Enad Global 7 Ab · OMXSTO:EG7
Enad Global 7 Ab — Merger or Acquisition (December 2020)
42 slides from Enad Global 7 Ab's merger presentation, December 2020
Slide 1: Investor Presentation December 2020
INVESTOR PRESENTATION December 2020
Slide 2: Agenda
AGENDA Section A: Introduction to EG7 Section B: Introduction to Daybreak Section C: The new group Appendix: Additional material 2
Slide 3: Introduction to EG7
Introduction to EG7 EG7 at a glance ▪ EG7 is a group of companies that develops, markets, publishes and distributes video games for PC, console and mobile on a global market ▪ The group comprises EG7 Studios, Petrol, Sold Out, Big Blue Bubble, Piranha Games and Antimatter Games among others ▪ Covers
Slide 4: Acquisition of Piranha Games
Acquisition of Piranha Games Piranha Games at a glance Transaction structure ▪ Video game developer and publisher founded in 2000 with c. 65 EV/Adj. EBITDA employees, based in Vancouver, Canada Purchase price table CADm LTM Q3’20 ▪ Operated on a work-for-hire basis until 2009. Made games for big-nam
Slide 5: Buy-and-build strategy
Buy-and-build strategy Revenue, SEKm 876 Q2 2018 Q2 2019 Q2 2019 Q4 2019 Q3 2020 Q4 2020 EV: 1 NOKm EV: 18 USDm EV: 1.6 SEKm EV: 16 + 5.2 GBPm EV: 16 + 60 CADm EV: 31 + 63 CADm 512 76 8 11 11 1) 1) 1) 2) 3) 2015-08 2016-08 2017-08 2018-12 2019-12 2020 PF annualised Source: Company Information. 1) 12
Slide 6: Two divisions with strong synergies
Two divisions with strong synergies GAMES SERVICES ▪ Development of own titles ▪ Creative marketing studio with 40+ ongoing marketing projects. ▪ Five independent studios with unique expertises Previous projects – Call of Duty Warzone, Far Cry 6 and Assasins Creed Valhalla ▪ 10 fully owned IPs ▪ 13
Slide 7: EG7's value chain
EG7’s value chain VALUE CHAIN – WE CONTROL THE VALUE CHAIN DEVELOPING MARKETING PUBLISHING DISTRIBUTING WE TAKE THE COMPANIES WE ACQUIRE TO A NEW LEVEL Source: Company Information. 7
Slide 8: Solid track record and pipeline
Solid track record and pipeline 160+ 25+ 40+ ONGOING MARKETING PREVIOUS GAME PROJECTS CURRENT GAME PROJECTS CAMPAIGNS Source: Company Information. 8
Slide 9: Titles to be released in 2020-2022
Titles to be released in 2020-2022 Source: Company Information. 9
Slide 10: Agenda
AGENDA Section A: Introduction to EG7 Section B: Introduction to Daybreak Section C: The new group Appendix: Additional material 10
Slide 11: Introduction to Daybreak
Introduction to Daybreak Daybreak at a glance DAYBREAK’S KEY PERSONNEL AND HIGHLIGHTS ▪ Leading MMORPG developer and publisher ▪ “THE” pioneer of online games with the release of EverQuest in 1999 Jason Epstein Ji Ham Jack Emmert ▪ Expertise in free-to-play and game as a service business model Execu
Slide 12: Daybreak – a unique journey
Daybreak – a unique journey Daybreak acquires Turbine and Standing Planetside 2 is Stone Games, bringing launched, receiving LOTRO and DDO Sony Online several accolades, onboard, since Entertainment is Successful launch including Best contributing with $72m founded as a of Planetside 1 and Launch of
Slide 13: Globally recognized third party IP portfolio
Globally recognized third party IP portfolio… Daybreak boasts one of the best 3rd party IP portfolios in the world Source: Company information. 13
Slide 14: Combined with valuable original IPs
…combined with valuable original IPs Released in 1999 Released in 2015 Released in 2012 1st fully 3D MMORPG game that Very first standalone battle royale The one and only First Person Shooter pioneered the genre game that inspired PUBG and Fortnite MMO in the world Numerous awards, i.e. “Top 50 PC O
Slide 15: Strong portfolio of games
Strong portfolio of games… Live game portfolio Experience a high-fantasy world “Parallel universe” to EQ set 500 Build a hero from the classic D&D races ▪ Evergreen live service based on epic quests and dungeons years after the first game’s events and experience 100+ hours of adventures game portfol
Slide 16: Leads to diversification
…leads to diversification Bookings by game1) EBITDA by game2) 9% 13% 10% 28% 38% 10% 11% 6% 15% 14% 30% 17% Source: Company information. Note: 1) YTD bookings as of 30th September 2020. 2) YTD Game level EBITDA as of 30th September 2020. 16
Slide 17: Loyal user base and industry leading monetization
Loyal user base and industry leading monetization Growing and loyaluser base Average Continuing Users (‘000) ~40% 411 367 of Monthly Active Users are Continuing Users 60%-80% Retention Rate for Continuing Users 96 116 Up to 5 Q3-19 Q3-20 Average Session Hours Deep monetizationmodeland industry leadi
Slide 18: Highly tenured user cohorts
Highly tenured user cohorts Bookings by user cohort1) 7.3% 7.0% 6.5% 3.9% 6.2% 2.7% 11.2% 3.0% 3.5% 4.5% 6.4% 6.3% 5.1% ▪ Daybreak’s user 7.5% 3.7% 6.6% 8.3% 6.6% 5.6% cohorts show 7.8% extremely long-term 6.1% 12.2% engagement and 11.3% 11.6% stickiness ▪ 65%+ of bookings for each game comes from p
Slide 19: Robust growth opportunities
Robust growth opportunities Q4’21 2022 TBA New project DCUO Upgrade LOTRO Upgrade New Project Summary: Summary: Summary: Modernize visuals, upgrade Planning visual and technical Unannounced project key game systems and add updates for LOTRO for PC brand new large content and nextgen consoles to upda
Slide 20: Historical financial development
Historical financial development Net revenuedevelopment Adj. EBITDA and Adj. EBITDA margin development USDm USDm 77.6 29.0 64.7 62.8 20.5 37% 32% 16.6 26% 2018 2019 LTM Q3'20 2018 2019 LTM Q3'20 ▪ Revenue fluctuated in 2018 and 2019 due to game update cycles ▪ Increasing profitability mainly driven
Slide 21: Agenda
AGENDA Section A: Introduction to EG7 Section B: Introduction to Daybreak Section C: The new group Appendix: Additional material 21
Slide 22: Key highlights from EG7 and Daybreak joining forces
Investment highlights 2 3 4 5 Key highlights from EG7 and Daybreak joining forces Further strengthens and adds diversification to EG7’s IP portfolio through acquisition of IP Portfolio best-in-class IPs (Everquest, Lord of the Rings, Dungeons & Dragons, DC Online) People Addition of a strong team of
Slide 23: New combined group
1 Combined group 3 4 5 New combined group CURRENT EG7 DAYBREAK COMBINED Video game development and Video game development, GaaS Video game development and DESCRIPTION related services operations and publishing related services SALES YTD SEK 657m SEK 666m SEK 1,322m + = EBITDA YTD SEK 156m SEK 255m S
Slide 24: Global coverage
1 2 Operational set-up 4 5 Global coverage BIG BLUE BUBBLE HQ ARTPLANT NORWAY TOADMAN HQ DEVELOPER & PUBLISHER GAME DEVELOPER GAME DEVELOPER ARTPLANT RUSSIA GAME DEVELOPER PIRANHA GAMES BIG BLUE BUBBLE DEVELOPER AND PUBLISHER DAYBREAK GAMES DEVELOPER & PUBLISHER TOADMAN BERLIN SOLD OUT GAME DEVELOPE
Slide 25: YTD pro forma Revenue and EBITDA
1 2 3 Pro forma financials 5 YTD pro forma Revenue and EBITDA Pro forma YTD Revenue Pro forma YTD EBITDA SEKm SEKm 2020 acquisitions 2020 acquisitions ▪ Through the acquisition of Big Blue Bubble, the announced acquisition of Piranha Games, and the contemplated acquisition of Daybreak, YTD pro forma
Slide 26: Group strategy
1 2 3 4 Strategy Group strategy Organic growth of existing IP portfolio Mix of original and sequels for well-known IPs Focus on free-to-play online with predictable and stable income Value-adding acquisitions that support overall group strategy 26
Slide 27: Agenda
AGENDA Section A: Introduction to EG7 Section B: Introduction to Daybreak Section C: The new group Appendix: Additional material 27
Slide 28: New legal group structure
New legal group structure New legal group structure Enad Global 7 AB (Publ) Toadman Petrol Advertising Sold Out Sales & Daybreak Game Piranha Games Big Blue Bubble Interactive Sweden Inc. Marketing Ltd. Company LLC Inc. Inc. Toadman Antimatter Games Artplant A/S Interactive GMBH Ltd. Rogue Planet Da
Slide 29: Pro forma income statement
Pro forma income statement Pro forma incomestatement Commentary ▪ On a pro forma basis, Big Blue Bubble, Piranha Games and Daybreak add SEK 80m, SEK 130m and Jan-Sep 2020 SEK 666m of total revenue, respectively Unaudited (SEKm) Swedish GAAP Adjusted Adjusted Adjusted Pro forma Revenues Net revenue 3
Slide 30: Pro forma balance sheet
Pro forma balance sheet Pro forma balancesheet Commentary ▪ C. SEK 150m, SEK 350m and SEK 2bn of the PPA is allocated to goodwill for Big Blue Bubble, Piranha Jan-Sep 2020 Games and Daybreak, respectively Unaudited (SEKm) Swedish GAAP Adjusted Adjusted Adjusted Pro forma ASSETS Non-current assets 1)
Slide 31: EG7's ownership per October 2020
EG7’s ownership per 31 October 2020 Ownership per 31 October 2020 Shareholders Type of Investor Number of Shares Ownership (%) Robin Flodin Co-founder 3,817,713 8.60% Dan Sten Olsson with family and trust Investor, represented on board level 3,625,000 8.16% Rasmus Davidsson Co-founder 2,872,743 6.47
Slide 32: Risk factors
Risk factors An investment in Enad Global 7 AB (publ) (the “Company” and together with its direct and indirect subsidiaries, the “Group”) shares involves various risks. The financial performance of the Company and the Group and the risks associated with its business are important when making an inve
Slide 33: Risk factors
Risk factors The Company is dependent on agreements with third party publishers for production of games As mentioned above, the Company’s Games business division partly comprise of producing games on behalf of a third party publishers. To produce games on behalf of third party publishers, the Compan
Slide 34: Risk factors
Risk factors The Company is dependent on a few important distribution channels for its game titles The Company’s sales of digital and physical game titles are largely done through a few important distributors. Steam is one of the digital platforms used by the Company, a so-called content delivery sy
Slide 35: Risk factors
Risk factors Completed and potential future acquisitions may fail to integrate successfully in the Company’s business and to fully achieve expected financial and strategic synergies The Company has from 2019 up until the date of the material completed several acquisitions of companies, as described
Slide 36: Risk factors
Risk factors The Company may be unsuccessful in evolving and adjusting to new technology The Company’s industry is characterised by rapid development of new products, technologies, and end-user practices, and it is thus important that the Company continuously updates and develops new and existing pr
Slide 37: Risk factors
Risk factors The Company relies on its ability to retain and recruit key personnel The Company’s success is based on, and depends on, existing employees’ knowledge and experience, as well as the Company’s ability to recruit and retain key personnel in the future. Some of the Company’s senior executi
Slide 38: Risk factors
Risk factors The Company risks being involved in legal and administrative proceedings Disputes do sometimes arise in the game industry, particularly in relation to intellectual property rights. Consequently, there is a risk that the Company in the future may be involved in legal or administrative pr
Slide 39: Risk factors
Risk factors Risk of insufficient insurance cover The Company has signed a business insurance covering the Company’s operations in Sweden, management and CEO. Certain types of losses are generally not covered by insurances, since such losses are deemed not possible to insure. This may include damage
Slide 40: Risk factors
Risk factors Risks related to the COVID-19 pandemic The COVID-19 pandemic and the measures put in place by governments worldwide have resulted in significant disruption to the economies relevant for the Company. The online gaming market is influenced by general economic and consumer trends beyond th
Slide 41: Risk factors
Risk factors The Company is subject to laws and regulations in several different jurisdictions The Company’s offering is available in a large number of jurisdictions across the world, many of which have their own individual regulations relating to the gaming businesses in particular. The Company clo
Slide 42: Risk factors
Risk factors Risks associated with the shares in the Company Risks relating to inactive and illiquid trading The trading in the Company’s shares have historically, from time to time, been characterized by inactive and illiquid trading with significant difference between the purchase price and sellin
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