Focus Entertainment : Annual Financial Report 2021/2022 & CSR Report

ANNUAL FINANCIAL REPORT

CSR REPORT

2021/2022

CONTENTS

ANNUAL FINANCIAL REPORT AS OF 31 MARCH 2022

1.	INTRODUCTION	pages 3 to 7
2.	DECLARATION BY THE PERSON RESPONSIBLE	page 8
3.	MANAGEMENT REPORT	pages 9 to 24
4.	BOARD REPORT ON CORPORATE GOVERNANCE	pages 25 to 33
5.	AUDITOR'S REPORT ON THE CONSOLIDATED FINANCIAL
STATEMENTS FOR YEAR ENDED 31 MARCH 2022	pages 34 to 36
6.	CONSOLIDATED ACCOUNTS AS OF 31 MARCH 2022	pages 37 to 58
7.	AUDITOR'S REPORT ON THE PARENT COMPANY'S FINANCIAL
STATEMENTS FOR YEAR ENDED 31 MARCH 2022	pages 59 to 61
8.	PARENT COMPANY'S FINANCIAL STATEMENTS AS OF 31 MARCH 2022	pages 62 to 77
9.	AUDITOR'S SPECIAL REPORT ON THE RELATED-PARTY AGREEMENTS
FOR THE YEAR ENDED 31 MARCH 2022	pages 78 to 80

10. CORPORATE SOCIAL RESPONSIBILITY (CSR) REPORT

MESSAGE FROM THE CEO	page 82
INTEGRATING CSR INTO FOCUS ENTERTAINMENT'S ACTIVITIES	pages 83 to 86
PILLAR 1: BE A PUBLISHER OF ENTERTAINING VIDEO GAMES
THAT ARE SAFE AND RESPECTFUL OF OUR PLAYERS	pages 86 to 88
PILLAR 2: BE AN ATTRACTIVE AND RESPONSIBLE EMPLOYER	pages 88 to 91
PILLAR 3: BE A PUBLISHER THAT IS COMMITTED
TO THE ENVIRONMENT AND SOCIETY	pages 91 to 94
METHODOLOGICAL NOTE/ABOUT THIS REPORT	pages 95 to 96

INTRODUCTION 1

MESSAGE FROM THE CEO

After the 2020/21 year, during which the video gaming industry benefited greatly from the lockdown measures implemented worldwide, FOCUS ENTERTAINMENT recorded turnover of €142.6M for FY 2021/22, including a contribution of €5.6M by Dotemu. SnowRunner, Insurgency: Sandstorm and A Plague Tale: Innocence made major contributions to the period's business thanks to the release of additional content and supplementary revenue from one-off deals, thereby confirming the Group's capacity to generate long-term revenue on flagship franchises. The year also benefited from the success enjoyed by Necromunda: Hired Gun developed by Streum On Studio, a member of the Group since April 2021, and by Aliens: Fireteam Elite, both of which were launched during the year.

In 2021/22, we also confirmed our desire to create our own franchises and bring together talents. Our strategy is to move up the value chain, evolving our business model from publisher/distributor to developer/publisher, increasing the portion of Intellectual Property (IP) held in our game portfolio. The long-term aim is to reach 50% of turnover generated by two games, whose IP is held by the Group.

To this end, this year should constitute a turning point:

• the Group carried out no fewer than 4 external growth operations during the year. After the 2020/21 Deck13 Interactive acquisition, the group acquired Stream On Studio (April 2021) and Dotemu (September 2021), followed by Douze Dixièmes (October 2021) and welcomed a fifth studio with the purchase of Leikir Studio (February 2022).
• The Group has secured the most ambitious game line-up in its history with 31 new games that are to be launched by March 2025. Throughout the period during which these games are to be marketed, 30% of turnover should come from games for which the Group holds the IP directly (15%) or jointly (15%).

In a parallel fashion, to give us the means to achieve our ambitions, the Group has continued to boost its financing, with the successful €70.4M capital increase by Private Placement in May 2021 and by signing a new loan for a total amount of €140M in July 2021.

At the same time, we are continuing to implement all the tools necessary to gather and gain the loyalty of our talented staff, like the capital increase reserved for Group employees carried out this year. Value creation also goes hand-in-hand with changes to our governance, establishing a Board of Directors and separating the duties of the Chairman of the Board of Directors and the CEO. Frank Sagnier has thus been appointed Chairman of the Board of Directors and I myself have been appointed as CEO. In compliance with the Middlenext Code, three independent directors have been appointed to the Board of Directors: Frank Sagnier, Virginie Calmels and Irit Hillel.

These structural changes were concluded with a new name for our Group, now called FOCUS ENTERTAINMENT. It aims to offer players across the world unique experiences with a publishing line that stands out thanks to its innovative concepts, alternative game plays and original worlds that go beyond the boundaries of video games.

Christophe Nobileau, CEO of FOCUS ENTERTAINMENT

FOCUS ENTERTAINMENT	3

1 INTRODUCTION

FOCUS ENTERTAINMENT IS A EUROPEAN LEADER

IN VIDEO GAME DEVELOPMENT AND PUBLISHING

Our objective is to offer unique experiences to players throughout the world.

Our editorial line stands out due to innovative concepts that transcend beyond the bounds of video games. With 20 years of know-how, we bring together talented individuals and game creators, to whom we offer top-level services, provided by publishing experts.

We support innovative projects without compromising on quality, with investments ranging from participation in financing new games through the partial or complete integration of a studio. Our developer partners become part of a strong Group that develops successful franchises such as A Plague Tale and SnowRunner and that is able to give their game a worldwide reach.

Initially created as a distribution company, FOCUS moved into interactive software with the famous music studio tool Ejay.

FOCUS became an international publisher with TrackMania, Sherlock Holmes and Runaway.

Farming Simulator	Deck13 became	Evolution of the governance
became the year's	first acquisition, IP	structure by implementing
top-selling PC game in	acquisition strategy,	a Board of Directors and
France with over 100K	f inancial capacity of	adopting the new name
copies sold.	€46M for M&A and	FOCUS ENTERTAINMENT.
	game development.

Private capital raise of
€13.3M from qualified	Private placement of
investors, largely	€70.4M from authorised
oversubscribed with a 3.7%	investors, with a limited
discount on the share price.	discount of 0.89% and new
	loan of €140M.

1995

2000

2006

2009

2011

2015

2017

2020

2021

2022

FOCUS obtained the rights to distribute Sudden Strike in France.

First success as a video game distributor.

FOCUS launched

its first console games.

IPO, €12.7M in funds raised (including €8.5M in a capital increase) - oversubscribed

12.2 times; Euronext "Jury prize" and BFM Business "Best IPO of the year"

Creation of the Deck13 Montreal studio, acquisitions of the studios Streum On Studio, Dotemu and Douze Dixièmes. Renewal of the partnership with Saber Interactive.

New leading shareholder	Acquisition of Leikir Studio.
Neology Holding.

SUPPORT FOR CREATIVE FREEDOM

The FOCUS ENTERTAINMENT editorial line is unique thanks to truly original experiences that are also respectful of our players.

Our catalogue is composed of a variety of titles in all genres (action, simulation, RPG, strategy, etc.). Whether it is a young "Indie" studio, or a studio composed of industry veterans, our developer partners share a strong vision: the desire to create games and franchises with unique content and strong commercial potential. Our games are designed for all types of players, everywhere in the world, of all ages, genders, origins and cultures. Creativity, for everyone's pleasure.

4	FOCUS ENTERTAINMENT

INTRODUCTION 1

ENHANCE CONTENT QUALITY

	budget
• Greater production quality to offer top-tier AA video games.	Development
• Solid content is essential and generates revenue through all
distribution channels and available platforms on the market.

1-3M

1-20M+

1-15M

1-7M

2015 2017 2019 2020+

AN OUTSTANDING EDITORIAL LINE

The FOCUS ENTERTAINMENT editorial line is distinguished by innovative concepts.

We are sensitive to emerging artistic movements that show new trends, new gameplays, as well as concepts and projects that do not yet exist and deserve to be offered to players throughout the world. We look for studios that have unique titles, and pay special attention to quality.

TRANSFORM CONCEPTS INTO WORLDWIDE SUCCESSES

Our catalogue is "genre- and trend-agnostic".

We do not seek special types of games to fill our catalogue, but rather titles supported by a creative vision and talented developers. Each day we demonstrate our capacity to transform niche concepts into worldwide successes. We do not let market trends dictate our editorial choices. Our standards are built on quality and originality.

A FEDERATION OF TALENT

FOCUS ENTERTAINMENT unites talent over the entire chain of creation, from the design to the development of a game, all the way to its sale worldwide.

BRICK-AND-MORTAR

STORES AND

DOWNLOADING

VIDEO GAME	SELECTION	PRODUCTION	MARKETING AND	MARKETING
DEVELOPMENT	OF TITLES	SUPPORT	COMMUNICATION

We support our developer partners with their vision, we help finance projects, or we invest in the studios by acquiring a majority stake. We aim to integrate talent and studios with a unique vision, in a strong and ambitious Group, to maximise value creation, and secure and operate our brands over the entire spectrum. We commit to unite and develop our talent within this shared vision. We form a virtuous circle in which passionate individuals create synergies that enable FOCUS ENTERTAINMENT to innovate, adapt, and anticipate the trends of a constantly changing video game market.

FOCUS ENTERTAINMENT	5