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MarketScreener Homepage  >  Equities  >  NASDAQ OMX STOCKHOLM  >  Embracer Group AB (publ)    EMBRAC B   SE0013121589

EMBRACER GROUP AB (PUBL)

(EMBRAC B)
  Report
End-of-day quote. End-of-day quote NASDAQ OMX STOCKHOLM - 01/13
197 SEK   +1.13%
2020EMBRACER : secures a new credit facility for M&A of SEK 3,0 billion
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2020EMBRACER : Loading the Next Level
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Embracer : Interim Report Q2 2020

11/18/2020 | 04:29am EST

20/21 INTERIM REPORT 2

JULY-SEPTEMBER 2020 EMBRACER GROUP AB (PUBL)

REG NO. 556582-6558

OPERATIONAL EBIT INCREASED 171% TO SEK 653 MILLION

SECOND QUARTER, JULY-SEPTEMBER 2020 (COMPARED TO JULY-SEPTEMBER2019)

  • Net sales increased by 89% to SEK 2,383.2 million (1,259.7). Net sales of the Games busi- ness area increased by 83% to SEK 1,495.4 million (816.1). THQ Nordic SEK 566.9 million (329.6), Deep Silver SEK 506.8 million (441.7), Coffee Stain SEK 129.9 million (44.7), Saber Interactive SEK 259.1 million (-) and DECA Games SEK 32.7 million (-).
  • Net sales of Partner Publishing/Film business area increased by 100% to SEK 887.8 million (443.6).
  • EBITDA increased by 132% to SEK 969.0 million (418.1), corresponding to an EBITDA margin of 41%.
  • Operational EBIT increased by 171% to SEK 652.5 million (240.7) corresponding to an Operational EBIT margin of 27% (19%).
  • Cash flow from operating activities amounted to SEK 804.7 million (284.8). Investments in intangible assets amounted to SEK 484.1 million (391.9). Free Cash Flow amounted to SEK 311.5 million (-115.8).
  • Adjusted earnings per share was SEK 1.80 (0.65).
  • Organic growth in constant currency for the Games Business Area amounted to 61% in the quarter.
  • Total game development projects increased 57% to 135 (86). Total headcount increased 49% to 4,445 (2,981) where total game developers increased 58% to 3,593 (2,272).

Jul-Sep

Jul-Sep

Apr-Sep

Apr-Sep

Apr 2019-

Key performance indicators, Group

2020

2019

2020

2019

Mar 2020

Net sales, SEK m

2,383.2

1,259.7

4,451.9

2,401.8

5,249.4

EBITDA, SEK m

969.0

418.1

1,934.1

807.6

1,821.3

Operational EBIT, SEK m

652.5

240.7

1,364.3

444.8

1,033.0

Cash flow from operating activities, SEK m

804.7

284.8

1,537.0

723.1

1,728.3

Free cash flow, SEK m

311.5

-115.8

515.5

-68.5

-0.1

Total investments in intangible assets, SEK m

484.1

391.9

981.6

770.0

1,653.4

Total game development projects

135

86

-

-

103

Total internal and external game developers

3,593

2,272

-

-

2,365

Total headcount

4,445

2,981

-

-

3,109

Sales growth, %

89

-1

85

14

3

EBITDA margin, %

41

33

43

34

35

Operational EBIT margin, %

27

19

31

19

20

In this report, all figures in brackets refer to the corresponding period of the previous year, unless otherwise stated.

EMBRACER GROUP AB (PUBL) | JULY-SEPTEMBER 2020

1

CEO COMMENTS

OPERATIONAL EBIT INCREASED 171% TO SEK 653 MILLION

The Group had yet another stable quarter with growing sales and profitability exceeding management expectations, driven in particular by a record strong performance of our back catalogue.

Net sales increased by 89% to a record SEK 2,383.2 million (1,259.7) whereof the Games business area contributed SEK 1,495.4 million (816.1) driven by 61% organic growth. Operational EBIT increased 171% to SEK 652.5 million (240.7), driven by strong back catalogue sales, improved quality of new releases and the generally favourable trends for gaming. The profitability was also driven by the fact that we are getting more recurring revenues from games-as-a-service or live-operated titles, for example Satisfactory, Wreckfest, Deep Rock Galactic, World War Z and the DECA catalogue.

It is gratifying to see that our companies attract and retain a lot of great talent. The number of employees has grown 17% on an organic basis in the past year. We continue to strive for long term organic growth by reinvesting our underlying operating cashflow into scaling up existing studios, setting up new studios and making more great games. Despite our efforts to find further growth investments, it is encouraging to see that our free cashflow reached a record SEK 311 million (-116) in the period.

We continue to emphasize our strategy for game development - quality comes first. Games should be released when ready. This will likely be appreciated and rewarded by our fans and gamers by more sold units, over a longer period of time at higher average selling price. Staying true to this strategy, in the recent months we decided to allow more time for polish- ing, bug fixing and completion to a number of titles across the operative groups.

Looking ahead this financial year ending March 31, 2021, we now expect the total value of completed games released to be SEK 1,000-1,100 million including a notable title from THQ Nordic that we still expect to launch within the fourth quarter. The third quarter will have less releases than the fourth quarter. We expect the third quarter to have new releases with expected completion value in the range of SEK 150-175 million followed by fourth quarter in the range of SEK 300-350 million. Looking ahead to the next financial year ending March 31, 2022, management is confident that it will be another record year in terms of new games released, as we see a potential to double the value of completed games compared to the current financial year.

Despite the ongoing covid-19 pandemic, we have been able to maintain operations in a good manner. The employees in our studios have been working from home where they have sustained the development and scheduled releases. It has been impressive to follow how our studios have been able to adapt to the current climate despite challenges to stay productive during the pandemic and to keep the pace at the level prior to the working from home situation. So far, we have no noticeable delays due to the coronavirus. Studios are somewhat affected by how their employees need extra support to maintain work-life balance under these new conditions and prevent ambient stress, a new challenge for management to address and consider.

We are happy to see that DECA Games, our most recent operative group, came off to a good start within the group. DECA Games will be a growth driver for the group within free- to-play going forward.

The outlook for the games market is positive. In 2020 according to Newzoo, the global market is projected to generate USD 159 billion which represents a 9% year-on-year growth. Embracer Group are a small fish in the big pond and currently represents 0.5-1% of the total market. The global market is expected to continue grow with a forecast exceeding USD

200 billion by the end of 2023. One strong factor for the continued growth is the next-generation consoles PlayStation 5 and Xbox Series X/S that are launching this month. Initially the demand will outstrip the supply, but long-term the next-generation consoles expected installed base will outperform the previous generation according to Ampere Analysis.

EMBRACER GROUP AB (PUBL) | JULY-SEPTEMBER 2020

2

Coupled with the on-going transition to digital distribution, which affects publisher's gross margins, will have a positive effect on Embracer Group.

The Group continues to grow within new segments of the gaming market, like Vertigo Games specializing in VR and DECA Games with a catalogue of free-to-play and mobile titles. VR is expecting to grow from USD 3.3 billion in 2019 to 5.7 billion in 2023 according to Superdata, thanks to improved equipment that increases convenience and player expe- rience. Mobile is the biggest segment at USD 77 billion in 2020 and showed no signs of slowing down with an estimated growth of 13% year-over-year. With over 2.7 billion players (Newzoo) the games market is becoming a global mass-market. New ways of playing and accessing games like streaming will help open up the market to a larger audience.

I am pleased to see that the operating groups are initiating an increased number of potential acquisitions. During the quarter we added eight new companies to the operative groups. The Embracer strategy to build a truly independent eco-system based on committed entrepreneurs and developers that share the same ambitious long-term mindset. I'm a firm believer in giving great people trust to make their own decisions. The M&A market is more active than ever and the past three months we have actively been engaging with more than 100 entrepreneurs who want to be part of the Embracer family, including a dozen sizable businesses that has the potential to create new operative groups under the parent com- pany. We patiently and disciplined continue to execute our M&A strategy across the group.

To support this M&A ambitions, we completed a directed share issue of SEK 5,7 billion on October 8. The new share issue further strengthens our financial position. I was happy to see that all of our existing institutional investors participating along with a wide range of new long term investors, including Canada Pension Plan Investment Board. It is important for me as a founder and major shareholder to have reputable and sizable long-term shareholders that share the same 20 years+ horizon of building something sustainable and substantial.

To conclude, I would like to send my thanks to all of our colleagues, customers, business partners, and shareholders contributing to our growing family's prosperity and success. I would like to personally wish you all a safe and relaxing upcoming holiday period.

All the best from Värmland

November 18, 2020, Karlstad, Sweden

Lars Wingefors

Co-founder & CEO

Hagudden, Fryken, Värmland

Photo: Tommie Svanström Ohlsson

EMBRACER GROUP AB (PUBL) | JULY-SEPTEMBER 2020

3

FINANCIAL PERFORMANCE

All comments refer to the quarter unless otherwise stated.

CONSOLIDATED NET SALES

Consolidated net sales

Jul-Sep

Jul-Sep

Apr-Sep

Apr-Sep

by business area, SEK m

2020

2019

Change

2020

2019

Change

Games - THQ Nordic

566.9

329.6

72%

1,054.7

514.7

105%

Games - Deep Silver

506.8

441.7

15%

1,119.5

815.1

37%

Games - Coffee Stain

129.9

44.7

191%

302.4

127.5

137%

Games - Saber Interactive

259.1

-

-

608.2

-

-

Games - DECA Games

32.7

-

-

32.7

-

-

Games Subtotal

1,495.4

816.1

83%

3,117.5

1,457.5

114%

Partner Publishing/Film

887.8

443.6

100%

1,334.4

944.3

41%

Consolidated Net Sales

2,383.2

1,259.7

89%

4,451.9

2,401.8

85%

Consolidated net sales in the quarter increased by 89% or SEK 1,123.5 million compared to last year. All business areas contributed to the growth, of which the recently acquired companies Saber Interactive contributed SEK 259,1 million and DECA Games with SEK 32.7 million. Business area Games - THQ Nordic, Coffee Stain and Deep Silver showed growth over last year, mainly driven by new releases and solid back catalog sales. Organic growth in constant currency for the Games Business Area amounted to 61% in the quarter.

The growth in Partner Publishing/Film business area is mainly driven by larger releases in the quarter compared to last year.

CONSOLIDATED EXPENSES

Jul-Sep

Jul-Sep

Apr-Sep

Apr-Sep

Apr 2019-

Operating expenses, SEK m

2020

2019

2020

2019

Mar 2020

Goods for resale

-1,034.1

-635.1

-1,794.0

-1,163.1

-2,576.0

Other external expenses

-359.7

-191.8

-651.9

-369.3

-784.0

Personnel expenses

-398.8

-258.2

-777.5

-481.4

-1,130.0

Depreciation, amortization and

impairment of property, plant and

equipment and intangible assets

-795.6

-341.7

-1,541.6

-649.9

-1,475.9

Total operating expenses

-2,588.2

-1,426.8

-4,765.0

-2,663.7

-5,965.9

Consolidated expenses has increased due to a number of additional acquisitions and general growth of underlying business. Goods for resale mainly includes cost of replication, license fees and royalties. Growth in goods for resale was relatively low compared to growth in net sales, resulting in an increased gross margin of 57% (50%). The improved gross margin is mainly due to a higher gross margin in both business area Games and Partner Publishing/film compared to last year. Gross margin improvement in business area Games is mainly driven by the addition of Saber which has a high proportion of royalty income and an important Work For Hire business.

The year-over-year increase in other external expenses and personnel expenses is primarily explained by acquisitions made versus corresponding quarter last year and increased internal investments in the Group's gaming portfolio of SEK 96.8 million. The net increase excluding capitalized game development amounts to SEK 211.7 million and is mainly driven by increased overhead to manage the growing games portfolio as well as increased general

  • administration expenses to further strengthen the Group's corporate capabilities. Costs for sales and marketing increased in the quarter, mainly explained by more releases than in the comparison period.

Kingdoms of Amalur: Re-Reckoning

EMBRACER GROUP AB (PUBL) | JULY-SEPTEMBER 2020

4

CONSOLIDATED DEPRECIATION AND AMORTIZATION EXPENSES

Jul-Sep

Jul-Sep

Apr-Sep

Apr-Sep

Apr 2019-

Depreciation and amortization, SEK m

2020

2019

2020

2019

Mar 2020

Intangible assets

Game development

-222.2

-143.7

-413.3

-306.1

-587.1

Other intangible assets (Film etc.)

-43.4

-26.5

-97.8

-43.0

-171.8

Sub-total

-265.7

-170.2

-511.2

-349.1

-758.9

Acquisition-related depreciation

IP-rights

-104.2

-100.5

-206.4

-169.6

-359.4

Surplus value Partner Publishing/Film

-15.3

-12.0

-30.4

-20.2

-43.1

Goodwill

-401.1

-51.7

-776.4

-97.2

-285.1

Sub-total

-520.6

-164.3

-1,013.2

-287.0

-687.6

Total intangible assets

-786.3

-334.5

-1,524.4

-636.1

-1,446.5

Tangible assets

-9.3

-7.4

-17.2

-13.8

-29.4

Total depreciation and amortization

-795.6

-341.7

-1,541.6

-649.9

-1,475.9

The increased amortization of games is mainly explained by the higher value of finalized game development in the quarter versus last year. The increase in depreciations of other intangible assets (Film etc.) in the quarter is mainly due to the fact that KSM is not included in the comparison period. The increase in acquisition related depreciations over last year in the quarter is primarily explained by that more acquisitions were completed during the year where the acquisition of Saber Interactive accounts for the largest portion.

Depreciation and amortization principles

Game development; Amortization of finished game development projects - degressive amortization over two years; 1/3 amortization during months 1 to 3 following release,

1/3 amortization in months 4 to 12 following release and the remaining 1/3 in months 13 to 24 following release.

Other intangible assets (Film etc); The majority of other intangible assets are related to the Group's film business and are amortized based on actual sales in relation to expected sales of the relevant title.

IP-rights; Amortization of IP rights related to Games - straight-line amortization over five years.

Surplus value Film & Partner publishing; Amortization of surplus values related to Partner Publishing/Film - straight-line amortization over five years.

Goodwill; Amortization of Goodwill - straight-line amortization over five years.

CONSOLIDATED EARNINGS

The increase of the Group's EBITDA, from SEK 418.1 million to SEK 969.0 million, and Operational EBIT, from SEK 240.7 million to SEK 652.5 million, for the quarter is mainly explained by the increase in net sales and improved gross margin compared to the same period last year.

EBITDA and EBIT for the period includes Profit from revaluation of shares in associated company Palindrome of SEK 41.4 million. The profit is recognized in accordance with Swedish GAAP K3 and relates to Embracer´s increased ownership in Palindrome during the quarter. The profit has no cash flow impact and has therefore been excluded from Operational EBIT.

The increase in Operational EBIT contributed to the increasing EBIT but was significantly lowered by increased acquisition-related depreciations, of SEK 356.3 million. EBIT increased, from SEK 76.4 million to SEK 173.4 million, in the quarter.

CONSOLIDATED CASH FLOW AND FINANCIAL POSITION

Cash flow from operating activities before changes in working capital for the quarter was SEK 852.1 million (364.7). The increase is mainly due to increased earnings from operations. Cash taxes for the quarter amounted to SEK -28.9 million (-53.4). Change in working capital amounts to SEK -47.5 million (-79.9).

Aquanox

EMBRACER GROUP AB (PUBL) | JULY-SEPTEMBER 2020

5

There was no effect of forfaiting in the quarter for the current year or the previous year.

Cash flow from operating activities after change of working capital for the period was SEK 804.7 million (284.8). Cash flow from investing activities was SEK -1,267.2 million (-1,203.3), where SEK -773.9 million (-802.7) relates to acquired companies.

The Group's investments in intangible fixed assets amounted to SEK -484.1 million (-391.9), related to capitalized expenditure for ongoing game development of SEK -444.7 million, film rights SEK -36.8 million and other SEK -2,6 million. Investments in buildings, property, plant and equipment amounted to SEK -12.8 million (-8.6). Change in financial assets amounted to SEK 3.6 million (-0.1).

Cash flow from financing activities amounted to SEK 513.7 million (619.6) and is mainly related to increased utilization of existing credit facilities.

Cash and cash equivalents at the end of the period were SEK 3,579.1 million compared to SEK 3,525.1 million as of June 30, 2020. The Group also had unutilized credit facilities of SEK 1,086.9 million compared to SEK 1,623.9 million as of June 30, 2020. The Group's total available cash and unutilized credit facilities were SEK 4,665.9 million at the end of the quarter compared to SEK 5,149.0 million as of June 30, 2020. As per September 30, 2020 the Net Cash of the Group amounted to SEK 1,281.3 million compared to SEK 813.7 million as per June 30, 2020.

CONDITIONAL PURCHASE PRICE OVERVIEW

As of 30 September 2020 the Group had provisions of 724.6 MSEK for earnouts with expected settlement according to the table below.

Provisions for conditional

Financial year when settlement is expected

purchase price, SEK m

20/21

21/22

22/23

23/24

>24/25

Total

Provisions to be settled in cash

9.4

23.3

137.5

100.1

414.2

684.4

Provisions to be settled by shares 1)

40.2

40.2

Total

9.4

23.3

137.5

100.1

454.4

724.6

  1. 361,744 shares are not issued and will be issued if certain earnout targets are met. If all shares are issued the dilution amounts to 0.09% of the outstanding shares and 0.053 percent of the outstanding votes per 30 September 2020.

In addition, out of the 385.4 million shares outstanding there are approximately 57.9 million shares with clawback rights as per 30 September 2020. These shares have already been issued to cover for future earnout obligations.

INTANGIBLE ASSETS

The Group had intangible assets of SEK 13,768.2 million at the end of the quarter, compared to SEK 10,971.1 million at the end of the previous quarter, June 30, 2020, distributed as follows:

Intangible assets - Specification, SEK m

Sep 30, 2020

Sep 30, 2019 Jun 30, 2020 Mar 31, 2020

Completed games

604.8

392.9

511.5

438.6

Ongoing game development projects

2,427.7

1,582.4

2,274.4

2,117.7

Other intangible assets (film etc.)

212.2

283.0

192.6

250.1

Intangible assets

3,244.7

2,258.3

2,978.5

2,806.4

IP-rights

1,463.2

2,071.8

1,337.6

1,479.8

Surplus value Partner Publishing/Film

167.5

208.3

152.1

173.0

Goodwill

8,892.8

983.2

6,502.9

1,411.7

Acquisition related intangible assets

10,523.5

3,263.3

7,992.6

3,064.5

Total

13,768.2

5,521.6

10,971.1

5,870.9

Desperados 3

EMBRACER GROUP AB (PUBL) | JULY-SEPTEMBER 2020

6

PRELIMINARY PURCHASE PRICE ALLOCATION

During the quarter Embracer closed the following acquisitions; Deca Games, 4A Games, Palindrome, Rare Earth, Vermila, Sola Media, Pow Wow Entertainment, NWI Interactive and Vertigo. The acquired companies have been included into Embracer's consolidated financial reporting from each respective closing date. A summary of the preliminary purchase price allocations is provided below:

SEK m

On-going game development

22

Finished game development

5

IP-rights/Trademarks

124

Other intangible assets

6

Total intangible assets

157

Total financial assets

17

Total tangible assets

10

Net working capital

11

Cash and cash equivalents

164

Provisions

-9

Other long term liabilities

-53

Total net assets acquired excluding surplus value

296

Goodwill

2,979

Surplus - value IP

97

Surplus - film

27

Deferred tax liabilities

-37

Total surplus value net of taxes

3,065

Total net assets acquired

3,362

Acquired cash

-164

Shares issued

-2,084

Earnout

-357

Other

-58

Net cash outflow on acquisition of business

699

Cash outflow relating to

earlier acquisitions

80

Total Net Cash outflow

on acquisitions of business

779

The above surplus values SEK 3,103 million is the base for the Amortization related to acquisitions closed in the quarter below. The difference between SEK 3,103 million and SEK 3,292 million relates to amortizations in Q2 and currency rates.

Non-operational Depreciations and Amortizations - Forecast

Q3

Q4

FY

FY

FY

FY

FY

FY

SEK m

20/21

20/21

21/22

22/23

23/24

24/25

25/26 26/27

Total

Amortization related to acqui-

sitions closed in the quarter

-166

-166

-666

-666

-666

-666

-297

0

-3,293

Amortization related to acquisi-

tions closed previous quarters

-468

-467-1,857-1,809-1,534-1,257

0

0

-7,391

Non-operational Deprecia-

tions and Amortizations

-634

-633-2,523-2,475-2,200-1,923

-297

0

-10,683

Forecast is based on the average exchange rate during the quarter for EUR and USD. Forecast is based on the purchase price allocations as per 30th September, which contain both preliminary and finalized purchase price allocations.

Spellforce 3: Fallen God

EMBRACER GROUP AB (PUBL) | JULY-SEPTEMBER 2020

7

DECA GAMES

As part of Embracer's consolidated financial reporting DECA Games has implemented the Swedish GAAP K3.

Revenues are reported on a gross basis within Business Area - DECA Games, which is consistent with peers in the industry of live-ops/mobile gaming.

DEPENDENCY ON FOREIGN EXCHANGE RATES

Embracer operates on a global market and reports financial performance in SEK and thus has a dependency towards foreign currencies, mainly USD and EUR. The SEK has strengthened after quarter end versus USD and EUR. Everything else being equal, this would have a negative impact on net sales in SEK. However, organic growth in net sales in local currency would not be affected.

PARENT COMPANY

The Parent Company's net sales for the quarter were SEK 252.9 million (183.0) and profit before tax was SEK -241.2 million (95.1). The negative outcome is explained by unrealized currency exchange loss on loan to a subsidiary. Profit after tax was SEK -189,3 million (74.2).

Investments in intangible assets in the quarter were SEK 150.1 million (189.9).

Cash and cash equivalents as of September 30, 2020 were SEK 2,083.3 million (2,069.5). The Parent Company's equity at the end of the period was SEK 11,965.9 million (5,552.0).

MotoGP 20

EMBRACER GROUP AB (PUBL) | JULY-SEPTEMBER 2020

8

OPERATIONAL OVERVIEW

BY BUSINESS AREA

BUSINESS AREA: GAMES - THQ NORDIC

Business Area: Games - THQ Nordic released the following new products in the quarter ended September 2020:

Title

Publishing Label

IP Owner Platforms

Channels

Destroy All Humans!

THQ Nordic

Own

PC, PS4, Xbox One

Digital & Physical

Kingdoms of Amalur Re-Reckoning

THQ Nordic

Own

PC, PS4, Xbox One

Digital & Physical

MX vs ATV All Out

THQ Nordic

Own

Switch

Digital & Physical

Little Big Workshop

HandyGames

Own

PS4, Xbox One,

Digital

Switch

One Hand Clapping - Early Access

HandyGames

External

Stadia

Digital

Spitlings

HandyGames

External

PC, PS4, Xbox One,

Digital

Switch

Through the Darkest of Times

HandyGames

External

PS4, Xbox One,

Digital

Switch

Net sales of THQ Nordic increased 72% to SEK 566.9 million (329.6) compared to the same period last year.

THQ Nordic reports a new record quarter. In the period, the major revenue drivers were Destroy all Humans! and Kingdoms of Amalur: Re-Reckoning - both exceeding management expectations. Back catalogue sales continued showing a strong momentum, driven by Spongebob Squarepants: Battle for Bikini Bottom - Rehydrated released during Q1.

THQ Nordic has established two new studios during the quarter; the first one, Ashborne Games, Brno, Czech Republic is a newly founded studio with an experienced team, focusing on strategy and RPG games. The second one, Rainbow Studios Montréal got its name from Rainbow Studios based in Phoenix, USA. This will allow the Rainbow Team a better access to the local talent pool in the Montréal area.

In August, THQ Nordic acquired the Austria-based Pow Wow Entertainment GmbH. The studio employs 22 developers with AAA- and Games-as-a-Service experience. The team is working on two unannounced games one of which is based on an existing THQ Nordic-owned IP.

Facts

Studios

Ashborne Games

Alkimia Interactive

Black Forest Games

Bugbear Entertainment

Experiment 101

(Brno, Czech Republic)

(Barcelona, Spain)

(Offenburg, Germany)

(Helsinki, Finland)

(Stockholm, Sweden)

Grimlore Games

Gunfire Games

HandyGames

Mirage Game Studios

Nine Rocks Games

(Munich, Germany)

(Austin, USA)

(Giebelstadt, Germany)

(Karlstad, Sweden)

(Bratislava, Slovakia)

Pieces Interactive

Piranha Bytes

Pow Wow Entertainment

Rainbow Studios

Rainbow Studios

(Skövde, Sweden)

(Essen, Germany)

((ienna, Austria)

(Phoenix, USA)

(Montréal, Canada)

Publisher

Internal headcount Studios

HandyGames (Giebelstadt, Germany)

599 (442)

15 (10)

THQ Nordic (Vienna, Austria)

Chronos: Before the Ashes

EMBRACER GROUP AB (PUBL) | JULY-SEPTEMBER 2020

9

BUSINESS AREA: GAMES - COFFEE STAIN

Net sales of Business Area: Games - Coffee Stain increased 191% to SEK 129.9 million (44.7) compared to the same period last year.

Coffee Stain had another strong quarter, with Satisfactory as the major revenue driver, followed by Deep Rock Galactic. Goat Simulator continues to be a solid contributor to back catalogue sales performing well on all seven published platforms.

After the end of the quarter, Coffee Stain announced several organizational changes. Stefan Hanna, one of the original founders of Coffee Stain, was appointed new CEO of Coffee Stain Studios. He replaces Johannes Aspeby who will move to work for Coffee Stain Publish- ing. Albert Säfström, one of the publishing founders, was appointed new CEO of Coffee Stain Publishing, replacing Tim Badylak, who moves on to new ventures. Anton Westbergh remains as Group-CEO of Coffee Stain.

Facts

Studios

Lavapotion

Coffee Stain Studios

Coffee Stain North

Box Dragon

(Gothenburg, Sweden)

(Skövde, Sweden)

(Stockholm, Sweden)

(Gothenburg, Sweden)

Publisher

Internal headcount Studios

Coffee Stain Publishing (Skövde, Sweden) 72 (55)

4 (3)

Satisfactory

EMBRACER GROUP AB (PUBL) | JULY-SEPTEMBER 2020

10

BUSINESS AREA: GAMES - DEEP SILVER

Business Area: Games - Deep Silver released the following new products in the quarter ended September 2020:

Title

Publishing Label

IP Owner

Platforms

Channels

Iron Harvest

Deep Silver

External

PC

Digital & Physical

Pathfinder

Kingmaker:

Deep Silver

External

PS4, Xbox One

Digital & Physical

Definitive

Edition

Wasteland 3

Deep Silver

External

PC, PS4, Xbox One

Digital & Physical

Windbound

Deep Silver

External

PC, PS4, Xbox One

Digital

Relicta

Ravenscourt

External

PC, PS4, Xbox One

Digital

Net sales of Deep Silver increased 15% to SEK 506.8 million (441.7) compared to the same period last year.

Deep Silver had a solid quarter, where the three new releases Wasteland 3, Windbound and Iron Harvest were the major revenue drivers. All titles performed in line with management expectations.

The back catalogue sales continued to exceed management expectations with a solid performance of the evergreen franchises Metro and Saints Row-series. Also Kingdom Come: Deliverance, Hunt: Showdown and Outward continued to perform well.

During the quarter, Koch Media/Deep Silver acquired the Dutch-based Vertigo Games, which develops, publishes and distributes games exclusively for Virtual Reality (VR). The VR-AAA title After the Fall is expected to launch during 2021. The addition of Vertigo Games will add a number of quality VR titles to Deep Silver's back catalogue.

Milestone performed above management expectations during the quarter, mainly driven by the increasing digital sales, based on the new consumer behavior due to covid-19 restric- tions.

MotoGP 20, released during the last quarter, continued to perform well during this quarter. The title got a lot of good visibility in connection to the real championship and has been well received by its community and fans.

Milestone released Ride 4 after the end of the period and has been well received by its audience, gaining better reviews than its predecessor and performed above management expectations.

Facts

Studios

Deep Silver Dambuster Studios

Milestone

Voxler

Warhorse Studio

(Nottingham, U.K)

(Milan, Italy)

(Paris, France)

(Prague, Czech Republic)

Deep Silver FishLabs

Deep Silver Volition

Vertigo Games

(Hamburg, Germany)

(Champaign, USA)

(Rotterdam, Netherlands)

Publisher

Internal headcount Studios

Deep Silver (Munich & London)

1,527* (1,358*)

7 (5)

Milestone (Milan, Italy)

* Koch Media Group included

Vertigo Games (Rotterdam, Netherlands)

Chorus

EMBRACER GROUP AB (PUBL) | JULY-SEPTEMBER 2020

11

BUSINESS AREA: GAMES - SABER INTERACTIVE

Business Area: Games - Saber interactive released the following new products in the quarter ended September 2020:

Title

Publishing Label

IP Owner

Platforms

Channels

World War Z Dronemaster

Exclusive

Update DLC

External

license

PC, PS4, Xbox One

Digital

SnowRunner Season 1:

Search & Recover DLC

External

Own

PC, PS4, Xbox One

Digital

Net sales of Saber Interactive were SEK 259.1 million (-) during the quarter.

Saber Interactive had a solid quarter. The strongest revenue driver was Snowrunner followed by World War Z which continued to outperform expectations on the back of strong sales following the DLC release Dronemaster Update that added cross-platform support. In September WWE 2K Battlegrounds was released. Since WWE 2K Battlegrounds is published by 2K, Saber Interactive didn't recognize any revenue during the quarter for this title.

Notable contributions also came from Work-for-Hire projects. Following the Switch-release in the previous quarter ended June, Crytek released Crysis 1 in September on more platforms.

Despite the challenging global covid-19 pandemic, Saber Interactive has had ongoing discussions with more M&A-candidates wanting to join the group. The collaboration between Saber Interactive and the other operational groups of Embracer Group has grown stronger during the period and shows Embracer's ecosystem's potential.

During the quarter, Saber Interactive acquired two new companies; Malta-based 4A Games and US/Canada based New World Interactive. 4A Games is the studio behind the successful Metro franchise and a long-term development partner to the Embracer owned publisher Deep Silver. New World Interactive is an award-winningindie-spirited creator and developer of First-Person-Shooter IPs founded in 2010.

After the reported quarter, New World Interactive announced the opening of a new development studio, New World East in Montréal, Canada. The new studio will provide ongoing, post-release support for Insurgency: Sandstorm and provide crucial development support for an unannounced future title.

Saber Interactive continues to expand its team targeting experienced executives in the game development space and recently hired Todd Hollenshead, former CEO of ID Software, as the new Head of Publishing as well as Bradley Doan, former CEO of Sperasoft, as the new Head of Production.

Facts

Studios

Saber Interactive

4A Games

New World Interactive

(Vila Nova de Gaia, Portugal)

(Kiev, Ukraine)

(Calgary,Canada)

(Saint Petersburg, Russia)

(Silema, Malta)

(Denver, USA)

(Alcobendas, Spain)

(Sundsvall, Sweden)

(Minsk, Belarus)

Publisher

Internal headcount

Studios

Saber Interactive

966 (-)

9 (-)

Snowrunner

EMBRACER GROUP AB (PUBL) | JULY-SEPTEMBER 2020

12

BUSINESS AREA: GAMES - AMPLIFIER GAME INVEST

Amplifier Game Invest screens and invests in internationally talented companies in the games industry. The strategy is to give top talented game developers full creative integrity, while offering financial and commercial support. Amplifier Game Invest either sets up new studios based on a start-up offering or acquires existing studios.

Amplifier Game Invest has continued to expand its team by adding more key people thereby broading its expertise in order to support to the growing team of studios in their global portfolio.

During the quarter Amplifier Game invest made the following transactions and acquisitions:

  • Acquisition of the remaining 50% of the shares in Palindrome Interactive, a 14-person strong game studio located in Skövde, Sweden, making Palindrome Interactive a wholly owned subsidiary.
  • Acquisition of the Austria-based development studio Rare Earth Games with a team of highly experienced industry veterans. Rare Earth Games focus on action-packed multiplayer game titles for PC, Consoles and Cloud services.
  • Acquisition of the ten-person strong game development studio Vermila Studios. Vermila Studios is currently working on their first production, Crisol: Theater of Idols, a first-person horror adventure.
  • Increased their holding from 20% to 41% in Kavalri Games, a development studio based in Stockholm.

Facts

Studios

S T U D I O S

Vermila Studios

Palindrome Interactive

Tarsier Studios

Destiny Bit

(Madrid, Spain)

(Skövde, Sweden)

(Malmö, Sweden)

(Ravenna, Italy)

Rare Earth Games

Misc Games

C77

River End Games

(Vienna, Austria)

(Sandnes, Norway)

(Belleveue, USA)

(Gothenburg, Sweden)

Publisher

Internal headcount

Studios

-

158 (3)

8 (-)

Fishing North Atlantic

EMBRACER GROUP AB (PUBL) | JULY-SEPTEMBER 2020

13

BUSINESS AREA: GAMES - DECA GAMES

Net sales of DECA Games were SEK 32.7 million (gross revenues for the period August 13 until September 30) (-).

DECA Games was announced the sixth operative group within Embracer Group at its acquisition August 13. It's a platform for building a new business vertical, applying the established asset care strategy to a new market segment: Mobile and Free-To-Play. This market segment is highly complementary to Embracer Group's existing, fast growing business within PC/console game development and publishing.

DECA Games had a solid first six weeks within the Group. Existing games at the time of the acquisition, Realm of the Mad God and Dragonvale have been performing above expectations as a result of covid-19 and increased content increased releasing pace of new content to existing games. During the quarter, DECA Games acquired two new franchises, Almost a Hero and Gods and Glory. The company has multiple ongoing M&A discussions including new franchises and entrepreneurs wanting to join the group.

Remote operations have been efficient and the integration has gone smoothly, despite the challenging circumstances with the ongoing pandemic.

Facts

Studios

DECA

DECA

DECA

Games Bulgaria

Games Berlin

Games

(Veliko Tarnovo, Bulgaria)

(Berlin, Germany)

(remote)

Publisher

Internal headcount

Studios

Deca Games (Berlin, Germany)

67 (-)

3 (-)

Realm of the Mad God

EMBRACER GROUP AB (PUBL) | JULY-SEPTEMBER 2020

14

BUSINESS AREA: PARTNER PUBLISHING/FILM

Net sales in the Partner Publishing/Film business area increased 100% to SEK 887.8 million (443.6) compared to the same period last year, mainly driven by larger game releases as well as increased film revenues.

In the Partner Publishing business segment, Marvel Avengers from Square Enix and F1 2020 from Codemasters were the major revenue drivers during the quarter. Mentioned notable releases and the general performance of the Partner Publishing business segment exceeded management expectations, despite the difficulties presented by the covid-19 restrictions to the traditional retail business.

The strong back catalogue performance and digital sales during the quarter were assessed to be driven by consumers' demand patterns affected by the covid-19 pandemic. While the lockdown had already significantly impacted the retail landscape in the quarter ending June, the reporting quarter was dominated by recovery and increasing numbers of customers buying games physically.

Partner Publishing does not expect any major new release during the quarter ending December. Releases for the quarter ending December will include Kingdom Hearts Melody of Memory, Mortal Kombat 11 Ultimate and DIRT 5.

The Film business segment had a strong quarter exceeding management expectations. Revenue more than doubled compared to same period last year driven by the full integration of the KSM business. Digital sales where at high levels, whereas physical sales still suffered from the covid-19 lockdowns. The film business released more than 70 titles during the quarter, including The Witch Next Door in cinemas and IP Man 4 for home video.

During the quarter, Koch Films acquired Sola Media, a Germany based sales agent of international film and TV-rights, distributing children and family films across the globe. Sola Media's titles Dreambuilders and Elfkins were the major revenue drivers in the period. The upcoming release of Forgotten Christmas is affected by the covid-19 lockdowns on certain markets. but is still planned to be released in both Switzerland and Austria.

Koch Film also launched a B2C subscription channel, "Aniverse" on Amazon Prime video channels, the launch was well received and has so far exceeded management expectations.

After the quarter end Koch Films had a successful launch of their own YouTube channel for movie streaming called "Moviedome".

Game Outlet Europe AB, the niche distributor of retro-products and deep back catalogue games, based in Karlstad, Sweden continued to have a positive development. During the period it announced its own publishing label for niche titles, Clear River Games, that released its first title, Ys Origin in EMEA territories. The retro segment had a continued great performance of 8BitDo products where Game Outlet Europe has the European distribution.

Facts

Internal headcount

1,540* (1,371*)

* Koch Media Group and Game Outlet Europe included

Biomutant

EMBRACER GROUP AB (PUBL) | JULY-SEPTEMBER 2020

15

ONGOING DEVELOPMENT AND UPCOMING RELEASES

The Company invested SEK 445 million in its growing ongoing development pipeline that will be driving growth and profitability in the coming years.

The finalized value of the completed and released games during the quarter were SEK 311 million driven by the releases of Destroy all Humans!, Iron Harvest and Wasteland 3.

Announced releases in the Games business area as of November 18, 2020

Publishing

Title

Label

IP Owner Platforms

Channels

Biomutant

THQ Nordic

Own

PC, PS4, Xbox One

Digital & Physical

Chronos: Before the Ashes

THQ Nordic

Own

PC, PS4, Xbox One,

Digital & Physical

Switch, Stadia

Destroy all Humans!

THQ Nordic

Own

Stadia

Digital

Gothic - Remake

THQ Nordic

Own

PC, next gen consoles

Digital & Physical

Kingdoms of Amalur

THQ Nordic

Own

PS4, Xbox One, PC

Digital

Expansion: Fatesworn

Knights of Honor II: Sovereign

THQ Nordic

Own

PC

Digital & Physical

Scarf

THQ Nordic

External

PC

Digital

Spongebob: Battle for Bikini

THQ Nordic

External

Stadia

Digital

Bottom Rehydrated

The Guild 3 (full version)

THQ Nordic

Own

PC

Digital & Physical

A Rat´s Quest

HandyGames

External

PS4, Xbox One, PC, Switch

Digital

Aces of the Luftwaffe

HandyGames

Own

Mobile

Digital

Squadron - Extended Edition

Airhead

HandyGames

External

PS4, Xbox One, PC, Switch

Digital

El Hijo

HandyGames

External

PC, PS4, Xbox One, Switch

Digital

Endling - Extinction is Forever

HandyGames

External

PC, PS4, Xbox One, Switch

Digital & Physical

One Hand Clapping

HandyGames

External

PS4, Xbox One, PC, Switch

Digital

Pile Up!

HandyGames

External

PS4, Xbox One, PC, Switch

Digital

Townsmen VR

HandyGames

Own

PC, PS4

Digital

Chorus

Deep Silver

Own

TBC

Digital & Physical

Chivalry 2

Deep Silver

External

PC, PS4, Xbox One

Physical

Dead Island 2

Deep Silver

Own

TBC

Digital & Physical

Iron Harvest

Deep Silver

External

TBC

Digital & Physical

Phoenix Point

Deep Silver

External

PS4, Xbox One

Digital & Physical

MXGP 2021

Milestone

Own

PC, PS5, PS4, Xbox One

Digital & Physical

Ride 4

Milestone

Own

PS5, Xbox series X

Digital & Physical

Let's Sing 2021

Ravenscourt

External

PS4, Switch

Digital & Physical

Proto Corgi

Ravenscourt

External

PC, Switch

Digital

Midnight Ghost Hunt

Coffee

Stain

Shared

PC

Digital

Satisfactory - Update 4

Coffee

Stain

Own

PC

Digital

Songs of Conquest

Coffee

Stain

Own

PC

Digital

Valheim

Coffee

Stain

External

PC

Digital

SnowRunner Season 2:

Explore & Expand

External

Own

PC, PS4, Xbox One

Digital

For latest release dates please refer to above mentioned publishers.

Goat Simulator

EMBRACER GROUP AB (PUBL) | JULY-SEPTEMBER 2020

16

EVENTS AFTER THE QUARTER

SIGNIFICANT EVENTS AFTER THE QUARTER

  • On the October 8, Embracer Group successfully completed a directed share issue of SEK 5,782 million. The new share issue further strengthen the Company's financial position and enable the company to continue its long track-record of successful acquisitions by comple- menting its operations by adding new game publishers, development studios or other gam- ing related-assets. The demand in the private placement was significant from both Swedish and international institutional investors, including Canada Pension Plan Investment Board acquiring new class B shares for a total amount of approximately SEK 2.1 billion.
  • In connection with the private placement, Embracer Group's founders consolidated their ownership in Embracer Group whereby Lars Wingefors AB acquired shares from the other founders Erik Stenberg, Mikael Brodén, Klemens Kreuzer and Reinhard Pollice. Post transaction, the co-founders became owners in Lars Wingefors AB and will no lon- ger own shares directly through their own holding companies in Embracer Group.
    The transactions are expected to be completed in the end of the calender year.
  • At the Extra General Meeting the 16th of November, it was resolved to authorize the Board to issue shares, convertibles and/or warrants in the amount not exceeding ten percent (46,793,296 shares) of the total number of shares in the company with the primarily purpose to raise new capital to increase the flexibility of the Company or in connection with acquisitions.
  • After the end of the quarter the loan, including accrued interest, of USD 101.0 million from the sellers of Saber Interactive was refinanced with an external bank loan of SEK 96 million on favourable terms. The sellers provided a discount of USD 5.0 million in connection with the repayment of the loan. In addition, Embracer realized an unrealized currency gain of approximately SEK 112 million (SEK/USD at 8.84). The net effect of the refinancing will have a positive effect on Embracer´s financial net with approximately USD 5.0 million equal to SEK 44.4 million in Q3 (SEK/USD 8.84). The transaction does not have any effect on Embracer´s available funds.

RELEASES AFTER THE END OF THE QUARTER

During the period October 1, 2020 until November 18, 2020, the following titles were released:

Publishing

Title

Label

IP Owner

Platforms

Channels

Aquanox - Deep Descent

THQ Nordic

Own

PC

Digital & Physical

Desperados 3 DLC2:

THQ Nordic

Own

PC, PS4, Xbox One

Digital

Five Steps Ahead

Desperados 3 DLC3:

THQ Nordic

Own

PC, PS4, Xbox One

Digital

Once More With Feeling

Spellforce 3: Fallen God

THQ Nordic

Own

PC

Digital

Chicken Police - Paint It Red!

HandyGames

External

PS4, Xbox One, PC,

Digital

Switch

Little Big Workshop

HandyGames

Own

PC

Digital

- The Evil DLC

Neighbours Back From Hell

HandyGames

Own

PS4, Xbox One, PC,

Digital

Switch

Maneater

Deep Silver

Extern

PS5, Xbox series X

Physical

Ride 4

Milestone

Own

PC, PS4, Xbox One

Digital & Physical

Let's Sing Queen

Ravenscourt

Own

PS4, Xbox One,

Digital & Physical

Switch

9 Monkey's of Shaolin

Ravenscourt

External

PC, PS4, Xbox One,

Digital & Physical

Switch

Fishing North Atlantic

Misc

Own

PC

Digital

Little Big Workshop

EMBRACER GROUP AB (PUBL) | JULY-SEPTEMBER 2020

17

OTHER INFORMATION

SUSTAINABILITY AND GOVERNANCE

During the quarter, the focus has been on the next step in completing the implementation of our Compliance Code, ensuring awareness in the whole group by conducting training. This is accomplished through a gamified version, in the same playful way as "the Code" available on our website. The training started in October, and we are proud of the commitment and participation that the employees in our parent company and in our subsidiaries have shown.

The Compliance Code training is carried out annually, and examples of areas covered are anti-corruption, privacy and data security, diversity and inclusion, and our whistleblowing service. We recognize the importance of training our employees. A total of 41% of our global group completed the training the first month. At Embracer parent company level, all employees have also completed a course in data privacy and the General Data Protection Regulation.

Our first sustainability report was published in the Annual Report 19/20 and laid the foundation for setting future goals and key performance indicators

Our work with green initiatives continues and together with a united climate group consisting of several Nordic gaming companies we have launched the website PlayCreateGreen.org. The site will feature best practices from gaming companies and inspire the games industry to promote climate-smart behavior. The site is functioning as a handbook and is a long- term project and part of the commitment we made together with the climate group in the UN's initiative Playing for the Planet.

Our cross-border initiative, the Ambassador program, has begun to work actively in small groups focusing on areas where they believe they make the greatest impact and what matters most from a sustainability perspective.

Destroy Alla Humans

EMBRACER GROUP AB (PUBL) | JULY-SEPTEMBER 2020

18

ANALYSTS FOLLOWING EMBRACER GROUP

Company

Name

Phone

Mail

Carnegie

Oscar Erixon

+46

8 58 86 89 73

oscar.erixon@carnegie.se

Berenberg

Benjamin May

+44 20 346 52 667 benjamin.may@berenberg.com

SEB

Mathias Lundberg

+46

8 522 297 94

mathias.lundberg@seb.se

Bernstein

Matti Littunen

+44 207 170 50 09

matti.littunen@bernstein.com

Nordea Markets

Erik Lindholm-Röjestål

+46

101 570 310

erik.lindholm-rojestal@nordea.com

Pareto Securities

Lars-Ola Hellstrom

+46

8 402 5277

lars-ola.hellstrom@paretosec.com

Handelsbanken

Fredrik Olsson

-

frol16@handelsbanken.se

Redeye

Tomas Otterbeck

-

tomas.otterbeck@redeye.se

ABG Sundal Collier

Jesper Birch-Jensen

+46

8 566 286 13

Jesper.Birch-Jensen@abgsc.se

Citi

Thomas A Singlehurst

+44 20 7986 4051

thomas.singlehurst@citi.com

Kepler Cheuvreux

Hjalmar Ahlberg

+46

708 62 50 79

hahlberg@keplercheuvreux.com

Goldman Sachs

Alexander Duval

-

alexander.duval@gs.com

Note: Redeye and ABG Sundal Collier are commissioned by Embracer Group.

ANALYSTS AND ESTIMATES

During the quarter we launched a new IR-service at embracer.com providing consensus estimates. The estimates are collected by Infront and based on predictions made by analysts who cover Embracer Group.

THE SHARE

Change from

TOP 10 OWNERS, AS OF SEPTEMBER 30, 2020

June 30, 2020

Class A

Class B

Share of

Share of

Class B

Name

shares

shares

capital, %

votes, %

shares

Lars Wingefors

19,504,401

88,571,196

28.04

41.34

Matthew Karch and Andrey Iones

6,399,137

35,386,220

10.84

14.49

Swedbank Robur Funds

25,651,868

6.66

3.74

-447,870

Erik Stenberg

4,223,172

19,177,800

6.07

8.95

Handelsbanken Funds

18,588,798

4.82

2.71

-1,064,447

Didner & Gerge Funds

11,233,848

2.91

1.64

-376,921

Mikael Broden

1,450,134

6,585,189

2.08

3.07

Ken Go

6,301,591

1.63

0.92

6,301,591

ODIN Funds

5,300,000

1.38

0.77

650,000

First Swedish National Pension Fund

4,920,256

1.28

0.72

-3,449,504

TOTAL TOP 10

31,576,844

221,716,766

65.71

78.35

ALL OTHER SHAREHOLDERS

1,822,293

130,333,855

34.29

21.65

TOTAL

33,399,137

352,050,621

100.00

100.00

Source: Holdings by Modular Finance.

TOP 15 MANAGEMENT & CO-FOUNDER OWNERS, AS OF SEPTEMBER 30, 2020

Class A

Class B

Share of

Share of

Owner

Co-Founder

shares

shares

capital, %

votes, %

Lars Wingefors

Embracer Group

19,504,401

88,571,196

28.04

41.34

Matthew Karch and Andrey Iones

Saber Interactive

6,399,137

35,386,220

10.84

14.49

Erik Stenberg

Embracer Group

4,223,172

19,177,800

6.07

8.95

Mikael Broden

Embracer Group

1,450,134

6,585,189

2.08

3.07

Ken Go

DECA Games

6,301,591

1.63

0.92

Luisa Bixio

Milestone

3,802,126

0.99

0.55

Klemens Kreuzer

THQ Nordic

605,352

2,748,963

0.87

1.28

Reinhard Pollice

THQ Nordic

347,043

1,966,572

0.60

0.79

Richard Stitselaar and Kimara Rouwit

Vertigo Games

1,928,210

0.50

0.28

Pelle Lundborg

Embracer Group

869,898

769,649

0.43

1.38

Anton Westbergh

Coffee Stain

1,206,333

0.31

0.18

Klemens Kundratitz

Koch Media

1,127,928

0.29

0.16

Vincent Van Brummen

Vertigo Games

747,851

0.19

0.11

John Coleman

Vertigo Games

406,956

0.11

0.06

Stefan Ljungqvist

Experiment 101

270,270

0.07

0.04

TOP 15

33,399,137

170,996,854

53.03

73.61

ALL OTHER SHAREHOLDERS

181,053,767

46.97

26.39

TOTAL

33,399,137

352,050,621

100.00

100.00

Holdings by management above are in general owned trough various wholly owned companies.

Metro Exodus - Sam's Story

EMBRACER GROUP AB (PUBL) | JULY-SEPTEMBER 2020

19

TOP 50 INSTITUTIONAL OWNERS,

Change from

AS OF SEPTEMBER 30, 2020

June 30, 2020

Class A

Class B

Share of

Share of

Class B

Name

shares

shares

capital, %

votes, %

shares

Swedbank Robur Funds

25,651,868

6.66

3.74

-447,870

Handelsbanken Funds

18,588,798

4.87

2.73

-1,064,447

Didner & Gerge Funds

11,233,848

2.91

1.64

-376,921

ODIN Funds

5,300,000

1.39

0.78

650,000

AP1 Första AP-fonden

4,920,256

1.28

0.72

-3,449,504

Avanza Pension

4,272,869

1.11

0.62

485,795

Dan Sten Olsson Family and Foundation

4,045,004

1.06

0.59

225,000

TIN Funds

4,056,869

1.05

0.59

403,382

AP2 Andra AP-fonden

3,416,211

0.89

0.50

-1,362,527

Livförsäkringsbolaget Skandia

3,214,081

0.83

0.47

-90,969

Janus Henderson Investors

3,015,714

0.79

0.44

-176,202

Futur Pension

2,756,884

0.72

0.40

-9,078

Martin Larsson (Chalex AB)

2,532,899

0.66

0.37

-28,198

Danske Invest (Lux)

2,282,000

0.60

0.33

9,000

BlackRock

2,134,488

0.56

0.31

141,888

AFA Försäkring

2,011,989

0.52

0.29

915,245

Skandia Funds

1,969,850

0.51

0.29

48,000

Länsförsäkringar Funds

1,874,514

0.49

0.27

-196,550

DNB Funds

1,855,614

0.48

0.27

1,070,482

Nordnet Pensionsförsäkring

1,458,546

0.38

0.21

115,152

JP Morgan Asset Management

1,295,874

0.34

0.19

176,865

Allianz Global Investors

1,153,593

0.30

0.17

-192,407

Naventi Funds

1,124,367

0.29

0.16

-127,027

Sensor Funds

1,101,092

0.29

0.16

Highclere International Investors LLP

1,057,257

0.28

0.16

-1,144,832

Aktia Asset Management

1,009,542

0.26

0.15

-38,590

Svenska Handelsbanken AB for PB

981,563

0.25

0.14

-33,840

Vanguard

926,367

0.24

0.14

2,635

Fondita Funds

920,000

0.24

0.13

Schroders

861,208

0.23

0.13

102,333

Amundi

843,014

0.22

0.12

RAM Rational Asset Management

789,317

0.21

0.12

Evli Funds

765,000

0.20

0.11

102,500

Global X Management Company LLC

754,349

0.20

0.11

491,200

Kuwait Investment Authority

750,000

0.19

0.11

76,132

Consensus Asset Management

710,000

0.19

0.10

240,665

Michael Knutsson

700,000

0.18

0.10

Varma Mutual Pension Insurance Company

675,000

0.18

0.10

Knutsson Holdings AB

650,000

0.17

0.09

100,000

CamGestion

620,770

0.16

0.09

DJE Kapital AG

607,900

0.16

0.09

Lancelot Asset Management AB

600,000

0.15

0.09

-50,000

American Century Investment Management

575,469

0.15

0.08

128,322

Nordea Funds (Lux)

527,974

0.14

0.08

Carnegie Funds

515,000

0.13

0.08

Handelsbanken Liv Försäkring AB

489,799

0.13

0.07

72,004

Delaware Investments

468,841

0.12

0.07

-73,392

Deka Investments

450,267

0.12

0.07

Van Eck

444,592

0.12

0.07

123,753

BNP Paribas Asset Management

406,044

0.11

0.06

-97,280

TOTAL TOP 50 INSTITUTIONAL OWNERS

0

129,366,501

33.68

18.90

ALL OTHER SHAREHOLDERS

33,399,137

222,684,120

66.32

81.10

TOTAL

33,399,137

352,050,621

100.00

100.00

Source: Holdings by Modular Finance.

INTERNATIONAL OWNERSHIP

INSTITUTIONAL OWNERSHIP

TOP 50 INSTITUTIONAL

VS MANAGEMENT

BY CAPITAL

BY CAPITAL

International

Top 50

Top 15

Swedish

Management

institutions

institutions

institutions

/Co-Founders

23.7%

78.3%

33.6%

53.0%

Other shareholders

13.4%

Ride 4

EMBRACER GROUP AB (PUBL) | JULY-SEPTEMBER 2020

20

INFORMATION ABOUT NASDAQ FIRST NORTH GROWTH MARKET

Nasdaq First North Growth Market ("First North") is an alternative marketplace operated by the constituent exchanges of Nasdaq ­Stockholm. It does not have the same legal status as a regulated marketplace. Companies quoted on First North are subject to First North's rules, rather than the legal requirements set for trading on a regulated marketplace. An investment in a company trading on First North implies higher risk than one in a company listed on a regulated market. Companies must apply to the exchange and gain approval before trading on First North can commence. A Certified Adviser guides the company through the listing process and also ensures that the company continuously satisfies First North's standards.

FNCA Sweden AB is Embracer Group's certified adviser who may be contacted at: info@fnca.se or +46-8-528 00 399.

RISKS AND UNCERTAINTY FACTORS

Embracer Group is exposed to risks, particularly the dependence on key persons, dependence of the success of game development, the sales performance of launched games, dependence on a few distributors and the success and performance of acquisitions. The complete risk analysis is found in the company's most recent Annual Report.

ACCOUNTING AND VALUATION POLICIES

This Interim Report has been prepared in accordance with the Swedish Annual Accounts Act. The accounting and valuation policies applied are consistent with the Swedish Accounting Standards Board's Category 3 (BFN K3) regulation and are unchanged since the latest published Annual Accounts, and the Swedish Accounting Standards Board's BFNAR 2012:1.

The Company's accounting policies are stated in its most recent Annual Report.

Amounts are reported in Swedish kronor, rounded to the nearest million unless otherwise stated. Rounding to the nearest million may mean that amounts are not consistent when added. Amounts and figures stated in brackets are comparatives for the corresponding period of the previous year.

AUDITOR'S REVIEW

This Interim Report has not been subject to review by the Company's auditor.

FORTHCOMING REPORTS

Interim Report Q3, October-December 2020

18 February, 2021

Interim Report Q4, January-March 2021

20 May, 2021

Interim Report Q1, April-June 2021

18 August, 2021

FOR MORE INFORMATION

Find more information about the Company at its website: embracer.com

For any questions on this report, please contact:

Lars Wingefors, Co-founder & CEO, lars.wingefors@embracer.com

The Guild 3

EMBRACER GROUP AB (PUBL) | JULY-SEPTEMBER 2020

21

SIGNATURES AND ASSURANCE

The Board of Directors and the Chief Executive Officer offer their assurance that this Interim Report gives a true and fair view of the Group's and Parent Company's operations, financial position and results of operations and describes the significant risks and uncertainties facing the Group and Parent Company.

Karlstad, Sweden, November 18, 2020

Kicki Wallje-Lund

Chairman of the Board

David Gardner

Ulf Hjalmarsson

Jacob Jonmyren

Matthew Karch

Erik Stenberg

Lars Wingefors

Chief Executive Officer

This Interim Report is information that is mandatory for Embracer Group to make public pursuant to the EU Market

Abuse Regulation. The information was submitted for publication, through the agency of the contact person

set out above, at 06:00 CET on November 18, 2020

Neighbours back from Hell

EMBRACER GROUP AB (PUBL) | JULY-SEPTEMBER 2020

22

CONSOLIDATED INCOME STATEMENT

Jul-Sep

Jul-Sep

Apr-Sep

Apr-Sep

Apr 2019-

SEK m

2020

2019

2020

2019

Mar 2020

Net sales

2,383.2

1,259.7

4,451.9

2,401.8

5,249.4

Work performed by the Company for its own use

and capitalized

273.4

176.6

521.3

307.8

752.8

Other operating income

64.1

66.9

128.6

111.9

305.9

Profit from revaluation of associated companies

41.4

41.4

Total operating income

2,762.1

1,503.3

5,143.2

2,821.4

6,308.1

Operating expenses

Goods for resale

-1,034.1

-635.1

-1,794.0

-1,163.1

-2,576.0

Other external expenses

-359.7

-191.8

-651.9

-369.3

-784.0

Personnel expenses

-398.8

-258.2

-777.5

-481.4

-1,130.0

Depreciation, amortization and impairment of property,

plant and equipment and intangible assets

-795.6

-341.7

-1,541.6

-649.9

-1,475.9

Total operating expenses

-2,588.2

-1,426.8

-4,765.0

-2,663.7

-5,965.9

Profit from participation in associated companies

-0.5

14.3

3.2

Operating profit

173.4

76.4

392.5

157.7

345.4

Profit from financial items

Other interest income, etc.

112.0

9.4

114.4

18.0

94.3

Other interest expenses, etc.

-21.8

-6.1

-59.9

-12.7

-30.9

Total financial items

90.2

3.3

54.6

5.3

63.4

Profit

after financial items

263.6

79.7

447.1

163.0

408.8

Profit

before tax

263.6

79.7

447.1

163.0

408.8

Tax on profit for the period

-35.8

-15.1

-128.8

-45.6

-125.5

Net profit for the period

227.8

64.6

318.3

117.4

283.3

Attributable to:

Equity holders of the parent

228.1

65.0

319.1

118.2

284.9

Non-controlling interests

-0.3

-0.4

-0.8

-0.8

-1.6

Earnings per share, SEK

0.60

0.21

0.85

0.38

0.91

Average number of outstanding shares, million

378

310

373

309

311

EMBRACER GROUP AB (PUBL) | JULY-SEPTEMBER 2020

23

CONDENSED CONSOLIDATED BALANCE SHEET

SEK m

Sep 30, 2020

Sep 30 2019

Mar 31, 2020

Intangible assets

13,768.2

5,521.6

5,870.9

Property, plant & equipment

203.0

169.9

184.5

Financial assets

395.0

218.1

251.1

Inventories

380.5

385.4

352.8

Current receivables

1,983.2

1,579.4

1,467.6

Cash and bank balance

3,579.1

2,867.9

2,510.3

Total assets

20,309.0

10,742.3

10,637.2

Share capital

1.1

0.9

0.9

Other capital reserves

12,921.8

5,289.1

5,300.5

Recognized profit including profit for the period

815.9

895.3

1,093.9

Provisions

1,547.2

1,214.0

1,241.0

Non-current liabilities

1,174.9

214.6

221.8

Current liabilities

3,848.1

3,128.3

2,779.1

Total liabilities and equity

20,309.0

10,742.3

10,637.2

Interest-bearing receivables amount to

3,579.1

2,867.9

2,510.3

Interest-bearing liabilities amount to

3,229.4

1,768.4

1,490.9

EMBRACER GROUP AB (PUBL) | JULY-SEPTEMBER 2020

24

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

Other paid-up

Other equity

Minority

Consolidated

SEK m

Share capital

capital

including net profit

interest

equity

Amount as of April 1, 2020

0.9

5,300.5

1,068.8

25.1

6,395.4

Translation difference

-688.2

-688.2

New share issue

0.2

7,656.0

7,656.2

Issue costs 1)

-43.7

-43.7

Tax effect

9.0

93.3

102.3

Other

-0.6

-0.6

Net profit

318.3

-0.8

317.5

Amount as of September 30, 2020

1.1

12,921.8

792.2

23.7

13,738.8

  1. Issue costs constitutes of cost of rights issue SEK 43.7 million and tax effects of the cost SEK 9.0 million.

CONDENSED CONSOLIDATED CASH FLOW STATEMENT

Jul-Sep

Jul-Sep

Apr-Sep

Apr-Sep

Apr 2019-

SEK m

2020

2019

2020

2019

Mar 2020

Cash flow from operating

activities before changes

in working capital

852.1

364.7

1,722.0

667.6

1,604.2

Change in working capital

-47.5

-79.9

-185.0

55.5

124.1

Cash flow from operating

activities

804.7

284.8

1,537.0

723.1

1,728.3

Cash flow from investing activities

Net investment in acquired companies

-773.9

-802.7

-1,877.7

-802.9

-905.7

Net investment in intangible assets

-484.1

-391.9

-978.5

-770.0

-1,653.4

Net investment in tangible assets

-12.8

-8.6

-29.0

-19.2

-42.4

Net investment in financial assets

3.6

-0.1

-14.0

-2.4

-32.6

Cash flow from financing activities

513.7

619.6

2,454.0

802.8

473.5

Cash flow for the period

51.3

-298.9

1,091.8

-68.6

-432.3

Cash and cash equivalents at beginning of period

3,525.1

3,159.0

2,510.3

2,929.1

2,929.1

Translation difference in cash and cash equivalents

2.7

7.8

-23.0

7.4

13.5

Cash and cash equivalents at end of period

3,579.1

2,867.9

3,579.1

2,867.9

2,510.3

EMBRACER GROUP AB (PUBL) | JULY-SEPTEMBER 2020

25

PARENT COMPANY INCOME STATEMENT

Jul-Sep

Jul-Sep

Apr-Sep

Apr-Sep

Apr 2019-

SEK m

2020

2019

2020

2019

Mar 2020

Net sales

252.9

183.0

442.7

284.3

495.9

Other operating income

0.0

2.7

0.0

2.7

11.1

Total operating income

252.9

185.8

442.7

287.0

507.0

Operating expenses

Other external expenses

-2.6

-6.2

-26.1

-10.6

-64.3

Personnel expenses

-5.3

-2.2

-10.0

-4.0

-12.8

Depreciation, amortization and impairment of property,

plant and equipment and intangible assets

-133.9

-95.4

-217.5

-171.2

-333.3

Total operating expenses

-141.8

-103.8

-253.6

-185.8

-410.4

Operating profit

111.1

81.9

189.1

101.2

96.6

Result from financial assets

1.3

2.5

2.6

4.6

39.7

Interest income, etc.

10.7

16.1

11.0

27.5

83.0

Interest expenses, etc.

-364.4

-5.4

-397.0

-10.4

-21.5

Total financial income/expenses

-352.4

13.2

-383.4

21.6

101.2

Profit after financial items

-241.2

95.1

-194.4

122.8

197.8

Appropriations

0.0

0.0

0.0

0.0

-60.0

Profit before tax

-241.2

95.1

-194.4

122.8

137.8

Tax on profit for the period

51.9

-20.9

41.9

-27.0

-29.7

Net profit for the period

-189.3

74.2

-152.5

95.8

108.1

CONDENSED PARENT COMPANY BALANCE SHEET

SEK m

Sep 30, 2020

Sep 30, 2019

Mar 31, 2020

Intangible assets

434.8

382.7

393.8

Tangible assets

5.5

1.6

Financial assets

9,156.9

2,678.6

2,813.6

Current receivables

1,733.1

771.6

927.7

Cash and bank balance

2,083.3

2,069.5

1,954.5

Total assets

13,413.5

5,902.4

6,091.2

Equity

11,965.9

5,552.0

5,575.1

Untaxed reserves

140.6

95.6

140.6

Provisions

3.6

3.6

3.6

Long-term liabilities

1,117.3

214.6

221.7

Current liabilities

186.1

36.5

150.2

Total liabilities and equity

13,413.5

5,902.4

6,091.2

EMBRACER GROUP AB (PUBL) | JULY-SEPTEMBER 2020

26

SELECTED KEY PERFORMANCE INDICATORS - GROUP

Financial metrics defined or specified pursuant to

Jul-Sep

Jul-Sep

Apr-Sep

Apr-Sep

Apr 2019-

Swedish Accounting Standards Board standards (BFNAR)

2020

2019

2020

2019

Mar 2020

Net sales, SEK m

2,383.2

1,259.7

4,451.9

2,401.8

5,249.4

Operating profit,

SEK

m

173.4

76.4

392.5

157.7

345.4

Profit

before tax,

SEK

m

263.6

79.7

447.1

163.0

408.8

Profit

after tax, SEK m

227.8

64.6

318.3

117.4

283.3

Number of shares at end of period, thousands 1)

385,450

311,905

385,450

311,905

312,067

Average number of outstanding shares, thousands 1)

377,834

309,759

373,135

308,737

311,411

Average number of full-time employees in the period

2,807

1,487

2,494

1,426

1,663

Number of employees at the end of the period

3,024

1,632

3,024

1,632

1,873

Alternative key performance indicators not

Jul-Sep

Jul-Sep

Apr-Sep

Apr-Sep

Apr 2019-

defined or specified pursuant to BFNAR

2020

2019

2020

2019

Mar 2020

Net sales growth, %

89

-1.0

85

14

3

EBITDA, SEK m

969.0

418.1

1,934.0

807.6

1,821.3

EBITDA margin, %

41

33

43

34

35

Operational EBIT, SEK m

652.5

240.7

1,364.3

444.8

1,033.0

EBIT, SEK m

173.4

76.4

392.5

157.7

345.4

EBIT margin, %

7

6

9

7

7

Equity/assets ratio, %

68

58

68

58

60

Adjusted earnings per share, SEK 1)

1.80

0.65

3.32

1.16

2.81

Earnings per share, SEK 1)

0.60

0.21

0.85

0.38

0.91

Dividend per share, SEK

0.0

0.0

0.0

0.0

0.0

Derivation of the alternative KPIs,

operational EBIT and EBITDA

EBIT, SEK m

173.4

76.4

392.5

157.7

345.4

Amortization expenses added back to Operational EBIT

- Goodwill, SEK m

401.1

51.7

776.4

97.2

285.1

- Intellectual property (IP) rights, SEK m

104.2

100.5

206.4

169.7

359.4

- Surplus value of Partner Publishing/Film, SEK m

15.3

12.0

30.3

20.2

43.1

Revaluation of shares in associated companies

-41.4

-41.4

Operational EBIT, SEK m

652.5

240.7

1,364.3

444.8

1,033.0

- Other depreciation and amortization expenses, SEK m

275.0

177.4

528.3

362.9

788.3

Revaluation of shares in associated companies

41.4

41.4

EBITDA, SEK m

969.0

418.1

1,934.0

807.6

1,821.3

  1. Recalculated with respect to the 3:1 split carried out on October 8, 2019 as resolved at the annual general meeting on September 17, 2019. Number of shares for previous periods have been adjusted.

EMBRACER GROUP AB (PUBL) | JULY-SEPTEMBER 2020

27

DEFINITIONS OF ALTERNATIVE KPI's

Embracer Group's definitions of a number of alternative KPI's used in this Interim Report are stated below. Net sales growth is reported by the Company because it regards this KPI as contributing to investor understanding of the Company's historical progress. EBITDA and EBITDA margin are reported because these are metrics commonly used by certain investors, financial analysts and other stakeholders to measure the Company's financial results. The company has chosen to disclose operational EBIT in order to provide a fair picture of the underlying operational performance. This alternative key performance metric excludes amortization of acquisition-related goodwill, surplus values of specific business areas (currently Partner Publishing/Film) and IP values (trademarks, patents, copyrights etc.). The equity/assets ratio is stated because the Company regards this as a metric commonly used by certain investors, financial analysts and other stakeholders to measure the Company's financial position.

DEFINITIONS OF KPI'S, GROUP

Adjusted Earnings per share

Earnings per share

EBIT margin

EBITDA

EBITDA margin

Equity/assets ratio

Free Cash Flow

Net sales growth

Non-operational Depreciation and Amortizations

Operational EBIT

Operational EBIT margin

Profit after tax excluding non-operational depreciations and amortizations net of tax and profit of revaluation of shares in associated companies divided by the average number of shares in the period. Tax related to non-operational depreciation and amortizations calculated using the effective tax rate (no tax effect on goodwill amortizations).

Profit after tax less non-controlling interest divided by the average number of shares in the period. EBIT as a percentage of net sales.

Earnings before interest taxes, depreciation and amortization. EBITDA as a percentage of net sales.

Equity as a percentage of total assets.

Cash Flow for the period excluding net investment in acquired companies and cash flow from Financing activities.

Net sales for the current period divided by net sales for the corresponding period of the previous year.

Amortization of acquisition-related goodwill, surplus values of specific business areas and IP Values (trademarks, patents, copyrights etc).

EBIT excluding non-operational depreciations and profit/loss of revaluation of participation in associated companies.

Operational EBIT as a percentage of net sales.

DEFINITIONS, QUARTERLY INFORMATION

Completed games

Total book value of finished game development

projects (released

games) during the quarter. Upon com-

pletion the released games are reclassified from

On-going Game

Development

Projects to Finished Games

and depreciation starts.

Depreciation

Game development

Depreciation of finished game development projects - degressive

depreciation

over two years. 1/3 depre-

ciation during month 1 to 3 following release, 1/3 depreciation in month 4 to 12 following release and the

remaining 1/3 in month 13 to 24 following release.

Other intangible assets

The majority of other intangible assets (Film etc) relates to the Group's film business and is depreciated

(Film etc)

based on actual sales in relation to expected sales of the relevant title.

IP-rights

Depreciation of IP rights related to Games - straight-line depreciation over five

years.

Surplus value Partner

Depreciation of surplus values related to Partner Publishing/Film - straight-line depreciation over five years.

Publishing/Film

Goodwill

Depreciation of Goodwill - straight-line depreciation over five years.

Digital sales

All net sales not shipped physically.

External game developers

Number of game developers engaged in game development projects by studios that are not owned by the

group (external studios).

External Studios

Number of external development studios engaged in game development projects.

Game development projects

Number of on-going game development projects financed by the

group.

Internal employees,

Number of employees not directly engaged in game development (both employees and contractors).

non-development

Internal game developers

Number of game developers (both employees and contractors) engaged in game development projects by

studios that are owned by the group (internal studios).

Internal Studios

Number of internal development studios.

Net sales split - Games business area

Owned titles

Net sales of game titles that are owned IP:s or titles that are controlled by the group.

Publishing titles

Net sales of game titles of IP:s the group does not own or control.

New releases sales

Net sales of game titles that are released in the current quarter.

by each quarter

Back catalog

Net sales of game titles that are not released in the current quarter.

Number of IP:s

Number of IP:s owned by the group.

Organic growth

Growth in Business Area - Games between periods where net sales from companies acquired in the last five

quarters have been excluded.

Organic growth, CCY

Growth in Business Area - Games between periods where net sales from companies acquired in the last five

quarters have been excluded. The comparison period is adjusted for differences in

exchange rates.

Physical sales

All net sales shipped physically.

EMBRACER GROUP AB (PUBL) | JULY-SEPTEMBER 2020

28

QUARTERLY INFORMATION BY CALENDAR YEAR

2017

2018

2019

2020

Jan-

Apr-

Jul-

Oct-

Full

Jan-

Apr-

Jul-

Oct-

Full

Jan-

Apr-

Jul-

Oct-

Full

Jan-

Apr-

Jul-

Mar Jun Sep Dec year

Mar

Jun

Sep

Dec

year

Mar

Jun

Sep

Dec

year

Mar

Jun

Sep

Consolidated Group

Net sales, SEK m

82

86

85

255

508

633

838

1,273

1,381

4,124

1,631

1,142

1,260

1,509

5,541

1,339

2,069

2,383

EBITDA, SEK m

42

40

35

156

273

226

207

215

326

974

619

390

418

518

1,945

495

965

969

Operational EBIT, SEK m

35

34

28

106

202

131

70

103

197

501

396

204

241

302

1,143

286

712

653

EBIT, SEK m

32

30

24

102

188

107

53

91

152

403

172

81

76

91

421

97

219

173

Profit after tax, SEK m

24

23

19

73

139

81

33

65

114

294

103

53

65

34

254

132

91

228

Number of shares (A&B), adjusted, million 1)

216

216

217

238

222

238

241

265

283

252

283

308

310

312

303

312

368

385

Earnings per share, SEK 1)

0.11

0.11

0.09

0.31

0.63

0.34

0.14

0.25

0.44

1.17

0.37

0.17

0.21

0.11

0.84

0.42

0.26

0.60

Adjusted Earnings per share, SEK 1)

0.12

0.12

0.10

0.33

0.68

0.42

0.19

0.28

0.55

1.50

1.00

0.51

0.65

0.68

2.82

0.97

1.51

1.80

Cash flow from operating activities, SEK m

30

22

29

99

179

700

165

-740

455

579

777

441

283

239

1,740

766

732

805

Free cash flow, SEK m

-

-

-

-

-

-

-

-

-

-

-

47

-116

-207

276

204

311

Sales growth, %

90%

62%

9%

99%

68%

673%

878%

1,403%

441%

713%

158%

36%

-1%

9%

34%

-18%

81%

89%

Organic growth, %

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

74%

51%

Organic growth, CCY, %

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

71%

61%

EBITDA, margin, %

51%

46%

41%

61%

54%

36%

25%

17%

24%

24%

38%

34%

33%

34%

35%

37%

47%

41%

Operational EBIT, margin, %

43%

39%

32%

41%

40%

20%

8%

8%

14%

12%

25%

18%

19%

20%

21%

21%

34%

27%

EBIT, margin, %

39%

35%

28%

40%

37%

17%

6%

7%

11%

10%

11%

7%

6%

6%

8%

7%

11%

7%

Gross Margin (Net sales-COGS), SEK m

57

61

55

186

360

313

372

378

542

1,604

889

614

625

762

2,889

673

1,309

1,349

Gross Margin, %

70%

72%

65%

73%

71%

50%

44%

30%

39%

39%

55%

54%

50%

51%

52%

50%

63%

57%

Net sales per business area

Games - THQ Nordic, SEK m

82

86

85

255

508

135

146

124

352

756

143

185

330

333

991

307

488

567

Games - Deep Silver, SEK m

-

-

-

-

-

257

338

252

187

1,033

794

373

442

467

2,076

515

613

507

Games - Coffee Stain, SEK m

-

-

-

-

-

-

-

-

14

14

98

83

45

36

261

82

172

130

Games - Saber, SEK m

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

349

259

Games - DECA Games, SEK m

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

33

Games, total

82

86

85

255

508

391

484

376

553

1,803

1,035

641

816

836

3,328

904

1,622

1,495

Partner Publishing/Film, SEK m

-

-

-

-

-

242

354

897

828

2,320

596

501

444

673

2,213

436

447

888

Net sales split - Games business area

Owned titles, %

67%

76%

74%

82%

77%

34%

39%

50%

72%

50%

84%

80%

78%

79%

80%

70%

74%

66%

Publishing titles, %

33%

24%

26%

18%

23%

66%

61%

50%

28%

50%

16%

20%

22%

21%

20%

30%

26%

34%

Owned titles, SEK m

55

66

63

208

391

134

189

188

396

907

871

510

637

657

2,675

633

1,194

994

Publishing titles, SEK m

27

20

22

47

116

257

295

188

157

897

164

131

179

178

653

270

428

501

New releases sales by each quarter, %

36%

16%

39%

74%

-

63%

20%

31%

58%

-

75%

18%

32%

35%

-

38%

45%

33%

Back catalog, %

64%

84%

61%

26%

-

37%

80%

69%

42%

-

25%

82%

68%

65%

-

62%

55%

67%

New releases sales by each quarter, SEK m

30

14

34

190

-

246

98

117

321

-

781

118

261

291

-

345

733

488

Back catalog, SEK m

52

72

51

65

-

145

386

259

232

-

254

524

555

545

-

559

889

1,007

Physical sales, %

49%

31%

44%

60%

50%

62%

50%

48%

59%

55%

39%

29%

26%

31%

32%

22%

26%

24%

Digital sales, %

51%

69%

56%

40%

50%

38%

50%

52%

41%

45%

61%

71%

74%

69%

68%

78%

74%

76%

Physical sales, SEK m

40

27

36

150

253

243

242

179

324

988

407

189

215

259

1,070

195

419

352

Digital sales, SEK m

42

59

49

102

251

148

242

197

229

815

628

452

601

577

2,258

709

1,203

1,143

Depreciation and amortization

Game development

-6

-6

-7

-43

-62

-59

-109

-80

-93

-341

-192

-162

-144

-133

-631

-148

-191

-222

Other intangible assets (Film etc.)

-33

-24

-27

-31

-115

-25

-16

-26

-76

-144

-53

-55

-43

Sub-total

-6

-6

-7

-43

-62

-92

-133

-107

-124

-455

-217

-179

-170

-209

-775

-201

-246

-265

Acquisition-related depreciation

IP-rights

-3

-3

-4

-4

-14

-11

-7

-9

-8

-33

-166

-69

-101

-123

-458

-67

-102

-104

Surplus value Partner Publishing/Film

-12

-10

-2

-9

-33

-15

-8

-12

-11

-46

-12

-15

-15

Goodwill

-1

-1

-2

-28

-32

-43

-45

-52

-77

-218

-110

-375

-401

Sub-total

-3

-3

-4

-4

-14

-24

-17

-13

-45

-99

-224-123-164-211-722

-189

-492

-521

Total intangible assets

-10

-9

-10

-47

-76

-116

-150

-120

-169

-554

-441

-302

-334

-420 -1,497

-390

-738

-786

Investments in intangible assets

External game development and advances, SEK m

54

44

59

54

212

115

114

132

167

528

189

225

166

152

732

193

209

172

Internal capitalized development, SEK m

13

14

19

33

80

58

94

102

106

359

116

131

177

221

645

224

248

273

Other intangible assets

-

-

-

11

11

12

31

18

31

91

20

22

43

46

131

40

41

39

IP-rights

-

-

4

-

4

-

0

22

11

32

0

0

6

0

7

8

0

0

Total

67

59

82

98

306

185

239

273

314

1,010

326

378

392

419

1,515

465

498

484

Completed games

Completed games, SEK m

1

2

40

134

176

123

47

50

162

383

220

168

104

152

644

165

253

311

Other KPIs

Total Game Dev projects

32

30

29

36

-

54

51

55

77

-

80

81

86

96

-

103

125

135

Announced Game Dev projects

14

13

13

12

-

19

17

20

29

-

32

34

37

44

-

43

52

53

Unannounced Game Dev projects

18

17

16

24

-

35

34

35

48

-

48

47

49

52

-

60

73

82

Total internal game developers

78

82

163

178

-

536

565

608

613

-

860

882

1,162

1,237

-

1,359

2,076

2,551

Total external game developers

282

306

261

229

-

714

692

740

871

-

807

946

1,110

1,021

-

1,006

1,109

1,042

Total internal employees, non-development

44

44

45

55

-

470

486

554

529

-

541

590

709

713

-

744

790

851

Total number headcount

404

432

469

462

-

1,720

1,743

1,902

2,013

-

2,208

2,418

2,981

2,970

-

3,109

3,975

4,445

Number of studios

Total number External Studios

-

-

-

-

-

18

29

26

26

-

42

48

55

58

-

58

55

56

Total number Internal Studios

-

-

-

-

-

10

10

10

10

-

17

18

18

20

-

26

33

46

Total number Studios

-

-

-

-

-

28

39

36

36

-

59

66

73

78

-

84

88

102

Total number of IP

-

-

-

-

-

91

106

107

119

-

136

138

148

154

-

160

174

195

  1. Recalculated with respect to the 3:1 split carried out on October 8, 2019 as resolved at the annual general meeting on September 17, 2019. Number of shares for previous periods have been adjusted.

EMBRACER GROUP AB (PUBL) | JULY-SEPTEMBER 2020

29

Embracer Group is the parent company of businesses developing and publishing PC, console and mobile games for the global games market. Embracer Group has an extensive catalogue of over 190 owned franchises, such as Saints Row, Goat Simulator, Dead Island, Darksiders, Metro,

MX vs ATV, Kingdoms of Amalur, TimeSplitters, Satisfactory, Wreckfest, Insurgency and World War Z, amongst many others.

With its head office based in Karlstad, Sweden, Embracer Group has a global presence through its six operative groups: THQ Nordic GmbH, Koch Media GmbH/Deep Silver, Coffee Stain AB, Amplifier Game Invest, Saber Interactive and DECA Games. Embracer Group has 46 internal game development studios and is engaging more than 4,000 employees and contracted employees in more than 40 countries.

Embracer Group AB (publ)

Älvgatan 1

SE-652 25 Karlstad, Sweden

embracer.com

Disclaimer

Embracer Group AB published this content on 18 November 2020 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 18 November 2020 09:28:04 UTC


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NameTitle
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