Media and Games Invest publishes its reviewed Year End Report 2020 and reports another record quarter supported by a balanced games and media mix

Regulatory release

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 EBITDA¹ amounted to 10.1 mEUR (Q4’19: 5.8 mEUR), which is an increase of 74%.
• Adjusted EBIT² 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 ratio³ 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

SELECTED KEY PERFORMANCE INDICATORS, MGI SEGMENTS

_{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.

For all major advertising formats, Verve Group is facing global fast organic growth. Especially the mo-bile games vertical has shown substantial growth. Based on company data, Verve 's Open Exchange is now among the top 20 programmatic marketplaces worldwide. With the recent acquisition of the video platform "LKQD" from Nexstar in January 2021 we now also added excellent video capabilities as well as a strong supply position in the Connected TV and OTT segments. Based on the experience from our Games Unit, MGI is also integrating the media companies to build a strong single platform, where all acquired and further to be acquired media companies are integrated, resulting in streamlined process-es, consolidated expertise, critical mass as well as cost advantages. MGI's clear focus on games is also reflected in the media unit's strong customer base consisting of several strong games companies such as e.g. Zynga and King. Next to the gaming unit the media unit acts in a very attractive growth market itself.

The strong media unit is also an important pillar for our mobile games strategy, as efficient user acquisi-tion is one of the key factors for success in this highly competitive market. Therefore, further M&A in combination with signing new mobile games licenses are part of the further growth strategy.

All in all, 2020 was a very successful year for MGI in which decisive milestones for further strong growth in the coming years could be established. With the acquisition of KingsIsle Entertainment Inc. for a total of USD 126m early 2021, we have completed the largest transaction in the company's history to date and expect substantial additional revenues and returns from this acquisition of USD 32m revenues with an EBITDA of USD 21m. This transaction also represents a new "strike zone" in terms of M&A.

Also on the capital markets side 2020 was a very special year. The listing at Nasdaq First North Premier in October 2020 unleashed a lot of share price-potential due to finally being listed amongst peer games companies. Also the capital increase that was attached to the listing in Sweden enabled us to get well respected cornerstone investors on board, strongly increasing the trading volume of our shares and thereby making MGI accessible even for large-scale-investors. But we are also welcoming and benefit-ing from a large and dynamically growing base of loyal private shareholders. With the KingsIsle acquisi-tion we have further substantially strengthened our future cashflows from operations. With also Oak-tree Capital coming on board as a new cornerstone minority investor we showed also our capability to attract a buy and build investor. Also the buy-back of the gamigo bond and the placement of a EUR 80 million bond with MGI as part of a total bond-framework of up to EUR 120m give us further flexibility for additional M&A and investments in growth activities moving forward.

Altogether we have further substantially strengthened the company in 2020 and are very well prepared for further profitable growth in 2021 and beyond.

I would like to use this opportunity to thank all our players, partners, investors and employees for their trust and support in the very special year 2020. Thanks for the commitment of each one of you! I am looking forward to an exciting year ahead.

Yours,”

Remco Westermann
CEO & Chairman of the Board of MGI Group

PRESENTATION

Remco Westermann, CEO of Media and Games Invest, and Paul Echt, CFO, will present the report for the fourth quarter of 2020 and for the full year 2020 on Friday, February 26 at 11.30. The presentation is in English and is available on request on the mgi.group website.

Link to follow the presentation LIVE

https://tv.streamfabriken.com/media-and-games-invest-q4-2020

Phone number you can call from
Sweden +46851999383
United Kingdom +443333009274
USA +18338230587
Germany +4969222239167

The Year End Report 2020 is available on the company's website mgi.group.

Responsible parties

The information in this notice has been made available for publication by the responsible person's agency listed below on the date revealed by MGI's news distributor EQS Newswire at the time of this press release. The responsible persons listed below can be contacted for more information.

Notes - All Notes are defined as in the latest financial report (Q4 2020) of MGI
Note (1) Adjusted EBITDA: Reported EBITDA excluding one-time costs.
Note (2) Adjusted EBIT: Earnings before interest and taxes excluding one-time costs and PPA depreciation.
Note (3) Net leverage ratio: Net Interest Bearing Debt divided by adjusted EBITDA for the past 12 months excluding Shareholder Loans.
Note (4) EBITDA: Earnings before interest, taxes, depreciation and amortization.
 

For further information, please contact:

Remco Westermann
Chairman of the Board and CEO
+49 40 411 885206

Sören Barz
Head of Investor Relations
+49 170 376 9571
soeren.barz@mgi.group, info@mgi.group
www.mgi.group

Jenny Rosberg, ROPA, IR contact Stockholm
Phone: +46707472741
Mail: Jenny.rosberg@ropa.se

Axel Mühlhaus / Dr. Sönke Knop, edicto GmbH, IR contact Frankfurt
Phone: +49 69 9055 05 51
Mail: mgi@edicto.de

About Media and Games Invest plc

Media and Games Invest plc (MGI), is a fast-growing and profitable company operating in the digital games sector with a strong supportive media unit and a focus on North America & EMEA. The company combines organic growth with value-accretive acquisitions, delivering strong and sustainable earnings growth. Since 2014 the MGI Group has successfully acquired well over 30 companies and assets which are integrated onto our platform, exploiting efficiency-enhancing technologies such as the cloud. The Company's shares are listed on Nasdaq First North Premier Growth Market in Stockholm and the Scale segment of the Frankfurt Stock Exchange. The Company also has a bond listed on Nasdaq Stockholm and on the Frankfurt Stock Exchange Open Market.

The Company's certified advisor on Nasdaq First North Premier Growth Market is FNCA Sweden AB;  info@fnca.se, +46-8-528 00 399.