Change in Presentational Currency

Keywords Studios PLC

28 June 2024

 

28 June 2024

Keywords Studios plc ("Keywords Studios", "Keywords", the "Group")

Change in Presentational Currency

Keywords Studios, the global provider of creative and technology-enabled solutions to the video games and entertainment industries, today announces that it has decided to change its presentational currency from euro to US Dollar with effect from 1 January 2024.

The Company has historically reported its results in euros due its revenues being solely euro denominated in the early stages of its development. As the business has grown into a global business, it now operates in a range of currencies, with the proportion of the Group's revenues originating in US dollars growing to c.60% in recent years. As such, the Board believes that the change in presentational currency will provide investors and other stakeholders with greater transparency of the Group's performance and reduced foreign exchange volatility.

Dividends will continue to be declared in sterling and will continue to follow the existing progressive dividend policy.

As noted above, the change in the Group's presentational currency will be effective from 1 January 2024. Consequently, the Group's first half results for the six-month period ending 30 June 2024, and all subsequent financial information, will be prepared using US dollars as the presentational currency.

The Group's primary consolidated financial statements, together with alternative performance measures, for the financial years ended 31 December 2022 and 31 December 2023, and for the half ended on 30 June 2023 (collectively the 'Restated Financial Information'), has been re-presented in US dollars and is set out herein for comparative purposes.

For further information, please contact: Keywords Studios Giles Blackham Director of Investor Relations [phone] [e-mail] Deutsche Numis Nomad & Joint Corporate Broker Stuart Skinner / Will Baunton [phone] MHP Group Financial Communications Katie Hunt / Eleni Menikou / Charles Hirst [phone] / [phone] [e-mail] Barclays Joint Corporate Broker Tom Macdonald / Stuart Jempson [phone]

 About Keywords Studios (www.keywordsstudios.com)

Keywords Studios is a global provider of creative and technology-enabled solutions to the video games and entertainment industries. Established in 1998, and now with over 70 facilities in 26 countries strategically located in Asia, Australia, the Americas, and Europe, it provides services across the entire content development life cycle through its Create, Globalize and Engage Divisions to a large blue-chip client base across the globe.

Keywords Studios has a strong market position, providing services to 24 of the top 25 most prominent games companies and contributing to over 70% of the 2023 Game Awards winners. Across the games and entertainment industry, clients include Activision Blizzard, Bandai Namco, Bethesda, Electronic Arts, Epic Games, Konami, Microsoft, Netflix, Riot Games, Square Enix, Supercell, Take-Two, Tencent and Ubisoft. Recent titles worked on include Starfield, Baldur's Gate 3, Diablo IV, Hogwarts Legacy, Elden Ring, Fortnite, Valorant, League of Legends and Clash Royale. Keywords Studios is listed on AIM, the London Stock Exchange regulated market (KWS.L).

Unaudited (Restated) Consolidated statement of comprehensive income

		Year ended	Half Year	Year ended
		31 December	30 June	31 December
		2023	2023	2022
		$'000	$'000	$'000
Revenue from contracts with customers		842,609	413,274	725,817
Cost of sales		(519,696)	(256,743)	(445,027)
Gross profit		322,913	156,531	280,790
Other income		-	-	1,220
Share-based payments expense		(23,743)	(10,177)	(19,689)
Costs of acquisition and integration		(29,424)	(7,876)	(8,673)
Amortisation of intangible assets		(28,150)	(13,771)	(17,725)
Total of items excluded from adjusted profit measures		(81,317)	(31,824)	(46,087)
Other administration expenses		(192,339)	(93,017)	(160,360)
Administrative expenses		(273,656)	(124,841)	(206,447)
Operating profit		49,257	31,690	75,563
Financing income		666	165	2,096
Financing cost		(13,453)	(6,789)	(6,121)
Profit before taxation		36,470	25,066	71,538
Taxation		(16,226)	(9,407)	(21,736)
Profit after taxation		20,244	15,659	49,802
Other comprehensive income:
Items that will not be reclassified subsequently to profit or loss
Actuarial gain / (loss) on defined benefit plans		17	(160)	300
Items that may be reclassified subsequently to profit or loss
Exchange gain / (loss) in net investment in foreign operations		4,026	1,201	(12,081)
Exchange gain / (loss) on translation of foreign operations		6,116	6,745	(18,726)
Non-controlling interest; recycled on disposal of subsidiary		-	-	180
Tax related to items taken to other comprehensive income		1,337	-	-
Total comprehensive income / (expense)		31,740	23,445	19,475
Profit / (loss) for the period attributable to:
Owners of the parent		20,244	15,659	49,850
Non-controlling interest		-	-	(48)
		20,244	15,659	49,802
Total comprehensive income / (expense) attributable to:
Owners of the parent		31,740	23,445	19,475
		31,740	23,445	19,475
Earnings per share		$ cent	$ cent	$ cent
Basic earnings per ordinary share		25.65	19.93	64.70
Diluted earnings per ordinary share		25.31	19.20	61.88

Unaudited (Restated) Consolidated statement of financial position

	At 31 December	At 30 June	At 31 December
	2023	2023	2022
	$'000	$'000	$'000
Non-current assets
Intangible assets	697,772	624,354	501,286
Right of use assets	46,362	48,131	40,181
Property, plant and equipment	55,458	58,191	47,766
Deferred tax assets	36,155	33,311	33,232
Investments	193	190	187
	835,940	764,177	622,652
Current assets
Cash and cash equivalents	66,083	47,632	87,339
Trade receivables	99,275	103,345	87,001
Other receivables	91,992	98,185	65,468
Corporation tax recoverable	6,614	6,392	6,937
	263,964	255,554	246,745
Current liabilities
Trade payables	15,780	16,081	16,935
Other payables	172,168	175,100	148,636
Loans and borrowings	-	-	48
Corporation tax liabilities	29,895	26,224	23,495
Lease liabilities	15,302	16,762	13,241
	233,145	234,167	202,355
Net current assets / (liabilities)	30,819	21,387	44,390
Non-current liabilities
Other payables	13,251	21,067	19,527
Employee defined benefit plans	4,448	3,913	3,052
Loans and borrowings	140,618	59,997	7
Deferred tax liabilities	11,378	17,138	18,151
Lease liabilities	36,549	37,186	32,110
	206,244	139,301	72,847
Net assets	660,515	646,263	594,195
Equity
Share capital	1,155	1,153	1,139
Share capital - to be issued	349	2,849	2,462
Share premium	64,956	64,906	56,795
Merger reserve	352,504	347,573	330,645
Foreign exchange reserve	(31,180)	(33,376)	(41,322)
Shares held in Employee Benefit Trust ("EBT")	(7,251)	(1,050)	-
Share-based payments reserve	90,005	79,580	73,786
Retained earnings	189,977	184,628	170,690
Total equity	660,515	646,263	594,195

Unaudited (Restated) Consolidated statement of cash flows

	Year Ended	Half Year	Year Ended
	31 December	30 June	31 December
	2023	2023	2022
	$'000	$'000	$'000
Cash flows from operating activities
Profit after taxation	20,244	15,659	49,802
Income and expenses not affecting operating cash flows
Depreciation and impairment - property, plant and equipment	31,225	11,769	19,241
Depreciation and impairment - right of use assets	17,205	8,422	15,133
Amortisation and impairment of intangible assets	28,150	13,771	17,725
Taxation	16,226	9,407	21,736
Share-based payments expense	23,743	10,177	19,689
Fair value movements in deferred and contingent consideration	9,945	4,668	2,369
Non-cash movements included in costs of acquisition and integration	2,899	-	-
Unwinding of discounted liabilities - deferred consideration	3,543	1,963	3,085
Unwinding of discounted liabilities - lease liabilities	1,562	680	1,005
Interest receivable	(666)	(165)	(326)
Fair value adjustments to employee defined benefit plans	1,243	721	538
Interest expense	6,235	2,408	1,336
Unrealised foreign exchange (gain) / loss	(1,201)	(3,762)	(681)
	140,109	60,059	100,850
Changes in operating assets and liabilities
Decrease / (increase) in trade receivables	(228)	(9,994)	(12,466)
Decrease / (increase) in MMTC and VGTR receivable	(12,159)	(17,917)	(3,779)
Decrease / (increase) in other receivables	(7,672)	(12,397)	(6,497)
(Decrease) / increase in accruals, trade and other payables	8,206	2,697	19,754
	(11,853)	(37,611)	(2,988)
Taxation paid	(22,645)	(8,575)	(18,285)
Settlement of deferred and contingent consideration related to continuous employment	(4,222)	-	-
Net cash generated by / (used in) operating activities	121,633	29,532	129,379
Cash flows from investing activities
Current year acquisition of subsidiaries net of cash acquired	(174,479)	(82,183)	(91,280)
Settlement of deferred liabilities on acquisitions	(33,020)	(10,943)	(27,655)
Acquisition of property, plant and equipment	(33,204)	(20,350)	(28,211)
Investment in intangible assets	(3,305)	(1,428)	(523)
Interest received	666	165	326
Net cash generated by / (used in) investing activities	(243,342)	(114,739)	(147,343)
Cash flows from financing activities
Cash proceeds, where EBT shares were utilised for the exercise of share-based payments	1,240	323	544
Repayment of loans	(105,176)	(35,047)	(89)
Drawdown of loans	244,804	95,000	-
Payments of principal on lease liabilities	(16,476)	(7,351)	(11,788)
Interest paid on principal of lease liabilities	(1,562)	(680)	(1,005)
Dividends paid	(2,311)	(1,561)	(2,053)
Company funded acquisition of shares by EBT	(15,991)	(5,075)	-
Shares issued for cash	1,647	1,618	7,029
Interest paid	(6,796)	(1,887)	(879)
Net cash generated by / (used in) financing activities	99,379	45,340	(8,241)
Increase / (decrease) in cash and cash equivalents	(22,330)	(39,867)	(26,205)
Exchange gain / (loss) on cash and cash equivalents	1,074	160	(6,187)
Cash and cash equivalents at beginning of the period	87,339	87,339	119,731
Cash and cash equivalents at end of the period	66,083	47,632	87,339

Notes forming part of the unaudited (restated) consolidated financial statements

1                     Basis of Preparation

The unaudited (restated) financial information should be read in conjunction with the Annual Report and Accounts for the year ended 31 December 2023; and the interim financial information for the six months ended 30 June 2023 all of which have been prepared in accordance with International Financial Reporting Standards ('IFRS'). The statutory accounts for the year ended 31 December 2023 were approved by the directors on 13 March 2024.

2                     Presentation Currency

Keywords Studios plc (the "Group") will present its consolidated financial statements for the year ending 31 December 2024 in US Dollars. In accordance with IAS 8, Accounting Policies, Changes in Accounting Estimates and Errors, this change in presentation currency will be applied retrospectively.

The unaudited (restated) financial information included herein will form the basis of the comparative financial information to be included in the Annual Report and Accounts of the Group for the year ending 31 December 2024 and all published financial information from 1 January 2024 onwards.

In accordance with the provisions of IAS 21, the Effects of Changes in Foreign Exchange Rates, in respect of changes in presentational currency, financial information has been restated from Euro to US Dollars as follows:

•         assets and liabilities in non-US denominated currencies were translated into US dollars at the rates of exchange ruling at the relevant balance sheet date;

•         non-US dollar income statements and cash flows were translated into US dollars at average rates of exchange for the relevant period;

•         share capital, share premium and all other equity items were translated at the historical rates prevailing at 1 January 2013, the date of transition to IFRS, or the subsequent rates prevailing on the date of each relevant transaction; and

•         the cumulative foreign exchange translation reserve was set to zero on 1 January 2013, the date of transition to IFRS and this reserve has been restated on the basis that the Group has reported in US dollars since that date.

		Year Ended	Half Year	Year Ended
		31 December	30 June	31 December
Average		2023	2023	2022
Euro		1.08	1.08	1.06
Sterling		1.23	1.23	1.31
Canadian Dollar		0.74	0.74	0.79
Period end
Euro		1.10	1.09	1.07
Sterling		1.27	1.27	1.20
Canadian Dollar		0.75	0.75	0.74

Restated Alternative Performance Measures

 The Group reports a number of alternative performance measures ("APMs") to present the financial performance of the business, that are not GAAP measures as defined under IFRS. The Directors believe that these measures, in conjunction with the IFRS financial information, provide the users of the financial statements with additional information to provide a more meaningful understanding of the underlying financial and operating performance of the Group. The measures are also used in the Group's internal strategic planning and budgeting processes and for setting internal management targets.

These measures can have limitations as analytical tools and therefore should not be considered in isolation, or as a substitute for IFRS measures. APM's may not be calculated uniformly by all companies and therefore may not be directly comparable with similarly titled measures and disclosures of other companies. As these measures frequently exclude significant recurring transactions that impact financial performance (e.g. share-based payments expense), the adjusted measures will typically be higher than the corresponding IFRS measures and should not be regarded as a complete picture of the Group's financial performance, which is presented in the Total comprehensive income / (expense) of the Group.

The Restated Alternative performance measures should be read in conjunction with the Annual Report and Accounts for the year ended 31 December 2023; and the interim financial information for the six months ended 30 June 2023.

Divisional analysis

The following table presents revenue growth by division at actual exchange rates ("AER").

	Full Year	Half Year	Full Year	Full Year	Half Year	Full Year
	31 December	30 June	31 December	31 December	30 June	31 December
	2023	2023	2022	2023	2023	2022
	Revenue	Revenue	Revenue	Growth	Growth	Growth
	AER	AER	AER	AER	AER	AER
	$m	$m	$m	%	%	%
Create	363.0	175.5	290.1	25.1%	28.5%	29.6%
Globalize	301.6	156.8	316.0	(4.6%)	0.8%	14.6%
Engage	178.0	81.0	119.7	48.7%	33.2%	9.3%
	842.6	413.3	725.8	16.1%	17.1%	19.2%

Pro forma revenue

Pro forma revenue is calculated by adding pre-acquisition revenues of current year acquisitions to the current year revenue numbers, to illustrate the size of the Group had the acquisitions been included from the start of the financial year.

	Full Year	Full Year	Full Year
	31 December	31 December	31 December
	2023	2023	2023
	Revenue	Pre-acquisition revenue	Pro forma Revenue
	AER	AER	AER
	$m	$m	$m
Create	363.0	47.2	410.2
Globalize	301.6	1.1	302.7
Engage	178.0	6.9	184.9
	842.6	55.2	897.8

Organic revenue at constant exchange rates

Organic revenue at constant exchange rates is calculated by adjusting the prior year revenues, adding pre-acquisition revenues for the corresponding period of ownership, and applying the prior period foreign exchange rates to the current periods, when translating studio results into the US Dollar reporting currency.

	Full Year	Half Year	Full Year
	31 December	30 June	31 December
	2023	2023	2022
	Organic revenue growth	Organic revenue growth	Organic revenue growth
	%	%	%
Create	17.3%	22.1%	25.9%
Globalize	(4.3%)	4.7%	23.4%
Engage	2.3%	-	9.7%
	5.6%	10.4%	21.8%

Adjusted operating costs

This comprises Administrative expenses as reported in the Consolidated statement of comprehensive income, adding back share-based payments expense, costs of acquisition and integration, amortisation of intangible assets, depreciation and impairment, and deducting bank charges.  

	Year End	Half Year	Year End
	31 December	30 June	31 December
	2023	2023	2022
Calculation	$'000	$'000	$'000
Administrative expenses	(273,656)	(124,841)	(206,447)
Share-based payments expense	23,743	10,177	19,689
Costs of acquisition and integration	29,424	7,876	8,673
Amortisation of intangible assets	28,150	13,771	17,725
Depreciation - property, plant and equipment	24,995	11,769	19,241
Depreciation - right of use assets	14,995	8,422	15,133
Bank charges	(781)	(380)	(695)
Adjusted operating costs	(153,130)	(73,206)	(126,681)
Adjusted operating costs as a % of revenue	18.2%	17.7%	17.5%

Adjusted operating profit

The Adjusted operating profit consists of the Operating profit as reported in the Consolidated statement of comprehensive income, adjusted for share-based payments expense, costs of acquisition and integration, and amortisation of intangible assets. In order to present the measure consistently year-on-year, the impact of other income is also excluded.

	Year End	Half Year	Year End
	31 December	30 June	31 December
	2023	2023	2022
Calculation	$'000	$'000	$'000
Operating profit	49,257	31,690	75,563
Share-based payments expense	23,743	10,177	19,689
Costs of acquisition and integration	29,424	7,876	8,673
Amortisation of intangible assets	28,150	13,771	17,725
Other income	-	-	(1,220)
Adjusted operating profit	130,574	63,514	120,430
Adjusted operating profit as a % of revenue	15.5%	15.4%	16.6%

EBITDA

EBITDA comprises Operating profit as reported in the Consolidated statement of comprehensive income, adjusted for amortisation of intangible assets, depreciation and impairment, and deducting bank charges.

	Year End	Half Year	Year End
	31 December	30 June	31 December
	2023	2023	2022
Calculation	$'000	$'000	$'000
Operating profit	49,257	31,690	75,563
Amortisation of intangible assets	28,150	13,771	17,725
Depreciation - property, plant and equipment	24,995	11,769	19,241
Depreciation - right of use assets	14,995	8,422	15,133
Bank charges	(781)	(380)	(695)
EBITDA	116,616	65,272	126,967

​Adjusted EBITDA

Adjusted EBITDA comprises EBITDA, adjusted for share-based payments expense, and costs of acquisition and integration. In order to present the measure consistently year-on-year, the impact of other income is also excluded.

	Year End	Half Year	Year End
	31 December	30 June	31 December
	2023	2023	2022
Calculation	$'000	$'000	$'000
EBITDA	116,616	65,272	126,967
Share-based payments expense	23,743	10,177	19,689
Costs of acquisition and integration	29,424	7,876	8,673
Other income	-	-	(1,220)
Adjusted EBITDA	169,783	83,325	154,109
Adjusted EBITDA as a % of revenue	20.1%	20.2%	21.2%

Adjusted profit before tax

Adjusted profit before tax comprises Profit before taxation as reported in the Consolidated statement of comprehensive income, adjusted for share-based payments expense, costs of acquisition and integration, amortisation of intangible assets, foreign exchange gains and losses, and unwinding of discounted liabilities. In order to present the measure consistently year-on-year, the impact of other income is also excluded.

	Year End	Half Year	Year End
	31 December	30 June	31 December
	2023	2023	2022
Calculation	$'000	$'000	$'000
Profit before taxation	36,470	25,066	71,538
Share-based payments expense	23,743	10,177	19,689
Costs of acquisition and integration	29,424	7,876	8,673
Amortisation of intangible assets	28,150	13,771	17,725
Foreign exchange (gain) / loss	1,332	1,358	(1,770)
Unwinding of discounted liabilities - deferred consideration	3,543	1,963	3,085
Other income	-	-	(1,220)
Adjusted profit before tax	122,662	60,211	117,720
Adjusted profit before tax as a % of revenue	14.6%	14.6%	16.2%

Adjusted effective tax rate

The Adjusted effective tax rate is the Taxation expense as reported in the Consolidated statement of comprehensive income, adjusted for the tax impact of the adjusting items in arriving at Adjusted profit before tax, as a percentage of the Adjusted profit before tax.

	Year End	Half Year	Year End
	31 December	30 June	31 December
	2023	2023	2022
Calculation	$'000	$'000	$'000
Adjusted profit before tax	122,662	60,211	117,720
Taxation	16,226	9,407	21,736
Effective tax rate before tax on adjusting items	13.2%	15.6%	18.5%
Tax arising on bridging items to Adjusted profit before tax	11,382	3,733	4,267
Adjusted taxation	27,608	13,140	26,003
Adjusted effective tax rate	22.5%	21.8%	22.1%

Adjusted earnings per share

The Adjusted profit after tax comprises the Adjusted profit before tax, less the Taxation expense as reported in the Consolidated statement of comprehensive income, adjusted for the tax impact of the adjusting items in arriving at Adjusted profit before tax.

The Adjusted earnings per share comprises the Adjusted profit after tax divided by the either the basic or diluted weighted average number of equity shares, as reported in note 8 of the 2023 Annual Report and Accounts and in the interim financial information for the 6 months ended 30 June 2023.

	Year End	Half Year	Year End
	31 December	30 June	31 December
	2023	2023	2022
Calculation	$'000	$'000	$'000
Adjusted profit before tax	122,662	60,211	117,720
Taxation	(16,226)	(9,407)	(21,736)
Tax arising on bridging items to Adjusted profit before tax	(11,382)	(3,733)	(4,267)
Adjusted profit after tax	95,054	47,071	91,717
Weighted average number of equity shares	Number	Number	Number
Basic	78,910,471	78,558,801	76,979,596
Diluted	79,995,267	81,552,510	80,481,897
Adjusted earnings per share	$ c	$ c	$ c
Basic	120.46	59.92	119.14
Diluted	118.82	57.72	113.96

Return on capital employed (ROCE)

ROCE represents the Adjusted profit before tax (excluding net interest costs, unwinding of discounted lease liabilities and bank charges, and also adjusted to include pre-acquisition profits of current-year acquisitions), expressed as a percentage of the capital employed. As the Group continues to make multiple acquisitions each year, the calculation further adjusts the Adjusted profit before tax and the capital employed as if all the acquisitions made during each year were made at the start of that year. 

Capital employed represents Total equity as reported on the Consolidated statement of financial position, adding back employee defined benefit plan liabilities, cumulative amortisation of intangible assets (customer relationships), acquisition-related liabilities (deferred and contingent consideration), together with loans and borrowings, while deducting cash and cash equivalents.

	Year End	Half Year	Year End
	31 December	30 June	31 December
	2023	2023	2022
Calculation	$'000	$'000	$'000
Adjusted profit before tax	122,662	60,211	117,720
Interest received	(666)	(165)	(326)
Bank charges	781	380	695
Interest expense	6,235	2,408	1,336
Unwinding of discounted liabilities - lease liabilities	1,562	680	1,005
Pre-acquisition profits of current year acquisitions	10,427	1,355	1,689
Adjusted profit before tax including pre-acquisition profit excluding interest for the period	141,001	64,869	122,119
Rolling 12 month adjustment	-	69,164	-
Adjusted profit before tax including pre-acquisition profit and excluding net interest	141,001	134,033	122,119
Total equity	660,515	646,263	594,195
Employee defined benefit plans	4,448	3,913	3,052
Cumulative amortisation of intangible assets (customer relationships)	84,579	73,335	62,182
Deferred and contingent consideration	61,627	83,281	67,465
Loans and borrowings	140,618	59,997	55
Cash and cash equivalents	(66,083)	(47,632)	(87,339)
Capital employed	885,704	819,157	639,610
Return on capital employed	15.9%	16.4%	19.1%

Free cash flow

Free cash flow represents Net cash generated by / (used in) operating activities as reported in the Consolidated statement of cash flows, adjusted for acquisition and integration cash outlay, capital expenditure, settlement of deferred consideration related to continuous employment, net interest paid, payments of principal on lease liabilities and is presented both before and after taxation paid. In order to present the measure consistently year-on-year, the impact of other income is also excluded.

	Year End	Half Year	Year End
	31 December	30 June	31 December
	2023	2023	2022
Calculation	$'000	$'000	$'000
Net cash generated by / (used in) operating activities	121,633	29,532	129,379
Acquisition and integration cash outlay:
Costs of acquisition and integration	29,424	7,876	8,673
Fair value adjustments to contingent consideration	(334)	-	(2,369)
Non-cash movements in Deferred and contingent consideration related to continuous employment	(9,611)	(4,668)	(3,240)
Fair value adjustments to property, plant and equipment	(6,231)	-	-
Fair value adjustments to right of use assets	(2,210)	-	-
Other fair value movements within Cost of acquisition and integration	(2,899)	-	-
Acquisition of property, plant and equipment	(33,204)	(20,350)	(28,211)
Investment in intangible assets	(3,305)	(1,428)	(523)
Other income	-	-	(1,220)
Settlement of deferred and contingent consideration related to continuous employment	4,222	-	-
Interest received	666	165	326
Interest paid	(8,358)	(2,567)	(1,884)
Payments of principal on lease liabilities	(16,476)	(7,351)	(11,788)
Free cash flow after tax	73,317	1,209	89,143
Taxation paid	22,645	8,575	18,285
Free cash flow before tax	95,962	9,784	107,428

Adjusted free cash flow

Adjusted free cash flow is a measure of cash flow adjusting for capital expenditure that is supporting growth in future periods (as measured by capital expenditure in excess of maintenance capital expenditure). 

	Year End	Half Year	Year End
	31 December	30 June	31 December
	2023	2023	2022
Calculation	$'000	$'000	$'000
Free cash flow before tax	95,962	9,784	107,428
Capital expenditure in excess of depreciation:
Acquisition of property, plant and equipment	33,204	20,350	28,211
Depreciation - property, plant and equipment	(24,995)	(11,769)	(19,241)
Capital expenditure in excess of depreciation	8,209	8,581	8,970
Adjusted free cash flow	104,171	18,365	116,398

Adjusted cash conversion rate

The Adjusted cash conversion rate is the Adjusted free cash flow as a percentage of the Adjusted profit before tax:

	Year End	Half Year	Year End
	31 December	30 June	31 December
	2023	2023	2022
Calculation	$'000	$'000	$'000
Adjusted free cash flow	104,171	18,365	116,398
Adjusted profit before tax	122,662	60,211	117,720
Adjusted cash conversion ratio	84.9%	30.5%	98.9%

Net debt

The Group manages capital by monitoring debt to capital and net debt ratios. Net debt is calculated as Loans and borrowings (as shown in the Consolidated statement of financial position) less Cash and cash equivalents, and excludes Lease liabilities. 

	Year End	Half Year	Year End
	31 December	30 June	31 December
	2023	2023	2022
Calculation	$'000	$'000	$'000
Loans and borrowings	140,618	59,997	55
Cash and cash equivalents	(66,083)	(47,632)	(87,339)
Net debt / (net cash) position	74,535	12,365	(87,284)

 

END