PCF Group launches previously announced issue of Series G shares to supplement financing of the Group’s growth strategy

THIS MATERIAL AND THE INFORMATION HEREIN, IS RESTRICTED AND IS NOT FOR PUBLICATION, RELEASE, TRANSMISSION, DISTRIBUTION, OR FORWARDING DIRECTLY OR INDIRECTLY, IN WHOLE OR IN PART, IN OR INTO THE UNITED STATES, AUSTRALIA, CANADA, THE REPUBLIC OF SOUTH AFRICA, JAPAN OR ANY OTHER JURISDICTION IN WHICH SUCH PUBLICATION, RELEASE OR DISTRIBUTION WOULD BE UNLAWFUL.

FURTHER, THIS MATERIAL IS FOR INFORMATION PURPOSES ONLY AND IS NOT AN OFFER OF SECURITIES IN ANY JURISDICTION.

PLEASE SEE THE IMPORTANT NOTICES AT THE END OF THIS MATERIAL.

9 August 2023

As anticipated, PCF Group is launching the issue of up to c. 2.51 million Series G shares. The shares will be offered in a private subscription. The book-building process will last until 10 August.

The company’s aim is to raise proceeds of at least PLN 100.9 million from the issue of shares, as the second stage of securing financing for the updated growth strategy announced at the end of January. The strategy calls for release of most of the games from the PCF Group portfolio in the self- publishing model, and generating at least PLN 3 billion in cumulative revenues in 2023–2027.

The issue of Series G shares supplements the issue of Series F shares conducted in late May and early June 2023. After conducting book-building at that time, the company allocated 3.34 million shares from the offered pool of a maximum of c. 5.85 million shares, at PLN 40.20 per share. The offering of Series F shares raised proceeds of PLN 134.4 million. The offering was directed almost entirely to Krafton, a South Korean publisher and developer of games with which PCF Group had previously signed an investment agreement.

“The aim of the issue now being conducted is to raise at least PLN 100.9 million to supplement the financing of our updated growth strategy. Together with the proceeds from the offering carried out in May/June, this would allow the previously planned capital increase to be completed” – said Sebastian Wojciechowski, CEO and principal shareholder of PCF Group.

“Our main direction remains to grow through the self-publishing model, and thus releasing most of the games from our portfolio ourselves. In the time horizon through 2027, this should mean an increase in operating scale by several times over. This is the aim for which we want to secure financing.” the CEO added.

The strategic goal of PCF Group is to generate at least PLN 3 billion in cumulative revenues in 2023– 2027, nearly five times more than in 2018–2022.

The self-publishing model will be complemented by the work-for-hire model. This type of cooperation provides financial stability to the company and has a positive impact on generation of revenue and cashflows. In recent weeks PCF Group signed a contract with Microsoft Corporation for development of a game in the AAA segment, and the letter of intent for potential cooperation with a renowned publisher from the United States for development of a new video game for VR platforms, both of which are in this model.

Eight projects in the pipeline, another in negotiations

People Can Fly is currently working on eight projects at various stages of advancement. Five of them are games from the AAA segment, two of which are being developed in the work-for-hire model: the game code-named Project Gemini (commissioned by Square Enix, already in the production phase) and Project Maverick (commissioned by Microsoft Corporation). Three more games in the AAA segment—Project Dagger, Project Bifrost and Project Victoria—are in pre-production, and the company plans to release them in the self-publishing model, with launches in 2025–2026. Another game is Project Red, from the compact-AAA segment, currently in the concept stage. The People Can Fly pipeline also includes two games for virtual reality platforms—Bulletstorm VR (previously code- named Thunder) and Green Hell VR—developed by PCF Group subsidiary Incuvo.

Moreover, in the second half of June the company also signed a letter of intent and began negotiations with a renowned American publisher for potential cooperation in development of a game for VR platforms code-named Dolphin, with an anticipated development budget of USD 16 to 24 million. If the negotiations are successful, the pipeline of games developed by People Can Fly will be joined by another project pursued in the work-for-hire model.

The issue of Series G shares has launched

The new issue will include up to c. 2.51 million Series G shares. The offering is being conducted via a private subscription (not requiring publication of a prospectus), directed exclusively to eligible investors invited to take part in the offering or investors subscribing for shares with a total value of at least EUR 100,000. The issue is being conducted excluding the pre-emptive rights of current shareholders, but shareholders eligible to take part in the offering, holding at least 0.25% of the company’s shares (at the end of the day on 7 August 2023), will have a right of priority in taking up new shares enabling them to maintain their existing share in the capital.

Krafton may take part in the offering. Under an additional agreement concluded with Krafton in mid- June of this year, the South Korean publisher has a right of priority in taking up Series G shares at a price of PLN 40.20 per share, in a number that will allow it to maintain a 10% share in the capital of PCF Group, regardless of the number and price of Series G shares taken up by other investors.

The offering schedule provides that book-building begins today, 9 August, and lasts until 10 August 2023, till 6 pm (with the possibility of shortening this period). On 10 August the company will announce the issue price for the shares, and the deadline for conclusion of agreements on taking up and paying for the shares will be 18 August.

The offering managers are Trigon Dom Maklerski and Wood & Company Financial Services.

***

People Can Fly was founded in 2002 and is one of the pioneers on the market for shooter games in Europe, and one of the top three most experienced Polish developers of games from the AAA segment. People Can Fly has developed such games as Painkiller (launched in 2004), Bulletstorm (2011), Gears of War: Judgment (2013) and Outriders (2021).

There are currently over 640 people working in the group, two-thirds of them in Europe and one-third in North America, of whom over 500 are game developers.

In January 2023 the group updated its growth strategy. It calls for increased publishing activity, implementation of most projects in the self-publishing model and the game-as-a-service model, as well as the use of diverse models for monetization of the games published by the group. The group plans further increases in the size of production teams and development of talent, as well as investments in new segments of the entertainment industry.

In 2022 the group generated revenue of PLN 171.5 million and consolidated EBITDA (operating profit plus amortization) of PLN 48.2 million.

The shares of PCF Group, which owns the People Can Fly studio, have been listed on the Warsaw Stock Exchange since December 2020.

***

For more information please contact:

***

IMPORTANT NOTICES

This material is solely for information purposes and has been prepared exclusively in order to provide essential information on the terms of the issuance and the offering for the new shares of PCF Group S.A. (the “Company”). This material is by no means intended, whether directly or indirectly, to promote the offering or subscription of the shares of the Company referred to in this material (the “New Shares”) and does not represent advertisement or promotional material prepared or published by the Company for the purpose of promoting the New Shares or their subscription, purchase or offering or for the purpose of encouraging an investor, whether directly or indirectly, to acquire or subscribe for the New Shares. The Company has not published and has no intention of publishing any materials aimed at promoting the New Shares or their subscription or purchase after the date of this material.

This material and the information contained in it is not for publication, release, transmission, distribution or forwarding, in whole or in part, directly or indirectly, in or into the United States, Australia, Canada, Japan or South Africa or any other jurisdiction in which publication, release or distribution would be unlawful. This material is for information purposes only and does not constitute an offer to sell or issue, or the solicitation of an offer to buy, acquire or subscribe for shares in the capital of the Company in the United States, Australia, Canada, Japan or South Africa or any other state or jurisdiction. This material has not been approved by any supervising authority or stock exchange. Any failure to comply with these restrictions may constitute a violation of the securities laws of such jurisdictions.

The New Shares have not been and will not be registered under the U.S. Securities Act of 1933, as amended (the “Securities Act”) or with any securities regulatory authority of any state or other jurisdiction of the United States and may not be offered, sold, pledged, taken up, resold, transferred or delivered, directly or indirectly, in or into the United States absent registration under the Securities Act, except pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the Securities Act and in compliance with any applicable securities laws of any state or other jurisdiction of the United States. The New Shares have not been approved, disapproved or recommended by the U.S. Securities and Exchange Commission, any state securities commission in the United States or any other U.S. regulatory authority, nor have any of the foregoing authorities passed upon or endorsed the merits of the offering of the New Shares. Subject to certain exceptions, the securities referred to herein may not be offered or sold in the United States, Australia, Canada, Japan, South Africa or to, or for the account or benefit of, any national, resident or citizen of the United States, Australia, Canada, Japan, the Republic of South Africa.

This material does not identify or suggest, nor is intended to identify or suggest, the risks (direct or indirect) that may be connected with investment in the New Shares.

This material contains (or may contain) certain forward-looking statements with respect to certain of the Company’s current expectations and projections about future events. These statements, which sometimes use words such as “aim”, “anticipate”, “believe”, “intend”, “plan”, “estimate”, “expect” and words of similar meaning, reflect the Company’s Management Board’s beliefs and expectations and involve a number of risks, uncertainties and assumptions which may occur in the future, are beyond the Company’s control and could cause actual results and performance to differ materially from any expected future results or performance expressed or implied by the forward-looking statement. Statements contained in this material regarding past trends or activities should not be taken as a representation that such trends or activities will continue in the future. The information contained in this material is subject to change without notice and, except as required by applicable law, the Company does not assume any responsibility or obligation to update publicly or review any of the forward-looking statements contained in it, nor do they intend to. You should not place undue reliance on forward-looking statements, which speak only as of the date of this material. No statement in this material is or is intended to be a profit forecast or profit estimate or to imply that the earnings of the Company for the current or future financial years will necessarily match or exceed the historical or published earnings of the Company. As a result of these risks, uncertainties and assumptions, the recipient should not place undue reliance on these forward-looking statements as a prediction of actual results or otherwise.

This material does not identify or suggest, or purport to identify or suggest, the risks (direct or indirect) that may be associated with an investment in the New Shares. Any investment decision to subscribe for or acquire the New Shares in the offering, subscription and/or sale of such shares must be made solely on the basis of publicly available information, which has not been independently verified.

This material does not constitute an invitation to underwrite, subscribe for or otherwise acquire or dispose of any securities in any jurisdiction. This material does not constitute a recommendation concerning any investor’s option with respect to the offering, subscription and/or purchase of the New Shares. Each investor or prospective investor should conduct his, her or its own investigation, analysis and evaluation of the business and data described in this material and publicly available information. The price and value of securities can go down as well as up. Past performance is not a guide to future performance.