Embracer Group Ab Class B · OMXSTO:EMBRAC_B
Embracer Group Ab Class B — Shareholder Meeting (September 2019)
31 slides from Embracer Group Ab Class B's shareholder meeting presentation, Sep 17, 2019
Slide 1: Welcome to Annual General Meeting FY 18/19
Welcome to Annual General Meeting FY 18/19 17 September 2019 1
Slide 2: Todays agenda
Todays agenda Webcast are between 15.00- approx. 16.00 (end of Q&A) 15.00 – 15.01 Welcome by Oscar Erixon, analyst Carnegie 15.01 – 15.05 AGM agenda by Kicki Wallje-Lund (in Swedish) 15.05 AGM 2019 presentation 15.30 Embracer Group presentation 15.40 Smarter Business – Embracer Group’s approach to s
Slide 3: Annual General Meeting 2019
Annual General Meeting 2019 17 September 2019 Lars Wingefors Co-Founder & Group CEO 3
Slide 4: 1. Operational overview FY18/19
1. Operational overview FY18/19
Slide 5: 2018-2019: Continued momentum and growth
2018-2019: CONTINUED MOMENTUM AND GROWTH FY17 FY18/19 Change Net sales growth 508 5754 1033% Operational EBIT 202 897 344% Reported earnings per share/SEK 1,88 4,68 149% Adjusted earnings per share/SEK 2,04 7,78 281% Depreciation of game development 62 533 760% Investment in game development 291 119
Slide 6: Key releases FY18/19
KEY RELEASES FY18/19 PC PS4 XB1 | 4A Games | Deep Silver PC | Coffee Stain Studios | Coffee Stain PC PS4 XB1 | Warhorse Studios | Deep Silver PC PS4 XB1 | Gunfire Games | THQ Nordic PC | Bugbear | THQ Nordic PC PS4 XB1 | Rainbow Studios | THQ Nordic PC PS4 XB1 | Nine Dots Studios | Deep Silver
Slide 7: Acquisitions – development studios and publishers
ACQUISITIONS – DEVELOPMENT STUDIOS AND PUBLISHERS LAVAPOTION ACQUISITIONS AFTER YEAR-END
Slide 8: Growth track record since IPO (Nov 2016)
GROWTH TRACK RECORD SINCE IPO (Nov 2016). – ORGANIC AND ACQUISITIVE (30% DILUTION*) GROWTH SINCE IPO UNTIL 30 JUN 2019 HAS YIELDED: # of game developers # of internal development studios Key IPs acquired since IPO 1 828 17 Long-term exclusive license STU DI OS +5x +4x 339 4 Lavapotion Sep 2016 (IPO)
Slide 9: Towards building a diversified, substantial and relevant player in the growing games industry
TOWARDS BUILDING A DIVERSIFIED, SUBSTANTIAL AND RELEVANT PLAYER IN THE GROWING GAMES INDUSTRY GROUP HQ Karlstad Group strategy and M&A Business Area Business Area Games Partner Publishing/Film Three autonomous sub-groups: Munich Vienna Munich Skövde 13 offices across the world: Selected partners:
Slide 10: Business Area Games – THQ Nordic
BUSINESS AREA GAMES – THQ NORDIC 31% 90+ IP’s Core strategy to acquire and build based on established IPs. 22 41 52 22 64 21 Klemens Kreuzer, CEO 7 29 31
Slide 11: Business Area Games – Deep Silver
BUSINESS AREA GAMES – DEEP SILVER 15+ IP’s 62% Exclusive license Own IPs within AAA development. Publishing on external products that needs powerful marketing and physical distribution power. 141 134 173 70 Klemens Kundratitz, CEO
Slide 12: Business Area Games – Coffee Stain
BUSINESS AREA GAMES – COFFEE STAIN 7% 9 IP’s Creative, focused on games-making and development, new IPs, ~20 people. 24 15 STUDIOS NORTH Skövde Stockholm Lavapotion Anton Westbergh, CEO
Slide 13: Investments in project pipeline
INVESTEMENTS IN PROJECT PIPELINE
Slide 14: Development pipeline – Business Area Games
DEVELOPMENT PIPELINE – BUSINESS AREA GAMES PC PS4 XB1 PS4 XB1 IP: Own IP: Own PC PS4 XB1 PC PS4 XB1 IP: Own IP: Own PC PS4 XB1 PC PS4 XB1 Switch IP: Own IP: 3rd party Strong reception – millions of trailer views
Slide 15: Market trends favourable to creators and owners of content
MARKET TRENDS FAVOURABLE TO CREATORS AND OWNERS OF CONTENT CLOUD GAMING • BUSINESS MODELS ARE IN TRANSITION – ”NETFLIX” FOR GAMERS • GAMES AS A SERVICE (GAAS) GROWING OPPORTUNITY • CLOUD GAMING IS CHALLENGING CONSOLES – BILLIONS OF DOLLARS UP FOR GRABS
Slide 16: New sustainability framework
NEW SUSTAINABILITY FRAMEWORK
Slide 17: The share ownership
Name Capital % Votes % Founder management Renouned institutions THE SHARE OWNERSHIP 30 June 2019 Lars Wingefors through companies 35.1 51.5 Co-Founder, Group CEO Swedbank Robur Funds 9.1 5.1 Erik Stenberg through company 7.6 11.2 Co-Founder, Deputy Group CEO Handelsbanken Funds 6.0 3.3 Mikael Brodén
Slide 18: 2. Financial overview
2. Financial overview MAJO 18
Slide 19: Balance as per 31 March 2019
Balance as per 31 March 2019 Operational Balance Sheet Items Financial Balance Sheet Items 4 500 4 500 4 058 4 058 4 000 4 000 3 500 3 500 Net Cash 3 000 3 000 2 011 2 500 2 500 4 058 2 000 1 815 1 815 2 000 Acquisition 150 161 related 156 1 500 Completed 1 500 intangible 395 games assets 1 000 1 00
Slide 20: Working Capital – Including Forfaiting
Working Capital – Including Forfaiting 800 40% Net working capital defined as; Inventories plus current receivables less current liabilities. 604 600 Excluding current financial- assets and 30% liabilities. 494 400 20% 290 14% 11% 200 10% 141 6% 6 2% 15 3% 3% 0 0% 0% Q4 -15 Q1 -11 -1 Q2 Q3 Q4 Q1 Q2
Slide 21: Working Capital – Forfaiting
Working Capital – Forfaiting 500 450 429 400 350 300 253 250 200 150 107 100 64 51 50 0 0 0 0 0 0 0 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q5 Q1 2016 2017 2017 2017 2017 18/19 18/19 18/19 18/19 18/19 19/20 *) Quarters refer to Financial year quarters Forfaiting (MSEK) 21
Slide 22: Working Capital – Excluding Forfaiting
Working Capital – Excluding Forfaiting 800 40% 700 668 35% 601 600 30% Increase in Q3 and Q4 18/19 mainly driven by strong quarters for Partner Publishing 500 25% (SEK 0,9bn and SEK 0,8bn). 400 20% 342 16% 300 15% 13% 200 10% 141 7% 100 5% 3% 3% 6 2% 15 0 0% 0% Q4 Q1 -11 -1 Q2 Q3 Q4 Q1 -1% Q2 Q3 Q4
Slide 23: Working Capital – Trade Receivables 31 March 2019
Working Capital – Trade Receivables 31 March 2019 1 000 Q5-18/19 Koch Media & Coffee 900 Stain; 883 800 Vast majority of trade receivables are insured with COFACE and Euler 700 Hermes. 600 500 400 300 200 Q4-17 THQ Q5-18/19 THQ 100 Nordic; 66 Nordic; 60 0 THQ Nordic THQ Nordic Koch Media & Coffee St
Slide 24: Cash Flow from 30 September 2016 to 30 June 2019
Cash Flow from 30 September 2016 to 30 June 2019 Financial Cash Flow Operating Cash Flow invested into operations Since September 2016 we have generated SEK 2,028m in operating cash flow and invested SEK 1,886m in our games portfolio, SEK 143m in Other intangibles (mainly Film) and SEK 53m in tangib
Slide 25: Games portfolio – By Quarter
Games portfolio – By Quarter 400 180% 356 160% 350 154% 305 140% 300 273 120% 250 234 220 100% 208 200 173 80% 162 72% 154 71% 150 134 123 60% 60% 51% 100 87 43% 78 40% 67 59 27% 47 47 50 50 40 23% 21% 20% 13 1 2 3% 0 1% 0% Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q5 Q1 2016 2017 2017 2017 2017 18/19 18/19 18/19
Slide 26: Games portfolio – Ongoing Projects
Games portfolio – Ongoing Projects 400 90 80 81 356 77 80 350 305 70 300 273 60 54 55 250 234 51 50 208 200 173 40 36 150 32 30 29 27 30 100 87 78 20 67 59 47 50 10 0 0 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q5 Q1 2016 2017 2017 2017 2017 18/19 18/19 18/19 18/19 18/19 19/20 Capex Games under development 26
Slide 27: Book value of investments into Game Development 30 June 2019
Book value of investments into Game Development 30 June 2019 Investments made up until 30 June 2019 in on-going games 1 500 development, driving future cash flow generation upon 1 280 completion. Book value of completed 1 000 games as per 30 June, current and future cash flow generators. 500 427 0 O
Slide 28: Finalized Games Development – Depreciation Model
Finalized Games Development – Depreciation Model 700 120% 600 587 100% 97% 100% 94% 528 92% 89% 500 480 86% 89% 83% 474 81% 78% 80% 75% 78% 72% 383 69% 400 67% 354 63% 344 67% 63% 59% 341 60% 59% 56% 299 56% 52% 300 291 48% 52% 44% 48% 41% 44% 37% 41% 217 40% 33% 37% 200 176 33% 31% 22% 28% 25% 22%
Slide 29: 3. Growth strategy and M&A update
3. Growth strategy and M&A update MAJO 29
Slide 30: Organic growth
GROWTH STRATEGY – Our model for sustainable and profitable growth Invest for long-term organic growth Financial model Investments in development should outpace finalised game development ORGANIC GROWTH Reduce operational and financial risk, and anchor decisions in both business acumen and financial
Slide 31: M&A process and current pipeline
M&A PROCESS AND CURRENT PIPELINE Typical M&A process Success factors 1. Scouting – Ongoing, patient scouting and research ü Professional but activity at HQ in Sweden, THQ Nordic Vienna, Koch fast and lean process Media/Deep Silver and Coffee Stain – focus on key issues 2. Proceeding with specific le
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