U.S. markets closed

Edited Transcript of EMBRACb.ST earnings conference call or presentation 14-Feb-18 8:00am GMT

Q4 2017 THQ Nordic AB Earnings Call

Stockholm Jun 15, 2020 (Thomson StreetEvents) -- Edited Transcript of Embracer Group AB earnings conference call or presentation Wednesday, February 14, 2018 at 8:00:00am GMT

TEXT version of Transcript

================================================================================

Corporate Participants

================================================================================

* Lars Wingefors

Embracer Group AB (publ) - Founder, CEO & Director

================================================================================

Conference Call Participants

================================================================================

* Oscar Erixon

Carnegie Investment Bank AB, Research Division - Financial Analyst

================================================================================

Presentation

--------------------------------------------------------------------------------

Lars Wingefors, Embracer Group AB (publ) - Founder, CEO & Director [1]

--------------------------------------------------------------------------------

Thank you, Oscar. I'm really happy this morning. I'm really happy being here presenting these 2 things today. I will probably start, for you, the least interesting thing, however, there is still the record year of THQ Nordic 2017 and the Q4. So let me grab this pointer, oops. So our financial performance in Q4 has been driven, obviously, of our new releases. Our net sales increased almost 100% over the same period last year, up to SEK 255 million. The EBIT margin has been 40%, which is about in line with the previous year, and the EBIT number for the Q4 was SEK 102 million compared to SEK 50.6 million last year. And looking at the full year number, we exceeded SEK 500 million and reached SEK 507 million for the full year compared to SEK 302 million last year. And for the full year, we had 71% in gross margin profit compared to the 61% last year. And looking at -- what I'm really driving the business on is the EBIT margin, really how much money you're making. And that number is up to SEK 188 million for the full year compared to SEK 95 million last year. That is an EBIT margin of 37%. And cash flow from the operating activities has been increasing about in the same level as the EBIT.

Looking at the net sales breakdown for the quarter and for the year. We had in the quarter of Q4, a profit margin of 73%. And it's obviously driven by all the new releases where you have higher margins. And if you note here, the physical sales in the quarter is up to 60%, and the digital is 40%, which is a bit lower than the previous quarter, but that is driven by all the new releases. However, the new releases of physical products still have a, I would say, fairly good margin.

So in Q4, 82% of the sales came from our own titles, and only 18% from the publishing titles, which is a new record number. And 74% of the sales in the Q4 came from new releases versus 24% for catalog. So obviously, the whole organization really focused on bringing out this 11 new products on the market.

And a bit on the KPIs. You can find all the KPIs in the back of the Q4 reporting. But the depreciations of IPs are fairly in line, SEK 3.8 million. Game development is the very much increasing number, which in the quarter are SEK 43.4 million, which is obviously driven by all the new releases. And just to remind you, we're having the same model for all our releases. So 33% of the development are depreciated the first quarter, 33% remaining nine months, so 2/3 of the full development first year and then 33% the last second year. We continue to invest even more into the future. So the investments in game development and royalty advances were NOK 93.2 million. And also the capitalized internal development, meaning really the burn rate of our own studios, the 7 owned studios, which has been increasing considerably are now SEK 33 million for the quarter. And the KPI of completed development, meaning the capitalized investments into development that are finished are put into the balance sheet, and then that number are -- stopped being depreciated.

So just shortly on the new releases for Q4, we had a significant release activity in the quarter with 11 releases, which 9 were our own IPs. Just to run them through very quickly. We had our publishing title Battle Chasers by the Darksiders' creator, Joe Madd, shipping on PC, PlayStation 4 and Xbox One. We had our semi global launch of The Muscle Hustle, the second major mobile title we're having. We had the last installation of We Sing Pop on PlayStation 4 and Xbox One. We had the semi-sequel, meaning kind of for the fan base follow-up to gothic of ELEX releasing in Q4, and that was obviously our biggest release for the quarter and biggest investment for Xbox One, PS4 and PC. We had This is the Police, the IP we acquired the previous year on Nintendo Switch. We had the sequel of Black Mirror, kind of Black Mirror 4, but it's just called Black Mirror. On PS4, Xbox One and PC. We had a very small asset care release on PC, called Sphinx and the Cursed Mummy. That is actually published by THQ back in the days, so I'm kind of glad for that. And we had a sequel in the end of the quarter in December of SpellForce 3 that were developed in our own studio in Munich, Grimlore Games. We had the asset care title de Blob, previously from THQ, Xbox One, PS4. We had our first original IP title from Black Forest Games called Fade to Silence, which is a survival game in winter settings, that is currently in semi release in early access on Steam, which is due out on all other formats later on.

And finally, we had a surprise release made in [shadow] of the expansion pack of Titan Quest, the 11-year old IP we owned that previously was owned by THQ called Titan Quest Ragnarok that actually made a really good success without any previous announcement. And announcements we made were -- also coming back to Titan Quest, for the future of Titan Quest, we also announced we will port it into the console platforms, PS4; Xbox One to start with, coming out this quarter, Q1 2018; and on Nintendo Switch later on.

And I'm really glad we made the deal to acquire Experiment 101 with -- headed up by Stefan Ljungqvist, that having this fantastic new product called Biomutant that are supposed to launch in the future. We paid a consideration in a number of SEK 75.3 million, a mix of cash and shares. And we have a smaller earn-out based on the performance. So so far, the performance in the development are really nice to see.

So a bit of the future, the pipeline. Here is a selected announced projects as of December 31. So as you know, we have a well invested pipeline for the future. We have Battle Chasers coming out on Switch, which I think quite a few of the fans really looking forward and waiting for. Then we have Darksiders III that were announced last May, that obviously we have a lot of fans waiting for currently announced for Xbox One, PS4 and PC. We have MX vs ATV All Out that are now confirmed to release, the 27th of March in this quarter, which is totally new from the ground up built gaming Unreal 4, made in our own studio in Phoenix, Arizona. And well, I'm really looking forward to actually bringing out something new. Biomutant, as mentioned. Aquanox, an older -- one of the first IPs we acquired from JuWooD, coming out on Xbox One, PS4, PC later on. The Guild, whenever that is finished in a final version later on PC. We have also, again, myself really enjoy seeing and playing Wreckfest, which is kind of the [full crest] made of the totally crazy Finnish guys at Bugbear. They -- if you follow the game on Steam, we have made a really good process of updating the game. The game has been on early access for 4 -- at least 4 years, so fans has been -- but have now we're actually supporting Bugbear to bring the product into the next level. And when that is done, it will be released on PC and then later on, on PS4 and Xbox One. It's a fantastic game. Titan Quest, obviously, as mentioned on the console formats.

In total, we had 36 products. In our development pipeline by end of Q4, whereof 12 were announced by that date and 24 was unannounced by the date. So that's a fairly stable pipeline of products.

So well, that's the Q4. So Oscar, I don't know if you want to say something, otherwise, I will continue what you are waiting for.

--------------------------------------------------------------------------------

Oscar Erixon, Carnegie Investment Bank AB, Research Division - Financial Analyst [2]

--------------------------------------------------------------------------------

Well, perhaps we can discuss the Q4 a little bit first? Or do you want to go through the acquisition first?

--------------------------------------------------------------------------------

Lars Wingefors, Embracer Group AB (publ) - Founder, CEO & Director [3]

--------------------------------------------------------------------------------

No, go ahead. You can take a few questions on Q4.

================================================================================

Questions and Answers

--------------------------------------------------------------------------------

Oscar Erixon, Carnegie Investment Bank AB, Research Division - Financial Analyst [1]

--------------------------------------------------------------------------------

Okay. Excellent. Well, very strong growth, as we have been through. Overall, are you satisfied with the result and what do you see for 2018 in terms of your...

--------------------------------------------------------------------------------

Lars Wingefors, Embracer Group AB (publ) - Founder, CEO & Director [2]

--------------------------------------------------------------------------------

Well, starting with the results of Q4, I think, is stable. I think it's in line with my own expectation and the management expectation. Obviously, a few titles could have performed much better. Reviews could have been much better. Our quality process of bug fixing could have been much better. So we are still a very small team in THQ Nordic Vienna, and they make a lot of products compared to other companies in the industry, as you will see. So I think we have a process to just become even better in the future, executing our releases that could actually add to the future revenue and profit.

--------------------------------------------------------------------------------

Oscar Erixon, Carnegie Investment Bank AB, Research Division - Financial Analyst [3]

--------------------------------------------------------------------------------

Okay. And as for the games that you weren't perhaps as satisfied with, what games are those?

--------------------------------------------------------------------------------

Lars Wingefors, Embracer Group AB (publ) - Founder, CEO & Director [4]

--------------------------------------------------------------------------------

I think Black Mirror is one standing out. It's not a huge investment, but I'm just getting a bit upset myself on failing on a few points there. However, and overall, 11 releases, I think the performance is fine.

I think ELEX stood to expectations. It did well against the fan base in Central Europe, Russia. It didn't break through in America. It's a really hard game. It's harsh. You need to be beaten for 20 hours before actually enjoying it. It's not really something you jump into for a few minutes. So it's hard core. However, there is a very good experience in the game. So on a long-term basis, I'm confident it's a good investment and not only in Q4.

--------------------------------------------------------------------------------

Oscar Erixon, Carnegie Investment Bank AB, Research Division - Financial Analyst [5]

--------------------------------------------------------------------------------

Okay. And generally, you have received quite good reviews. But I guess ELEX is one of those that hasn't really reached the level

--------------------------------------------------------------------------------

Lars Wingefors, Embracer Group AB (publ) - Founder, CEO & Director [6]

--------------------------------------------------------------------------------

As you see in -- some ELEX are up in the 80s or up to 80, but then you have American fans are giving it 40, which on Metacritic, average out to, whatever, 68. I don't think Metacritic is a good metric to decide if ELEX is a good game. It's a very polarized fan base. Either you love it or you kind of don't understand it and kind of hate it, yes?

--------------------------------------------------------------------------------

Oscar Erixon, Carnegie Investment Bank AB, Research Division - Financial Analyst [7]

--------------------------------------------------------------------------------

Yes. And you also released The Guild 3 that was in Q3. What's the status of that game now? Was it early access in...

--------------------------------------------------------------------------------

Lars Wingefors, Embracer Group AB (publ) - Founder, CEO & Director [8]

--------------------------------------------------------------------------------

The development, that was one, I would say, the first product we start development on in our company history. And that has been a far too long process. We learned a lot. We can do it much better. We have a plan how to take it forward. We -- I still believe there is a huge market for the fan base and the kind of niche it is in. And commercially, the game on early access has been doing okay. So financially, it's okay for us. However, my own expectation, I would say, is a bit higher on the quality level at early access.

--------------------------------------------------------------------------------

Oscar Erixon, Carnegie Investment Bank AB, Research Division - Financial Analyst [9]

--------------------------------------------------------------------------------

And you really pushed the envelope on investments in 2017, I have to say. What can we expect going forward? Will the pace continue at this level?

--------------------------------------------------------------------------------

Lars Wingefors, Embracer Group AB (publ) - Founder, CEO & Director [10]

--------------------------------------------------------------------------------

You mean the investment in development?

--------------------------------------------------------------------------------

Oscar Erixon, Carnegie Investment Bank AB, Research Division - Financial Analyst [11]

--------------------------------------------------------------------------------

Yes, development, investments.

--------------------------------------------------------------------------------

Lars Wingefors, Embracer Group AB (publ) - Founder, CEO & Director [12]

--------------------------------------------------------------------------------

Yes, the story goes on. We are continuing adding new development projects and -- but obviously, we're carefully managing not only the investment in terms of money, but how many products we actually could manage. And that is a bottleneck. And we might have solutions, various solutions for that going forward. But bottlenecks of the organization is one thing that limits our investments and also a bottleneck of actually finding development resources for our key IPs. A few of our IPs, perhaps there is only 1 or 2 or 3 teams in the world that are able to pull such game off. You need to wait for the right people to get excited and ready. That could take many years, 5 years, 2 years, 10 years, I don't know.

--------------------------------------------------------------------------------

Oscar Erixon, Carnegie Investment Bank AB, Research Division - Financial Analyst [13]

--------------------------------------------------------------------------------

We'll come into acquisition more later, but is it -- is this -- could this be a way to sort of solve the bottleneck more capacity in general?

--------------------------------------------------------------------------------

Lars Wingefors, Embracer Group AB (publ) - Founder, CEO & Director [14]

--------------------------------------------------------------------------------

Yes. I've been stating that before, obviously, bottleneck could be solved partly with acquisitions, yes?

--------------------------------------------------------------------------------

Oscar Erixon, Carnegie Investment Bank AB, Research Division - Financial Analyst [15]

--------------------------------------------------------------------------------

It's a big way to solve the problem. And I mean, Q4, obviously, very back-end loaded year, 2017 now in Q4. Can we expect something similar in 2018? Or...

--------------------------------------------------------------------------------

Lars Wingefors, Embracer Group AB (publ) - Founder, CEO & Director [16]

--------------------------------------------------------------------------------

I think we have a history of releasing products late in the year, looking back in the numbers. And it looks like it will be the same going forward. It's hard to predict exact release days, and I'm not communicating that really. But obviously, the market are peaking, especially console in Q4. So if you can break that through, you, in theory, could have a higher sales, but partly it's a higher risk because the competition is higher. But in the end of the day, to be honest, it's all about making the game ready to launch and to have it in the quality needed to actually have a success and that will be even important factor for us in the future to get the best return of investment. We need to wait until the products are good enough or perfect, whatever you can call it, to release, yes? We need to take that investment of not being pushed by you as analysts and others, yes?

--------------------------------------------------------------------------------

Oscar Erixon, Carnegie Investment Bank AB, Research Division - Financial Analyst [17]

--------------------------------------------------------------------------------

I mean how do you feel about that constant pressure of expectation because it's constantly...

--------------------------------------------------------------------------------

Lars Wingefors, Embracer Group AB (publ) - Founder, CEO & Director [18]

--------------------------------------------------------------------------------

I'm enjoying to manage the business, yes? So I have various things I could tune on to manage this so...

--------------------------------------------------------------------------------

Oscar Erixon, Carnegie Investment Bank AB, Research Division - Financial Analyst [19]

--------------------------------------------------------------------------------

So as for 2018, can you say something about what games are closest to be ready for the market?

--------------------------------------------------------------------------------

Lars Wingefors, Embracer Group AB (publ) - Founder, CEO & Director [20]

--------------------------------------------------------------------------------

No. The only thing I can say is MX coming out in March and Titan Quest is coming out in this quarter. And you have a release list in Q4 report here. That's it really. Then the daily business operations in Vienna are communicating various release dates being updated all the time. So I can't really say anything more about that. Sorry.

--------------------------------------------------------------------------------

Oscar Erixon, Carnegie Investment Bank AB, Research Division - Financial Analyst [21]

--------------------------------------------------------------------------------

Fair enough. And a 2-part question. Which games are you most excited about 2018? And what game do you think has the largest commercial success potential?

--------------------------------------------------------------------------------

Lars Wingefors, Embracer Group AB (publ) - Founder, CEO & Director [22]

--------------------------------------------------------------------------------

Again, I don't want to talk 2018. What games I'm excited about, I can talk, yes? Then I'm excited, obviously, of all our games, but most perhaps likely Darksiders III, Biomutant and there might -- Wreckfest, especially, and perhaps a few of the 24 not announced games I could be also excited on.

--------------------------------------------------------------------------------

Oscar Erixon, Carnegie Investment Bank AB, Research Division - Financial Analyst [23]

--------------------------------------------------------------------------------

And I mean, it's quite remarkable with the share of sales from physical still for THQ Nordic. It's quite unusual today to see that level.

--------------------------------------------------------------------------------

Lars Wingefors, Embracer Group AB (publ) - Founder, CEO & Director [24]

--------------------------------------------------------------------------------

I think that is a wrong perspective in market is all just all going digital. For us as an IP holder and developer, it doesn't really matter if it's physical or digital and what channel it's sold in. The margin is great. You just need to make good products and we make sure distributed in all the relevant channels. That is what's driving our profit.

Now physical is a really relevant channel when you do console gaming. And it's even more driven now by the release of Nintendo Switch. We could see up to 80% of our incomes on Nintendo Switch products are physical. Nintendo Switch players, they would like to buy the physical thing. And it partly is a technical thing because you don't have the capacity to download full games. You need to buy new memory sticks or you cannot buy this game, yes? So I think the market for -- in my horizon, 3 to 5 years, at least, will be stable in the physical market. And I'm quite confident there will be a physical market in many more years than people think.

--------------------------------------------------------------------------------

Oscar Erixon, Carnegie Investment Bank AB, Research Division - Financial Analyst [25]

--------------------------------------------------------------------------------

Now let's talk about Nintendo Switch for a bit. I mean it has been a fantastic success for the company. What do you see in the potential for you guys on Nintendo? You've obviously announced a lot of projects...

--------------------------------------------------------------------------------

Lars Wingefors, Embracer Group AB (publ) - Founder, CEO & Director [26]

--------------------------------------------------------------------------------

Yes, you can see some -- I'm trying to make a challenge of shorter press releases ever, announcing titles now almost on a weekly basis in the past weeks here. But we have a huge catalog of assets and IPs we can bring on Switch. So obviously, that will be constantly made. It's more of a challenge when talking news, big titles, especially if they are developed as a very high resolution, high-spec game from the beginning. Then it's a considerable work to actually make the Formula One of releasing products to make a simultaneous release on all platforms at the same time. So we are working on this. And obviously, Switch is a great revenue generator. So for sure, we will work on Switch for the years to come.

--------------------------------------------------------------------------------

Oscar Erixon, Carnegie Investment Bank AB, Research Division - Financial Analyst [27]

--------------------------------------------------------------------------------

Okay. Should we go over through to the acquisition? Do you have a presentation, or just...

--------------------------------------------------------------------------------

Lars Wingefors, Embracer Group AB (publ) - Founder, CEO & Director [28]

--------------------------------------------------------------------------------

Yes, yes.

--------------------------------------------------------------------------------

Oscar Erixon, Carnegie Investment Bank AB, Research Division - Financial Analyst [29]

--------------------------------------------------------------------------------

Okay. I'll let you take over there.

================================================================================

Presentation

--------------------------------------------------------------------------------

Lars Wingefors, Embracer Group AB (publ) - Founder, CEO & Director [1]

--------------------------------------------------------------------------------

Thank you, Oscar. So well, again, just making such a deal as this takes quite a lot of time. And it's about timing, and it's been a tight process. We signed this deal in the morning in Vienna today. So the history behind THQ Nordic and Koch Media varies. As you know, I've been in this industry for 25 years, and Koch Media has always been a player, especially the past 15 years. So it's very much global, and especially, European company that are linked everywhere in the industry with other publishers, with their own products, with people. I have employees that are working there. There is always links to this.

I've been knowing Klemens, the founder, Dr. Klemens Kundratitz, for many years. And that, obviously, has been more intense the past half year. They are a major player. Or -- and I think it's a really good fit between the companies.

We have a few things in common. One thing being in the THQ Inc. process 2013 when they went under on NASDAQ. The big IPs of THQ were acquired by a few big industry players and one being Koch Media and Deep Silver, the other ones being Take-Two and Ubisoft and a few others. And then we made the last deal of taking everything else on a plate. I didn't have enough money to be with the big guys. So that was a few months before. So it's really glad to have this THQ IPs back into the THQ kind of family.

The process has been, as I like it, you start doing a business with someone. You start to learn with someone. And we started the business relation with Koch Media, well, early last year in the spring 2017, where we chose to pick Koch Media as our publishing partner for certain territories in Europe, being the German-speaking language, the Italian markets and the Benelux countries just to try out, how are they paying in time, all these things. And we were really happy. We could see they can do more business on our products than our current setup.

So then, obviously, we get I visited Volition myself, the development studio in Chicago, right before E3. And I start having a few ideas, yes? Obviously, I had this idea long before, but with Klemens, and then we start talking. But this whole thing became a reality in the end of 2017, November. Koch Media were owned by -- Dr. Kundratitz is the founder, however, he's not been the majority shareholder. So the majority shareholder is a private, older person in Austria that's kind of wanted to find a new home for this business, yes? It's a massive amount of employees. There is -- so he want to find someone that could take care of it, yes? And I could really see that we could take care of it and invest into the future.

And then, well, it was a very short process of deciding the terms. And then when deciding the kind of terms, I hired the, hopefully, the best advisers, Carnegie, Baker and a well-reputated accounting firm to actually do this, to deal again this valuation. Always, you need to do in the proper way, and adopt this morning, signing in Vienna. So that's the process, yes?

You need to remember, Koch Media found in 1994, has been profitable since foundation every year, but hasn't really paid any dividend out from the company. I think they paid EUR 10 million ever, that's it. So it's a really solid business on the balance sheet and financial settings.

But they had a major issue in 2017. They had the very big investment into Agents of Mayhem, which were a title developed by Volition, the Saints Row developers. So -- and that totally bombed or flopped when released in August last year, selling not a lot of units, because they really failed on delivering, I don't know, to the fan base. I think the game is okay, but it's not the Saints Row, and the fans wanted that kind of game. So that resulted in almost EUR 50 million or EUR 47 million only that year, EUR 47 million write-down in impairment test, which is really hitting the P&L. So financially, they had the first loss year ever.

Obviously, I'm buying into this because I really believe in all other businesses they have. And I can promise you, I'm not -- won't really make Agents on Mayhem 2, yes? So most likely make something else. Volition is a great team. It's a really talented studio. And I really believe it were the right moment for us to come in here, make this deal and work with them in the future to execute their business plan because they are really talented. They have a great business plan, lineup of products, and their growth will really be generated just by execution of these 4 AAA titles we are communicating today.

So Koch Media is huge, yes? So you will have a lot of information here, yes? So as stated, they have a AAA IP rights in Saints Row, Dead Island. I would say it's above our current lines of IP, Darksiders-type. I wouldn't talk about Biomutant, I don't know. But Saints Row is a very established IP. You will see later on in the presentation, and Dead Island, yes? Dead Island were kind of their own first really good success, and they made a lot of money on that, 2011 and onwards. And then they have the long-term license, exclusive license for games for the Metro brand. Metro is a very famous science fiction book series made by the Russian author, you can read here. Now its amazing books and its amazing series -- and the series, the first game was made under the flag of THQ Inc. So Koch Media acquired the license for Metro, or the game assets, and then Saints Row on Volition from THQ.

Again, so they have 4 AAA titles in production. Then that is including the Metro Exodus, coming out 2018, and Dead Island 2 that will be coming out in the future. They have 2 AAA studios, which is way bigger than we have currently, one being Volition and one being Deep Silver Dambuster Studios. Then they are the #1 publishing partner in Europe for over 50 companies. So they are the biggest player in partner publishing. I will come back to that as well, but we're talking Sega, Square Enix, Codemasters, Paradox along a lot of other industry players.

So for THQ Nordic, they have a very complementary business model. So they have other business models that we have. And they have a very much entrepreneur-driven company. Klemens is an entrepreneur himself. I really enjoy doing business with him, but also his full organization. They have 14 companies. They have considerable companies in all Europe, the U.K., the Nordics, Spain, Italy and so on. And each organization have their own entrepreneurial spirit. So it's a really good fit to us.

Obviously, this deal has a lot of potential revenue synergies. To be honest, we haven't communicated, I haven't counted that on day 1, we can make a huge list. What I'm communicating today, one is we're not really making any headcount cuts. We're not making any restructuring. We will look into these synergies in the future. It's just a huge potential. Both companies, THQ Nordic in Vienna as a publisher and Koch Media with all their companies, will be 2 independent businesses from day 1, with synergies potential in between.

I think earnings per share, it's a fantastic -- or fantastic, sorry. It's a stable deal for shareholders that will bring value. I don't use the word fantastic ever, yes?

So some KPIs on the both companies. So this is not super because -- it's KPIs I will talk you through. The internal development studios, we have 7, they have 3. However, as I stated, they are much bigger in headcounts and our studios are smaller. In total, we will have 10 internal development studios in the new group. External development partners. Again, we have more, we have 18, they have 8. However, they are bigger, not including, for example, 4A Games making the Metro Exodus that has a lot of people on Malta and Kiev. Number of IPs, well that's our core competence, the acquired IPs, so we have a lot of them, yes? We have 91 and they have 15. However, again, they have much bigger IPs if you're talking Dead Islands and Saints Row. And the pipeline for the future. We have 12 announced and 24 unannounced. They have 5 announced and 9 unannounced. Again, they have bigger projects. Headcounts then, talking internal and external, we have 462 end of quarter, and they have 1,181. So in total, we'll have 1,643 people. I think internal employees is about 999, the number I got.

Net sales for the period, and the reason being 9 months is because of Koch Media's financial reporting. For the 9 months, April to December 2017, we had sales of SEK 426 million, and they have sales of SEK 2.5 billion. So the total group over the 9 months was almost SEK 3 billion net sales. And EBIT level, adjusted EBIT, well, it's the same as our normal EBIT, it's SEK 157 million for us and SEK 296 million for Koch Media. That is before the impairment test, extraordinary write-down of Agents of Mayhem. So in total, we have an adjusted EBIT of over SEK 500 million on last year's 9 months.

So there is a high level transaction structure and terms. So THQ Nordic AB in Karlstad, Alvgatan are acquiring a new dormant company called SALEM einhundertste Holding in Vienna. That company are acquiring 100% of the shares of Koch Media holding based in Germany. So then we are getting 100% control of Koch Media operating company based Hofen in Austria, very nice alp village. And our plan is that SALEM einhundertste will be renamed this week or as soon as possible to Koch Media Holding GmbH.

The transaction is -- the purchase price is EUR 91.5 million. I really paid them the cash I had on account with a buffer to run the operating business, and that was EUR 66 million paid today. And then I agreed with the seller, they will have another EUR 16 million in cash, paid no later than 6 months later in August this year. And further, EUR 9.5 million in shares, and the majority of those shares will be held by Dr. Klemens Kundratitz, the Founder and CEO.

The dilution for the current shareholders making this transaction is 1.2%, which is a good number if you are a shareholder. So the total consideration for 100% of the share capital are EUR 121 million in enterprise value. That is -- well, I won't talk you through enterprise value, yes? We have a journalist on the call trying to explain this, but it's all in the press release. Please read it.

The closing, expected to be taking place today. And our aim is to reassess our capital structure in the mother company, to explore potential debt in order to continue being active in value-adding acquisitions. We decided, because we had the funding and we made this construction and we are having a very solid business anyhow going forward. Without this, we decided to wait post-transaction to make this process. Hopefully, we have better terms.

Oscar, you look like you have a lot of questions.

--------------------------------------------------------------------------------

Oscar Erixon, Carnegie Investment Bank AB, Research Division - Financial Analyst [2]

--------------------------------------------------------------------------------

Yes, I do.

--------------------------------------------------------------------------------

Lars Wingefors, Embracer Group AB (publ) - Founder, CEO & Director [3]

--------------------------------------------------------------------------------

Hold on, I will talk you through a bit more.

So here is a new organization setup. So we have now 2 Klemens reporting to me. I actually I have 2 Reinhard as well, it's quite funny. Fantastic persons. So Klemens will continue to run Koch Media as an independent entity. Klemens Kreuzer, our Operating Management Director in Vienna, will continue to run that publishing part.

Yes. Here's a bit of the history of Koch Media. As stated, founded '94. '96, they entered the video games market, I think before they were more in the software business, which were big back in the days. 2002, they launched the Deep Silver publishing brand. 2003, they started with films. 2008, they opened the first U.S. office branch. And then here, you can see the key titles releasing in the previous years. So 2009 were the first year their turnover exceeded or surpasses EUR 300 million.

So 2009, they released the first Risen. And then they made Risen 2 and Risen 3 coming out 2014. And Risen, as you -- most of you or a few of you know, is the IP that was previous to ELEX from Piranha Bytes. 2011, they had a huge success of Dead Island, developed by the great Polish developer, Techland, but they own the IP. And that were generating 2011, '12, 13, a huge amount of revenues and profit for Koch Media.

2013, they made the THQ Inc. transaction, as I told you before. 2014, they acquired Dambuster Studios, along with the IP of Homefront. Homefront was one -- also one THQ Inc. IP that Crytek, another industry player, acquired from THQ. However, they went into some difficulties and Deep Silver was funding the development, ending up Klemens making a deal taking on the development studio and IP. However, that product were released in 2016, and they didn't release it in a good shape. So that didn't become a success. However, I would say, Homefront really are now a good game. However, and especially under the THQ -- yes, it was famous in the days. And 2017, I told you about Agents of Mayhem, I guess coming back to that in a second.

So here's the glance of Koch Media. This is, on the left, the games. They have the publishing label Deep Silver, making the big titles, AAA titles. And they have another label called Ravenscourt that are publishing games. They have a global presence. The 9 months 2017, the Deep Silver business had EUR 68 million in revenues, representing 26% of the total sales for the group. Koch Media, the #1 publishing partner in Europe with 11 offices, had a great year, having EUR 175 million in revenues, representing 67% of the revenues. And the smallest part on the business is the film business, which has a lot of synergies with the partner publishing. It's the independent distributor and coproducer films. They have a huge right catalog of 1,500 products for German and Italy. And they have kind of some niches I like. I'm not a film guy. But when you talk to them, they are really into it, yes? They have some cult classics for a German market, for example. And in Italy, they are really strong on horror movies. So they found their niche in this business. However, it's a EUR 20 million business, representing only 8%. But the majority of the income on the film business are nonphysical, meaning downloading TV, cinemas and et cetera.

So Volition, the highly praised open-world developer with their own tech. It's based in Champaign, which -- size of Karlstad in just south of Chicago, Illinois. They are the leading, I would say, in a few aspects in the open world, especially making kind of destruction things within games, yes, which you can see in our IP called the Red Faction.

After the issues with Agents of Mayhem, they made a restructuring, cutting 50 headcounts and the management partly. They brought back Jim Boone, which is a very senior guy that previously worked in Volition, back to Champaign and to the lead studio, so currently, there are 148 employees.

Yes. So he's here a bit of the IPs. If you're a gamer, you kind of love a few of them here, Descent: FreeSpace, Red Faction, The Punisher and then the Saints Row mixed and ending up with Agents of Mayhem.

Dambuster Studios. Its really origins' back to the '90s. It was a studio called Free Radical Design, which were very famous for certain products in England. And here, again, if you're a gamer, you can recognize TimeSplitters, Crysis published by EA, then now Homefront. It's a very experienced team based in Nottingham, lovely settings and office. Really talented, 108 employees currently.

And then finally, the third and last studio called Fishlabs is based in Hamburg, currently 67 employees. They had a huge success on mobile, winning quite a few awards in mobile gaming. However, because of the mobile gaming challenges the past years of actually breaking through, they decided to move back into console and PC gaming. So they're currently working on a range of products that will be announced in the coming years.

So Metro, a bit of the IPs here. Metro, post-apocalyptic, first-person shooter, first release was 2010 under the flag of THQ Inc. Deep Silver has a separate agreement with the author of Metro, having the rights for Metro. Estimated EUR 95 million in lifetime revenues, 12 million copies sold of the 2 games released. And currently, we have Metro Exodus under development by the external studio, 4A Games, which is a really good and talented team, origins from Ukraine.

So actually, I will show you just a very short trailer that were a big boom at E3 last year, and I actually was in the audience and just feeling, wow. So here we go.

(presentation)

--------------------------------------------------------------------------------

Lars Wingefors, Embracer Group AB (publ) - Founder, CEO & Director [4]

--------------------------------------------------------------------------------

There is quite a few fans across the world waiting for this. There's also quite a few fans for Dead Islands. We estimate there is 14 million copies sold of Dead Island. It really has been 1 game, and then they made further versions of it. But it's been one Dead Island game. It's open-world survival, horror setting, one of the first in the zombie era, in a way. We estimate -- or the estimate is EUR 185 million in lifetime revenues in this IP. Dead Island 2 has been under development for quite a few years now by the external studio of Sumo Digital in the U.K. And we have not still communicated a release window for that.

And then finally, Saints Row. Saints Row was a huge success back in the days for THQ Inc. I would say it's one of the few titles or products actually standing up, back down at least against GTA. It's kind of same audience. It's very violent, but it's also with a lot of humor. It has -- just to give you some color on that, it has estimated $600 million in lifetime revenues. You can compare that to the Darksiders and the Metro, for example, which is much lower. It has 32 million copies sold lifetime on all platforms. As you see, the Metacritic for journalists and from the fan base has been fantastic on the 4 games they've made.

And here is the last slide -- or coming back to the problems. Agents of Mayhem, again, released 2017, only EUR 19 million lifetime revenues and only 300,000 copies sold on all platforms. And really, what's the reason? We can talk a lot about that. But I think the expectation from fan base and also perhaps using the name of, say, Agents of Mayhem rather than actually building on a Saints Row IP, it was decision that perhaps would have been doing different.

The impairment write-down of Agents of Mayhem and Homefront investments has been EUR 87 million. Homefront did fairly better, however, not at all, according to expectation. EUR 33 million in lifetime revenues, 1.2 million copies sold lifetime. Really, the game wasn't finished when releasing, which were hitting the Metacritic, hitting the fans, people were angry. But if you look at the game today, I think it has its nice part. It was released 2017.

So Deep Silver has a strong pipeline of new games. And here is the announced products, starting with Kingdom Come: Deliverance. Kingdom Come: Deliverance is developed by a Czech developer called Warhorse, which has really good development base doing this such games. It's a huge game, huge game. It's released yesterday on Stream, and it's topping Stream. And well, you can look at the chart this week in Europe, yes? It's a publishing title. It's not their own IP, but it's a good publishing title of Deep Silver. It's a niche product in a way, however, there is a big audience for it. I like it.

They have Dakar, coming out 2018. Metro, I told you about this year. Dead Island 2, in the future. And then they have another if you're a gamer, it's a product you have to love, it's Shenmue, which were an amazing game from Sega, recent Dreamcast, back in the days. Actually, I remember selling this kind of semi exclusive in Nordic, like 15, 20 years ago, thanks to [partner area]. So Shenmue III is developed by a small indie team that -- what I understand is from partly the creators from Shenmue in Tokyo, Japan. So coming out in the future. And then have 7 other pipeline projects. And then the 2 top secret, next AAA title from Volition coming out in the future and the next AAA title from Dambuster coming out in the future. Not announced --

Number one European publishing partner. Again, it's not about only shipping products. They have a very good team actually replacing the local competence of the publisher. So it's a lot about PR, local marketing in all the languages, strategic planning how to launch a product. This is very complex material how to actually launch a global product. And there is a lot of publishers in the world, and not everyone could have their own setup in all countries, yes? So they are the #1 partner with all -- more than 50 players across the industry.

They have a huge operations based in Hofen in this small village, which is very nice, again. But it's actually serving Continental Europe within 24 hours, except Spain where they have their own operations in Madrid. And in the U.K., they have an external partner for operations.

And selected key partners they're working with is Bethesda, -- this is -- all partners is not for all countries. So if you are publisher, you can really pick and choose what service you like in what countries you like. A few of them are for the whole Europe, a few of them are just for 1 or 2 countries. For example, THQ Nordic, we picked them last year for 3 countries.

So one partner being Bethesda, Capcom, Codemasters, with -- they have a great relationship doing this Formula One and Rally games, for example. Their own products, Deep Silver and the margin, obviously, for Deep Silver products are within in this business group, yes? The Focus Home Interactive in Paris; Kalypso, the great German publisher; Koei Tecmo, Japanese; Milestone doing racing games from Italy; Paradox here in Stockholm, Rising Star Games, doing the niche Japanese games based out of U.K. and Kungsbacka; Sega, I don't have to tell you what Sega is. So a lot of great British publisher. Solutions 2 Go, they're publishing this, the Ark, the product that has been successful on Steam, on console; Square Enix being one of the major players, obviously, with everything from Final Fantasy to Just Cause and many other products; and then obviously, the great THQ Nordic and many others.

I have to say, it's not only about shipping day 1 physical discs. They have a range of non-digital products, being accessories, being merchandise, collector editions with figurines. They have this Commodore 64, C64 Mini stick releasing globally in March that sold out within a few days, if you look on Amazon coming out in a few weeks.

So here's a slide of the revenues, going back. So you can see that the total revenues has been fairly in the same level, yes? But what's happened in difference is the business grew areas, yes? So they had this huge success. You can't see the years before here, but they have this also this huge success of Dead Island, and then the THQ deal with Saints Row making a lot of money, yes? And then they had the issues with Homefront and Agents of Mayhem last year and the year before. But the partner publishing at the same time has been increasing and they had the best year almost or what we can see here, 2016, '17, and '17, '18. And film business has been stable. They've been trying to -- they did try to get to film into the U.K., but they left the U.K. film market. Now it's just Germany and Italy.

So the post deal setup. Again, each organization maintains a full operational focus on executing its own business plan. Not only 2018 but obviously, that business plan continues for quite a few years, and that we've been working in detail with Koch Media to make sure we actually have a plan. We have no cost savings program planned. We have no operational changes to each entity management. The primary focus is just to continue with your current plans, continue executing because both organization has a huge pipeline of products and partners they need to execute on. That's the most important thing.

Obviously, in the future, we're talking on synergies here. We will have a much, as a group, stable platforms to handle bottlenecks, as you say. And there is potential synergies, for example, with partnerships for IPs within the group, yes? One obvious things without -- I'm not saying is I'm not announcing anything here, but one obviously can think of is Red Faction being made by Volition in the past, yes? Or another thing is Risen they are selling is being made by our partner, Piranha Bytes. There is a huge things similar to that you can look into.

Development, capacity and tech usage across the group. Obviously, the distribution power of Koch Media and the THQ Nordic product could, in theory, improve our margins and revenues by adding that. And they have a lot of office organizations that we don't have. For example, a big legal department and many other things.

Going forward, I see they have a stable business as it is. But I see the margin improvements could be realized by further copublishing deals with partners, licensing of products for Europe and global and more publishing products as long as adding a proactive acquisition approach. They have not had any acquisitions again, really, the past year or years. And adding that could bring value to the shareholders of the listed company.

On the organization level, again, THQ Nordic and Koch Media will be 2 separate entities, but will be consolidated in the mother company listed. The first quarter report will be on the same day as the AGM, the 16th of May. We will consolidate the business from February. We will propose, and after discussions at Board and together with the companies, to change the name of the listed THQ Nordic. The reason being is I want to -- it's many reasons. But one reason, I want the entities has their own independence. And I don't want the public listed company to be influenced by what's happening on the end consumer bit. So I don't see this business -- the deal in the industry is not really the THQ Nordic Vienna are acquiring Deep Silver. It's really the owner of THQ Nordic Vienna are acquiring Koch Media and Deep Silver.

Pro forma. I think I've been talking through the net sales and the adjusted EBIT, the financial -- just a bit on the financial position. No capital are being taken out from Koch Media, pre the transaction neither post the transaction. So we're just buying the shares. So they're not paying a dividend or anything. So I was really keen to -- they will maintain their business and very solid balance sheet as they are.

We actually, in the group now, has a larger working capital facility today than we had yesterday. So we have approximately SEK 800 million in working capital facilities, which is according to our analysis, more than well enough to run their business and do the deals they want in a daily manner. However, again, we will assess -- reassess the possibility at the mother-company level to take on new -- a small bit of loan if the terms are right. We have the balance sheet to support that with the right terms, hopefully. So we have a very comfortable financial position in the group.

[Legal short] and the appendix. Time is now 5 past 10. So I'll stop talking, yes? If you have any further questions, especially on the financials, you're very welcome to e-mail me at ir@thqnordic.com, and I will make short reply on you because there might be questions on the balance sheet and P&L. So Oscar?

================================================================================

Questions and Answers

--------------------------------------------------------------------------------

Oscar Erixon, Carnegie Investment Bank AB, Research Division - Financial Analyst [1]

--------------------------------------------------------------------------------

Let's start with a few questions from me and then perhaps a few quick questions from the audience as well. So first of all, it seems like Koch Media has a lot of plans already for maybe the coming 1 to 2 years at least. But you intend to...

--------------------------------------------------------------------------------

Lars Wingefors, Embracer Group AB (publ) - Founder, CEO & Director [2]

--------------------------------------------------------------------------------

I would say, in this industry, you need to be longer than 1 to 2 years, yes? It takes 3 years to make a game. I would say you need to have a much longer business plan than 1 to 2 years. So they have the -- and I'm confident in their business plan.

--------------------------------------------------------------------------------

Oscar Erixon, Carnegie Investment Bank AB, Research Division - Financial Analyst [3]

--------------------------------------------------------------------------------

Okay. I think I read something about that. There's been a lot of changes recently, I guess, perhaps because of the gains that didn't perform that well recently. Is that the case?

--------------------------------------------------------------------------------

Lars Wingefors, Embracer Group AB (publ) - Founder, CEO & Director [4]

--------------------------------------------------------------------------------

They restructured Volition, change management Volition, downsized the headcount. Not necessarily all relates for Agents of Mayhem. I think it's quite normal. If you have a AAA development and it's finishing off, you normally had a few headcounts leaving anyhow because you need to change the team or people are leaving. But they made kind of a semi restructuring in the summer or just right after summer. And same-ish situation at Dambusters Studios when releasing Homefront, especially on the management side.

--------------------------------------------------------------------------------

Oscar Erixon, Carnegie Investment Bank AB, Research Division - Financial Analyst [5]

--------------------------------------------------------------------------------

And I mean it is a AAA studio company. How do you feel about that when you compare it to THQ?

--------------------------------------------------------------------------------

Lars Wingefors, Embracer Group AB (publ) - Founder, CEO & Director [6]

--------------------------------------------------------------------------------

I think when I have that organization, 1,100 people and 750 employees working on that, they have the competency, and I trust them. And now I can see obviously, they have -- making a AAA game, you need to have total different kind of processes in place, yes? And they learn a lot from the mistakes, obviously. So they implemented what you call a stage-gate process in development, which is very detailed how you actually develop the game. It takes a bit longer time, cost a bit of more money. However, you're taking away a bit of the business risk of development. So all people get together on a regular basis to check is the development going in the right direction of the game or the quality and so on. That's just one example of what they implemented. And we are not working with a stage-grade process at THQ Nordic. I would say that is for the really big guys. You make that when you have products for EUR 15 million, EUR 20 million and up to EUR 100 million or even more, yes?

Now Koch Media is a bigger company than THQ Nordic. I know I say THQ Nordic is a really small player in a huge industry. Koch Media is a bigger player. But we are still in the new group as a small player, yes? The big peers we are having in this industry, as you know, are much bigger corporations, yes? So I still think we are underdogs in a way. I really would like to continue with this growth.

--------------------------------------------------------------------------------

Oscar Erixon, Carnegie Investment Bank AB, Research Division - Financial Analyst [7]

--------------------------------------------------------------------------------

I mean the physical publishing business is huge, and you have a business in that as well, you're strong in physical. What -- how can you use your position in Europe? And what do you see in terms of competition and market share? Did you...

--------------------------------------------------------------------------------

Lars Wingefors, Embracer Group AB (publ) - Founder, CEO & Director [8]

--------------------------------------------------------------------------------

They're #1 player. I would say the market is -- this player has been around for many years. Most players have been around for 10, 20 years. They have 1 main competitor in Europe, so there is 2 Continental Europe players on this. And then there is strong local players in each territory. So that's the landscape of this. It's stable. It's actually a growing business for them. It's profitable. I think it's adding a lot of other values to us. And I have communicated, I expect the business to remain stable in the coming years, yes? And especially within the current life cycle of consoles, I don't see that business being changed, and that especially if you include Nintendo Switch.

--------------------------------------------------------------------------------

Oscar Erixon, Carnegie Investment Bank AB, Research Division - Financial Analyst [9]

--------------------------------------------------------------------------------

And it's -- the publishing business is around 60% roughly, and the games business, 30%. What do you feel in 2, 3 years' time, what do you think the games business should be given that publishing perhaps is more stable?

--------------------------------------------------------------------------------

Lars Wingefors, Embracer Group AB (publ) - Founder, CEO & Director [10]

--------------------------------------------------------------------------------

I have the luxury of not communicating the financial targets on this, yes? I'm just confident they will deliver in the future, yes? The big growth in profit or the growth in profit are not big, the growth. Revenue and profit will be driven by the execution of the AAA releases and the Deep Silver brand.

--------------------------------------------------------------------------------

Oscar Erixon, Carnegie Investment Bank AB, Research Division - Financial Analyst [11]

--------------------------------------------------------------------------------

Can you say something about the profitability in the segments? I mean games is probably volatile, but the other segments...

--------------------------------------------------------------------------------

Lars Wingefors, Embracer Group AB (publ) - Founder, CEO & Director [12]

--------------------------------------------------------------------------------

Taking off Agents of Mayhem, they have stable profitability in all business areas, which is it's a well-consolidated business. And I'm not communicating the exact margins here, I'm expecting to give you more color in the future, especially as you as analysts, you need to be able to track this down. At the Q1 reporting at AGM, I would expect us to give you some more colors on KPIs, yes?

--------------------------------------------------------------------------------

Oscar Erixon, Carnegie Investment Bank AB, Research Division - Financial Analyst [13]

--------------------------------------------------------------------------------

Okay. One last question from me for now, and then I'll leave it to the audience. With the acquisition, obviously, the balance sheet changes quite a lot. You mentioned debt to finance perhaps at a later stage. How will the cash flow be in the new company? And how will it affect further acquisitions going forward?

--------------------------------------------------------------------------------

Lars Wingefors, Embracer Group AB (publ) - Founder, CEO & Director [14]

--------------------------------------------------------------------------------

First of all, I see cash as 2 separate things, one being the working capital facilities you need to have to run the businesses, then it's the cash pool of what you can use for acquisitions. Partly can mix it, but in a way, 2 different things. The cash flow in the past of Koch Media has been invested into the development. And because of the failure of Agents of Mayhem, really, you can look at the cash flow they generated has been eaten up by the Agents of Mayhem and Homefront failure. Well, going forward, they have invested already a lot of money into the current pipeline, including the game title release yesterday and a lot of these new products coming out. So that quite -- a lot of investment is already taken. But obviously, from this morning, we have a daily investment into the current development pipeline. I can't really give you any future cash flow projections more than that.

--------------------------------------------------------------------------------

Oscar Erixon, Carnegie Investment Bank AB, Research Division - Financial Analyst [15]

--------------------------------------------------------------------------------

And just the intangibles in the pro forma numbers, SEK 1.2 billion, roughly. And you have around SEK 300 million, EUR 400 million yourself. Is that mostly for the games business than for Koch Media?

--------------------------------------------------------------------------------

Lars Wingefors, Embracer Group AB (publ) - Founder, CEO & Director [16]

--------------------------------------------------------------------------------

Yes.

--------------------------------------------------------------------------------

Oscar Erixon, Carnegie Investment Bank AB, Research Division - Financial Analyst [17]

--------------------------------------------------------------------------------

Okay. Any questions from the audience? All crystal clear? Do we have any calls?

--------------------------------------------------------------------------------

Operator [18]

--------------------------------------------------------------------------------

(Operator Instructions)

--------------------------------------------------------------------------------

Oscar Erixon, Carnegie Investment Bank AB, Research Division - Financial Analyst [19]

--------------------------------------------------------------------------------

No calls? Okay. Perhaps a few last questions for me then. You mentioned revenue and cost synergies, but it feels like for now, perhaps it's get the things done that's currently going. Do you see potential for, perhaps, slimming down the organization at a later stage? I mean 1,100 employees.

--------------------------------------------------------------------------------

Lars Wingefors, Embracer Group AB (publ) - Founder, CEO & Director [20]

--------------------------------------------------------------------------------

Koch Media is a growth business, they are set up to deliver growth, yes? And if they are executing on that business plan, I don't see there is a need to make headcount cut, yes? But obviously, it could be synergies anyhow between the companies, yes?

--------------------------------------------------------------------------------

Oscar Erixon, Carnegie Investment Bank AB, Research Division - Financial Analyst [21]

--------------------------------------------------------------------------------

And can we get some flavor perhaps on the unannounced titles, the split between publishing and own development?

--------------------------------------------------------------------------------

Lars Wingefors, Embracer Group AB (publ) - Founder, CEO & Director [22]

--------------------------------------------------------------------------------

Well, it's a good mix. 50-50.

--------------------------------------------------------------------------------

Oscar Erixon, Carnegie Investment Bank AB, Research Division - Financial Analyst [23]

--------------------------------------------------------------------------------

And the film business, do you see a long-term future for the film business? Or is that up for discussion?

--------------------------------------------------------------------------------

Lars Wingefors, Embracer Group AB (publ) - Founder, CEO & Director [24]

--------------------------------------------------------------------------------

I like the film business. I like to learn before we make any further decisions on the film business, yes? And there is synergies with the film business, and it's part of their DNA. It's profitable. I'm not -- I don't have a plan to divest that. I don't mind, they run their business, deliver profits. I will learn more. I will come back in the future quarter reports on that.

I think if you have any more questions about finishing off this deal, what is this deal? And it's really a thing should you -- what I would like to do, yes? I communicated, I have a huge list of deals I want to make, and this is one of them, yes? You get a lot of assets for this price, and the opportunity for the future is huge. And it was the right moment to make it, yes? And I have great confidence in the business, yes?

--------------------------------------------------------------------------------

Unidentified Analyst, [25]

--------------------------------------------------------------------------------

Could you maybe just comment in what production phase the AAA titles are? Are they pre-production?

--------------------------------------------------------------------------------

Lars Wingefors, Embracer Group AB (publ) - Founder, CEO & Director [26]

--------------------------------------------------------------------------------

Or you start talking the financial forecasting?

--------------------------------------------------------------------------------

Unidentified Analyst, [27]

--------------------------------------------------------------------------------

No, I don't know, if that's what I'm coming from.

--------------------------------------------------------------------------------

Lars Wingefors, Embracer Group AB (publ) - Founder, CEO & Director [28]

--------------------------------------------------------------------------------

No. I can't really give you any color on that, sorry. Okay. Thank you very much. Thank you for coming here.

--------------------------------------------------------------------------------

Oscar Erixon, Carnegie Investment Bank AB, Research Division - Financial Analyst [29]

--------------------------------------------------------------------------------

Thank you.