Financial · November 28, 2022

2022-23 Half-Year Results Up

Published by Nacon

Summary

Nacon reported a significant increase in profitability for the first half of the 2022-23 fiscal year, covering the period from April 1 to September 30, 2022. Total sales reached 77.5 million euros, a 6.2% increase over the previous year, while net income surged by 123.5% to 8.4 million euros. This financial performance was primarily driven by the publishing division, which saw revenues grow by 72.3% to 47.0 million euros. The success of new releases such as Steelrising and Session Skate Sim, combined with a 33.3% increase in back-catalogue sales, offset a sharp 34.7% decline in the accessories segment. The shift in product mix toward higher-margin software publishing resulted in a gross margin of 61.4%, up from 52.1% in the prior year. Despite these gains, the accessories business faced headwinds due to a high base effect in the United States and a global downturn in the headset market. Furthermore, net debt increased to 63.6 million euros, reflecting the 34.1 million euro acquisition of Daedalic Entertainment and rising inventory costs linked to the global electronic components crisis. Looking ahead, the company maintains a positive outlook for the remainder of the fiscal year, though it has adjusted expectations to account for the delayed release of several major titles into the fourth quarter. Management anticipates slight year-over-year growth in sales and operating income for the full 2022-23 period. Long-term growth is expected to accelerate in the 2023-24 fiscal year, supported by a pipeline of 50 games currently in development, including the highly anticipated The Lord of the Rings: Gollum, which is now scheduled for the first half of the next fiscal year.

From the report

Press release Lesquin,28 November 2022, 18: 00hrs 2022-23 HALF-YEAR RESULTS UP • 77. 5 M€ SALES (+6.2%) • 11.1 M€ CURRENT OPERATING PROFIT (+31.4%) • 8.4 M€ NET RESULT (+123.5%) 2022-23 YEAR-END RESULTS EXPECTED TO GROW • THRIVING PUBLISHING ACTIVITY IN HY2 2022-23 NACON (ISIN FR0013482791) today releases its audited consolidated results for 1st Half Year 2022-23 (from April 1, 2022 to September 30, 2022) as approved by its Board of directors on 28 November 2022. Consolidated in M€ - IFRS 09/2022 09/2021 Change Sales 77.5 73.0 +6.2% Gross margin(1) 47.6 38.0 +25.1% In % of Sales 61.4% 52.1 % EBITDA(2) 25.6 21.4 +19.8% In % of Sales 33.1% 29.3% Current operating income 11. 1 8.4 +31.4% In EBITA 14.,3% 11.6% % of Sales Non recurrent items (1.3) (4.0) Operating income 9.8 4.5 +119.2% In % of Sales 12.7% 6.1% Financial result 1.3 0.0

TA 14.,3% 11.6% % of Sales Non recurrent items (1.3) (4.0) Operating income 9.8 4.5 +119.2% In % of Sales 12.7% 6.1% Financial result 1.3 0.0 Earnings before tax 11.1 4.5 +145.2% In % of Sales 14.3% 6.2% Tax (2.6) (0.7) Net result for the period 8.4 3.8 +123.5% In % of Sales 10.9% 5.2% Business and earnings growth driven by the Games business In the first half of 2022-23, Nacon posted revenues of 77.5 M€, up 6.2%, reflecting the growth of its games business. Over the period, this business generated revenues of 47.0 M€ (+72.3%). With the launch in HY1 of several iconic games such as Vampire: The Masquerade®- Swansong, SteelrisingTM and Session Skate SimTM , current catalogue sales more than doubled to 25.4 M€. Back catalogue sales (games released in previous years) also increased by 33.3% to 21.6 M€. Over the first half of the year, Accessories sales amounted to 28.5 M€, down 34.7%. This activity remains marked by a very high base effect, particularly in the USA, and by a sharp decline in the global market for headsets. Gross margin was 47.6 M€, or 61.4% of sales (52.1% in previous year).

er the first half of the year, Accessories sales amounted to 28.5 M€, down 34.7%. This activity remains marked by a very high base effect, particularly in the USA, and by a sharp decline in the global market for headsets. Gross margin was 47.6 M€, or 61.4% of sales (52.1% in previous year). The product mix, with a lower relative weighting of Accessories (37% of total sales versus 60% in previous year) explains this increase in the gross margin rate. Current operating income for the first half of the year rose by 31.4% to 11.1 M€, or 14.3% of sales. Net income amounted to 8.4 M€ (10.9% of sales in HY1 2022-23), more than double the net income generated last year (3.8 M€ in HY1 2021-22).

Strong financial structure and continued investment for growth As of September 30, 2022, shareholders' equity amounted to 241.5 M€, up 1 3.1 M€ compared to the end of March 2022. Cash and cash equivalents amounted to 38.1 M€ compared to 82.1 M€ at the end of March 2022, in line with the Group's determination to reinvest its cash flows in the development of its activities. To date, 50 games are under development, representing CAPEX of more than 30 M€ over the first half of 2022-23. In addition, investments related to external growth transactions (acquisition of Daedalic in April 2022) amount to 34.1 M€ over the same period. Cash-flow for the first half of the year amounted to 27.5 M€, up 31% compared with the first half of 2021-22. With the acquisition of Daedalic and the increase in inventories due to the electronical components crisis, net debt stood at 63.6 M€ at September 30, 2022, compared to 10.4 M€ at March 31,2022 . Confidence reaffirmed in medium-term prospects Sustained publishing activity in the second half of 2022-23 Released on November 3, WRC Generations recorded a slight increase in sales over the first three weeks compared with WRC10, which was released in the previous fiscal year. Many games in the catalogue, some of which were initially scheduled for release in the third quarter, will finally be released in the fourth quarter: • Blood Bowl®3, a game similar to American soccer, set in a fantasy world, a new installment in the succes

in the previous fiscal year. Many games in the catalogue, some of which were initially scheduled for release in the third quarter, will finally be released in the fourth quarter: • Blood Bowl®3, a game similar to American soccer, set in a fantasy world, a new installment in the successful Blood Bowl franchise. • Chef Life, in partnership with the Michelin Guide. • Clash, in the very dynamic fighting game segment. • Transport Fever 2 Console Edition, on PlayStation®4, PlayStation®5, Xbox®One and Xbox®Series. NACON now anticipates sales and current operating income for 2022-23 to be slightly up on the previous fiscal year with the delayed release of several major games, a decline in the Accessories business and tensions in the supply of new consoles. Strong growth expected in 2023-24, driven by current investments In FY 2023-24, NACON will continue to pursue a sustained and varied publishing activity. The 2022-23 releases will feed the 2023-24 back catalogue and will mechanically accelerate growth. The highly anticipated release of The Lord of the Rings GollumTM , an emblematic character from the world of J.R.R. Tolkien from the novel The Lord of the Rings, is now scheduled for HY1 2023-24. Next event: Q2 2022-2023 sales, 23 January 2023, Press release after close of the Euronext Paris stock exchange ABOUT NACON

ord of the Rings GollumTM , an emblematic character from the world of J.R.R. Tolkien from the novel The Lord of the Rings, is now scheduled for HY1 2023-24. Next event: Q2 2022-2023 sales, 23 January 2023, Press release after close of the Euronext Paris stock exchange ABOUT NACON 2021-22ANNUAL SALES NACON is a company of the BIGBEN Group founded in 2019 to optimize its know-how through strong 155.9M€ synergies in the video game market. By bringing together its 16development studios, the publishing of AA video games, the design and distribution of premium gaming devices, NACON focuses 30 years of HEADCOUNT expertise at the service of players. This new unified business unit strengthens NACON's position in the Over900 employees market, enablesit to innovate by creating new unique competitive advantages. Company listed on Euronext Paris, compartment B ISIN : FR0013482791 ; Reuters : NACON.PA ; Bloomberg : NACON:FP INTERNATIONAL 23subsidiaries and a distribution network PRESS CONTACT across 100 countries Cap Value–Gilles [email protected]+33 1 80 81 50 01 https://corporate.nacongaming.com/

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