It has been a transformative year for Embracer. The restructuring program, that is now successfully finalized, has created a stronger foundation for improved profitability, cash flows and long-term value creation. The divestments of parts of Saber Interactive and Gearbox Entertainment will improve profit margins and cash conversion, and reduce financial leverage, while the subsequent intention to initiate a separation of the group into three separate publicly listed companies, sets a clear strategic direction.

Throughout the past year, our companies and studios have had to part ways with team members. These were necessary but difficult decisions, and it has been important to carry out the changes with compassion, respect and integrity towards those affected. Post-restructuring, we will strive to make continuous improvements as part of our ordinary business, to further improve operational efficiency and capital allocation.

We remain excited about our PC/Console pipeline over the coming years. Our resources within PC/Console are increasingly focused towards our own and controlled key IPs, such as Darksiders, Dead Island, Deep Rock Galactic, Kingdom Come: Deliverance, Killing Floor, The Lord of the Rings, Metro, Remnant, Satisfactory, Tomb Raider, Wreckfest and many others.

As announced on April 22, we have initiated the process to separate into three separate, publicly listed entities. It is encouraging that shareholders share our view of the transformational separation. So far, the processes are tracking according to plan. There is significant untapped potential within the group, which I am confident the new structure will unleash. Asmodee, "Coffee Stain & Friends” and "Middle-earth Enterprises & Friends” will all boast sufficient scale, coherent strategies and a clearer focus, paving the way to unlock value in our high-quality assets. Importantly, each standalone entity will ultimately be able to fully utilize its own balance sheet, its own set of financial targets and optimal financing structure and capital allocation strategy that enable their growth ambitions. This, in turn, will create value for all stakeholders as it notably improves the conditions for our entrepreneurs and employees to create the best possible games.

We see great potential in The Lord of the Rings IP and believe the universe can become a key driver in the coming decades, with the aim to delight fans across the globe. New Tomb Raider stories in streaming and film will allow us to further nurture and grow another unique IP, taking it to new heights. Strong partners, such as Warner Bros. Discovery and Amazon MGM Studios, that complement our capabilities are an important part of our IP strategy.

We are now starting a new and exciting chapter for the businesses and people that make up Embracer Group. I am excited about the future and fully convinced that the best is still ahead of us. To conclude, I would like to send my thanks to all our team members, shareholders, customers, and business partners for contributing to the continued prosperity and success in our new chapter.

May 23, 2024, Karlstad, Värmland, Sweden

Lars Wingefors
Co-founder & Group CEO