DGAP-Ad-hoc: Media and Games Invest SE / Key word(s): Acquisition
Media and Games Invest acquires the mobile games developer AxesInMotion further strengthening its Ad-Software-Platform with premium first party data from more than 700 million users

28-Apr-2022 / 17:45 CET/CEST
Disclosure of an inside information acc. to Article 17 MAR of the Regulation (EU) No 596/2014, transmitted by DGAP - a service of EQS Group AG.
The issuer is solely responsible for the content of this announcement.

The acquisition of AxesInMotion reflects MGI's new investment focus following its transformation into an Ad-Software-Platform with strong first party data from games content. In a world where the use of identifiers for advertising tracking, such as Apple's IDFA, is increasingly restricted, it is becoming more and more difficult for the advertising industry to run efficient data-driven user acquisition campaigns. This had a strong negative impact on several advertisers and their user acquisition costs in 2021 as well as on publishers in the area of ad monetization. This challenge can be overcome by having strong first party audience data from own content to enrich advertiser campaigns which enables efficient targeting for them. In combination with MGI's end-to-end vertical full-stack and multichannel Ad-Software-Platform set-up, efficient and data-driven multichannel campaigns across all ad formats can continue to be exercised going forward without relying on identifiers and third-party data, leading to a high ROI for advertisers and efficient monetization of advertising space for AxesInMotion.

MGI's management expects that the integration of AxesInMotion's mobile games into MGI's Ad-Software-Platform will result in significant revenue synergies due to more efficient user acquisition and better monetization of in-game-advertising-space. Taking revenue and cost synergies into account, MGI's management expects to grow mid-term revenues of AxesInMotion by 165% to EUR 24 million and the adj. EBITDA by 176% to EUR 17 million (a 68% adj. EBITDA margin) compared to the revenue and EBITDA guidance of 2022 ('Revenue Guidance' and 'EBITDA Guidance'). The standalone and the synergy case are reflected in the tables below.

Apart from the synergies that could be leveraged between AxesInMotion and the Ad-Software-Platform of MGI, AxesInMotion also has promising new game releases in the pipeline. In addition to the company's flagship titles Extreme Car Driving Simulator, Mega Ramps and Extreme SUV Driving Simulator, the Company has planned two new titles, one of them being fully developed already.

TRANSACTION OVERVIEW BEFORE SYNERGIES

A preliminary unaudited pro forma income statement is shown below, with the purpose of describing a hypothetical financial result of MGI Group as if the acquisition of AxesInMotion had been completed per 1 January 2021. No synergies have been taken into consideration in the Combined Pro Forma numbers and all numbers are preliminary and unaudited.

MGI Group Pro Forma Financials Full Year 2021

TRANSACTION OVERVIEW TAKING POTENTIAL MID-TERM SYNERGIES INTO ACCOUNT

A preliminary unaudited pro forma income statement^{is shown below, with the purpose of describing a hypothetical financial result of MGI Group as if the acquisition of AxesInMotion had been completed on 1 January 2021 and includes also potential synergies that may occur in the coming years by combining both companies. All numbers are preliminary, unaudited and illustrative. The potential synergies are based on MGI's assumptions and estimates of the combined future business and are subject to uncertainty.}

MGI Group Pro Forma Financials 2021 Incl. Mid-Term Buyer Specific Synergies

• The transaction further enriches MGI's Ad-Software-Platform with premium first party content and more than 700 million additional unique users.
•  Revenue and EBITDA Guidance 2022 for AxesInMotion is EUR 9.2 million of revenues and an expected adjusted EBITDA of EUR 6.0 million, which represents a 65% adjusted EBITDA margin.
• Taking mid-term revenue synergies into account for AxesInMotion the expected revenues amount to EUR 24 million with an expected adjusted EBITDA of EUR 16 million, which represents a 68% adjusted EBITDA margin.
• MGI's combined group adj. EBITDA excluding synergies grows on a pro forma FY 2021 basis from EUR 71.1 million to EUR 76.1 million following the Transaction while the adjusted EBITDA margin increases from 28% to 29%.
• MGI's combined group adj. EBITDA including synergies grows on a pro forma FY 2021 basis from EUR 71 million to EUR 88 million following the Transaction while the adjusted EBITDA margin increases from 28% to 32%.
• In view of the strong synergy potential in the area of user acquisition and monetization of advertising space on the one hand, as well as the enrichment of the Ad-software-Platform with high-quality first party games content and valuable data on the other, management sees considerable growth potential from the Transaction.
• The Fixed Consideration of EUR 55 million represents an EV/EBITDA multiple of 9.1x based on the EBITDA-Guidance. Applying the potential synergies as illustrated above and taking the Earn-Out Consideration into account as well as a substantial higher EBITDA due to realized revenue and EBITDA synergies until 2024, the EV/EBITDA multiple may differ to a range of 6.8x - 9.1x¹.
• Post-transaction, Net Leverage⁴ of MGI will be within the net leverage target ratio of 2-3x adj. EBITDA.
• The Total Consideration on a cash-and-debt-free basis is divided into a fixed component comprising a total of EUR 55 million and three earn out levels which could result in EUR 110 million of additional payments, depending on achieved EBITDA in 2022, 2023 and 2024.
• The Total Consideration will be fully paid in cash.
• Closing of the Transaction is expected to take place in May 2022.

Remco Westermann, CEO of Media and Games Invest SE

'The acquisition of AxesInMotion is the first games transaction following our transformation into an Advertising-Software Platform. It adds new mobile games to our portfolio and expands our first party data with over 700 million downloads, making our Ad-Software-Platform even more attractive to advertisers and thus indirectly to publishers. Especially in a post identifier world, first party games content is extremely valuable and once integrated with our ad software platform, AxesInMotion will accelerate the MGI flywheel even more. At the same time, the games themselves will also benefit greatly from our Ad-Software-Platform by leveraging our leading advertising technology and strong expertise in user acquisition and monetization of ad space. This is a pioneering acquisition and sets the direction for future transactions in the games sector.'

Jens Knauber, COO of Media and Games Invest SE

'We are quite pleased with the acquisition of AxesInMotion and can now focus our collective efforts on unlocking synergies. Since the beginning of the transaction, there have been in-depth dialogues between the AxesInMotion and MGI teams. We are all very excited and looking forward to start working together on the various projects we've identified within the impressive games portfolio of AxesInMotion and MGI's advertising technology. We are especially excited for the synergies we can leverage together.'

About AxesInMotion

AxesInMotion is a leading mobile developer and publisher based in Seville, Spain. Proud creators of Extreme Car Driving Simulator with a team of more than 30 people. The company developed one of the most popular and realistic racing and driving simulators, resulting in over 700 million downloads to date, providing fun, innovation and excitement to hundreds of millions of users.
_{Notes
Note 1) EV/EBITDA multiple: Enterprise value contingent to Earn-Out payment in the relevant period divided by AxesInMotion's expected adjusted EBITDA for the relevant period
Note 2) Numbers may not add up due to rounding
Note 3) Net revenues and adjusted EBITDA MGI Group as defined in MGI's Year End Report 2021
Note 4) Net leverage ratio MGI Group taking LTM EBITDAs of acquisitions into account
Note 5) AxesInMotion's Net revenues and EBITDA pro forma reduced for IDFA / identifier impact as well as for licensing / IP costs
Note 6) The Business Plan is the Buyer Case which will be used by the independent advisor for the PPA Report}

ADVISERS
Baker McKenzie acted as legal adviser for MGI in connection with the Transaction. Agnitio Capital acted as M&A adviser and Garrigues acted as legal adviser to AxesInMotion in connection with the transaction.

CONFERENCE CALL FOR INVESTORS, ANALYSTS AND THE MEDIA

Event date
April 29, 2022, 11 am CEST

Weblink
https://tv.streamfabriken.com/pressconference-april-2022

Participant dial in number (NOTE: PIN code needed for participants)
SE: +46850558373
DE: +4578723250
UK: +443333009265
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Responsible parties

This information is such information Media and Games Invest SE is obliged to make public in accordance with the (EU) Market Abuse Regulation 596/2014. The information in this release has been made public through the agency of the responsible persons set out below for publication at the time stated by MGI's news distributor EQS Newswire at the publication of this release. The responsible persons below may be contacted for further information.

For further information, please contact:

Sören Barz
Head of Investor Relations
+49 170 376 9571
soeren.barz@mgi-se.com, investor@mgi-se.com
www.mgi-se.com

Jenny Rosberg, ROPA, IR contact Stockholm
+46707472741
Jenny.rosberg@ropa.se

Axel Mühlhaus / Dr. Sönke Knop, edicto GmbH, IR contact Frankfurt
+49 69 9055 05 51
mgi@edicto.de

About Media and Games Invest SE

Media and Games Invest SE ('MGI') is an advertising software platform with strong first party games content. MGI's main operational presence is in Europe and North America. The company combines organic growth with value-generating synergetic acquisitions, which has demonstrated continuous strong profitable growth with a revenue CAGR of 77% (2018 -2021). Next to strong organic growth, the MGI Group has successfully acquired more than 35 companies and assets in the past 6 years. The acquired assets and companies have been integrated and amongst others cloud technology is actively used to achieve efficiency gains and competitive advantages. MGI is registered as Societas Europaea in Malta (registration number SE 15) and its shares are listed on Nasdaq First North Premier Growth Market in Stockholm and in the Scale segment of the Frankfurt Stock Exchange. The Company has a secured bond that is listed on Nasdaq Stockholm and on the Frankfurt Stock Exchange Open Market.

The Company's certified advisor on Nasdaq First North Premier Growth Market is FNCA Sweden AB; info@fnca.se, +46-8-528 00 399.

IMPORTANT INFORMATION
This release does not constitute an offer, or a solicitation of any offer, to buy or subscribe for any securities in MGI in any jurisdiction, neither from MGI nor from someone else.

Forward-looking statements

This press release contains forward-looking statements that reflect the Company's intentions, beliefs, or current expectations about and targets for the Company's future results of operations, financial condition, liquidity, performance, prospects, anticipated growth, strategies and opportunities and the markets in which the Company operates. Forward-looking statements are statements that are not historical facts and may be identified by words such as 'believe', 'expect', 'anticipate', 'intend', 'may', 'plan', 'estimate', 'will', 'should', 'could', 'aim' or 'might', or, in each case, their negative, or similar expressions. The forward-looking statements in this press release are based upon various assumptions, many of which are based, in turn, upon further assumptions. Although the Company believes that the expectations reflected in these forward-looking statements are reasonable, it can give no assurances that they will materialize or prove to be correct. Because these statements are based on assumptions or estimates and are subject to risks and uncertainties, the actual results or outcome could differ materially from those set out in the forward-looking statements as a result of many factors. Such risks, uncertainties, contingencies and other important factors could cause actual events to differ materially from the expectations expressed or implied in this release by such forward-looking statements. The Company does not guarantee that the assumptions underlying the forward-looking statements in this press release are free from errors and readers of this press release should not place undue reliance on the forward-looking statements in this press release. The information, opinions and forward-looking statements that are expressly or implicitly contained herein speak only as of its date and are subject to change without notice. Neither the Company nor anyone else undertake to review, update, confirm or to release publicly any revisions to any forward-looking statements to reflect events that occur or circumstances that arise in relation to the content of this press release, unless it is not required by law or Nasdaq First North Growth Market's Rulebook for issuers.

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