DGAP-News: Media and Games Invest plc / Key word(s): Annual Results 
Media and Games Invest publishes its reviewed Year End Report 2020 and reports another record quarter supported by a 
balanced games and media mix 
2021-02-25 / 10:00 
The issuer is solely responsible for the content of this announcement. 
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[February 25, 2020] 
Media and Games Invest publishes its reviewed Year End Report 2020 and reports another record quarter supported by a 
balanced games and media mix 
HIGHLIGHTS Q4 2020 
  . Net revenues amounted to 48.7 mEUR (Q4'19: 28.2 mEUR), which is an increase of 73% compared to 2019. 
  . Adjusted EBITDA^1 amounted to 10.1 mEUR (Q4'19: 5.8 mEUR), which is an increase of 74%. 
  . Adjusted EBIT^2 amounted to 5.8 mEUR (Q4'19: 3.6 mEUR), which is an increase of 64%. 
  . Operating cash flow amounted to 10.6 mEUR in Q4'20 (Q4'19: 7.1 mEUR), which is an increase of 49%. 
HIGHLIGHTS FULL YEAR 2020 
  . Net revenues amounted to 140.2 mEUR (FY'19: 83.9 mEUR), which is an increase of 67% compared to 2019. 
  . Adjusted EBITDA amounted to 29.1 mEUR (FY'19: 18.1 mEUR), which is an increase of 61%. 
  . Adjusted EBIT amounted to 17.5 mEUR (FY'19: 10.5 mEUR), which is an increase of 67%. 
  . Operating cash flow amounted to EUR 25.2 million in FY'20 (FY'19: EUR 16.2 million), an increase of 56%. 
  . Leverage ratio^3 amounted to 2.1 as per 31 December 2020 (1.9 as per 31 December 2020) and thus remained on the 
    lower end of the target range of 2-3x leverage. 
  . Cash and cash equivalents amounted to 46.3 mEUR (December 31, 2019: 33.0 mEUR). 
 
SELECTED KEY PERFORMANCE INDICATORS, MGI GROUP 
In mEUR                 Q4 2020   Q4 2019 FY 2020   FY 2019 
Net Revenues            48.7      28.2    140.2     83.9 
YoY Growth in revenues  73%       72%     67%       - 
EBITDA^4                9.0       4.1     26.5      15.5 
EBITDA margins          19%       14%     19%       19% 
Adj. EBITDA             10.1      5.8     29.1      18.1 
Adj. EBITDA margins     21%       21%     21%       22% 
Adj. EBIT               5.8       3.6     17.5      10.5 
Adj. EBIT margins       12%       13%     12%       13% 
Net Result              2.0       0.3     2.7       1.3

SELECTED KEY PERFORMANCE INDICATORS, MGI SEGMENTS 


MGI Games Segment 
 
In mEUR              Q4 2020 Q3 2020 Q2 2020 Q1 2020 FY 2020 FY 2019 
Net Revenues         24.5    18.0    18.8    13.9    75.2    43.1 
Group revenue share  50%     51%     63%     52%     54%     51% 
EBITDA               6.9     4.8     5.3     4.5     21.4    12.6 
EBITDA margins       28%     27%     28%     32%     29%     29% 
Adj. EBITDA          7.7     5.0     5.5     5.0     23.2    14.5 
Adj. EBITDA margins  31%     28%     29%     36%     31%     34% 
 
MGI Media Segment 
 
In mEUR              Q4 2020 Q3 2020 Q2 2020 Q1 2020 FY 2020 FY 2019 
Net Revenues         24.2    17.0    11.2    12.6    65.0    40.8 
Group revenue share  50%     49%     37%     48%     46%     49% 
EBITDA               2.1     1.1     1.0     0.8     5.1     2.9 
EBITDA margins       9%      7%      9%      6%      8%      7% 
Adj. EBITDA          2.4     1.4     1.2     0.9     6.0     3.6 
Adj. EBITDA margins  10%     8%      11%     7%      9%      9%

[All financials are reviewed by the auditor but not audited. ] A WORD FROM REMCO WESTERMANN, CEO

"Dear shareholders,

In 2020 we outperformed our revenue and EBITDA targets for the year and performed a 45% average revenue-growth now for the sixth year in row. Overall MGI recorded a 67% revenue-growth and a 61% EBITDA-growth versus 2019. The pace of growth was supported by consequent continuation of our "buy, integrate, build and improve"-strategy with a well-balanced games portfolio strongly backed by our media unit. And we are keeping the pace: We ended 2020 with yet another record quarter Reve-nue- and EBITDA-wise. In total, we achieved in the fourth quarter 2020, EUR 49 million net revenues in Q4 2020, which represents 73 percent growth versus Q4 2019 and an adjusted EBITDA of EUR 10 million - a steep rise of 74%.

The Corona stay-at-home-policy was especially boosting our revenues and intakes of new players in the second quarter, leading to a higher base-level for our strong portfolio of massive multiplayer games (MMO's). With several updates of our key games, we are sustaining the momentum: ArcheAge, Fiesta Online and Trove had several updates and large DLCs, which also shows that the output of our internal game development is further increasing. With Atlas Rogues -which is currently in open Beta- our game development team is also showing that they can -based on the old IP and Software- develop an in-house sequel. We are furthermore continuing our strategy to grow our revenues by established games with an attractive risk-return-profile and an increasing cost-efficiency. As of now we are sticking to our philoso-phy of not developing new games from scratch as this is still too risky for a company of our size. We will stick to our focus as we are convinced that it needs a larger scale to pursue a portfolio strategy of de-veloping several games in parallel. Selectively launching games of third party developers is further focus as well as acquiring further strong games with sustainable revenues via M&A.

15 days after the end of our reporting period we entered into an agreement to acquire KingsIsle, a lead-ing game developer headquartered in Texas. This transaction is, based on the size of the deal, a trans-forming transaction for MGI, adding substantial revenues and EBITDA to our P&L. The combination of MGI's and KingsIsle's complementary product portfolios and audiences is an excellent strategic fit and significantly increases MGI's addressable market.

We are also well prepared for further growth in our gaming segment in 2021, having numerous organic growth projects in the pipeline. In addition to expansions and updates to the games of our current port-folio, also further internationalization, the expansion of our games to additional platforms (e.g. from PC to console and mobile), as well as an increased number of game launches are on the roadmap for 2021. A.o we will also further increase our focus on the mobile games segment. We already announced the licensing of the two new mobile games Golf Champions and Heroes of Twilight).

Also our massive multiplayer game Trove, which is one of our top games is a good example of how we are planning to create further growth opportunities through internationalization into new markets and platform extensions. We recently announced the closed beta for the Korean version of Trove in cooper-ation with our Korean publishing partner Aprogen Games, and we are in talks with additional partners for other Asian regions. Furthermore, we are planning to release Trove, which is currently available on PC, Xbox and Playstation, on Nintendo Switch this year. As Trove is doing well on Xbox and Playstation, we expect also that it also will do well on Nintendo Switch, which was one of the best-selling consoles in 2019 and 2020 and is played significantly more than Playstation and Xbox by younger gamers, who are Trove's core target audience.

After the announcement of the acquisition of KingsIsle, we received a lot of positive feedback from players. Most of them would like to see new content, further internationalization and localization as well as a mobile version of their game. Wizard101 and Pirate101, the two strong game IPs that were acquired as part of the KingsIsle transaction have a lot of growth potential via additional content and internationalization. Also porting to consoles as well as selectively including advertising slots create additional potential, this will however take a bit longer and is expected to materialize from 2022 on-wards.

With the two acquisitions KingsIsle and LKQD in January 2021 we started with a strong M&A perfor-mance in 2021, whereas these deals were of course prepared in 2020. Also for the remaining year 2021 we expect further M&A in the gaming as well as in the media sector, as our pipeline of M&A targets is well filled. Overall we see -especially for larger mobile targets- that purchase multiples are going up due to the fight for larger targets. Even though we have increased the size of the targets we are acquir-ing, we still want to rather focus on targets with not too high multiples, to further build shareholder value while not increasing the risk profile too much.

After now well over 10 acquisitions in the media sector, MGI's Media Unit branded as ("Verve Group"), in which all media companies are being integrated, is now one of few players in the digital programmat-ic advertising market that can offer a fully integrated programmatic advertising platform from demand to supply. In 2020, all our media platforms were connected which results in substantial synergies on the cost side combined with strong revenue synergies. Also many new demand and supply partners have been connected, also leading to additional growth. Within the media sector our focus and revenue split has clearly shifted away from more people savy services like influencers and affiliate business towards programmatic software as a service media and gaming infrastructure services. Thus, in addition to providing a strong competitive advantage for MGI's Games Unit with respect to customer acquisition, the Verve Group is more and more becoming a significant player in the global media sector itself.

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