Dear shareholders, it's a great pleasure to welcome you all to this year's annual general meeting in Embracer Group. Of course, welcome to Karlstad. We have been holding our AGMs here for quite a few years now, eight to be very specific. Those of you who know me will probably not be surprised that I think this has become a tradition we are very proud of. It's always special for me to welcome shareholders here in my hometown and in Värmland. So a warm welcome to all of you here today and those joining us online. With that, I hereby declare the meeting open. Standing here in Karlstad today, it's hard not to think about how much has happened since we started this journey. Almost 10 years ago, in November 2016, we listed THQ Nordic. One share cost SEK 20 at the time.
I remember standing in the front of our new shareholders, and I said a few things that day. One of them was, stay tuned. A lot has happened since then. Some things went very well, some things didn't. I could not have predicted most of it. The way we have created value has changed along the way. Sometimes by building, sometimes by acquiring, sometimes by selling, and sometimes by giving a business the freedom to stand on its own. If you bought one share in THQ Nordic at the IPO 2016, that investment today represents ownership in three listed companies equaling to SEK 270. These three are soon to become four. I also said something else back then, that I felt a great responsibility to deliver on the trust of all of our shareholders. I still do.
Of course, 10 years of experience changes how you look at things. 10 years ago, a lot more opportunities looked interesting. Today, well, far fewer pass that test. The conditions are different today, and when conditions change, you have to change with them. But if experience makes you afraid to act, I'm not sure you have learned the right lesson. There are still plenty of opportunities for us to create value. So even if fewer opportunities pass the test today, there is still plenty to do, and not necessarily in the ways we are used to. Some of the biggest games in the world are getting older and staying on the top. Players don't necessarily always want the new thing. They want more reasons to spend time in the worlds they already love. Those worlds no longer have to live in one place.
A book becomes a game, a game becomes a film or TV. A digital world can become a physical experience, even places people travel to visit. I have believed in this for a long time. What is different today is how much more of it we are seeing. A great story doesn't have to belong to one format. A great world can have many doors into it. Then there is AI. I don't think any of us knows exactly where that will take us. So what happens when those boundaries continue to disappear? How do we give people more reasons to stay within the worlds that they already love? Perhaps most interestingly, what opportunities have we not thought of yet? At the same time, we are preparing to become two different businesses, Embracer and Fellowship, and they are different for a reason.
Fellowship will have one direction built around some of our strongest IPs, communities, and studios. Embracer will be more decentralized, with entrepreneurs and businesses following different paths. They will not look the same, and the way they create value will be different. I believe strongly in both. I could not have predicted most of what happened over the last 10 years, and I certainly won't pretend I can predict the next 10. Back in 2016, I told our new shareholders something else. I had already been in this business for 23 years back then, and I said I intended to stay for another 23. If I count correctly, I still have 13 to go. A lot has changed since then, but that has not changed. Stay tuned. With that said, let's move on to the formal business of today's meeting.
The second item on the agenda is the election of the chair of the meeting. The Nomination Committee has proposed Ian Gulam, our General Counsel. Can the meeting approve the proposal? Thank you. With that, Ian, I hand over to you to take us through the rest of the meeting.
Thank you, Lars, and thank you all for the confidence. First, a few formalities. I would like to ask everyone to just turn off their phones to silent mode, if you haven't already done that, due to the live cast. The Board of Directors proposes that the meeting is held in English. Can the meeting decide so?
Yes.
Thank you very much. There will also be a Q&A session during the item of presenting the business of the group. Finally, but not least, just saying that there are a lot of guests in the room that have not registered shareholders or notified their participation before the meeting. It's only shareholders, their proxies, or their representatives in the room that will be able to ask questions during the meeting. We will open up the floor during the Q&A for everyone, but I would like to ask the meeting if these non-registered shareholders, et cetera, could participate at the meeting.
Yes.
Thank you very much. Atieh, my colleague here to the right, will keep the minutes. Today we have the board here. We have a quorum board with Kicki Wallje-Lund, Lars Wingefors, Brian Ward, and Jacob is there. Cecilia is there. Phil Rogers, our CEO, is here as well. Müge, our CFO as well. Per Fredriksson from the Nomination Committee is here as well. Not the least, Magnus from PwC is here, the company's auditor. Now we move over to item three, which is preparation of the voting list. Everyone that has notified their participation in meeting have been ticked off when they walked into the room. The voting list is here with me. If anyone has any questions about it, you are free to come to me after the meeting.
To sum up, today we have 9 million A shares represented and 133,394,375 B shares represented in the room. That totals 142,394,375 shares, which corresponds to 223,394,375 votes. This then, when it comes to representation in respect to capital and votes, 62.22% of the capital is represented today, and 72.09% of the votes are represented here in the room today. Can we approve the voting list as presented?
Yes.
Thank you very much. Now we have come to item number four, which is election of one or two persons to certify the minutes. We have a proposal that one person is to certify the minutes, and that is Carl Janot from Alecta Tjänstepension Ömsesidigt. I do not see where. There. Perfect. When I ask any other proposals? No. Carl, can you be available afterwards and certify? Perfect. Thank you. Can we then appoint Carl as the certifier today?
Yes.
Perfect. Thank you very much. Item number five, question if the meeting has been duly convened. Now I leave over with warm hand to Atieh to present that.
Thank you. Okay. In accordance with the company's articles of association, notice to the AGM shall be given by publishing the notice on the company's website and in the Swedish Official Gazette, no earlier than six weeks and no later than four weeks before the meeting is to be held. At the time of the notice, information of the notice must also be announced in Svenska Dagbladet. The notice to today's general meeting has been published on the company's website on 24th August, 2026, and in the Swedish Official Gazette on 27th of August, 2026. Information of the notice has also been announced in Svenska Dagbladet on 27th August, 2026. We can then state that the notice has been considered to have been made in accordance with legislation and the company's articles of association.
Thank you, Atieh. Then I ask the general meeting if it can consider itself duly convened.
Yes.
Thank you very much. Item number six, which is approval of the agenda. It has been included in the notice for the meeting. I would like to ask the meeting if we can approve the proposed agenda. Thank you very much. Now we have item number seven, which is presentation of the business activities. I would like to welcome Phil to the stage.
Please. I'm okay?
Yeah. I'm okay, yeah.
Good afternoon, everyone. Our AGM is an important opportunity for us to speak directly to our shareholders. Lars has taken us through the past journey. I would like to look forward and ask one simple question today, and that's what should you expect from us next? For me, it comes down to three things. First, that we continue to convert the early signs of underlying improvement into consistent business delivery. Second, that we take the next steps towards value creation through focus, and through that focus, we deliver growth. And third, that we show we truly are built differently to capture the opportunities ahead. These are the three areas which Müge and I will cover today. For fiscal 2025/2026, the Embracer Group generated net sales of SEK 15.9 billion and an adjusted EBIT of SEK 0.9 billion.
It was a year of change and progress, particularly within PC/Console, with a quiet major release slate. Following a stronger Q4, we ended the full year with positive free cash flow. With a positive trend shift in Q1 and into Q2 this year, our goal is to translate our stronger foundation into sustained earnings and free cash flow growth. At the heart of this ambition is something quite simple. When we put our great teams behind strong games and franchises, understand our audiences, and execute well finding them, we can create significant value. Kingdom Come: Deliverance II is the clearest example. REANIMAL is another. During the course of fiscal 2025/2026, of course, we've spun off the Coffee Stain Group, and after the year end, we announced that we will further evolve into two separate companies through Fellowship Entertainment and Embracer.
This next step is about creation, focus, and growth. Sustainability remains an important part of how we create long-term value and how we run a responsible business. Over the last years, we've strengthened reporting, transparency, governance, and implementation across the group. This year we published our first CSRD-aligned sustainability statement. For those like me sometimes who aren't familiar with the acronyms, CSRD, Corporate Sustainability Reporting Directive. There's always more to do, and we remain committed to that journey as we move towards two separate companies. Business delivery happens with people, and it's early in this part of the AGM and today, but I want to take this moment to thank our teams for their creativity, commitment, resilience through a year of both significant change and delivery. Müge.
Thank you, Phil. Hi, everyone. Let's take a look at our financial development in FY 2025/2026. Then, if you'll bear with me, we'll take a closer look at the underlying improvements that we're already seeing in the current financial year. As Phil mentioned, FY 2025/2026 was a year with no major PC/Console releases. It was also a year where we were impacted by divestments and FX impacts, which had a negative impact on year-on-year comparisons. Net sales of SEK 15.9 billion for the year were down 25% on a reported basis from SEK 23.3 billion the year before.
Excluding the effects of divestments and FX impacts, however, net sales were only down by 3% on an organic basis. The lack of major PC console releases, combined with the year-on-year impact from the sale of Easybrain early FY 2024/2025, resulted in a negative mix impact, which we see in the software-adjusted EBIT margins. Around half of the seven points year-on-year in the margin can be attributed to the divestment impact of Easybrain. As you know, starting in Q1 FY 2026/2027, cash EBIT was introduced alongside adjusted EBIT as our primary profitability measure. You can already see here the evolution of cash EBIT margins, which follow a similar trend year-on-year to adjusted EBIT. We believe that cash EBIT better reflects the economics of game development and the internal steering of our business.
In addition to structural changes through divestments, we continued our focus on cost control, and we have created a solid platform for profitable growth and continued cash generation going forward. Turning now to the balance sheet. As we've seen in the last years, we have significantly strengthened our balance sheet position through a combination of spin-offs, divestments, and cost control. On the left side of the slide, you have our balance sheet reported at the end of March, while on the right, we can see how this breaks down between operational and financial items. Looking first at the operational items on the top right, total assets of SEK 13.4 billion relate largely to investments in completed or ongoing games development projects, which combined represent SEK 5.8 billion. Other non-current assets of SEK 3.1 billion relate primarily to deferred tax assets and property, plant, and equipment.
Other current assets of SEK 4.1 billion relate to working capital assets, all which around half is trade receivables. On the liability side, other non-current liabilities relate primarily to deferred tax and the non-current portion of the lease liabilities, while other current liabilities relate primarily to trade payables, accrued expenses, and current lease liabilities. In financial items which you can see bottom right of the slide, total assets of SEK 12.3 billion are primarily related to goodwill and IP rights relating to past acquisitions, as well as a net cash position of SEK 3.8 billion, being SEK 5 billion gross cash, less SEK 1.2 billion of debt, which we'll look at in a bit more detail in the next slide.
Well, as you can see, thinking back a couple of years, the financial profile of the group has changed significantly through lower development investment, portfolio actions, and the reduced cost base all contributing to a stronger balance sheet position. Looking more specifically at the evolution of our net cash position over the year, as I mentioned earlier, FY 2025, 2026 was impacted by not having any major PC console releases, resulting in a number of quiet quarters. The stronger fourth quarter, however, allowed the group to finish the year with a positive free cash flow. Operating cash flows of SEK 3 billion fully funded our capital expenditures on game development. M&A and financial cash flows of -SEK 1.7 billion included the return of around SEK 500 million to shareholders via our share buyback program. The completion of Coffee Stain spin-off resulted in a further 500 million outflow.
We received SEK 105 million of net proceeds from the divestment of non-strategic assets, and we paid around SEK 700 million in earnouts related to past acquisitions. We now have relatively limited cash-settled earnout obligations of SEK 0.5 billion for the coming five financial years. In fact, as of today, this has already reduced to SEK 0.2 billion . All of these flows resulted in a net cash position at year-end of SEK 3.8 billion , a strong position that maintains financial flexibility for the group, allowing for further cash returns to shareholders through our ongoing share buyback program, while also preparing the ground for the future spin-off of Fellowship Entertainment. As Phil mentioned earlier, Q1 FY 2026, 2027 has provided an encouraging start. With 33% organic growth, Cash EBIT has been improved by SEK 146 million year-on-year, and the cash flow improved by 386 million year-on-year.
These underlying earnings releases are early signs that the stronger foundation is continuing to show through. As mentioned in August, we expect these underlying improvements to carry into Q2. Again, this is the trajectory we expected when we set out the direction in May. It is progress in the right direction, but the focus remains on delivering consistently over a full year and over time. Now that we've talked about the underlying improvements, where does this take us? Let's take a look now at our second topic of the day. On May 20th, we announced our intention to spin off Fellowship Entertainment as a separately listed company, and at that time, we laid out the rationale that you can see here. And here is my color. Over the past four months, one question has frequently come up. Why do this at all? Couldn't you just keep reporting as two segments?
I want to be clear. This is not about creating two smaller groups. It is about creating value through greater focus and growth. These businesses have different strengths, different opportunities, and increasingly different needs. Separation gives each business a clearer strategy, an equity story, dedicated management, stronger accountability, and better conditions to realize its full potential. This is a long-term decision made for long-term value creation. Phil?
Thank you. Fellowship Entertainment is being built around some extraordinary worlds, the studios and business teams to bring them to life and deliver results. We know the major IPs, of course. The Lord of the Rings, The Hobbit, Tomb Raider, Kingdom Come, Metro, Dead Island, Darksiders, and Remnant. Embracer has a different opportunity. It is becoming leaner, decentralized ecosystem of established entrepreneurial businesses across games and entertainment. It has strong positions across a number of attractive niches. These business have their own identities, audiences, and expertise, and many have thrived through change. Embracer has a stronger and more focused PC console pipeline with an improved return and profitability outlook today. I want to spend a moment on the market we operate in, because the backdrop matters. Gaming is the number one entertainment sector in the world, passing the SEK 200 billion market value milestone for the first time.
Bigger than film, bigger than recorded music, and importantly, it is growing. 2025 delivered the strongest growth we have seen since the pandemic years, up 9% year-over-year, with PC and mobile both showing growth in that 11%-12% range. Further market growth is expected in 2026, at +6% year-over-year. One notable driver, of course, is the launch of Grand Theft Auto VI. This will be a huge event for the whole entertainment sector, expecting to drive new, lapsed, and upgrading gamers into the market in big numbers. Beyond FY 2026 or 2026, a CAGR of +5% is expected through 2028. I do not stand here today and tell you it is an easy market. The industry has gone through real structural change. Hardware costs have squeezed the economics across the board. How do we read this? I would say two things.
First, a growing market where consolidating capacity is possible with disciplined operators gaining market share. Second, the trends play to a multi-platform portfolio strategy built on owned and controlled IP, long-tail catalog, and core game focus. This is precisely the direction we have taken over the past two years. In a nutshell, to face the future, we are not creating two smaller versions of the Embracer Group of the past. We are creating two focused businesses, each built differently for its opportunity, and each with its own way of creating value and capturing the growth that we see. Built differently does not mean bigger bets. Bigger does not automatically mean better. Built differently means smarter bets. What matters is that we are putting our best people, our capital, and creative energy behind franchises and worlds that can live for many years.
As described in the May 20th event, worlds that players can return to again and again. About a year ago at an investor meeting, some of you likely in that room, we were asked a question, why we had not planned more expansions for KCD II. The answer is simple, and that is that KCD II was not really set up for that. Of course, we have since announced a new Kingdom Come game for the next financial year, built, of course, on the foundations of Kingdom Come: Deliverance II. However, the deeper answer is yes. When fans want to stay in our worlds, we should plan to give them more to do there. Franchise planning is how we improve predictability, not by removing creative risk, because that is part of the industry that we are in, but by being deliberate about how we take it.
The next point is publishing, and let me use Metro as the backdrop. Again, for those that were there at Gamescom just a few weeks ago, it was really exciting to receive the response from fans and press to more details on Metro 2039. Metro is a series that has seen consecutive growth for each mainline entry released, with the last game, Exodus, exceeding 18 million lifetime unit sales. The opportunity now is to activate that fan base for Metro 2039. We are humble, but all indications are that we are on the right track. We do not see the job of publishing as just getting a game shipped. Publishing today is about finding the right players, reaching them efficiently, and staying close to them over time. It is about turning fan and community signals into participation, turning a strong launch into a long relationship.
For us, that means being sharper in how we position titles, how we use data and insights, and how we support our studios before launch and after. The ambition is not to publish more, it is to publish better, greater reach, stronger execution, more durable outcomes. Fellowship will work as one publisher to do exactly that. Of course, for Embracer, there will be several publishers, each with their own specialisms. What we are saying is that one model does not fit all. We are choosing the model that is the right fit for each business. To AI. Last year at the AGM, for anyone that was there, I described our approach as pragmatic, perhaps ethical, sustainable. If you recall, AI is the co-pilot, not the pilot. Our teams own the creative and final product. Well, since then, our best people and teams have pushed that further in practical use.
Standing back, of course, the world is loud on AI right now. Frontier models, regulation, hyperscalers, sentient AI. I want to cut through all that and just bring it back to pragmatism. The industry has always embraced new tools, engines, motion capture. Studios picked up what existed, pushed it past its limits, and when it was not good enough anymore, they built their own. Every one of these tools that we see was going to change everything, and every one of them did when in the hands of talented people. AI is the next chapter of that story. More tools on the table. Some are already in use across the group, and where they work, they do the work that every good tool does: take away the slow, repetitive work, enabling faster prototyping, faster testing ideas, and many more things.
What it does not do is replace judgment or the craft of making great games. What makes a game worth playing is still decided by people who understand players and fans. That is why we are deliberate today about where AI goes and where it does not. The opportunity is simple. Use these tools where they make sense, and our teams get time back for the work only they can do. That is the whole thesis. Better tools in the hands of talented people. Let me close. We have spent the past years creating a stronger foundation. We have simplified the group, we have strengthened the balance sheet, and we have sharpened our focus and clarified the path ahead. But ultimately, our success will be measured by what we deliver. So what should you expect from us now until the next AGM?
Well, it comes down to the same three things. First, that we continue to deliver on the early signs of underlying improvement, stronger cash earnings, consistent execution, and further momentum in our portfolio. Second is that the current year shows that greater focus translates into longer-term growth and value creation. The industry keeps changing. The answer is not to chase every opportunity. It is to know where we genuinely are stronger and go deeper and faster there. Third, that everyone is clear inside and outside the group that we are, in fact, built differently to capture the opportunities for the next decade and beyond to Lars' point. For me, the upcoming quarterly reports, the CMD, and the spinoffs are the key milestones on that journey, and we will take that journey step by step.
Now it is time to build on our momentum for our players and fans, for our businesses and IP, for our people, and of course, for our shareholders. With that, I would like to leave you with a glimpse of what ultimately it all comes down to, the games. Some already in the hands of players, others still to come. Thank you.
Wow. Great. Yeah. Now we will kick off the Q&A. My name is Jacob Edler. I am an equity analyst with Danske Bank in Stockholm, and I will be moderating the Q&A. I think I will start with a few questions on my own, then I will ask the audience if there are any questions, and there will be a microphone that will be handed out. Then we will end with some webcast questions. Thank you so much for having me, to start with, and thank you for the presentation. I will start with one question. Maybe this to you, Lars. You have already completed two spinoffs with Coffee Stain and Asmodee. What learnings are you taking with you heading into the Fellowship spinoff in calendar 2027?
No, I think the overall learning is the strategy we put forward worked. I think it is a greater focus both within Asmodee and Coffee Stain. I am very happy with that performance. So obviously there is, I do not know, minor details like to shareholders, some backflow of capital, if you go in the minor market, for example, but over time, that will correct itself.
Good. Then just a question, Müge was talking about fortunate net cash position you have currently, I believe as of the last report, SEK 3.4 billion. How should we think about the kind of net cash composition for the separate units looking forward? On one end, you have Fellowship, which already today has solid margins and a good trajectory looking forward. On the other hand, a bit obviously higher CapEx to sales, and then in Embracer, a bit lower margins, but a bit more CapEx light in relation to sales. If I can just dig a few thoughts on that.
Well, we will be following a very similar process as the one we proceeded in our last spinoff. We identify and assess our balance sheet needs in a dynamic manner as part of the upcoming spinoff. Obviously, the balance sheet needs and the strategic needs for both Fellowship and Embracer are to be confirmed. We are in a position of strength of sitting on net cash, but obviously as we try to communicate today, we are after healthy businesses which are cash flow positive. The idea is to leave enough cash for both businesses and then return any excess cash to shareholders, like our ongoing share buyback program as a mindset.
Good. Then I think we have to talk about the pipeline and Metro. It is the title that has reached, in the fastest pace in your history, 1 million wishlists. We are also seeing really good trends in Tomb Raider, Legacy of Atlantis. A lot of excitement on Gamescom as well.
Yeah.
Maybe you can talk a bit about what you are seeing there.
Yeah, we're really excited by it. For the teams themselves, there's always like any sort of big event, sort of nervousness on when people get their hands on finally, or you show more, but that's why these events are so good because, with Gamescom, there's hundreds of thousands of players. The lines were incredible. I think for us, the whole business, it really is a massive sort of galvanizing force and energy. So we're really excited. The good news now, we do get a lot of data in terms of how much viewership we get, how much wish lists we track to, and we can trend that against other launches. As I said in the notes, we know there's a player base for Metro. It's a big fantasy. It's a great mechanic.
It's a world that people want to play in, and the same with Tomb Raider. So finding those fans and players around the world is now the stage that we're at and we're encouraged. Lots more to do, of course, but we're excited.
Good. I'll sneak in one question before I'll ask the floor as well, but when it comes to Fellowship Entertainment, you've talked about having one of the strongest pipelines in the industry, and that you think it will support above-industry growth for the coming years. You've also talked about an aspiration for kind of industry-leading margins in that business. Can you give us some color on what you define as industry leading, and also what you think in terms of the vague timeline for when this could be achieved?
Was that a York quote?
Yeah.
I'll start with that. I'll be kind of vague and clear, probably in equal measure. I really believe in understanding the margin structures in games today. It comes back to our Cash EBIT drive. We want people in the business understanding why. Of course, from an accounting point of view, we capitalize everything. We're responsible for that in terms of how we report and measure, because we know we're investing significantly. We understand then the margin structures that ultimately we should be getting to. If I go back to past years thinking about margin structures, the 20%, 30%, north of that's the sort of play that we want to feel we're heading to, and we've got the organization that's at the right size and shape to support that. A little bit to my point, it's not about publishing more.
Sometimes business is set up and they just end up publishing a lot to maintain that overhead. That's a different approach.
Yeah.
I think that's what the world now will hopefully see as we roll this forward. I think key message here, it's a target that we want the whole business to really sort of own and embrace.
Yeah.
It's important for that.
Good.
But it was your letter.
Yeah. Well, I don't know where that exactly come from, but obviously it's different things. It's the return of investment of our games development, which is a significant chunk, and then there is the whole catalog. Then on top of that, we have our licensing business.
Licensing business, yeah.
These three things obviously are a very important part. I am sure there is analysts that will do that work when the time comes.
Yeah, for sure. I could sneak in one question there. Sorry, audience, if you are really eager to ask one, but it was a nice segue because you have also talked about expanding that licensing business from moving from not solely being focused on The Lord of the Rings and Tomb Raider. Can you elaborate a bit more about that opportunity?
Well, I can. It is early stage, but it is very clear direction. We see a lot of opportunities in inbound interest. What about this IP? What about that IP? And we are really interested in those discussions. We are not the master of everything. We do not have the monopoly of wisdom on every single game. And where we can partner and license out, these are great things for us across the transmedia side, but on games themselves. I think actually this is an evolution today in the gaming space that people come to you, they are very famous teams often, but they have got treatments. And it has happened in other media, and I think now we are seeing it begin to happen in games. So bringing that into one clear structure for us, is our intent and that is our ambition.
Good. Do we have any questions in the audience currently? There is a question.
Joachim Spetz, Swedbank Robur Fonder. What skills or competencies will be most important to attract to the company, and how do you work with remaining an attractive employer?
That's a great question. There's a lot of technical competencies that are fast changing and arguably some of these technical competencies, today, in one, two years with the progress of change could become less clear. I guess I come back to some fundamental things of the sort of skills we want. We want people with inquiring minds. We want teamwork. We want great communicators. Some really core aspects there. Problem solvers. There's a reference that changes about AI, and I know there's so much written about it, and the meta headlines are at a very interesting level. But when it comes down to people doing their jobs today, we want people to lean in. We want people who do have the confidence in what they can create and adopt tools that can make that faster. It exposes people as well, but we want people who have that confidence.
I think that's generally I think where we're going, and I think with the way we're now talking about ourselves and we believe in ourselves, I think we will be an attractive place for people to come and join. That's it.
We have a couple of questions from the webcast as well. We will squeeze in one or two here. One question is on, you have a goal of two major games with full economics starting next fiscal year and going forward. The question is, does that include the partner-funded titles like Tomb Raider? What specific titles do you have in the pipeline for fiscal 2029 and 2030?
Well, we couldn't divulge all those secrets, could we? I think full economics is quite clear, if I am honest. I think people generally understand that. Tomb Raider we are working with our partners at Amazon, so that wouldn't be counted within that. We are not going to get into game specific titles now or specific titles for how we see it, but we do believe in the two. That's the rhythm we are looking for. We have confidence that we can deliver to that.
Yeah. Just one question we had was on the strategy for Embracer and maybe the margin levers you can pull there, because I believe you have double-digit margins in mobile. You have single-digit margins in entertainment and services, whilst there's been a bit lower margins within PC console in that remaining business. You've done cost actions within this area, but what do you think is the main lever to pull ahead? Is it continuing cost savings and potentially divestments, or is it a top-line question or a combination?
Well, again, the answer, it's always disappointing. It's probably a combination of both.
Yeah.
Right? We always believe that. In some cases, the top-line growth is very clear that this consolidation we talked about, some of our niches are very sizable. When we talk about the specialisms we have in the distribution side right now, I think that will allow us to grow, and that will drive accretive business to us. I think we've got a number of factor, really, and that really plays to that decentralized because they're all quite unique and they've all got their own opportunities there to work forward with.
Very good. I think we will wrap it up there and continue with the agenda. Or did you have a last question? Oh, sorry. We had a last question here.
Sorry. Just a final additional question. Phil, you mentioned in the presentation your continued commitment to sustainability, and I realize this might be a bit too soon to ask, but I was just curious if you could share any additional thoughts on how you expect your overall sustainability ambitions to evolve once the spin-off is completed. My name is Erik Granström, I represent Folksam, the Swedish insurance and pension provider. Thank you.
Yeah. I'd say there's two answers to that or two aspects to that answer. One is that I think we've got a great framework. When I look at the detail we report and work to and govern, we really have set up the structures here to help us to do the right thing. I think in some ways that's going to be a, is it a copy-paste? But that is now sort of DNA, I think, that we can take into both sides of the business as we conclude the spin-out. I'd say the second thing is the ambitions won't change. I say that really, when you walk around the group, and we're a very international group, but everybody is interested in sustainability. There's not a person you get to, oh, sort of who cares? It's on everyone's agenda. How do we help?
I think that gives us comfort that the ambition that we take, we will realize.
Good. Thank you, guys.
Thanks.
Thank you.
Thank you.
Thank you.
You can walk down from the stage if you want to. Thanks a lot. Continuing item eight, that is a presentation of the annual report, et cetera. The report for the financial year has been available at the company's website since 18th of June this year. Available here in the room today with me, and some of you have probably picked it up as well, and it has been available at the company since then as well. Any questions on the report? Can't see any hands. Then I would like to welcome Magnus, the company's main responsible auditor, to the stage. Thank you.
Thank you, Mr. Chairman, ladies and gentlemen, dear shareholders. My name is Magnus Henryson. I am the auditor in charge of the audit of Embracer Group. You, the shareholders, engaged us to express our opinion on the financial statements of Embracer and the management administration of the company. Our audit has been performed throughout the year, beginning with planning and ending now with our presentation of the conclusions. We have had extensive communication with management throughout the audit on matters relating to the business operations and the financial reporting. We have reported our work to the Audit and the Sustainability Committee in connection with us finalizing the various work streams of the audit. We have met with a full board of directors to provide a summary of our work and our conclusions.
When we meet the directors, there is time and opportunity for them to ask us questions in regards of our audit, and that opportunity has been taken advantage of course. We believe that the collaboration with both management and the directors has worked very well during the year. Our global team consists of a central team of auditors and experts, and those experts come from areas such as tax, IT, sustainability, valuation, and accounting. In addition, we have instructed local teams in various territories to do work for us and report their conclusions to us to support our consolidated audit opinion. Our view is that Embracer overall has robust processes for the financial reporting, and that the business performance is presented transparently. These qualities are built on the expectations set out by the directors and management, and on the commitment and competence of the employees.
Our audit report sets out the key areas that we have determined to be the most important in our audit, and I thought I should mention a few words on each of these. The first area is revenue recognition. The diverse nature of Embracer's business generate revenue streams with varied characteristics depending on the type of product or service and how they are distributed. Embracer is party to agreements with publishers, platforms, and other counterparties that may influence how revenue are recognized. We have tested the reporting of revenues, that it is consistent with the accounting principles through evaluation of systems and controls and testing of details. We have assessed that revenues are reported correctly according to the accounting principles, and that those principles are consistent with IFRS. The second area is valuation of goodwill and other intangible assets. Embracer has acquired many businesses, as you have heard today.
Those acquisitions has led to recognition of goodwill and other assets on consolidation. They represent significant amounts. Such items have requirements that they need to be tested for impairment on an annual basis. During our audit, we have examined a sample of impairment tests and evaluated significant assumptions made. Our view is that goodwill and other intangible assets identified in business combinations have been measured correctly in accordance with IFRS. The third area of importance in our audit has been the separation and distribution of Coffee Stain. A project of this size and complexity has required a lot of management attention of various nature, including accounting matters. We believe that the distribution of Coffee Stain and the related transactions have been presented in accordance with IFRS.
As was mentioned before by Phil, the annual report also includes a sustainability report prepared in accordance with the European Sustainability Reporting Standards and the EU taxonomy. Our opinion from the review of this report can be found in the annual report. If you don't want to read that, I can tell you that it is compliant with the directive and reporting standards in the best way. I have now come to the conclusions of our audit. Those can be read from the audit opinion that is in the annual report. We recommend that the annual general meeting adopts the income statement and the balance sheet for the parent company and for the group. That the profit be appropriated in accordance with the proposal as set out in the administration report, and that the directors and the managing director be discharged of liability for the financial year. Thank you.
Thank you, Magnus. While we have Magnus on the stage, any questions about the audit report? No. Okay. Thank you very much, Magnus. Then we can conclude that the annual report and consolidated accounts has been presented. I will come to item number nine, which is resolution regarding adoption of the statements and balance sheets and discharge from liability and the profit and loss statements of the company. As we all heard, Magnus, not Magnus, but the auditors, they endorse all these proposals, and I will now go through each of them and ask you to approve them. If we start with the first, which is the adoption of the income statement and balance sheet and the group income statement and group balance sheet. Can the general meeting adopt those?
Yes.
Thank you very much. Can the general meeting decide in accordance with the board's proposal with respect to the profit to loss?
Yes.
Thank you. For the discharge of liability for the board and the CEO, can the general meeting decide to grant that?
Yes.
Thank you very much. I would just note to the minutes that directors or CEO who own shares have not participated in the vote for themselves. I will also note that sufficient majority for discharge has been reached. Now we come to item 10- 12 relating to board election and fees. We will bring up Per to present that.
Good afternoon, everyone, present and online. My name is Per Fredriksson, and I am chairing the nomination committee of Embracer. Do we have a picture of the. Yeah. There. Well, not me. Also of the nomination-
No, only you.
That's good. Firstly, I would like to say that the other members of the nomination committee, it's not only me. I was appointed by Lars Wingefors. Ola Åhman was appointed by Savvy Games Group. Andreas Wollheim, appointed by SEB Fonder and Asset Management. Erik Granström, appointed by Folksam, and Magnus Tell appointed by Alecta. I assume that everyone has had the opportunity to review the nomination committee proposal and our comments. I will therefore not go through the proposal in detail, but instead briefly highlight a few of the key considerations behind our recommendations. Firstly, our work. Ahead of the AGM, the nomination committee has held five recorded meetings and has had regular contacts in between.
For its works, the nomination committee has reviewed and considered the internal evaluation of the work that has been conducted by the board of directors and the chair's statement regarding the board's work. The nomination committee has also reviewed the company strategies and interviewed the company auditor as well as all individual members of the board. Comment to remuneration. In the process of setting and proposing the board fees, the nomination committee has conducted a thorough benchmark of board remuneration levels based on Swedish and international peers, and has also sounded with present board candidates in this effort. You may have noticed in the material a reduction in fees for chair and vice-chair. Well, as previously communicated, this reflects the reduced scope of operations and the board's responsibilities following the completed spin-offs and divestments.
I would also like to underline the fact that the nomination committee encourages directors of the board to hold shares in the company. The composition of the board. The proposed composition, this is my comment, of the board meets all requirements of the Swedish Code of Corporate Governance. I will not go through all the details of the proposals. You'll see that on the screen as well. Finally, I would like to thank my fellow members of the nomination committee, Ola, Magnus, Andreas, and Erik, for their commitment and for our excellent cooperation. Following the proposals then.
Thank you.
Okay. Any questions while I am here? No. Okay.
Thank you. I will keep this short as well and just note that as Per said, all the proposals have been included in the notice for the AGM and the complete proposal from the Nomination Committee as well. I will once again still ask if anyone has any questions on the proposals on any details. It does not seem like that. I would like to ask the meeting to decide if you want to decide in accordance with the proposal for item 10, 11, and 12. Thank you very much. Item number 13, which is presentation of the remuneration report and approval of the same. Here, it has also been available prior to the meeting on the company's website. I can note that the auditor's statement about the guidelines for remuneration to senior executives has also been available at the company's website since 24th of August.
Any questions on this item? No. Good. Can the general meeting decide in accordance with the proposal to approve the report? Thank you very much. We come to the item of the guidelines to senior executives. Again, I will not go through them in detail. They have been available at the website prior to the meeting and in the notice. Any questions from anyone? No. Can the meeting resolve in accordance with the proposal and adopt the presented guidelines? Thank you very much. We have item 15, 16, and 17, which will be done as one decision as they all are connected.
That is connected to the repurchase of shares that have been made during the buyback program, where the board now proposes that shares held in treasury up until the day of the notice are canceled by reducing the share capital of the company, which then requires a change of the articles as well. To avoid an unnecessary lengthy process with the company's registration office, a bonus issue without the issuance of shares to restore the share capital is proposed as well. Simply, any questions on these three proposals? No. Good. Can we then resolve in accordance with these proposals?
Yes.
Thank you very much. We will also note that all of them have been passed by sufficient majority as well. Then we have the resolution for authorizing the board to issue shares, warrants, or convertibles. This is the standard one we always have with up to 10%, so I will not go through that in any details either. I would like to ask the meeting if there is any questions on that. No? Thank you. Can we resolve in accordance with the proposal?
Yes.
Perfect. Thank you very much. I will note here as well that sufficient majority has been reached. Just for information as well, the number of shares based on the number of shares that will actually follow after the reduction of share capital that could be issued under this authorization amounts to 21,980,672 shares. Then we have another authorization coming in item number 19, which is to repurchase own shares. Again, I will not be lengthy. Any questions? No. Great. Let us go to resolution. You say yes or no?
Yes.
Perfect. Thank you. Note here as well, sufficient majority has been reached. One more authorization to transfer own shares. Again, any questions? No. Perfect. Can the meeting resolve in accordance with the proposal?
Yes.
Thank you very much. Again, we have sufficient majority. End of the road for this meeting. One more to follow. Lars, please take the stage.
Thank you, Ian. That was swift. But before we conclude today's meeting, I would like, on behalf of the board, to take a moment to recognize Bernt Ingman. Being at the board level of Embracer and the company has been a lot of work. The shareholders does not see much of that work, but there is some hard work, and that is why I would like to recognize Bernt, who is today stepping down from the board. Unfortunately, Bernt cannot be with us here today, but I did not want to end this meeting without recognizing his contribution over the past three years and give him a proper thank you, not only flowers. Bernt was always someone who believed in keeping things in good order, paid attention to details, he was disciplined, and he certainly kept an eye on the costs.
As chair of the audit committee, Bernt brought exactly those qualities to that role. He kept the committee firmly on track and led its work with great care and good judgment. On behalf of the whole board, a warm thank you to Bernt for his dedication, his contribution, and not least, for all the humor and positive energy he has brought to our work over the past three years. We will make sure to thank him properly when we next have the opportunity to get together in person. Thank you, Bernt.
Perfect.
That is all from me.
Thank you, Lars.
Thank you.
Then we can formally close the meeting. Thank you everyone for listening in here and somewhere else.