Thunderful Group AB

Thank you very much. So, my name is Brian Sjögersson. I'm the CEO of Thunderful Group, and I'm here with our CFO, Anders Mikvist, to present the year-end report. Next slide, please. Go to slide two. So, first, about Thunderful Group. So, Thunderful Group is primarily a pan-Nordic gaming group of companies, and we're active in two segments. We're active in one segment called Thunderfield Games, where we do game development and game publishing, and Thunderfield Distribution. These two segments operate on different markets. The Thunderfield Games segment develops and publishes games for the global market, whereas Thunderfield Distribution operates on primarily the Nordic market. The group was recently strengthened in the fourth quarter through the acquisition of CodeSync Limited and Station Interactive AB. And today, we're also happy to announce the acquisition of HEDUP, which is a German game publisher and game developer. The largest shareholders in Thunderfield Group are Bergsala Holding. After that, it's Swedbank Robar. it's brian stegerson myself and klaus lingelid our head of games um the main office is located here in sunny beautiful gothenburg sweden and we have additional offices in the nordic countries in the uk in germany and in hong kong if we look at the on the right side of this slide here um the financial highlights between for 2020 are that we have a revenue of roughly 3 billion Swedish, with an adjusted EBIT margin of 8.8%, and an adjusted EBIT of 271 million Swedish. Operational highlights are that we are now 350 employees in Kung Fu Group. We've had 25 game releases of our own IPs. We've had a unique Nintendo partnership since 1981. And we currently have 12 games in development. Among Thunderful Games and Thunderful Distribution, we own or oversee around 100 brands or IPs. Next slide, please. One thing, let me talk briefly about the group business strategy. Our business is IP-centric. IP and brands are very central to us. And so it follows that we take good care of our existing IP portfolio, both the ones that we develop in the games segment, but also the IPs and brands that we manage for clients on the distribution side. So that means that we are very good at managing the existing contracts and partnerships that we have. When it comes to being IP-centric on the gaming side, we are in a very good position to do platform deals with platform owners such as Nintendo, Microsoft, Sony, Google, et cetera. Since we can... always talk about the ips directly and and and and that we own the ips that means that our games are optimally suited for subscription and streaming based gaming also because that because the way the games are set up so the games are do not contain any in-app purchases you pay up front and and then you're not disturbed anymore during your gaming experience And also on the IP centric side, we are expanding the number of private labels for the distribution segment, meaning that we have a growing part of our portfolio there is our IPs or brands that we own ourselves. That means better margins for us. Finally, the core of the group business strategy is that we can take the great cash flows from the distribution side and invest heavily in in the in the games segment that means that we can make bigger and more profitable investments in games and we can also focus on making acquisitions in in the gaming space um next slide please i'm going to hand it over to our cfo to talk about the group financial development

Yes, so we're moving into slide four, the Group Financial Development in terms of revenues. For the fourth quarter, we're up 28% in the Q4 2020 compared to Q4 2019. We're reaching 1,288 million SEK in revenues in the fourth quarter. And for the full year 2020, compared to the full year 2019 we're up 46 percent and reaching more than 3 billion sec in in in group revenue the adjusted ebit for q4 is decreasing with 21 percent now 97 million compared to 122 in q419 and for the full year we're up 30 percent reaching an adjusted ebit of 271 The adjustments in EBIT for Q4 2020 and full year 2020, they are excluding depreciations from the non-cash issue and also from intangible assets from the acquisitions that we made during the year. And they're also excluding acquisition transaction costs of the 14.7 million SEK in the fourth quarter. So even though the revenue development has been good for both the fourth quarter and the full year, we see a hit in EBIT in the fourth quarter. And it's basically coming from Santa Fe distribution, where we see two different reasons. The first one is the mixed effects, where we've sold... game consoles and game accessories has been generating a large portion of the of the the increase in in revenues while toys has been decreasing and we do have mixed effects where toys have a higher cost margin than than than game consoles and also higher than than gaming accessories And also, it's a fact that for the Nintendo distribution in Dark Solar, most of the revenue increase has been in hardware, which is typically lower margins than the games. There hasn't been so many AAA games released in the fourth quarter. In addition to that, we see the COVID-19 effect. We had the second wave of the pandemic in the fourth quarter, meaning that physical stores in the Nordics, especially in the neighboring countries to Sweden, closed and we've seen a different order structure in the toy distribution company. We are selling more smaller orders and that's generating higher logistics costs and also decreasing revenues overall in the toy distribution segment. But on the other hand, for the gaming segment, we've tripled the number of game developers during the year. We started the year with less than 70 game developers, and at the end of the year, we have more than 220 game developers in the company group. So we are scaling up our game development, and we are growing both organically but also through add-on acquisitions and complementary acquisitions. So if we switch over to the next slide, slide number five,

Yeah, excellent. Thank you. So in the fourth quarter, we did two acquisitions. One is called CodeSync Software Limited. It's a company that operates out of Sunderland in the northeast of England, close to Newcastle. They are both a game developer, a co-developer, where they co-develop with other developers on games, and they're also a third-party publisher. They publish both their own games and other developers' games. They are around 100 full-time employees, and we acquired them at the beginning of October 2020. So with that acquisition of 100 full-time employees, that was fantastic. uh certainly a transformative um acquisition in the sense that we uh we were suddenly twice as many developers as we were before it's been it's been really interesting to follow then in november we we did an asset acquisition of station interactive which is a studio in in karlshamn in sweden they work on work primarily on other people's ips for example they've been working perennially on the little big planet franchise and they're fantastic fantastically talented 35 full-time employees in khartan were then incorporated into thunderful development and then today we're very happy to announce our new colleagues at head up a which is a game publisher and developer and distributor that is operating out of Duren which is next to Cologne in Germany there 15 full-time employees they've been been going about their business since 2009 and we believe that together we are going to achieve great things not the least when it comes to M&A because I think we can as we are expanding our into uh into other countries we will be in touch with a lot of developers that we weren't in touch with before so i think you could sum it up by saying that add-on acquisitions are and will remain an important enabler of fundable strategy and future growth this is something that we are going to continue to do vigorously next slide please let's go to slide six and anders do you want to do this