TIDMTM17
RNS Number : 8420M
Team17 Group PLC
19 September 2023
19 September 2023
Team17 Group plc
("Team17" or the "Group" or "Company")
UNAUDITED HALF YEAR RESULTS FOR THE SIX MONTHSED 30 JUNE
2023
Strong H1 revenue growth underpinned by new releases and
portfolio, expect full year results in line with expectations
Team17 , a global games label, creative partner, developer and
publisher of independent ("indie") premium video games, educational
entertainment apps for children, and working simulation games, is
pleased to announce its unaudited results for the six months ended
30 June 2023 ("H1 2023" or the "period").
H1 2023 financial highlights
-- Revenues increased 31% to GBP69.7m (H1 2022: GBP53.2m)
-- Gross profit increased 18% to GBP30.2m (H1 2022: GBP25.5m)
-- Adjusted EBITDA of GBP16.5m (H1 2022: GBP18.2m)
-- Profit before tax of GBP8.1m (H1 2022: GBP11.2m)
-- Adjusted profit before tax of GBP15.6m (H1 2022: GBP17.3m)
-- Earnings per share ("EPS") of 3.9 pence (H1 2022: 6.5 pence)
-- Adjusted earnings per share ("AEPS") of 8.6 pence (H1 2022: 10.4 pence)
-- Operating cash conversion of 142% (H1 2022: 139%)
-- Net cash and cash equivalents at 30 June 2023 of GBP45.2m (H1 2022: GBP51.3m)
-- Group headcount at 30 June 2023 was 438 (FY22: 392)
H1 2023 operational highlights
-- Strong H1 2023 revenue growth across the Group, driven by the
diversified portfolio of games, apps and strong new release
profile.
-- Group H1 2023 EBITDA performance reflects the early H2
release pipeline which drove increased marketing and operational
costs in H1 to support the release profile, with these costs
reducing in H2.
-- Team17 Games Label delivered strong revenue growth across its portfolio in H1 2023:
o 17 (H1 2022: 20) new downloadable content ("DLC") packages
released across 13 (H1 2022: 12) titles.
o Content portfolio now comprises over 800 digital revenue lines
(H1 2022: over 600 digital revenue lines).
o 5 new titles released in H1 which included Dredge , Trepang2
and Killer Frequency.
o 2 existing titles released on additional platforms.
-- astragon delivered a strong performance underpinned by own IP revenues:
o 12 paid DLC, two season passes and free content updates
launched to select own IP titles in the period (H1 2022: 10).
o Own IP working simulation titles Construction Simulator and
Police Simulator have maintained continued impressive sales
momentum following Q3 & Q4 FY 2022 launches respectively.
o Completed the acquisition of Independent Arts Software GmbH
("IAS") in April 2023, expanding the working simulation development
team to accelerate the creation and launch of a new own IP
title.
-- StoryToys delivered a strong performance across the portfolio
with payable active subscribers continuing to grow to over 320,000
(H1 2022: over 250,000):
o Extended and strengthened relationships with key license
partners including Mattel, Marvel Entertainment, Sesame Workshop,
The LEGO(R) Group and The Walt Disney Company.
o Launched 3 new apps in H1 2023: Barbie Color Creations,
LEGO(R) DUPLO(R) DISNEY - MICKEY AND FRIS and Marvel HQ.
o Developed and launched 134 (H1 2022: 108) app updates across
existing titles.
-- Continued to strengthen the leadership and Board bringing in
operational depth and video gaming experience as we prepare for the
next phase of diversified growth.
Outlook
-- Strong H1 revenue performance de-risks FY23 delivery with a reduced H2 weighting.
-- We expect H2 EBITDA to benefit from more favourable phasing
of costs, planned cost efficiencies and controls, which together
with the second half pipeline of new title releases and content
updates, will deliver second half weighted results.
-- The Board therefore expects to deliver full year results in
line with current market expectations.
-- The Group continues to be highly cash generative, maintains a
strong balance sheet and is mindful of the acquisition and
consolidation opportunities that exist in the current market.
-- Whilst cognisant of the competitive pressures in the games
market with high-quality games and elevated discounting levels, the
Board remains confident in the long-term trajectory of the
business.
-- The Group continues to bolster and differentiate Team17's
customer offering to broaden its market appeal.
-- The Board remains confident in the long-term trajectory of the business.
Debbie Bestwick MBE, CEO of Team17, said:
"We are pleased with the Group's first half performance, with
strong growth delivering record revenue levels, against a backdrop
of one of the most competitive years for high quality launches and
deep peer discounting that I can remember. The strength of our
results illustrates the success of our diverse portfolio strategy,
expertise in lifecycle management and franchise building,
disciplined approach to discounting, and the tireless commitment of
our people across the Group.
"We are mindful that the gaming environment remains highly
competitive, and we continuously review cost efficiencies to ensure
we have the right balance between internal and outsourced resources
in our service areas. We believe that this will enable us to remain
agile and cost effective to deliver the best results for our
partners and stakeholders over future years.
"astragon and StoryToys continue to deliver strong revenue
growth, high quality content and synergy opportunities. In the
current environment, I believe our strong balance sheet and M&A
track record puts us in an excellent position to pursue further
opportunities which can support our strategy of enhancing the
Group's reach across genres, platforms, and customer demographics.
We are being presented with more new content opportunities of
quality than ever before and will remain as highly disciplined in
our approach as ever to ensure we maintain our track record of
delivering exceptional games to our customers.
"I have been impressed with the passion, insight, and leadership
that Steve Bell has already brought to the Group in his role as CEO
designate and am delighted with Frank Sagnier's appointment as
Chair designate. So finally, as I enter my last few months as CEO,
I can confidently say I have never been more excited about the
Group's leadership and future."
Analyst and institutional investor webcast
A webcast presentation for analysts and institutional investors
will be held on Tuesday, 19 September 2023 at 8.00 a.m. BST. To
register for this event and join the stream on the day, please
click the following link: https://brrmedia.news/TM17_HYR23
Retail investor webcast
A webcast for retail investors will be held on Thursday, 21
September 2023 at 2.00 p.m. BST. The presentation will be hosted on
the Investor Meet Company platform. Questions can be submitted
pre-event via the Investor Meeting Company dashboard up until 9.00
a.m. the day before the meeting or at any time during the live
presentation.
Investors can sign up for free and add to meet Team17 via:
https://www.investormeetcompany.com/team17-group-plc/register-investor
Enquiries:
Team17 Group plc via Vigo Consulting
Debbie Bestwick MBE, Chief Executive Officer
Steve Bell, Chief Executive Officer Designate
Mark Crawford, Chief Financial Officer
James Targett, Group Investor Relations Director
Houlihan Lokey UK Limited (Nominated Adviser)
Adrian Reed / Tim Richardson +44 (0)161 250 3577
Berenberg (Joint Corporate Broker)
Toby Flaux / Ben Wright / Marie Moy / Alix
Mecklenburg-Solodkoff +44 (0)20 3207 7800
Peel Hunt (Joint Corporate Broker)
Neil Patel / Paul Gillam / Richard Chambers
/ James Smith +44 (0)20 7418 8900
Vigo Consulting (Financial Public Relations)
Jeremy Garcia / Fiona Hetherington / Kate
Kilgallen
team17@vigoconsulting.com +44 (0)20 7390 0233
About Team17
Team17 Group plc is a global provider of games entertainment to
a broad audience. The Group now includes a games entertainment
label and creative partner for indie developers, a leading
developer of educational apps, targeting children under the age of
eight, and a leading working simulation games developer and
publisher.
Visit www.team17.com for more info.
Operational Review
The Group delivered another solid performance in H1 2023,
reporting record revenue following strong contributions from the
three divisions: Games Label, StoryToys, and astragon.
Team17 now benefits from operating across a much enlarged
geographical footprint and customer demographic, and while the
divisions continue to function autonomously, with their own
distinct identities and audiences, they remain fully aligned to the
Group's shared company values and a collective drive to deliver the
highest quality games and apps for their customers.
The Group has continued to see significant traction in games and
apps across the portfolio, from both customers and platform
partners. Our divisions remain focused on bringing new titles to
our expanded audience base, as well as maintaining engagement
through additional content and where appropriate sequels for the
existing titles in their portfolios. During the period across the
three divisions, the Group has launched 5 new titles, 2 existing
titles on additional platforms, 3 new edutainment apps, 31 paid for
and free DLC updates and 134 app updates.
Revenues in H1 2023 grew 31% to a record GBP69.7m (H1 2022:
GBP53.2m), with gross profit of GBP30.2m (H1 2022: GBP25.5m). This
strong performance is underpinned by the combined contribution of
the Games Label, StoryToys and astragon, as well as growth in
revenues from third party IP of 30% to GBP42.7m (H1 2022:
GBP32.8m). This represented 61% (H1 2022: 62%) of total revenue and
benefited from StoryToys app sales alongside the standout
performance of the Games Label's Dredge which launched in the
period. Revenues from own IP titles grew 32% in total delivering
revenues of GBP27.0m (H1 2022: GBP20.4m) making up 39% of total
revenues (H1 2022: 38%). Own IP titles across the Group include
Golf With Your Friends ("GWYF"), Hell Let Loose ("HLL"),
Construction Simulator and Police Simulator.
The Group's new release revenues contributed GBP14.9m (H1 2022:
GBP0.2m) predominantly coming from the Games Label, with the back
catalogue generating revenues of GBP54.8m (H1 2022: GBP53.0m)
demonstrating the continued strength of the Group's broadening
portfolio.
Gross margins were impacted in H1 2023 by several factors
including: the sales mix between own and third party IP across the
divisions and their associated royalties; ongoing investment in the
back catalogue content updates; higher expensed development costs
and increased amortisation charges driven in part by the timing of
new titles launched in the period as well as those launched towards
the end of FY 2022.
Administrative expenses for H1 2023 were GBP21.7m (H1 2022:
GBP13.6m) which include GBP6.1m acquisition-related adjustments (H1
2022: GBP5.5m) which are outlined in Note 5 below. The underlying
cost base saw enlarged headcount across the Group to support the
increased demands to develop and launch titles across the
ever-expanding portfolio. Marketing costs were more heavily first
half weighted compared with the prior year supporting both the
launch of titles in the period and also titles launched at the
start of H2 2023. In addition, attendances at live events saw an
increase in spend in H1 2023. General inflation to other costs
alongside a strengthening GBP compared to the same period last year
have contributed to the overall increase in administrative
expenses.
Overall headcount has grown to 438 (H1 2022: 345) in part a
result of the increased headcount across the existing Group in the
second half of FY 2022, but also includes the development team of
45 within the Independent Arts Software GmbH ("IAS") acquired by
astragon in April 2023; this accounts for almost all of the
increase in headcount since the start of the year (FY2022:
392).
As a consequence of the factors influencing gross margin
outlined above combined with the front loading in marketing spend
and investment in people in H1, adjusted EBITDA decreased to
GBP16.5m (H1 2022: GBP18.2m) with an adjusted EBITDA margin(1) of
24% (H1 2022: 34%).
Earnings per Share for the period decreased to 3.9 pence (H1
2022: 6.5 pence) reflecting the cost impacts outlined above;
increase in the number of shares in issue; and also the relative
impact of tax rates across the Group including the increase in UK
tax rate in April 2023. The adjusted Earnings per Share ( adding
back share-based compensation costs, acquisition-related costs and
adjustments) of 8.6 pence (H1 2022: 10.4 pence) better reflects the
underlying performance in the period across the Group.
Operating cash conversion was 142% (H1 2022: 139%) elevated from
the 2022 year-end and reflects seasonal working capital movements.
Cash and cash equivalents at the end of the period were GBP45.2m
(H1 2022: GBP51.3m) after payments for contingent consideration
made in H1 2023 alongside GBP2.3m for the acquisition of IAS.
Following the announcement of Debbie Bestwick's intention to
step down as Group Chief Executive Office to assume a Non-Executive
Director ("NED") role, the Group appointed Steve Bell as her
successor. Steve joined the Group earlier this month and will be
working alongside Debbie until the end of the year to ensure a
smooth transition ahead of Debbie assuming her NED role in January
2024.
The Board has been further strengthened with the appointment of
Peter Whiting as NED/Chair of RemCom and Frank Sagnier as Chair
designate, who come with a wealth of experience in various NED
roles and video gaming respectively. The Group would like to thank
Jennifer Lawrence, Martin Hellawell and Chris Bell for their
unwavering support and contribution to Team17 and wish them all the
very best in their future endeavours.
Additionally, we have strengthened the Group leadership team
with the addition of Ann Hurley who joined in July 2023 as Group
Commercial Operations Director. She brings over 15 years of
outsourcing knowledge alongside her combined three decades of
experience across the games industry in senior sales, business
development, marketing, leadership and operational roles. James
Targett joined in August 2023 as Group Investor Relations Director
with over two decades of experience in equity research with several
major investment banks. Nigel Martin joins in September 2023 as
Group People and Culture Director with over three decades
experience in commercial, strategic, and international HR
leadership roles in large blue-chip companies as well as smaller
entrepreneurial businesses.
Having undergone a sustained period of acquisitive growth, the
core foundations of Team17's business strategy remain unchanged,
with a focus on identifying, developing, and publishing genre
agnostic content that appeals to a wide range of users and is
accessible through multiple platforms.
As demonstrated by the strong revenue growth in H1 2023, the
Group is also cognisant of the importance of lifecycle management
of existing games in the portfolio in addition to important new
title launches, and more recently, in exploring synergy
opportunities across the enlarged Group This was demonstrated when
astragon managed the physical launch for Team17 Games Label's
Blasphemous 2. To that end, we continue to develop and launch
exciting new content and extensions to our existing games and app
portfolio, responding to market demand and implementing customer
feedback wherever possible.
Games Label
The Games Label continues to perform well, having launched 5 new
titles and 2 existing titles on to additional platforms alongside
multiple DLC updates in H1 2023, delivering revenue growth of 15%
to GBP47.1m (H1 2022: GBP40.8m). The Games Label continues to build
out their diverse portfolio ensuring all new content is of the
highest possible quality, with each new title undergoing rigorous
quality assurance testing prior to release. The Games Label's
continued success remains rooted in our expertise in lifecycle
management, franchise building, own IP launches, and third party IP
management, all of which underpin stable and scalable revenue
streams.
Titles launched in H1 2023 included Trepang 2 and Dredge, and
DLC for GWYF and Marauders. Additionally, Team17 USA's Farmside
title was launched on Apple Arcade in February 2023, achieving top
5 engagement levels in week one and achieving a current worldwide
4.2 out of 5-star rating. This was followed by the release from
Team17 USA and subsequent launch of Summon Quest on Apple Arcade in
April 2023.
Within the Games Label, Team17 Digital now boasts over 800
digital revenue lines, an increase from the prior year period (H1
2022: over 600).
The Games Label titles Farmside and Dredge, and the Games Label
itself, were nominated in seven categories at the Develop:Star
Awards which took place in July 2023, with the Games Label and
Dredge crowned the winners in the Publishing Star and Best Small
Studio categories respectively.
The Games Label has launched a number of highly anticipated
sequels, including those to Moving Out and Blasphemous and launched
the new title Gord, all of which were released early in the second
half. The Games Label has a further 2 new title releases planned
for later in the second half, including Headbangers - Rhythm
Royale.
StoryToys
StoryToys has had an exceptionally busy H1 2023, delivering a
solid performance in line with expectations with revenues up 39 %
to GBP6.4m (H1 2022: GBP4.6m). Total subscriptions and subscription
revenues have continued to trend upwards in H1 2023, with StoryToys
now boasting over 320,000 active subscribers (H1 2022: over
250,000).
Through the strengthening of key partner relationships,
StoryToys has further consolidated their reputation with leading
brands wishing to extend their reach into the edutainment space.
StoryToys remains focused on providing a firm basis on which to
nurture and further grow their strategic brand partnerships for
years to come.
A number of titles were released in the period, the result of
new brand agreements and contract extensions with existing
partners. These include:
o New license agreement with Mattel to launch Barbie Color
Creations in June 2023
o New license agreement to launch LEGO(R) DUPLO(R) Disney Mickey
and Friends in April 2023
o Agreement extension with Marvel Entertainment to include a new
Marvel HQ app, which launched in May 2023
StoryToys also launched Disney Coloring World+ on Apple Arcade
in May 2023, expanding the active user base of the title.
(c)2023 The LEGO GROUP
(c) 2023 MARVEL
(c) 2023 Disney
StoryToys' H2 2023 pipeline is strong, with multiple new content
updates planned, in addition to the launch of LEGO(R) DUPLO(R)
WORLD+ on Apple Arcade in July 2023. Management is encouraged by
Mattel's decision to enter a long-term licensing deal with
StoryToys to build their brand in the edutainment space. Looking
ahead, StoryToys will continue to actively seek additional
opportunities to further expand its network of global license
partners.
astragon
astragon continues to perform strongly and in line with
management expectations, benefitting from the highly successful
launches of Construction Simulator and Police Simulator in Q3 and
Q4 2022 respectively. Overall, sales increased 109 % to GBP 16.3 m
in the period (H1 2022: GBP7.8m), noting that the prior year was
heavily second half weighted with launches on all own IP
titles.
Portfolio content updates were launched for a number of own IP
titles across the period, including a JCB pack and Airfield
Expansion for Construction Simulator, and Next Stop 21 for Bus
Simulator. All titles in the portfolio continue to gain good
customer traction, supported by the release of 12 DLC (H1 2022: 3)
and content updates in the period.
In June 2023, astragon announced a partnership with Randwerk
Games to publish their atmospheric physics-destruction building
game, ABRISS - build to destroy. The game is currently available
for PC in Early Access and won the Best Graphic Design award at the
German Computer Game Awards in 2023. ABRISS - build to destroy saw
its full launch on PC at the start of September with expectations
to release on wider platforms in the near future.
Alongside the third party title launches of ABRISS - build to
destroy and Howl, astragon has multiple planned updates and DLC
releases across their own IP titles during the second half.
In April 2023, the Group announced that astragon had acquired
Independent Arts Software ("IAS"), a long-established third party
development partner of astragon. This acquisition brings a team of
expert 'simulation' developers that will ultimately accelerate the
development and launch of new astragon IP. The integration of IAS
is now complete, with the team based in their own studio in Hamm,
Germany.
Outlook
-- The games market in the second half of the year FY 2023 is
expected to continue to be more competitive than it has been for a
number of years in terms of high-quality games and elevated
discounting levels.
-- Strong H1 revenue performance de-risks FY 2023 delivery with a reduced H2 weighting.
-- Anticipate adjusted EBITDA for FY 2023 will remain in line
with current market expectations, with improved adjusted EBITDA
margins in H2 due to more favourable phasing of costs, supported by
planned and identified cost efficiencies and controls.
-- The Group continues to be highly cash generative, maintaining
a strong balance sheet and is mindful of the ongoing acquisition
and consolidation opportunities that exist in the current
market.
-- We continue to focus on bolstering and differentiating
Team17's customer offering to broaden our market appeal.
-- The Board remains confident in the long-term trajectory of the business.
Debbie Bestwick MBE
Group Chief Executive Officer
19 September 2023
Condensed Consolidated Income Statement
Unaudited Unaudited
Six months Six months
ended ended
30 June 30 June
2023 2022
Note GBP'000 GBP'000
Revenue 4 69,708 53,249
Cost of sales (39,501) (27,705)
-------------------------------------------- ----- ------------ ------------------------------
Gross profit 30,207 25,544
Gross profit % 43.3% 48.0%
Administrative expenses (21,678) (13,639)
Other Income 2 257
-------------------------------------------- ----- ------------ ------------------------------
Operating profit 8,531 12,162
Amortisation of other intangibles 553 16
Depreciation 644 577
Share based compensation 612 (69)
Acquisition-related adjustments (excluding
interest on consideration) 6,117 5,539
-------------------------------------------- ----- ------------ ------------------------------
Adjusted EBITDA(1) 5 16,457 18,225
-------------------------------------------- ----- ------------ ------------------------------
Finance income 36 7
Finance cost (461) (1,000)
-------------------------------------------- ----- ------------ ------------------------------
Profit before tax 8,106 11,169
Taxation (2,546) (2,262)
-------------------------------------------- ----- ------------ ------------------------------
Profit for the period 5,560 8,907
============================================ ===== ============ ==============================
Basic earnings per share 6 3.9 Pence 6.5 Pence
Diluted earnings per share 6 3.9 Pence 6.4 Pence
Basic adjusted earnings per share 6 8.6 Pence 10.4 Pence
Diluted adjusted earnings per share 6 8.6 Pence 10.3 Pence
-------------------------------------------- ----- ------------ ------------------------------
All results relate to continuing activities.
(1) Adjusted EBITDA is defined as operating profit adjusted to
add back depreciation of property, plant and equipment,
amortisation of intangible assets (excluding capitalised
development costs), share based compensation and all acquisition
related adjustments and fees.
Condensed Consolidated Statement of Comprehensive Income
Unaudited Unaudited
Six months Six months
ended ended
30 June 30 June
2023 2022
GBP'000 GBP'000
Profit for the period 5,560 8,907
Items which might be potentially
reclassified to profit or loss:
Exchange difference on translation
of foreign operations (4,105) 5,345
------------------------------------- ------------- -------------
Total comprehensive income for
the period 1,455 14,252
------------------------------------- ------------- -------------
Condensed Consolidated Statement of Financial Position
Unaudited Unaudited Audited
30 June 30 June 31 December
2023 2022 2022
Note GBP'000 GBP'000 GBP'000
-------------------------------- ----- ---------- ---------- -------------
ASSETS
Non-current assets
Investments in associates 832 645 1,045
Intangible fixed assets 7 239,086 225,989 234,109
Property, plant and equipment 1,782 1,933 1,692
Right of use assets 4,271 2,818 2,785
Deferred tax asset - 14 -
-------------------------------- ----- ---------- ---------- -------------
245,971 231,399 239,631
-------------------------------- ----- ---------- ---------- -------------
Current assets
Trade and other receivables 26,490 18,966 36,044
Inventories 929 969 1,225
Cash and cash equivalents 45,159 51,295 50,828
-------------------------------- ----- ---------- ---------- -------------
72,578 71,230 88,097
-------------------------------- ----- ---------- ---------- -------------
Total assets 318,549 302,629 327,728
================================ ===== ========== ========== =============
EQUITY AND LIABILITIES
Equity
Share capital 1,457 1,456 1,456
Share premium 132,923 136,775 132,126
Merger reserve (restated) (149,173) (153,822) (149,173)
Currency translation reserve 3,865 5,245 7,970
Other reserves 159,296 159,296 159,296
Retained earnings 106,971 86,200 100,785
-------------------------------- ----- ---------- ---------- -------------
Total equity 255,339 235,150 252,460
-------------------------------- ----- ---------- ---------- -------------
Non-current liabilities
-------------------------------- ----- ---------- ---------- -------------
Lease liabilities 3,918 2,689 2,625
Other payables - 25,242 9,369
Provisions 155 124 140
Deferred tax liabilities 8,229 8,624 9,169
-------------------------------- ----- ---------- ---------- -------------
Total non-current liabilities 12,302 36,679 21,303
-------------------------------- ----- ---------- ---------- -------------
Current liabilities
Trade and other payables 49,097 28,722 52,339
Current tax liabilities 1,081 1,718 1,262
Lease liabilities 730 360 364
-------------------------------- ----- ---------- ---------- -------------
Total current liabilities 50,908 30,800 53,965
-------------------------------- ----- ---------- ---------- -------------
Total liabilities 63,210 67,479 75,268
-------------------------------- ----- ---------- ---------- -------------
Total equity and liabilities 318,549 302,629 327,728
-------------------------------- ----- ---------- ---------- -------------
Condensed Consolidated Statement of Changes in Equity
Share Share Merger Currency Other Retained
capital premium Reserve translation reserves earnings Total
(restated) (restated) reserve
Six months to Note GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
30 June 2022
----------------- ------ --------- -------------- ------------ ------------- ---------- ---------- -----------
Balance at
1 January 2022
(audited) 1,315 44,084 (153,822) (100) 159,296 76,863 127,636
------------------------- --------- -------------- ------------ ------------- ---------- ---------- -----------
Profit for the
period - - - - - 8,907 8,907
Other comprehensive
income for the
period - - - 5,345 - - 5,345
Transactions
with
owners
Issue of shares
for a business
combination (restated) 6 - 4,649 - - - 4,655
Issue of shares
for acquisition
of IP 15 11,779 - - - - 11,794
Issue of shares
to satisfy share
options 10 - - - - - 10
Contributions of
equity 110 76,263 - - - - 76,373
Share based compensation - - - - - 430 430
========================= ========= ============== ============ ============= ========== ========== ===========
Total transactions
with owners (restated) 141 88,042 4,649 - - 430 93,262
------------------------- --------- -------------- ------------ ------------- ---------- ---------- -----------
Balance at
30 June 2022 (restated)
(unaudited) 1,456 132,126 (149,173) 5,245 159,296 86,200 235,150
------------------------- --------- -------------- ------------ ------------- ---------- ---------- ===========
Six months to
31 December
2022
================= ====== ============== ---------------------------------------------------------------------------
Balance at
1 July 2022 (unaudited) 1,456 132,126 (149,173) 5,245 159,296 86,200 235,150
Profit for the
period - - - - - 14,571 14,571
Other comprehensive
expense for the
period - - - 2,725 - - 2,725
Transactions
with
owners
Share based compensation - - - - - 14 14
------------------------- --------- -------------- ------------ ------------- ---------- ---------- -----------
Total transactions
with owners - - - - - 14 14
------------------------- --------- -------------- ------------ ------------- ---------- ---------- -----------
Balance at
31 December 2022
(audited) 1,456 132,126 (149,173) 7,970 159,296 100,785 252,460
------------------------- --------- -------------- ------------ ------------- ---------- ---------- -----------
Six months to
30 June 2023
-------------------------- -------- ---------- ------------ -------- ---------- ---------- ----------
Balance at
1 January 2023
(audited) 1,456 132,126 (149,173) 7,970 159,296 100,785 252,460
Profit for the
period - - - - - 5,560 5,560
Other comprehensive
income - - - (4,105) - - (4,105)
Transactions
with owners
Share based compensation - - - - - 626 626
Issue of ordinary
shares 1 797 - - - - 798
--------------------------- -------- ---------- ------------ -------- ---------- ---------- ----------
Total transactions
with owners 1 797 - - - 626 1,424
--------------------------- -------- ---------- ------------ -------- ---------- ---------- ----------
Balance at
30 June 2023
(unaudited) 1,457 132,923 (149,173) 3,865 159,296 106,971 255,339
=========================== ======== ========== ============ ======== ========== ========== ==========
H1 22 restatement: The premium on the share for share exchange
as part of a business combination was reclassified to the merger
reserve instead
of the share premium reserve under the Companies Act.
Condensed Consolidated Statement of Cash Flows
Unaudited Unaudited
Six months Six months
ended ended
30 June 30 June
2023 2022
Note GBP'000 GBP'000
------------------------------------------- ----- ------------ ------------
Operating activities
Profit before tax 8,106 11,169
Adjustments for:
Depreciation of property, plant and
equipment 382 355
Depreciation of right-of-use assets 171 222
Amortisation of intangible fixed
assets 7 12,285 8,463
Share of profits of associates 239 -
Share-based compensation 626 440
Finance income (36) (7)
Financial expenses 461 1,000
Decrease/(increase) in trade and
other receivables 9,334 17,757
(Decrease)/increase in trade and
other payables (1,441) (10,555)
Decrease/(increase) in inventory 262 (521)
Increase in provisions 15 15
------------------------------------------- ----- ------------ ------------
Cash generated from operating activities 30,404 28,338
Tax paid (3,328) (3,430)
------------------------------------------- ----- ------------ ------------
Net cash inflow from operating activities 27,076 24,908
------------------------------------------- ----- ------------ ------------
Cash flow from investing activities
Acquisition of subsidiaries (net
of cash acquired) (4,875) (74,313)
Purchase of property, plant and equipment (392) (733)
Purchase of Intellectual Property 7 (7,500) (18,750)
Purchase of other intangibles (875) -
Capitalisation of development costs 7 (18,331) (10,018)
Interest received 36 7
------------------------------------------- ----- ------------ ------------
Net cash outflow from investing
activities (31,937) (103,807)
------------------------------------------- ----- ------------ ------------
Cash flow from financing activities
Interest paid (68) (361)
Proceeds from issues of shares - 76,372
Repayment of lease liabilities (184) (121)
------------------------------------------- ----- ------------ ------------
Net cash (outflow)/inflow from financing
activities (252) 75,890
------------------------------------------- ----- ------------ ------------
Net (decrease)/increase in cash
and cash equivalents (5,113) (3,009)
Cash and cash equivalents at beginning
of period 50,828 55,302
Effect of exchange rates on cash
and cash equivalents (556) (998)
------------------------------------------- ----- ------------ ------------
Cash and cash equivalents at end
of period 45,159 51,295
------------------------------------------- ----- ------------ ------------
Notes to the Condensed Consolidated Interim Financial
Statements
1. Nature of operations and general information
Team17 Group Plc and its subsidiaries (The Group) are a global
games label, creative partner and developer of independent
("indie"), premium video games and developer and publisher of
educational entertainment ("edutainment") apps for children and a
leading working simulation games developer and publisher.
2. Basis of preparation
These condensed consolidated interim financial statements have
been prepared in accordance with the AIM rules and UK adopted IAS
34 "Interim Financial Reporting". The condensed consolidated
interim financial statements for the 6 months ended 30 June 2023
should be read in conjunction with the financial statements of
Team17 Group Plc for the year ended 31 December 2022 (the "Prior
year financial statements") which includes the financial results of
the Group prepared in accordance with international accounting
standards in conformity with the requirements of the Companies Act
2006 ('IFRS') and the applicable legal requirements of the
Companies Act 2006.
The report of the auditors for the prior year financial
statements for the year ended 31 December 2022 was unqualified, did
not contain an emphasis of matter paragraph and did not include a
statement under Section 498 of the Companies Act 2006. The Group's
condensed consolidated interim financial statements are not audited
and do not constitute statutory financial statements as defined in
Section 434 of the Companies Act 2006. These condensed consolidated
interim financial statements were approved for issue on 12
September 2023.
Going concern
Management has produced forecasts that have also been sensitised
to reflect plausible downside scenarios which have been reviewed by
the directors. These demonstrate the Group is forecast to generate
profits and cash in the year ending 31 December 2024 and beyond and
that the Group has sufficient cash reserves to enable the Group to
meet its obligations as they fall due for a period of at least 12
months from the release of these results.
As such, the directors are satisfied that the Group has adequate
resources to continue to operate for the foreseeable future. For
this reason they continue to adopt the going concern basis for
preparing this interim report.
Accounting policies
The Group's principal accounting policies used in preparing this
information are as stated on pages 55 to 63 of the prior year
financial statements. There has been no change to any accounting
policy from the date of the prior year financial statements. A
review of revenue recognition focussing on the recognition of
revenue as either Gross or Net is currently underway recognising
the changing nature of the games sector.
3. Segmental information
The Group has three different operating segments within the
business which are as follows:
-- Games Label - Developing and publishing video games for the digital and physical market.
-- Simulation - Developing and publishing simulation games for
the digital and physical market.
-- Edutainment - Developing educational entertainment apps for children.
The chief operating decision maker ("CODM") of the Group is
considered to be Debbie Bestwick MBE and Mark Crawford, the group
executive directors. The CODM review's the Group's internal
reporting in order to assess performance and allocate resources.
The CODM determines the operating segments based on these reports
and on the internal reporting structure.
The CODM considered the aggregation criteria set out within IFRS
8 "Operating Segments" where two or more operating segments can be
combined for reporting purposes so long as aggregation provides
financial statement users with information to evaluate the business
and the environment in which it operates.
After assessing this criteria, the CODM deems it appropriate for
all three operating segments to be aggregated and reported as a
single segment. Each segment develops and publishes games and apps
using own and third-party IP through similar distribution methods
with similar margins in the same regulatory environments.
Therefore, all figures reported in these results are reported as a
single aggregated reporting segment.
4. Revenue
Whilst the CODM considers there to be only one reportable
segment, the Company's portfolio of games is split between internal
IP (those based on IP owned by the Group) and third-party IP
incurring royalties to the IP owner which are included in cost of
sales. Therefore, to aid the readers understanding of our results,
the split of revenue from these two categories is shown below:
Revenue by Own IP/Third Party IP:
Unaudited Unaudited
Six months Six months
ended ended
30 June 30 June
2023 2022
GBP'000 GBP'000
---------------- ------------ ------------
Own IP 27,031 20,414
Third Party IP 42,677 32,835
------------ ------------
69,708 53,249
============ ============
The Group does not provide any information on the geographical
location of sales as the majority of revenue is through third-party
distribution platforms which are responsible for the data of
consumers.
5. Alternative Performance Measures
Adjusted Profit After Tax
Unaudited
Six months Unaudited
ended Six months
30 June ended
2023 30 June 2022
GBP'000 GBP'000
----------------------------------------- ------------ --------------
Profit before tax 8,106 11,169
Share based compensation 612 (69)
Acquisition-related adjustments
:
Acquisition fees (Admin expenses) 87 550
Fair value movements on acquisition
balances (Admin expenses) 1,797 118
Interest on consideration (Finance
cost) 768 700
Other acquisition-related adjustments
(Admin expenses) (460) 172
Amortisation on acquired intangible
assets (Admin expenses) 4,693 4,683
------------ --------------
Adjusted profit before tax 15,603 17,323
Taxation (net of adjustments
above) (3,227) (3,031)
------------ --------------
Adjusted profit after tax 12,376 14,292
------------ --------------
The share-based compensation figure includes the add back of
Employers' National Insurance contributions due upon exercise of
the share options.
Adjusted EBITDA
Unaudited
Six months Unaudited
ended Six months
30 June ended
2023 30 June 2022
GBP'000 GBP'000
--------------------------------------- ------------ --------------
Profit before tax 8,106 11,169
Amortisation on other intangibles 553 16
Depreciation 644 577
Net interest (343) 293
Share based compensation 612 (69)
Acquisition-related adjustments
:
Acquisition fees 87 550
Fair value movements on acquisition
balances 1,797 118
Interest on consideration 768 700
Other acquisition-related
adjustments (460) 188
Amortisation on acquired
intangible assets 4,693 4,683
------------ --------------
Adjusted EBITDA 16,457 18,225
------------ --------------
Operating cash conversion
Operating cash conversion is defined as cash generated from
operating activities as per the statement of cash flows adjusted to
add back payments made to satisfy pre-acquisition liabilities
recognised under IFRS 3 "Business Combinations", divided by
earnings before interest, tax, depreciation and amortisation
("EBITDA").
Unaudited Unaudited
Six months Six months
ended ended
30 June 30 June
2023 2022
------------------------------- ------------ ------------
Cash generated from operating
activities 30,404 28,338
Payments made to satisfy
pre-acquisition liabilities
recognised under IFRS 3
"Business Combinations" - 1,036
------------ ------------
Adjusted cash generated
from operating activities 30,404 29,374
EBITDA 21,460 21,202
Adjusted operating cash 139%*
conversion 142%
------------ ------------
*The operating cash conversion metric was impacted by the
acquisitions made in the period and the acquired working capital.
After adjusting the metric to remove operating cashflows from
businesses acquired from the operating cash conversion calculation
in the period to 30 June 2022 the figure would have been 111%.
6. Earnings per share
The calculation of the basic earnings per share is based on the
profits attributable to the shareholders of Team17 Group plc
divided by the weighted average number of shares in issue. The
weighted average number of shares takes into account treasury
shares held by the Team17 Employee Benefit Trust. The diluted
earnings per share uses the same calculation however the number of
shares in issue is adjusted to include shares considered to be
dilutive under the treasury stock method. An option is considered
to be dilutive when the total proceeds per option are less than the
average share price for the period.
Unaudited Unaudited
Six months Six months
ended ended
30 June 30 June
2023 2022
------------------------------- ------------ ------------
Profit for the period GBP'000 5,560 8,907
Weighted average number
of shares 143,724,920 137,624,741
Weighted average diluted
number of shares 143,972,343 138,720,958
------------ ------------
Basic earnings per share
(pence) 3.9 6.5
Diluted earnings per share
(pence) 3.9 6.4
------------ ------------
The calculation of adjusted earnings per share is based on the
profit attributable to shareholders as shown in the Statement of
Comprehensive Income plus additional costs added back during the
year as shown in note 5. The weighted average diluted number of
shares includes share options considered to be dilutive under the
treasury stock method as described above.
Unaudited
Six months Unaudited
ended Six months
30 June ended
2023 30 June 2022
--------------------------- ------------ --------------
Adjusted profit for the
period GBP'000 12,375 14,308
Weighted average number
of shares 143,724,920 137,624,741
Weighted average diluted
number of shares 143,972,343 138,720,958
------------ --------------
Adjusted basic earnings
per share (pence) 8.6 10.4
Adjusted diluted earnings
per share (pence) 8.6 10.3
------------ --------------
7. Intangibles
Customer
Development Acquired and Developer Other
costs Brands Apps Relationships Intangibles Goodwill Total
GBP'000 GBP'000 GBP'0000 GBP'000 GBP'000 GBP'000 GBP'000
------------------- -------------- ---------- ----------- --------------- -------------- ----------- ----------
Cost
At 1 January 2022
(audited) 29,597 34,738 6,228 - 107 41,449 112,119
Additions 10,018 43,773 - - - - 53,791
Acquisitions - 2,034 21,716 4,720 - 65,964 94,434
Disposals (440) - - - - - (440)
Translation on
foreign
operations 145 48 407 545 - 3,830 4,975
-------------- ---------- ----------- --------------- -------------- ----------- ----------
At 30 June 2022
(unaudited) 39,320 80,593 28,351 5,265 107 111,243 264,879
Additions 16,014 - - - 11 - 16,025
Translation on
foreign
operations 158 90 1,003 15 6 2,181 3,453
-------------- ---------- ----------- --------------- -------------- ----------- ----------
At 31 December
2022 (audited) 55,492 80,683 29,354 5,280 124 113,424 284,357
Additions 18,823 - - - 875 - 19,698
Acquisitions - - - - 1 2,106 2,107
Disposals (975) - - - - - (975)
Translation on
foreign
operations (317) (92) (920) (252) (18) (3,243) (4,842)
-------------- ---------- ----------- --------------- -------------- ----------- ----------
At 30 June 2023
(unaudited) 73,023 80,591 28,434 5,028 982 112,287 300,345
-------------- ---------- ----------- --------------- -------------- ----------- ----------
Amortisation
At 1 January 2022
(audited) 19,749 10,749 311 - 2 - 30,811
Charge for the
period 2,804 3,097 2,298 248 16 - 8,463
Disposals (440) - - - - - (440)
Translation on
foreign
operations 3 2 43 15 - - 63
============== ========== =========== =============== ============== =========== ==========
At 30 June 2022
(unaudited) 22,116 13,848 2,652 263 18 - 38,897
Charge for the
period 6,473 3,118 1,371 268 - - 11,230
Translation on
foreign
operations 73 7 121 (3) 23 - 221
-------------- ---------- ----------- --------------- -------------- ----------- ----------
At 31 December
2022 (audited) 28,662 16,873 4,144 528 41 - 50,248
Charge for the
period 6,543 3,059 1,879 251 553 - 12,285
Disposals (975) - - - - - (975)
Translation on
foreign
operations (96) (10) (158) (25) (10) - (299)
-------------- ---------- ----------- --------------- -------------- ----------- ----------
At 30 June 2023
(unaudited) 34,134 19,922 5,865 754 584 - 61,259
============== ========== =========== =============== ============== =========== ==========
Net Book Value
At 30 June 2023
(unaudited) 38,889 60,669 22,569 4,274 398 112,287 239,086
------- ------- ------- ------ ---- -------- --------
At 1 January
2023 (audited) 26,830 63,810 25,210 4,752 83 113,424 234,109
======= ======= ======= ====== ==== ======== ========
Included within acquired apps are development costs from the
acquisition of astragon. The amortisation on this asset of GBP0.5m
(H1 2022: GBP1.0m) is treated as development cost amortisation for
the purposes of calculating adjusted EBITDA in note 5.
Acquisition of Independent Arts Software GmbH
On 27 April 2023 astragon Entertainment GmbH acquired 100% of
the share capital of Independent Arts Software GmbH for a maximum
payment of GBP3.1m (EUR3.5m) subject to the seller and Company
meeting certain requirements. The initial payment for the
acquisition was GBP1.8m (EUR2.0m) in cash. A further payment of up
to GBP1.3m (EUR1.5m) is payable in cash based on the seller meeting
certain requirements following completion of the acquisition. There
was no minimum due on the contingent payment. The results of the
business have been included in the Consolidated Statement of Profit
or Loss from the date of acquisition.
Independent Arts Software GmbH is a talented video game
developer based in Germany. The acquisition increases astragon's
development capabilities in the simulation space.
Contingent consideration of GBP1.0m (EUR1.1m) consists of the
payments to the sellers included at fair value and payable based on
them and the Company meeting certain requirements. There has been
no fair value adjustment to contingent consideration post the
acquisition date assessment.
The total consideration for the acquisition was GBP2.8m which is
made up of GBP0.7m of assets and liabilities along with GBP2.1m of
goodwill recognised. The goodwill is attributable to Independent
Arts Software's talented development team. It has been allocated to
the Simulation segment of the business led by astragon
Entertainment GmbH which is the development and publishing of
simulation games for the digital and physical market. None of the
goodwill is expected to be deductible for tax purposes.
Acquisition fees
Total acquisition fees for the period ended 30 June 2023 of
GBP0.1m (2022: GBP0.6m) are included in administrative expenses in
the Income Statement.
Goodwill
The Group tests for impairment annually, or more frequently if
there are indicators that goodwill might be impaired.
8. Share Capital
Unaudited Unaudited
Six months Six months Audited
ended ended Year ended
30 June 30 June 31 December
2023 2022 2022
GBP'000 GBP'000 GBP'000
--------------------------------- ------------ ------------ -------------
Authorised, allotted, called
up and fully paid
145,803,620 (2022: 145,593,271)
ordinary shares of 1p each 1,457 1,456 1,456
------------ ------------ -------------
1,457 1,456 1,456
============ ============ =============
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END
IR FFFIVAFITLIV
(END) Dow Jones Newswires
September 19, 2023 02:00 ET (06:00 GMT)
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