TIDMTM17
RNS Number : 6393L
Team17 Group PLC
14 September 2021
14 September 2021
Team17 Group plc
("Team17", the "Group" or the "Company")
Half year results
Strengthened portfolio and lifecycle management underpins record
H1 performance
Team17 , a global games label, creative partner and developer of
independent ("indie") premium video games and developer of
educational entertainment ("edutainment") apps for children, is
pleased to announce its unaudited interim results for the six
months ended 30 June 2021 ("H1 2021").
H1 2021 financial highlights:
-- Record revenues up 3% to GBP40.1m (H1 2020: GBP38.8m)
-- Record Gross profit up 10% to GBP20.2m (H1 2020: GBP18.3m)
-- Gross profit margin up 3% points to 50% (H1 2020: 47%)
-- Record profit before tax up 5% to GBP14.0m (H1 2020: GBP13.3m)
-- Record adjusted EBITDA* up 9% to GBP16.2m (H1 2020: GBP14.9m)
-- Earnings per share ("EPS") increased to 8.6 pence (H1 2020: 8.5 pence)
-- Adjusted earnings per share** ("AEPS") increased to 9.0 pence (H1 2020: 8.9 pence)
-- Operating cash conversion of 108% (H1 2020: 114%) ***
-- Net cash and cash equivalents of GBP66.6m (H1 2020: GBP50.4m)
H1 2021 operational highlights:
-- Solid performance across a strengthening portfolio delivering value through:
o Six new title releases across multiple platforms
o Existing titles Overcooked! All You Can Eat and Worms Rumble
released on additional platforms in March and June respectively
o Continued lifecycle management with 17 additional new
downloadable content (DLC) packages released across 9 titles within
the Games Label portfolio
o Content portfolio now comprises over 500 digital revenue lines
spanning across a broad range of genres and platforms
-- Ongoing investment to build the team saw headcount increase to 262 from 250 at period end
-- Acquired the rights and assets to Golf With Your Friends ("GWYF") in January 2021 for GBP12m, strengthening Team17's own IP portfolio and offering potential for future franchise development
-- Team17 continues to be recognised as a leader in the industry
with a number of nominations and awards received in the period
including:
o Queen's Award for Enterprise, International Trade awarded in
April this year
o Narita Boy awarded Best 2D visuals at the Unity Showcase
Awards
o Debbie Bestwick has been awarded the highly prestigious
Develop Star Award which will be formally presented later this
year
Post Period End & Outlook:
-- Acquired StoryToys, a world-class developer and publisher of
edutainment apps for the initial cash consideration of US$26.5
million, with a further maximum US$22.5 million payable in cash on
delivery of certain targets within three years, creating a new
highly complementary edutainment vertical
-- Appointment of Michael Pattison as CEO of Team 17's Games
Label who joins on 18 October 2021 from Sony Interactive
Entertainment where he held a number of Executive positions and
brings over 25 years' video games industry experience in Global
Brand and Marketing roles
-- Strengthened the Group's senior leadership team through the
creation of new CEO roles bringing Michael Pattison alongside Emmet
O'Neill, CEO of the recently acquired StoryToys, both reporting
directly to Debbie Bestwick, Group CEO
-- Ongoing assessment of acquisition opportunities, seeking to
further strengthen Team17's position as a leading games
entertainment company, whilst delivering quality games to our
target audiences
-- Combination of a solid pipeline of releases and additional
new content planned across H2 to maintain solid portfolio growth
and lifecycle management, underpins confidence in the Games Label
business model
Debbie Bestwick, Chief Executive Officer of Team17 Group,
commented:
"Our performance during the first half of this year is a
testament to the continued commitment and passion of our teamsters
and label partners. I am delighted to report we've been able to
continue the trend of delivering improved year on year results
specifically considering the corresponding half record set the
previous year, which benefitted from the one-off impact of the
global pandemic and large swathes of global lockdowns.
"Alongside the acquisition of the GWYF IP in January, the recent
acquisition of StoryToys improves the breadth of our offering
across the gaming space and brings an exceptional team with
additional skill sets into the Group.
"I'm very pleased to share today that we have further
strengthened our Games Label team with a very high-profile
executive hire in Michael Pattison who joins from Sony Interactive
Entertainment as CEO of our Games Label from next month. Alongside
Emmet O'Neill, CEO of StoryToys, we are building a truly remarkable
senior leadership team to help deliver on our shared vision for the
future of the Group.
"Sadly, earlier this year we said goodbye to one of our
teamsters, Troy Horton who passed away suddenly and unexpectedly
and we'd like to dedicate this year to him and the amazing legacy
he leaves within each of us. He was a UK gaming legend but also an
inspiration to each and every one of us here at Team17.
"I'd also like to thank our exceptional business partners who
over the last 18 months have worked tirelessly to ensure we have
delivered our games on time in very challenging times."
*Adjusted EBITDA is defined as operating profit adjusted to add
back depreciation of property, plant and equipment, amortisation of
brands and impairment of intangible assets (excluding capitalised
development costs), share based payment costs (note 4).
** Adjusted EPS is calculated by dividing the adjusted profit
after tax by the weighted average number of ordinary shares. This
is adjusted for the effect of share options when calculating the
diluted adjusted earnings per share (note 5).
*** Operating cash conversion is defined as cash generated from
operating activities as per the statement of cash flows, divided by
EBITDA.
Enquiries:
Team17 Group plc via Vigo Consulting
Debbie Bestwick MBE, Chief Executive Officer
Mark Crawford, Chief Financial Officer
GCA Altium (Nominated Adviser) +44 (0)845 505
Adrian Reed / Paul Lines 4343
Berenberg (Broker)
Chris Bowman / Toby Flaux / Marie Moy / +44 (0)20 3207
Alix Mecklenburg-Solodkoff 7800
Vigo Consulting (Financial Public Relations)
Jeremy Garcia / Fiona Hetherington / Kate
Kilgallen +44 (0)20 7390
team17@vigocon sulting.com 0233
About Team17
Team17 is a leading games entertainment label and creative
partner for independent ("indie") developers, focused on the
premium, rather than free to play market, and creating games for
the PC home computer market, the video games console market and the
mobile and tablet gaming markets.
Alongside developing the Company's own games in house ("first
party IP"), Team17 also partners with independent developers across
the globe to add value to their games in all areas of development
and production alongside bringing them to market across multiple
platforms for fixed percentage royalties ("third party IP").
Since foundation in 1990, we have launched over 100 games,
including the iconic Worms franchise, Overcooked and The Escapists
franchises, Yooka-Laylee, Yoku's Island Express, My Time at Portia,
Hell Let Loose, Blasphemous, Golf With Your Friends, Neon Abyss and
Moving Out making Team17 one of the most prolific developers and
diverse partners of games for the indie market.
About StoryToys
Team17's wholly owned subsidiary StoryToys, is a leading
developer and publisher of educational apps, targeting the
pre-school market of children aged two to seven years old.
StoryToys apps have been downloaded over 100 million times
across 120 countries, and its edutainment apps are produced in 28
different languages. StoryToys' mission is to create apps for
children that engage them in well-rounded activities designed to
help them learn, play, and grow, with partners including The Walt
Disney Company, The LEGO(R) Group, Penguin Books, Sesame Workshop,
Apple, Amazon and Google. www.storytoys.com
Visit www.team17.com for more information
OPERATIONAL REVIEW
Introduction
The Group has maintained sales growth across its portfolio in
the first half of 2021, surpassing an exceptional period of trading
in H1 2020. The Board is pleased to report that trading for the
first six months of this year is in line with expectations, with
the business continuing to see demand for games across our
portfolio.
In H1 2021, the Group delivered both record revenues of GBP40.1m
(H1 2020: GBP38.8m) and gross profit of GBP20.2m (H1 2020:
GBP18.3m), ahead of the corresponding half year records set the
previous year, which benefitted from the one-off impact of global
lockdowns driving demand for video games as a result of the
pandemic.
The back catalogue, with 17 additional new DLC released in the
period, delivered revenues totalling GBP36.4m (H1 2020: GBP33.5m
representing 91% of total revenues (H1 2020: 86%). This revenue was
positively impacted by the titles released towards the back end of
last year and supported by revenues from the six new titles
released in H1 2021. Revenues from own IP rose to GBP11.4m (H1
2020: GBP5.4m) driven by the additional contribution from The
Survivalists and Worms Rumble, titles launched in the latter part
of H2 last year alongside the inclusion of Golf With Your Friends,
an own IP title since January 2021.
The Group's portfolio continues to expand, with current digital
revenue lines ("DRL") now totalling over 500. We continue to adopt
a genre and platform agnostic approach to ensure Team17 is not over
reliant on any title or distribution platform.
Adjusted EBITDA in the period increased by 9% to GBP16.2m (H1
2020: GBP14.9m), with the adjusted EBITDA margin at 40.3% (H1 2020:
38.4%). The increase in adjusted EBITDA margin was attributed to a
higher weighting of own IP revenues.
The effective tax rate increased to 20.1% (H1 2020: 17.4%) which
is the result of the effect on deferred tax balances of the
announced changes in tax rate to 25% from 1 April 2023.
Moving into H2 2021, the Group has a solid pipeline of game
launches scheduled and will also benefit from a full six-month
contribution from StoryToys acquired post period end. The Group
anticipates the overall revenue profile for 2021 to be second half
weighted, reflecting the sales mix and impact of StoryToys.
Team17 remains focused on maintaining the core values of its
business model that underpin the growth trajectory and are key to
the ongoing success of the Group. To that end, the Group will
continue to focus on the following priorities:
-- Further expanding and developing our portfolio of titles,
including the development and launch of both paid for and free
DLC
-- Leveraging technology, innovation and new platforms
-- Capitalising on the strength of the Games Label model and the
Group's unique Game Scouting process which identifies, assesses,
and contracts new IP
-- Evaluating selective M&A opportunities that complement
the Group's strategy and align with its values
-- Continuing to invest in our people and infrastructure, while
identifying new creative and commercial talent
The Company continually assesses acquisition opportunities and
partnerships. In January 2021, we announced the GBP12 million
acquisition of all rights and assets to GWYF. Team17 had initially
announced a partnership with Blacklight Interactive, the developers
of GWYF, in June 2019. The acquisition of all rights and assets
enables Team17 to build on the success of the game and to explore
opportunities to build a franchise with additional paid for and
free DLC going forward.
Post-period end, the Group announced the acquisition of
StoryToys, a world-class developer and publisher of edutainment
apps for children under the age of eight, strengthening Team17's
position as a leading games entertainment business. The initial
consideration of US$26.5 million (with a further maximum US$22.5
million payable in cash on delivery of certain targets by the
vendors within three years) will be funded from Team17's existing
cash reserves. The multi-award winning StoryToys boasts over 100
million app downloads to date and has produced apps in partnership
with many leading children's brands, including The LEGO(R) Group ,
Disney, Pixar, Penguin, Sesame Workshop, Dick Bruna, Warner Bros,
Hasbro, and Nickelodeon. StoryToys will operate as a new label
within the existing Group alongside the existing Team17 Games Label
and, supported by Team17, aims to be the global number one
children's edutainment brand for children aged eight and under.
We have also announced today a further strengthening of the
Group's senior management team with the appointment of Michael
Pattison, who will join as CEO of Team17's Games Label in October
2021. Michael has over 25 years' video games industry experience in
a number of Global Brand and Marketing roles. He joins Team17 from
Sony Interactive Entertainment where he held a number of Executive
positions.
Emmet O'Neill, CEO of StoryToys will continue to head up the
Group's edutainment vertical and alongside the recently appointed
Michael Pattison, CEO of Team17's Games Label, both will report
directly to Debbie Bestwick, Group CEO, creating an extremely
talented and experienced leadership team across the Group.
The Group continues to evaluate other M&A opportunities,
both to bolster the existing games label, and to establish
additional verticals within the Group to further expand its
customer reach and skillset, as keenly demonstrated through the
acquisition of StoryToys.
In the first six months of 2021, we continued to recruit new
team members to build and strengthen our skillset across all our
sites. As a result, headcount across all three sites - Nottingham,
Wakefield and Manchester - increased to 262 at the end of June 2021
from 250 at year end 2020.
Team17 remains a recognised leader in the industry as a business
and through its people and titles, with a number of nominations and
awards received during the period. These include the prestigious
Queen's Award for Enterprise, International Trade awarded in April
this year, Narita Boy, won Best 2D visuals at the Unity Showcase
Awards and Debbie Bestwick, Group CEO will collect the highly
prestigious Develop Star Awardlater this year.
Market dynamics
The global video games market continues to perform well. A
recent report from Newzoo forecasts that the market will generate
revenues of just over $175 billion in 2021 - flat when compared to
2020's exceptionally strong year - but will return to growth again
to be worth in excess of $200 billion in 2023[1]. Newzoo states
that a number of AAA releases have been delayed as a result of the
Covid-19 pandemic, with launches initially pencilled for 2021 being
pushed to Q1 2022, and a shortage of hardware due to limited stocks
of chips and components. These factors have negatively impacted
consumer spend, contributing to the flat growth rates in 2021.
Due to Team17's Games label focus on the indie games space, the
Group is confident that despite the overall market's flat growth
projections for 2021, it will continue to develop successful games,
and additional DLC to engage and captivate our target audiences.
Furthermore, the acquisition of StoryToys demonstrates that the
Group is seeking to diversify and expand its customer base, and
thereby reduce its dependence on any single vertical within the
broader games market.
H1 2021 Releases
Team17 launched six new titles in the first half of the year,
alongside additional DLC across multiple titles and platforms,
including:
-- Rogue Heroes launched in February on PC and Nintendo Switch(TM)
-- Narita Boy launched in March on PC, PlayStation(R) 4, Nintendo Switch(TM) and Xbox One
-- Before We Leave launched in May on PC
-- King of Seas launched in May on PC, Nintendo Switch(TM), PS4 and Xbox One
-- Hokko Life launched in June into Early Access on Steam
-- Super Magbot launched in June on PC and Nintendo Switch(TM) in June 2021
Alongside the new titles, Overcooked! All You Can Eat was
launched in March across Nintendo Switch(TM), PlayStation(R) 4,
Xbox One and Steam and Worms Rumble launched on Nintendo Switch(TM)
in June.
H2 2021 Releases
The Group has announced a pipeline of new games tabled for
launch in H2 2021, with Hell Let Loose already launched out of
Early Access in July 2021 and will release on console in October on
PlayStation(R) 5 and Xbox X/S. In addition, Greak: Memories of Azur
launched in August on PC, Nintendo Switch(TM), Xbox X/S,
PlayStation(R) 5 and the Group also plans to launch the following
new title releases in H2:
-- Honey I Joined a Cult - funky '70's inspired cult simulation
-- Epic Chef - humorous, cook/craft story driven
-- Sheltered 2 - survival management simulator set in a post-apocalyptic wasteland.
-- The Unliving - rogue-lite action RPG game
-- Thymesia - gruelling action RGP, intricate plague weapon system
-- Age of Darkness - RTS colony management game
Alongside this ambitious pipeline of new IP launches, Team17
will also continue to develop additional DLC for its existing
portfolio of titles. For example, the Company has already released
additional DLC for Overcooked! All You Can Eat in August 2021, in
time for the fifth anniversary of the launch of the highly
successful Overcooked! franchise.
StoryToys will continue to support its existing content
portfolio of key titles including LEGO(R) DUPLO(R) WORLD, Disney
Colouring World and Hungry Caterpillar Play School with regular
updates and also has an exciting line up of new content releases as
well as opportunities for new IP licensing partnerships.
Current trading and outlook
The Group has entered H2 2021 with confidence from a solid start
to the year driven by a strengthening portfolio benefitting from
the launches of new titles towards the end of last year and
complemented by the launch of new titles in H1 2021 alongside
additional DLC released to support the back catalogue lifecycle
management. Our first half performance has been a true testament to
our teams, delivering against a backdrop of an exceptionally strong
pandemic driven H1 2020, which gives the Board continued confidence
for the remainder of the year and beyond.
Furthermore, the Group will benefit in H2 from the contribution
following the recent acquisition of StoryToys. The acquisition
represents an exciting new chapter for Team17, which significantly
broadens the scope of the Group's existing portfolio and introduces
an additional vertical, reinforcing the Group's position as a
leading games entertainment business.
We look forward to continuing to support our global development
partners as we deliver on our ambitious pipeline, and look forward
to working alongside the StoryToys team to achieve our joint
ambitions.
Debbie Bestwick MBE
Chief Executive Officer
14 September 2021
Condensed Consolidated Statement of Comprehensive Income
Unaudited Unaudited Audited
Six months Six months Year ended
ended ended 31 December
30 June 30 June 2020
2021 2020
Note GBP'000 GBP'000 GBP'000
Revenue 3 40,110 38,777 82,969
Cost of sales (19,921) (20,445) (43,823)
====================================== ===== ============ =========================== =============
Gross profit 20,189 18,332 39,146
Gross profit % 50.3% 47.3% 47.2%
Administrative expenses (6,188) (5,057) (12,979)
Operating profit 14,001 13,275 26,167
Finance income 7 81 112
Finance cost (20) (22) (43)
====================================== ===== ============ =========================== =============
Profit before tax 13,988 13,334 26,236
Taxation (2,808) (2,317) (4,292)
====================================== ===== ============ =========================== =============
Profit and total comprehensive
income attributable to shareholders 11,180 11,017 21,944
====================================== ===== ============ =========================== =============
Basic earnings per share 5 8.6 Pence 8.5 Pence 17.0 Pence
Diluted earnings per share 5 8.6 Pence 8.5 Pence 16.8 Pence
Basic adjusted earnings per 5 9.0 Pence 8.9 Pence 18.2 Pence
share
Diluted adjusted earnings 5 8.9 Pence 8.9 Pence 18.1 Pence
per share
====================================== ===== ============ =========================== =============
All results relate to continuing activities.
Condensed Consolidated Statement of Financial Position
Unaudited Audited
Unaudited 30 June 31 December
30 June 2021 2020 2020
Note GBP'000 GBP'000 GBP'000
================================ ===== ============== ========== =============
ASSETS
Non-current assets
Goodwill 6 22,379 22,379 22,379
Brands 6 24,764 15,147 14,255
Development costs 6 7,207 5,895 6,287
Property, plant and equipment 1,432 1,457 1,353
Right of use assets 1,311 1,446 1,378
57,093 46,324 45,652
================================ ===== ============== ========== =============
Current assets
Trade and other receivables 11,400 12,111 16,430
Tax receivables 257 378 670
Cash and cash equivalents 66,591 50,375 61,470
================================ ===== ============== ========== =============
78,248 62,864 78,570
================================ ===== ============== ========== =============
Total assets 135,341 109,188 124,222
================================ ===== ============== ========== =============
EQUITY AND LIABILITIES
Equity
Share capital 1,315 1,315 1,315
Share premium 44,084 44,084 44,084
Merger reserve (153,822) (153,822) (153,822)
Other reserves 159,296 159,296 159,296
Retained earnings 64,020 41,130 52,476
================================ ===== ============== ========== =============
Total equity 114,893 92,003 103,349
================================ ===== ============== ========== =============
Non-current liabilities
Lease liabilities 1,247 1,393 1,320
Provisions 91 41 76
Deferred tax liabilities 2,631 2,819 2,126
================================ ===== ============== ========== =============
Total non-current liabilities 3,969 4,253 3,522
================================ ===== ============== ========== =============
Current liabilities
Trade and other payables 16,334 12,789 17,206
Lease liabilities 145 142 145
Current tax liabilities - - -
Total current liabilities 16,479 12,931 17,351
================================ ===== ============== ========== =============
Total liabilities 20,448 17,185 20,873
================================ ===== ============== ========== =============
Total equity and liabilities 135,341 109,188 124,222
================================ ===== ============== ========== =============
Condensed Consolidated Statement of Changes in Equity
Share Share Merger Other Retained
capital premium reserve reserves earnings Total
Six months to Note GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
30 June 2020
=========================== ====== ========= ========= ========== ========== ========== ========
Balance at
1 January 2020
(audited) 1,313 44,084 (153,822) 158,864 29,710 80,149
Share based compensation - - - - 403 403
Issue of shares
on acquisition
of subsidiaries 2 - - 432 - 434
=================================== ========= ========= ========== ========== ========== ========
Total transactions
with owners recognised
directly within
equity 2 - - 432 403 837
=================================== ========= ========= ========== ========== ========== ========
Profit and total
comprehensive
expense for the
period - - - - 11,017 11,017
=================================== ========= ========= ========== ========== ========== ========
Balance at
30 June 2020 (unaudited) 1,315 44,084 (153,822) 159,296 41,130 92,003
=================================== ========= ========= ========== ========== ========== ========
Six months to
31 December 2020
=========================== ====== ==================================================================
Balance at
1 July 2020 (unaudited) 1,315 44,084 (153,822) 159,296 41,130 92,003
Share based compensation - - - - 419 419
=================================== ========= ========= ========== ========== ========== ========
Total transactions
with owners recognised
directly within
equity - - - - 419 419
=================================== ========= ========= ========== ========== ========== ========
Profit and total
comprehensive
income for the
period - - - - 10,927 10,927
=================================== ========= ========= ========== ========== ========== ========
Balance at
31 December 2020
(audited) 1,315 44,084 (153,822) 159,296 52,476 103,349
=================================== ========= ========= ========== ========== ========== ========
Six months to
30 June 2021
=========================== ======== ========= ============ ========== ========= ==========
Balance at
1 January 2021
(audited) 1,315 44,084 (153,822) 159,296 52,476 103,349
Share based compensation - - - - 364 364
Total transactions
with owners recognised
directly within
equity - - - - 364 364
============================ ======== ========= ============ ========== ========= ==========
Profit and total
comprehensive
income for the
period - - - - 11,180 11,180
============================ ======== ========= ============ ========== ========= ==========
Balance at
30 June 2021 (unaudited) 1,315 44,084 (153,822) 159,296 64,020 114,893
============================ ======== ========= ============ ========== ========= ==========
Condensed Consolidated Statement of Cash Flows
Unaudited Unaudited
Six months Six months Audited
ended ended Year ended
30 June 30 June 31 December
2021 2020 2020
Note GBP'000 GBP'000 GBP'000
===================================== ===== ============ ============ =============
Operating activities
Profit before tax 13,988 13,334 26,236
Adjustments for:
Depreciation of property,
plant and equipment 198 203 404
Depreciation of right-of-use
assets 68 67 135
Amortisation of intangible
fixed assets 6 4,236 1,636 5,812
(Profit)/loss on disposal
of fixed assets (10) - 24
Share-based compensation 364 403 822
Finance income (7) (81) (112)
Financial expenses 20 22 43
Decrease/(increase) in trade
and other receivables 5,030 (588) (4,908)
(Decrease)/increase in trade
and other payables (3,872) 2,340 6,908
Increase in provisions 16 15 50
===================================== ===== ============ ============ =============
Cash generated from operating
activities 20,031 17,351 35,414
Tax paid (1,890) (4,164) (7,125)
===================================== ===== ============ ============ =============
Net cash inflow from operating
activities 18,141 13,187 28,289
===================================== ===== ============ ============ =============
Cash flow from investing activities
Acquisition of subsidiaries
(net of cash acquired) - (664) (813)
Purchase of property, plant
and equipment (280) (173) (338)
Purchase of Intellectual Property 6 (9,000) - -
Sale of property, plant and
equipment 10 - 43
Capitalisation of development
costs 6 (3,665) (3,836) (7,512)
Interest received 7 81 112
===================================== ===== ============ ============ =============
Net cash outflow from investing
activities (12,928) (4,592) (8,508)
===================================== ===== ============ ============ =============
Cash flow from financing activities
Interest paid (20) (22) (43)
Repayment of lease liabilities (72) (51) (121)
Net cash outflow from financing
activities (92) (73) (164)
===================================== ===== ============ ============ =============
Net increase in cash and cash
equivalents 5,121 8,522 19,617
Cash and cash equivalents
at beginning of period 61,470 41,853 41,853
===================================== ===== ============ ============ =============
Cash and cash equivalents
at end of period 66,591 50,375 61,470
===================================== ===== ============ ============ =============
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.
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 2021
should be read in conjunction with the financial statements of
Team17 Group Plc for the year ended 31 December 2020 (the "Prior
year financial statements") which includes the financial results of
the group prepared in accordance with International Financial
Reporting Standards (IFRSs) in conformity with the requirements of
the Companies Act 2006 and IFRS adopted pursuant to Regulation (EC)
No 1606/2002 as it applies in the European Union. In the year to 31
December 2021 the annual financial statements will be prepared in
accordance with IFRS as adopted by the UK Endorsement Board and
that this change in basis of preparation is required by UK company
law for the purposes of financial reporting as a result of the UK's
exit from the EU on 31 January 2020 and the cessation of the
transition period on 31 December 2020. This change in basis does
not have any impact on recognition, measurement or disclosure
between the two frameworks and does not constitute a change in
accounting policy but rather a change in framework which is
required to ground the use of IFRS in company law.
The report of the auditors for the prior year financial
statements for the year ended 31 December 2020 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 is not audited
and does 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 14 September 2021.
Going concern
Management has produced forecasts that have also been sensitised
to reflect plausible downside scenarios as a result of the COVID-19
pandemic and its impact on the global economy, which have been
reviewed by the directors. These demonstrate the Group is forecast
to generate profits and cash in the year ending 31 December 2022
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 51 to 59 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 the capitalisation and amortisation accounting policies
is currently underway recognising the changing nature of the games
sector.
3. Segmental information
For management purposes the Group is considered to comprise only
one segment for reporting to the chief operating decision maker,
that of the development and publishing of video games for the
digital and physical market. However the following information is
voluntarily disclosed.
Revenue by Third Party/Own IP:
Unaudited Unaudited
Six months Six months Audited
ended ended Year ended
30 June 30 June 31 December
2021 2020 2020
GBP'000 GBP'000 GBP'000
================ ============ ============ =============
Own IP 11,338 5,431 17,310
Third Party IP 28,772 33,346 65,659
============ ============ =============
40,110 38,777 82,969
============ ============ =============
4. Adjusted EBITDA calculation
Unaudited Unaudited
Six months Six months Audited
ended ended Year ended
30 June 30 June 31 December
2021 2020 2020
GBP'000 GBP'000 GBP'000
Profit attributable to shareholders 11,180 11,017 21,944
Share based compensation 433 459 1,662
Adjusted earnings 11,613 11,476 23,606
============ ============ =============
Taxation 2,808 2,317 4,292
Finance income (7) (81) (112)
Finance cost 20 22 43
Amortisation of brands intangible
asset 1,491 892 1,784
Depreciation 266 270 535
============ ============ =============
Adjusted EBITDA 16,191 14,896 30,148
============ ============ =============
5. 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 are 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 is less than the
average share price for the period. At 30 June 2021, 972,727 (30
June 2020: 243,182, 31 December 2020: 972,727) outstanding share
options had met the required performance criteria.
Unaudited Unaudited
Six months Six months Audited
ended ended Year ended
30 June 2021 30 June 31 December
2020 2020
Profit attributable to shareholders
GBP'000 11,180 11,017 21,944
Weighted average number
of shares 129,431,328 129,360,382 129,398,375
Weighted average diluted
number of shares 130,404,055 129,431,178 130,607,624
-------------- ------------ -------------
Basic earnings per share
(pence) 8.6 8.5 17.0
Diluted earnings per share
(pence) 8.6 8.5 16.8
-------------- ------------ -------------
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 4. The weighted average diluted number of
shares includes share options considered to be dilutive under the
treasury stock method as described above.
Unaudited Unaudited
Six months Six months Audited
ended ended Year ended
30 June 2021 30 June 31 December
2020 2020
Adjusted earnings GBP'000 11,613 11,476 23,606
Weighted average number
of shares 129,431,328 129,360,382 129,398,375
Weighted average diluted
number of shares 130,404,055 129,431,178 130,607,624
-------------- ------------ -------------
Adjusted basic earnings
per share (pence) 9.0 8.9 18.2
Adjusted diluted earnings
per share (pence) 8.9 8.9 18.1
-------------- ------------ -------------
6. Intangibles
Development
costs Brands Goodwill Total
GBP'000 GBP'000 GBP'000 GBP'000
Cost
At 1 January 2020 (audited) 13,830 21,983 21,083 56,896
Additions 3,836 - 1,296 5,132
At 30 June 2020 (unaudited) 17,666 21,983 22,379 62,028
Additions 3,676 - - 3,676
============ ========== =========== ==========
At 31 December 2020
(audited) 21,342 21,983 22,379 65,704
Additions 3,665 12,000 - 15,665
============ ========== =========== ==========
At 30 June 2021 (unaudited) 25,007 33,983 22,379 81,369
============ ========== =========== ==========
Amortisation
At 1 January 2020 (audited) 11,027 5,944 - 16,971
Additions 744 892 - 1,636
============ ========== =========== ==========
At 30 June 2020 (unaudited) 11,771 6,836 - 18,607
Additions 3,284 892 - 4,176
============ ========== =========== ==========
At 31 December 2020
(audited) 15,055 7,728 - 22,783
Additions 2,745 1,491 - 4,236
============ ========== =========== ==========
At 30 June 2021 (unaudited) 17,800 9,219 - 27,019
============ ========== =========== ==========
Net Carrying Amount
At 30 June 2021 (unaudited) 7,207 24,764 22,379 54,350
============ ========== =========== ==========
At 31 December 2020
(audited) 6,287 14,255 22,379 42,921
============ ========== =========== ==========
At 30 June 2020 (unaudited) 5,895 15,147 22,379 43,421
============ ========== =========== ==========
At 1 January 2020 (audited) 2,803 16,039 21,083 39,925
============ ========== =========== ==========
Acquisition of Golf With Your Friends
On 4 January 2021, Team 17 Digital acquired the Golf With Your
Friends IP from Entertainment Holdings Pty Ltd a company
incorporated in Australia for GBP12m. This consideration is made up
of an initial cash payment of GBP9m and deferred cash consideration
of GBP3m due within 12 months of the acquisition date. The purchase
is not being accounted for as a business combination under IFRS 3
due to the assets being acquired comprising a single group of
assets under the concentration test as set out in "Definition of a
Business (Amendments to IFRS 3)" by the IASB issued in October
2018. As such the acquisition is considered an asset purchase under
"Intangible Assets" IAS 38.
Goodwill
The Group tests for impairment every six months, or more
frequently if there are indicators that goodwill might be
impaired.
7. Post Balance Sheet Events
On 2 July 2021 Team17 Group Plc acquired 100% of the issued
shares in Touch Press Inc. trading as StoryToys for an initial
consideration of $26.5m, (GBP22.8m) with a further maximum $22.5m
payable in cash on delivery of certain targets being met within
three years following completion of the Acquisition.
StoryToys is a world-class developer and publisher of
edutainment apps for children, and the Acquisition establishes a
new highly complementary and fast growing edutainment vertical for
Team17, strengthening the enlarged Group's position as a leading
games entertainment business.
Following the acquisition the Group are assessing the accounting
under IFRS3 'Business Combinations' and hence the fair values of
assets acquired have not been disclosed and the details will be
presented in the December 2021 financial statements.
[1]
https://newzoo.com/insights/articles/global-games-market-to-generate-175-8-billion-in-2021-despite-a-slight-decline-the-market-is-on-track-to-surpass-200-billion-in-2023/
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END
IR SFAEFDEFSEFU
(END) Dow Jones Newswires
September 14, 2021 02:00 ET (06:00 GMT)
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