Half Yearly Report

RNS Number : 9343O

Keywords Studios PLC

26 September 2013

 



26 September 2013

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

Half year results for the 27 weeks to 8 July 2013

Keywords Studios, the international technical services provider to the global video games industry, today provides its half year results for the 27 weeks to 8 July 2013¹, following the Trading Update issued on 20 September 2013.

Operational overview:

·     First half performance in line with expectations, growth of 12% against strong comparative performance in  the first half of prior year

·     Significant investment in international expansion:

o  Dublin Localisation and Testing capacity enhanced

o  Significant headcount increase in Seattle operations

o  Increased staff levels in Montreal and Tokyo

·     Gained market share by building on a strong, established client base

Financial overview:

·     Group revenue increased by 12% to €7.2m (2012: €6.4m)

·     Adjusted profit before tax* of €0.4m

·     Statutory loss before tax of €(0.2)m (2012: profit before tax of €1.4m)

·     Earnings per share of (0.87c)  (2012: 3.81c)

·     Net cash of €3.1m (2012: €3.3m) pre receipt of IPO proceeds

·     Maiden interim dividend of 0.33p per share; intention of declaring a final dividend of 0.67p

Current Trading and Outlook

·     Lower levels of industry activity than anticipated at IPO in the second half due to next generation console timetable and scale back of launch territories

·     Now working on many of the major next generation titles resulting in a significant increase in utilisation rates compared to the first half

·     Expect significantly stronger margins in the second half than in the first half

·     Full financial year profit outturn expected to be at a similar level to that achieved in 2012 with good underlying revenue growth

·     Continue to gain market share, leaving us well placed for a year of significant games market activity expected in 2014

·     Actively reviewing a number of potential acquisition opportunities

*Profit before tax excludes €0.64 million (2012: nil) of exceptional items relating to expenses associated with the Group's flotation on 12 July 2013.

Andrew Day, Chief Executive of Keywords Studios, commented:

"Notwithstanding the hiatus caused by the timing of the simultaneous launch of two new consoles in an unprecedented launch cycle, we have made considerable progress in strengthening our market share and in the development of our Seattle business from a standing start to employing 60 people. While it has proven difficult to predict the exact timetable of forthcoming launches, 2014 is expected to be a year of significant activity for the games industry leaving us well placed for substantial growth in the year ahead.

"From our strong market position, we therefore remain confident of making further progress in line with our stated strategy of growing organically and gaining market share, complemented by selective acquisitions to extend our market penetration and expand our range of services."

¹On 8 July 2013, prior to Keywords Studios plc's Admission to AIM on 12 July, it acquired 100% of the Keywords group of companies, through a share for share exchange with the shareholders of Keywords International Limited. As a result consolidated results for the whole group for the six months to 30 June 2013 would not provide a meaningful picture of the performance of the consolidated Group.  We have, therefore, prepared the consolidated results for 27 weeks to 8 July 2013, as compared to the half year to 30 June 2012.

For further information, please contact:

Keywords Studios (www.keywordsstudios.com) Andrew Day, Chief Executive Officer David O'Connor, Chief Financial Officer	[phone]
Numis (Financial Adviser) Stuart Skinner / Kevin Cruickshank  (Nominated Adviser) James Serjeant (Corporate Broker)	020 7260 1000
MHP Communications (Financial PR) Lucinda Kemeny / Katie Hunt / Vicky Watkins	020 3128 8100

Notes to Editors

Keywords Studios is an international technical services provider to the global video games industry. Established in 1998, and now with facilities in Dublin, Tokyo, Rome, Montreal and Seattle, it provides integrated localisation, testing and audio services across 30 languages and 12 games platforms to a blue chip client base in more than 15 countries.  It has a strong market position, providing services to 15 of the top 25 most prominent games companies, including Microsoft, Namco Bandai, Konami, Electronic Arts and Square Enix.  Keywords Studios is listed on AIM, the London Stock Exchange regulated market (KWS.L).  For further information please visit: www.keywordsstudios.com

 

Report of Management

Overview

The first half of the financial year has seen the Group deliver a performance in line with expectations at the time of the IPO in July.  It has increased revenues by 12% to €7.2m for the 27 week period to 8 July 2013 against strong comparatives in the first half of 2012 (€6.4m) when the Group had a particularly good performance in Localisation Testing.  During the first half, Keywords Studios also invested significantly in expansion, with the launch of its operations in Seattle, and in additional headcount across the Group ahead of anticipated higher levels of activity in the second half of the current year due to the next generation console launches, being Xbox One and PlayStation 4.  After those additional costs, profit before tax and  IPO costs for the first half of the current financial year was €0.4m (2012: €1.4m).

During the first half of 2013, the games industry prepared for what was expected to be a particularly active second half of the year due to the anticipated launch of Sony's and Microsoft's next generation consoles in November, in advance of the important holiday period.  We were anticipating a material number of launch window title releases requiring localisation and localisation testing for these next generation consoles as well as on-going levels of activity for game launches for the much larger installed base of around 250 million current generation consoles.  As such, the Board's stated expectation was for a greater second half weighting to the current financial year than in an ordinary year.  However, since IPO and following the publicised scaling back of launch territories for the Xbox One, the decision by both Sony and Microsoft not to launch either console in Japan in 2013, and the postponement by some publishers of certain current generation titles, we now believe that the video games service market will be softer in the second half of the current financial year than previously expected.  In what will be an unprecedented launch cycle, the Xbox One and PlayStation 4 consoles will be launched within a week of each other in November, in fewer initial territories (and therefore languages) than expected at the time of IPO.

Given the intense industry focus on these simultaneous major new console launches, several publishers have very recently chosen to defer launches of current generation console titles in order to focus financial resources and capacity on new generation games and be able to launch at a time when marketing current generation games will achieve a better share of attention.  In addition, the late timing of the launches offers fewer opportunities for further game franchises to be launched ahead of the key holiday sales period.

Despite the lower than previously expected levels of industry activity in the second half, Keywords Studios continues to gain market share having maintained relationships across its existing blue-chip clients and is now working on many of the major next generation titles it had expected to support in the second half while some titles have slipped into next year. 

Results for the period

On 8 July 2013, prior to Keywords Studios plc's Admission to AIM on 12 July, it acquired 100% of the Keywords group of companies, through a share for share exchange with the shareholders of Keywords International Limited. As a result consolidated results for the whole group for the six months to 30 June 2013 would not have provided a meaningful picture of the performance of the consolidated Group.  We have, therefore, prepared the consolidated results for 27 weeks to 8 July 2013, as compared to the half year to 30 June 2012.

Group revenues from continuing operations increased by 12% to €7.17m (2012: €6.42m) during the period.  This increase was primarily driven by our Localisation business, which accounts for 41.1% of Group revenues and which grew by 23.9% during the first half of the year to €2.95m (H1 2012: €2.38m).  Our Localisation Testing activities, which account for approximately 46.8% of Group Revenue (2012: 50.7%), increased by 3.2% to €3.36m (2012: €3.25m) reflecting a creditable performance against particularly strong comparatives for testing in 2012 and despite subdued market growth rates.  Audio and Functional Testing, which represent the remaining 12.1% of Group revenues, grew by 10.6% to €0.87m from €0.78m previously.

Operating expenses increased in the first half of the year by a total of €1.32m for the period to €4.98m (2012: €3.65m) following our investment in expansion and increased capacity.  In particular, this reflected a €0.76m increase in operating costs in Dublin as we expanded our Localisation and Testing capacity, an incremental increase of €0.14m in costs in Tokyo, and a €0.42m increase in costs in Montreal and Seattle.  There were no  material costs in the comparative period reflecting the Group's expansion in these geographies since the first half of 2012.

As a result of this investment, in additional capacity ahead of anticipated higher levels of activity, and the strong comparative performance in Localisation Testing, gross profit margins for the continuing businesses were 30.6% (2012: 43.0%).

One time costs of €0.64m (2012: nil) were incurred in the period, relating to expenses associated with the Group's IPO on 12 July 2013.  Included in net finance costs are foreign exchange losses of €0.17m incurred in the first half of the current year, which compared to a foreign exchange gain of €0.06m in the first half of 2012, representing a swing of €0.23m.  This reflects the strengthening of the euro against Yen primarily but also against the Canadian Dollar.

Underlying profit before tax and exceptional items for the first half of the current financial year was €0.4m (2012: €1.43m). After exceptional costs, the Group reported a loss before tax for the period of €0.25m (2012: profit before tax of €1.43m). 

The average tax rate on the profit before taxation (excluding losses before tax) in the period was 13.3% (2012: 12.4%).  Taxation paid in the period ended 8 July 2013 of €0.2m reflected a full level of taxation payments on account as available tax losses have reduced. 

Basic and diluted earnings per share from continuing operations were (0.87)c (2012: 3.81c). 

DIVIDENDS

The Board is pleased to announce today its maiden interim dividend payment, in line with its progressive dividend policy subject to the retention of funds needed to fund future growth of the Group's business and its strategic aims.  The interim dividend of 0.33p per share will be paid on 28 October 2013 to shareholders on the register on 11 October 2013. The ex-dividend date will be 9 October 2013 and the interim dividend payment will absorb approximately £0.13m of cash resources.

The Board expects to declare a final dividend of 0.67p per share in 2014 which would make the total dividend for the year ending 31 December 2013 1.00p per share.  In 2013 dividends of €42.21 per share, based on the shares in issue at the time, were paid by Keywords International Limited.

In future years, the Board expects that the interim dividend will be around one third of the total dividend for the year.

Strategy

Our strategy is focussed on continuing to grow the Group organically, building on its existing expertise to further extend its technical services offering to the video games industry.  In addition, the Group plans to play a leading role in the consolidation of the highly fragmented video games services industry through selective acquisitions of complementary technical services businesses.  The Directors believe that there is clear opportunity for Keywords Studios to build on its existing relationships with many of the major video games companies by: extending its services into original games content development and operational support services, expanding geographically, as clients require support, and by executing the full outsourcing of client localisation requirements.

We have made good progress during the period, in line with our strategy, by gaining market share through adding to our strong, established client base, and we are currently reviewing a number of potential acquisition opportunities.

CURRENT TRADING AND OUTLOOK

Keywords Studios is now working on many of the major next generation titles it had expected to support in the second half, while some titles have slipped into next year.  As we move through the second half of the current financial year we have, therefore, seen marked increases in utilisation rates across Localisation Testing which we expect to result in significantly stronger margins in the second half, when compared to the first half.  However, given the effect on the wider industry of the volatility in the console game market, a scaling back in the number of next generation launch territories, delays to some earlier generation games releases, combined with the investments the Group made in the first half, we expect the profit outturn for the full financial year to be at a similar level to that achieved in 2012 (as announced on 20 September 2013).

Notwithstanding the hiatus caused by the timing of the simultaneous launch of two new consoles in an unprecedented launch cycle, we have made considerable progress in strengthening our market share and in the development of our Seattle business from a standing start to employing 73 people as at today.  While it has proven unusually difficult to predict the exact timetable of forthcoming launches, 2014 is expected to be a year of significant activity for the games industry leaving us well placed for substantial growth in the year ahead.  For example, of the 15 launch titles announced by Microsoft, four are scheduled for release in 2013 and 11 in 2014 while Sony is releasing 5 out of 20 launch titles in 2013, with the balance to be released in 2014.

Once the current uncertainty subsides, we believe there will be significant opportunities not only from the extensive pipeline of new generation launch window titles from Microsoft and Sony, two of our largest clients, but also due to a return of Xbox 360 and PS3 games release activity, new PlayStation Network and Xbox Live Arcade titles and a return to more normal levels of game release activity by many of the third party publishers with whom we already work.  These launches, combined with the expansion of PlayStation 4 and Xbox One into further territories in 2014 and predictions that the new generation consoles could reach one billion in lifetime sales, tripling the installed base of current generation consoles, are expected to underpin further growth in demand for translation and localisation testing services during 2014 and beyond.

From the strength of our existing market position, we therefore remain confident of making further progress in line with our stated strategy of growing organically and gaining market share, complemented by selective acquisitions to extend our market penetration and expand our range of services.

 

Interim consolidated statement of comprehensive income

			Unaudited 27 weeks ended 8 July 2013	Unaudited 26 weeks ended 30 June 2012
	Note		€	€
Revenues	3		7,171,692	6,415,460
Direct costs			(4,979,607)	(3,654,527)
			_______	_______
Gross Profit			2,192,085	2,760,933
Other administrative expenses			(1,633,303)	(1,412,052)
Costs of IPO			(638,526)	-
Administrative expenses			(2,271,829)	(1,412,052)
			_______	_______
Operating (loss) / profit			(79,744)	1,348,881
Financing income			24,022	87,827
Financing cost			(192,165)	(8,556)
			_______	_______
(Loss) / Profit before taxation			(247,887)	1,428,151
Tax expense	5		(29,110)	(212,499)
			_______	_______
(Loss) / Profit for the period from continuing operations			(276,997)	1,215,652
Other comprehensive income:
Items to be reclassified to profit or loss in subsequent periods
Exchange gains/(losses) on translation of foreign operations			28,964	(58,333)
			_______	_______
Total comprehensive (loss) / income for the year attributable to the owners of the parent			(248,033)	1,157,319
			======	======
Earnings per share	8
Basic earnings per Ordinary share (Euro cent)			(0.87)	3.81
Diluted earnings per Ordinary share (Euro cent)			(0.87)	3.81

Condensed consolidated statement of changes in equity

	Share capital	Merger Reserve	Foreign Exchange reserve	Retained earnings	Total equity
	€	€	€	€	€
Balance at 1 January 2012 (audited)	188	-	24,989	4,119,761	4,144,938
Net Comprehensive income for the period	-	-	(58,333)	1,215,652	1,157,319
Dividends paid	-	-	-	-	-
	_______	_______	_______	_______	_______
Balance at 30 June 2012 (unaudited)	188	-	(33,344)	5,335,413	5,302,257
Total comprehensive income for the period	-	-	(28,393)	1,112,442	1,084,049
Dividends paid	-	-	-	(375,483)	(375,483)
	_______	_______	_______	_______	_______
Balance at 31 December 2012 (audited)	188	-	(61,737)	6,072,372	6,010,823
Total comprehensive loss for the period	-	-	28,964	(276,997)	(248,033)
Dividends paid	-	-	-	(624,516)	(624,516)
Shares issued	370,071	-	-	-	370,071
Merger Reserve arising on Group reconstruction	-	(370,069)	-	-	(370,069)
	_______	_______	_______	_______	_______
Balance at 8 July 2013 (unaudited)	370,269	(370,069)	(32,773)	5,170,859	5,138,286
	_______	_______	_______	_______	_______

Interim consolidated Statement of Financial Position

			Unaudited as at 8 July 2013	Audited as at 31 Dec 2012
			€	€
Non-current assets
Property, plant and equipment			617,807	490,404
			_______	_______
Current assets
Trade receivables			2,515,122	1,397,248
Other receivables			1,586,829	907,302
Cash and cash equivalents			3,132,669	4,397,674
			_______	_______
			7,234,620	6,702,224
			_______	_______
Total assets			7,852,427	7,192,628
			======	======
Equity
Share capital			370,269	188
Merger Reserve			(370,069)	-
Foreign Exchange Reserve			(32,773)	(61,737)
Retained earnings			5,170,859	6,072,372
			_______	_______
Total equity			5,138,286	6,010,823
			_______	_______
Current liabilities
Trade payables			814,306	701,197
Other payables			1,899,835	480,608
			_______	_______
			2,714,141	1,181,805
			_______	_______
Total equity and liabilities			7,852,427	7,192,628
			======	======

Interim consolidated statement of cash flows

			Unaudited 27 weeks ended 8 July 2013	Unaudited 26 weeks ended 30 June 2012
			€	€
Cash flows from operating activities
(Loss)/Profit after tax from continuing operations			(276,997)	1,215,652
Adjustments to reconcile net income to net cash provided by operating activities (see below)			89,494	(772,545)
Income taxes (paid)/refunded			(200,000)	(138,857)
			_______	_______
Net cash provided by operating activities			(387,503)	304,250
			_______	_______
Cash flows from investing activities
Acquisition of property, plant and equipment			(252,998)	(250,977)
			_______	_______
Net cash used in investing activities			(252,998)	(250,977)
			_______	_______
Cash flows from financing activities
Dividends paid			(624,516)	-
Shares issued			12	-
			_______	_______
Net cash used in financing activities			(624,504)	-
			_______	_______
(Decrease) / Increase in cash and cash equivalents			(1,265,005)	53,273
Cash and cash equivalents at beginning of the period			4,397,674	3,262,632
			_______	_______
Cash and cash equivalents at end of period			3,132,669	3,315,905
			======	======

Adjustments to reconcile net income to net cash provided by operating activities

		Unaudited 27 weeks ended 8 July 2013	Unaudited 26 weeks ended 30 June 2012
		€	€
Income and expenses not affecting operating cash flows
Depreciation		125,594	93,708
Income tax expense		29,110	212,498
Changes in operating assets and liabilities
Increase in trade receivables		(1,117,874)	(520,989)
Decrease/(increase) in other receivables		(508,636)	(690,479)
Increase in trade and other payables		1,532,336	191,050
Increase / (Decrease) in foreign exchange reserve		28,964	(58,333)
		_______	_______
		89,494	(772,545)
		_______	_______

Notes to the financial information

1	Basis of preparation

The Group was formed on 8 July 2013 when Keywords Studios Plc (formerly Keywords Studios Limited) acquired the entire share capital of Keywords International Limited through the issue of 31,901,332 ordinary shares. 

The acquisition of Keywords International Limited is deemed to be a 'combination under common control' as ultimate control before and after the acquisition was the same.  As a result, these transactions are outside the scope of IFRS 3 "Business combinations" and have been accounted for under the principles of merger accounting as set out under UK GAAP. 

Keywords Studios Limited was incorporated on 29 May 2013.  Accordingly, although the units which comprise the Group did not form a legal group for the entire period, the current period comprises the results and balances of the subsidiary companies and the Company as if the Group had been in existence throughout the entire period and comparative results and balances comprise the consolidated results and balances of Keywords International Limited. 

The interim financial statements were approved by the Board of Directors on 25 September 2013.  The interim results for the 27 weeks ended 8 July 2013 and 26 weeks ended 30 June 2012 are neither audited nor reviewed by our auditors and the accounts in this interim report do not therefore constitute statutory accounts in accordance with Section 434 of the Companies Act 2006.  They do not include all of the information required for full annual financial statements, and should be read in conjunction with the consolidated financial statements of Keywords International Limited for the year ended 31 December 2012.

The consolidated statutory accounts of Keywords International Limited for the year ended 31 December 2012 have been filed with the Companies Registration Office in Ireland.  The report of the auditors on those accounts was unqualified, did not contain any statements under s.498 (2) or (3) of the Companies Act 2006 and did not contain any matters to which the auditors drew attention without qualifying their report.

The same accounting policies, presentation and methods of computation are followed in these condensed consolidated financial statements as were applied in the Keywords International Limited's latest annual audited financial statements except that in the current financial year, the Group has adopted a number of revised Standards and Interpretations.  However, none of these has had a material impact on the Group' reporting.

The financial information has been prepared in accordance with recognition and measurement requirements of International Financial Reporting Standards, International Accounting Standards and interpretations (collectively IFRS) issued by the International Accounting Standards Board (IASB) as adopted by the European Union ("adopted IFRSs").  In the current year the Group has adopted all of the new and revised standards and interpretations issued by the IASB and the International Financial Reporting Interpretations Committee (IFRIC) of the IASB, as they have been adopted by the European Union, that are relevant to its operations and effective for accounting periods beginning on 1 January 2012.

2	Use of estimates and judgements

There has been no material revisions to the nature and amount of changes in estimates of amounts reported in the annual financial statements 2012 for Keywords International Limited.

3	Segmental analysis

Management considers that the Group's activity as a single source supplier of Localisation and Localisation Testing Services constitutes one operating and reporting segment, as defined under IFRS 8. 

Management review the performance of the Group by reference to group-wide profit measures and the revenues derived from four main service groupings:

·      Localisation - Localisation services relate to translation and cultural adaptation of in-game text and audio scripts across multiple game platforms and genres.

·      Localisation Testing - Localisation Testing involves testing the linguistic correctness and cultural acceptability of computer games.

·      Audio - Audio Services relate to the audio production process for computer games and includes script translation, actor selection and talent management through pre-production, audio direction, recording, and post-production, including native language QA

·      Functional Testing - Functional Testing relates to quality assurance services provided to game producers to ensure games function as required.

There is no allocation of operating expenses, profit measures, assets and liabilities to individual product groupings.  Accordingly the disclosures below are provided on an entity-wide basis.

The activity is reported in a manner consistent with the internal reporting provided to the chief operating decision-maker. The chief operating decision maker has been identified as the executive management team made up of the Chief Executive Officer and the Finance Director.

Revenue by line of business		Unaudited 27 weeks ended 8 July 2013	Unaudited 26 weeks ended 30 June 2012
		€	€
Localisation Testing		3,358,388	3,253,880
Localisation		2,947,498	2,378,848
Audio		668,544	772,484
Functional Testing		197,262	10,248
		_______	_______
		7,171,692	6,415,460
Unallocated direct costs		(4,979,607)	(3,654,527)
		_______	_______
Gross Profit		2,192,085	2,760,933
Administrative expenses		(1,633,303)	(1,412,052)
Costs of IPO		(638,526)	-
Administrative expenses		(2,271,829)	(1,412,052)
		_______	_______
Operating (loss)/profit		(79,744)	1,348,881
Financing income		24,022	87,827
Financing cost		(192,165)	(8,556)
		_______	_______
(Loss) / Profit before taxation		(247,887)	1,428,151
Tax expense		29,110	212,499
		_______	_______
(Loss) / Profit for the period from continuing operations		(276,997)	1,215,652
		_______	_______

Geographical Analysis of Revenues by Jurisdiction

Analysis by geographical regions is made according to the Group's operational jurisdictions.  This does not reflect the region of the Group's customers, whose locations are worldwide.

		Unaudited 27 weeks ended 8 July 2013	Unaudited 26 weeks ended 30 June 2012
		€	€
Ireland		5,401,497	4,949,662
Japan		675,063	914,012
Italy		196,354	541,538
Canada		680,312	10,248
United States		218,466	-
		_______	_______
Total Revenues		7,171,692	6,415,460
		_______	_______

Geographical Analysis of Non-current assets from Continuing Businesses

		Unaudited As at 8 July 2013	Audited As at 31 Dec 2012
		€	€
Ireland		464,041	357,277
Canada		109,145	84,101
Italy		27,128	24,837
Japan		16,883	23,575
United States		610	614
		_______	_______
		617,807	490,404
		_______	_______

4	Seasonal Business

The video games industry, and in particular the console sector of the games industry, is heavily dependent on sales of new releases of games and consoles during the traditional holiday season, including the run up to Thanksgiving in the United States and Christmas in other parts of the world.  As with all other service providers to the video games industry, Keywords Group typically experiences significantly higher activity as part of this release cycle during the six months from June to November.  This activity drives increased revenues in that period and generates higher Gross Profit margins compared with the other six months.

Revenue for the 53 weeks ended 8th July 2013 totalled €15,099,181 (2012: 52 weeks €12,905,292) and Gross Profit of €4,586,817 (2012: 52 weeks €5,761,353). 
 

5

Taxation

A number of entities within the group have incurred losses during the period, on which no tax refund has been assumed.  The tax charge is calculated on those entities in the group which have generated profits during the period.

Tax charged on these entities is at an average rate of 13.3% for the 27 weeks ended 8 July 2013 (30 June 2012: 12.4%) representing the best estimate of the effective tax rate expected to apply for the full year, applied to the pre-tax income of the 27 week period,

6

Dividends

			Unaudited 27 weeks ended 8 July 2013		Unaudited 26 weeks ended 30 June 2013
			Per share	Per share	Per share	€
Interim			8.42	124,516	-	-
Final			33.79	500,000	-	-
Dividends paid to shareholders			42.21	624,516	-	-

In November 2012, Keywords International Limited distributed €25.38 per share, based on the shares in issue at that time, or, €375,482 in total, as an interim dividend for 2011.

In May 2013, Keywords International Limited distributed €8.42 per share, based on the shares in issue at that time, or €124,516 in total, as a special dividend for 2011.

In June 2013, Keywords International Limited distributed €33.79 per share, based on the shares in issue at that time, or €500,000 in total, as a final dividend for 2012.

7	Related party transactions

Parties are considered to be related if one party has the ability to control the other party or exercise significant influence over the other party's making of financial or operational decisions, or if both parties are controlled by the same third party.

During the period Italicatessen Limited is related by virtue of a common significant shareholder.  The following transactions arose with Italicatessen Limited, which provides canteen services to Keywords International Limited.  Moreover, Italicatessen is a related party debtor at each period end due to reimbursable charges paid by Keywords International Limited on behalf of Italicatessen Limited.  There is no interest payable on this loan and it is of no fixed duration.

		Unaudited 27 weeks ended 8 July 2013	Unaudited 26 weeks ended 30 June 2012
		€	€
Operating expenses
Canteen charges		27,446	11,370

The following are period / year-end balances:		Unaudited As at 8 July 2013	Audited As at 31 Dec 2012
Related party debtors
Italicatessen Limited		15,354	247,021
		_______	_______

Keywords International Limited paid the following amounts to Mr. Giorgio Guastalla in respect of rent on premises occupied by the employees of the Group in Dublin.

		Unaudited 27 weeks ended 8 July 2013	Unaudited 26 weeks ended 30 June 2012
		€	€
Operating expenses
Rental payment		9,387	9,000

The details of key management compensation (being the remuneration of the directors) are:

		Unaudited 6 months ended 8 July 2013	Unaudited 6 months ended 30 June 2012
		€	€
Operating expenses
Salary and related costs		97,794	50,000

8	Earnings per share

		Unaudited 27 weeks ended 8 July 2013	Unaudited 26 weeks ended 30 June 2012
		Euro cent	Euro cent
Basic		(0.87)	3.81
Diluted		(0.87)	3.81

		Unaudited 27 weeks ended 8 July 2013	Unaudited 26 weeks ended 30 June 2012
		€	€
(Loss)/Profit for the period from continuing operations		(276,997)	1,215,652
		======	======

		Number	Number
Denominator - basic
Weighted average number of equity shares		31,902,332	31,902,332
Diluted		31,902,332	31,902,332
		======	======

9	Share Capital

	Unaudited 27 weeks ended 8 July 2013		Unaudited 26 weeks ended 30 June 2012
	Shares	€	Shares	€
At the start of the period
Ordinary Shares of €0.012697 each	14,797	188	14,797	188
Issued during the period
Ordinary Shares of Stg£0.01 each issued on incorporation	1,000	12	-	-
Ordinary Shares of Stg£0.01 each issued on -reconstruction	31,901,332	370,257	-	-
Ordinary Shares of €0.012697 each eliminated on reconstruction	(14,797)	(188)	-	-
	_______	_______	_______	_______
At the end of the period	31,902,332	370,269	14,797	188
	_______	_______	_______	_______

On May 29 2013 the Group issued 1,000 Ordinary shares of 1p each on incorporation, at nominal value.

On July 8 2013, as part of the Group reconstruction, the Group issued a further 31,901,332 Ordinary shares of 1p each, as part of a share for share exchange with the shareholders of Keywords International Limited.

The comparative period shows the issued shares of Keywords International Limited prior to the Group's reconstruction on July 8 2013.

10	Post balance sheet events

On 10 July 2013, Keywords Studios issued 8,130,081 new shares of 1p each for £1.23 per share, raising £10 million in gross cash for the Group.  Keywords Studios plc was admitted to the Alternative Investment Market (AIM) of the London Stock Exchange.  Share trading commenced on 12 July 2013.

Gross costs of the IPO, including share issuance costs, are estimated to be €1,342,540.  €638,526 has been expensed in the current period.  It is estimated that a further €480,000 will be expensed in the second half of 2013 and the remaining €224,000 will be written off against share premium as Share Issuance Costs.

 

END

 

 

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