeed David Reeves as
Senior Independent Director following
the AGM.
Georges has over 30 years’ experience
in the technology and video games
sectors and is currently Deputy CEO of
Qobuz, the French high quality music
streaming service. Georges worked in
senior management at Sony Computer
Entertainment (Europe), culminating
as Senior Vice President from 2004
to 2011. Georges has also held
significant industry-wide roles including
President of SELL, France’s Union of
Entertainment Software Publishers.
Marion brings extensive investment
banking and international M&A
experience from many years serving
on a number of public company boards
as a non-executive director, senior
independent director and committee
chair, giving her long-standing listed
company experience and stakeholder
understanding. Marion is currently
a Non-Executive Director at Dunelm
Group plc and WH Smith plc and is Senior
Independent Director at Aberdeen
New Dawn Investment Trust plc. She
is also Senior Independent Director at
Fidelity European Trust plc but will retire
from that Board on 10 May 2022 after
completing nine years’ tenure.
Marion will succeed David Reeves
as Remuneration Committee Chair
following the AGM.
Neil held a number of senior positions
within Microsoft Corporation, including
as part of the management team that
launched Xbox in Europe and for a number
of years ran Microsoft’s Consumer and
Devices business across EMEA. He has
extensive experience of scaling new
businesses across international territories
and building resilient organisations in
constantly changing environments. He is a
Non-Executive Director at E.P. Barrus Ltd.
and acts as a board adviser to start-up
SaaS businesses.
L E V E L 5 6
X P 4
C O M M I T T E E
A N R
L E V E L 6 5
X P 4
C O M M I T T E E
A E
L E V E L 5 9
X P < 1
C O M M I T T E E
A N R E
L E V E L 5 5
X P < 1
C O M M I T T E E
A N R
E
STRATEGIC REPORTGOVERNANCEOVERVIEWFINANCIAL STATEMENTSSUPPLEMENTARY INFORMATION
CHAIRMAN'S INTRODUCTION
The Board is committed
to the highest standards
of corporate governance
R O S S G R A H A M
C H A I R M A N O F T H E B O A R D
Dear shareholders
As Chairman of the Board of Directors of Keywords Group plc, I am pleased to introduce the Group’s
corporate governance report. The corporate governance statement provides an insight into how the
Board operated during the year and the key issues considered. The Board is committed to robust
corporate governance and it remains central to the ongoing success of the Group.
It is my responsibility to ensure that the Group has both sound corporate governance and a Board
which operates mindful of its responsibility to all stakeholders but particularly to the creation of
shareholder value. As Chairman of the Company, my responsibilities include leading the Board
effectively, overseeing the Group’s corporate governance model, communicating with shareholders
and ensuring that good information flows freely between the Executive and Non-Executive Directors
in a timely manner. An externally facilitated Board evaluation process in 2021 concluded that the Board
operates effectively and actions were agreed to further enhance the Board’s operations. Further details
can be read on page 64.
The Directors of the Company recognise the value of good corporate governance in every part of its
business. The Company has adopted the Quoted Companies Alliance Corporate Governance Code (QCA
Code), which we believe is the most appropriate for Keywords; however, we strive to comply with the UK
Corporate Governance Code where possible and practicable. The Board provides annual updates on our
compliance with the QCA Code.
The Board considers that the Group complies with the QCA Code in all applicable respects. Our QCA
Code disclosures within this Annual Report are summarised in the table to the right. In addition, an
explanatory statement of how we have applied the QCA Code guidance, and disclosures of any areas of
non-compliance, can be found on our website at: www.keywordsstudios.com.
The Board understands that the application of the QCA Code supports the Group’s long-term success
while simultaneously managing risks and provides an underlying framework of commitment and
transparent communications with stakeholders.
61
1
2
0
2
S
T
N
U
O
C
C
A
D
N
A
T
R
O
P
E
R
L
A
U
N
N
A
C
L
P
S
O
I
D
U
T
S
S
D
R
O
W
Y
E
K
The main Group-wide governance documents are our Core Values and the Code of Business Conduct,
which underpins the culture of the Company. These documents, together with our policies, govern how we
conduct our business and set the standards that drive performance. Board oversight, reviews and audits
form part of the monitoring and supervision process. A risk register is used to monitor our principal and
emerging risks and risk processes are embedded and reviewed on an ongoing basis across the business.
A newly established ESG Committee provides dedicated focus for the Board on environment, workforce,
community and governance matters to ensure the long-term sustainable success of the Company. The
important corporate governance developments at Keywords over the last year are outlined below, including
the addition of two new Directors, adding diverse experience and knowledge to the Board, and numerous
changes to remuneration arrangements to bring our executive remuneration in line with best practice.
In July 2022, I will have served as Chairman for nine years. Following a rigorous assessment of my performance
and independence, in light of the recent executive-level changes, I have been asked by the Board to remain as
Chairman for a further year to ensure the smooth running of the Board and an orderly succession process for
the Chair position. As such, I will be presenting myself for re-election as a Director at the 2022 AGM.
R O S S G R A H A M
C H A I R M A N O F T H E B O A R D
30 March 2022
Principle
Disclosure
within this
report
1
2
3
4
Establish a strategy and business model which promote long-term value for shareholders.
Pages 7–20
Seek to understand and meet shareholder needs and expectations.
Take into account wider stakeholder and social responsibilities and their implications for long-
term success.
Pages 51–52, 64
Pages 34–52, 64
Embed effective risk management, considering both opportunities and threats, throughout
the organisation.
Pages 57–58, 66–68
6
7
8
5 Maintain the board as a well-functioning, balanced team led by the chair.
Ensure that between them the directors have the necessary up-to-date experience,
skills and capabilities.
Pages 59–63
Pages 59–60, 82–83
Evaluate board performance based on clear and relevant objectives, seeking continuous
improvement.
Page 64
Promote a corporate culture that is based on ethical values and behaviours.
Pages 34–36, 65
9 Maintain governance structures and processes that are fit for purpose and support good
Pages 48–49, 62–63
decision-making by the board.
10 Communicate how the company is governed and is performing by maintaining a dialogue with
Pages 51–52
shareholders and other relevant stakeholders.
OVERVIEWSTRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSSUPPLEMENTARY INFORMATION
CORPORATE GOVERNANCE
Strategy
The Board
A description of the Company’s strategy, business model and supporting strategic pillars, along
with key attributes of our positioning and growing maturity, can be found in the Strategic report
on pages 1 to 58.
Internal controls and risk management
The Board recognises the need for an effective and well-defined risk management process and it
oversees and regularly reviews the Group’s risk management and internal control mechanisms. The
status of our principal risks is recorded in a comprehensive risk register and shared regularly with the
Audit Committee, with key updates reported to the full Board. The Company’s principal risks, along with
key challenges in the execution of the Company’s strategy and controls implemented to mitigate them,
can be found in the Strategic report on pages 7 to 20.
The Audit Committee has been delegated responsibility for the oversight of the Company’s risk
management and internal controls and procedures, as well as determining the adequacy and efficiency
of internal control and risk management systems. Continuous improvement is the aim and although
2021 has evidenced improved practices we know there are still areas where we can do better. The Board
continuously monitors and upgrades its internal control procedures and risk management mechanisms
and conducts regular reviews, when it assesses both for effectiveness. This process enables the Board
to determine whether the risk exposure has changed during the year. In setting and implementing the
Company’s strategies, the Board, having identified the risks, seeks to limit the extent of the Company’s
exposure to them having regard to both its risk tolerance and risk appetite.
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 areas in the business;
– Monthly financial reporting, for the Group and for each service line, of actual performance
compared to budget and the prior year;
– Visits to key locations (not practical in 2021);
– Annual budget setting;
– Tight cash management;
– Annual strategy conference with top management team; and
– A defined organisational structure with appropriate delegation of authority.
The Company continues to strengthen its internal controls and cyber security policies and processes
with maturing internal audit and cyber security functions with the support of specialist third
party advisers.
Further information on the Company’s approach to risk management and internal controls can be also
found in the Audit Committee report on pages 66 to 68.
The Board, as a whole, is responsible for the overall management of the Group and for its strategic
direction, including approval of the Group’s strategy (including corporate and business development),
its annual business plans and budgets, the interim and full year financial statements and reports, any
dividend proposals, the accounting policies, major capital projects, any investments or disposals, its
succession plans and the monitoring of financial performance against budget and the formulation of the
Group’s risk appetite, including the identification, assessment and monitoring of Keywords’ principal risks.
Director biographies and committee memberships are set out on pages 59 and 60. Charlotta Ginman
currently has six NED roles. Of those, three are investment companies that generally only have four to
five meetings a year, and her other three roles are with AIM listed entities, with less regulatory burden
than premium listed companies, and therefore Charlotta has sufficient time to devote to her Keywords
role. Director time availability for each director is, however, something we assess on an annual basis as
part of our Board evaluation.
The Board comprises two Executive Directors, Bertrand Bodson (CEO) and Jon Hauck (CFO), and six
Independent Non-Executive Directors, Ross Graham (Chairman), David Reeves (Senior Independent
Director), Georges Fornay, Charlotta Ginman, Marion Sears and Neil Thompson. Following a number of
Board changes in the year, our Board diversity is currently 25% female Directors. The Company has
approved an enhanced Board Diversity Policy, which demonstrates our commitment to improving gender
diversity at Keywords and in the industry and a reflection of the changing demographic of our global
gaming community. Details of Board changes in the year can be read in the Nomination Committee report
on pages 82 and 83.
Keywords Studios Board of Directors
Audit
Committee
Nomination
Committee
Remuneration
Committee
ESG
Committee
Chief Executive Officer
Internal Audit
Executive Director
62
1
2
0
2
S
T
N
U
O
C
C
A
D
N
A
T
R
O
P
E
R
L
A
U
N
N
A
C
L
P
S
O
I
D
U
T
S
S
D
R
O
W
Y
E
K
OVERVIEWSTRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSSUPPLEMENTARY INFORMATION
CORPORATE GOVERNANCE CONTINUED
63
1
2
0
2
S
T
N
U
O
C
C
A
D
N
A
T
R
O
P
E
R
L
A
U
N
N
A
C
L
P
S
O
I
D
U
T
S
S
D
R
O
W
Y
E
K
Letters of appointment of all Directors are available for inspection at the Company’s registered office
during normal business hours. The Executive Directors work full-time for the Company. All the Non-
Executive Directors are expected to dedicate at least 30 days per annum to the Company, rising to 40
days if they also chair a Committee, and the Chairman is expected to dedicate 60 days per annum. The
Company has adopted a policy whereby all members of the Board are subject to re-election at each AGM.
In practice, all the Independent Non-Executive Directors spend more than the minimum number of days on
Company business and additional time has been dedicated by all Non-Executive Directors since Andrew
Day’s departure, to ensure effective oversight of the Company’s activities and good communications with
key stakeholders during a period of change.
The Board is satisfied that it has a suitable balance between independence, on the one hand, and
knowledge of the Company, on the other, and that no individual or group may dominate the Board’s
decisions. The Non-Executive Directors have both a breadth and depth of skills and experience to fulfil their
roles. The Company believes that the current balance of skills in the Board as a whole reflects a very broad
range of personal, commercial and professional experience, and notes the range of financial and managerial
skills. All Directors are encouraged to use their independent judgement and to challenge all matters,
whether strategic or operational, enabling the Board to discharge its duties and responsibilities effectively.
The Board meets a minimum of eight times a year and a calendar of meetings and principal matters
to be discussed are agreed at the beginning of each year. In order to be efficient, the Directors meet
formally and informally both in person (limited in 2021) and by telephone or videoconference. The
COVID-19 pandemic has continued to restrict our ability to meet in person; however, the Directors,
similarly to the Company’s workforce working from home, have been able to continue to engage
effectively with other Directors, shareholders and stakeholders using remote, videoconference,
communications. Meetings are open and constructive, with every Director participating fully. Senior
management are invited to meetings, providing the Board with a thorough overview of the Company.
The Non-Executive Directors meet without the presence of the Executive Directors and maintain
ongoing communications with Executive Directors between formal Board meetings.
Management supply the Board with appropriate and timely information and the Directors are free to
seek any further information they consider necessary.
David Reeves acts as the Senior Independent Director (SID) of the Company, serving as a sounding
board for the Chair and acting as an intermediary for the other Directors. The SID is also available to
shareholders and other Non-Executive Directors to address any concerns or issues they feel have not
been adequately dealt with through the usual channels of communication.
Audit Committee
The Audit Committee is chaired by Charlotta Ginman, and its other members are Ross Graham, David
Reeves, Georges Fornay, Marion Sears and Neil Thompson. The Audit Committee is responsible for
assisting the Board in fulfilling its financial and risk responsibilities. The Audit Committee oversees
the financial reporting, risk management and internal control procedures of the Company. The Audit
Committee also advises the Board on the appointment and removal of the external auditor and
discusses the nature, scope and results of the audit with the auditors, and the auditor’s performance
and remuneration. The Audit Committee reviews the extent of non-audit services provided by the
auditors and reviews with them their independence and objectivity. Further information on the Audit
Committee can be found in the Audit Committee report on pages 66 to 68.
Remuneration Committee
The Remuneration Committee is chaired by David Reeves, and its other members are Ross Graham,
Charlotta Ginman and Marion Sears. Neil Thompson was appointed to the Committee in February 2022.
When David Reeves steps down as a Director at the 2022 AGM, Marion Sears will succeed him as Chair
of the Remuneration Committee. The Remuneration Committee is responsible for determining the
remuneration of the Chair (who does not participate in such discussions), Executive Directors and senior
executives of Keywords. The Remuneration Committee is responsible for making recommendations to
the Board on Directors’ and senior executives’ remuneration. Non-Executive Directors’ remuneration
and conditions are considered and agreed by the Board. Financial packages for Executive Directors are
established by reference to those prevailing in the employment market for executives of equivalent
status both in terms of level of responsibility of the position and their achievement of recognised job
qualifications and skills. The Committee will also have regard to the terms, which may be required
to attract an equivalent experienced executive to join the Board from another company. Further
information on the Remuneration Committee can be found in the Remuneration Committee report on
pages 69 to 81.
Nomination Committee
The Nomination Committee is chaired by Ross Graham. Charlotta Ginman, David Reeves, Marion Sears
and Neil Thompson are the other members. Neil Thompson and Marion Sears were appointed to the
Committee in February 2022. Further information on the Nomination Committee, including its role and
responsibilities, can be found in the Report of the Nomination Committee on pages 82 and 83.
Disclosure Committee
The Disclosure Committee, responsible for assisting in the design, implementation and evaluation
of the Company’s disclosure controls and procedures, was reconstituted in 2022 as a sub-committee
of the executive committee, in order to enhance the Company’s ability to comply with the Market
Abuse Regulation.
ESG Committee
Established in 2021, the ESG Committee is chaired by Georges Fornay. Neil Thompson, Marion Sears,
Bertrand Bodson and Jon Hauck are the other members. The remit of the ESG Committee is to
oversee the following areas which have been identified as environmental, social, and governance
priorities: (i) people; (ii) diversity and inclusion; (iii) customer/client centricity and innovation;
(iv) community; (v) environment; and (vi) corporate governance and business ethics. Further information
on the ESG Committee, including its role and responsibilities, can be found in the ESG Committee report
on pages 84 and 85.
Terms of reference of all Keywords’ Committees are available to view on the Company’s website at: www.
keywordsstudios.com.
The table on page 65 sets out attendance statistics for each Director at scheduled Board, and where
relevant, Committee meetings held during the year.
OVERVIEWSTRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSSUPPLEMENTARY INFORMATION
CORPORATE GOVERNANCE CONTINUED
Stakeholder engagement
Annual evaluation of the Board and Committees’ performance
The Board recognises that the long-term success of the Company relies upon good relations with other
stakeholders, including employees, its contractors, customers, suppliers, regulators and community
participants. The Board has put in place a range of processes and systems to ensure that there is
close oversight and contact with its key resources and relationships. The ESG Committee enhances the
Board’s ability to oversee Group initiatives designed to promote the long-term success of the Company
as a sustainable, well governed, responsible employer.
The Company has close ongoing relationships with a broad range of its stakeholders and provides them
with the opportunity to raise issues and provide feedback to the Company. The Company conducts
frequent customer feedback surveys, which broadens communication while simultaneously embracing
influential developers and producers in the games industry and determining Company perception. In
addition, client partners foster close relations with our key customers to achieve an understanding of
their needs, interests and expectations in a holistic way spanning all of the Company’s service lines.
The Board is committed to maintaining good communication and constructive interaction with all
shareholders throughout its annual reporting cycle, holding analyst and investor presentations,
Regulatory News Service releases, and information published on the Company’s website. The Chair
offers to meet with the largest shareholders during the year without management present. The
Executive Directors meet shareholders and other investors/potential investors at regular intervals
during the year and host broker and analyst meetings from time to time. The whole Board attends the
AGM, which we regard as an opportunity to meet, listen and present to shareholders, and shareholders
are encouraged to attend and ask questions. Although Director and shareholder attendance in person
was restricted at the 2021 AGM due to ongoing government restrictions caused by the COVID-19
pandemic, shareholders were given the opportunity to submit questions to the Board in advance via
email and a video conferencing facility was made available for shareholders and Directors to attend
remotely. As a result, engagement between the Board and its shareholders was not impeded by the
ongoing outbreak and subsequent changes to AGM arrangements. In addition, the Company receives
reports and updates from proxy voting agencies on corporate governance and general meeting
shareholder voting recommendations.
Full details of the Company’s and the Board’s engagement with its stakeholders is presented in the
Strategic report on pages 51 and 52.
This year’s annual Board and Committee evaluation exercise was conducted on an independent basis by
ONE Advisory Limited (ONE Advisory).
The areas covered included structure and skills, operating effectiveness, operating efficiency, quality of
information and ongoing development. The evaluation process involved detailed questionnaires for the
Board (including feedback on the overall contribution of each Director), review of the Chair and a survey
regarding each of the Board’s main Committees. An independent report on the findings of the Board
and Committee surveys was prepared by ONE Advisory.
The evaluation process confirmed that the Board and its Committees, including the new ESG Committee,
are working well and progress was noted for all areas highlighted for attention in 2021, as follows:
– Several members of the Senior Management Team presented at Board and Committee meetings,
and a two-day Executive Summit was held in October 2021 which was attended by the entire
Board and Senior Management Team.
– Further analysis of the strategic options for the Company, with Bertrand Bodson conducting a
comprehensive review as part of his 100-day plan.
– Succession planning for the Chair and Senior Independent Director positions.
The Board will review the findings of the survey in the first half of 2022 and will develop an action plan to
address the areas highlighted for attention in the coming year. These areas included:
– Succession planning to focus on candidates with media and entertainment, technology or
videogame experience;
– More time at Board meetings dedicated to discussing (i) culture, and (ii) long-term strategic and
operational plans; and
– Continue to enhance contact between the Board and Senior Management Team.
The Chairman will incorporate feedback on the overall contribution of each Director into individual
reviews of the performance of the Non-Executive Directors. The contribution of the Chairman will be
reviewed by the rest of the Directors in the first half of 2022.
64
1
2
0
2
S
T
N
U
O
C
C
A
D
N
A
T
R
O
P
E
R
L
A
U
N
N
A
C
L
P
S
O
I
D
U
T
S
S
D
R
O
W
Y
E
K
OVERVIEWSTRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSSUPPLEMENTARY INFORMATION
CORPORATE GOVERNANCE CONTINUED
65
1
2
0
2
S
T
N
U
O
C
C
A
D
N
A
T
R
O
P
E
R
L
A
U
N
N
A
C
L
P
S
O
I
D
U
T
S
S
D
R
O
W
Y
E
K
Advisers
The Board has regular contact with its advisers to ensure that it is aware of changes in corporate
governance procedures and requirements and that the Group is, at all times, compliant with applicable
rules and regulations. The Company had Director and Officers’ liability insurance cover in place
throughout the year and it is intended for the policy to continue for the year ending 31 December 2022
and subsequent years. Additionally, the Company provides an indemnity in respect of all the Company’s
Directors or other officers of the Company against all costs, charges, losses, expenses and liabilities
incurred by them in the execution and discharge of their duties. The Company’s Nomad supports the
Board’s development, specifically providing guidance on corporate governance and other regulatory
matters, as required.
The Company has retained Ellason LLP, who provide advice in relation to remuneration matters.
Additional information can be found in the Remuneration report on pages 69 to 81.
All Directors may receive independent professional advice at Keywords’ expense, if necessary, for the
performance of their duties.
The Group also promotes employee engagement and receives feedback from employees through an
annual employee survey, which is available for completion by all employees in the Group. The results
of the survey are fed back for the consideration of the Board. In the survey conducted in 2021, we were
delighted that, despite working from home arrangements implemented due to COVID-19, the feedback
from our employees was positive overall and an improvement on results of previous years.
Further details can be found in the Our people, our culture (pages 34 to 36) and the Responsible
business report (pages 37 to 49) sections of the Strategic report.
The ESG Committee is responsible for overseeing workforce matters, including corporate culture, further
details of which can be read in the ESG Committee report (page 84).
Meetings and attendance
The following table shows the attendance of Directors at scheduled meetings of the Board and its
Committees. The number of attendances is shown next to the maximum number of meetings the
Director was entitled to attend.
Culture
The Board recognises that its decisions regarding strategy and risk may impact the corporate culture
of the Company as a whole and that this will impact the performance of the Company. The Board is also
aware that the tone and culture set by the Board can have an important influence on the Company as a
whole and in the way that employees behave. The corporate governance arrangements that the Board
has adopted are designed to ensure that the Company delivers long-term value to its shareholders
while being cognisant of the interests of other stakeholders. Shareholders are encouraged to express
their views and expectations for the Company in open dialogue with the Board.
During the year, the Board sponsored a new Group programme to develop the leadership skills of the
Senior Management Team, thereby enabling an evolution of the Company’s culture to reflect its growing
size and increasing complexity.
With each new acquisition, we deploy our Integration Memorandum, a unified communication package
delivered by an existing member of the Keywords executive team, in order to ensure a smooth
transition into the Keywords family. This is designed to provide a consistency of culture throughout the
Group, and also facilitates two-way communications.
A large part of the Company’s activities is centred upon an open and respectful dialogue with
employees, customers and other stakeholders. Therefore, the importance of sound ethical values and
behaviours is crucial to the ability of the Company to successfully achieve its corporate objectives.
The Board places great importance on this aspect of corporate life and seeks to ensure that this flows
through all that the Company does. The Directors consider that the Company has an open culture
facilitating comprehensive dialogue and feedback, which enables positive and constructive challenge.
The Board recognises that sustaining this culture will be a crucial element of the long-term success of
the business.
The Group operates a whistleblowing policy to encourage the reporting by employees of suspected
misconduct, illegal acts or failures to act within the Group. The aim of this Policy is to create a safe
environment for employees and others who have serious bona fide concerns about any aspect of the
Group’s work to come forward and voice those concerns without personal risk of penalisation or reprisal.
Director
Ross Graham
Bertrand Bodson
Andrew Day
Jon Hauck
Sonia Sedler
David Reeves
Charlotta Ginman
Georges Fornay
Marion Sears
Neil Thompson
Giorgio Guastalla
It is noted that:
Board
11/11
1/1
2/5
11/11
11/11
11/11
11/11
11/11
4/4
4/4
11/11
Audit
Committee
Remuneration
Committee
Nomination
Committee
ESG
Committee
Disclosure
Committee
5/5
7/7
4/4
–
–
–
–
5/5
5/5
5/5
2/2
2/2
–
–
–
–
–
7/7
7/7
–
3/3
–
–
–
–
–
–
4/4
4/4
–
–
–
–
–
1/1
–
4/4
4/4
–
–
4/4
2/2
2/2
3/4
2/2
–
1/1
2/2
2/2
2/2
2/2
–
–
–
–
– Sonia Sedler joined the Board on 18 January 2021 and retired from the Board on 18 March 2022.
– Andrew Day retired from the Board on 14 June 2021.
– Marion Sears and Neil Thompson both joined the Board on 13 August 2021.
– Bertrand Bodson joined the Board on 1 December 2021.
– Giorgio Guastalla retired from the Board on 26 January 2022.
OVERVIEWSTRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSSUPPLEMENTARY INFORMATION
AUDIT COMMITTEE REPORT
Effective oversight of financial
reporting, risk management and
internal controls systems and
the external auditor
C H A R L O T TA G I N M A N
C H A I R O F T H E A U D I T C O M M I T T E E
Introduction from the Chair
I am pleased to present once again as Chair of the Audit Committee, the report for the year ended
31 December 2021. This report details the work of the Committee over the past year, fulfilling our
responsibilities to provide effective governance over the Group’s financial activities.
Composition and attendance in 2021
The Committee members, Ross Graham, David Reeves, Georges Fornay and myself, were joined by
Marion Sears and Neil Thompson from September 2021. Ross will remain on the Committee for 2022,
while David is due to retire during the year. The Audit Committee, as a whole, has competence relevant
to the video games industry, both Ross Graham and I are Chartered Accountants and I also chair the
audit committees for other public companies. More information about the Committee members can
be found on pages 59 and 60. The Committee met five times during the financial year and the four
members in place at the beginning of the financial year attended all Committee meetings throughout
the year, with Marion Sears and Neil Thompson attending all meetings following their appointment.
The majority of the meetings have been a hybrid of in-person and remote meetings by the use of
technology, such as videoconferencing and board portal software. I am pleased to confirm that this has
continued to work well, with Committee members able to operate as effectively as before.
Committee role and responsibilities
The Committee has written terms of reference which are available to view on the Company’s website
www.keywordsstudios.com. The terms of reference clearly define the Committee’s responsibilities and
duties and are reviewed by the Board annually. In addition to the Terms of Reference, the Committee
has developed an annual agenda which corresponds with the meeting schedule, to ensure all key
responsibilities are completed and managed.
Significant issues considered by the Audit Committee during the year
Key Reporting Issues
During the year and as part of the year end procedures, the Committee considered the following key
financial matters in relation to the Group’s financial statements and disclosures with input from both
management and the external Auditor:
– Revenue recognition – we reviewed, as part of the regular CFO report, any areas of judgement
relating to revenue recognition in client contracts;
– Business combinations – we reviewed, as part of the regular CFO report, the key business
combination accounting assumptions;
– Valuation of goodwill and intangible assets – we received goodwill impairment review results, and
challenged the underlying assumptions made; and
– Functional currency – we reviewed papers supporting the functional currency of the Group on a
semi-annual basis.
Furthermore, we also spent time talking about management estimates and judgements in connection
with bad debt provisioning (IFRS 9), going concern, taxation and treasury, and segmental reporting. For
further detail on these, see notes 2 and 3 of the financial statements.
Annual Report and financial statements
The Board has asked the Committee to confirm that, in its opinion, the Annual Report as a whole can be
taken as fair, balanced and understandable and provides the information necessary for shareholders
to assess the Group’s financial position, performance, business model and strategy. In doing so, the
Committee has given consideration to:
– The way the Strategic report (including the Chairman’s statement and reports of the CEO and
CFO) presents the Group and its operations, financial and business model and the metrics
management uses to measure performance;
– Whether suitable accounting policies have been adopted and have challenged the robustness
of significant management judgements and estimates reflected in the financial results;
– The comprehensive control framework around the production of the Annual Report, including the
verification processes in place to deal with the factual content;
– The extensive levels of review that are undertaken in the production process, by both
management and advisers; and
– The Group’s internal control environment.
The Group uses certain APMs to present its results alongside the statutory financial statements.
These are non-GAAP measures used by management and the Board designed to provide the users
with a further understanding of the trading performance of the business. An explanation of the APMs
and a reconciliation to the nearest statutory equivalent measure is provided on pages 132 to 137.
As a result of the work performed, the Committee has concluded that the Annual Report for the
year ended 31 December 2021, taken as a whole, is fair, balanced and understandable and provides
the information necessary for shareholders to assess the Group’s performance, business model and
strategy, and it has reported on these findings to the Board.
66
1
2
0
2
S
T
N
U
O
C
C
A
D
N
A
T
R
O
P
E
R
L
A
U
N
N
A
C
L
P
S
O
I
D
U
T
S
S
D
R
O
W
Y
E
K
OVERVIEWSTRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSSUPPLEMENTARY INFORMATION
AUDIT COMMITTEE REPORT CONTINUED
Internal control and risk assurance framework
Internal audit
The Audit Committee has continued to review and challenge the upgrades that have and are taking
place during the year to the Company’s internal control and risk assurance framework to ensure that
following its rapid expansion, the Company operates within a fit-for-purpose framework.
The semi-annual management confirmation by regional heads of operations and finance teams to the
CFO, was extended to service line directors from June. Themes for 2021 included key policy roll-outs, risk
reviews, internal controls and contract management. Management confirmed new procedures are in
place and provided updates on key risks where applicable.
The Committee is pleased to see continued progress made in the global financial systems roll-out which
will eventually allow a fully integrated reporting system to operate seamlessly across the Group. During
2021, the focus has been on the remaining locations in Europe and Asia and recent acquisitions, with
the majority of studios (representing 92% of revenue as at December 2021, from 87% as at December
2020) are now migrated to the Netsuite system. To complement the system roll out, a project has
been initiated to implement a consolidation, reporting and planning tool to replace the current manual
consolidation process. This is expected to be in place by Q1 2022.
The work on our Group cash pooling platform continues, providing us with better control and visibility
of Group cash and the optimisation of cash management. During 2021, the European studios continued
to cash pool in key currencies, with new cash pools set up in North America, where we have multiple
studios in the same jurisdiction.
The industry and our clients require the highest standards of security. During 2021, Keywords updated
the Group Information Security Framework, to align to industry standards, and this security programme
has been reviewed by an independent third party. The Audit Committee receives regular updates from
the IT function on the state of the cybersecurity programme and the results of the external assurance
review. Keywords continues to invest in its information security environment focusing on five key areas:
Asset Management, Identity & Access Management, Governance Risk & Compliance, Security Operations
and Resilience.
During the year, the Audit Committee has continued its regular review of the Company’s principal risks
on behalf of the Board, ensuring these are top of mind and relevant, and mitigation plans are in place
where possible. For 2021, the Audit Committee dedicated one of their five meetings to the risk register,
considering the principal and emerging risks identified from both the top-down Board risk overview and
the bottom-up Senior Leadership Team review. Climate change has been classified as an emerging risk
for the Company and shall continue to be monitored closely. Further details of the principal risks and
uncertainties faced by Keywords are identified on pages 57 and 58.
The Head of Internal Audit reports into the Audit Committee Chair with a dotted reporting line into the
Group CFO. The activities of the Internal Audit function are governed by an Internal Audit Charter which
was re-approved and signed off by the Audit Committee during the year. The 2021 Internal Audit plan
was revised to take into account the continuing impact of COVID-19. The Audit Committee received
updates on the results of Internal Audit work including:
– Post acquisition reviews and completion of integration plans for acquisitions made in 2020;
–
Implementation and communication of Group policies including the new whistleblowing portal (see
below);
– Sales and people process mapping in selected service lines;
– Review of access controls to key information; and
– Entity level controls mapped to the Committee of Sponsoring Organisations (COSO) framework.
In October 2021, the Audit Committee engaged Deloitte Ireland to provide a Risk Assessment and
Internal Control review of the Group in co-ordination with Internal Audit, to:
– Gain an external view of the material risks, including financial and operational risks; and
– Develop and document an internal controls framework (expected controls by risk category) for
five in-scope process areas.
Preliminary results of this review were presented to the Audit Committee in December 2021 and the final
output will form part of the considerations for the 2022 Internal Audit plan, once complete.
Group policies
Key individual Group policies are reviewed and re-approved annually by the Audit Committee, including:
– Protected disclosures (whistleblowing) policy
– Anti-bribery and corruption policy
– Fraud and anti-theft policy
– Non-audit services policy
– Employment of former auditors policy
– Anti-tax evasion policy
– General information security & cybersecurity policies
67
1
2
0
2
S
T
N
U
O
C
C
A
D
N
A
T
R
O
P
E
R
L
A
U
N
N
A
C
L
P
S
O
I
D
U
T
S
S
D
R
O
W
Y
E
K
OVERVIEWSTRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSSUPPLEMENTARY INFORMATION
AUDIT COMMITTEE REPORT CONTINUED
Whistleblowing policy
During the year, Keywords engaged with an external provider to introduce a new whistleblowing portal
to co-ordinate responses to protected disclosures received, and to securely handle confidential or
anonymous reports in line with data privacy rules and the latest whistleblowing legislation in relevant
jurisdictions where we operate.
The Audit Committee reviewed and approved the updated whistleblowing policy and the accompanying
new process that the Group is rolling out globally. The policy allows a wide definition of employees
and third parties, to raise any concerns they may have about possible financial or other irregularities
confidentially. During 2021, two whistleblowing disclosures were reported, which were fully investigated
and are currently being resolved (2020: none).
Effectiveness
The Audit Committee monitored and evaluated the effectiveness of the Auditor under the current
terms of appointment based on an assessment of the Auditor’s performance, qualification, knowledge,
expertise and resources and in light of current COVID-19 restrictions. The Auditor’s effectiveness was
also considered along with other factors such as audit planning and interpretations of accounting
standards and separate discussions with management (without the Auditor present) and with the
Auditor (without management present). The Chair of the Audit Committee also had discussions with the
Audit partner outside the formal meetings throughout the year.
The Committee was satisfied that the audit was effective and that BDO continues to demonstrate the
skills and experience needed to fulfil its duties effectively.
Audit regulation
In the year since my last report to you, the UK Department of Business, Energy & Industrial Strategy
issued its white paper for consultation in March 2021, which proposes important charges for both
corporate directors, audit committees and the external audit sector. The Audit Committee has
considered the proposals and how they may affect the Company and await the publication of the
final legislation.
External audit
Audit services
The Auditor is appointed by the shareholders annually to provide an opinion on financial statements
prepared by the Directors. BDO, the Company’s current Auditor, was first appointed in 2013. Currently,
Stephen McCallion acts as our lead partner, following partner rotation last year. The Audit Committee
will run a tender process during 2022, in line with best practice for corporate governance and
auditor independence.
The auditor attends Audit Committee meetings. The scope of the current annual year-end audit was
agreed in advance with the Committee with a focus on areas of audit risk and the appropriate level
of audit materiality. The Committee also had discussions with the auditor on fees, internal controls,
accounting policies and areas of critical accounting estimates and judgements. Following the audit, BDO
reported to the Audit Committee on the results of the audit work and highlighted any issue which the
work had discovered, or the Committee had previously identified as significant or material in the context
of the financial statements.
There were no adverse matters brought to the Audit Committee’s attention in respect of the 2021 audit,
which were material and which should be brought to shareholders’ attention.
Independence and non-audit fees
The non-audit services policy was last updated in 2020 in line with the FRC ethical standards,
and reviewed again during 2021. Any non-audit services are required to be pre-approved by the
Audit Committee. During the year BDO provided non-audit services to the Company of €13,350
(2020: €13,000).
In order to fulfil the Committee’s responsibility regarding independence of the Auditor, the Committee
reviewed the senior staffing of the audit, the Auditor’s arrangements concerning any conflicts of
interest, the extent of any non-audit services, the fact that no former external auditors have been
employed in the business, and the Auditor’s independence statement. The Committee was satisfied that
the Auditor remains independent.
C H A R L O T TA G I N M A N F C A
C H A I R O F T H E A U D I T C O M M I T T E E
30 March 2022
68
1
2
0
2
S
T
N
U
O
C
C
A
D
N
A
T
R
O
P
E
R
L
A
U
N
N
A
C
L
P
S
O
I
D
U
T
S
S
D
R
O
W
Y
E
K
OVERVIEWSTRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSSUPPLEMENTARY INFORMATION
DIRECTORS’ REMUNERATION REPORT
In order to improve the clarity
of our policies and outcomes,
I have included a summary of
Keywords’ main action points
in 2021 and 2022
D A V I D R E E V E S
C H A I R O F T H E
R E M U N E R AT I O N C O M M I T T E E
Strategic Policy
– Continued positioning of Executive Directors’ remuneration: cash salary targeted at lower quartile
to median, modest bonus capped at maximum 30% of base salary, salary shares for selected
executives, 5% of base salary pension, continued emphasis on Long-Term Incentive Plan (LTIP)
awards vesting on relative Total Shareholder Return (“TSR”) performance.
FY 2021
– CEO took extended leave from March due to illness and retired in June. Treated as a good leaver.
– Appointment of incumbent COO and CFO as Interim Joint CEOs with clear, redefined
responsibilities and financial and non-financial objectives from 15 March to 30 November 2021.
Awarded acting-up allowances of £75,000 each, split 50% cash and 50% salary shares.
– LTIP awards granted to Executive Directors in 2021 with vesting based on Relative TSR, with a
change to the benchmark for awards granted in May from the FTSE Small Cap to the FTSE 250
Index (excluding Investment Trusts).
– Appointment of new CEO from 1 December 2021. Remuneration in line with policy and comprising
median salary (of £600,000) relative to relevant industry benchmarks, bonus of up to 30%
of base salary, pension of 5% of base salary, plus 275% of base salary LTIP awards. An LTIP
grant was made for 2021, together with an additional restricted stock award to compensate for
remuneration foregone at his previous employer.
Increase of £50,000 in base salary for incumbent CFO to £295,000, based on defined expanded
role and increased responsibility for M&A programme from 1 December. Resulting harmonisation
of COO and CFO remuneration packages.
–
– COO and CFO overall single figure remuneration for 2021 did not include any LTIP vesting but
reflected 100% bonus pay-out for each executive for achieving financial and non-financial
objectives, and salary shares.
– New CEO FY21 bonus of 30% of base salary (one month pro rata).
– CEO’s single composite pay ratio disclosed (includes Andrew Day until end March 2021, co-CEOs
for the period April-November, Bertrand Bodson from 1 December 2021).
69
1
2
0
2
S
T
N
U
O
C
C
A
D
N
A
T
R
O
P
E
R
L
A
U
N
N
A
C
L
P
S
O
I
D
U
T
S
S
D
R
O
W
Y
E
K
– New global employee share-save scheme established in 2021.
– No UK Government support was received in 2021 in respect of COVID-19; modest government
support was received in three overseas operations and which will be repaid.
– US$500,000 hardship fund to support COVID-19 affected employees (uptake $72,820 at end
December 2021) and will be continued in 2022.
– NED base fees and Committee membership fees disclosed.
– Directors’ interest in shares disclosed.
FY 2022
– Base salary increases of 3.5% in March awarded to COO and CFO, in line with or below the level
of increase for Keywords studio staff in UK and Ireland. No increase for new CEO given his
recent appointment.
– Sonia Sedler stepped down from the Board on 18 March 2022 and left the company for personal
reasons. Treated as a good leaver.
– Salary share award of £60,000 for CFO, to supplement lower quartile base salary which
attracts neither pension nor bonus, and which vests in annual one-third increments subject to
continued employment.
– Clear financial and non-financial objectives for the bonus (weighted 60/40) set for Executive
Directors based on the Group’s Strategic objectives (pages 73 and 77).
– LTIPs in 2022 to vest, as before, on three-year relative TSR performance versus the FTSE 250
(excluding Investment Trusts), with vesting of 25% at median TSR and full vesting at 20%
outperformance.
Increased shareholding requirements for Executive Directors, plus the introduction of a one-year
post employment requirement (page 74).
–
– Share plans for workplace remuneration will provide a competitive advantage for Keywords in
attracting talent versus smaller independent studios.
– Continued oversight of wider Group pay mechanics to ensure retention of employees.
– Clear, direct links between each remuneration element and our strategic objectives as
demonstrated in the remuneration policy table (page 73).
– Clear cognisance taken of workforce pay versus Executive Director remuneration.
– LTIP grants based on percentages of base salary level from 2022.
Dear fellow shareholders
As Chair of the Remuneration Committee, it is my pleasure to present the Directors’ remuneration report for
the period ended 31 December 2021. Keywords Studios plc has chosen to apply the Corporate Governance
Code for Small and Mid-size Quoted Companies published by the Quoted Companies Alliance. The Company
is currently AIM quoted but the Board recognises the importance of shareholder transparency and
standards of governance. Therefore, as with last year, this report contains all the information required to
be disclosed as an AIM quoted Company and also contains some additional information that would be
applicable were the Company listed on the London Stock Exchange main market.
We have continued to implement a simple Executive Director Remuneration structure comprising base
salary, pension, annual bonus capped at 30% of base salary, salary shares to supplement if salaries are
below the 25th percentile, and a LTIP. This structure provides a clear and direct link between pay and our
key strategic priorities and is aligned with shareholders’ interests; the majority of the overall remuneration
opportunity is performance-based, primarily reflecting Total Shareholder Return (“TSR”). The pension
offered to Executive Directors, of 5% of base salary, is the same as that offered to the local workforce, and
we are incorporating updates to our Remuneration Policy in keeping with best practice.
OVERVIEWSTRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSSUPPLEMENTARY INFORMATION
DIRECTORS’ REMUNERATION REPORT CONTINUED
70
The Group delivered a very strong performance in 2021 with good growth in revenue and profit, and
exceptional strong cash generation despite the continued industry disruption caused by the COVID-19
pandemic. We completed six acquisitions during the year, further strengthening the breadth and depth
of the Group’s value-added services offered to our global video games clients.
During the year and since the year end, a number of executive changes also took place and our
remuneration report explains how we addressed these. In the year, our Founder CEO, Andrew Day,
retired due to illness, and the Board appointed Jon Hauck, CFO, and Sonia Sedler, COO, as interim
co-CEOs. Following a search process, Bertrand Bodson joined as our new CEO on 1 December 2021,
following which Jon and Sonia returned to their roles of CFO and COO respectively. Also, in December,
Jon’s role was expanded to include M&A, as described below. Since the year end Sonia has left the
company for personal reasons and her exit arrangements are described on page 78.
2021 remuneration and vesting outcomes
Andrew Day acted as CEO until 15 March 2021 when he took a leave of absence due to illness, and
subsequently retired from the business on 14 June 2021. Andrew’s exit remuneration arrangements are
described on page 78.
Jon Hauck and Sonia Sedler acted as CFO and COO respectively until they were appointed as interim
co-CEOs on 15 March, an arrangement that lasted until 30 November. In this interim period, Jon and
Sonia each received supplementary remuneration of £75,000, paid as cash of £37,500 and salary shares
of £37,500. Salary shares are subject to continued employment, vest in one-third annual tranches over
three years, and attract neither pension nor bonus.
On 1 December 2021, the responsibilities of Jon Hauck, CFO, were expanded to include M&A, which had
previously been specifically under the direction of Andrew Day. Jon’s base salary was increased by
£50,000 in recognition of his increased responsibilities.
Bonuses for the 2021 financial year were based on a scorecard of financial (weighted 70%) and non-
financial (weighted 30%) measures. The outcomes, as determined by the Committee, and directly linked
to the Group’s strategic objectives, have generated bonuses of 30% of salary for the Executive Directors,
except for Andrew Day who did not earn a bonus for FY21, as described on page 77.
An LTIP award granted to Andrew Day in 2018 vested on 18 May 2021. These awards vested based
on TSR performance vs the Numis Smaller Companies (excluding Investment Trusts) Index. Full
vesting required Keywords TSR to outperform the Index over the three-year period by 20%. Based on
Keywords’ TSR performance, these awards vested in full.
No LTIP was due to vest in the year for the CFO or COO. Overall, during the year, Jon Hauck, CFO, earned
a single figure remuneration of £456k, and Sonia Sedler £479k. These amounts include the salary shares
awarded as a supplement to base salary, the 2021 bonus vesting plus the supplementary remuneration
awarded for their co-CEO tenures, including further salary shares.
On 1 December, Bertrand Bodson joined as our new CEO and his remuneration was disclosed at that time.
This is further set out on page 78; it follows the same structure as for the other Executive Directors and
is in line with our Policy. Bertrand’s base salary is median for FTSE250 companies; we chose to incentivise
him by awarding a 2021 LTIP equivalent to 275% of salary, and restricted shares to the value of 100%
salary (subject to employment) to compensate on a like-for-like basis for remuneration foregone at
his previous employer. We have also applied increased shareholding requirements and adopted post-
cessation shareholding requirements to Bertrand’s remuneration, in line with good practice.
1
2
0
2
S
T
N
U
O
C
C
A
D
N
A
T
R
O
P
E
R
L
A
U
N
N
A
C
L
P
S
O
I
D
U
T
S
S
D
R
O
W
Y
E
K
Stakeholder considerations
The Committee has considered the experience of each stakeholder group in 2021 and determined that
the remuneration outcomes described above are fair and reasonable and that no discretion needed to
be exercised to adjust outturns or to address windfall gains. In coming to this conclusion, the Committee
took into account the following factors:
– The financial performance of the Group has been strong;
– The Group resumed paying a dividend at the half-year and has declared a full-year dividend in
line with the dividend policy, as noted on page 56;
– No UK Government support was received in 2021 in respect of COVID-19; the modest government
support which was received in 2021 in three of our overseas operations (totalling c.€330k) in
respect of COVID-19 will be repaid;
– The employee engagement score increased;
– All staff received a pay review according to local market conditions, performance and tenure; and
– The establishment of a hardship fund available to employees suffering as a result of COVID-19.
2022 Remuneration
Our philosophy for future years will continue to be based around using pay to reinforce long-term
decision making and alignment with shareholders, and we have an established structure which is
cascaded through the organisation to align the leadership and management teams. The use of salary
shares, which attract neither pension nor bonus, to supplement salaries which are below lower quartile
also provides flexibility and aids long-term retention.
In 2022, the CEO’s salary will remain at the level upon appointment, while the base salary of the CFO and
COO increased by 3.5% with effect from 1 March, in line with or below the increases for the UK workforce.
Since the year end Sonia has left Keywords. We will award salary shares of £60,000 to Jon Hauck
to help compensate for the below 25th percentile positioning of his cash salary, and ensure overall
a competitive level of fixed pay in line with our stated philosophy. The pension supplement, at 5% of
salary for all executives, will be in line with the UK workforce average in 2022, and the bonus opportunity
will remain at 30% of salary. Bonuses for the CEO and CFO in 2022 will be based 60% on financial
metrics and 40% on well-defined and disclosed non-financial objectives and will be directly linked to our
overall strategic objectives (pages 72 and 73).
The Committee reviewed the LTIP grant policy during 2021 and concluded that awards from 2022
would be granted on the basis of face value, rather than the fixed-number of shares approach used in
previous years. The Committee took this decision after considering feedback from shareholders as well
as desiring a greater consistency with market practice. We intend to award an LTIP in 2022 to the CEO
and CFO equal to 275% of base salary (which is broadly consistent with the values we have granted over
prior years), using the same TSR metric to govern vesting as in 2021. As flagged in last year’s report,
the Committee reviewed the LTIP TSR comparison approach in early 2021 and approved a change to the
TSR benchmark for future cycles to take into account the current size of Keywords (which at the start
of 2021 was equivalent to FTSE 170 and AIM top 10) to be the FTSE 250 excluding investment trusts.
Overall, the remuneration package for 2022 places our Executive Directors between lower quartile to
median for base salary plus salary shares, at lower decile for annual bonus opportunity, but in the upper
quartile for the LTIP award quantum. The Committee believes the package puts emphasis on increasing
value for shareholders, and incentivises exceptional performance.
OVERVIEWSTRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSSUPPLEMENTARY INFORMATION
DIRECTORS’ REMUNERATION REPORT CONTINUED
71
1
2
0
2
S
T
N
U
O
C
C
A
D
N
A
T
R
O
P
E
R
L
A
U
N
N
A
C
L
P
S
O
I
D
U
T
S
S
D
R
O
W
Y
E
K
Shareholder Engagement
Executive Directors’ remuneration at a glance
On behalf of the Committee, I discussed our plans for 2021 remuneration with Keywords’ largest
shareholders and relevant proxy agencies in January 2021 and considered the feedback from these
meetings in finalising the details of the changes. I notified major shareholders in March 2021 of our
conclusions; this engagement also provided the foundation for the further work we have conducted
with regard to updating the Remuneration Policy and LTIP rules this year. Our remuneration structure
is broadly consistent with FTSE main market good practice, and we thank those shareholders who
contributed their time and feedback, which was useful in shaping the design.
Policy and LTIP updates
In 2021, as we addressed executive change, we took the opportunity to update our Remuneration
Policy to include certain best practice developments. Accordingly, the Committee adopted an updated
Policy in December 2021; the main elements of this include increased shareholding requirements, the
introduction of a post-cessation shareholding requirement, and updated malus and clawback provisions.
Our LTIP rules have also been updated; the main amendments are updated malus and clawback
provisions, clarification around the use of Remuneration Committee discretion in the event of a change
of control, and alignment with best practice in the leaver arrangements.
Workforce remuneration
We have provided more disclosure in this year’s report describing the Committee’s oversight of
workforce remuneration. Equity ownership across all organisational levels, not just the Executive
Directors, is important to the philosophy of pay at Keywords, and we regard it as a competitive
advantage for our recruitment and M&A brand. During 2021, Keywords introduced a new all-employee
share-save scheme which enabled staff at all levels to purchase Keywords shares, in common with the
arrangements used at many of our peers. The Company will be looking to continue this scheme in 2022
as well as keeping the Remuneration Policy and its execution under constant review to ensure it delivers
a workforce pay philosophy which is consistent with that of the Executive Directors, promotes the
retention of staff in a competitive industry, enhances the shareholder experience and is directly aligned
with our strategic objectives, particularly in light of the continuing COVID-19 pandemic.
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.
After nine years as a Non-Executive Director at Keywords, I am stepping down from my positions
as a Director, Remuneration Committee Chair and Senior Independent Director at the 2022 AGM.
I will be succeeded as Remuneration Committee Chair by Marion Sears, who joined the Committee
in August 2021.
D R D A V I D R E E V E S
C H A I R O F T H E R E M U N E R AT I O N C O M M I T T E E
30 March 2022
The following is a summary of the key components of Keywords’ Executive Director remuneration,
including changes and implementation in the forthcoming financial year.
Element
Remuneration in 2021
Remuneration in 2022
Base
salary
With effect from 1 January 2021:
CEO (A Day): £325,000
CFO: £245,000
COO: £295,000 (from 18 January 2021)
With effect from 15 March 2021
CFO: £282,500
COO: £332,500
Both increases to reflect co-CEO duties
With effect from 1 December 2021
CEO (B Bodson): £600,000 (on appointment)
CFO: £295,000 (increased to reflect additional responsibilities)
COO: £295,000 (i.e. reversion to regular COO level)
With effect from 1 March 2022
CEO (B Bodson): £600,000 (no increase)
CFO: £305,325 (3.5% increase)
COO: £305,325 (3.5% increase until
departure on 18 March)
Salary
shares
Regular awards
Regular awards
Shares were granted with the following values:
Shares will be granted with the following values:
CEO (A Day): £75,000
CFO: £40,000
COO: £10,000
Awards to reflect additional responsibility
Shares were granted with the following values:
Co-CEO (J Hauck): additional award of £37,500
Co-CEO (S Sedler): additional award of £37,500
CEO: nil
CFO: £60,000
Pension CEO (A Day): 3% of base salary
5% of base salary for all Executive Directors
CFO: 5%
COO: 5%
CEO (B Bodson): 5%
Annual
bonus
Maximum opportunity of 30% of base salary based on:
– Financial targets, including turnover and profitability
–
(weighted 70%)
Individual performance vs Non-Financial Objectives
(weighted 30%)
The Committee determined 2021 performance warranted bonuses
of 30% of base salary for all the Executive Directors in role at the
year end. The bonus for B Bodson was pro-rated to reflect his
tenure in the role. No bonus was paid to A Day
Maximum opportunity of 30% of base salary
based on:
– Financial targets, including turnover
and profitability (weighted 60%)
Individual performance vs Non-Financial
Objectives (weighted 40%)
–
LTIP
CEO (A Day): 50,000 shares
CFO: 25,000 shares
COO: 35,000 shares as a regular award, plus a further 25,000
shares as compensation for forfeited awards at previous employer
CEO (B Bodson): a regular LTIP award of 275% of base salary,
plus time-vesting restricted stock of 100% of base salary as
compensation for forfeited awards at previous employer
All regular LTIP awards vest on TSR vs the FTSE250 (the COO’s
joining award vests on TSR vs the FTSE Small Cap)
275% of base salary for all Executive Directors
Same performance conditions as for the 2021
regular award
OVERVIEWSTRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSSUPPLEMENTARY INFORMATION
DIRECTORS’ REMUNERATION REPORT CONTINUED
S E C T I O N 1 : D I R E C T O R S ’ R E M U N E R AT I O N P O L I C Y
Policy and principles
Executive Director remuneration components
The Remuneration Committee determines the Company’s policy on the remuneration structure
for the Executive Directors and Senior Management Team, and is responsible for oversight of the
remuneration policy for the broader employee population.
The objectives of this policy are to:
Various remuneration components are combined to ensure an appropriate and balanced remuneration
package which reflects the size and complexity of the Group, the executive’s experience, responsibility
and position, as well as market practice. For this, the Remuneration Committee takes into account the
performance of the individual, comparisons with peer companies and, where considered appropriate,
reports from external independent consultants.
– Reward executives in a manner that ensures they are properly incentivised and motivated to
perform in the best interests of shareholders;
– Provide a level of remuneration required to attract, motivate and retain high-calibre individuals;
– Encourage value creation, through consistent and transparent alignment of incentive
arrangements with the agreed Company strategy over the long term; and
– Ensure the total remuneration packages, comprising both performance-related and non-
performance-related remuneration, are designed to motivate the individual, align interests with
shareholders and comply with corporate governance best practices.
The Board and the Remuneration Committee believe the foregoing objectives are best achieved by a
remuneration structure whereby:
– Base salaries are targeted at the lower quartile of relevant comparator groups albeit sufficient for
the challenges and pressures of the role; from 2021, awards of salary shares have been used to
ensure a more competitive position is achieved in a structure which is aligned with shareholders;
– Annual bonuses are set at modest levels, with a maximum of 30% of base salary, on the premise
that an annual bonus should not unduly encourage short-term behaviour or commitment of a
senior executive; and
– Long-term incentives are the means by which executives can earn significant rewards if, but only
if, shareholders likewise have obtained a good return.
The remuneration package comprises the following elements:
– Fixed remuneration (base salary, pension and, where appropriate, salary shares)
– Performance-based remuneration (annual bonus and LTIP grants)
These elements are detailed in the table below, which refers to the structure used for the Executive
Directors; the structure is cascaded down to the Senior Management Team albeit with some variation to
reflect the typical market practice for this executive level.
During 2020, the Remuneration Committee reviewed the pay structure for the Executive Directors,
with a particular focus on how the package compares with companies of similar scale and complexity
to Keywords, taking into account Keywords’ very significant growth in recent years. The Committee
concluded that some changes were required to help ensure fixed pay is consistent with our philosophy
of targeting cash salaries at the lower quartile of relevant comparator groups, as it was evident that
the Keywords CEO and CFO salaries were significantly lower than this target position. Following
shareholder consultation in January 2021, the Committee approved the introduction of ‘salary shares’
where base salaries are below lower quartile. Salary shares were awarded in 2021 and it is envisaged
that the Committee may need to make an annual award of salary shares for the CFO. Salary shares
vest in one-third annual tranches over three years subject to continued employment. Salary shares are
not intended to be part of the regular CEO remuneration package as his cash salary is approximately
median level versus our comparator companies.
During 2021, the Remuneration Committee updated the Policy and LTIP scheme rules further to
incorporate shareholding requirements, including a post-cessation extension. The terms relating to
the use of Remuneration Committee discretion in determining vesting levels in the event of change of
control were also updated, as were malus and clawback, and leaver treatment provisions.
72
1
2
0
2
S
T
N
U
O
C
C
A
D
N
A
T
R
O
P
E
R
L
A
U
N
N
A
C
L
P
S
O
I
D
U
T
S
S
D
R
O
W
Y
E
K
OVERVIEWSTRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSSUPPLEMENTARY INFORMATION
DIRECTORS’ REMUNERATION REPORT CONTINUED
S E C T I O N 1 : D I R E C T O R S ’ R E M U N E R AT I O N P O L I C Y C O N T I N U E D
73
Executive Director Remuneration Components continued
The updated LTIP scheme and the Policy updates are described below.
Purpose and link to Strategy
Operation
Opportunity
Performance measures
Base salary
To attract and retain talented executives to deliver the
Group’s strategy, by ensuring base salaries and the implied
total package are competitive in relevant talent markets,
while not overpaying.
Base salaries are reviewed by the Committee annually
and benchmarked periodically against comparable roles
at comparable companies of similar size and complexity.
Paid in cash.
Salaries are set on a case-by-case basis to reflect the role,
the experience and qualifications of the individual.
Base salary increases for the executives take into account
personal performance, Group performance, significant
changes in responsibilities, the average increase awarded
to the wider workforce, and competitive market practice.
In the normal course, the expectation is that base salary
will increase annually in line with, or below, any increase
paid to the wider workforce.
Salary shares
To supplement the base salary to ensure fixed pay is
competitive in relevant talent markets and is structured to
align with shareholders.
Pension and benefits
To provide an appropriate structure and level of post-
retirement benefit for executives in a cost-efficient manner
that reflects local market norms in the relevant jurisdiction.
Annual awards of shares, the vesting of which is over three
years subject to continued employment, with annual one-
third vesting.
Salary shares are not bonusable or pensionable (both of
which are based only on base salary).
Malus provisions apply in certain circumstances.
Set at a level which helps ensure an executive’s fixed pay is
at least at the 25th percentile of relevant benchmarks.
It is anticipated the value in any one financial year will not
exceed £120,000 on an individual basis, but this level may
be exceeded based on the Committee’s regular review of
market pay levels.
At the discretion of the Remuneration Committee, an
executive may participate in a pension scheme facilitated
by the Company.
The Company also provides access to Group benefit
schemes where appropriate by region which may include
moderate contribution towards private health insurance,
death in service cover and other Group-based benefits.
The Company provides access to pension schemes
based on local legal requirements or where expected by
local labour markets. Contributions meet the minimum
requirements or are of a modest level.
Basic additional benefits may also be provided where
available and where considered the norm for managerial
positions in similar businesses.
An amount is paid equivalent to a percentage of base
salary not exceeding the average paid in respect of the
local workforce (currently 5% in UK).
Up to a maximum of 30% of base salary. Paid in cash.
Annual bonus
To provide a modest award where individual and Company
performance have been at or above expected levels.
Executives are eligible to participate in an annual
bonus scheme.
The Remuneration Committee reviews targets and the
weighting of performance measures each year.
LTIP
To incentivise delivery against total shareholder return
targets and align the interests of executives and
shareholders in growing the value of the Group over
the long term.
LTIP grants are made annually in the form of conditional
awards of shares or nil-cost share options which vest
subject to performance conditions measured over three
years. Once vested, awards may be exercised for a period
of up to 10 years from grant.
Malus and clawback provisions apply.
Maximum opportunity 300% of base salary. Dividends are
accrued over the vesting period.
1
2
0
2
S
T
N
U
O
C
C
A
D
N
A
T
R
O
P
E
R
L
A
U
N
N
A
C
L
P
S
O
I
D
U
T
S
S
D
R
O
W
Y
E
K
n/a
n/a
n/a
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 targets for the year.
Performance targets are majority weighted on the Company’s financial
performance and minority weighted on performance against strategic and
personal targets. The Remuneration Committee has discretion over outcomes; for
example, if the Company’s financial performance is considered to be unsatisfactory,
the element based on personal performance is likely to be foregone or reduced.
Vesting of LTIP awards is subject to continued employment during the
performance period and the achievement of performance conditions based
on Total Shareholder Return (TSR).
The Committee has the discretion to adjust the outcome in exceptional
circumstances to ensure it is a fair reflection of underlying performance. Further
details, including the performance targets attached to the LTIP in respect of each
year will be disclosed in the relevant implementation report on remuneration
(subject to these being considered not to be commercially sensitive).
For Executive Directors, a proportion (currently 25%) of LTIP shares vesting
after tax and NI must be held to build towards the required shareholding.
OVERVIEWSTRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSSUPPLEMENTARY INFORMATION
DIRECTORS’ REMUNERATION REPORT CONTINUED
S E C T I O N 1 : D I R E C T O R S ’ R E M U N E R AT I O N P O L I C Y C O N T I N U E D
74
1
2
0
2
S
T
N
U
O
C
C
A
D
N
A
T
R
O
P
E
R
L
A
U
N
N
A
C
L
P
S
O
I
D
U
T
S
S
D
R
O
W
Y
E
K
Executive Director shareholding guidelines
Executive Director service contracts
Executive Directors are encouraged to build and maintain over time a shareholding in the Company.
To align the interests of Executive Directors with those of shareholders, and to promote long-term
thinking, the Remuneration Committee introduced shareholding requirements which apply to all
LTIP awards made to Executive Directors with effect from 1 December 2021. The Committee has
adopted shareholding requirements which apply both during employment and for a period following
employment, although the Remuneration Committee retains the right to waive this requirement in
exceptional circumstances such as death, ill health or severe financial hardship.
The CEO is required to build a shareholding equivalent to 250% of base salary, and other Executive
Directors 200% of base salary, to be built over time, but with a requirement to hold 25% of any LTIP
shares vesting (after tax and NI) until the required shareholding level is achieved. On departure, an
Executive Director must continue to hold the required shareholding (or their actual shareholding if
lower) for 12 months. These requirements will be first applied to LTIP shares granted in 2022 and
beyond, and not applied to salary shares.
Details of the Executive Directors’ current shareholdings are provided on page 80.
Recovery provisions (malus and clawback)
Recovery provisions may be applied to the annual bonus and LTIP awards in cases of fraud, dishonesty
or deceit, gross misconduct or material financial misstatement in the audited financial results of the
Group. The Remuneration Committee may determine that an award is cancelled in its entirety or be
reduced to the extent they see fit.
Malus provisions apply which enable the Committee to determine before the payment of an annual
bonus or the vesting of an LTIP award, that the bonus opportunity or LTIP award may be cancelled
or reduced. Clawback provisions apply which enable the Committee to determine for up to two years
following the payment of a cash bonus or the vesting of an LTIP award, that the amount of the bonus
paid may be recovered and the LTIP or share award may be cancelled or reduced (if it has not been
exercised) or recovery may be applied to it (if it has been exercised).
Use of discretion
The Remuneration Committee may apply its discretion when agreeing any remuneration outcomes, to
help ensure that the implementation of our remuneration policy is consistent with underlying Company
performance and is equitable to all parties.
Process for determining the remuneration policy
The Remuneration Committee periodically, typically annually, reviews the remuneration policy to
ensure it reflects, if appropriate, trends in remuneration design and governance developments, taking
into account market practices, best practices, and revisions to the pay guidelines published by major
investors and their representative bodies. In approving any changes to the policy, the Committee
considers the impact on individual Executive Directors and as well as the consistency of pay structures
and levels throughout the organisation. The Committee uses specific pay benchmarking studies,
when relevant, to ensure Keywords’ remuneration levels are positioned at the appropriate level. If
major changes are considered for Executive Director remuneration, the Committee will undertake a
consultation of major shareholders and relevant proxy agencies to ensure their feedback is taken into
account before implementation.
In accordance with general market practice, each of the Executive Directors has a rolling service contract.
The following table shows the date of the service contract for each Executive Director in post during 2022:
Executive Director
Position
Date of appointment
Date of service agreement
Notice period
Bertrand Bodson
Jon Hauck
Sonia Sedler
CEO
CFO
COO
1 Dec 2021
14 Oct 2019
18 Jan 2021
19 Sep 2021
30 Sep 2019
7 Dec 2020
6 months
6 months
6 months
Remuneration for the wider workforce
The Remuneration Committee receives information about the composition of the wider workforce, it has
visibility of the overall pay structures in place throughout the Group and it has specific responsibility
for senior management LTIP and Stock Option awards. The remuneration policy for all employees is
based on principles consistent with those that are applied to executive remuneration, with the common
objectives of driving financial performance, achieving strategic objectives and contributing to the long-
term success of the Group. Objectives and performance conditions are set for Executive Directors and
as far as possible are cascaded through the organisation to align the whole workforce strategically. We
regard the use of share plans in management remuneration as a competitive advantage for Keywords
Studios: LTIP and Stock Option awards create alignment with shareholders, incentivising and retaining,
and, in total, 1,019 employees received share awards in 2021, an increase of 20% vs 2020.
Keywords Studios currently employs over 10,000 people in 23 countries on a variety of permanent and
flexible contract types, and salary levels range across our service lines from minimum wage equivalent
to highly paid technical experts. The complexity of this matrix means that remuneration is structured by
country for employment type, local salary awards, pensions and bonus, and centrally by banding for the
wider leadership team globally, with input and guidelines provided by the Remuneration Committee.
Annual salary reviews take into account performance, local pay and market conditions plus salary for
similar levels for similar roles in comparable companies and this is reviewed on a country level during the
budget process. Most permanent employees are eligible to participate in annual bonus schemes.
For the senior leadership team, the remuneration structure mirrors that for Executive Directors
comprising salary, pension in line with local workforce, bonus up to 30% of salary, and LTIP or Stock
Options. Performance metrics for the bonus are set to reflect an individual’s specific objectives but the
performance conditions for all LTIP awards are the same throughout the company. In 2021, awards
over 1.1% of share capital were made under the LTIP to 400 members of the senior leadership team,
and awards over 0.8% of the share capital were made under the Employee Stock Option Plan to 619
members of the management team. The LTIP awards cover a three year performance period and are
subject to performance conditions as well as continued employment, whereas the Employee Stock
Options do not carry a performance condition but are subject to employment with vesting after two,
three and four years.
In 2021, an all-employee share-save plan was introduced under which our employees can save up to
£416 per month over a six-month period and subsequently invest in shares at a 10% discount to the
share price on the date their plan period ends.
OVERVIEWSTRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSSUPPLEMENTARY INFORMATION
DIRECTORS’ REMUNERATION REPORT CONTINUED
S E C T I O N 1 : D I R E C T O R S ’ R E M U N E R AT I O N P O L I C Y C O N T I N U E D
75
1
2
0
2
S
T
N
U
O
C
C
A
D
N
A
T
R
O
P
E
R
L
A
U
N
N
A
C
L
P
S
O
I
D
U
T
S
S
D
R
O
W
Y
E
K
The total employee population at 31 December 2021 of 10,509 consists of 74% male and 25% female
employees (with the remaining 1% choosing not to disclose), although there is wide variation of gender
balance by geography. There is an ongoing focus on female recruitment and the Group is proud to have
become a sponsor for Women in Games during 2021. The Group complies with equal pay directives
across all its locations, conducting periodic assessments and analysis, and the Board is satisfied that
there is equal gender pay given location and roles. The latest data (for 2021) shows that our gender
pay gap has reduced to ~3% for both our mean and median hourly rate pay. In particular, the Board of
Directors recently discussed the results of the 2021 Global Gender Equality Pay Review and noted that
differences in favour of males or females were accounted for by seniority, experience, length of service,
and speciality within roles.
The CEO pay ratio disclosed relates only to our UK workforce of 679 employees. The ratio for 2021 of
38:1 is a composite number reflecting a year of change; in the period Andrew Day served six months
as CEO, Sonia Sedler and Jon Hauck together served eight months as Joint Interim CEOs and Bertrand
Bodson served one month as our new CEO.
Pay for performance scenario analysis
The charts below provide an estimate of the potential future reward opportunities for the CEO and
CFO and the potential split between the different elements of remuneration under four different
performance scenarios: “Minimum”, “On-target”, “Maximum” and “Maximum +50% (share price
appreciation)”. These charts illustrate how performance-orientated and long term the Company’s
remuneration arrangements are, with the majority of the remuneration opportunity being delivered only
under the “Maximum” scenarios. We have also included a bar showing the value of the actual package
paid for 2021.A graph is not provided for Sonia Sedler as she left the company on 18 March 2022 and her
single figure remuneration for 2021 is provided on page 76.
Potential reward opportunities are based on the Remuneration Policy, applied to 2022 base salaries and
incentive opportunities. Note that the LTIP awards granted in a year will not normally vest until the third
anniversary of the date of grant, and the projected value excludes the impact of share price movement
except in the “Maximum +50%” scenario.
External appointments held by Executive Directors
CEO
CFO
Executive Directors may not accept any external appointment without the consent of the Board. Any
associated fees are retained by executives and the Board approved Bertrand Bodson’s other Board
appointments at the time of his appointment.
Consideration of shareholder views
The Remuneration Committee took into consideration major shareholder views, and those of their
representative agencies, during the year and will continue to do so in 2022. AGM voting and other
shareholder feedback is important in shaping the Company’s implementation of its Remuneration Policy
as well as any changes to the Policy.
Leaver treatment
Fair treatment will be extended to departing executives. The Group’s policy on termination payments
is to consider the circumstances on a case-by-case basis, taking into account the relevant contractual
terms in the executive’s service contract and the circumstances of termination.
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 unvested LTIP shares, including
salary shares.
Good leavers (normally including such circumstances as retirement, death, disability and redundancy)
are permitted to exercise unvested LTIP awards, reduced pro rata to reflect the remaining vesting
period (unless such reduction is waived by the Remuneration Committee) and to the extent that the
performance criteria are met over the full performance period. At its discretion, the Remuneration
Committee may allow the acceleration of vesting to the termination date, for which the achievement of
the performance condition would be at the discretion of the Committee.
On a change of control, all unvested LTIP awards and salary shares may be exercised in full at the time
of the event subject to discretion by the Remuneration Committee. It is intended that the Committee
would only apply discretion to reduce vesting if the change of control took place due to poor underlying
performance. Awards would be reduced pro rata to reflect the remaining vesting period unless such
reduction is waived by the Remuneration Committee. A rollover of unvested awards into new awards
may also be offered.
Actual 2021
Minimum
On-target
Maximum
Max +50%
Actual 2021
Minimum
On-target
Maximum
Max +50%
0
1,000
2,000
£000
3,000
4,000
0
500
1,500
2,000
1,000
£000
Fixed pay
Short-term variable pay
Long-term variable pay
Scenarios 2022
Assumptions:
“Actual 2021”: Fixed remuneration (2021 base salary, salary shares, pension), bonus paid for 2021 and LTIP vesting in 2021.
“Minimum”: Fixed remuneration only (2022 base salary, salary shares, pension).
“On-target”: Fixed remuneration as above, plus target bonus (50% of maximum) and threshold LTIP vesting (25% of maximum)
“Maximum”: Fixed remuneration, plus maximum bonus (30% of base salary) and full vesting of LTIP awards
“Maximum+50%”: As per Maximum scenario but with an assumption of share price growth of 50% over the three-year
performance period for LTIP awards.
Non-Executive Director fee policy
Non-Executive Directors receive fees for attendance at Board meetings and its sub-committees. The
Company does not operate any pension scheme for Non-Executive Directors nor do they participate in
any variable pay plan. Any reasonable business expenses (including tax thereon) may be reimbursed.
OVERVIEWSTRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSSUPPLEMENTARY INFORMATION
DIRECTORS’ REMUNERATION REPORT CONTINUED
S E C T I O N 2 : I M P L E M E N TAT I O N O F T H E R E M U N E R AT I O N P O L I C Y I N 2 0 2 1
76
1
2
0
2
S
T
N
U
O
C
C
A
D
N
A
T
R
O
P
E
R
L
A
U
N
N
A
C
L
P
S
O
I
D
U
T
S
S
D
R
O
W
Y
E
K
The Remuneration Committee
The members of the Remuneration Committee in 2021 were David Reeves (Committee Chair), Charlotta
Ginman, Marion Sears and Ross Graham. The members are all independent Non-Executive Directors.
In the year ended 31 December 2021, the Remuneration Committee met on seven occasions. The
three members in place at the beginning of the year financial year attended all Committee meetings
throughout the year, with Marion Sears attending all meetings following her appointment on 13 August.
On occasion, the CEO, the CFO, the COO and the Global HR Director attended meetings, all at the request
of the Committee Chair.
As the financial year 2021 is his ninth year as a Non-Executive Director, David Reeves intends to step
down from his role as Remuneration Committee Chair following the May 2022 AGM. This is following the
guidance in the UK Corporate Governance Code that a Non-Executive Director is no longer considered
independent if he has been in the position for nine years. Following the AGM, the role of Remuneration
Committee Chair will then be held by Marion Sears, who will have been a member of the Remuneration
Committee since August 2021.
The Company Chair and the Chair of the Remuneration Committee also met with key investors
and relevant proxy agencies in 2021 to obtain input and feedback on executive and Company-wide
remuneration.
The remit of the Committee is to determine and agree with the Board the framework for the
remuneration of the Company Chair (Ross Graham is not involved in related discussions), Executive
Directors, Company Secretary and other members of the Senior Management of the Group, and also
oversee the remuneration policy for the wider workforce. No Director is involved in any discussion or
decision about his or her own remuneration.
The Committee appointed Ellason to provide independent advice to the Committee from 1 January 2021.
Ellason supported the Remuneration Committee on remuneration-related matters during the year.
Ellason is a member of the Remuneration Consultants Group and, as such, voluntarily operates under
the Code of Conduct in relation to executive remuneration consulting in the UK. Ellason does not have
any other association with the Company and is considered independent by the Committee.
Directors’ emoluments
The remuneration for the Directors of the Company for the period year ended 31 December 2021 is
detailed in the table below:
Director
Bertrand Bodson1
Jon Hauck2
Sonia Sedler2,3
Andrew Day4
Ross Graham5
David Reeves5
2021 Fixed pay £’000
2021 Variable pay £’000
Cash
salary/fee
Salary
Shares
Benefits
Pension
Total
Bonus
LTIP7
Total
77.5
47.5
50
279.8
319.3
61.2
132.5
94.3
2.5
14.3
15.9
4.9
52.5
371.6
382.7
66.1
132.5
94.3
15.0
84.0
95.8
15.0
84.0
95.8
1,226.0
1,226.0
1,292.1
132.5
94.3
2021 Total
remuneration
£’000
67.5
455.6
478.5
Director
Giorgio Guastalla
Georges Fornay
Charlotta Ginman5
Marion Sears6
Neil Thompson6
TOTAL
2021 Fixed pay £’000
2021 Variable pay £’000
2021 Total
remuneration
Cash
salary/fee
Salary
Shares
Benefits
Pension
Total
Bonus
LTIP7
Total
£’000
51.8
62.3
89.3
22.8
21.3
51.8
62.3
89.3
22.8
21.3
51.8
62.3
89.3
22.8
21.3
1,184.6
125.0
37.6
1,347.2
194.8
1,226.0
1,420.8
2,768.0
1. Bertrand Bodson was appointed on 1 December 2021. His one-off award of restricted stock granted on appointment is not
included as this award is compensation for awards forfeited at a previous employer.
2. Cash salary includes one-off £37,500 as co-CEO allowance; Salary Shares include one-off £37,500 as co-CEO allowance.
3. Sonia Sedler was appointed on 18 January 2021 and left the company since the year end on 18 March 2022.
4. Andrew Day retired on 14 June 2021; his salary shares granted in FY21 do not appear in the table as these lapsed on his retirement.
5. Ross Graham, Charlotta Ginman and David Reeves all received an additional fixed fee to reflect the additional work undertaken
in relation to the change of CEO and other new director appointments during the year. Ross Graham received £40,000 and
Charlotta Ginman and David Reeves each received £25,000.
6. Marion Sears and Neil Thompson were appointed as Non-Executive Directors on 13 August 2021.
7. 50,000 LTIP shares, granted to Andrew Day in 2018, fully vested on 18 May 2021 due to Keywords’ three-year TSR exceeding the
full vesting level. The value shown in the table is based on the vest-date share price of £24.52, and 30% of which is based on the
gain in the share price over the period (from a grant price of £17.22).
The remuneration for the Directors of the Company for the year ended 31 December 2020 is detailed in
the table below:
2020 Fixed pay £’000
2020 Variable pay £’000
2020 Total
remuneration
Director
Salary/fee1
Benefits
Pension
Andrew Day
Jon Hauck
Ross Graham
David Reeves
Giorgio Guastalla
Georges Fornay
Charlotta Ginman
TOTAL
228
190
84
63
45
48
59
717
7
10
Bonus
LTIP2
777
Total
777
Total
235
200
84
63
45
48
59
£’000
1,012
200
84
63
45
48
59
17
734
777
777
1,511
1. The Directors took a 20% reduction in salary for April to July related to the COVID-19 pandemic.
2. Based on share price vesting date of 15 May 2020 @£14.95 for 52,000 LTIPs.
OVERVIEWSTRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSSUPPLEMENTARY INFORMATION
DIRECTORS’ REMUNERATION REPORT CONTINUED
S E C T I O N 2 : I M P L E M E N TAT I O N O F T H E R E M U N E R AT I O N P O L I C Y I N 2 0 2 1 C O N T I N U E D
77
Salaries in 2021
The following cash salaries were applied in 2021:
– Andrew Day: £244,800
–
Jon Hauck: £204,000 up to 1 March, £245,000 between 1 March and 30 November, and £295,000
to reflect the CFO’s additional responsibilities from 1 December
– Sonia Sadler: £295,000 on her appointment in January
– Bertrand Bodson: £600,000 on his appointment in December
The following salary shares were granted in 2021:
– Andrew Day: £75,000 (but which subsequently lapsed on his departing the Board)
–
– Sonia Sadler: £10,000
Jon Hauck: £40,000
The salary shares vest, subject to continued employment, in annual one-third tranches starting
in May 2022 (see note below).
The discretionary element considers the Director’s performance for the year against non-financial
targets, under various categories. The non-financial objectives for the CFO included Management
Accounts targets (6% of bonus), ESG (6%), Internal control (6%), Treasury management (6%) and
Financial Systems (6%). The non-financial objectives for the COO included those based on organisational
development (6% of bonus), global operating systems (6%), operational KPIs (7.5%), contact with
operational heads of major clients (3.5%), tiered vendor structure (4%) and specific key project
implementation (3%). As Bertrand Bodson was appointed only in December, his non-financial component
was based on a discretionary assessment by the Remuneration Committee of the achievement of his
‘first 100-day objectives’ to the extent they were relevant over this first 30-day period.
The Remuneration Committee considered performance against all the non-financial objectives set
for the Executive Directors, and the difficult circumstances of the executive changes, and determined
that each Director had achieved full vesting under this component of the bonus.
Bertrand Bodson’s bonus has been prorated to reflect time served during the 2021 financial year.
As a result of his retirement, Andrew Day was not eligible to be paid a bonus for 2021.
1
2
0
2
S
T
N
U
O
C
C
A
D
N
A
T
R
O
P
E
R
L
A
U
N
N
A
C
L
P
S
O
I
D
U
T
S
S
D
R
O
W
Y
E
K
In addition, to reflect their contribution to the co-CEO role during the year, Jon Hauck and Sonia Sedler
also were each granted one-off allowances as follows:
Director
Bertrand Bodson
– Additional cash salary: £37,500
– Additional salary shares: £37,500, vesting in one-third annual tranches starting September 2022
(see note below).
Andrew Day
Jon Hauck
Sonia Sedler
Formulaic outcome,
% of base salary
Bonus for 2021
30%
n/a
30%
30%
£15,000
£nil
£83,950
£95,778
Note: when the salary shares were originally introduced, the Remuneration Committee intended that
the awards would be granted at the same time as LTIP awards, and vest in one-third annual increments.
The complications around CEO succession in FY21 presented certain logistical challenges which meant
the ‘regular’ salary shares (i.e. not the one-off co-CEO top-up allowances) were granted later than LTIP
awards. The one-off co-CEO top-up salary shares were stated in the RNS at time of grant to vest after
two years. The Committee has subsequently harmonised the vesting schedule under the new LTIP rules
so that all salary shares granted in FY21 will be subject to one-third annual vesting, and with the vest
dates for the regular salary share awards to be as if they had been granted at the same time as the
FY21 LTIP awards (in May 2021).
Pension
During 2021, the Executive Directors were paid pension contributions of 5% of salary, except for
Andrew Day who was paid 3%.
Annual bonus outcome for 2021
During 2021, the Executive Directors participated in the annual bonus scheme, and were eligible to earn
awards of up to 30% of base salary, subject to the attainment of specific targets set for each individual.
The portion of bonus earned in the year was dependent on Company performance (weighted 70%)
against financial targets for the year in line with our financial KPIs (see pages 22 and 23) and on the
Remuneration Committee’s discretionary assessment of each individual’s performance (weighted 30%).
The financial targets were based on Revenue (weighted 20% of bonus), Gross Margin (20%), EBITDA
margin (15%), working capital as % of revenue run rate (10%) and overall EBITDA from acquisitions (5%).
Performance against the targets set for the year was assessed by the Committee, and the Committee
determined that 100% of the financial component was warranted. The targets are not disclosed due to
commercial sensitivities.
Long-term incentives vesting in 2021
In May 2018, Andrew Day was granted an LTIP award over 50,000 shares, the vesting of which was
based on the Company’s TSR performance versus the Numis Smaller Companies (excluding Investment
Trusts) Index over the three-year period ending on 18 May 2021, with 10% vesting for TSR in line with
the Index and full vesting for 20% outperformance. Based on Keywords’ TSR performance, which
outperformed the Index by 27.7%, the awards fully vested.
Other long-term incentives outstanding during 2021
LTIP awards granted to the Executive Directors in May 2019, September 2019 and May 2020 remained
outstanding during 2021. Vesting of the 2019 and 2020 awards requires Keywords TSR to outperform
the FTSE Small Cap Index over a three-year period. Threshold vesting (10% of the award) will be earned
for TSR in line with the Index and full vesting will be earned for exceeding the Index TSR by 20% over the
performance period. Based on performance up to 31 December 2021, the 2019 and 2020 awards would
fully vest (see TSR performance chart on page 78).
Long-term incentives granted during 2021
In 2021, the Executive Directors were awarded LTIPs, the vesting of which is based on the Company’s
TSR performance versus the FTSE 250 Index (excluding investment trusts) over a three-year
performance period. Given Keywords’ growth during the period the Committee deemed it appropriate to
use the FTSE 250 as the Index against which TSR should be measured. Threshold vesting (25% of the
award) will be earned for TSR in line with the Index and full vesting will be earned for exceeding the Index
TSR by 20% over the performance period.
OVERVIEWSTRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSSUPPLEMENTARY INFORMATION
DIRECTORS’ REMUNERATION REPORT CONTINUED
S E C T I O N 2 : I M P L E M E N TAT I O N O F T H E R E M U N E R AT I O N P O L I C Y I N 2 0 2 1 C O N T I N U E D
Andrew Day leaving arrangements
Andrew retired from the Board in June 2021. Andrew received base pay and benefits up to 31 March 2021
and was on unpaid leave up to his leaving date of 14 June 2021, at which time a payment of £162,500 in
lieu of 6 months’ notice was made. Andrew is not eligible for a bonus for 2021, but as a good leaver, and
under the previous 2013 LTIP rules, his outstanding LTIP awards will continue and vest on the normal
vest dates subject to performance over the normal period. The salary shares granted to Andrew in 2021
lapsed on his leaving.
Sonia Sedler leaving arrangements
Sonia left the company on 18 March 2022 due to personal reasons and was treated as a good leaver.
Sonia received base pay and benefits up to 18 March and received her bonus in respect of 2021. Upon
departure Sonia was awarded an ex-gratia payment of £183,536 plus payment in lieu of notice of
£147,500. Sonia retains the 25,000 LTIP award made in respect of compensation foregone at her joining
and this award will vest subject to performance conditions at the normal vesting date. The May award of
35,000 LTIP shares was pro-rated according to time served under our new good leaver provisions and
Sonia retains 10,144 LTIP shares which will also vest subject to performance conditions at the normal
vesting date in 2024. All salary shares lapsed.
Bertrand Bodson remuneration package on appointment
Bertrand was appointed as CEO on 1 December 2021 on a salary of £600,000. His annual bonus
opportunity is in line with the other executives at 30% of salary, as are awards under the LTIP.
Bertrand was granted an award under the LTIP in 2021 with a face value of 275% of salary, with vesting
determined by TSR performance against the FTSE 250. Bertrand will receive a pension contribution of
5% of salary, in line with the other executives and the UK workforce. Bertrand also received a one-off
conditional award of 100% of salary in restricted shares, granted on a like-for like basis for foregone
awards from his previous position of employment, and vesting on continued employment after
three years.
TSR performance
The chart opposite show (i) the Company’s TSR since listing versus relevant indices, and (ii) the
shareholder value created each financial year based on share price growth and dividends paid.
78
Bertrand Bodson was granted his LTIP award on his appointment on 1 December 2021, and was also
awarded a one-off grant of restricted shares with a face value of 100% of salary in compensation for
awards forfeited on joining Keywords. These conditional LTIP shares will vest based on performance
over the period to May 2024, in line with other LTIP awards granted in 2021, and the restricted shares
will vest in December 2024 providing he is still employed by Keywords.
On her appointment, Sonia Sedler was also awarded a one-off grant of 25,000 shares in compensation
for awards she forfeited on joining Keywords. Following her departure in March 2022, these awards have
been treated in accordance with Good Leaver rules and Sonia’s exit remuneration is described opposite.
This award over 25,000 shares will vest according to Keywords relative TSR performance vs the FTSE
Small Cap Index over the three years to January 2024, in line with LTIP awards granted in 2020.
The number of performance-based LTIP shares granted to the Executive Directors in 2021 is
summarised in the table below.
Director
Number of shares
Value as % of salary
Performance period
Vest date
Bertrand Bodson
Jon Hauck
Sonia Sedler1
Andrew Day2
61,156
25,000
35,000
25,000
50,000
275%
5 May 2021 – 4 May 2024
5 May 2024
260%
5 May 2021 – 4 May 2024
5 May 2024
302%
5 May 2021 – 4 May 2024
5 May 2024
236% 29 Jan 2021 – 28 Jan 2024
29 Jan 2024
392%
5 May 2021 – 4 May 2024
5 May 2024
The 2021 awards granted in May were granted at a share price of £25.48; those granted to Sonia Sedler
in January were granted at a share price of £27.48. Based on performance up to 31 December 2021,
these awards would not vest (see chart below).
1. The treatment of the awards to Sonia Sedler as part of her exit arrangements is described opposite
2. Andrew Day was granted an award on 5 May 2021, prior to the announcement that he would bring forward his plan to retire on
14 June 2021
TSR performance up to 31 December 2021, in-flight LTIP awards
2019–2022 LTIP
(May grant)
2019–2022 LTIP
(Sept grant)
2020–2023 LTIP
47.0%
43.1%
48.1%
85.7%
97.3%
140.1%
2021–2024 LTIP
(COO Jan grant)
31.4%
20.7%
2021–2024 LTIP
13.5%
8.9%
0
20%
40%
60%
80%
100%
120%
140%
160%
FTSE Small Cap
FTSE 250
Keywords
1
2
0
2
S
T
N
U
O
C
C
A
D
N
A
T
R
O
P
E
R
L
A
U
N
N
A
C
L
P
S
O
I
D
U
T
S
S
D
R
O
W
Y
E
K
OVERVIEWSTRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSSUPPLEMENTARY INFORMATION
DIRECTORS’ REMUNERATION REPORT CONTINUED
S E C T I O N 2 : I M P L E M E N TAT I O N O F T H E R E M U N E R AT I O N P O L I C Y I N 2 0 2 1 C O N T I N U E D
79
Value of £100 invested in July 2013
The table below illustrates the CEO’s single figure of total remuneration over the same period as the
charts above.
£2,500
£2,000
£1,500
£1,000
£500
£0
2013
Keywords
FTSE Small Cap
Numis Small Cap
Single figure (£’000)1
Annual bonus outcome (% of max)
LTIP vesting (% of max)
SOP vesting (% of max)
52
N/A
N/A
N/A
FY13
FY14
FY15
213
FY16
449
FY17
397
146
100%
100%
100%
100%
FY18
820
30%
FY19
FY20
FY21
1,198
1,012
1,532
0%
0% 100%2
N/A
N/A
N/A
100%
N/A
100%
100%
100% 100%3
100%
100%
100%
N/A
N/A
N/A
N/A
2014
2015
2016
2017
2018
2019
2020
2021
As at 31 December
1. The numbers in the table for FY13-FY20 are for Andrew Day; FY21 is based on a combination of Andrew Day, Bertrand Bodson,
Jon Hauck and Sonia Sedler (see further explanation in CEO pay ratio section).
2. 100% bonus outcome reflects the bonus outcome for those individuals performing the role of CEO in FY21 (Andrew Day, who
retired in FY21, was not paid a bonus).
3. Of those who performed the CEO role during FY21, only Andrew Day benefitted from an LTIP vesting in FY21.
Chief Executive Officer pay ratio
The table below provides disclosure of the ratio between the CEO’s total remuneration and that of the
lower quartile, median and upper quartile of our 679 (2020: 458) UK-based employees. The CEO pay data
in 2021 includes all income paid to Andrew Day up to his retirement, the co-CEO cash salary and Salary
Shares paid to the CFO and COO and any bonus earned for the cash element of this, and all income
paid to Bertrand Bodson from 1 December excluding his one-off award of restricted shares paid as
compensation for forfeited awards at a previous employer.
Shareholder value created each year, £m
Methodology used
P25 (lower quartile)
P50 (median)
P75 (upper quartile)
Option A
Option A
51:1
33:1
38:1
25:1
Year
2021
2020
Year
2021
1,009
664
2020
Base Salary (£’000)
Total remuneration (£’000)
Base Salary (£’000)
Total remuneration (£’000)
P25 (lower quartile)
P50 (median)
P75 (upper quartile)
27
30
27
31
35
40
35
40
50
57
50
57
27:1
18:1
CEO
261
1,532
228
1,012
15
2014
34
2015
176
280
126
2016
2017
2018
2019
2020
2021
(337)
Shareholder value created each year is based on the change in share price plus dividends paid over each financial year multiplied
by the number of shares outstanding at the start of each year.
The lower, median and upper quartile employees were determined using calculation methodology A
which involved calculating the actual full-time equivalent remuneration for all UK employees for the year
ended 31 December 2021. From this analysis, three employees were then identified as representing the
25th, 50th and 75th percentile of the UK employee population. Keywords chose this method as it is the
preferred approach of the Government and that of shareholders, and the Company had the systems in
place to undertake this method. As the drafting of this report was earlier than the final determination
of bonuses for the wider population, the bonus outcomes have been based on the financial forecasts in
December 2021.
The CEO pay ratio increased from 25 in FY20 to 38 in FY21 primarily as a result of the significant
increase in the vest-date value of the LTIP award vesting in the year to Andrew Day (£1.2m in FY21
compared to £777k in FY20) due to the strength of the share price growth over the vesting period of
the LTIP awards granted in May 2018.
1
2
0
2
S
T
N
U
O
C
C
A
D
N
A
T
R
O
P
E
R
L
A
U
N
N
A
C
L
P
S
O
I
D
U
T
S
S
D
R
O
W
Y
E
K
1,200
1,000
800
600
400
200
0
-200
-400
OVERVIEWSTRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSSUPPLEMENTARY INFORMATION
DIRECTORS’ REMUNERATION REPORT CONTINUED
S E C T I O N 2 : I M P L E M E N TAT I O N O F T H E R E M U N E R AT I O N P O L I C Y I N 2 0 2 1 C O N T I N U E D
80
The CEO pay ratio is based on comparing the CEO’s pay to that of Keywords’ UK-based workforce,
a large proportion of whom are engineers, artists and support staff. The Committee expects that
the ratios will be largely driven by the CEO’s incentive pay outcomes, which will likely lead to greater
variability in his pay than that observed at lower levels who, consistent with market practices, have a
greater proportion of their pay linked to fixed components. The Committee considers these ratios when
making decisions around the Executive Director pay packages, and Keywords takes seriously the need
to ensure competitive pay packages across the organisation.
Implementation of the remuneration policy in 2022
Base salary
With effect from 1 March 2022, base salary increases of 3.5% were awarded to the CFO and COO, such
that their 2022 base salaries would both be £305,325 and this increase is in line with or below that of
the UK workforce. Since the year end, Sonia Sedler has left the company on 18 March 2022. Bertrand
Bodson’s base salary will remain at £600,000, having joined on 1 December 2021.
Salary shares
The CFO will be granted an award of salary shares over £60,000, at the same time as LTIP awards are
granted. The number of salary shares will be based on the share price at the time of grant and will be
based on grant values intended to ensure total salaries (cash salary plus salary shares) are consistent
with our targeted remuneration position. The award will vest in one-third annual tranches over three
years and be subject to continued employment over this period.
The Committee’s review of pay benchmarks for the Executive Directors, suggest the total salary (cash
and salary shares) for each individual will be lower quartile vs FTSE 250 and broadly median vs market
(based on a combination of UK technology peers, global gaming peers and the FTSE 250).
Pension
The Executive Directors’ pensions will remain at 5% of base salary, in line with the UK workforce.
Annual bonus
The CEO and CFO will be eligible to earn an annual bonus of up to 30% of base salary in line with
previous years. The outcome will be determined with reference to targets set at the start of 2022
around financial performance (weighted 60%) and non-financial performance (weighted 40%).
LTIP
The Remuneration Committee intends to grant LTIP awards of 275% of base salary to the CEO and
CFO, with vesting based on the Company’s three-year TSR performance versus the FTSE 250 Index
(excluding Investment Trusts), with threshold vesting (25% of the award) for TSR in line with the Index
and full vesting for exceeding the Index TSR by 20% over the performance period.
The Committee reviewed the LTIP grant policy during 2021 and concluded that awards going forward would
be granted on the basis of face value, rather than the fixed-number of shares approach used in previous
years. The Committee took this decision after considering feedback from shareholders as well as desiring
greater consistency with market practice. The proposed award levels, at 275% of base salary, take into
account typical market practice for LTIP levels as well as Keywords low bonus opportunity (which, at 30% of
base salary, is significantly below the lower quartile). All LTIP awards made under our new Policy and LTIP
rules from 2022 will include higher shareholding requirements and one year post-cessation holding.
1
2
0
2
S
T
N
U
O
C
C
A
D
N
A
T
R
O
P
E
R
L
A
U
N
N
A
C
L
P
S
O
I
D
U
T
S
S
D
R
O
W
Y
E
K
Non-Executive Directors’ remuneration
Non-Executive Director fees are based on the roles and responsibilities of the Directors (see table
below).The fees have been increased by 3.5% for the Non-Executive Directors with effect from 1 March
2022, in line with or below that of the UK workforce and to reflect the increased scale of the business
and the consequent increased time requirement of the Directors.
Role
Board Chairman
Senior Independent Director fee
Non-Executive Director basic fee
Additional fees:
Chair of the Audit Committee
Chair of the Remuneration Committee
Chair of the ESG Committee
Member of:
Audit Committee
Remuneration Committee
ESG Committee
Directors’ interest in shares
Fee
£96,255
£5,175
£51,233
£12,420
£12,420
£12,420
£3,105
£3,105
£3,105
The interests of each person who was a Director of the Company (together with interests held by his or
her connected persons) at the end of each financial year (or the time the Director departed the Board, if
relevant) were:
Andrew Day1
Giorgio Guastalla2
Ross Graham
David Reeves
Jon Hauck
Sonia Sedler
Bertrand Bodson
Georges Fornay
Charlotta Ginman
Marion Sears3
Neil Thompson
At 31 December 2021 At 31 December 2020
3,296,573
500,736
59,819
33,464
nil
nil
nil
6,521
1,733
1,000
2,496
3,296,573
3,150,662
59,819
33,089
nil
n/a
n/a
6,521
1,733
n/a
n/a
3,902,342
6,548,397
1. Andrew Day was no longer a Director of the Company at the end of the 2021 financial year.
2. Giorgio Guastalla’s indirect shareholding arises out of his 90% holding in P.E.Q. Holdings Limited.
3. Since 31 December 2021, Marion Sears has acquired a further 1,000 shares.
OVERVIEWSTRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSSUPPLEMENTARY INFORMATION
DIRECTORS’ REMUNERATION REPORT CONTINUED
S E C T I O N 2 : I M P L E M E N TAT I O N O F T H E R E M U N E R AT I O N P O L I C Y I N 2 0 2 1 C O N T I N U E D
81
The outstanding LTIP awards held by each Executive Director of the Company are as follows.
Salary shares and restricted shares
LTIP
Number at
31 December
2020
Number
granted
during the
year
Number
vesting
during the
year
Number
lapsed/
forfeited
during the
year
Number
exercised
during the
year
Number at
31 December
2021
First vesting
date
Current
vesting
expectation1
Bertrand Bodson
–
61,156
35,000
60,000
52,000
50,000
50,000
50,000
–
–
–
–
–
–
–
50,000
25,000
43,936
25,000
–
–
–
–
–
–
25,000
25,000
35,0002
Andrew Day
Jon Hauck
Sonia Sedler
–
–
–
-
50,000
–
–
–
–
–
–
–
–
–
Total
390,936
196,156
50,000
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
61,156
5 May 2024
0%
35,000
1 Jun 2018
60,000
10 May 2019
52,000
15 May 2020
50,000
18 May 2021
50,000
3 May 2022
50,000
1 May 2023
50,000
5 May 2024
25,000
30 Sep 2022
43,936
30 Sep 2022
25,000
1 May 2023
25,000
5 May 2024
25,000
29 Jan 2024
35,000
5 May 2024
637,092
100%
100%
0%
100%
100%
100%
0%
0%
0%
1. Vesting expectation (% of award) is based on the achievement of the TSR performance condition up to 31 December 2021.
2. Sonia Sedler’s award of 35,000 shares has been reduced as part of her departure arrangements and with effect from
18 March 2022, 10,144 LTIP shares remain under this award.
Andrew Day retired from the Board on 14 June 2021. The awards disclosed above remain outstanding.
Number at
31 December
2020
Number
granted
during the
year
Number
vesting
during the
year
Andrew Day
Jon Hauck
Sonia Sedler
Bertrand Bodson1
Total
–
–
–
–
–
–
–
2,983
1,630
1,231
407
1,231
22,239
29,721
–
–
–
–
–
–
–
Number
lapsed/
forfeited
during the
year
2,983
–
–
–
–
–
2,983
Number
exercised
during the
year
Number at
31 December
2021
First vesting
date for one-third
tranche1
Current
vesting
expectation
–
–
–
–
–
–
–
–
1,630
1,231
5 May 2022
16 Sep 2022
407
5 May 2022
1,231
16 Sep 2022
22,239
26,738
1 Dec 2024
100%
100%
100%
100%
100%
1. All awards above vest in one-third annual tranches over three years, except those granted to Bertrand Bodson, which were
granted as compensation for forfeited awards from his previous employment and which vest in full after three years subject
to continued employment.
Andrew Day’s salary shares lapsed on his leaving during 2021.
Sonia Sedler’s salary shares lapsed on her leaving on 18 March 2022.
Share Option Scheme
Executive Directors no longer receive awards under the Share Option Scheme. There are no awards
outstanding under this scheme.
1
2
0
2
S
T
N
U
O
C
C
A
D
N
A
T
R
O
P
E
R
L
A
U
N
N
A
C
L
P
S
O
I
D
U
T
S
S
D
R
O
W
Y
E
K
OVERVIEWSTRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSSUPPLEMENTARY INFORMATION
REPORT OF THE NOMINATION COMMITTEE
Continued focus on succession
planning, having consideration
for diversity and the skills,
knowledge and experience of
the Board as a whole
R O S S G R A H A M
C H A I R O F T H E N O M I N AT I O N C O M M I T T E E
Roles and responsibilities
The role of the Committee is to develop and maintain a formal, rigorous and transparent procedure
for making recommendations on appointments and reappointments to the Board. In addition, it is
responsible for reviewing the succession plans for the Executive Directors and the Non-Executive
Directors. This involves:
– Reviewing the structure, size and composition of the Board and making recommendations to the
Board with regard to any changes.
– Assessing the effectiveness and performance of the Board and each of its Committees including
consideration of the balance of skills, experience, independence and knowledge of the Company
on the Board, its diversity, including gender, how the Board works together as a unit, and other
factors relevant to its effectiveness.
– Considering succession planning for Directors and members of the Executive Management Team.
–
– Reviewing the results of the annual Board performance evaluation process that relate to the
Identifying and nominating new members to the Board.
composition of the Board and the performance of individual Directors.
– Reviewing annually the time input required from Non-Executive Directors.
Diversity
Following Board changes made in the year, our Board composition is 25% female Directors. The
Company is committed to improving gender diversity at Keywords and in the industry. Information
about gender diversity across the Group can be read on pages 34, 35 and 41.
The Committee reviews the Board Diversity Policy regularly and during the year it approved several
enhancements. The policy acknowledges that an effective Board will include and make good use of
differences in the skills, regional and industry experience, background, ethnicity, gender and other
distinctions between Directors and emphasises that in identifying suitable candidates for appointment
to the Board, the Committee will consider candidates on merit against objective criteria, with due regard
for the benefits of diversity on the Board and the skills, experience, independence and knowledge which
the Board as a whole requires to be effective.
Governance processes
The Committee meets at least twice a year and at such other times as the Committee Chair or any
member of the Committee may request. In 2021, the Committee met twice. The Committee has formal
terms of reference which can be viewed on the Company’s website, www.keywordsstudios.com.
Board and Committee composition
The Committee reviewed the size, composition and skill set of the Board during the year and concluded
that there was an appropriate mix of experience, skills and knowledge to provide strong and effective
leadership. Consideration was given to the appropriate mix of industry, financial and geographical
knowledge and experience on the Board and Committees. The biographies of our Directors can be read
on pages 59 and 60.
Andrew Day brought forward his retirement plan for health reasons and left the Company in June
2021. Following that, Jon Hauck (CFO) and Sonia Sedler (appointed as an Executive Director and COO in
January 2021) acted as Joint Interim CEOs and continued to drive the Group’s strategic development,
acquisition strategy and operational performance until the appointment of Bertrand Bodson as CEO
in December 2021. Neil Thompson and Marion Sears were both appointed as Non-Executive Directors
in August 2021, adding considerable technology, industry and corporate experience and stakeholder
understanding. In March 2022, Sonia Sedler stepped down as a Director and left the Company due to
personal circumstances. Giorgio Guastalla resigned as a Director on 26 January 2022.
The Committee also recognises that by May and July 2022 respectively, David Reeves and Ross Graham
will each have completed nine years tenure. An active process is in hand to find a successor for the Chair
role, led by Charlotta Ginman and the Committee believes it is appropriate for Ross Graham to remain in
his role for a further year to ensure the smooth operation of the Board and to provide robust support
for Bertrand Bodson during his first year as CEO. David Reeves will not seek re-election at the 2022 AGM
and Charlotta Ginman will succeed David as Senior Independent Director.
The Committee believes that, as a result of the changes in the year, the Board has a good balance of
qualities and capabilities required to promote the long term success of the Company.
Details of the independent evaluation of the Board’s and Committees’ performance can be read on
page 64.
82
1
2
0
2
S
T
N
U
O
C
C
A
D
N
A
T
R
O
P
E
R
L
A
U
N
N
A
C
L
P
S
O
I
D
U
T
S
S
D
R
O
W
Y
E
K
OVERVIEWSTRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSSUPPLEMENTARY INFORMATION
REPORT OF THE NOMINATION COMMITTEE CONTINUED
Succession
The Board is committed to effectively managing leadership succession and proactively engages with
the Senior Management Team to assess the executive talent pool. The Committee and the Board
receive regular contributions from individuals in the wider executive group at meetings of the Board and
Committees throughout the year. These contributions are valuable for our decision making and have
helped the Non-Executive Directors to develop a clear understanding of the strength of the executive
team and the business of the Group as a whole.
Succession planning is designed to consider the planned process of transition to new leadership
over time and also the potential for unforeseen change over a shorter time frame. The Board and
the Committee keep in touch with the talent development teams throughout the organisation, and
are conscious of the strategic importance of promoting from within as far as possible to support the
Company’s growth plans, as set out in the Strategic report. During the year, the Board sponsored a new
programme to develop the leadership skills of the Senior Management Team.
Induction and development
All new Directors receive a comprehensive induction programme upon joining the Board, tailored to the
specific needs of the individual. This includes meetings with key senior management personnel and key
external stakeholders, to obtain a deep understanding of Keywords' operations and environment. The
Company’s Nominated Adviser (Nomad), Numis Securities Ltd, provides the initial corporate governance
training as part of a new Director’s on-boarding. Non-Executive Directors are encouraged to be involved
in specific workshops or meetings, in line with their individual areas of expertise. Further training and
development needs are assessed on a periodic basis and as part of Board and Committee evaluations.
Information on some of the Bertrand’s activities during his first 100-days with Keywords can be read
on page 12.
Role of the Company Secretary
The Directors had access to the Company Secretary for advice on corporate governance matters.
Since the year end, we have appointed Andrew Kennedy, our General Counsel, as Company Secretary.
2022 plan
The Committee has two meetings scheduled for 2022. Attention will continue to be focused on the
Senior Management Team in addition to succession planning for the Chair role.
R O S S G R A H A M
C H A I R O F T H E N O M I N AT I O N C O M M I T T E E
30 March 2022
83
1
2
0
2
S
T
N
U
O
C
C
A
D
N
A
T
R
O
P
E
R
L
A
U
N
N
A
C
L
P
S
O
I
D
U
T
S
S
D
R
O
W
Y
E
K
OVERVIEWSTRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSSUPPLEMENTARY INFORMATION
REPORT OF THE ESG COMMITTEE
As Chair of the ESG Committee,
I’m very pleased to present our
first ESG Committee Report
G E O R G E S F O R N AY
C H A I R O F T H E E S G C O M M I T T E E
The global focus on environmental, social and governance (ESG) matters is sharpening, and we
acknowledge that our shareholders, employees, customers and suppliers are becoming increasingly
interested in our ESG programme. We see this as a positive development because we’re conscious of
the impact climate change may have on our business, as well as the social impact of our business. At
Keywords, we recognise a collective responsibility and accountability to take account of the interests
of our stakeholders and to contribute positively to the environmental and social initiatives of our
customers and wider industry.
Established in 2021, this was the first year of activity for the ESG Committee but we’re already proud of
the progress we’ve made. The following examples, described in more detail in our Responsible business
report on pages 37 to 49, illustrate our progress in the year:
– People – we conduct an annual Global Employee Engagement Survey and our eNPS score
improved from 22 in 2020 to 42 in 2021, showing a strong improvement in almost all our studio
locations. The survey had a 69% response rate
– Planet – rollout of the Group's first Environmental Policy
– Gender diversity – this remains a major challenge across the gaming industry, particularly the lack
of female senior managers and engineers, and we have plans to improve this – our partnership with
Women in Games demonstrates our commitment to making this a business priority
– MSCI ESG Rating improved to A from BBB
Let me thank the members of the Committee, the management team and over 10,000 Keywordians
across the world for their support and continued efforts in driving our ESG programmes forward.
Roles and responsibilities
The role of the ESG Committee is to implement and monitor initiatives across the Group which aim to
improve the Group’s impact on its people, communities and the planet. The remit of the ESG Committee
is to oversee the following areas which have been identified as environmental, social, and governance
priorities for our business and key stakeholders: people, planet, client, community and governance.
The ESG Committee is supported by an executive subcommittee, the Responsible Business Committee,
which itself is supported by regional responsible business committees and the DE&I Committee.
Activities during the year
Four meetings were held during the year. The Committee received presentations on the investor
context and existing initiatives across the Group (including Women in Games) and agreed the strategy,
framework and priorities for the ESG programme. Various Group policies have been reviewed and
updated to support initiatives to be rolled out in 2022.
Given the importance of people to Keywords, immediate focus was given to social areas of the ESG
programme. A comprehensive global employee survey was conducted to measure our employee net
promoter score (eNPS), with a response rate of 69%, and the results were discussed in full by the
Committee. Several action plans have been developed to address key themes arising from this survey,
including Group communications, wellness and professional development programmes.
Details of our initiatives can be found in the Responsible business report on pages 37 to 49.
84
1
2
0
2
S
T
N
U
O
C
C
A
D
N
A
T
R
O
P
E
R
L
A
U
N
N
A
C
L
P
S
O
I
D
U
T
S
S
D
R
O
W
Y
E
K
OVERVIEWSTRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSSUPPLEMENTARY INFORMATION
REPORT OF THE ESG COMMITTEE CONTINUED
85
Framework
The table below sets out the framework for our ESG programme, including our five pillars, key initiatives
and metrics.
People
Planet
Client
Community
Governance
Promote a positive workplace
environment and be a leader in
attracting a diverse, equal, and
inclusive workforce
Reduce our impact
through Sustainable
Studios
Improve client
experience through
technology and
innovation
Encourage team
outreach and
support in local
communities
Operate to the
highest standards of
honesty, integrity,
and ethical conduct
1
2
0
2
S
T
N
U
O
C
C
A
D
N
A
T
R
O
P
E
R
L
A
U
N
N
A
C
L
P
S
O
I
D
U
T
S
S
D
R
O
W
Y
E
K
DE&I
– Global DE&I
Council
– Women in
Games
– Female
empowerment
programme
– Affinity groups
– Board diversity
– Group diversity
People
– Mental health
and well-being
programme
– Training and
development
– Hardship fund
– Employee
Recognition
(e-cards)
– Staff surveys
(annual and
pulse)
– Glassdoor
monitoring
2022 plan
– Sustainable
studios
– Environmental
policy
– Data security
– Strategic
partnerships
– Keywords
Cares matching
programme
– Outreach
activities
– Scholarships
– Local volunteering
– Code of Conduct
awareness
– Policy training
– Whistleblowing
awareness
– GHG recording
– Customer
satisfaction
scores
– Number of clients
with three or
more services
– Keywords Cares
programme
monitoring
– Compliance
reports
– Whistleblowing
reports
The Committee has five meetings scheduled for 2022. Attention will be focused on enhancing initiatives
across our five priority areas and establishing the targets and key performance indicators to monitor and
report on our progress. This will include work on a three-year plus plan (current year plus 2023–2025).
G E O R G E S F O R N AY
C H A I R O F T H E E S G C O M M I T T E E
30 March 2022
OVERVIEWSTRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSSUPPLEMENTARY INFORMATION
DIRECTORS’ REPORT
86
The Directors present the Annual Report together with both the audited consolidated financial
statements and the parent Company (Keywords Studios plc) financial statements for the year ended
31 December 2021.
Dividends
The results for the year are set out in the Financial Statements section of this report. As described in
the Financial and operating overview section, the Board is proposing a final dividend of 1.45 pence per
share (2020: nil), bringing the total dividend for 2021 to 2.15 pence per share (2020: nil).
Directors and changes to the Board
The Directors of the Company during the year were Ross Graham, Bertrand Bodson (appointed on 1
December 2021), Andrew Day (retired on 14 June 2021), David Reeves, Giorgio Guastalla (resigned on
26 January 2022), Georges Fornay, Charlotta Ginman, Marion Sears (appointed on 13 August 2021), Neil
Thompson (appointed on 13 August 2021), Jon Hauck and Sonia Sedler (appointed on 18 January 2021
and stepped down as a Director on 18 March 2022). Details of current members of the Board are set out
on pages 59 and 60.
A list of Directors, their interests in the ordinary share capital of the Company, their interests in its
long-term performance share plan and details of their options over the ordinary share capital of the
Company are given in the Directors’ remuneration report on pages 69 to 81. No Director had a material
interest in any significant contract, other than a service contract or contract for services, with the
Company or any of its operating companies at any time during the year.
Directors’ indemnity provisions
As permitted by the Articles of Association and the Companies Act, the Directors had the benefit of an
indemnity from the Company in respect of liability incurred as a result of their office throughout the
financial period and at the date of approval of these financial statements. The Group also purchased
and maintained throughout the financial period Directors’ and Officers’ liability insurance in respect of
itself and its Directors.
Going concern
The Directors have performed an assessment, including a review of the Group’s business activities,
performance, position, principal risks and uncertainties (as set out in the Strategic report on pages
1 to 58), as well as the Group’s budget for the 2022 financial year and its longer term plans. After
making enquiries, the Directors consider it appropriate to continue to adopt the going concern basis
in preparing the consolidated and Company financial statements. In doing so, the Directors have
considered the uncertain nature of the Ukrainian crisis and the COVID-19 pandemic, but have noted:
– The net cash position of the Group
– The strong cash flow performance of the Group through the year
– The continued demand for the Group’s services
– The ability to operate most of its services in a work from home model where studios are
temporarily closed
– The historical resilience of the broader video games industry in times of economic downturn
– The ability of the Group to flex its cost base in response to a reduction in trading activity
1
2
0
2
S
T
N
U
O
C
C
A
D
N
A
T
R
O
P
E
R
L
A
U
N
N
A
C
L
P
S
O
I
D
U
T
S
S
D
R
O
W
Y
E
K
The Directors have also considered the Group’s strong liquidity position, with net cash of €105.6m and
committed undrawn facilities under the Revolving Credit Facility (RCF) of €150m as at 31 December 2021.
The Directors have applied downside sensitivities to the Group’s cash flow projections to evaluate the
Group’s ability to withstand a further prolonged period of studio closures as a result of the COVID-19
pandemic, leading to a reduction in production capability and a worst case scenario of withdrawing from
the Group's operations in Russia. Under this severe case the Group would have sufficient liquidity and
remain within its banking covenants. The Directors have a reasonable expectation that the Company
and the Group have adequate resources to continue to operate and meet their liabilities as they fall due
for the foreseeable future, a period considered to be at least 12 months from the date of these full year
financial statements and therefore the going concern basis of preparation continues to be appropriate.
Financial risk management
The Group’s approach to capital management is shown in note 25 of the financial statements. The
Group’s exposure and approach to liquidity, credit, interest rate and foreign currency risk is shown in
note 24 of the financial statements. Our approach to risk management generally and our principal risks
can be found in the Strategic report on pages 57 and 58.
Political donations
No political donations were made in the year, in line with our Group policy.
Share capital structure
At 31 December 2021, the Company’s issued share capital was 76,275,775 ordinary shares of one pence
each. Further details of the Company’s issued share capital are given in note 22 to the Consolidated
Financial Statements on pages 115 to 117. The Company’s ordinary shares rank pari passu in all respects
with each other, including for voting purposes and for all dividends and each share carries the right to
one vote at general meetings of the Company.
Significant shareholdings
At 28 February 2022, the Company was aware of the following shareholdings of 3% or more of its issued
share capital on that date:
Name
Capital Group
Franklin Templeton
Liontrust Asset Management
Octopus Investments
Andrew Day
T Rowe Price Global Investments
Aberdeen Standard Investments
Comgest
Shares
6,362,547
6,241,117
3,943,686
3,849,284
2,946,573
2,665,401
2,662,367
2,298,232
%
8.33
8.17
5.17
5.04
3.86
3.49
3.49
3.01
OVERVIEWSTRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSSUPPLEMENTARY INFORMATION
DIRECTORS’ REPORT CONTINUED
Subsidiary undertakings
Employee involvement
A list of the Group’s subsidiary undertakings and non-UK branches is provided in the note 28 of the
financial statements on pages 123 and 124.
Significant events and future developments
Important events since the financial year end are described in note 29 of the financial statements, the
Chief Executive Officer’s review on pages 10 to 14, the service line review on pages 25 to 33 and the
Financial and operating overview on page 53 to 56. Future developments are described in the Strategy
section of the Strategic report on page 20.
The Group provides employees with information on matters of concern to them so that their views
can be taken into account when making decisions that are likely to affect their interests. A summary
of the methods we use to engage with our employees are provided in the Our people, our culture
section of the Annual Report on pages 34 to 36, the Responsible business report on pages 37 to 41
and the Section 172(1) statement on pages 51 and 52. Approximately 9% of the workforce participate
in employee share schemes operated by the Company (see page 74). We continue to review options to
expand participation in employee share schemes to improve incentives and align them with the long
term success of the Group.
Change of control
Corporate responsibility
Information on agreements between the Company and its Directors providing for compensation for loss
of office of employment (including details of change of control provisions in share schemes) is set out
on page 75. Otherwise, there are no agreements between the Company and its employees providing for
compensation for loss of office or employment that occurs because of a takeover bid.
Disclosures concerning emissions
Keywords seeks to be a socially responsible Group which has a positive impact on the communities
in which it operates. 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. Further details are provided in the Responsible business report on pages 37 to 49.
The disclosures relating to emissions are set out in the Responsible business report on page 46.
Disclosure of information to auditor
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 customers.
Keywords’ average number of employees was 9,493 during 2021. This permanent headcount is
supplemented with staff on short-term contracts as activity changes throughout the year.
Employment policy
Keywords has a range of employment policies covering such issues as diversity, employee wellbeing
and equal opportunities. The Group continues to give full and fair consideration to applications for
employment made by disabled persons, having regard to their particular skills and experience.
Appropriate arrangements are made for the continued employment and training, career development
and promotion of disabled persons employed by the Group, including making reasonable adjustments
where required. In the event of any colleague becoming disabled during their career at Keywords, every
effort is made by the Group to ensure their continued employment and engagement with the business.
As far as the Directors are aware, there is no relevant audit information (that is, information needed by
the Group’s Auditor in connection with preparing their Report) of which the Group’s Auditor is unaware,
and each Director has taken all reasonable steps that they ought to have taken as a Director in order
to make themself aware of any relevant audit information and to establish that the Group’s Auditor is
aware of that information.
By order of the Board
J O N H A U C K
C H I E F F I N A N C I A L O F F I C E R
30 March 2022
87
1
2
0
2
S
T
N
U
O
C
C
A
D
N
A
T
R
O
P
E
R
L
A
U
N
N
A
C
L
P
S
O
I
D
U
T
S
S
D
R
O
W
Y
E
K
OVERVIEWSTRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSSUPPLEMENTARY INFORMATION
STATEMENT OF DIRECTORS’ RESPONSIBILITIES
The Directors are responsible for preparing the Annual Report and financial statements.
Website publication
The Directors are responsible for ensuring the Annual Report and financial statements are made
available on a website. Financial statements are published on the Group’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 Group’s
website 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
J O N H A U C K
C H I E F F I N A N C I A L O F F I C E R
30 March 2022
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
withUK adopted international accounting standards in conformity with the requirements of the
Companies Act 2006.
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;
– State whether international accounting standards in conformity with the requirements of
the Companies Act 2006 have been followed, subject to any material departures disclosed
and explained in the Group and Company financial statements respectively; and
– Prepare the financial statements on a 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 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 section on pages 59 and 60, confirm that:
– So far as the 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 they ought to have taken as a Director in order to make
themself aware of any relevant audit information and to establish that the Company’s auditors
are aware of that information.
This confirmation is given and should be interpreted in accordance with the provisions of section 418 of
the Companies Act 2006.
88
1
2
0
2
S
T
N
U
O
C
C
A
D
N
A
T
R
O
P
E
R
L
A
U
N
N
A
C
L
P
S
O
I
D
U
T
S
S
D
R
O
W
Y
E
K
OVERVIEWSTRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSSUPPLEMENTARY INFORMATION
INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF KEYWORDS STUDIOS PLC
Opinion
Conclusions relating to going concern
We have audited the financial statements of Keywords Studios plc (the ‘parent company’) and its
subsidiaries (the ‘group’) for the year ended 31 December 2021 which comprise the Group and Parent
Company Statements of Financial Position, the Group Statement of Comprehensive Income, the
Group and Parent Company Statements of Cash Flows, the Group and Parent Company Statements
of Changes in Equity, and the notes to the financial statements, including a summary of significant
accounting policies.
The financial reporting framework that has been applied in the preparation of the financial is
applicable law and United Kingdom adopted international accounting standards, and as regards the
Parent company financial statements, as applied in accordance with the provisions of the Companies
Act 2006.
In our opinion:
the financial statements give a true and fair view of the state of the group’s and of the parent
company’s affairs as at 31 December 2021 and of the group’s profit for the year then ended;
In auditing the financial statements, we have concluded that the directors’ use of the going concern
basis of accounting in the preparation of the financial statements is appropriate.
Our evaluation of the Directors assessment of the group and parent company’s ability to continue to
adopt the going concern basis of accounting in the preparation of the financial statements included;
– We considered as part of our risk assessment the nature of the company, its business
model and related risks including, where relevant, the impact of the Covid-19 pandemic, the
requirements of the applicable financial reporting framework and the system of internal control.
– We have reviewed the Directors’ assessment of the Group and Company’s ability to continue
as a going concern, challenging the underlying data and key assumptions used to make the
assessment, and stress tested the directors’ plans for future actions in relation to their going
concern assessment.
– We have reviewed the historical accuracy of budgeting and forecasts made by the Group and
Company as an indicator as to their reliability,
the group financial statements have been properly prepared in accordance with UK adopted
international accounting standards in conformity with the requirements of the Companies
Act 2006;
– We have reviewed the performance of the business in the year, including its cash flow
performance, liquidity position, and financing facilities, up to and including the date of signing
the audit opinion.
–
–
–
the parent company financial statements have been properly prepared in accordance with
UK adopted international accounting standards in conformity with the requirements of the
Companies Act 2006 and as applied in accordance with the provisions of the Companies Act
2006; and
–
the financial statements have been prepared in accordance with the requirements of the
Companies Act 2006.
Basis for opinion
We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK))
and applicable law. Our responsibilities under those standards are further described in the Auditor’s
responsibilities for the audit of the financial statements section of our report. We believe that the
audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Independence
We are independent of the Group and Parent Company in accordance with the ethical requirements
that are relevant to our audit of the financial statements in the UK, including the FRCs Ethical
Standard as applied to listed entities, and we have fulfilled our other ethical responsibilities in
accordance with these requirements.
Based on the work we have performed, we have not identified any material uncertainties relating to
events or conditions that, individually or collectively, may cast significant doubt on the group’s and
parent company's ability to continue as a going concern for a period of at least twelve months from
when the financial statements are authorised for issue.
Our responsibilities and the responsibilities of the directors with respect to going concern are
described in the relevant sections of this report.
An overview of the scope of our audit
The Group has diverse international operations. Our audit was scoped by obtaining an understanding
of the Group and its environment, including the group wide controls, and assessing the risks of
material misstatement identified at group level. We also assessed the risk of management override of
internal controls, including assessing whether there was evidence of bias by the Directors that may
have represented a risk of material misstatement.
Significant components
Based on our assessment, we have completed full scope audit procedures in relation to the following
entities; Keywords Studios plc, Keywords International Limited, Sperasoft Studios LLC, Studio Gobo
Limited, Electric Square Limited, Keywords Studios QC-Games Inc, Keywords France, Sperasoft Inc, D3T
Limited, Tantalus Media Pty Limited and Keywords Studios Italia S.R.L (formerly Binari Sonori S.R.L &
Sillabit S.R.L).
89
1
2
0
2
S
T
N
U
O
C
C
A
D
N
A
T
R
O
P
E
R
L
A
U
N
N
A
C
L
P
S
O
I
D
U
T
S
S
D
R
O
W
Y
E
K
OVERVIEWSTRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSSUPPLEMENTARY INFORMATION
INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF KEYWORDS STUDIOS PLC CONTINUED
90
Specified audit procedures
In addition, specific audit procedures have been completed in relation to certain material balances and
transaction streams in VMC Embedded Services, Keywords Canada Holdings Inc (formerly Volt Canada
Inc), Keywords Studios QC-Tech Inc (formerly Alchemic Dream Inc), High Voltage Software Inc, and
Keywords Studios Japan.
1 Business Combinations
Key Audit Matter
The Group has entered into a significant number of acquisitions and business combinations
throughout the year, which have had a material and extensive impact on the group’s financial
performance and position.
The above full scope and specified audit procedure entities represent 70% of group revenues.
Desktop review procedures have been performed on the remaining non-significant components in
the group.
The Group auditor, BDO Dublin, has audited Keywords Studios plc, Keywords International Limited,
Studio Gobo Limited, Electric Square Limited and D3T Limited. Their involvement in the work
performed by other component auditors varies by location and involves, at a minimum, direction of
the audit procedures to be completed, and review of the reports received in relation to the results of
the audit work undertaken by component audit teams.
In the current year, as a result of the ongoing Covid 19 restrictions, the Senior Statutory auditor or
senior members of the Group audit team have completed their oversight and review work of other
locations remotely.
Parent Company and consolidation
At the parent company level we have also tested the consolidation process and carried out additional
procedures to confirm our conclusion that there were no significant risks of material misstatement
of the aggregated financial information of the remaining components not subject to full scope or
specific procedures.
Key audit matters
Key audit matters are those matters that, in our professional judgement, were of most significance in
our audit of the financial statements of the current period and include the most significant assessed
risks of material misstatement (whether or not due to fraud) we identified, including those which had
the greatest effect on: the overall audit strategy, the allocation of resources in the audit; and directing
the efforts of the engagement team. These matters were addressed in the context of our audit of the
financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate
opinion on these matters.
Following the purchase price allocations (in which identifiable assets and liabilities assumed were
recognised at fair value), €325m (2020: €212m) of goodwill has been recognised cumulatively to date.
The fair value of certain identifiable assets acquired and liabilities assumed in a business combination
is different from their carrying amounts in the acquired statements of financial position which
can give rise to fair value adjustments as part of the purchase price allocations of these business
combinations. Accordingly, the cumulative acquisitions are material and significant judgement is
required in relation to the purchase price allocations including the resulting goodwill.
Management determined the fair value of the identifiable assets and liabilities and notably the value
of the customer relationships. The valuation of these assets was primarily based upon the expected
future cash flows related to these acquisitions.
A number of these acquisitions have also included deferred consideration in the form of shares and
cash payments at future dates, which add further complexity with regard to the acquisition-date fair
value of such consideration as part of the consideration transferred in exchange for the acquisitions
and business combinations.
Related Disclosures
Refer to note 2 of the accompanying consolidated financial statements for the accounting policy in
relation to business combinations. In addition, detailed disclosures have been made in relation to the
current year business combinations in note 27 to the financial statements.
Audit Response
We have reviewed the underlying contracts and share purchase agreements relating to each
acquisition to assess whether the basis for treatment of the acquisitions is in accordance with the
accounting policy and International Financial Reporting Standard 3 – Business Combinations.
We have assessed the carrying value of each material balance at the date of acquisition, and have
reviewed management’s assessments of the fair value of the assets and liabilities acquired, and in
particular, the methodology applied in the valuation of intangible assets and goodwill.
Our procedures included;
– We reviewed the methodology applied to identify the categories of intangible assets,
– We evaluated whether the cash flow forecasts used in the valuation are consistent with
information approved by the Board and have reviewed the historical accuracy of management’s
forecasts in order to assess the reliance which can be placed upon management’s forecasting,
– We have challenged the key assumptions such as the growth factors and discount rates
by comparing them to relevant market rates and historic acquisitions to evaluate whether
management had been consistent in its approach to valuations, and
– We assessed the adequacy of the acquisition disclosures in the Group’s financial statements.
1
2
0
2
S
T
N
U
O
C
C
A
D
N
A
T
R
O
P
E
R
L
A
U
N
N
A
C
L
P
S
O
I
D
U
T
S
S
D
R
O
W
Y
E
K
OVERVIEWSTRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSSUPPLEMENTARY INFORMATION
INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF KEYWORDS STUDIOS PLC CONTINUED
91
In addition, we have examined the terms of all business combinations to assess whether the fair value
of any deferred / contingent consideration is treated appropriately in accordance with the group
accounting policy and IFRS 3.
We also examined the key post combination employment contracts of former shareholders of the
acquired entities, reviewing the substance of the transactions and considered whether they have been
appropriately accounted for in line with the group accounting policy and the requirements of IFRS 3.
2 Valuation of goodwill and intangible assets
Key Audit Matter
As a result of both the current year and prior year acquisitions, the group has amassed significant
intangible assets and goodwill balances. These balances are material to the financial statements,
with goodwill carrying value of €325m (2020: €212m), and intangibles carrying value of €29m (2020:
€28.8m). The valuation of goodwill and other intangible assets is significant to our audit due to the
fact that the impairment test calculations are based on several key assumptions which are estimated
by management, and are by nature judgemental. Key assumptions include the expected future cash
flows for the forecasting period, the discount rates and perpetual growth rate.
The Directors have concluded that there is one cash generating unit (“CGU”) in the group, for the
purposes of impairment assessment.
Related Disclosures
Refer to note 2 of the accompanying consolidated financial statements for the accounting policy in
relation to business combinations, intangible assets and goodwill. In addition, detailed disclosures
have been made in relation to the current year business combinations in note 27 to the financial
statements. Detailed disclosures are made in note 11 relating to goodwill and intangible assets.
Audit Response
We have reviewed the Director’s assessment of the carrying value of goodwill and intangible assets.
We have challenged the Directors assumptions in relation to CGU identification, cash flow forecasting,
discount rates applied, and future growth rates.
Our procedures included;
– We have evaluated that the CGU identified is the lowest level at which management monitors
goodwill and intangible assets,
– We have reviewed the accuracy of the cash flow forecasts used, and ensured that these
represent those which are reviewed by the Board,
– We have reviewed and assessed the accuracy of the historical forecasts prepared by the Group,
– We have assessed the key estimates and inputs into the discounted cash flow models, including
the growth rates assumed, and tested these where possible to supporting evidence such as
post year end activities,
– We have completed sensitivity analyses in relation to the cash flow models and have stress
tested all key assumptions used, and
– We have considered the appropriateness of the disclosures relating to the valuation of goodwill
and intangible assets in the financial statements.
1
2
0
2
S
T
N
U
O
C
C
A
D
N
A
T
R
O
P
E
R
L
A
U
N
N
A
C
L
P
S
O
I
D
U
T
S
S
D
R
O
W
Y
E
K
3 Revenue Recognition – cut off
Key Audit Matter
Although the majority of the Group’s revenue contracts are non complex in nature, there is a material
accrued revenue balance as at 31 December 2021 of €10m (2020: €9.2m). We focused on this area due
to the risk of management manipulation of the timing of revenue recognition and the cut off relating
to accrued revenue at the year end.
Related Disclosures
Refer to note 2 of the accompanying consolidated financial statements for the accounting policies of
the Group in relation to Revenue Recognition.
Audit Response
We have performed audit procedures to understand the application of the revenue recognition
accounting policies and to assess whether for each material revenue stream, that revenue has been
recognised correctly in accordance with the Group Revenue Recognition policy. We have completed
a substantive based audit approach across all full scope locations and completed specific audit
procedures on a sample basis on less significant components of the group.
Our audit work included, but was not restricted to, reviewing a sample of transactions both
throughout the year and around the year end, to assess that the stage of completion and therefore
accrued revenue is reflective of the underlying project status. We have tested these transactions
to supporting documentation such as sales orders and contracts from customers, project status
evidence, and subsequent billing. When examining samples of transactions around the year end we
have assessed whether the revenue has been recognised in the correct period.
Our application of materiality
We apply the concept of materiality both in planning and performing our audit, and in evaluating
the effect of misstatements. We consider materiality to be the magnitude by which misstatements,
including omissions in the financial statements, could influence the economic decisions of reasonable
users that are taken on the basis of the financial statements.
Importantly, misstatements below these levels will not necessarily be evaluated as immaterial as we
also take into account the nature of identified misstatements, and in particular the circumstances of
their occurrence, when evaluating their effect on the financial statements as a whole.
We determined materiality for the financial statements as a whole to be €4.4m, which represents
5% of adjusted profit before tax, 9% of profit before taxation, and represents less than 1% of equity.
We consider profit before income tax, and adjusted profit before tax, to be the most significant
determinant of the group’s financial performance used by shareholders and other users and therefore
consider this as an appropriate basis for materiality. Our materiality is higher than the level we set for
the year ended 31 December 2020 (€3m), due to the increased profits of the group.
We assessed the parent company’s materiality using a % of net assets as the most appropriate
benchmark as the parent company is an investment holding Company. However we capped this same
level as the group materiality.
OVERVIEWSTRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSSUPPLEMENTARY INFORMATION
INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF KEYWORDS STUDIOS PLC CONTINUED
92
Whilst materiality for the financial statements as a whole was €4.4m, each component of the group
was audited to a lower level of materiality within a range from €3.1m to €2.6m. Audits of these
components were performed at a materiality level calculated by reference to a proportion of group
materiality appropriate to the relative scale of the business concerned.
We agreed with the Audit Committee that we would report to the Committee all individual differences
identified during the course of our audit in excess of €220,000 (2020: €150,000). We also agreed to
report differences below this threshold that, in our view, warranted reporting on qualitative grounds.
Other information
The directors are responsible for the other information. The other information comprises the
information included in the annual report, other than the financial statements and our auditor’s report
thereon. Our opinion on the financial statements does not cover the other information and, except
to the extent otherwise explicitly stated in our report, we do not express any form of assurance
conclusion thereon.
In connection with our audit of the financial statements, our responsibility is to read the other
information and, in doing so, consider whether the other information is materially inconsistent with
the financial statements or our knowledge obtained in the audit or otherwise appears to be materially
misstated. If we identify such material inconsistencies or apparent material misstatements, we are
required to determine whether there is a material misstatement in the financial statements or a
material misstatement of the other information. If, based on the work we have performed, we conclude
that there is a material misstatement of this other information, we are required to report that fact.
We have nothing to report in this regard.
Opinions on other matters prescribed by the Companies Act 2006
In our opinion, based on the work undertaken in the course of the audit:
–
–
the information given in the strategic report and the directors’ report for the financial year for
which the financial statements are prepared is consistent with the financial statements; and
the strategic report and the directors’ report have been prepared in accordance with applicable
legal requirements.
Matters on which we are required to report by exception
In the light of the knowledge and understanding of the group and the parent company and its
environment obtained in the course of the audit, we have not identified material misstatements
in the strategic report or the directors’ report.
1
2
0
2
S
T
N
U
O
C
C
A
D
N
A
T
R
O
P
E
R
L
A
U
N
N
A
C
L
P
S
O
I
D
U
T
S
S
D
R
O
W
Y
E
K
We have nothing to report in respect of the following matters in relation to which the Companies Act
2006 requires us to report to you if, in our opinion:
– adequate accounting records have not been kept by the parent company, or returns adequate
for our audit have not been received from branches not visited by us; or
–
the parent company financial statements are not in agreement with the accounting records
and returns; or
–
certain disclosures of directors’ remuneration specified by law are not made; or
– we have not received all the information and explanations we require for our audit.
Responsibilities of directors
As explained more fully in the directors’ responsibilities statement set out on page 88 the directors
are responsible for the preparation of the financial statements and for being satisfied that they give
a true and fair view, and for such internal control as the directors determine is necessary to enable
the preparation of financial statements that are free from material misstatement, whether due to
fraud or error.
In preparing the financial statements, the directors are responsible for assessing the group’s and the
parent company’s ability to continue as a going concern, disclosing, as applicable, matters related to
going concern and using the going concern basis of accounting unless the directors either intend to
liquidate the group or the parent company or to cease operations, or have no realistic alternative but
to do so.
Auditor’s responsibilities for the audit of the financial statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole
are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report
that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee
that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement
when it exists.
Misstatements can arise from fraud or error and are considered material if, individually or in
aggregate, they could reasonably be expected to influence the economic decisions of users taken
on the basis of these financial statements.
The objectives of our audit, in respect to fraud, are; to identify and assess the risks of material
misstatement of the financial statements due to fraud; to obtain sufficient appropriate audit
evidence regarding the assessed risks of material misstatement due to fraud, through designing
and implementing appropriate responses; and to respond appropriately to fraud or suspected fraud
identified during the audit. However, the primary responsibility for the prevention and detection of
fraud rests with both those charged with governance of the entity and management.
OVERVIEWSTRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSSUPPLEMENTARY INFORMATION
INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF KEYWORDS STUDIOS PLC CONTINUED
93
Our approach was as follows:
– We obtained an understanding of the legal and regulatory frameworks that are applicable to
the Group and Company. We determined that the most significant which are directly relevant
to specific assertions in the financial statements are those related to the reporting framework
(United Kingdom adopted International Accounting Standards and the Companies Act 2006).
– We understood how the Group and Company are complying with those legal and regulatory
frameworks by making enquiries to management and those responsible for legal and
compliance procedures and the Company secretary. We corroborated our enquiries through
our review of board minutes.
– We assessed the susceptibility of the Group and Company’s financial statements to material
misstatement, including how fraud might occur by meeting with management from various
parts of the business to understand where it is considered there was a susceptibility of fraud.
We considered the programs and controls that the Group and Company have established to
address risks identified, or that otherwise prevent, deter and detect fraud; and how senior
management monitors those programs and controls. Where the risk was considered to be
higher, we performed audit procedures to address each identified fraud risk. These procedures
included testing manual journals and were designed to provide reasonable assurance that the
financial statements were free of fraud or error.
A further description of our responsibilities for the audit of the financial statements is located on the
Financial Reporting Council’s website at: https://www.frc.org.uk/auditors/audit-assurance/auditor-s-
responsibilities-for-the-audit-of-the-fi/description-of-the-auditor%E2%80%99s-responsibilities-for.
This description forms part of our auditor’s report.
Use of our report
This report is made solely to the company’s members, as a body, in accordance with Chapter 3 of
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 our audit work, for
this report, or for the opinions we have formed.
S T E P H E N M C C A L L I O N ( S E N I O R S TAT U T O R Y A U D I T O R )
F O R A N D O N B E H A L F O F B D O , S TAT U T O R Y A U D I T O R
D U B L I N 2 , I R E L A N D
30 March 2022
1
2
0
2
S
T
N
U
O
C
C
A
D
N
A
T
R
O
P
E
R
L
A
U
N
N
A
C
L
P
S
O
I
D
U
T
S
S
D
R
O
W
Y
E
K
OVERVIEWSTRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSSUPPLEMENTARY INFORMATION
Earnings per share
Basic earnings per ordinary share
Diluted earnings per ordinary share
Years ended 31 December
2021
€ cent
45.16
42.98
2020
€ cent
30.32
28.71
8
8
The notes from pages 98 to 125 form an integral part of these consolidated financial statements.
On behalf of the Board
B E R T R A N D B O D S O N
D I R E C T O R
J O N H A U C K
D I R E C T O R
30 March 2022
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
Revenue from contracts with customers
Cost of sales
Gross profit
Investment income
Share-based payments expense
Costs of acquisition and integration
Amortisation and impairment of intangible assets
COVID-19 government subsidies claimed
Total of items excluded from adjusted profit measures
Other administration expenses
Administrative expenses
Operating profit
Financing income
Financing cost
Profit before taxation
Taxation
Profit after taxation
Note
4
5
5
23
5
11
6
6
7
Years ended 31 December
2021
€'000
512,200
(312,086)
200,114
–
(16,394)
(7,972)
(13,688)
–
(38,054)
(111,695)
(149,749)
50,365
2,045
(4,427)
47,983
(13,875)
34,108
2020
€'000
373,538
(231,766)
141,772
1,437
(15,350)
(2,650)
(8,808)
9,231
(17,577)
(84,513)
(102,090)
41,119
76
(8,701)
32,494
(11,027)
21,467
Other comprehensive income:
Items that will not be reclassified subsequently to profit or loss
Actuarial gain/(loss) on defined benefit plans
20
27
(421)
Items that may be reclassified subsequently to profit or loss
Exchange gain/(loss) in net investment in foreign operations
Exchange gain/(loss) on translation of foreign operations
Total comprehensive income/(expense)
Profit/(loss) for the period attributable to:
Owners of the parent
Non-controlling interest
Total comprehensive income/(expense) attributable to:
Owners of the parent
Non-controlling interest
8,228
14,581
56,944
34,175
(67)
34,108
57,011
(67)
56,944
(4,909)
(10,843)
5,294
21,552
(85)
21,467
5,379
(85)
5,294
94
1
2
0
2
S
T
N
U
O
C
C
A
D
N
A
T
R
O
P
E
R
L
A
U
N
N
A
C
L
P
S
O
I
D
U
T
S
S
D
R
O
W
Y
E
K
OVERVIEWSTRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSSUPPLEMENTARY INFORMATION
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
At 31 December
Note
2021
€’000
2020
€’000
Non-current assets
Intangible assets
Right of use assets
Property, plant and equipment
Deferred tax assets
Investments
Current assets
Cash and cash equivalents
Trade receivables
Other receivables
Corporation tax recoverable
Current liabilities
Trade payables
Other payables
Loans and borrowings
Corporation tax liabilities
Lease liabilities
Net current assets/(liabilities)
Non-current liabilities
Other payables
Employee defined benefit plans
Loans and borrowings
Deferred tax liabilities
Lease liabilities
Net assets
11
12
13
21
14
15
16
17
18
19
17
20
18
21
19
105,710
68,067
49,110
6,764
229,651
11,122
108,423
81
12,635
11,217
143,478
86,173
18,254
3,088
48
13,840
26,418
61,648
472,120
103,070
47,832
38,665
–
189,567
8,170
62,958
73
12,568
7,361
91,130
98,437
1,994
2,693
122
10,575
21,503
36,887
371,235
Equity
353,943
240,810
Share capital
35,991
36,018
21,468
175
27,807
26,419
14,649
–
Share capital – to be issued
Share premium
Merger reserve
Foreign exchange reserve
447,595
309,685
Shares held in Employee Benefit Trust (“EBT”)
Share-based payment reserve
Retained earnings
Non-controlling interest
Total equity
Note
22
22
22
22
22
At 31 December
2021
€’000
2020
€’000
904
2,185
38,549
273,677
12,821
(1,997)
48,193
97,905
472,237
(117)
879
13,047
22,951
250,276
(9,988)
(1,997)
31,799
64,318
371,285
(50)
472,120
371,235
The notes from pages 98 to 125 form an integral part of these consolidated financial statements.
The financial statements were approved and authorised for issue by the Board on 30 March 2022.
On behalf of the Board
B E R T R A N D B O D S O N
D I R E C T O R
J O N H A U C K
D I R E C T O R
30 March 2022
95
1
2
0
2
S
T
N
U
O
C
C
A
D
N
A
T
R
O
P
E
R
L
A
U
N
N
A
C
L
P
S
O
I
D
U
T
S
S
D
R
O
W
Y
E
K
OVERVIEWSTRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSSUPPLEMENTARY INFORMATION
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
At 01 January 2020
Profit/(loss) for the period
Other comprehensive income
Total comprehensive income for the period
Contributions by and contributions to the owners:
Shares issued for cash
Share-based payments expense
Share options exercised
Acquisition-related issuance of shares
Contributions by and contributions to the owners
At 31 December 2020
Profit/(loss) for the period
Other comprehensive income
Total comprehensive income for the period
Contributions by and contributions to the owners:
Share-based payments expense
Share options exercised
Employee Share Purchase Plan
Dividends
Acquisition-related issuance of shares
Contributions by and contributions to the owners
At 31 December 2021
Share capital
€’000
Share capital–
to be issued
€’000
780
5,310
Share
premium
€’000
20,718
–
–
–
77
–
16
6
99
–
–
–
–
–
–
7,737
7,737
879
13,047
–
–
–
–
11
–
–
14
25
904
–
–
–
–
–
–
–
(10,862)
(10,862)
2,185
–
–
–
–
–
2,233
–
2,233
22,951
–
–
–
–
4,929
398
–
10,271
15,598
38,549
Merger
reserve
€’000
132,712
–
–
–
109,372
–
–
8,192
117,564
250,276
–
–
–
–
–
–
–
23,401
23,401
273,677
96
1
2
0
2
S
T
N
U
O
C
C
A
D
N
A
T
R
O
P
E
R
L
A
U
N
N
A
C
L
P
S
O
I
D
U
T
S
S
D
R
O
W
Y
E
K
Foreign
exchange
reserve
€’000
5,764
–
(15,752)
(15,752)
–
–
–
–
–
(9,988)
–
22,809
22,809
–
–
–
–
–
–
Shares held
in EBT
€’000
Share-based
payments reserve
€’000
(1,997)
16,449
–
–
–
–
–
–
–
–
(1,997)
–
–
–
–
–
–
–
–
–
–
–
–
–
15,350
–
–
15,350
31,799
–
–
–
16,394
–
–
–
–
16,394
48,193
12,821
(1,997)
Retained
earnings
€’000
43,187
21,552
(421)
21,131
–
–
–
–
–
64,318
34,175
27
34,202
–
–
–
(615)
–
(615)
97,905
Total attributable
to owners
of parent
€’000
Non-controlling
interest
€’000
222,923
21,552
(16,173)
5,379
109,449
15,350
2,249
15,935
142,983
371,285
34,175
22,836
57,011
16,394
4,940
398
(615)
22,824
43,941
472,237
35
(85)
–
(85)
–
–
–
–
–
(50)
(67)
–
(67)
–
–
–
–
–
–
(117)
Total
equity
€’000
222,958
21,467
(16,173)
5,294
109,449
15,350
2,249
15,935
142,983
371,235
34,108
22,836
56,944
16,394
4,940
398
(615)
22,824
43,941
472,120
OVERVIEWSTRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSSUPPLEMENTARY INFORMATION
CONSOLIDATED STATEMENT OF CASH FLOWS
Cash flows from operating activities
Profit after taxation
Income and expenses not affecting operating cash flows
Depreciation – property, plant and equipment
Depreciation – right of use assets
Amortisation and impairment of intangible assets
Taxation
Share-based payments expense
Fair value adjustments to contingent consideration
Fair value adjustments to right of use assets
Unwinding of discounted liabilities – deferred consideration
Unwinding of discounted liabilities – lease liabilities
Interest receivable
Fair value adjustments to employee defined benefit plans
Interest expense
Unrealised foreign exchange (gain)/loss
Changes in operating assets and liabilities
Decrease/(increase) in trade receivables
Decrease/(increase) in MMTC and VGTR receivable
Decrease/(increase) in other receivables
(Decrease)/increase in accruals, trade and other payables
Taxation paid
Net cash generated by/(used in) operating activities
Cash flows from investing activities
Current year acquisition of subsidiaries net of cash acquired
Settlement of deferred liabilities on acquisitions
Acquisition of property, plant and equipment
Investment in intangible assets
Other investment
Interest received
Years ended 31 December
Note
2021
€’000
2020
€’000
34,108
21,467
Repayment of loans
Cash flows from financing activities
Drawdown of loans
Payments of principal on lease liabilities
Interest paid on principal of lease liabilities
Dividends paid
Shares issued for cash
Interest paid
Net cash generated by/(used in) financing activities
Increase/(decrease) in cash and cash equivalents
Exchange gain/(loss) on cash and cash equivalents
Cash and cash equivalents at beginning of the period
Cash and cash equivalents at end of the period
13
12
11
7
23
5
12
6
6
6
20
6
27
17
13
11
11,661
10,473
13,688
13,875
16,394
5,567
–
1,882
985
(62)
419
1,040
583
76,505
(15,117)
(4,502)
3,341
20,158
3,880
(23,948)
90,545
(48,697)
(14,393)
(19,360)
(315)
(175)
62
8,983
8,402
8,808
11,027
15,350
(66)
434
132
843
(76)
354
1,071
1,874
57,136
(4,255)
555
(3,902)
9,878
2,276
(4,459)
76,420
(37,447)
(2,489)
(13,908)
(259)
–
76
Net cash generated by/(used in) investing activities
(82,878)
(54,027)
97
1
2
0
2
S
T
N
U
O
C
C
A
D
N
A
T
R
O
P
E
R
L
A
U
N
N
A
C
L
P
S
O
I
D
U
T
S
S
D
R
O
W
Y
E
K
Note
18
18
6
22
Years ended 31 December
2021
€’000
2020
€’000
(80)
–
(9,953)
(985)
(615)
5,338
(1,753)
(8,048)
(381)
3,021
103,070
105,710
(64,030)
4,500
(8,170)
(843)
–
111,698
(879)
42,276
64,669
(3,426)
41,827
103,070
OVERVIEWSTRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSSUPPLEMENTARY INFORMATION
NOTES FORMING PART OF THE CONSOLIDATED FINANCIAL STATEMENTS
1 Basis of Preparation
Keywords Studios plc (the “Company”) is a company incorporated in the United Kingdom. The
consolidated financial statements include the financial statements of the Company and its subsidiaries
(the “Group”) made up to 31 December 2021.
The consolidated financial statements have been prepared in accordance with UK-adopted
international accounting standards, and in conformity with the requirements of the Companies
Act 2006.
Unless otherwise stated, the financial statements have been prepared in thousands (’000) and the
financial statements are presented in euro (€) which is the functional currency of the Group.
Going Concern Basis of Accounting
After making enquiries, the Directors consider it appropriate to continue to adopt the going concern
basis in preparing the Consolidated and Company financial statements. In doing so, the Directors have
considered the uncertain nature of the Ukrainian crisis and the COVID-19 pandemic, but have noted:
– The net cash position of the Group;
– The strong cash flow performance of the Group through the year;
– The continued demand for the Group’s services;
– The ability to operate most of its services in a work from home model where studios are
temporarily closed;
– The historical resilience of the broader video games industry in times of economic downturn; and
– The ability of the Group to flex its cost base in response to a reduction in trading activity.
The Directors have also considered the Group’s strong liquidity position with net cash of €105.6m
as at 31 December 2021, and committed undrawn facilities of €150m under the Revolving Credit
Facility (“RCF”).
The Directors have applied downside sensitivities to the Group’s cash flow projections to evaluate the
Group’s ability to withstand a further prolonged period of studio closures as a result of the COVID-19
pandemic, leading to a reduction in production capability and a worst case scenario of withdrawing
from the Group’s operations in Russia. Under this severe case, the Group would have sufficient
liquidity and remain within its banking covenants. The Directors have a reasonable expectation that
the Company and the Group have adequate resources to continue to operate and meet liabilities as
they fall due for the foreseeable future, a period considered to be at least twelve months from the
date of these financial statements and therefore the going concern basis of preparation continues to
be appropriate.
98
1
2
0
2
S
T
N
U
O
C
C
A
D
N
A
T
R
O
P
E
R
L
A
U
N
N
A
C
L
P
S
O
I
D
U
T
S
S
D
R
O
W
Y
E
K
New Standards, Interpretations and Amendments effective 01 January 2021
A number of new amendments and interpretations to accounting standards are effective from
01 January 2021, including:
– COVID-19-Related Rent Concessions – further amendment to IFRS 16;
– Interest Rate Benchmark Reform – further amendments to IFRS 9, IAS 39 and IFRS 7.
These amendments and interpretations have not resulted in any Group accounting policy changes,
and have not had a material effect on the Group’s financial statements.
New Standards, Interpretations and Amendments not yet effective
There are a number of standards, amendments to standards, and interpretations which have been
issued by the IASB that are effective in future accounting periods that the Group has decided not to
adopt early.
The following amendments are effective for the period beginning 01 January 2022:
– Onerous Contracts – Cost of Fulfilling a Contract – amendments to IAS 37;
– Property, Plant and Equipment: Proceeds before Intended Use – amendments to IAS 16;
– Annual Improvements to IFRS Standards 2018–2020 – amendments to IFRS 1, IFRS 9, IFRS 16 and
IAS 41; and
– References to Conceptual Framework – amendments to IFRS 3.
The Group does not expect these amendments or any other standards issued by the IASB, but not
yet effective, to have a material impact on the Group.
2 Significant Accounting Policies
Basis of Consolidation
Where the Company has control over an investee, it is classified as a subsidiary. The Company
controls an investee if all three of the following elements are present: power over the investee,
exposure to variable returns from the investee, and the ability of the investor to use its power to
affect those variable returns. Control is reassessed whenever facts and circumstances indicate that
there may be a change in any of these elements of control.
De-facto control exists in situations where the Company has the practical ability to direct the relevant
activities of the investee without holding the majority of the voting rights. In determining whether de-
facto control exists, the Company considers all relevant facts and circumstances, including:
– The size of the Company’s voting rights relative to both the size and dispersion of other parties
who hold voting rights;
– Substantive potential voting rights held by the Company and by other parties;
– Other contractual arrangements; and
– Historic patterns in voting attendance.
OVERVIEWSTRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSSUPPLEMENTARY INFORMATION
NOTES FORMING PART OF THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED
2 Significant Accounting Policies continued
The consolidated financial statements present the results of the Company and its subsidiaries (“the
Group”) as if they formed a single entity. Intercompany transactions and balances between Group
companies are eliminated in full.
Business Combinations
The consolidated financial statements incorporate the results of business combinations using the
purchase method. The results of acquired operations are included in the consolidated financial
statements from the date on which control is obtained. They are consolidated until the date on which
control ceases. In the Consolidated statement of financial position, the acquired identifiable assets,
liabilities and contingent liabilities are initially recognised at their fair values at the acquisition date.
If the initial accounting for a business combination is incomplete by the end of the reporting period
in which the combination occurs, the Group reports provisional amounts for the items for which
the valuation of the fair value of assets and liabilities acquired is still in progress. Those provisional
amounts are adjusted when additional information is obtained about facts and circumstances which
would have affected the amounts recognised as of that date, and any adjustments to the provisional
values allocated to the consideration, identifiable assets or liabilities (and contingent liabilities, if
relevant) are made within the measurement period, a period of no more than one year from the
acquisition date.
Any contingent consideration payable is recognised at fair value at the acquisition date and is split
between current liabilities and long-term liabilities depending on when it is due. The fair value of
contingent consideration at acquisition date is arrived at through discounting the expected payment
(based on scenario modelling) to present value. In general, in order for contingent consideration to
become payable, pre-defined profit and/or revenue targets must be exceeded. At each balance sheet
date, the fair value of the contingent consideration is revalued, with the expected pay-out determined
separately in respect of each individual acquisition and any change recognised in the statement of
comprehensive income.
For deferred consideration which is to be provided for by the issue of a fixed number of shares at a
future defined date, where there is no obligation on Keywords to offer a variable number of shares,
the deferred consideration is classified as an equity arrangement and the value of the shares is fixed
at the date of the acquisition. Deferred consideration may also be in the form of cash consideration
payable at a future defined date. Such consideration is recognised at fair value at the acquisition date
and is split between current liabilities and non-current liabilities depending on when it is due.
Intangible Assets
The Group’s Intangible Assets comprise Goodwill, Customer Relationships and Other Intangible Assets.
99
1
2
0
2
S
T
N
U
O
C
C
A
D
N
A
T
R
O
P
E
R
L
A
U
N
N
A
C
L
P
S
O
I
D
U
T
S
S
D
R
O
W
Y
E
K
Goodwill
Goodwill represents the excess of the cost of a business combination over the total acquisition date
fair value of the identifiable assets, liabilities and contingent liabilities acquired. The cost comprises
the fair value of assets given, liabilities assumed and equity instruments issued, plus the amount of
any non-controlling interests in the acquiree plus, if the business combination is achieved in stages,
the fair value of the existing equity interest in the acquiree. Contingent consideration is included
at fair value on the acquisition date and, in the case of contingent consideration classified as a
financial liability, re-measured subsequently through the profit and loss. Acquisition-related costs are
recognised immediately as an expense in the periods in which the costs are incurred and the services
are received. Goodwill is capitalised as an intangible asset with any impairment in carrying value being
charged to the consolidated statement of comprehensive income.
Customer Relationships
Intangible assets, separately identified from goodwill acquired as part of a business combination
(mainly Customer Relationships), are initially stated at fair value. The fair value attributed is
determined by discounting the expected future cash flows generated from the net margin of the
business from the main customers taken on at acquisition. The assets are amortised on a straight-
line basis (to administration expenses) over their useful economic lives (typically five years is deemed
appropriate, however, this is re-examined for each acquisition).
Other Intangible Assets
Other intangible assets include Intellectual Property and Music Licences, both acquired and internally
developed. Other intangible assets are recognised as assets where it is probable that the use of the
asset will generate future economic benefits and where the costs of the asset can be determined
reliably. Other intangible assets that are acquired by the Group are stated at cost less accumulated
amortization (see below) and impairment losses, if any. Subsequent expenditures on capitalised
intangible assets are capitalised only when they increase the future economic benefits embodied in
the specific assets to which they relate. All other expenditure is expensed as incurred. Other intangible
assets with definite useful lives are amortised from the date they are available for use on a straight-
line basis over their useful lives, being the estimated period over which the Group will use the assets.
Residual amounts, useful lives and the amortization methods are reviewed at the end of every
accounting period.
Development costs are capitalised as an intangible asset if all of the following criteria are met:
– The technical feasibility of completing the intangible asset so that it will be available for use or sale;
– The intention to complete the intangible asset and use or sell it;
– The ability to use or sell the intangible asset;
– The asset will generate probable future economic benefits and demonstrate the existence of a
market or the usefulness of the intangible asset if it is to be used internally;
– The availability of adequate technical, financial and other resources to complete the development
and to use or sell it; and
– The ability to measure reliably the expenditure attributable to the intangible asset during
its development.
NOTES FORMING PART OF THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUEDOVERVIEWSTRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSSUPPLEMENTARY INFORMATION
NOTES FORMING PART OF THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED
2 Significant Accounting Policies continued
Following initial recognition of the development expenditure as an intangible asset, the cost model is
applied requiring the intangible asset to be carried at cost, less any accumulated amortization and
accumulated impairment losses. The intangible asset is amortised on a straight-line basis over the
period of its expected benefit, starting from the date of full commercial use of the product. During
the period of development, the asset is tested for impairment annually. If specific events indicate that
impairment of an item of intangible asset may have taken place, the item’s recoverability is assessed
by comparing its carrying amount with its recoverable amount. The recoverable amount is the higher
of the fair value net of disposal costs and the value in use.
Impairment
Impairment tests on goodwill and other intangible assets with indefinite useful economic lives are
undertaken annually at the financial year end. Other non-financial assets are subject to impairment
tests whenever events or changes in circumstances indicate that their carrying amount may not be
recoverable. Where the carrying value of an asset exceeds its recoverable amount (i.e. the higher of
value in use and fair value less costs to sell), the asset is written down accordingly.
Where it is not possible to estimate the recoverable amount of an individual asset, the impairment
test is carried out on the smallest group of assets to which it belongs for which there are separately
identifiable cash flows; its cash generating units (“CGUs”). Goodwill is allocated on initial recognition to
each of the Group’s CGUs that are expected to benefit from a business combination that gives rise to
the goodwill.
The Group has one CGU. This CGU represents the lowest level at which goodwill is monitored by the
Group and the lowest level at which management captures information for internal management
reporting purposes about the benefits of the goodwill. Impairment charges are included in profit or
loss, except to the extent they reverse gains previously recognised in other comprehensive income.
An impairment loss recognised for goodwill is not reversed.
Investments
Investments are held at cost where the Group does not have control and is not able to exercise
significant influence over the investee.
Cash and Cash Equivalents
For the purpose of presentation in the Statements of financial position and on the Statements of cash
flows, cash and cash equivalents include cash on hand and on call deposits with financial institutions.
Foreign Currency
The consolidated financial statements are presented in euro, which is the presentation currency of the
Group and the functional currency of the Parent Company.
Transactions entered into by Group entities in a currency other than the currency of the primary
economic environment in which they operate (their “functional currency”) are recorded at the rates
ruling when the transactions occur. Foreign currency monetary assets and liabilities are translated at
the rates ruling at the reporting date. Exchange differences arising on the retranslation of unsettled
monetary assets and liabilities are recognised immediately in profit or loss.
On consolidation, the results of overseas operations are translated into euro at rates approximating
when the transactions took place. All assets and liabilities of overseas operations, including goodwill
arising on the acquisition of those 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 from Contracts with Customers
Contracts are typically for services, performing agreed-upon tasks for a customer and can be time-
and-materials or milestone based. Most contracts are short term in duration (generally less than one
month); however, milestone based contracts can be longer term and extend to several months (or
in some cases over a year). Where there are multiple performance obligations outlined in a contract,
each performance obligation is separately assessed, the transaction price is allocated to each
obligation, and related revenues are recognised as services or assets are transferred to the customer.
Performance obligations are typically satisfied over time, as the majority of contracts meet the criteria
outlined in IFRS 15 paragraph 35 (a) and (c).
Due to the nature of the services provided and the competitive nature of the market, contracts
generally allocate specific transaction prices to separate performance obligations. Individual services
or individual milestones generally involve extensive commercial negotiation to arrive at the specific
agreed-upon tasks, and the related pricing outlined in the contract. Such negotiations extend further
for milestone based contracts to also include the criteria involved in the periodic and regular process
of milestone acceptance by the customer. Such criteria may involve qualitative, as well as quantitative
measures and judgements.
100
1
2
0
2
S
T
N
U
O
C
C
A
D
N
A
T
R
O
P
E
R
L
A
U
N
N
A
C
L
P
S
O
I
D
U
T
S
S
D
R
O
W
Y
E
K
NOTES FORMING PART OF THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUEDOVERVIEWSTRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSSUPPLEMENTARY INFORMATION
NOTES FORMING PART OF THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED
101
1
2
0
2
S
T
N
U
O
C
C
A
D
N
A
T
R
O
P
E
R
L
A
U
N
N
A
C
L
P
S
O
I
D
U
T
S
S
D
R
O
W
Y
E
K
2 Significant Accounting Policies continued
In measuring progress towards complete satisfaction of performance obligations, the input method
is considered to be the most appropriate method to depict the underlying nature of the contracts
with customers, the interactive way the service is delivered and projects are managed with the
customer. For time-and-materials contracts, other than tracking and valuing time expended, significant
judgement is not normally involved. For milestone based contracts, progress is generally measured
based on the proportion of contract costs incurred at the balance sheet date, (e.g. worked days)
relative to the total estimated costs of the contract, involving estimates of the cost to completion
etc. Added to this, significant judgement can be involved in measuring progress towards customer
acceptance of the milestone. Significant judgement may also be involved where circumstances
arise that may change the original estimates of revenues, costs or extent of progress towards
complete satisfaction of the performance obligations. In such circumstances estimates are revised.
These revisions may result in increases or decreases in revenue or costs and are reflected in income
in the period in which the circumstances that give rise to the revision became known. When the
outcome of a contract cannot be measured reliably, contract revenue is recognised only to the extent
that milestones have been accepted by the customer. Contract costs are recognised as incurred.
When it is probable that total contract costs will exceed total contract revenue, the expected loss
is recognised immediately.
Revenue recognised represents the consideration received or receivable, net of sales taxes, rebates
discounts and after eliminating intercompany sales. Revenue is recognised only where it is probable
that consideration will be received. Where consideration is received and the related revenue has not
been recognised, the consideration received is recognised as a contract liability (Deferred Revenue),
until either revenue is recognised or the consideration is refunded.
Revenue is derived from eight main service groupings:
– Art Creation – Art Creation services relate to the production of graphical art assets for inclusion
in the video game, including concept art creation along with 2D and 3D art asset production and
animation. Contracts can be either time-and-materials based or milestone based, with performance
obligations satisfied over time. Contracts are generally short term in duration; however, for longer
contracts the input method is used to measure progress (e.g. worked days relative to the total
expected inputs). Time-and-materials based contract revenue is recognised as the related services
are rendered. For milestone based contracts where progress can be measured reliably towards
complete satisfaction of the performance obligation, revenue is recognised using the input method
to measure progress. Where progress cannot be measured reliably, revenue is recognised on
milestone acceptance.
– Marketing – Marketing services include game trailers, marketing art and materials, PR and full brand
campaign strategies. Contracts can be either time-and-materials based or milestone based, with
performance obligations satisfied over time. Contracts are generally short term in duration; however,
for longer contracts the input method is used to measure progress. Time-and-materials based
contract revenue is recognised as the related services are rendered. For milestone based contracts
where progress can be measured reliably towards complete satisfaction of the performance
obligation, revenue is recognised using the input method to measure progress. Where progress
cannot be measured reliably, revenue is recognised on milestone acceptance.
– Game Development – Game Development relates to software engineering services which are
integrated with client processes to develop video games. Contracts can be either time-and-
materials based or milestone based, with performance obligations satisfied over time. Contracts
are generally longer term in duration. Time-and-materials based contract revenue is recognised as
the related services are rendered. For milestone based contracts where progress can be measured
reliably towards complete satisfaction of the performance obligation, revenue is recognised using
the input method to measure progress. Where progress cannot be measured reliably, revenue is
recognised on milestone acceptance.
– Audio – Audio services relate to the audio production process for computer games and includes
script translation, actor selection and talent management through pre-production, audio direction,
recording, and post-production, including native language quality assurance of the recordings.
Audio contracts may also involve music licensing or selling music soundtracks. Audio service
contracts are typically milestone based, with performance obligations satisfied over time. Audio
services contracts are generally short term in duration; however, for longer contracts where
progress towards complete satisfaction of the performance obligation can be measured reliably,
revenue is recognised using the input method to measure progress. Where progress cannot be
measured reliably, audio services revenue is recognised on milestone acceptance. Music licensing
and music soundtracks performance obligations are assessed separately, and related revenue is
recognised on licence inception and on delivery of the soundtracks, respectively.
– Functional Testing – Functional Testing relates to quality assurance services provided to game
producers to ensure games function as required. Contracts are typically time-and-materials based
and performance obligations are satisfied over time. Contracts are generally short term in duration.
Revenue is recognised as the related services are rendered.
– Localization – Localization services relate to translation and cultural adaptation of in-game text
and audio scripts across multiple game platforms and genres. Contracts are typically time-and-
materials based and performance obligations are satisfied over time. Contracts are generally short
term in duration; however, for longer contracts the input method is used to measure progress.
Localization contracts may also involve licensing translation software as a service. Such revenue
is assessed separately. Revenue is recognised as the related services are rendered.
– Localization Testing – Localization Testing involves testing the linguistic correctness and
cultural acceptability of computer games. Contracts are typically time-and-materials based and
performance obligations are satisfied over time. Contracts are generally short term in duration.
Revenue is recognised as the related services are rendered.
– Player Support – Player Support relates to the live operations support services such as community
management, player support and associated services provided to producers of games to ensure
that consumers have a positive user experience. Contracts are typically time-and-materials based
and performance obligations are satisfied over time. Contracts are generally long term in duration.
Revenue is recognised as the related services are rendered.
NOTES FORMING PART OF THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUEDOVERVIEWSTRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSSUPPLEMENTARY INFORMATION
NOTES FORMING PART OF THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED
102
1
2
0
2
S
T
N
U
O
C
C
A
D
N
A
T
R
O
P
E
R
L
A
U
N
N
A
C
L
P
S
O
I
D
U
T
S
S
D
R
O
W
Y
E
K
2 Significant Accounting Policies continued
Multimedia Tax Credits/Video Game Tax Relief
The multimedia tax credits (“MMTC”) received in Canada and video games tax relief (“VGTR”) in the UK
are tax credits related to staff costs. Tax credits are recognised as income over the periods necessary
to match the credit on a systematic basis with the costs that it is intended to compensate. Thus,
credits are taken as a deduction against direct costs each period, but typically paid in the following
financial year once the claims have been submitted and agreed. The nature of the grants is such that
they are not dependent on taxable profits, and are recognised (under IAS 20), at their fair value when
there is a reasonable assurance that the grant will be received and all attaching conditions have been
complied with.
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”). In 2022, a number of Executive Directors
also received conditional awards under the rules of the LTIP Plan (“Salary Shares”).
The fair value determined at the grant date is expensed on a straight-line basis over the vesting
period. Other than continuous service, grants do not have non-market-based vesting conditions.
At each reporting date the Company adjusts for unvested forfeitures and the impact is recognised
in profit or loss, with a corresponding adjustment to equity reserves. The Company has no legal or
constructive obligation to repurchase or settle the options in cash.
Additional employer costs, including social security taxes, in respect of options and awards are
expensed over the vesting period with a corresponding liability recognised. The liability recognised
depends on the number of options that are expected to be exercised, and the liability is adjusted by
reference to the fair value of the options at the end of each reporting period.
Where share-based payments are issued to employees of subsidiary companies, the annual cost of
the options are recharged to the subsidiary company through an inter-company recharge.
Employee Share Purchase Plan
In 2021, the Group introduced an Employee Share Purchase Plan (“ESPP”). The ESPP allows individual
employees the possibility to save up to €500 monthly and acquire KWS shares discounted by 10% on
the market price at the date of purchase. The plan has bi-annual purchase periods, with share-based
benefits expensed within the period.
Share Option Plan
These are measured at fair value 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 vesting after four years. The only vesting condition is
continuous service. There is no requirement to revalue the option at any subsequent date.
LTIP
The exercise of LTIP awards is subject to the Company’s share price (stock symbol: KWS) performance
versus the designated Share Index in terms of shareholder return over a three-year period. For the
awards granted up to 2015, one-third of the share options vested if the Company exceeded the Total
Shareholder Returns (“TSR”) of the Numis Small Cap Index (excluding Investment Trusts) by 10%, two-
thirds if the TSR exceeded the Index by 20% and full vesting if the TSR exceeded the Index by 30%.
This was amended for the 2016 and 2017 awards to 100% vesting if the shareholder return exceeds
the Index by 45%, and a pro-rated return between 10% if the TSR matches the Index, to 100% if the
TSR exceeds the Index by 45%. The scheme was further amended in 2018 to 100% vesting if the TSR
exceeds the Index by 20%, and a pro-rated return between 10% and 100% if the TSR exceeds the
Index by between 0% and 20%. In 2019, the benchmark Index was amended for future grants to be
the FTSE Small Cap Index, with the same performance conditions as 2018. In 2021, the benchmark
Index was amended to be the FTSE250 Index (excluding investment trusts) and threshold vesting
(25% of the award) will be earned for TSR in line with the Index and full vesting will be earned for
exceeding the Index TSR by 20% over the performance period. A pro-rated return will be earned
between 25% and 100% if the TSR exceeds the Index by between 0% and 20%.
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.
Salary Shares
Salary shares are measured at fair value on the grant date. As the only vesting condition is
continuous service, the fair value of the shares is amortised over the vesting period.
Dividend Distribution
Final dividends are recorded in the Group’s financial statements in the period in which they are
approved by the Group’s shareholders. Interim dividends are recognised when paid.
Income Taxes and Deferred Taxation
Provision for income taxes is calculated in accordance with the tax legislations and applicable tax rates
in force at the reporting date in the countries in which the Group companies have been incorporated.
Deferred tax assets and liabilities are recognised where the carrying amount of an asset or liability
in the consolidated statement of financial position differs from its tax base, except for differences
arising on:
– The initial recognition of an asset or liability in a transaction which is not a business combination
and at the time of the transaction affects neither accounting or taxable profit; and
– Investments in subsidiaries and jointly controlled entities where the Group is able to control the
timing of the reversal of the difference and it is probable that the difference will not reverse in the
foreseeable future.
The amount of the asset or liability is determined using tax rates that have been enacted or
substantively enacted by the reporting date and are expected to apply when the deferred tax
liabilities/(assets) are settled/(recovered).
NOTES FORMING PART OF THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUEDOVERVIEWSTRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSSUPPLEMENTARY INFORMATION
NOTES FORMING PART OF THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED
103
2 Significant Accounting Policies continued
Deferred tax assets and liabilities are offset when the Group has a legally enforceable right to offset
current tax assets and liabilities and the deferred tax assets and liabilities relate to taxes levied by the
same tax authority on either:
– The same taxable Group company; or
– Different Group entities which intend either to settle current tax assets and liabilities on a net
basis, or to realise the assets and settle the liabilities simultaneously, in each future period in which
significant amounts of deferred tax assets or liabilities are expected to be settled or recovered.
Government Subsidies
Government subsidies are recognised at their fair value when there is a reasonable assurance that
the subsidy will be received and all attaching conditions have been complied with. Subsidies are
recognised in the period the subsidy is designated to compensate.
Property, Plant and Equipment
Property, plant and equipment comprise computers, leasehold improvements, and office furniture and
equipment, and are stated at cost less accumulated depreciation. Carrying amounts are reviewed for
impairment whenever events or changes in circumstances indicate that their carrying amount may
not be recoverable. Where the carrying amount of an asset is greater than its estimated recoverable
amount, it is written down immediately to its recoverable amount.
Property, plant and equipment acquired through business combinations are valued at fair value on
the date of acquisition.
Depreciation is calculated to write off the cost of fixed assets on a straight-line basis over the
expected useful lives of the assets concerned. The principal annual rates used for this purpose are:
Computers and software
Office furniture and equipment
Leasehold improvements
3–5 years
10 years
over the length of the lease
Gains and losses on disposals are determined by comparing proceeds with carrying amount and are
included in the Consolidated statement of comprehensive income.
Financial Assets
The Group’s most significant financial assets comprise trade and other receivables and cash and
cash equivalents in the Consolidated statement of financial position, whereas the Company’s most
significant financial assets comprise inter-group receivables.
1
2
0
2
S
T
N
U
O
C
C
A
D
N
A
T
R
O
P
E
R
L
A
U
N
N
A
C
L
P
S
O
I
D
U
T
S
S
D
R
O
W
Y
E
K
Trade Receivables
Trade receivables, which principally represent amounts due from customers, are recognised at
amortised cost as they meet the IFRS 9 classification test of being held to collect, and the cash
flow characteristics represent solely payments of principal and interest. The Group’s impairment
methodology is in line with the requirements of IFRS 9. The simplified approach to providing for
expected credit losses has been applied to trade receivables, which requires the use of a lifetime
expected loss provision.
Cash and Cash Equivalents
Cash and cash equivalents comprise cash in hand, deposits held on call with banks and other short-
term highly liquid investments. Where cash is on deposit with maturity dates greater than three
months, it is disclosed as short-term investments.
Accrued Income from Contracts with Customers
Accrued income from contracts with customers, arising from Revenue from Contracts with Customers,
is recognised in accordance with our Revenue Recognition policy, as discussed separately in this note.
The Group applies the simplified approach to assessing expected credit losses in relation to such
assets, as their maturities are less than twelve months. Based upon the recoverability of contract
assets at year end, no significant expected credit loss provision has been applied.
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
Contingent consideration is initially recognised at fair value and subsequently re-measured through
the profit and loss. Trade payables, bank borrowings and other monetary liabilities are initially
recognised at fair value and subsequently carried at amortised cost using the effective interest
rate method.
Leased Assets
A lease is defined as ‘a contract, or part of a contract, that conveys the right to use an asset
(the underlying asset) for a period of time in exchange for consideration’.
At lease commencement date, the Group recognises a right of use asset and a lease liability on the
balance sheet. The right of use asset is measured at cost, which is made up of the initial measurement
of the lease liability, any initial direct costs incurred by the Group, an estimate of any costs to
dismantle and remove the asset at the end of the lease, and any lease payments made in advance
of the lease commencement date (net of any incentives received).
The Group depreciates the right of use assets on a straight-line basis from the lease commencement
date to the earlier of the end of the useful life of the right of use asset or the end of the lease
term. The Group also assesses the right of use asset for impairment when such indicators exist.
At the commencement date, the Group measures the lease liability at the present value of the lease
payments unpaid at that date, discounted using the interest rate implicit in the lease if that rate is
readily available or at the Group’s incremental borrowing rate.
NOTES FORMING PART OF THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUEDOVERVIEWSTRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSSUPPLEMENTARY INFORMATION
NOTES FORMING PART OF THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED
2 Significant Accounting Policies continued
Lease payments included in the measurement of the lease liability are made up of fixed payments
(including in-substance fixed), variable payments based on an index or rate, amounts expected to be
payable under a residual value guarantee, and payments arising from purchase and extension options
reasonably certain to be exercised.
Subsequent to initial measurement, the liability will be reduced for payments made and increased
for interest. It is remeasured to reflect any reassessment or modification, or if there are changes to
in-substance fixed payments. When the lease liability is remeasured, the corresponding adjustment is
reflected in the right of use asset, or profit and loss if the right of use asset is already reduced to zero.
The Group has elected to account for short-term leases and leases of low-value assets using the
practical expedients. Instead of recognising a right of use asset and lease liability, the payments
in relation to these are recognised as an expense in profit or loss on a straight-line basis over the
lease term.
The Group has applied judgement to determine the lease term for contracts in which it is a lessee
that include renewal options. The assessment of whether the Group is reasonably certain to exercise
such options impacts the lease term, which significantly affects the lease liabilities and right of use
assets recognised.
Employee Benefit Trust
Ordinary shares purchased by the Employee Benefit Trust on behalf of the parent company under
the Terms of the Share Option Plan are deducted from equity on the face of the Consolidated
statement of financial position. No gain or loss is recognised in relation to the purchase, sale, issue
or cancellation of the parent company’s ordinary shares.
3 Critical Accounting Estimates and Judgements
The Group makes certain estimates and assumptions regarding the future. Estimates and
judgements are continually evaluated based on historical experience and other factors, including
expectations of future events that are believed to be reasonable under the circumstances. In the
future, actual experience may differ from these estimates and assumptions.
Judgements
The judgements, apart from those involving estimations, that management have made in the process
of applying the Group’s accounting policies and that have the most significant effect on the amounts
recognised in the financial statements, are outlined below.
– Group
– Functional Currency: The Directors have considered the requirements of IAS 21 in determining the
currency that most faithfully represents the economic effects of the underlying transactions, events
and conditions to determine the Group’s functional currency. Detailed consideration has been given to
both the Primary and Secondary Indicators in forming this conclusion. The Primary Indicators relate
to revenues, regulation, competitive forces and costs, while the Secondary Indicators are primarily
concerned with financing the business and the currency in which receipts from operating activities are
usually retained. With a mix of currencies dominating the indicators, there is no clear single currency
that influences the Group; however, the euro remains marginally the most dominant when all factors
are considered. Therefore, the Directors consider the euro as the currency that most faithfully
represents the economic effects of the underlying transactions, events and conditions.
– Business Combinations (Customer relationships): When acquiring a business, the Group
is required to identify and recognise intangible assets, the determination of which requires a
significant degree of judgement. Acquisitions may also result in intangible benefits being brought
into the Group, some of which qualify for recognition as intangible assets while other such
benefits do not meet the recognition requirements of IFRS and therefore form part of goodwill.
Customer relationships are recognised as separate assets where revenues are recurring in
nature and material revenues have been generated with the customer for a continuous period
of three years. For the Game Development service line, the key asset acquired is typically
“know-how”, an asset that is not readily measurable and thus intrinsically linked to goodwill.
Relationships are typically fixed term contract based rather than relationship based. Therefore,
neither customer contracts nor customer relationships are typically recognised on the acquisition
of a Game Development business.
– IFRS 16 Leases: The Group has determined that the Group’s incremental borrowing rate is
the appropriate rate to use to discount lease liabilities. The Group has applied judgement to
determine the lease term for contracts in which it is a lessee that include renewal options. The
assessment of whether the Group is reasonably certain to exercise such options impacts the
lease term, which significantly affects the lease liabilities and right of use assets recognised.
– Business Combinations (Put and call options over Non-controlling interest): The Group
acquired an 85% interest in Tantalus in March 2021, with the sellers retaining a minority
shareholding. The shareholder agreement (signed with the purchase agreement) includes put
and call options (“the Forward”) that require the sellers to sell, or require the Group to buy, the
remaining 15% shareholding in three years using a pre-determined valuation methodology
linked to post-acquisition performance. IFRS 3 does not provide specific guidance on how such
contracts should be accounted for in a business combination. The Board determined, taking into
consideration all the contracts’ terms and conditions, that the impact of the Forward put the Group
in a similar position as if the Group had acquired a 100% interest in the subsidiary on the acquisition
date, with deferred contingent consideration payable at a future date. In doing so, the Board
considered whether the risks and rewards of ownership reside with the Non-controlling interest
or had effectively transferred to the Group, and concluded that the Non-controlling interest arising
on the acquisition had been extinguished by a combination of the Forward and other conditions in
the agreements. Therefore, the Group has accounted for the acquisition as if a 100% interest was
acquired on acquisition, accounting for the initial investment and the Forward as a single linked
transaction in which 100% control is gained, with the Forward recognised at fair value, as a financial
liability within Deferred and contingent consideration (note 17), and no Non-controlling interest
recognised on the acquisition. Any subsequent re-measurement required due to changes in the fair
value of the liability will be recognised in the Consolidated statement of comprehensive income.
104
1
2
0
2
S
T
N
U
O
C
C
A
D
N
A
T
R
O
P
E
R
L
A
U
N
N
A
C
L
P
S
O
I
D
U
T
S
S
D
R
O
W
Y
E
K
NOTES FORMING PART OF THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUEDOVERVIEWSTRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSSUPPLEMENTARY INFORMATION
NOTES FORMING PART OF THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED
105
3 Critical Accounting Estimates and Judgements continued
Estimates and Assumptions
The Group makes certain estimates and assumptions regarding the future. Estimates and
judgements are continually evaluated based on historical experience and other factors, including
expectations of future events that are believed to be reasonable under the circumstances. In the
future, actual experience may differ from these estimates and assumptions.
A number of areas requiring the use of estimates and critical judgements impact the Group’s earnings
and financial position. These include revenue recognition, the computation of income taxes, the value
of goodwill and intangible assets arising on acquisitions, the valuation of multimedia tax credits/
video game tax relief, leasing and the valuation of defined retirement benefits. The Directors consider
that no reasonably possible changes to any of the assumptions used in the estimates would in the
view of the Directors give rise to significant risk of a material adjustment to the carrying value of the
associated balances in the subsequent financial year.
4 Revenue from Contracts with Customers and Segmental Analysis
Revenue from Contracts with Customers
Revenue recognised in the reporting period arises from contracts with customers, and is
predominantly recognised over time. There were no significant amounts of revenue recognised in the
reporting period that were included in a contract liability balance at the beginning of the reporting
period, or from performance obligations satisfied in the previous reporting period.
Revenue by line of business
Art Creation*
Marketing*
Game Development
Audio
Functional Testing
Localization
Localization Testing
Player Support
2021
€’000
49,326
46,183
138,852
61,333
92,686
50,791
27,091
45,938
2020
€’000
38,903
18,421
80,017
47,232
78,479
45,357
23,323
41,806
512,200
373,538
* The prior year comparatives have been re-classified to separately report Marketing services, previously reported within the
Art Creation service line.
1
2
0
2
S
T
N
U
O
C
C
A
D
N
A
T
R
O
P
E
R
L
A
U
N
N
A
C
L
P
S
O
I
D
U
T
S
S
D
R
O
W
Y
E
K
For many contracts, operations are completed across multiple sites. Analysis of revenues by
geographical regions is presented by producing location, which may not reflect the jurisdiction from
which the final invoice to the client is raised, or the region of the Group’s customers, whose locations
are worldwide.
Geographical analysis of revenues, by producing location *
Canada
United States
United Kingdom
Italy
Russia
Japan
Poland
China
India
Ireland
Philippines
Spain
France
Singapore
Australia
Other
2021
€’000
97,748
96,060
94,426
32,448
29,424
21,898
21,397
20,350
18,640
13,948
13,461
10,331
8,436
7,856
7,408
18,369
512,200
2020
€’000
88,713
50,504
58,645
25,210
27,987
20,944
12,121
18,429
11,369
12,291
12,021
7,642
7,771
6,798
–
13,093
373,538
* The prior year comparatives have been re-classified from billing entity location to producing entity location to align to the
current year presentation, as the Directors consider this measure to be more meaningful.
No single customer accounted for more than 10% of the Group’s revenue in either year presented.
NOTES FORMING PART OF THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUEDOVERVIEWSTRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSSUPPLEMENTARY INFORMATION
NOTES FORMING PART OF THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED
106
4 Revenue from Contracts with Customers and Segmental Analysis continued
Revenue Expected to be Recognised
For Game Development, games are developed to an agreed specification and time schedule, and
often have delivery schedules and/or milestones that extend well into the future. The following are
Game Development revenues expected to be recognised for contracts with a schedule of work that
extends beyond one year, representing the aggregate amount of the transaction price allocated
to the performance obligations that are unsatisfied (or partially unsatisfied) as at the end of the
reporting period:
Revenue expected to be recognised
At 31 December 2021
At 31 December 2020
Total undelivered
€’000
55,294
13,538
Scheduled
completion within
1 year
€’000
44,973
12,991
Scheduled
completion
1–2 years
€’000
9,319
547
Scheduled
completion
2–5 years
€’000
1,002
–
For all service lines excluding Game Development, contracts do not extend to more than one year,
therefore information concerning unsatisfied performance obligations are not disclosed, as allowed
under the practical expedient exemption under IFRS 15. This practical expedient is also availed of for
Game Development contracts of less than one year in duration.
Segmental Analysis
Management considers that the Group’s activity as a single source supplier of services to the gaming
industry constitutes one operating and reporting segment, as defined under IFRS 8.
Management reviews the performance of the Group by reference to Group-wide profit measures
and the revenues derived from seven main service groupings.
There is no allocation of operating expenses, profit measures, assets and liabilities to individual
product groupings. Accordingly, the disclosures above are provided on a Group-wide basis.
Activities are reported in a manner consistent with the internal reporting provided to the chief
operating decision-maker. The chief operating decision-maker has been identified as the executive
management team made up of the Chief Executive Officer and the Chief Financial Officer.
1
2
0
2
S
T
N
U
O
C
C
A
D
N
A
T
R
O
P
E
R
L
A
U
N
N
A
C
L
P
S
O
I
D
U
T
S
S
D
R
O
W
Y
E
K
Geographical analysis of non-current assets from continuing businesses *
United States
United Kingdom
Australia
Canada
Italy
Switzerland
France
China
Ireland
Germany
Spain
Japan
India
Romania
Poland
Mexico
Other
2021
€’000
171,126
114,871
45,528
31,096
15,612
10,025
7,548
8,296
8,422
5,336
4,988
6,955
4,001
2,763
3,275
2,452
5,301
2020
€’000
133,026
58,414
–
27,882
13,928
10,117
7,302
7,492
22,860
5,391
5,502
6,359
2,379
–
1,839
1,958
5,236
* The prior year comparatives have been re-classified to align to the current year presentation, as the Directors consider this
measure to be more meaningful.
447,595
309,685
NOTES FORMING PART OF THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUEDOVERVIEWSTRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSSUPPLEMENTARY INFORMATION
NOTES FORMING PART OF THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED
107
5 Cost of Sales and Operating Profit
Cost of sales
Operating expenses
Multimedia tax credits/video game tax relief
Other direct costs
Operating profit is stated after charging/(crediting):
Depreciation – property, plant and equipment
Depreciation – right of use assets
Amortisation of intangible assets
Costs of acquisition and integration
Auditor’s remuneration
Short-term leases
Investment income
Costs of acquisition and integration
Acquisition and integrations costs re: current year acquisitions (note 27)
Acquisition and integrations costs re: prior acquisitions
Fair value adjustments to contingent consideration (note 17)
Deferred consideration related to continuing employment
Acquisition team and related costs
Fair value adjustments to right of use assets (note 12)
Other re-organisation and restructuring costs
Auditor’s remuneration
Audit services:
Parent company and Group audit
Subsidiary companies audit
Non-audit services:
Audit-related assurance services
1
2
0
2
S
T
N
U
O
C
C
A
D
N
A
T
R
O
P
E
R
L
A
U
N
N
A
C
L
P
S
O
I
D
U
T
S
S
D
R
O
W
Y
E
K
2021
€’000
320,159
(20,966)
12,893
312,086
2020
€’000
238,664
(15,593)
8,695
231,766
2021
€’000
11,661
10,473
13,688
7,972
605
1,531
–
2021
€’000
1,099
191
5,567
454
313
–
348
7,972
2021
€’000
314
278
13
605
2020
€’000
8,983
8,402
8,808
2,650
553
1,747
(1,437)
2020
€’000
307
743
(66)
649
247
434
336
2,650
2020
€’000
290
250
13
553
Investment income
Gain on disposal of investment
2021
€’000
–
–
2020
€’000
(1,437)
(1,437)
The Group acquired a minor holding in Hutch Games Limited, when Keywords purchased Liquid
Development studio in 2015. During 2020, Hutch Games was acquired and the Group received
proceeds of USD$1.7m (€1.4m) in December 2020, and will become entitled to receive further
consideration of up to USD$450K over the period 2022 through 2025, subject to earnout targets
being met.
6 Financing Income and Cost
Financing income
Interest received
Foreign exchange gain
Financing cost
Bank charges
Interest expense
Unwinding of discounted liabilities – lease liabilities
Unwinding of discounted liabilities – deferred consideration
Foreign exchange loss
Net financing income/(cost)
7 Taxation
Current income tax
Income tax on profits of subsidiaries
Deferred tax (note 21)
2021
€’000
62
1,983
2,045
(520)
(1,040)
(985)
(1,882)
–
(4,427)
(2,382)
2021
€’000
17,632
(3,757)
13,875
2020
€’000
76
–
76
(552)
(1,071)
(843)
(132)
(6,103)
(8,701)
(8,625)
2020
€’000
13,899
(2,872)
11,027
NOTES FORMING PART OF THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUEDOVERVIEWSTRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSSUPPLEMENTARY INFORMATION
NOTES FORMING PART OF THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED
108
7 Taxation continued
8 Earnings per Share
The tax charge for the year can be reconciled to accounting profit as follows:
Profit before tax
Tax charge based on the Effective tax rate*
Income tax prior year (over)/under provision
Deferred tax prior year (over)/under provision and impact of change in tax rates
Items disallowed for tax purposes
Exempt and non-taxable income
Tax incentives
Current year tax losses utilised
Current year tax losses where deferred tax has not been provided
State and other direct taxes
Other differences – net
Total tax charge
* Effective tax rate – being the statutory tax rate relative to the profit before tax in
each jurisdiction
2021
€’000
47,983
10,527
(261)
148
3,430
(174)
(951)
(363)
204
658
657
2020
€’000
32,494
8,071
(1,302)
402
3,846
258
(892)
(3)
477
548
(378)
13,875
11,027
21.9%
24.8%
The Group’s subsidiaries are located in different jurisdictions and are taxed on their residual profit in
those jurisdictions. The effective tax rate will vary year on year due to the effect of changes in tax
rates and changes in the proportion of profits in each jurisdiction.
Tax effects relating to each component of other comprehensive income
Exchange gain/(loss) in net investments foreign operations
Tax (expense)/benefit
Net of tax amount
Actuarial gain/(loss) on defined benefit plans
Tax (expense)/benefit
Net of tax amount
Exchange gain/(loss) on translation of foreign operations
Tax (expense)/benefit
Net of tax amount
2021
€’000
8,228
(1,029)
7,199
27
–
27
14,581
–
14,581
2020
€’000
(4,909)
614
(4,295)
(421)
–
(421)
(10,843)
–
(10,843)
1
2
0
2
S
T
N
U
O
C
C
A
D
N
A
T
R
O
P
E
R
L
A
U
N
N
A
C
L
P
S
O
I
D
U
T
S
S
D
R
O
W
Y
E
K
Basic
Diluted
Earnings
Profit for the period from continuing operations
Weighted average number of equity shares
Basic (i)
Diluting impact of share options (ii)
Diluted (i)
(i) Includes (weighted average) shares to be issued:
2021
€ cent
45.16
42.98
€’000
34,108
2020
€ cent
30.32
28.71
€’000
21,467
Number
Number
75,526,296
70,800,455
3,826,990
3,959,878
79,353,286
74,760,333
Number
219,146
Number
242,077
(ii) Contingently issuable ordinary shares have been excluded where the conditions governing exercisability have not been
satisfied:
LTIPs
Share options
Number
903,656
–
903,656
Number
–
–
–
Details of the number of share options outstanding at the year-end are set out in note 23.
9 Dividends
Dividends paid
Interim
Dividends paid to shareholders 2021
In respect of Approval date
2021
Sep-21
€ cent per
share
Pence STG
per share
Total dividend
€’000 Payment date
0.81
0.81
0.70
0.70
615
615
Oct-21
Recommended
Final
In respect of Approval date
Expected
€ cent per
share
Pence STG
per share
Expected
total dividend
€’000
Expected
payment
date
2021
Mar-22
1.72
1.45
1,299
Jul-22
NOTES FORMING PART OF THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUEDOVERVIEWSTRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSSUPPLEMENTARY INFORMATION
NOTES FORMING PART OF THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED
9 Dividends continued
11 Intangible Assets
At 31 December 2021, Retained earnings available for distribution (being Retained earnings plus
Share-based payments reserve) in the Company were €47.7m (2020: €25.5m). In addition, certain
amounts within Merger reserve are considered distributable (see note 22).
In light of COVID-19, the Directors did not recommend any dividend payments for 2020. Dividend
payments were resumed in 2021, and the Directors do not foresee any impediment in continuing
to implement the dividend policy of the Group moving forward.
The Group does not recognise deferred tax on unremitted retained earnings, as, in general, retained
earnings (as dividends) are only remitted where there are minimal or no tax consequences.
10 Staff Costs
Total staff costs (including Directors)
Salaries and related costs
Social welfare costs
Pension costs
Share-based payments expense
Average number of employees
Operations
General and administration
Key management compensation
Salaries and related costs
Social welfare costs
Pension costs
Share-based payments expense
2021
€’000
263,036
30,455
6,685
16,394
316,570
2021
8,821
672
9,493
2021
€’000
1,569
201
25
698
2,493
2020
€’000
198,064
21,623
5,212
15,350
240,249
2020
7,768
585
8,353
2020
€’000
1,188
366
45
1,604
3,203
The key management compensation comprises compensation to eleven Directors of Keywords
Studios plc during the year (2020: seven). For more information, please refer to the Director’s
remuneration report on page 69.
Cost
At 01 January 2020
Recognition on acquisition of subsidiaries
Additions
Exchange rate movement
At 31 December 2020
Recognition on acquisition of subsidiaries
Additions
Exchange rate movement
At 31 December 2021
Accumulated amortisation
At 01 January 2020
Amortisation charge
Impairment charge
Exchange rate movement
At 31 December 2020
Amortisation charge
Exchange rate movement
At 31 December 2021
Net book value
At 01 January 2021
At 31 December 2021
Goodwill
€’000
175,639
47,112
–
(10,587)
212,164
97,918
–
14,955
325,037
–
–
147
–
147
–
–
147
212,017
324,890
Customer
relationships
€’000
Intellectual
property/
Development costs
€’000
37,620
17,673
–
(2,870)
52,423
11,502
–
4,400
68,325
20,018
6,421
–
(1,261)
25,178
13,261
2,269
40,708
27,245
27,617
3,527
–
259
13
3,799
–
315
–
4,114
–
327
1,913
11
2,251
427
–
2,678
1,548
1,436
Total*
€’000
216,786
64,785
259
(13,444)
268,386
109,420
315
19,355
397,476
20,018
6,748
2,060
(1,250)
27,576
13,688
2,269
43,533
240,810
353,943
* Please note: fully depreciated Music licences have been removed from the prior year comparatives.
Customer relationships and intellectual property/development costs are amortised on a straight-
line basis over five years. Customer relationships amortisation commences on acquisition, whereas
intellectual property/development costs amortisation commences when the product is launched.
109
1
2
0
2
S
T
N
U
O
C
C
A
D
N
A
T
R
O
P
E
R
L
A
U
N
N
A
C
L
P
S
O
I
D
U
T
S
S
D
R
O
W
Y
E
K
NOTES FORMING PART OF THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUEDOVERVIEWSTRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSSUPPLEMENTARY INFORMATION
NOTES FORMING PART OF THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED
110
11 Intangible Assets continued
Impairment tests for goodwill
The Group assesses the carrying value of goodwill each year on the basis of budget projections for
the coming year extrapolated using a one to five year growth rate and a terminal value calculated
using a long-term growth rate projection. The discount rate used of 12.5% (2020: 12.5%) is based on
the Board’s assessment of the weighted average cost of capital (“WACC”) of the Group. The WACC
assessment is supported by an annual independently calculated report, using the Capital Asset
Pricing Model. However, the Board has excluded the impact of short-term market volatility on these
calculations in determining the Group WACC.
Cost
At 01 January
Additions
Key assumptions
Recognition on acquisition of subsidiaries
1 to 5 year growth rate assumption
Long-term growth rate assumption
Value in use (€m)
Carrying value – goodwill (€m)
Actual
Sensitivity analysis
2021
10%
2%
792
325
2020
10%
2%
532
212
2021
15%
2%
947
2020
15%
2%
636
2021
5%
2%
673
2020
5%
2%
452
The value in use calculations were consistently calculated year over year, with no significant changes
in the assumptions made. The result of the value in use calculations was that no impairment
is required in this period. The Directors consider that no reasonably probable change in the
assumptions would result in an impairment.
Specific impairment reviews
In the prior year, due to the uncertainty caused by COVID-19, an impairment charge of €2,060k was
recognised, related to intangible assets in certain early technology pre-revenue businesses, fully
impairing their carrying value.
Exchange rate movement
At 31 December
Accumulated depreciation
At 01 January
Depreciation charge
Impairment charge
Exchange rate movement
At 31 December
Net book value
At 01 January
At 31 December
1
2
0
2
S
T
N
U
O
C
C
A
D
N
A
T
R
O
P
E
R
L
A
U
N
N
A
C
L
P
S
O
I
D
U
T
S
S
D
R
O
W
Y
E
K
12 Right of Use Assets
The Group has entered into leases, across the business, principally relating to property.
These property leases have varying terms and renewal rights.
2021
€’000
44,092
15,392
1,402
2,954
63,840
16,285
10,473
–
1,091
27,849
27,807
35,991
2020
€’000
29,384
15,035
2,376
(2,703)
44,092
7,915
8,402
434
(466)
16,285
21,469
27,807
NOTES FORMING PART OF THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUEDOVERVIEWSTRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSSUPPLEMENTARY INFORMATION
NOTES FORMING PART OF THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED
111
13 Property, Plant and Equipment
Computers and
software
€’000
Office furniture and
equipment
€’000
Leasehold
improvements
€’000
Cost
At 01 January 2020
Exchange rate movement
Additions
Acquisitions through business combinations at
fair value
Disposals
At 31 December 2020
Exchange rate movement
Additions
Acquisitions through business combinations at
fair value
Disposals
At 31 December 2021
Accumulated depreciation
At 01 January 2020
Exchange rate movement
Depreciation charge
Disposals
At 31 December 2020
Exchange rate movement
Depreciation charge
Disposals
At 31 December 2021
Net book value
At 01 January 2021
At 31 December 2021
14 Investments
Investments
24,843
(2,058)
8,338
523
(2,440)
29,206
2,877
13,492
304
(2,830)
43,049
14,725
(1,378)
5,979
(2,440)
16,886
2,342
8,170
(2,830)
24,568
12,320
18,481
6,747
(155)
541
125
(352)
6,906
783
1,444
266
(185)
9,214
2,751
35
868
(352)
3,302
603
590
(185)
4,310
3,604
4,904
11,161
(1,339)
5,029
197
(136)
14,912
1,289
4,424
2
(5,699)
14,928
3,112
(695)
2,136
(136)
4,417
676
2,901
(5,699)
2,295
10,495
12,633
2021
€’000
175
The Group (via Keywords Ventures Limited) has made modest investments in businesses developing
innovative technologies and services that will benefit its clients, while further accelerating the success
of investee companies through access to its global platform and relationships.
1
2
0
2
S
T
N
U
O
C
C
A
D
N
A
T
R
O
P
E
R
L
A
U
N
N
A
C
L
P
S
O
I
D
U
T
S
S
D
R
O
W
Y
E
K
15 Trade Receivables
Trade receivables
Provision for bad debts (note 24)
Financial asset held at amortised cost
Trade receivables arise from revenues derived from contracts with customers.
16 Other Receivables
Current
Accrued income from contracts with customers
Prepayments
Rent deposits and other receivables
Multimedia tax credits/video games tax relief
Tax and social security
2021
€’000
69,835
(1,768)
68,067
2021
€’000
9,997
7,114
4,203
22,860
4,936
49,110
2020
€’000
49,814
(1,982)
47,832
2020
€’000
9,202
4,608
4,816
16,668
3,371
38,665
Accrued income from contracts with customers represent mainly contract assets in process and
related items. The movement in the year comprises transfers in and out as items are accrued and
subsequently invoiced to customers, with no significant amounts written off or impaired in the period,
or no significant amounts recognised on the acquisition of subsidiaries.
17 Other Payables
Current liabilities
Accrued expenses
Payroll taxes
Deferred and contingent consideration (i)
Other payables (ii)
Non-current liabilities
Deferred and contingent consideration (i)
2021
€’000
53,526
2,666
35,888
16,343
108,423
18,254
18,254
2020
€’000
31,086
2,563
18,808
10,501
62,958
1,994
1,994
Total
€’000
42,751
(3,552)
13,908
845
(2,928)
51,024
4,949
19,360
572
(8,714)
67,191
20,588
(2,038)
8,983
(2,928)
24,605
3,621
11,661
(8,714)
31,173
26,419
36,018
2020
€’000
–
NOTES FORMING PART OF THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUEDOVERVIEWSTRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSSUPPLEMENTARY INFORMATION
NOTES FORMING PART OF THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED
112
17 Other Payables continued
(i) The movement in deferred and contingent consideration during the financial year was as follows:
Carrying amount at the beginning of the year
Consideration settled by cash
Consideration settled by shares
Unwinding of discount (note 6)
Additional liabilities from current year acquisitions (note 27)
Adjustment arising from prior year business combinations
Fair value adjustments
Exchange rate movement
Carrying amount at the end of the year
2021
€’000
20,802
(14,393)
(2,838)
1,882
40,059
5,567
–
3,063
54,142
2020
€’000
6,035
(2,489)
(3,321)
132
21,131
–
(66)
(620)
20,802
In general, in order for contingent consideration to become payable, pre-defined profit and/or revenue
targets must be exceeded. The valuation of contingent consideration is derived using data from
sources that are not widely available to the public and involves a degree of judgement (Level 3 input
in the fair value hierarchy). A 10% increase in expected performance would increase the carrying value
of contingent consideration by €1.7m, while a 10% reduction in expected performance would decrease
the carrying value by €6.3m. On an undiscounted basis, the Group may be liable for deferred and
contingent consideration ranging from €0.2m to a maximum of €61.2m.
(ii) Other payables includes deferred income from contracts with customers of €3,470k (2020: €2,967k),
which mainly comprise items invoiced prior to services being delivered. The movement in the year
comprises transfers in and out as items are deferred and subsequently recognised as revenue.
18 Loans and Borrowings
Maturity analysis of Loans and borrowings
Current
Expiry within 1 year
Non-current
Expiry between 1 and 2 years
Expiry over 2 years
Currency denomination
Euro
Canadian dollars
2021
€’000
2020
€’000
–
–
129
129
129
–
129
129
–
–
195
195
195
–
195
195
1
2
0
2
S
T
N
U
O
C
C
A
D
N
A
T
R
O
P
E
R
L
A
U
N
N
A
C
L
P
S
O
I
D
U
T
S
S
D
R
O
W
Y
E
K
In December 2021 the Company put a new unsecured revolving credit facility (“RCF”) in place with
a syndicate of four lenders, which replaced its previous €100m secured revolving credit facility.
The new RCF is a committed facility that allows financing of up to €150m, which may be drawn down
in euro, sterling, US dollars or Canadian dollars, with an option (subject to lender consent), to increase
the facility by up to €50m to a total of €200m, at interest rates based on a margin over currency
benchmark rates, plus a separate margin charged for the unutilised facility. The new RCF extends
to December 2024, with an option to extend the term by two further one-year periods.
Under the previous RCF, security was granted over the major subsidiaries of the Group. As part of
putting the new unsecured RCF in place, all security arrangements relating to the previous revolving
credit facility have now been released.
In connection with the financial covenants of both the new and previous RCF, the Group are required
to comply with and report certain interest cover and leverage ratios. Non-compliance with RCF terms
could result in lenders refusing to advance funds under the facility or, in the worst case, calling in
outstanding loans. Throughout the period, the Group operated well within the applicable ratio terms
of both the new and previous RCF agreements.
While technically any borrowings are repaid and re-borrowed multiple times during the term of the
RCF, so long as the Group remains compliant with the financial covenants and certain other terms of
the RCF, any debt is rolled from one period to another, with the legal and commercial substance of a
multi-year committed facility. Hence the Group presents any RCF liabilities as non-current.
The movements in Loans and borrowings are as follows:
At 01 January 2020
Cash flows:
Drawdowns
Repayments
Non-cash flows:
Exchange rate movement
At 31 December 2020
Cash flows:
Repayments
Non-cash flows:
Exchange rate movement
At 31 December 2021
Current
€’000
80
Non-current
€’000
59,671
Total
€’000
59,751
–
–
(7)
73
–
8
81
4,500
(64,030)
4,500
(64,030)
(19)
122
(80)
6
48
(26)
195
(80)
14
129
Following the share placing in May 2020, the balance of the previous RCF was repaid in June 2020,
with the residual balance being loans owed by Keywords Studios QC-Interactive Inc.
Loans and borrowings (classified as financial liabilities under IFRS 9), are held at amortised cost.
Interest expenses which are calculated using the effective interest method are disclosed in note 6.
NOTES FORMING PART OF THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUEDOVERVIEWSTRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSSUPPLEMENTARY INFORMATION
NOTES FORMING PART OF THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED
113
19 Lease Liabilities
The Group has entered into leases, across the business, principally relating to property. These
property leases have varying terms and renewal rights. Management applies judgement in
determining whether it is reasonably certain that a renewal or termination option will be exercised.
The movement in lease liabilities during the financial year was as follows:
Lease payments not recognised as a liability
The future minimum lease payments related to these leases
Not later than one year
Later than one year and not later than five years
Later than five years
2021
€’000
516
–
–
516
2020
€’000
991
–
–
991
Carrying amount at the beginning of the year
Recognition on acquisition of subsidiaries (note 27)
Liabilities recognised on new leases in the period
Unwinding of discounted liabilities – lease liabilities
Payment of principal and interest on lease liabilities
Exchange rate movement
Carrying amount at the end of the year
2021
€’000
28,864
1,402
15,392
985
(10,938)
1,930
37,635
2020
€’000
21,907
2,376
15,035
843
(9,013)
(2,284)
28,864
The value of leases not yet commenced to which the lessee is committed, which are not included in
lease liabilities at 31 December 2021, was €nil (2020: €10.3m).
The effect of variable lease payments and re-instatement costs on future cash outflows arising from
leases is not material for the Group.
20 Employee Defined Benefit Plans
In line with statutory requirements in France, Italy and India, we are required to maintain employee
defined benefit termination payment schemes.
In France, employees are entitled to a lump-sum on retirement or early termination, based on salary
and length of service ("Indemnité de Fin de Carrière" or "IFC"), entitling the Group’s French employees
to benefits of up to two months' salary per year of service.
In Italy, on leaving employment, each employee is entitled to 1/13.5 of their final salary for each year
of service ("Trattamento di Fine Rapporto" or "TFR").
2021
€’000
Lease
payments
2021
€’000
Finance
charges
2021
€’000
2020
€’000
Lease
liabilities
Lease
payments
2020
€’000
Finance
charges
2020
€’000
Lease
liabilities
In India, in compliance with statutory requirements, employees with over five years' service
are entitled to a termination benefit of 15/26 of monthly salary for each year of service
("Gratuity" benefits).
Maturity analysis of lease liabilities
Current
Not later than one year
12,059
842
11,217
8,291
930
7,361
Non-current
Later than one year and
not later than five years
Later than five years
At 31 December
21,299
7,000
28,299
40,358
1,488
393
1,881
2,723
19,811
6,607
26,418
37,635
18,715
5,307
24,022
32,313
1,013
1,506
2,519
3,449
17,702
3,801
21,503
28,864
The Group has elected not to recognise a lease liability for short-term leases (leases with an expected
term of twelve months or less) or for leases of low-value assets. Payments made under such leases
are expensed on a straight-line basis. The expenses in the period relating to payments not included in
the measurement of the lease liability were as follows:
Lease payments not recognised as a liability
Short-term leases
Leases of low value assets
2021
€’000
1,531
–
1,531
2020
€’000
1,747
–
1,747
The Group commissions an actuarial valuation of the related liabilities in each jurisdiction annually.
The liabilities at year end are recorded as long term. The actuarial gain or loss is recorded separately
within Other comprehensive income. The movements through the year are as follows:
Opening liabilities at 01 January
Service cost
Interest cost
Benefits paid
Actuarial (gain)/loss
Exchange rate movement
Closing liabilities at 31 December
2021
€’000
2,693
419
33
(141)
(27)
111
2020
€’000
2,049
354
30
(110)
421
(51)
3,088
2,693
1
2
0
2
S
T
N
U
O
C
C
A
D
N
A
T
R
O
P
E
R
L
A
U
N
N
A
C
L
P
S
O
I
D
U
T
S
S
D
R
O
W
Y
E
K
NOTES FORMING PART OF THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUEDOVERVIEWSTRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSSUPPLEMENTARY INFORMATION
NOTES FORMING PART OF THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED
20 Employee Defined Benefit Plans continued
– Certain inputs were estimated by management, including:
– Employee attrition rates, estimated based on company experience in each jurisdiction.
– In Italy, TFR rules allow for early drawdown of benefits in certain circumstances. Such advances
were estimated on the basis of company experience.
114
1
2
0
2
S
T
N
U
O
C
C
A
D
N
A
T
R
O
P
E
R
L
A
U
N
N
A
C
L
P
S
O
I
D
U
T
S
S
D
R
O
W
Y
E
K
The Directors have considered the key specific risk factors which the Group faces due to the
employee defined benefit plans which are in place. Having fully considered all specific elements of
these plans, the Directors believe that the key issues faced are as follows:
– The plan is currently 100% unfunded, there are no specific assets to meet the future liabilities as
they fall due; as such, there will be a cash flow impact as the liabilities must be met with current
working capital as they fall due.
The Group has taken no specific actions to mitigate these factors as due to the long-term nature of
the plans it is expected that there will be no sudden financial impact on the Group’s results caused
by any of these factors. A maturity profile of the obligation is not presented as the liability is not
significant in the context of the Group, and due to the age profile of employees a significant outlay
is not anticipated for the foreseeable future.
In 2022, the Group expects the costs of the employee defined benefit plan to be in line with current
year levels, as staff levels are not anticipated to change significantly in the period.
The actuarial valuation is based on the Projected Unit Credit Method, in line with IAS 19.
Cost for year
Service cost
Interest cost
Actuarial (gain)/loss
Actuarial (gain)/loss
Change due to experience
Change due to demographical assumptions
Change due to financial assumptions
2021
€’000
419
33
(27)
425
2021
€’000
41
(9)
(59)
(27)
2020
€’000
354
30
421
805
2020
€’000
98
(93)
416
421
Economic and financial assumptions
Staff salary increase rate
Inflation rate
Discount rate
Key statistics
Staff (number)
Average age (years)
Average service (years)
Interest rate sensitivities
(0.25)%
0.25%
Mortality rate sensitivities
(0.025)%
0.025%
Staff turnover rate sensitivities
(0.50)%
0.50%
Staff salary increase rate sensitivities
Assumptions Underlying the Actuarial Valuations and Sensitivities of the Assumptions
For the actuarial valuations, the following demographic and economic and financial assumptions
were applied:
(0.50)%
0.50%
– Mortality probabilities were derived from the population demographics, as recorded by the
government statistics offices in each jurisdiction.
– Disability, retirement age and other relevant demographic assumptions were taken from relevant
life assurance statistics.
2021
4.07%
3.04%
1.67%
2021
874
31
4
2021
€’000
3,176
2,880
2021
€’000
3,018
3,015
2021
€’000
3,049
2,985
2021
€’000
2,976
3,072
2020
3.63%
2.93%
1.23%
2020
782
31
4
2020
€’000
2,842
2,568
2020
€’000
2,696
2,693
2020
€’000
2,726
2,664
2020
€’000
2,703
2,745
NOTES FORMING PART OF THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUEDOVERVIEWSTRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSSUPPLEMENTARY INFORMATION
NOTES FORMING PART OF THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED
115
21 Deferred Tax
Details of the deferred tax assets and liabilities, and amounts recognised in the Consolidated
statement of comprehensive income are as follows:
22 Shareholders’ Equity
Share Capital
2021 €’000
Issue date Per share €
Defined benefit termination payments
Available losses
Rent-free period provisions
Fixed asset tax base versus accounting book value
Deferred tax related to tax credits
Deferred tax arising on items deductible on a paid basis
Recognition on acquisition of subsidiaries
Deferred tax arising on intangibles
Net tax assets/liabilities
Impact of change in tax rates
Prior year (over)/under provision
Total (credited)/charged to income statement
Defined benefit termination payments
Available losses
Rent-free period provisions
Fixed asset tax base versus accounting book value
Deferred tax related to tax credits
Deferred tax arising on items deductible on a paid basis
Recognition on acquisition of subsidiaries
Deferred tax arising on intangibles
Net tax assets/liabilities
Impact of change in tax rates
Prior year (over)/under provision
Total (credited)/charged to income statement
Assets
Liabilities
328
1,817
222
1,818
–
5,557
2,539
9,187
–
–
–
1,702
3,570
1,761
3,006
3,801
21,468
13,840
2020 €’000
Assets
Liabilities
69
1,157
75
603
38
3,344
9,363
–
–
–
–
704
2,144
1,405
3,970
2,352
14,649
10,575
Net
328
1,817
222
116
(3,570)
3,796
(467)
5,386
7,628
Net
69
1,157
75
(101)
(2,106)
1,939
5,393
(2,352)
4,074
(Credited)/
charged
to income
statement
(259)
(660)
(147)
(217)
1,464
(1,857)
–
(2,345)
(4,021)
189
75
(3,757)
(Credited)/
charged
to income
statement
(19)
293
(64)
104
(1,057)
(949)
–
(1,451)
(3,143)
289
(18)
(2,872)
The deferred tax asset not recognised on available losses at the period end is €3.2m (2020: €3.2m).
1
2
0
2
S
T
N
U
O
C
C
A
D
N
A
T
R
O
P
E
R
L
A
U
N
N
A
C
L
P
S
O
I
D
U
T
S
S
D
R
O
W
Y
E
K
Number of
ordinary
£0.01 shares
Number of
ordinary
£0.01 shares
– to be issued
Share
capital
€’000
Share
capital – to
be issued
€’000
Share
premium
€’000
Merger
reserve
€’000
65,212,515
349,721
780
5,310
20,718
132,712
At 01 January 2020
Acquisition-related
issuance of shares:
Sunny Side Up
Laced
Cord Worldwide
06-Jan-20
14-Apr-20
14-Apr-20
Descriptive Video Works 12-Jun-20
12.46
17.48
17.48
17.93
60,179
(60,179)
8,194
65,550
35,560
(8,194)
(65,550)
(35,560)
Coconut Lizard
25-Jun-20
20.23
–
19,739
Studio Gobo and
Electric Square
Maverick Media
TV+SYNCHRON
G-Net Media
Ichi
Jinglebell
19-Aug-20
26-Aug-20
05-Oct-20
24-Nov-20
02-Dec-20
10-Dec-20
High Voltage Software
14-Dec-20
Indigo Pearl
Kantan
15-Dec-20
22-Dec-20
Acquisition-related
issuance of shares
16.72
24.63
13.12
23.26
15.95
25.94
26.06
26.27
15.86
198,576
–
–
13,579
68,608
(68,608)
–
130,448
55,612
(55,612)
–
–
–
11,564
307,597
20,125
26,085
(26,085)
518,364
183,264
Share placing
20-May-20
16.23
6,900,000
Exercise of share
options
At 31 December 2020
–
–
0.96
1,448,364
74,079,243
532,985
1
–
1
–
–
2
–
1
–
1
–
–
–
–
6
77
16
879
(750)
(143)
(1,145)
(638)
399
–
334
(900)
3,034
(886)
300
8,017
529
(414)
7,737
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
749
143
1,145
637
–
3,319
–
899
–
886
–
–
–
414
8,192
109,372
2,233
–
13,047
22,951
250,276
NOTES FORMING PART OF THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUEDOVERVIEWSTRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSSUPPLEMENTARY INFORMATION
NOTES FORMING PART OF THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED
116
22 Shareholders’ Equity continued
Issue date Per share €
Number of
ordinary
£0.01 shares
Number of
ordinary
£0.01 shares
– to be issued
Share
capital
€’000
Share
capital – to
be issued
€’000
Share
premium
€’000
Merger
reserve
€’000
Acquisition-related
issuance of shares:
High Voltage Software
12-Jan-21
26.06
307,597
(307,597)
Heavy Iron
Tantalus
Tantalus
Climax Studios
Climax Studios
Ichi
Coconut Lizard
Kantan
Kantan related
adjustment
AMC
Maverick Media
Coconut Lizard
G-Net Media
G-Net Media related
adjustment
Waste
Indigo Pearl
12-Jan-21
18-Mar-21
15-Apr-21
21-Apr-21
17-May-21
28-May-21
25-Jun-21
02-Jul-21
02-Jul-21
11-Aug-21
27-Aug-21
07-Sep-21
06-Dec-21
06-Dec-21
16-Dec-21
22-Dec-21
High Voltage Software
24-Dec-21
31.84
27.87
27.87
33.53
33.53
15.94
18.24
15.86
15.86
33.49
25.35
28.44
23.26
23.26
30.78
26.27
29.77
–
–
12,914
368,750
368,750
(368,750)
–
232,517
232,517
(232,517)
14,635
19,739
12,614
–
–
36,211
7,962
(14,635)
(19,739)
(12,614)
(2,683)
25,080
(13,579)
–
130,410
(130,410)
–
–
20,125
69,130
(38)
20,585
(20,125)
–
4
–
–
4
–
3
–
–
–
–
–
–
–
2
–
–
–
1
(8,017)
411
10,275
–
–
–
(10,275)
10,271
7,797
(7,797)
(233)
(399)
(200)
–
840
(334)
–
(3,034)
(1)
634
(529)
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
Acquisition-related
issuance of shares
Employee Share
Purchase Plan
Exercise of share
options
At 31 December 2021
1,219,690
(462,841)
14
(10,862)
10,271
23,401
13,982
962,860
–
–
–
11
–
–
398
4,929
–
–
76,275,775
70,144
904
2,185
38,549
273,677
1
2
0
2
S
T
N
U
O
C
C
A
D
N
A
T
R
O
P
E
R
L
A
U
N
N
A
C
L
P
S
O
I
D
U
T
S
S
D
R
O
W
Y
E
K
Subject to applicable law, the Company’s articles of association and any relevant authority of the
Company passed by the shareholders in general meeting, there is no limit to the number of shares
which the Company can issue, nor are there are any restrictions on dividends or distributions on
such shares. In the context of the Company’s general meeting authorities, at the Company’s AGM on
26 May 2021 its shareholders gave the Directors the authority to allot the following number of shares
(or grant rights to subscribe for, or convert any security into, shares) in the capital of the Company:
8,013
a) Up to 3,723,243 shares in respect of the Company’s Long Term Incentive Plan and Share Option Plan
(5% of the Company’s issued share capital as at 8 April 2021); and
b) Otherwise, up to 24,796,802 shares (33.3% of the Company’s issued share capital as at 8 April 2021).
This authority is considered prudent as it gives the Company flexibility to take advantage of possible
opportunities which may arise from time to time. The authority granted at the 2021 AGM will expire on
the earlier of (i) fifteen months after 26 May 2021; and (ii) the conclusion of the 2022 AGM.
Shares to be issued are valued at the share price at the date of acquisition, and are recorded in
accordance with IAS 32.16.
Shares held in the Employee Benefit Trust (“EBT”)
Ordinary shares held in the EBT
2021
2020
Shares
335,425
€’000
1,997
Shares
335,425
€’000
1,997
–
–
–
–
7,794
233
399
200
–
–
918
227
3,032
–
–
528
2,057
NOTES FORMING PART OF THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUEDOVERVIEWSTRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSSUPPLEMENTARY INFORMATION
NOTES FORMING PART OF THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED
117
22 Shareholders’ Equity continued
23 Share Incentive Schemes
Reserves
The following describes the nature and purpose of each reserve within owners’ equity:
In July 2013, at the time of the IPO, a Share Option Scheme and a Long-Term Incentive Plan (“LTIP”)
was put in place, while in 2021, the Group introduced an Employee Share Purchase Plan. The charge
in relation to these arrangements is as follows:
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-based payments reserve
The Share-based payments reserve is the credit arising on share-based payment
charges in relation to the Company’s share and share option schemes.
Shares to be issued
Merger reserve
For deferred consideration which is to be provided for by the issue of a fixed number
of shares at a future defined date, where there is no obligation on Keywords to offer
a variable number of shares, the deferred consideration is classified as an Equity
Arrangement and the value of the shares is fixed at the date of the acquisition.
The merger reserve was initially created following the Group reconstruction,
when Keywords Studios plc acquired the Keywords International Limited group
of companies.
When the Group uses Keywords Studios plc shares as consideration for the
acquisition of an entity and has secured at least a 90% equity holding in the
acquisition, the value of the shares in excess of the nominal value (net of share
issuance costs) is also recorded within this reserve, in line with S612 of the
Companies Act 2006.
Within Merger reserve are balances related to the share premium on the share
placements in 2015 and 2020, of €14.4m and €109.5m respectively, both completed
via a cash box structure, with the Company acquiring the net proceeds via a share
for share exchange. In both cases, the share premium on the issuance of new shares
was credited to Merger reserve (in accordance with S610 of the Companies Act
2006). At the time of the placements, the proceeds were not allocated to a specific
acquisition or specific purpose, and thus, amounts totalling €123.9m included in the
Merger reserve are considered distributable.
Share option scheme expense
LTIP option expense
Employee Share Purchase Plan
Share-based payments expense
2021
€’000
3,446
12,904
44
16,394
2020
€’000
2,576
12,774
–
15,350
Of the total Share-based payments expense, €698k relates to Directors of the Company (2020: €1,007k).
Share Option Scheme
Share options are granted to Executive Directors and to permanent employees. The exercise price of
the granted options is equal to the market price of the shares at the time of the award of the options.
The Company has no legal or constructive obligation to repurchase or settle the options in cash.
Movements in the number of share options outstanding and their related weighted average exercise
prices are as follows:
Outstanding at the beginning of the period
Granted
Lapsed
Exercised
Outstanding at the end of the period
Exercisable at the end of the period
Weighted average share price at date of exercise
2021
2020
Average exercise
price in £ per share
Number of options
Average exercise
price in £ per share
Number of options
12.66
25.48
18.96
11.46
15.68
6.74
27.42
2,345,238
616,000
(163,791)
(373,879)
2,423,568
668,734
9.97
15.93
15.64
4.55
12.66
4.39
17.91
2,148,102
822,000
(179,151)
(445,713)
2,345,238
638,238
1
2
0
2
S
T
N
U
O
C
C
A
D
N
A
T
R
O
P
E
R
L
A
U
N
N
A
C
L
P
S
O
I
D
U
T
S
S
D
R
O
W
Y
E
K
NOTES FORMING PART OF THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUEDOVERVIEWSTRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSSUPPLEMENTARY INFORMATION
NOTES FORMING PART OF THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED
118
23 Share Incentive Schemes continued
Summary by year
2015
£1.58
2016
£2.54
2017
£7.76
2018
£17.10
2019
2020
2021
Total
£15.88
£15.93
£25.48
458,613
34,296
127,034
374,982
588,000
762,313
–
2,345,238
–
–
–
–
–
–
–
–
616,000
616,000
(500)
(11,000)
(37,000)
(64,291)
(51,000)
(163,791)
(73,318)
(13,719)
(69,534)
(119,058)
(98,250)
–
–
(373,879)
385,295
20,577
57,000
244,924
452,750
698,022
565,000
2,423,568
Year of Option
Exercise price
Outstanding at
the beginning
of the period
Granted
Lapsed
Exercised
Outstanding at the
end of the period
Exercisable at
31 December 2021
Exercisable 2022
Exercisable 2023
Exercisable 2024
Exercisable 2025
Long-term Incentive Plan Scheme
LTIP share awards are subject to KWS performance versus the designated share index over a
three-year period.
Movements in the number of share options outstanding and their related weighted average exercise
prices are as follows:
Outstanding at the beginning of the period
Granted
Lapsed
Exercised
2021
2020
Average exercise
price in £ per share
Number of options
Average exercise
price in £ per share
Number of options
0.01
0.01
0.01
0.01
0.01
0.01
27.62
3,692,817
932,656
(312,006)
(608,569)
3,704,898
559,506
0.01
0.01
0.01
0.01
0.01
0.01
17.34
3,445,868
1,428,000
(178,400)
(1,002,651)
3,692,817
373,648
385,295
20,577
57,000
111,590
93,750
522
133,334
179,500
232,500
–
–
668,734
545,334
Outstanding at the end of the period
Exercisable at the end of the period
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
179,500
232,500
188,333
600,333
Weighted average share price at date of exercise
–
–
232,500
188,333
420,833
–
188,334
188,334
Summary by year
The inputs into the Black-Scholes model, used to value the options are as follows:
Year of Option
2015
2016
2017
2018
2019
2020
2021
Weighted
average
Weighted average
share price (£)
Weighted average
exercise price (£)
Fair value at
measurement
date (€)
Average expected
life
£1.64
£2.54
£7.75
£17.22
£16.09
£16.00
£26.42
£1.58
£2.54
£7.76
£17.10
£15.88
£15.93
£25.48
€0.56
€0.40
€1.13
€3.79
€5.72
€6.06
€9.32
4 Years
4 Years
4 Years
4 Years
4 Years
4 Years
4 Years
Expected volatility
28.03%
Risk-free rates
0.90%
27.17%
0.58%
24.79%
35.87%
45.23%
50.15%
0.16%
0.89%
0.81%
0.07%
47.70%
0.15%
Average expected
dividend yield
Weighted average
remaining life of
options in months
0.75%
0.55%
0.21%
0.10%
0.10%
0.10%
0.10%
–
–
–
5
17
29
41
22
Expected volatility was determined by reference to KWS volatility. 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.
Year of Option
Exercise price
Outstanding at
the beginning
of the period
Granted
Lapsed
Exercised
Outstanding at the
end of the period
Exercisable at
31 December 2021
Exercisable 2022
Exercisable 2023
Exercisable 2024
2015
£0.01
2016
£0.01
2017
£0.01
2018
£0.01
2019
£0.01
2020
£0.01
2021
£0.01
Total
47,358
132,293
196,030
799,000
1,133,936
1,384,200
–
3,692,817
–
–
–
–
–
–
–
–
–
932,656
932,656
(6,606)
(115,400)
(161,000)
(29,000)
(312,006)
(8,358)
(46,405)
(90,994)
(462,812)
–
–
–
(608,569)
39,000
85,888
105,036
329,582
1,018,536
1,223,200
903,656
3,704,898
39,000
85,888
105,036
329,582
–
–
–
–
–
–
–
–
–
–
–
–
–
1,018,536
–
–
–
–
1,223,200
–
–
–
559,506
1,018,536
1,223,200
–
903,656
903,656
1
2
0
2
S
T
N
U
O
C
C
A
D
N
A
T
R
O
P
E
R
L
A
U
N
N
A
C
L
P
S
O
I
D
U
T
S
S
D
R
O
W
Y
E
K
NOTES FORMING PART OF THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUEDOVERVIEWSTRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSSUPPLEMENTARY INFORMATION
NOTES FORMING PART OF THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED
119
23 Share Incentive Schemes continued
The inputs into the Monte Carlo binomial model, used to value the options, are as follows:
Year of Option
2015
2016
2017
2018
2019
2020
2021
Weighted
average
Weighted average
share price (£)
Weighted average
exercise price (£)
Fair value at
measurement
date (€)
Average expected
life
£1.60
£2.56
£7.75
£17.24
£16.05
£16.00
£26.42
£0.01
£0.01
£0.01
£0.01
£0.01
£0.01
£0.01
€1.38
€1.74
€4.96
€11.83
€13.98
€13.28
€16.73
3 Years
3 Years
3 Years
3 Years
3 Years
3 Years
3 Years
Expected volatility
28.21%
Risk-free rates
0.88%
27.11%
0.54%
24.79%
35.87%
45.26%
50.15%
0.16%
0.89%
0.81%
0.07%
47.70%
0.13%
Weighted average
remaining life of
options in months
–
–
–
–
5
17
29
14
Expected volatility was determined by reference to KWS share price volatility. 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.
LTIP’s vest on the third anniversary of the grant, if the market performance criteria are met. LTIPs
must be exercised before the seventh anniversary of the grant.
Salary Shares
In 2021, a total of 26,738 Salary Shares were granted to a number of Executive Directors under the
LTIP plan, with 2,462 shares vesting two years after the grant date, and 24,276 shares vesting three
years after the grant date. The average fair value of the shares at the grant date was €32.08.
1
2
0
2
S
T
N
U
O
C
C
A
D
N
A
T
R
O
P
E
R
L
A
U
N
N
A
C
L
P
S
O
I
D
U
T
S
S
D
R
O
W
Y
E
K
24 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 rates. The management monitors interest rate fluctuations on a
continuous basis and acts accordingly.
Where the Group has a significant amount of surplus cash, it invests in higher earning interest deposit
accounts. Due to interest rate conditions, the interest rates for short-term deposits are at similar
levels to those achieved for longer terms.
The effect of a strengthening or a weakening of 1% in interest rates charged during the reporting
period on the interest expense would have resulted in the following pre-tax profit/(loss) impact for
the year:
1%
Strengthening
2021
€’000
1%
Weakening
2021
€’000
1%
Strengthening
2020
€’000
Interest expense
–
–
(290)
Credit Risk
The Group’s main financial assets are cash and cash equivalents, as well as trade and other
receivables which represent the Group’s maximum exposure to credit risk in connection with
its financial assets.
1%
Weakening
2020
€’000
257
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. Credit risk arising in
the context of the Group’s operations is not significant with the total bad debt provision at the balance
sheet date amounting to 2.5% of net trade receivables (2020: 4%). Customer credit risk is managed
at appropriate Group locations according to established policies, procedures and controls. Customer
credit quality is assessed and credit limits are established where appropriate. Outstanding customer
balances are regularly monitored and a review for indicators of impairment (evidence of financial
difficulty of the customer, payment default, breach of contract etc.) is carried out at each reporting
date. Significant balances are reviewed individually while smaller balances are grouped and assessed
collectively. Receivables balances are unsecured and non-interest-bearing. The trade receivables
balances disclosed comprise a large number of customers spread across the Group’s activities
and geographies with balances classified as “Not past due” representing 77.5% of the total trade
receivables balance at the balance sheet date (2020: 79%). Trade and other receivables are carried on
the Consolidated statement of financial position net of bad debt provisions.
NOTES FORMING PART OF THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUEDOVERVIEWSTRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSSUPPLEMENTARY INFORMATION
NOTES FORMING PART OF THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED
120
24 Financial Instruments and Risk Management continued
The ageing of trade receivables can be analysed as follows:
At 31 December 2021
At 31 December 2020
Total
€’000
68,067
47,832
Not past due
€’000
52,753
37,936
1–2 months
past due
€’000
More than 2 months
past due
€’000
14,192
7,678
1,122
2,218
A provision for doubtful debtors is included within trade receivables and can be reconciled as follows:
Provision at the beginning of the year
Impairment of financial assets (trade receivables) charged to administration expenses
Foreign exchange movement in the year
Utilised
Provision at the end of the year
2021
€’000
1,982
821
63
(1,098)
1,768
2020
€’000
1,283
1,293
(284)
(310)
1,982
Currency Risk
Currency risk is the risk that the value of financial instruments will fluctuate due to changes in foreign
exchange rates. The foreign exchange risk arises for the Group where assets and liabilities arise in a
currency other than the functional currency of the entity.
The Group’s policy, where possible, is for Group entities to manage foreign exchange risk at a
local level by matching the currency in which revenue is generated with the expenses incurred
and by settling liabilities denominated in their functional currency with cash generated from their
own operations in that currency. Where Group entities have liabilities denominated in a currency
other than their functional currency (and have insufficient reserves of that currency to settle them),
cash already denominated in that currency will, where possible, be transferred from elsewhere within
the Group.
The Group is predominantly exposed to currency risk on the balances held within working capital
across the Group and the exposure is concentrated in the movement of the US dollar, sterling
and Canadian dollar against the euro. The effect of a strengthening or weakening of 10% in those
currencies against the euro at the reporting date on the working capital balances would, all other
variables held constant, have resulted in the following pre-tax profit/(loss) impact for the year:
Trade receivables loss allowance is estimated using a practical expedient to arrive at lifetime expected
credit losses. Overdue receivables are evaluated to calculate an expected credit loss using a historical
credit loss experience of 1.0% (2020: 0.5%). Taking into account internal and external information,
the historical credit loss experience may be adjusted where it is determined that there has been a
significant increase in credit risk. Where a receivable is credit impaired, the impairment is recognised
immediately, and impaired balances are removed from the expected credit loss calculation.
US dollar to euro
Sterling to euro
Canadian dollar to euro
2021
€’000
2020
€’000
10%
Strengthening
10%
Weakening
10%
Strengthening
10%
Weakening
5,545
(1,333)
169
(4,536)
1,091
(138)
4,712
835
594
(3,855)
(683)
(486)
Trade receivables gross
Credit impaired
Expected credit losses
At 31 December 2021
Trade receivables gross
Credit impaired
Expected credit losses
At 31 December 2020
Total
€’000
69,835
(1,070)
(698)
68,067
Total
€’000
49,814
(1,733)
(249)
47,832
Not past due
€’000
1–2 months
past due
€’000
More than 2 months
past due
€’000
53,286
–
(533)
52,753
14,502
(165)
(145)
14,192
2,047
(905)
(20)
1,122
Not past due
€’000
1–2 months
past due
€’000
More than 2 months
past due
€’000
38,150
(23)
(191)
37,936
7,887
(170)
(39)
7,678
3,777
(1,540)
(19)
2,218
There were no related party receivables at the end of either period presented.
1
2
0
2
S
T
N
U
O
C
C
A
D
N
A
T
R
O
P
E
R
L
A
U
N
N
A
C
L
P
S
O
I
D
U
T
S
S
D
R
O
W
Y
E
K
NOTES FORMING PART OF THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUEDOVERVIEWSTRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSSUPPLEMENTARY INFORMATION
NOTES FORMING PART OF THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED
121
24 Financial Instruments and Risk Management continued
Total Financial Assets and Liabilities
The carrying amount of the financial assets and liabilities shown in the Consolidated and Company
Statements of financial position are stated at amortised costs, with the exception of contingent
consideration held at fair value.
Liquidity Risk
Liquidity risk arises from the Group’s management of working capital and the financial charges on its
debt instruments.
The Group’s policy is to ensure that it will have sufficient cash to allow it to meet its liabilities when
they become due. The Directors consider liquidity risk is mitigated by the strong working capital
position, with €229.7m of current assets, including cash of €105.7m available to settle liabilities as they
fall due.
The following are the contractual maturities (representing undiscounted contractual cash flows) of the
Group’s financial liabilities:
Carrying value
Contractual cash flows
25 Capital Management
Group
Loans and borrowings (note 18)
Less: cash and cash equivalents
Net debt/(net cash) position
Total equity
Net debt/(net cash) to capital ratio
2021
€’000
129
(105,710)
(105,581)
472,120
(22.4)%
2020
€’000
195
(103,070)
(102,875)
371,235
(27.7)%
The Group manages capital by monitoring debt to capital and net debt ratios. This debt to capital ratio
is calculated as net debt to total equity. Net debt is calculated as loans and borrowings (as shown
in the Consolidated statement of financial position) less cash and cash equivalents. The liquidity
risk and cash management for the Group is managed centrally by the Group Treasury function.
Group Treasury manage bank balances centrally, and monitors the credit rating and stability of
the institutions the Group banks with. The Board receives projections on a monthly basis as well as
information regarding cash balances. The Group’s strategy is to preserve a strong cash base and
secure access to finance at reasonable cost by maintaining a good credit rating.
1
2
0
2
S
T
N
U
O
C
C
A
D
N
A
T
R
O
P
E
R
L
A
U
N
N
A
C
L
P
S
O
I
D
U
T
S
S
D
R
O
W
Y
E
K
At 31 December 2021
Trade payables
Deferred and contingent
consideration (i)
Other payables
Loans and borrowings
Loan interest
Lease liabilities
Total
At 31 December 2020
Trade payables
Deferred and contingent
consideration (i)
Other payables
Loans and borrowings
Loan interest
Lease liabilities
Total
Within 1 year
€’000
1–2 years
€’000
2–5 years
€’000
Over 5 years
€’000
26 Related Parties and Shareholders
Total
€’000
11,122
54,142
72,535
129
–
37,635
175,563
Total
€’000
11,122
61,223
72,535
129
6
40,358
185,373
11,122
–
–
14,008
9,262
37,953
72,535
81
4
12,059
133,754
–
48
2
8,257
22,315
–
–
–
–
–
–
–
–
Italicatessen Limited, a company registered in Ireland, is related by virtue of a common significant
shareholder. P.E.Q. Holdings Limited is 100% owner of Italicatessen Limited. At 31 December 2021,
P.E.Q. Holdings Limited owned 0.66% (2020: 4.73%) of the Company. In addition, Mr. Giorgio Guastalla
is a Director of Italicatessen Limited, P.E.Q. Holdings Limited and the Company, and owns, or controls,
90% of the share capital of P.E.Q. Holdings Limited. Mr. Giorgio Guastalla retired from the Board of the
Company in January 2022.
13,042
22,304
7,000
7,000
There were no transactions in the period with Italicatessen Limited (2020: €13k), who provided
canteen services to Keywords International Limited on an arm’s length basis. This activity ceased in
2020, and there were no balances owing to Italicatessen Limited at the end of either period presented.
Carrying value
Contractual cash flows
Total
€’000
8,170
20,802
44,150
195
10
28,864
102,191
Total
€’000
8,170
26,442
44,150
195
10
32,313
111,280
Within 1 year
€’000
1–2 years
€’000
2–5 years
€’000
Over 5 years
€’000
8,170
20,699
44,150
73
5
8,291
81,388
–
5,743
–
122
5
7,153
13,023
–
–
–
–
–
–
–
–
–
–
11,562
11,562
5,307
5,307
In addition, on an arm’s length basis, the Group paid rent of €22k in 2020, in respect of premises
occupied by employees of the Group in Dublin to Mr. Giorgio Guastalla, Director of the Company, and
shareholder of P.E.Q. Holdings Limited. This activity also ceased in 2020, and there were no balances
owing at the end of either period presented in respect of this activity.
The details of key management compensation (being the remuneration of the Directors) are set out
in note 10.
(i) Deferred and contingent consideration at 31 December 2021 has arisen on business combinations, and is based on
contracted amounts to be paid in the future to sellers under share purchase agreements. In general, in order for contingent
consideration to become payable, pre-defined profit and/or revenue targets must be exceeded. On an undiscounted basis,
the Group may be liable for deferred and contingent consideration up to a maximum of €61.2m.
NOTES FORMING PART OF THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUEDOVERVIEWSTRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSSUPPLEMENTARY INFORMATION
122
27 Business Combinations
Details of goodwill and the fair value of net assets acquired
Book value:
Property, plant and equipment
Right of use assets
Trade and other receivables – gross
Bad debt provision
Cash and cash equivalents
Trade and other payables
Lease liabilities
Book value of identifiable assets and liabilities acquired
Fair value adjustments:
Identifiable intangible assets
Identifiable tangible assets
Deferred tax assets
Trade and other payables
Deferred tax liabilities
Total fair value adjustments
Net assets acquired
Goodwill from current year acquisitions
Total purchase consideration
Details of purchase consideration and outflows from current acquisitions
Cash
Deferred cash
Deferred consideration contingent on performance
Combination put/call options to acquire residual 15% of Tantalus
Shares to be issued
Total purchase consideration
Related acquisition costs charged through to the Statement of comprehensive income:
Number of shares:
Shares issued on acquisition
Fixed number of shares to be issued
Net cash outflow arising on acquisition:
Cash paid in the period
Less: cash and cash equivalent balances transferred
Net cash outflow arising on acquisition
2021
€’000
572
1,402
7,439
(7)
10,618
(8,245)
(1,402)
10,377
11,502
–
2,539
–
(3,006)
11,035
21,412
97,918
119,330
59,314
1,565
33,726
4,768
19,957
119,330
1,099
621,852
37,994
59,314
(10,617)
48,697
2020
€’000
872
2,376
4,069
–
9,477
(4,904)
(2,376)
9,514
17,673
(27)
9,363
1,003
(3,970)
24,042
33,556
47,112
80,668
46,924
41
21,090
–
12,613
80,668
307
–
503,052
46,924
(9,477)
37,447
1
2
0
2
S
T
N
U
O
C
C
A
D
N
A
T
R
O
P
E
R
L
A
U
N
N
A
C
L
P
S
O
I
D
U
T
S
S
D
R
O
W
Y
E
K
Business Combinations continued
Details of pro forma revenues and profitability of current acquisitions
Pre-acquisition revenue
Pre-acquisition revenue with Keywords Group
Post-acquisition revenue
Pro forma revenue
Pre-acquisition profit before tax
Post-acquisition profit before tax
Pro forma profit before tax
2021
€’000
2020
€’000
16,345
(1,908)
24,990
39,427
2,573
9,653
12,226
35,729
–
7,208
42,937
9,399
2,561
11,960
During the period, the Group completed six acquisitions, Heavy Iron, Tantalus, Climax Studios, AMC,
Waste and Wicked Witch, purchasing 100% of the share capital of these businesses, except in the
case of Tantalus where the Group acquired an 85% interest. A combination of put and call options
are in place requiring the sellers to sell, or the Group to buy, the remaining 15% shareholding in three
years. The Group has recognised a contingent consideration liability at fair value, being the Group’s
estimate of the present value of the amount required to settle the liability, and has accounted for the
acquisition as if a 100% interest was acquired on acquisition (see note 3).
The aggregate amounts recognised in respect of the identifiable assets acquired and liabilities
assumed on acquisitions completed in the period are set out in the table above. Details of the
purchase consideration and other information relevant to the evaluation of the financial effect of the
acquisitions are also presented.
The main factors leading to the recognition of goodwill on the acquisitions are the presence of certain
intangible assets in the acquired entities, which are not valued for separate recognition. These include
expertise in the acquired entities, enhancing and growing our service capabilities, broadening our
service offering, and extending our geographical footprint, further building out our global platform.
The goodwill that arose from business combinations completed in the period that is expected to be
deductible for tax purposes was €9.1m.
NOTES FORMING PART OF THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUEDOVERVIEWSTRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSSUPPLEMENTARY INFORMATION
123
28 Subsidiaries
The results and financial position of all the subsidiaries are included in the consolidated financial
statements. Details of the Company’s direct and indirect subsidiaries as at 31 December 2021 are
set out below:
Name
Country of
incorporation
Date of
incorporation/
acquisition
Ownership^
Registered office
3455 Productions, LLC
USA
24 Nov 20
100%
251 Little Falls Drive, Wilmington, New Castle, DE 19808, USA
9409–2954 Québec Inc.
Canada
04 Dec 19
100%
1751 Richardson Street, Suite 8400, Montreal, Quebec,
H3K 1G6, Canada
Alset Limited
Appsectest Limited
UK
UK
17 Aug 18
100%
1st Floor, 39 Earlham Street, London WC2H 9LT, UK
22 Jan 19
48.8%
Unit 13 Orton Enterprise Centre, Bakewell Road,
Peterborough, Cambridgeshire, PE2 6XU, UK
India
17 Feb 14
100%
3rd floor, Vardhman Orchard Plaza, Plot No 4, LSC, West
Enclave, Pitampura, New Delhi, 110034, India
17 Feb 14
100%
1st Floor, 39 Earlham Street, London, WC2H 9LT, UK
17 Feb 14
100%
251 Little Falls Drive, Wilmington, New Castle, DE 19808, USA
17 Aug 18
100%
1st Floor, 39 Earlham Street, London, WC2H 9LT, UK
08 Jun 18
100%
8335 Sunset Blvd, Ste 307, West Hollywood, CA 90069, USA
22 Apr 21
100%
1st Floor, 39 Earlham Street, London, WC2H 9LT, UK
22 Apr 21
100%
1st Floor, 39 Earlham Street, London, WC2H 9LT, UK
25 Jun 20
100%
1st Floor, 39 Earlham Street, London, WC2H 9LT, UK
07 Apr 18
100%
1st Floor, 39 Earlham Street, London, WC2H 9LT, UK
30 Aug 18
100%
1st Floor, 39 Earlham Street, London, WC2H 9LT, UK
19 Oct 17
100%
100%
1st Floor, 39 Earlham Street, London, WC2H 9LT, UK
400–725 Granville Street, PO Box 10325, Vancouver BC
V7Y 1G5, Canada
Descriptive Video Works Inc.
Canada
11 Jun 19
Eastern New Media Limited
Hong Kong 19 May 17
100%
4404, 44/F Hopewell Centre, 183 Queen’s Road East,
Wanchai, Hong Kong
India
09 Oct 14
100%
D – 3/C, Munirka Flats, New Delhi, 110067, India
Babel Media India
Private Limited
Babel Media Limited *
Babel Media USA, Inc.
Bitsy SG Limited
Blindlight, LLC
Climax Development Limited
Climax Studios Limited
Coconut Lizard Limited
Cord Worldwide Limited
d3t Development Limited
d3t Limited
Edugame Solutions
Private Limited
Electric Square Limited
Fire Without Smoke Inc
Fire Without Smoke Limited
GameSim Inc.
g-Net Media, Inc.
High Voltage Software, Inc.
HVS Nola LLC
Ichi Creative Ltd
UK
USA
UK
USA
UK
UK
UK
UK
UK
UK
UK
USA
UK
USA
USA
USA
USA
USA
1
2
0
2
S
T
N
U
O
C
C
A
D
N
A
T
R
O
P
E
R
L
A
U
N
N
A
C
L
P
S
O
I
D
U
T
S
S
D
R
O
W
Y
E
K
Name
Ichi Limited
Indigo Pearl Limited
Itsy SGD Limited
Jinglebell S.r.l.
Country of
incorporation
Date of
incorporation/
acquisition
Ownership^
Registered office
UK
UK
UK
26 Nov 19
100%
1st Floor, 39 Earlham Street, London, WC2H 9LT, UK
15 Dec 20
100%
1st Floor, 39 Earlham Street, London, WC2H 9LT, UK
17 Aug 18
100%
1st Floor, 39 Earlham Street, London, WC2H 9LT, UK
Italy
10 Dec 20
100%
Via Marco d’Oggiono 12, Milan, Italy
Jurango Pty Limited ~~
Australia
20 Dec 21
100%
29 Thornton Crescent, Mitcham, VIC 3132, Australia
Keywords (Shanghai)
Information Technology Limited
China
02 Apr 15
100%
7th Floor, Building A, Dong Ti YuHui Road, Hongkou District,
Shanghai, China
Keywords Asia Private Limited
Singapore
15 Mar 16
100%
20 Kallang Avenue, #06-6A, Lobby B, Pico Creative Centre,
339411, Singapore
Keywords Australia
Holdings Limited
Keywords Australia Pty
Limited ~
UK
17 Mar 21
100%
1st Floor, 39 Earlham Street, London, WC2H 9LT, UK
Australia
18 Mar 21
85%
12 Spring Street, Fitzroy, Victoria, 3065, Australia
Keywords Canada Holdings Inc.
Canada
27 Oct 17
100%
1751 Richardson Street Suite 8400, Montreal QC,
H3K 1G6, Canada
Keywords do Brasil
Localização e Tradução Ltda
Keywords Germany
Holdings GmbH
Keywords International Co.,
Limited
Brazil
18 Jan 15
100%
Av. Churchill, 109 – Sala 204 – Centro, Rio de Janeiro-RJ,
CEP: 20020-050, Brazil
Germany
06 Sep 19
100%
Moriz-Seeler-Strasse 5–7, Franz Ehrlich Haus,12489
Berlin, Germany
Japan
30 Nov 10
100%
2-3-1 Kudanminami, Chiyoda-ku, Tokyo 102-0074, Japan
Keywords International Limited
Ireland
13 May 98
100%
Whelan House, South County Business Park, Dublin 18,
Ireland
Keywords International
Pte. Limited
Singapore
24 Apr 14
100%
20 Kallang Avenue, #06-6A, Lobby B, Pico Creative Centre,
339411, Singapore
17 Aug 18
100%
1st Floor, 39 Earlham Street, London, WC2H 9LT, UK
Keywords International, Inc.
USA
26 Sep 12
100%
251 Little Falls Drive, Wilmington, New Castle, DE 19808, USA
29 May 18
100%
251 Little Falls Drive, Wilmington, New Castle, DE 19808, USA
Keywords Studios B.C., Inc.
Canada
27 Oct 17
100%
1700-1075 West Georgia Street, Vancouver, BC,
V6E 3C9, Canada
29 May 18
100%
1st Floor, 39 Earlham Street, London, WC2H 9LT, UK
16 May 17
100%
13501 Ingenuity Drive, Suite 310, Orlando, FL 32826, USA
24 Nov 20
100%
251 Little Falls Drive, Wilmington, New Castle, DE 19808, USA
14 Dec 20
100%
2345 Pembroke Ave., Hoffman Estates, IL 60169, USA
14 Dec 20
100%
201 St. Charles Ave., Suite 2220, New Orleans, LA 70170, USA
26 Nov 19
100%
251 Little Falls Drive, Wilmington, New Castle, DE 19808, USA
Keywords Studios France SAS
France
08 Jun 16
100%
59 Boulevard Exelmans, 75016 Paris, France
Keywords Studios Italy S.R.L.
Italy
08 May 14
100%
Via Egadi 2, Milano, MI, 20144, Italy
Keywords Studios
Korea Corporation
Keywords Studios
Los Angeles, Inc.
South
Korea
11 Jan 21
100%
16th Floor, Gangnam Building, 1321-1, Seocho-dong, Seocho-
gu, Seoul 137-070, South Korea
USA
08 May 14
100%
1115 Flower Street, Burbank, CA 91502, USA
NOTES FORMING PART OF THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUEDOVERVIEWSTRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSSUPPLEMENTARY INFORMATION
124
28 Subsidiaries continued
Name
Country of
incorporation
Date of
incorporation/
acquisition
Ownership^
Registered office
Name
Country of
incorporation
Date of
incorporation/
acquisition
Ownership^
Registered office
Keywords Studios
Netherlands B.V.
Keywords Studios
Poland Spolka z.o.o.
Keywords Studios
QC-Games Inc.
Keywords Studios
QC-Interactive Inc.
Keywords Studios Limited *
Ireland
27 Mar 18
100%
Keywords Studios México,
S. de R.L. de C.V.
Mexico
16 Jul 15
100%
Netherlands 05 Feb 19
100%
Whelan House, South County Business Park, Dublin 18,
Ireland
Torrente #75, Colonia Ampliación Alpes, Del. Álvaro
Obregón, CP. 01710, Ciudad de México, México
Wilhelmina van Pruisenweg 35, 2595AN The Hague,
The Netherlands
Poland
04 Feb 21
100%
11 Ul. Na Zjezdzie, Krakow 30-527, Poland
Canada
17 Feb 14
100%
Canada
16 Nov 16
100%
1751 Richardson, suite 8400, Montréal, Québec,
H3K1G6, Canada
1751 Richardson, suite 8400, Montréal, Québec,
H3K1G6, Canada
1751 Richardson, suite 8400, Montréal, Québec,
H3K1G6, Canada
Keywords Studios QC-Tech Inc.
Canada
06 Jan 15
100%
Keywords Studios Spain SLU
Spain
16 Jul 15
100%
Julián Camarillo 6A, 3B, 28037 Madrid, Spain
Keywords UK Holdings Limited
UK
28 Mar 18
100%
1st Floor, 39 Earlham Street, London, WC2H 9LT, UK
Keywords US Holdings Inc.
USA
23 Oct 17
100%
251 Little Falls Drive, Wilmington, New Castle, DE 19808, USA
Keywords Ventures Limited
Laced Music Limited
UK
UK
06 Apr 18
100%
1st Floor, 39 Earlham Street, London, WC2H 9LT, UK
07 Apr 18
100%
1st Floor, 39 Earlham Street, London, WC2H 9LT, UK
Lakshya Digital Private Limited * India
09 Oct 14
100%
Singapore
09 Oct 14
100%
3rd floor, Vardhman Orchard Plaza, Plot No 4, LSC, West
Enclave, Pitampura, New Delhi, 110034, India
20 Kallang Avenue, #06-6A, Lobby B, Pico Creative Centre,
339411, Singapore
Sperasoft Studios LLC
Russia
13 Dec 17
100%
196084, Russia, Saint-Petersburg, Kievskaya street,
5 – building
Sperasoft, Inc.
SperaSystems LLC
SPOV Limited
USA
USA
UK
13 Dec 17
100%
251 Little Falls Drive, Wilmington, New Castle, DE 19808, USA
13 Dec 17
100%
2033 Gateway Pl Ste 500 San Jose, CA 95110-3712, USA
16 Feb 17
100%
1st Floor, 39 Earlham Street, London, WC2H 9LT, UK
Strongbox Limited
Seychelles
19 May 17
100%
306 Victoria House, Victoria, Mahe, Seychelles
Studio Gobo Limited
UK
17 Aug 18
100%
1st Floor, 39 Earlham Street, London, WC2H 9LT, UK
Sunny Side Up Creative Inc.
Canada
03 Jan 19
100%
410 Boulevard Charest Est, Suite 410, Québec, Québec,
G1K 8G3, Canada
Synthesis Deutschland GmbH * Germany
12 Apr 16
100%
Holstenkamp 46 A, Bahrenfeld, 22525 Hamburg, Germany
Synthesis Global Solutions SA*
Switzerland 12 Apr 16
100%
Corso Elvezia 16, 6900 Lugano, Ticino, Switzerland
Tantalus Media Pty Limited ~
Australia
18 Mar 21
100%
13 Spring Street, Fitzroy, Victoria, 3065, Australia
The Trailerfarm Limited
UK
13 Sep 18
100%
1st Floor, 39 Earlham Street, London, WC2H 9LT, UK
TV+SYNCHRON Berlin GmbH
Germany
01 Oct 19
100%
Moriz-Seeler-Strasse 5-7, Franz Ehrlich Haus, 12489,
Berlin, Germany
VMC Consulting Corporation
USA
24 Oct 17
100%
251 Little Falls Drive, Wilmington, New Castle, DE 19808, USA
Waste Creative Limited
Waste Holdings Limited
UK
UK
16 Dec 21
100%
1st Floor, 39 Earlham Street, London, WC2H 9LT, UK
16 Dec 21
100%
1st Floor, 39 Earlham Street, London, WC2H 9LT, UK
Wicked Witch Software Pty
Limited~~
Australia
20 Dec 21
100%
29 Thornton Crescent, Mitcham, VIC 3132, Australia
Wizcorp Inc.
Japan
18 Apr 19
100%
3-10-14, Higashi-Nihonbashi 3-chome, Sunrise Tachibana 6F,
Chuo-ku, 103-0004, Tokyo, Japan
USA
UK
UK
USA
UK
UK
UK
19 Aug 15
100%
411 SW 2nd Ave Ste 300, Portland, OR 97204, USA
15 Jan 14
100%
1st Floor, 39 Earlham Street, London, WC2H 9LT, UK
Xcelerator Machine
Translations Limited
Ireland
12 Dec 19
100%
Invent, Dublin City University, Glasnevin, Dublin 9, Ireland
15 Dec 20
100%
1st Floor, 39 Earlham Street, London, WC2H 9LT, UK
Xloc, Inc.
USA
08 May 17
100%
8801 Fast Park Drive, Suite 301, Raleigh, NC 27617, USA
22 Jan 20
100%
815A Brazos #334, Austin, TX 78701, USA
* Indicates a direct subsidiary (all other holdings are indirect, being subsidiaries of various intermediate group
27 Aug 20
100%
1st Floor, 39 Earlham Street, London, WC2H 9LT, UK
holding companies)
07 Apr 18
100%
1st Floor, 39 Earlham Street, London, WC2H 9LT, UK
^ Proportion of voting rights and ordinary share capital ultimately held by Keywords Group
26 Oct 16
100%
1st Floor, 39 Earlham Street, London, WC2H 9LT, UK
+ The registered office address was changed from 201 Temple Chambers, 3–7 Temple Avenue, London, EC4Y 0DT, England on
26 January 2022
PT Limitless Indonesia
Indonesia
19 May 17
100%
JI. Timoho II, No. 32, Yogyakarta, Indonesia
Snowed In Studios, Inc
Canada
19 Jul 18
100%
400–981 Wellington Street West, Ottawa, Ontario, K1Y 2Y1,
Canada
~ A combination of put and call options are in place requiring the sellers to sell, or the Group to buy the remaining 15%
shareholding in three years. The Group has accounted for the acquisition as if a 100% interest was acquired on acquisition
(see note 3).
Sperasoft Poland Spólka z.o.o.
Poland
13 Dec 17
100%
Ul. Na Kozłówce 27, 30-664 Kraków, Poland
~~ Acquired by Keywords Australia Pty Limited
Lakshya Digital
Singapore Pte. Limited
Liquid Development, LLC
Liquid Violet Limited *
Lonsdale Miller Limited
Marching Cube, LLC
Maverick Media Limited
Paleblue Limited
Player Research Limited
1
2
0
2
S
T
N
U
O
C
C
A
D
N
A
T
R
O
P
E
R
L
A
U
N
N
A
C
L
P
S
O
I
D
U
T
S
S
D
R
O
W
Y
E
K
NOTES FORMING PART OF THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUEDOVERVIEWSTRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSSUPPLEMENTARY INFORMATION
125
28 Subsidiaries continued
Post-acquisition, the Group reviews entities to streamline activities and close any dormant entities
acquired or re-structured entities. Re-structuring details are set out below:
Name
Ichi Holdings Limited
Keywords International Barcelona SL
Red Hot Software (Shanghai) Limited
Red Hot Software (Zhengzhou) Limited
Country of
incorporation
Date of
incorporation/
acquisition
Ownership
Date of re-
structuring
Re-structuring
details
UK
26-Nov-19
Spain
China
China
09-Jan-15
19-May-17
19-May-17
100%
100%
100%
100%
16-Dec-21
Liquidated
23-Nov-21
Merged
30-Jun-21
Dissolved
21-Oct-21
Dissolved
29 Events after the Reporting Date
Crisis in Ukraine
Since the year end, the Group’s operations have been impacted by the tragic events in Ukraine. While
the Group does not have operations in Ukraine, the Group does have Game Development teams in a
number of locations in Russia working exclusively for customers located outside of the country. The
Group also works with a number of freelance suppliers in Ukraine. Our immediate priority has been to
do all that we can to support our people and our freelance suppliers in the territory, while contributing
to the wider humanitarian efforts in the region.
Revenues delivered from the Group’s operations in Russia are presented in note 4. In 2021, the Group
delivered €29.4m of revenue in Russia, up from €28.0m in 2020, and represents approximately 5.7%
of Group revenue. While we continue to focus on serving our customers, we are also focused on
mitigating any potential business interruption or other risks associated with this activity.
Geographical analysis of non-current assets from continuing businesses is also presented in note
4. Approximately €1.4m of the amount presented within the “Other” category relates to Russian
located property, plant and equipment, being mainly computer equipment. The Group does not have
significant receivables exposure in Russia, as work produced in Russia is contracted and collected in
other territories. In addition, the Group does not have significant amounts of other current assets or
right of use assets located in Russia. Thus, any exposure to impairment of assets located in Russia is
not considered material.
The Directors have applied downside sensitivities to the Group’s projections to evaluate any potential
goodwill impairment resulting from the crisis. The result of the value in use calculations was that no
impairment would be required even in a worst case scenario where all Russian located production
capacity was excluded from projections.
1
2
0
2
S
T
N
U
O
C
C
A
D
N
A
T
R
O
P
E
R
L
A
U
N
N
A
C
L
P
S
O
I
D
U
T
S
S
D
R
O
W
Y
E
K
NOTES FORMING PART OF THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUEDOVERVIEWSTRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSSUPPLEMENTARY INFORMATION
In accordance with the Companies Act 2006, the Company is availing of the exemption from
presenting its individual Statement of comprehensive income to the Annual General Meeting and from
filing it with Companies House. The amount of profit after tax dealt with in the parent undertaking is
€6,404k (2020: loss of €6,183k).
The notes from page 128 onwards form an integral part of these Company financial statements.
The financial statements were approved and authorised for issue by the Board on 30 March 2022.
On behalf of the Board
B E R T R A N D B O D S O N
D I R E C T O R
J O N H A U C K
D I R E C T O R
30 March 2022
COMPANY STATEMENT OF FINANCIAL POSITION
126
At 31 December
Non-current assets
Right of use assets
Property, plant and equipment
Deferred tax assets
Investment in subsidiaries
Other receivables
Current assets
Cash and cash equivalents
Other receivables
Current liabilities
Trade payables
Other payables
Lease liabilities
Net current assets/(liabilities)
Non-current liabilities
Other payables
Lease liabilities
Net assets
Equity
Share capital
Share capital – to be issued
Share premium
Merger reserve
Shares held in Employee Benefit Trust (“EBT”)
Share-based payments reserve
Retained earnings
Total equity
1
2
0
2
S
T
N
U
O
C
C
A
D
N
A
T
R
O
P
E
R
L
A
U
N
N
A
C
L
P
S
O
I
D
U
T
S
S
D
R
O
W
Y
E
K
Note
36
37
38
39
39
40
41
40
41
22
22
22
22
2021
€’000
206
308
657
30,175
335,511
366,857
17,043
7,468
24,511
1,127
19,651
216
20,994
3,517
3,660
–
3,660
366,714
904
2,185
38,549
279,358
(1,997)
48,193
(478)
2020
€’000
389
317
379
30,670
258,536
290,291
30,696
5,821
36,517
61
9,979
197
10,237
26,280
–
202
202
316,369
879
13,047
22,951
255,957
(1,997)
31,799
(6,267)
366,714
316,369
OVERVIEWSTRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSSUPPLEMENTARY INFORMATION
COMPANY STATEMENT OF CHANGES IN EQUITY
COMPANY STATEMENT OF CASH FLOWS
127
Share
capital
€’000
Share
capital – to
be issued
€’000
Share
premium
€’000
Merger
reserve
€’000
Shares
held in
EBT
€’000
Share-based
payments
reserve
€’000
Retained
earnings
€’000
Total equity
€’000
At 01 January 2020
780
5,310
20,718
138,393
(1,997)
16,449
(84)
179,569
Cash flows from operating activities
Years ended 31 December
Note
2021
€’000
2020
€’000
(6,183)
(6,183)
Profit/(loss) after tax
6,404
(6,183)
(6,183)
(6,183)
Share-based payments expense, net of amounts re-charged to subsidiary companies
4,099
Income and expenses not affecting operating cash flows
–
–
–
–
–
–
–
–
–
2,233
–
–
109,372
–
–
7,737
–
8,192
7,737
2,233
117,564
–
–
–
–
–
–
–
–
–
–
15,350
–
–
15,350
–
–
–
–
–
109,449
15,350
2,249
15,935
142,983
Interest receivable
Interest expense
Depreciation – property, plant and equipment
Depreciation – right of use assets
Amounts written off financial assets
Unrealised foreign exchange (gain)/loss
Changes in operating assets and liabilities
13,047
22,951
255,957
(1,997)
31,799
(6,267)
316,369
(Increase)/decrease in other receivables
–
–
77
–
16
6
99
879
–
–
–
11
–
–
Profit/(loss) for the period
Total comprehensive income
for the period
Contributions by and
contributions to the owners:
Shares issued for cash
Share-based payments expense
Share options exercised
Acquisition-related issuance
of shares
Contributions by and
contributions to the owners
At 31 December 2020
Profit/(loss) for the period
Total comprehensive income
for the period
Contributions by and
contributions to the owners:
Share-based payments expense
Share options exercised
Employee Share Purchase Plan
Dividends
Acquisition-related issuance
of shares
Contributions by and
contributions to the owners
–
–
–
–
–
–
–
–
–
4,929
398
–
–
–
–
–
–
–
14
(10,862)
10,271
23,401
25
(10,862)
15,598
23,401
–
–
–
–
–
–
–
–
At 31 December 2021
904
2,185
38,549
279,358
(1,997)
–
–
16,394
–
–
–
–
6,404
6,404
Increase/(decrease) in trade and other payables
6,404
6,404
Taxation paid
–
–
–
(615)
16,394
4,940
398
(615)
Net cash generated by/(used in) operating activities
Cash flows from investing activities
Funding advanced to subsidiaries
Current year acquisition of subsidiaries net of cash acquired
Acquisition of property, plant and equipment
Interest received
–
22,824
Net cash generated by/(used in) investing activities
16,394
48,193
615
43,941
(478)
366,714
Cash flows from financing activities
Repayment of loans
Loan to finance acquisitions
Payments of principal on lease liability
Interest paid on principal of lease liability
Dividends paid
Shares issued for cash
Interest paid
Net cash generated by/(used in) financing activities
Increase/(decrease) in cash and cash equivalents
Cash and cash equivalents at beginning of the period
Cash and cash equivalents at end of the period
1
2
0
2
S
T
N
U
O
C
C
A
D
N
A
T
R
O
P
E
R
L
A
U
N
N
A
C
L
P
S
O
I
D
U
T
S
S
D
R
O
W
Y
E
K
37
36
37
42
42
9
22
–
935
54
204
(126)
34
5,200
25,123
14,232
39,355
–
50,959
(64,200)
(3,124)
(45)
–
621
(6)
946
47
200
–
–
1,808
29,329
(6,944)
22,385
–
18,010
(39,142)
–
(7)
6
(67,369)
(39,143)
–
–
(206)
(7)
(615)
5,338
(1,753)
2,757
(13,653)
30,696
17,043
(64,000)
4,500
(194)
(12)
–
111,698
(762)
51,230
30,097
599
30,696
OVERVIEWSTRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSSUPPLEMENTARY INFORMATION
NOTES FORMING PART OF THE COMPANY FINANCIAL STATEMENTS
128
30 Basis of Preparation
The Company financial statements have been prepared in accordance with UK-adopted international
accounting standards, and in conformity with the requirements of the Companies Act 2006.
Unless otherwise stated, the financial statements have been prepared in thousands (’000) and the
financial statements are presented in euro (€).
Company
– Expected Credit Loss Provision on Company Receivables from Subsidiaries: As outlined
in note 39, the Company has significant receivables from subsidiaries, primarily related to
investments in acquisitions. The Directors have taken into account both the ongoing acquisition
integration program and the cash-generating capacity of the Group, in concluding (in note 43)
that all such loans are recoverable and the expected credit loss provisions are adequate.
Please refer to the Group financial statements for additional information concerning the basis of
preparation. References in the Company financial statements to notes numbered earlier than note 30,
refer directly to specific notes in the Group financial statements.
– Other Judgements: The Company applies consistent judgements to those applied by the
Group. To the extent that judgements are relevant to both Group and Company financial
statements, please refer to the Group financial statements for other relevant judgements.
31 Significant Accounting Policies
Intercompany Receivables
Intercompany receivables are recognised at amortised cost as they meet the IFRS 9 classification
test of being held to collect, and the cash flow characteristics represent solely payments of principal
and interest.
The Company applies the general approach to applying the expected credit losses to its related
party loans. Under the General Approach, at each reporting date, the Company determines whether
there has been a Significant Increase in Credit Risk (“SICR”) since initial recognition and whether
any balances are credit impaired. This determines the amount, if any, of expected credit losses to
be recognised.
Other Significant Accounting Policies
The Company applies consistent accounting policies to those applied by the Group. Please refer to
the Group financial statements for disclosure of other relevant accounting policies.
32 Critical Accounting Estimates and Judgements
The Company makes certain estimates and assumptions regarding the future. Estimates and
judgements are continually evaluated based on historical experience and other factors, including
expectations of future events that are believed to be reasonable under the circumstances. In the
future, actual experience may differ from these estimates and assumptions.
Judgements
The judgements, apart from those involving estimations, that management have made in the process
of applying the Company’s accounting policies and that have the most significant effect on the
amounts recognised in the Company financial statements, are outlined below.
33 Auditor Statutory Disclosure
The audit fee for the Company is outlined in note 5 of the Group financial statements.
34 Dividends and Distributable Reserves
Details of dividends and distributable reserves of the Company are presented in note 9 of the Group
financial statements.
35 Staff Costs
Total staff costs (including Directors)
Salaries and related costs
Social welfare costs
Pension costs
Share-based payments expense
Average number of employees
Operations
General and administration
2021
€’000
5,221
525
88
16,394
22,228
2021
3
34
37
2020
€’000
2,626
312
96
15,350
18,384
2020
4
22
26
1
2
0
2
S
T
N
U
O
C
C
A
D
N
A
T
R
O
P
E
R
L
A
U
N
N
A
C
L
P
S
O
I
D
U
T
S
S
D
R
O
W
Y
E
K
OVERVIEWSTRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSSUPPLEMENTARY INFORMATION
NOTES FORMING PART OF THE COMPANY FINANCIAL STATEMENTS CONTINUED
129
36 Right of Use Assets
38 Investment in Subsidiaries
The Company has entered into leases, principally relating to property.
2021
€’000
2020
€’000
2021
€’000
30,175
2020
€’000
30,670
Cost
At 01 January
Exchange rate movement
At 31 December
Accumulated depreciation
At 01 January
Depreciation charge
Exchange rate movement
At 31 December
Net book value
At 01 January
At 31 December
781
54
835
392
204
33
629
389
206
37 Property, Plant and Equipment
Computers and
software
€’000
Office furniture and
equipment
€’000
Leasehold
improvements
€’000
Cost
At 01 January 2020
Additions
At 31 December 2020
Additions
At 31 December 2021
Accumulated depreciation
At 01 January 2020
Depreciation charge
At 31 December 2020
Depreciation charge
At 31 December 2021
Net book value
At 01 January 2021
At 31 December 2021
5
7
12
45
57
3
2
5
9
14
7
43
145
–
145
–
145
23
15
38
15
53
107
92
280
–
280
–
280
47
30
77
30
107
203
173
Details of the Company’s direct and indirect subsidiaries as at 31 December 2021 are set out in note 28
of the Group financial statements.
39 Other Receivables
Current
Intercompany receivables (financial assets held at amortised cost, see note 44)
Prepayments
Other receivables
Tax and social security
Non-current
Intercompany receivables (financial assets held at amortised cost, see note 44)
40 Other Payables
Current
Accrued expenses
Payroll taxes
Other payables
Intercompany payables
Non-current
Intercompany payables
2021
€’000
5,099
1,702
478
189
7,468
2021
€’000
335,511
335,511
2021
€’000
1,915
164
253
17,319
19,651
2021
€’000
3,660
3,660
2020
€’000
5,126
556
–
139
5,821
2020
€’000
258,536
258,536
2020
€’000
1,053
412
33
8,481
9,979
2020
€’000
–
–
825
(44)
781
206
200
(14)
392
619
389
Total
€’000
430
7
437
45
482
73
47
120
54
174
317
308
1
2
0
2
S
T
N
U
O
C
C
A
D
N
A
T
R
O
P
E
R
L
A
U
N
N
A
C
L
P
S
O
I
D
U
T
S
S
D
R
O
W
Y
E
K
OVERVIEWSTRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSSUPPLEMENTARY INFORMATION
NOTES FORMING PART OF THE COMPANY FINANCIAL STATEMENTS CONTINUED
41 Lease Liabilities
43 Risk Management
The Company has entered into leases principally relating to property. Management applies judgement
in determining whether it is reasonably certain that a renewal or termination option will be exercised.
The movement in lease liabilities during the financial year was as follows:
Carrying amount at the beginning of the year
Unwinding of discounted liabilities – lease liabilities
Payment of principal and interest on lease liabilities
Exchange rate movement
Carrying amount at the end of the year
2021
€’000
399
7
(213)
23
216
2020
€’000
626
12
(206)
(33)
399
2021
€’000
Lease payments
2021
€’000
Finance charges
2021
€’000
Lease liabilities
2020
€’000
Lease payments
2020
€’000
Finance charges
2020
€’000
Lease liabilities
218
–
–
–
218
2
–
–
–
2
216
204
–
–
216
204
–
204
408
7
2
–
2
9
197
202
–
202
399
Maturity analysis of lease liabilities
Current
Not later than one year
Non-current
Later than one year and
not later than five years
Later than five years
At 31 December
42 Loans and Borrowings
Loans and borrowings (classified as financial liabilities under IFRS 9), are held at amortised cost.
The movement in loans and borrowings is as follows:
At 01 January 2020
Cash flows:
Drawdowns
Repayments
At 31 December 2020
At 31 December 2021
Current
€’000
–
–
–
–
–
Non-current
€’000
59,500
Total
€’000
59,500
4,500
4,500
(64,000)
(64,000)
–
–
–
–
Details of the Company’s credit facilities are outlined in note 18 of the Group financial statements.
A description of the Group’s financial risk management objectives and policies is provided in note 24
to the Group financial statements. These financial risk management objectives and policies also apply
to the Company.
Credit Risk
As presented in note 39, receivables from subsidiaries relating to investments in acquisitions comprise
term loans extended to subsidiaries, while receivables from subsidiaries relating to trading activities
comprise trading balances repayable on demand. Balances are analysed in terms of the risk profile of
the subsidiary.
The Directors have assessed the ongoing expected recovery strategy of loans due from subsidiaries
of €335.5m (2020: €258.5m), within Stage 1 of the IFRS 9 impairment assessment model. Having noted
that such loans are within their repayment terms, the Directors have concluded that no provision for
expected credit losses is required (2020: €nil).
Separately, the Company has balances of €5.1m (2020: €5.1m), which are technically repayable upon
demand. These loans are within Stage 3 of the IFRS 9 impairment assessment model. The Directors
have reviewed in detail the recovery strategy in relation to these loans and concluded that a small
number of such loans are technically in a credit-impaired status. No expected credit loss has been
recognised in relation to these balances (2020: €218k).
The following are the contractual maturities (representing undiscounted contractual cash flows) of the
Company’s financial liabilities:
At 31 December 2021
Trade payables
Other payables
Lease liability
Total
At 31 December 2020
Trade payables
Other payables
Lease liability
Total
Carrying value
Contractual cash flows
Total
€’000
1,127
23,311
216
24,654
Total
€’000
1,127
23,311
218
24,656
Within 1 year
€’000
1–2 years
€’000
2–5 years
€’000
Over 5 years
€’000
1,127
23,311
218
24,656
–
–
–
–
–
–
–
–
–
–
–
–
Carrying value
Contractual cash flows
Total
€’000
61
9,979
399
Total
€’000
61
9,979
408
Within 1 year
€’000
1–2 years
€’000
2–5 years
€’000
Over 5 years
€’000
61
9,979
204
–
–
204
204
–
–
–
–
–
–
–
–
10,439
10,448
10,244
130
1
2
0
2
S
T
N
U
O
C
C
A
D
N
A
T
R
O
P
E
R
L
A
U
N
N
A
C
L
P
S
O
I
D
U
T
S
S
D
R
O
W
Y
E
K
OVERVIEWSTRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSSUPPLEMENTARY INFORMATION
NOTES FORMING PART OF THE COMPANY FINANCIAL STATEMENTS CONTINUED
131
44 Related Parties
As at 31 December 2021 and 2020, the Company had amounts receivable from its subsidiaries
as follows:
Receivables from subsidiaries related to investment in acquisitions
Receivables from subsidiaries relating to trading activities
Non-current (note 39)
Current (note 39)
2021
€’000
335,511
5,099
340,610
2021
€’000
335,511
5,099
340,610
2020
€’000
258,536
5,126
263,662
2020
€’000
258,536
5,126
263,662
1
2
0
2
S
T
N
U
O
C
C
A
D
N
A
T
R
O
P
E
R
L
A
U
N
N
A
C
L
P
S
O
I
D
U
T
S
S
D
R
O
W
Y
E
K
OVERVIEWSTRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSSUPPLEMENTARY INFORMATION
ALTERNATIVE PERFORMANCE MEASURES
The Group reports a number of alternative performance measures ("APMs") to present the financial
performance of the business, that are not GAAP measures as defined under IFRS. The Directors
believe that these measures, in conjunction with the IFRS financial information, provide the users of
the financial statements with additional information to provide a more meaningful understanding of
the underlying financial and operating performance of the Group. The measures are also used in the
Group’s internal strategic planning and budgeting processes and for setting internal management
targets. These measures can have limitations as analytical tools and therefore should not be
considered in isolation, or as a substitute for IFRS measures.
The principal measures used by the Group are set out below:
Organic revenue growth – Acquisitions are a core part of the Group’s growth strategy. Organic
revenue growth measures are used to help understand the underlying trading performance of the
Group excluding the impact of acquisitions. Organic revenue growth is calculated by adjusting the
prior year revenues, adding pre- acquisition revenues for the corresponding period of ownership to
provide a like-for-like comparison with the current year, and applying the prior year’s foreign exchange
rates to both years.
Constant exchange rates ("CER") – Given the international nature of the Group’s operations, foreign
exchange movements can have an impact on the reported results of the Group when they are
translated into the Group’s reporting currency, the euro. In order to understand the underlying trading
performance of the business, revenue is also presented using rates consistent with the prior year in
order to provide year over year comparability.
Adjusted profit and earnings per share measures – Adjusted profit and earnings per share
measures are used to provide management and other users of the financial statements with a clear
understanding of the underlying profitability of the business over time. Adjusted profit measures are
calculated by adding the following items back to the equivalent GAAP profit measures:
– Amortisation of intangible assets – Customer relationships and music licence amortisation
commences on acquisition, whereas intellectual property/development costs amortisation
commences when the product is launched. These costs, by their nature, can vary by size
and amount each year. As a result, amortisation of intangibles is added back to assist with
the understanding of the underlying trading performance of the business and to allow
comparability across regions and categories.
– Costs of acquisition and integration – The level of acquisition activity can vary each year and
therefore the costs associated with acquiring and integrating businesses are added back to
assist with the understanding of the underlying trading performance of the Group.
– Share-based payments – The Group uses share-based payments as part of remuneration
to align the interests of senior management and employees with shareholders. These are
non-cash charges and the charge is based on the Group’s share price which can change.
The costs are therefore added back to assist with the understanding of the underlying
trading performance.
132
1
2
0
2
S
T
N
U
O
C
C
A
D
N
A
T
R
O
P
E
R
L
A
U
N
N
A
C
L
P
S
O
I
D
U
T
S
S
D
R
O
W
Y
E
K
– Foreign exchange gains and losses – The Group does not hedge foreign currency translation
exposures. The effect on the Group’s results of movements in exchange rates can vary each
year and are therefore added back to assist with understanding the underlying trading
performance of the business.
– COVID-19 government subsidies claimed – In 2020 the Group applied for COVID-19
government subsidies in various jurisdictions, introduced in response to the global pandemic.
These subsidies have been added back in order to present adjusted profit and cash flow
measures consistently year-on-year.
–
Investment income – The Group acquired a minor holding in Hutch Games Limited, when
Keywords purchased Liquid Development studio in 2015. In 2020, Hutch Games Limited was
acquired and the Group received €1.4m proceeds in December 2020. As the gain has arisen
outside the normal trading activities of the Group, the income has been added back to assist
with the understanding of the underlying trading performance.
Free cash flow measures – The Group aims to generate sustainable cash flow (Free cash flow) in
order to support its acquisition program and to fund dividend payments to shareholders. Free cash
flow is measured as Net cash generated by/(used in) operating activities after capital expenditure,
payments of principal on lease liabilities, interest and tax payments, but before acquisition and
integration cash outlay, investment income and dividend payments. Adjusted free cash flow is a
measure of cash flow adjusting for capital expenditure that is supporting growth in future periods
(represented by capital expenditure in excess of depreciation). In the prior year, the measure has also
been adjusted for COVID-19 subsidies claimed given the one-time nature of this income.
Net debt – The Group manages capital by monitoring debt to capital and net debt ratios. Net debt
is calculated as Loans and borrowings less Cash and cash equivalents, and excludes Lease liabilities.
The debt to capital ratio is calculated as net debt as a percentage of total equity.
The remainder of this section provides a reconciliation of the APMs with the relevant IFRS
GAAP equivalent.
OVERVIEWSTRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSSUPPLEMENTARY INFORMATION
Organic revenue at constant exchange rates
Organic revenue at constant exchange rates is calculated by adjusting the prior year revenues, adding
pre-acquisition revenues for the corresponding period of ownership, and applying the 2020 foreign
exchange rates to both years.
Art Creation*
Marketing*
Game Development
Audio
Functional Testing
Localization
Localization Testing
Player Support
2020
Revenue
AER
€m
2020
Pre-acquisition
revenue
AER
€m
2020
Like for like
revenue
AER
€m
2021
Revenue
growth
CER
€m
2021
Revenue
CER
€m
2021
Organic revenue
growth
CER
%
38.9
18.4
80.0
47.2
78.5
45.4
23.3
41.8
373.5
0.9
16.3
40.7
1.4
–
0.4
–
–
59.7
39.8
34.7
120.7
48.6
78.5
45.8
23.3
41.8
433.2
9.7
11.7
19.3
13.3
13.5
5.6
3.9
5.3
82.3
49.5
46.4
140.0
61.9
92.0
51.4
27.2
47.1
515.5
24.4%
33.7%
16.0%
27.4%
17.2%
12.2%
16.7%
12.7%
19.0%
* The prior year comparatives have been re-classified to separately report Marketing services, previously reported within the Art
Creation service line. The equivalent 2020 organic growth rates were 30.8% for Marketing and 13.0% for Art Creation respectively.
ALTERNATIVE PERFORMANCE MEASURES CONTINUED
133
Service line analysis
The following table presents revenue growth by service line at both actual exchange rates ("AER")
and constant exchange rates ("CER"). Constant exchange rates are calculated by retranslating
current year reported numbers at the corresponding 2020 foreign exchange rates, in order to give
management and other users of the financial statements better visibility of underlying trading
performance against the prior year.
Art Creation*
Marketing*
Game Development
Audio
Functional Testing
Localization
Localization Testing
Player Support
2021
Revenue
AER
€m
2021
Revenue
CER
€m
2020
Revenue
AER
€m
49.3
46.2
138.9
61.3
92.7
50.8
27.1
45.9
512.2
49.5
46.4
140.0
61.9
92.0
51.4
27.2
47.1
515.5
38.9
18.4
80.0
47.2
78.5
45.4
23.3
41.8
373.5
2021
Growth
AER
%
26.7%
151.1%
73.6%
29.9%
18.1%
11.9%
16.3%
9.8%
37.1%
2021
Growth
CER
%
27.2%
152.2%
75.0%
31.1%
17.2%
13.2%
16.7%
12.7%
38.0%
* The prior year comparatives have been re-classified to separately report Marketing services, previously reported within the
Art Creation service line.
Pro forma revenue
Pro forma revenue is calculated by adding pre-acquisition revenues of current year acquisitions to the
current year revenue numbers, to illustrate the size of the Group had the acquisitions been included
from the start of the financial year.
Art Creation
Marketing
Game Development
Audio
Functional Testing
Localization
Localization Testing
Player Support
2021
Revenue
AER
€m
2021
Pre-acquisition
revenue
AER
€m
2021
Pro forma
Revenue
AER
€m
49.3
46.2
138.9
61.3
92.7
50.8
27.1
45.9
512.2
1.6
6.2
8.5
–
–
–
–
–
50.9
52.4
147.4
61.3
92.7
50.8
27.1
45.9
16.3
528.5
1
2
0
2
S
T
N
U
O
C
C
A
D
N
A
T
R
O
P
E
R
L
A
U
N
N
A
C
L
P
S
O
I
D
U
T
S
S
D
R
O
W
Y
E
K
OVERVIEWSTRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSSUPPLEMENTARY INFORMATION
134
Adjusted operating costs
This comprises Administrative expenses as reported in the Consolidated statement of
comprehensive income, adding back share-based payments expense, costs of acquisition and
integration, amortisation and impairment of intangible assets, depreciation, non-controlling interest
and deducting bank charges. In order to present the measure consistently year-on-year, the impact
of COVID-19 government subsidies claimed is also excluded.
Calculation
2021
€’000
2020
€’000
Administrative expenses
Consolidated statement of comprehensive income
(149,749)
(102,090)
Share-based payments expense
Consolidated statement of comprehensive income
Costs of acquisition and integration
Consolidated statement of comprehensive income
16,394
7,972
15,350
2,650
13,688
8,808
Bank charges
EBITDA
Amortisation and impairment of
intangible assets
Depreciation – property, plant
and equipment
Consolidated statement of comprehensive income
Note 13
Depreciation – right of use assets
Note 12
Non-controlling interest
Consolidated statement of comprehensive income
Bank charges
Note 6
COVID-19 government subsidies claimed
Consolidated statement of comprehensive income
Adjusted operating costs
Adjusted operating costs as a % of revenue
11,661
10,473
67
(520)
–
8,983
8,402
85
(552)
(9,231)
(90,014)
(67,595)
17.6%
18.1%
Adjusted operating profit
The Adjusted operating profit consists of the Operating profit as reported in the Consolidated
statement of comprehensive income, adjusted for share-based payments expense, costs of
acquisition and integration, and amortisation and impairment of intangible assets. In order to present
the measure consistently year-on-year, the impact of investment income and COVID-19 government
subsidies claimed are also excluded.
Calculation
Operating profit
Consolidated statement of comprehensive income
Share-based payments expense
Consolidated statement of comprehensive income
Costs of acquisition and integration
Consolidated statement of comprehensive income
Amortisation and impairment
of intangible assets
Consolidated statement of comprehensive income
Investment income
Consolidated statement of comprehensive income
COVID-19 government subsidies claimed Consolidated statement of comprehensive income
Adjusted operating profit
Adjusted operating profit as a % of revenue
2021
€’000
50,365
16,394
7,972
13,688
–
–
88,419
17.3%
2020
€’000
41,119
15,350
2,650
8,808
(1,437)
(9,231)
57,259
15.3%
1
2
0
2
S
T
N
U
O
C
C
A
D
N
A
T
R
O
P
E
R
L
A
U
N
N
A
C
L
P
S
O
I
D
U
T
S
S
D
R
O
W
Y
E
K
EBITDA
EBITDA comprises Operating profit as reported in the Consolidated statement of comprehensive
income, adjusted for amortisation and impairment of intangible assets, depreciation, and deducting
bank charges.
Calculation
Operating profit
Amortisation and impairment
of intangible assets
Depreciation – property plant
and equipment
Depreciation – right of use assets
Consolidated statement of comprehensive income
50,365
Consolidated statement of comprehensive income
2021
€’000
2020
€’000
41,119
Note 13
Note 12
Note 6
13,688
8,808
11,661
10,473
(520)
85,667
8,983
8,402
(552)
66,760
Adjusted EBITDA
Adjusted EBITDA comprises EBITDA, adjusted for share-based payments expense, costs of
acquisition and integration and non-controlling interest. In order to present the measure consistently
year-on-year, the impact of investment income and COVID-19 government subsidies claimed are
also excluded.
Calculation
EBITDA
As above
Share-based payments expense
Consolidated statement of comprehensive income
Costs of acquisition and integration
Consolidated statement of comprehensive income
Non-controlling interest
Consolidated statement of comprehensive income
Investment income
Consolidated statement of comprehensive income
COVID-19 government subsidies claimed Consolidated statement of comprehensive income
Adjusted EBITDA
Adjusted EBITDA as a % of revenue
2021
€’000
85,667
16,394
7,972
67
–
–
110,100
21.5%
2020
€’000
66,760
15,350
2,650
85
(1,437)
(9,231)
74,177
19.9%
ALTERNATIVE PERFORMANCE MEASURES CONTINUEDOVERVIEWSTRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSSUPPLEMENTARY INFORMATION
135
Adjusted profit before tax
Adjusted profit before tax comprises Profit before taxation as reported in the Consolidated statement of
comprehensive income, adjusted for share-based payments expense, costs of acquisition and integration,
amortisation and impairment of intangible assets, non-controlling interest, foreign exchange gains and
losses, and unwinding of discounted liabilities. In order to present the measure consistently year-on-year,
the impact of investment income and COVID-19 government subsidies claimed are also excluded.
Adjusted earnings per share
The Adjusted profit after tax comprises the Adjusted profit before tax, less the Taxation expense as
reported in the Consolidated statement of comprehensive income, adjusted for the tax impact of the
adjusting items in arriving at Adjusted profit before tax.
The Adjusted earnings per share comprises the Adjusted profit after tax divided by the non-diluted
weighted average number of shares as reported in note 8.
Calculation
Adjusted profit before tax
As above
Taxation
Consolidated statement of comprehensive income
Tax arising on bridging items
to Adjusted profit before tax^
Adjusted profit after tax
Denominator (weighted average
number of equity shares)
Note 8
Adjusted earnings per share
Adjusted earnings per share %
growth
2021
€’000
86,003
(13,875)
(4,729)
67,399
2020
€’000
54,954
(11,027)
(785)
43,142
75,526,296
70,800,455
€ cent
89.24
€ cent
60.93
46.5%
24.9%
^ Being mainly the tax impact of share-based payments expense €2.8m, amortisation of intangible assets €2.1m, less foreign
exchange €0.2m, with the prior year being mainly the tax impact of amortisation of intangible assets €1.8m, foreign exchange €1.2m,
share-based payments expense €0.7m, less COVID-19 government subsidies claimed €2.6m and investment income €0.3m.
Calculation
Profit before taxation
Consolidated statement of comprehensive income
Share-based payments expense
Consolidated statement of comprehensive income
Costs of acquisition and integration
Consolidated statement of comprehensive income
Amortisation and impairment
of intangible assets
Consolidated statement of comprehensive income
Non-controlling interest
Consolidated statement of comprehensive income
Foreign exchange (gain)/loss
Unwinding of discounted liabilities –
deferred consideration
Note 6
Note 6
Investment income
Consolidated statement of comprehensive income
COVID-19 government subsidies claimed Consolidated statement of comprehensive income
Adjusted profit before tax
Adjusted profit before tax as a % of revenue
2021
€’000
47,983
16,394
7,972
13,688
67
(1,983)
1,882
–
–
86,003
16.8%
2020
€’000
32,494
15,350
2,650
8,808
85
6,103
132
(1,437)
(9,231)
54,954
14.7%
Adjusted effective tax rate
The Adjusted effective tax rate is the Taxation expense as reported in the Consolidated statement of
comprehensive income, adjusted for the tax impact of the adjusting items in arriving at Adjusted profit
before tax, as a percentage of the Adjusted profit before tax.
Calculation
Adjusted profit before tax
As above
Taxation
Consolidated statement of comprehensive income
Taxation/Adjusted profit before tax
Effective tax rate before
tax on adjusting items
Tax arising on bridging items
to Adjusted profit before tax^
Adjusted taxation
Adjusted effective tax rate
Adjusted taxation/Adjusted profit before tax
2021
€’000
86,003
13,875
2020
€’000
54,954
11,027
16.1%
20.1%
4,729
18,604
21.6%
785
11,812
21.5%
^ Being mainly the tax impact of share-based payments expense €2.8m, amortisation of intangible assets €2.1m, less
foreign exchange €0.2m, with the prior year being mainly the tax impact of amortisation of intangible assets €1.8m, foreign
exchange €1.2m, share-based payments expense €0.7m, less COVID-19 government subsidies claimed €2.6m and investment
income €0.3m.
1
2
0
2
S
T
N
U
O
C
C
A
D
N
A
T
R
O
P
E
R
L
A
U
N
N
A
C
L
P
S
O
I
D
U
T
S
S
D
R
O
W
Y
E
K
ALTERNATIVE PERFORMANCE MEASURES CONTINUEDOVERVIEWSTRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSSUPPLEMENTARY INFORMATION
136
Return on capital employed (ROCE)
ROCE represents the Adjusted profit before tax (excluding net interest costs, unwinding of discounted
lease liabilities and bank charges, and also adjusted to include pre-acquisition profits of current year
acquisitions), expressed as a percentage of the capital employed. As the Group continues to make
multiple acquisitions each year, the calculation further adjusts the Adjusted profit before tax and the
capital employed as if all the acquisitions made during each year were made at the start of that year.
Free cash flow
Free cash flow represents Net cash generated by/(used in) operating activities as reported in the
Consolidated statement of cash flows, adjusted for acquisition and integration cash outlay, capital
expenditure, net interest paid, payments of principal on lease liabilities and is presented both before
and after taxation paid. In order to present the measure consistently year-on-year, the impact of
investment income is also excluded.
Capital employed represents Total equity as reported on the Consolidated statement of financial
position, adding back employee defined benefit plan liabilities, cumulative amortisation of intangible
assets (customer relationships), acquisition-related liabilities (deferred and contingent consideration),
together with loans and borrowings, while deducting cash and cash equivalents.
Calculation
Adjusted profit before tax
Interest received
Bank charges
Interest expense
As above
Note 6
Note 6
Note 6
Unwinding of discounted liabilities – lease liabilities Note 6
Pre-acquisition profits of current year acquisitions Note 27
Adjusted profit before tax including
pre-acquisition profit and excluding net interest
2021
€’000
86,003
(62)
520
1,040
985
2,573
91,059
Total equity
Consolidated statement of financial position
472,120
Employee defined benefit plans
Consolidated statement of financial position
3,088
Cumulative amortisation of intangibles
assets (customer relationships)
Deferred and contingent consideration
Loans and borrowings
Note 11
Note 17
Note 18
40,708
54,142
129
2020
€’000
54,954
(76)
552
1,071
843
9,399
66,743
371,235
2,693
25,178
20,802
195
Cash and cash equivalents
Consolidated statement of financial position
(105,710)
(103,070)
Capital employed
Return on capital employed
Adjusted profit before tax including pre-
acquisition profit and excluding net interest
expense/capital employed
464,477
317,033
19.6%
21.1%
Calculation
Net cash generated by/(used in)
operating activities
Acquisition and integration cash outlay:
Consolidated statement of cash flows
2021
€’000
2020
€’000
90,545
76,420
Costs of acquisition and integration
Consolidated statement of comprehensive income
7,972
2,650
Fair value adjustments to contingent
consideration
Consolidated statement of cash flows
Fair value adjustments to right
of use assets
Acquisition of property, plant
and equipment
Consolidated statement of cash flows
Consolidated statement of cash flows
Investment in intangible assets
Consolidated statement of cash flows
Investment income
Interest received
Interest paid
Consolidated statement of comprehensive income
Consolidated statement of cash flows
Consolidated statement of cash flows
Payments of principal on lease liabilities
Consolidated statement of cash flows
Free cash flow after tax
Taxation paid
Consolidated statement of cash flows
Free cash flow before tax
(5,567)
66
–
(434)
(19,360)
(13,908)
(315)
–
62
(2,738)
(9,953)
60,646
23,948
84,594
(259)
(1,437)
76
(1,722)
(8,170)
53,282
4,459
57,741
1
2
0
2
S
T
N
U
O
C
C
A
D
N
A
T
R
O
P
E
R
L
A
U
N
N
A
C
L
P
S
O
I
D
U
T
S
S
D
R
O
W
Y
E
K
ALTERNATIVE PERFORMANCE MEASURES CONTINUEDOVERVIEWSTRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSSUPPLEMENTARY INFORMATION
137
Adjusted free cash flow
Adjusted free cash flow is a measure of cash flow adjusting for capital expenditure that is supporting
growth in future periods (as measured by capital expenditure in excess of maintenance capital
expenditure). In order to present the measure consistently year-on-year, the impact of COVID-19
government subsidies claimed is also excluded.
Calculation
Free cash flow before tax
As above
Capital expenditure in excess of depreciation:
Acquisition of property, plant and equipment
Consolidated statement of cash flows
Depreciation – property, plant and equipment
Consolidated statement of cash flows
Capital expenditure in excess of depreciation
COVID-19 government subsidies claimed
Adjusted free cash flow
Consolidated statement of
comprehensive income
2021
€’000
84,594
19,360
(11,661)
7,699
–
92,293
2020
€’000
57,741
13,908
(8,983)
4,925
(9,231)
53,435
Adjusted cash conversion rate
The Adjusted cash conversion rate is the Adjusted free cash flow as a percentage of the Adjusted
profit before tax:
Calculation
Adjusted free cash flow
Adjusted profit before tax
Adjusted cash conversion ratio
As above
As above
Free cash flow before tax and capital
expenditure in excess of depreciation,
as a % of Adjusted profit before tax
2021
€’000
92,293
86,003
2020
€’000
53,435
54,954
107.3%
97.2%
Net debt
The Group manages capital by monitoring debt to capital and net debt ratios. Net debt is calculated
as Loans and borrowings (as shown in the Consolidated statement of financial position) less Cash
and cash equivalents, and excludes Lease liabilities.
Calculation
Loans and borrowings
Note 18
2021
€’000
129
2020
€’000
195
Cash and cash equivalents
Consolidated statement of financial position
(105,710)
(103,070)
Net debt/(net cash) position
(105,581)
(102,875)
1
2
0
2
S
T
N
U
O
C
C
A
D
N
A
T
R
O
P
E
R
L
A
U
N
N
A
C
L
P
S
O
I
D
U
T
S
S
D
R
O
W
Y
E
K
ALTERNATIVE PERFORMANCE MEASURES CONTINUEDOVERVIEWSTRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSSUPPLEMENTARY INFORMATION
KEY DISCLAIMERS
COMPANY INFORMATION
138
References to “Keywords”, “Keywords Studios” or the “Group” are to Keywords Studios Plc (the
“Company”) and its subsidiaries unless otherwise stated. The “Keywords Studios” word and logo
marks are trademarks owned by Keywords International Limited, a member of the Group. Other
product and company names mentioned herein may be the trademarks of their respective owners.
Directors
Secretary
Ross Graham, Bertrand Bodson, Jon Hauck, Georges Fornay,
Charlotta Ginman, David Reeves, Marion Sears, Neil Thompson
Andrew Kennedy
This report contains “forward-looking statements” with respect to the Group’s financial condition,
results of operations and businesses and certain of the Group’s plans and objectives. In particular, such
forward-looking statements include, but are not limited to, statements with respect to: expectations
regarding the Group’s financial condition or results of operations and the guidance for a financial year;
the Group’s sustainable business strategy and targets; expectations for the Group’s future performance
generally; expectations regarding the operating environment and market conditions and trends,
including customers, new game launches and next generation consoles, adjacent markets, games-as-a-
service, competitive position and macroeconomic pressures, price trends, commercial momentum and
opportunities in specific geographic markets; expectations regarding the integration or performance
of current and future investments and newly acquired businesses. Forward-looking statements
are sometimes, but not always, identified by their use of a date in the future or such words as “will”,
“anticipates”, “could”, “may”, “should”, “expects”, “believes”, “estimates”, “intends”, “plans” “projects”
or “targets” (in each case including in their negative form or other variations or their comparable
terminology). By their nature, forward-looking statements include matters that are not historical facts
and are inherently predictive, speculative and involve risk and uncertainty because they relate to events,
and depend on circumstances, that may or may not occur in the future. No reliance whatsoever should
be placed on any forward-looking statements.
There are a number of factors that could cause actual results and developments to differ materially
from those expressed or implied by these forward-looking statements. These factors include, but are
not limited to, the following: changes in economic, financial, political and regulatory conditions; factors
that contribute to uncertainty and volatility, including natural and man-made disasters, civil unrest,
pandemics (e.g. the coronavirus (COVID-19) pandemic (the “COVID-19 pandemic”)) and geopolitical
uncertainty; the ability of the Group to successfully recover from a disaster, force majeure event or
other business continuity problem including, but not limited to, due to a hurricane, flood, earthquake,
terrorist attack, war, pandemic, security breach, cyber-attack, insider threats or supplier breach,
power loss, telecommunications failure or other natural or man-made event; any governmental or
other third party policies or actions to maintain the functioning of national or global economies and
markets; changes to legal, regulatory and tax environments; increased competition; the Group’s
ability to generate and grow revenue; slower than expected customer growth, reduced customer
retention, reductions or changes in customer spending and increased pricing pressure; the Group’s
ability to attract and retain talent and wage inflation; the Group’s ability to realise expected benefits
or synergies from acquisitions; acquisitions and divestments of Group businesses and assets and
the pursuit of new, unexpected strategic opportunities; the Group’s ability to integrate acquired
business or assets; the extent of any future write-downs or impairment charges on the Group’s
assets, or restructuring charges incurred as a result of an acquisition or disposition; developments
in the Group’s financial condition, earnings and distributable funds and other factors that the Board
takes into account in determining the level of dividends; the Group’s ability to satisfy working capital
requirements; and changes in foreign exchange rates.
1
2
0
2
S
T
N
U
O
C
C
A
D
N
A
T
R
O
P
E
R
L
A
U
N
N
A
C
L
P
S
O
I
D
U
T
S
S
D
R
O
W
Y
E
K
Registered Number
8548351
Registered Office
First Floor, 39 Earlham Street, London WC2H 9LT, UK
Auditors
Registrars
Remuneration Consultants
BDO
Registered Auditors, Beaux Lane House, Mercer Street,
Lower Dublin 2, Ireland
Link Group
10th Floor, Central Square, 29 Wellington Street, Leeds LS1 4DL, UK
Ellason LLP
1 Park Road, Hampton Wick, Kingston upon Thames, Surrey
KT1 4AS, UK
Principal Bankers
Citibank, N.A., London Branch
Citigroup Centre, Canada Square, Canary Wharf, London E14 5LB, UK
Fifth Third Bank, National Association Representative Office
38 Fountain Square Plaza, Cincinnati, Ohio 45263, USA
HSBC Continental Europe
38 Avenue Kléber, 75116 Paris, France
ING Bank N.V., Dublin Branch
Block 4, Dundrum Town, Sandyford Road, Ireland
Nominated Adviser and Broker Numis Securities Limited
Financial PR Adviser
Solicitors
45 Gresham Street, London EC2V 7BF, UK
MHP Communications
60 Great Portland Street, London W1W 7RT, UK
DWF LLP
20 Fenchurch Street, London EC3M 3AG, UK
OVERVIEWSTRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSSUPPLEMENTARY INFORMATION
Keywords Studios plc
Whelan House
South County Business Park
Dublin 18
Ireland
T: +353 190 22 730
www.keywordsstudios.com