REG - Team17 Group PLC - Half Year Results
17/09/2024 07:00
For best results when printing this announcement, please click on link below:
http://newsfile.refinitiv.com/getnewsfile/v1/story?guid=urn:newsml:reuters.com:20240917:nRSQ4119Ea&default-theme=true
RNS Number : 4119E Team17 Group PLC 17 September 2024
17 September 2024
Team17 Group plc
("Team17" or the "Group")
Half Year Results
Back catalogue and first-party IP growth underpins a strong trading
performance across the Group
Team17, a leading global independent ("Indie") games developer and publisher
of premium video games and apps, is pleased to announce its unaudited results
for the six months ended 30 June 2024 ("H1 2024" or the "period").
H1 2024 financial summary:
Unaudited six months ended 30 June 2024 Unaudited six months ended 30 June 2023 (restated) % change
Revenue(1) £80.6m £72.4m +11%
Gross Profit £32.9m £30.2m +9%
Gross Profit Margin(1) 40.8% 41.8%
Adjusted EBITDA(2) £19.4m £16.5m +18%
Adjusted EBITDA margin 24.1% 22.7%
Profit Before Tax £12.4m £8.1m +53%
Adjusted Profit Before Tax £19.2m £15.6m +23%
Basic Earnings per Share ("EPS") 6.3p 3.9p +62%
Adjusted EPS(2) 10.1p 8.6p +17%
Operating Cash Conversion(3) 109% 132%
Cash and cash equivalents £54.3m £45.2m +20%
H1 2024 operational highlights
· Strong organic growth of 11% delivers record revenues of £80.6m (H1
2023: £72.4m).
· The Group launched 9 new games which included 3 new apps during the
period (H1 2023: 8) while 4 existing games were released on additional
platforms (H1 2023: 2).
· The Group's first-party IP grew 25%, now representing 42% of total
revenues (H1 2023: 37%).
· Continued exceptional lifecycle management delivered back catalogue
revenue growth of 30%, significantly ahead of the sector, accounting for 92%
of Group revenues (H1 2023: 79%)
· The new release market across H1 2024 has continued to remain
challenging, contributing to the decision to make a combined £4.6m impairment
across a small number of titles (H1 2023: nil) for FY24 and FY25 release
· The Group saw strong overall revenue performance as well as new
releases across each of its divisions:
o Games Label revenues grew 9% to £51.3m (H1 2023: £47.1m), with strong
back catalogue sales growth of 54%, and significant first-party sales growth
of 33%. Games Label released 4 new titles in H1 2024: Border Bots, Classified
France '44, Undead Inc and Autopsy Simulator. Hell Let Loose was launched on
Game Pass and 15 (H1 2023: 20) new downloadable content ("DLC") packages were
released in the period. In line with the decisions made following the
strategic review undertaken within Games Label in H2 2023, the team is
refocused on its core Indie business model.
o astragon delivered 13% revenue growth to £18.5m (H1 2023: £16.4m),
underpinned by strong performances from Construction Simulator and Police
Simulator, driving an increase in first-party sales of 17%. astragon launched
2 new titles: Construction Simulator 4 (on Switch and mobile) and Lawn Mowing
Simulator (on Switch) with 3 existing titles launched on additional platforms.
5 new DLC packages were released across the Police Simulator and Construction
Simulator franchises.
o StoryToys revenues increased 23% to £10.9m (H1 2023: £8.9m), driven by
242 app updates over the period (H1 2023: 134), including updates on the 3
newly launched apps: Sesame Street Mecha Builders, Thomas & Friends™:
Let's Roll and LEGO® DUPLO® Peppa Pig. Active subscribers increased to over
350,000 (H1 2023: over 310,000).
· The Group remains committed to its strategy to accelerate growth,
with a renewed focus on its Indie strengths. This is evidenced by the further
increase in first-party IP and evergreen franchise titles, improving
profitability as a result of tighter cost controls, and a sharpened
greenlighting process.
Outlook
· Following the Group's H1 2024 results and performance so far in H2
2024, the Board is confident of delivering full year results in line with
market expectations for FY 2024.
· New release revenues are expected to be higher in H2 2024, in part
driven by the anticipated physically distributed third-party new releases at
astragon. While H1 2024 did benefit from the favourable phasing of license
deals, together with strong summer sales and social media support on key
titles, the Group's back catalogue is expected to deliver another good
performance in H2 2024.
· Due to the timing of new releases and market conditions, the Group
expects to deliver a more evenly balanced adjusted EBITDA performance across
the first and second half of FY 2024 than in previous years.
· Management remains excited about the Indie gaming sector, the
first-party and third-party games currently being greenlit, signed and
developed across the Group and is confident that the initiatives underway will
enable accelerated revenue growth and profitability over the medium term.
Steve Bell, CEO of Team17, commented:
"I am pleased with the Group's performance during the first half as we
continue to focus on driving sales through first-party IP titles and across
our extensive portfolio, with strong demand for our games and apps across the
Group.
"I'd like to thank Ann, Tim, Julia, Emmett and the rest of the leadership team
for their support in leading our Group, as well as all of our people and
development partners. Their passion, dedication and knowledge are fundamental
to making our business a success, and I am grateful to all for their
contribution.
"Looking ahead, there is significant growth potential in our core markets -
Indie, edutainment and working simulation games. Our focus on creating a
portfolio of games and apps with evergreen longevity, and leveraging our
excellent lifecycle management capabilities, ideally positions us to
capitalise on this and build a lifetime of play within our growing portfolio
and player base."
Footnotes:
(1) 2023 revenues and margins have been restated for platform revenue
recognition. Due to a change in accounting policy, revenue from digital sales
through Apple and Google app stores is now recognised gross of any platform
fees charged where historically the net amount was recognised. For these
platforms only, the platforms are deemed to be an agent in the transaction
under IFRS15, this change has no impact on profits in either the current or
prior year, but does impact both gross margin and adjusted EBITDA margin
percentages
(2) Adjusted EBITDA reflects the EBITDA of the Group in a steady state,
without the impact of acquisition-related costs which vary year on year based
on acquisition activity. In addition, we include the impact of amortisation
and impairment of development costs as this reflects the primary costs
incurred by the Group in generating revenue
(3) Operating cash conversion is defined as cash generated from operating
activities 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")
Analyst and institutional investor webcast
A presentation for analysts and institutional investors will be held on
Tuesday, 17 September 2024 at 8.30 a.m. BST in London. To register for this
event, or to join the live stream on the day, please contact Vigo on
team17@vigoconsulting.com (mailto:team17@vigoconsulting.com) .
Retail investor webcast
A webcast for retail investors will be held on Friday, 20 September 2024 at
1.00 p.m. BST. The presentation will be hosted on the Investor Meet Company
platform. Questions can be submitted pre-event via the Investor Meet 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 the following link:
https://www.investormeetcompany.com/team17-group-plc/register-investor
(https://www.investormeetcompany.com/team17-group-plc/register-investor)
Enquiries:
Team17 Group plc ir@team17.com (mailto:ir@team17.com)
Steve Bell, Chief Executive Officer
Mark Crawford, Chief Financial Officer
James Targett, Group Investor Relations Director
Houlihan Lokey Advisory Limited (Nominated Adviser) +44 (0)20 7839 3355
Tim Richardson / Giulio Scanferlato / Adrian Reed
Jefferies International Limited (Joint Corporate Broker) +44 (0)20 7029 8000
Philip Noblet / Will Brown / Shaam Vora
Peel Hunt (Joint Corporate Broker) +44 (0)20 7418 8900
Neil Patel / Benjamin Cryer / Kate Bannatyne
Vigo Consulting (Financial Public Relations) +44 (0)20 7390 0233
Jeremy Garcia / Fiona Hetherington/ Anna Stacey
team17@vigoconsulting.com (mailto:team17@vigoconsulting.com)
About Team17
Team17 Group plc is a leading global developer and publisher of video games
entertainment to a broad audience. The Group includes a games entertainment
label and creative partner for Indie developers, a developer and publisher of
educational apps appealing to children under the age of eight, and a working
simulation games developer and publisher.
Visit www.team17.com (http://www.team17.com) for more info.
Operational review
Introduction
The Group has traded strongly in H1 2024, delivering double digit revenue and
adjusted EBITDA growth, with positive contributions across the divisions.
The Group has continued to focus on driving sales through its extensive back
catalogue, and ensuring new titles have the maximum chance of commercial
success by deploying flexible marketing strategies to drive discoverability of
our games. The strength of the back catalogue performance in H1 2024 has again
demonstrated the Group's continued success and expertise in lifecycle
management, franchise building, first-party IP and third-party IP management,
all of which underpin stable and scalable revenue streams.
The new release market across H1 2024 has been extremely competitive, with
8,410 titles released on Steam alone in the period, 26% more than in H1 2023,
with data also suggesting that consumers are prioritising spending on games
released in prior years. This has unfortunately resulted in the impairment of
a small number of FY24 and FY25 titles in the period. Despite this, the strong
adjusted EBITDA growth is a testament to the Group's portfolio management and
improved cost discipline.
The Group has made steady progress against its stated strategy to accelerate
growth alongside improving profitability and return on investment ("ROI"),
which is evidenced by a renewed focus on first-party IP and evergreen
franchise titles, as well as tighter cost controls. Games Label has sharpened
its greenlight process to ensure games have the right investment profile and
that it has the appropriate skillset to promote them accordingly. In addition,
a number of initiatives have been introduced to strengthen the Group's
internal structure, which has put it in a stronger position to leverage
attractive acquisition opportunities as they arise, as well as foster greater
collaboration between both teams and divisions.
Group Financial Performance
Revenues in H1 2024 grew 11% to a record £80.6m (H1 2023: £72.4m(1)). This
pleasing trading performance is underpinned by strong back catalogue sales,
which grew 30% to £74.3m (H1 2023: £57.1m), in particular driven both by the
Group's established first-party IP as well as third-party titles launched in
2023. In a competitive new release environment, the Group delivered revenues
from new releases of £6.3m, against a tough comparator (H1 2023: £15.2m)
which included the highly successful break-out title, Dredge. First-party
titles performed particularly well in H1 2024, with revenues up 25% compared
to H1 2023, now accounting for 42% of Group revenues (H1 2023: 37%), while
third-party revenues also delivered growth, up 4%.
Revenues improved across each division, with Games Label revenues up 9% to
£51.2m (H1 2023: £47.1m), astragon revenues up 13% to £18.5m (H1 2023:
£16.4m) and StoryToys continuing its growth performance, delivering revenues
up 23% to £10.9m (H1 2023: £8.9m).
Group gross profit increased 9% to £32.9m (H1 2023: £30.2m). The margin
performance was positively impacted by lower expensed development costs
year-on-year resulting from a combination of studio cost restructuring in H2
2023 and ongoing tighter cost controls on development spend. This was offset
by higher development cost amortisation, including £4.6m (H1 2023: nil) of
impairment charges across select titles following the lower-than-expected
performance of new releases in H1 2024 and a more prudent view of the H2 2024
and FY 2025 new release market. Royalties as a percentage of sales remained in
line with the prior year at 30.7%, with the benefit from higher first-party IP
title sales offset by strong performance on certain third-party titles with a
higher royalty payment profile.
Administrative expenses were £20.8m (H1 2023: £21.7m) and include £7.2m of
acquisition-related adjustments (H1 2023: £6.9m) which are outlined in the
table below. The movement in acquisition-related adjustments is impacted by
a reduction in contingent consideration charges. This is offset by changes in
amortisation charges associated with reassessed and subsequently increased
acquired intangible assets in astragon as outlined in the FY 2023 Report and
Accounts, as well as acquisition-related management incentive payments in the
period which were nil in the same period in the prior year.
The reduction in the underlying administrative cost base predominantly
reflects lower marketing costs specifically within Games Label where these
have now returned to historic levels as a percentage of sales. Following the
restructuring within Games Label in H2 2023, overall headcount at the period
end was 352 (H1 2023: 438). This is modestly above the level at 31 December
2023 (348), due to a headcount increase at StoryToys offsetting the reduction
within Games Label. Attrition rates within the period fell towards prior
levels. While Games Label staff costs are now lower than the previous year,
Group staff costs rose year-on-year due to acquisition-related management
incentive payments, along with increased staff costs in other parts of the
Group.
Overall, despite the impairment charge in the period, the positive revenue and
gross profit performance combined with lower administrative costs led to a 40%
increase in operating profit to £12.2m (H1 2023: £8.5m). Adjusted EBITDA(2)
increased 18% to £19.4m (H1 2023: £16.5m) with an adjusted EBITDA margin of
24.1% (H1 2023: 22.8%(1)).
Alternative Performance Measures adjustments table
Adjusted EBITDA Adjusted Profit after Tax
Unaudited Unaudited Unaudited Unaudited
six months ended six months ended six months ended six months ended
30 June 2024 30 June 2023 30 June 2024 30 June 2023
Profit before Tax 12,388 8,106 12,388 8,106
Development cost amortisation eliminated through FV adjustments (896) - (896) -
Share-based compensation 498 612 498 612
Acquisition-related costs & adjustments
Amortisation on acquired intangible assets 5,721 4,693 5,721 4,693
Acquisition-related costs 1,442 (373) 1,442 (373)
Earn out fair value 43 1,797 43 1,797
Interest & FX on contingent consideration 11 768 11 768
Adjusted profit before tax 19,207 15,603 19,207 15,603
Finance income and costs net of acquisition-related costs and adjustments (484) (343) n/a n/a
Depreciation and loss on disposal of tangible assets 577 644 n/a n/a
Amortisation of software 148 553 n/a n/a
Adjusted EBITDA 19,448 16,457 - -
Taxation (net of impacts on adjustments) - - (4,708) (3,227)
Adjusted Profit after Tax - - 14,499 12,376
Adjusted basic EPS - - 10.1 8.6
Earnings per Share for the period increased 76% to 6.9 pence (H1 2023: 3.9
pence), reflecting higher operating profits as well as significantly higher
interest income and a lower effective tax rate. Adjusted Earnings per Share
(adding back share-based compensation costs, acquisition-related costs and
adjustments) increased 17% to 10.1 pence (H1 2023: 8.6 pence), which the
Directors believe better reflects the Group's underlying performance in the
period.
Operating cash conversion(3) was slightly lower in the period at 109% (H1
2023: 132%), primarily due to a lower net working capital inflow. Cash and
cash equivalents at the end of the period increased to £54.3m (H1 2023:
£45.2m), due to lower acquisition-related payments in the period of £5.0m
(H1 2023: £12.4m) and lower capitalised development costs, which fell to
£11.6m (H1 2023: £18.3m) due to new investment limits within Games Label as
well as the phasing of development project spend, of which Games Label
accounted for £5.4m, astragon £4.6m and for StoryToys £1.4m.
Games Label
As a result of the strategic review undertaken within Games Label in H2 2023,
the business has refocused on its core Indie model. This is the founding
strength of the business and results in unrivalled knowledge in delivering
successful franchises that continue to generate significant revenues over many
years. Games Label remains focused on building successful franchises,
alongside launching both first-party and third-party IP.
Revenues grew 9% to £51.3m (H1 2023: £46.9m(1)), driven by back catalogue
sales which increased an impressive 54%, and first-party sales which increased
33%. The Overcooked! franchise enjoyed strong sales thanks to focussed
marketing activity and lifecycle management. New additions to the back
catalogue including Dredge, Blasphemous 2 and Trepang(2) also recorded a
strong performance. Games Label revenues also benefitted from the successful
Steam publisher sale in the run up to the Steam summer sale as well as
favourable phasing of license deals.
Games Label released four new titles in H1 2024: Border Bots, Classified
France '44, Undead Inc and Autopsy Simulator. Hell Let Loose was launched on
Game Pass and 15 new downloadable content ("DLC") packages were released in
the period (H1 2023: 17).
So far in H2 2024, three new titles have been launched: Conscript, Thalassa
Edge of the Abyss and Warcana. Dredge: The Iron Rig DLC was also released in
August, further extending the success of the popular 2023 title. A number of
additional titles are expected to launch in H2 2024, including the Worms
Armageddon Anniversary Edition and the enhanced update of Autopsy Simulator,
focusing on simulation game play, also being launched on console.
Despite the challenging new release market, the positive reviews from and
engagement with the community, along with planned updates for some of these
titles, provide an opportunity for improved future performance within the back
catalogue, driven by the team's proven lifecycle management expertise.
Looking further ahead, management is confident about both the continued
strength of the Indie games market overall and Games Label's position within
that market. The pipeline of first-party and third-party games currently being
greenlit, signed and developed for FY 2025 and beyond looks very promising,
and the team is focused on implementing innovative marketing models to give
our games the best possible profile and opportunity for successful launch.
astragon
astragon delivered a positive first half revenue performance with growth of
13% to £18.5m (H1 2023: £16.4m(1)), underpinned by the ongoing strong
performances from Construction Simulator and Police Simulator, driving an
increase in first-party sales of 17% in the period and further highlighting
the attraction of the working simulation gaming segment as well as
astragon's ability to develop strong first-party IP franchises and drive
steady back catalogue sales.
astragon launched two new titles: Construction Simulator 4 on Switch and
mobile (part of the successful first-party IP franchise) and Lawn Mowing
Simulator on Switch (a third-party publishing title). Additionally, astragon
saw three titles launching on additional platforms, including ABRISS and Tram
Simulator on console, and Howl on mobile and console.
In addition to the new releases, four new DLC packages and one Year-2 season
pass were released and well received across the Police Simulator and
Construction Simulator franchises which continue to be leading first-party IP
titles within astragon and the Group.
Planned new releases in H2 2024 include Police Simulator on Switch, as well as
the much-anticipated next release of Farming Simulator for which astragon will
provide the physical distribution within Germany.
StoryToys
StoryToys delivered another record performance, outperforming the edutainment
segment as a whole with revenues up 23% to £10.9m (H1 2023: £8.9m(1)).
StoryToys continues to build its reputation as a leading and trusted partner
for brands looking to expand into the edutainment space.
In the first half of the year, StoryToys launched 242 app updates (H1 2023:
134) across the increased number of titles, including LEGO® DUPLO® WORLD,
LEGO® DUPLO® MARVEL-, Disney Coloring World, Barbie Color Creations, and
Hungry Caterpillar Play School.
Furthermore, StoryToys published three new apps in the period the result of
new brand agreements and contract extensions with existing partners: Sesame
Street Mecha Builders, Thomas & Friends™: Let's Roll and LEGO® DUPLO®
Peppa Pig, the latter another example of a leading brand choosing to partner
with StoryToys to expand their offering in the edutainment space. Thomas
& Friends™: Let's Roll was designed in conjunction with an autism
specialist, building on StoryToys' reputation for developing apps that promote
inclusivity. As is typical of these apps, we expect sales to continue to build
in the coming years.
Total subscriptions and renewals have continued to trend upwards in H1 2024,
with StoryToys now boasting over 350,000 active subscribers (H1 2023: over
310,000).
StoryToys was proud to be included in The Sunday Times "Best Places to Work"
2024 list, one of only 35 companies in Ireland to be recognised.
Looking ahead, StoryToys will continue to grow existing licensing
relationships in addition to pursuing opportunities and, where appropriate, to
further expand its network of global license partners.
Strategy and Key Priorities
In the FY 2023 results, announced in April 2024, CEO Steve Bell communicated
an action plan to accelerate growth and improve profitability and ROI. The
Group is making good progress on these key priorities with the full impact
expect to be realised in future periods.
Accelerating growth:
· Double down on Indie focus: The Indie segment offers great
opportunities to Games Label due to its faster and more innovative growth,
differentiated and more affordable proposition for gamers, and lower risk ROIs
compared to the AA/AAA segment. All new games signed in the current year to
date are firmly within this Indie segment.
· Prioritise evergreen franchises to drive back catalogue: The Group's
core established franchises provide the most visible and reliable revenue
streams. This was demonstrated by the 30% growth in back catalogue revenues in
the period, driven by strong performance in key franchises, including
Overcooked!, Hell Let Loose, Golf With Your Friends, Construction Sim and
Police Sim, supported by a combination of platform deals, DLCs, marketing and
influencer engagement.
· M&A: The M&A market in gaming is highly active and the
Group's strong cash position provides a clear opportunity to acquire quality
assets, including established IP to support the back catalogue, as
opportunities arise. The Group is in the process of strengthening its internal
structure and is making targeted senior hires (such as a Group Legal
Director), which put it in a stronger position to fully scale and leverage
attractive opportunities as they arise.
· Progressive Participation Marketing: With more games released across
platforms, discoverability is crucial. Traditional marketing techniques such
as game trailers are no longer enough to sufficiently break through, and
marketing innovation is essential. The marketing teams are constantly looking
at ways to blend more traditional marketing tactics with more innovative
participative experiences for our audiences.
· Innovative publishing models: As the needs and priorities of game
developers change, publishers must adapt their offering. The Group is
investing in its leaders, ensuring they have the capabilities to tailor its
publishing services to maintain a compelling proposition for developers,
including multi-platform reach, access to insight-driven data and financial
resources.
Improving profitability & ROI:
· Increase sales mix of first-party IP: Increasing the mix of
first-party IP is an important lever to gross margin improvement, therefore,
first-party IP investment projects have been accelerated in the last six
months. First-party sales increased from 17% in FY 2019 to 35% in FY 2023.
While this journey will not always be linear, first-party IP titles performed
particularly well in H1 2024, with revenues up 25%, now accounting for 42% of
Group revenues (H1 2023: 37%). The Group has active investment programmes
underway for its key first-party IP titles, including Worms, Hell Let Loose,
The Escapists, Golf With Your Friends, Police Simulator and Construction
Simulator.
· Games Label investment limits: As part of Games Label's renewed Indie
focus, investment limit guidance of £1.5m has been set for third-party Games
Label titles. While the reduction in capitalised development costs in the
period partly reflects some project phasing, we now expect capitalised
development costs for FY 2024 to be broadly in line with FY 2023 levels.
· Tightened cost controls: The focus on cost control is Group-wide and
a leaner cost base will support improved profitability over the mid-term.
Total development costs fell 36% in the period. Administrative costs also
fell, with the return of marketing costs to historic levels, a further
indicator of the Group's greater cost discipline.
· Sharpened greenlight process: Games Label saw a record number of
submissions to our publishing label in the first half of the year,
highlighting that the Group is still the go-to publisher for developers. We
continue to implement strict controls and reviews as part of the greenlight
process to ensure we identify the highest quality games that are primed for
success, and the right games to complement our existing portfolio. Speed is
essential to remain competitive, and with a framework in place to enable
quicker decisions with fewer people involved, Games Label is now benefitting
from a higher number of titles signed.
Outlook
Following the Group's H1 2024 results and performance so far in H2 2024, the
Board is confident of delivering full year results in line with market
expectations for FY 2024.
New release revenues are expected to be higher in H2 2024, in part driven by
the anticipated physically distributed third-party new releases at astragon.
While H1 2024 did benefit from the favourable phasing of license deals,
together with strong summer sales and social media support on key titles, the
Group's back catalogue is expected to deliver another good performance in H2
2024.
Due to the timing of new releases and market conditions, the Group expects to
deliver a more evenly balanced adjusted EBITDA performance across the first
and second half of FY 2024 than in previous years.
The Board remains excited about the Indie gaming sector together with the
future impact of the first-party and third-party games currently being
greenlit, developed and published across the Group and is confident that the
initiatives underway will enable accelerated revenue growth and profitability
over the medium term.
Footnotes:
(1) 2023 revenues and margins have been restated for platform revenue
recognition. Due to a change in accounting policy, revenue recognition on
digital sales through Apple and Google app stores is now recognised gross of
any platform fees charged where historically the net amount was recognised.
For these platforms only, the platforms are deemed to be an agent in the
transaction under IFRS15, this change has no impact on profits in either the
current or prior year, however, does impact both gross margin and adjusted
EBITDA margin percentages
( )
(2) Adjusted EBITDA reflects the EBITDA of the Group in a steady state,
without the impact of acquisition-related costs which vary year on year based
on acquisition activity. In addition, we include the impact of amortisation
and impairment of development costs as this reflects the primary costs
incurred by the Group in generating revenue
( )
(3) Operating cash conversion is defined as cash generated from operating
activities 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")
Condensed Consolidated Income Statement
Unaudited Unaudited
Six months ended Six months ended
30 June 30 June (restated)
2024 2023
Note £'000 £'000
Revenue 4 80,647 72,352
Cost of sales (47,739) (42,145)
Gross profit 32,908 30,207
Gross profit % 40.8% 41.8%
Administrative expenses (20,824) (21,678)
Other Income 72 2
12,156
Operating profit 8,531
Share of net loss of associates accounted for using the equity method (241) -
Finance income 710 36
Finance cost (237) (461)
Profit before tax 12,388 8,106
Taxation (3,377) (2,546)
Profit for the period 9,011 5,560
Basic earnings per share 6 6.3 Pence 3.9 Pence
Diluted earnings per share 6 6.2 Pence 3.9 Pence
Basic adjusted earnings per share 6 10.1 Pence 8.6 Pence
Diluted adjusted earnings per share 6 10.0 Pence 8.6 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 ended Six months
30 June ended
2024 30 June
£'000 2023
£'000
Profit for the period 9,011 5,560
Items which might be potentially reclassified to profit or loss:
Exchange difference on translation of foreign operations (2,362) (4,105)
6,649 1,455
Total comprehensive income for the period
Condensed Consolidated Statement of Financial Position
Unaudited Unaudited Audited
30 June 2024 30 June 2023 31 December
2023
Note £'000 £'000 £'000
ASSETS
Non-current assets
Investments in associates 721 832 867
Intangible fixed assets 7 201,716 239,086 209,992
Property, plant and equipment 1,305 1,782 1,440
Right of use assets 2,834 4,271 3,172
206,576 245,971 215,471
Current assets
Trade and other receivables 35,449 26,490 38,408
Inventories 1,121 929 960
Cash and cash equivalents 54,328 45,159 42,824
90,898 72,578 82,192
Total assets 297,474 318,549 297,663
EQUITY AND LIABILITIES
Equity
Share capital 1,458 1,457 1,458
Share premium 137,572 132,923 137,572
Merger reserve (153,822) (149,173) (153,822)
Currency translation reserve 2,399 3,865 4,761
Other reserves 159,296 159,296 159,296
Retained earnings 106,713 106,971 97,514
Total equity 253,616 255,339 246,779
Non-current liabilities
Lease liabilities 2,484 3,918 2,889
Provisions 110 155 113
Deferred tax liabilities 8,802 8,229 8,386
Total non-current liabilities 11,396 12,302 11,388
Current liabilities
Trade and other payables 31,574 49,097 35,422
Current tax liabilities 145 1,081 3,391
Lease liabilities 743 730 683
Total current liabilities 32,462 50,908 39,496
Total liabilities 43,858 63,210 50,884
Total equity and liabilities 297,474 318,549 297,663
Condensed Consolidated Statement of Changes in Equity
Currency translation reserve
Share capital Share premium Merger Other Retained earnings
Reserve reserves Total
Six months to 30 June 2023 Note £'000 £'000 £'000 £'000 £'000 £'000 £'000
Balance at 1,456 132,126 (149,173) 7,970 159,296 100,785 252,460
1 January 2023 (audited)
Profit for the period - - - - - 5,560 5,560
Other comprehensive income for the period - - - (4,105) - - (4,105)
Transactions with owners
Issue of ordinary shares 1 797 - - - - 798
Share based compensation - - - - - 626 626
Total transactions with owners (restated) 1 797 - - - 626 1,424
Balance at 1,457 132,923 (149,173 3,865 159,296 106,971 255,339
30 June 2023 (unaudited)
Share capital Share premium Merger Currency translation reserve Other Retained earnings Total
Reserve reserves
Six months to 31 December 2023 Note £'000 £'000 £'000 £'000 £'000 £'000 £'000
Balance at 1,457 132,923 (149,173) 3,865 159,296 106,971 255,339
1 July 2023 (unaudited)
Profit for the period - - - - - (9,305) (9,305)
Other comprehensive expense for the period - - - 896 - - 896
Adjustment - 4,649 (4,649) - - - -
Transactions with owners
Issue of ordinary shares 1 - - - - - 1
Share based compensation - - - - - (152) (152)
Total transactions with owners 1 - - - - (152) (151)
Balance at 1,458 137,572 (153,822) 4,761 159,296 97,514 246,779
31 December 2023 (audited)
Share capital Share premium Merger Other Retained earnings Total
Reserve Currency translation reserve reserves
Six months to 30 June 2024 Note £'000 £'000 £'000 £'000 £'000 £'000 £'000
Balance at 1,458 137,572 (153,822) 4,761 159,296 97,514 246,779
1 January 2024 (audited)
Profit for the period - - - - - 9,011 9,011
Other comprehensive expense for the period
- - - (2,362) - - (2,362)
Transactions with owners
Share based compensation - - - - - 188 188
Total transactions with owners - - - - - 188 188
Balance at 1,458 137,572 (153,822) 2,399 159,296 106,713 253,616
30 June 2024 (unaudited)
Condensed Consolidated Statement of Cash Flows
Unaudited Unaudited
Six months ended Six months ended
30 June 2024 30 June 2023
Note £'000 £'000
Operating activities
Profit before tax 12,388 8,106
Adjustments for:
Depreciation of property, plant and equipment 357 382
Depreciation of right-of-use assets 316 171
Amortisation of intangible fixed assets 7 12,599 12,285
Impairment of intangible fixed assets 4,610 -
(Profit)/loss on disposal of intangible assets (42) -
Fair value movement in contingent consideration 42 -
Share of profits of associates 241 239
Share-based compensation 188 626
Finance income (710) (36)
Financial expenses 237 461
Increase in trade and other receivables 950 9,334
Increase/(decrease) in trade and other payables 1,417 (1,441)
Decrease/(increase) in inventory (186) 262
(Decrease)/Increase in provisions (3) 15
Cash generated from operating activities 32,404 30,404
Tax paid (4,321) (3,328)
Net cash inflow from operating activities 28,083 27,076
Cash flow from investing activities
Acquisition of subsidiaries (net of cash acquired) - (4,875)
Purchase of property, plant and equipment (238) (392)
Proceeds from sale of intangible assets 400 -
Purchase of Intellectual Property 7 (5,000) (7,500)
Purchase of other intangibles - (875)
Capitalisation of development costs 7 (11,640) (18,331)
Interest received 710 36
Net cash outflow from investing activities (15,768) (31,937)
Cash flow from financing activities
Interest paid (168) (68)
Repayment of lease liabilities (310) (184)
Net cash outflow from financing activities (478) (252)
Net (decrease)/increase in cash and cash equivalents 11,837 (5,113)
Cash and cash equivalents at beginning of period 42,824 50,828
Effect of exchange rates on cash and cash equivalents (333) (556)
Cash and cash equivalents at end of period 54,328 45,159
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 2024 should be read in conjunction with the financial
statements of Team17 Group Plc for the year ended 31 December 2023 (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 2023 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
16 September 2024.
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 2025 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
Steve Bell 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 first-party IP (those based on
IP owned by the Group) and third-party IP incurring royalties. Therefore, to
aid the readers understanding of our results, the split of revenue from these
two categories is shown below:
Revenue by First Party/Third Party IP:
Unaudited Unaudited
Six months ended Six months ended
30 June 2024 30 June 2023 (restated)
£'000 £'000
First Party IP 33,702 27,031
Third Party IP 46,945 45,321
80,647 72,352
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 EBITDA Adjusted Profit after Tax
Unaudited Unaudited Unaudited Unaudited
Six months ended Six months ended Six months ended Six months ended
30 June 2024 30 June 2023 30 June 2024 30 June 2023
Profit before Tax 12,388 8,106 12,388 8,106
Development cost amortisation eliminated through FV adjustments (896) - (896) -
Share based compensation 498 612 498 612
Acquisition related costs & adjustments
Amortisation on acquired intangible assets 5,721 4,693 5,721 4,693
Acquisition related costs 1,442 (373) 1,442 (373)
Earn out fair value 43 1,797 43 1,797
Interest & FX on contingent consideration 11 768 11 768
Adjusted profit before tax 19,207 15,603 19,207 15,603
Finance income and costs net of acquisition related costs and adjustments (484) (343) n/a n/a
Depreciation and loss on disposal of tangible assets 577 644 n/a n/a
Amortisation of software 148 553 n/a n/a
Adjusted EBITDA 19,448 16,457 - -
Taxation (net of impacts on adjustments) - - (4,708) (3,227)
Adjusted Profit after Tax - - 14,499 12,376
Adjusted basic EPS - - 10.1 8.6
Operating cash conversion
Operating cash conversion is defined as cash generated from operating
activities as per the statement of cash flows activities 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 ended Six months ended
30 June 2024 30 June 2023
Cash generated from operating activities 32,404 28,338
EBITDA 29,756 21,460
Adjusted operating cash conversion 109% 132%
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 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 2024, 404,985 (30 June 2023: 247,243) outstanding share options had
met the required performance criteria.
Unaudited Unaudited
Six months ended Six months ended
30 June 2024 30 June 2023
Profit for the period £'000 9,011 5,560
Weighted average number of shares 143,969,944 143,724,920
Weighted average diluted number of shares 144,374,929 143,972,343
Basic earnings per share (pence) 6.3 3.9
Diluted earnings per share (pence) 6.2 3.9
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 Unaudited
Six months ended Six months ended
30 June 2024 30 June 2023
Adjusted profit for the period £'000 14,499 12,376
Weighted average number of shares 143,969,944 143,724,920
Weighted average diluted number of shares 144,374,929 143,972,343
Adjusted basic earnings per share (pence) 10.1 8.6
Adjusted diluted earnings per share (pence) 10.0 8.6
7. Intangibles
Customer and Developer Relationships
Development costs Acquired Apps £'0000 £'000 Other Intangibles £'0000 Total
£'000 Brands Goodwill £'000
£'000 £'000
Cost
At 1 January 2023 (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
Additions 13,361 - - - 25 - 13,386
Adjustments - - 8,269 - - (5,561) 2,708
Disposals (2,426) - - - - - (2,426)
Translation on foreign operations 122 26 515 (9) 13 397 1,064
At 31 December 2023 (audited) 84,080 80,617 37,218 5,019 1,020 107,123 315,077
Additions 11,640 - - - - - 11,640
Disposals (1,678) - - - - - (1,678)
Translation on foreign operations (469) (67) (875) 34 (24) (1,344) (2,745)
At 30 June 2024 (unaudited) 93,573 80,550 36,343 5,053 996 105,779 322,294
Amortisation
At 1 January 2023 (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
Charge for the period 6,131 3,059 4,486 261 211 - 14,148
Impairment 11,121 - - - - 20,879 32,000
Disposals (2,426) - - - - - (2,426)
Translation on foreign operations 48 4 58 (12) 6 - 104
At 31 December 2023 (audited) 49,008 22,985 10,409 1,003 801 20,879 105,085
Charge for the period 6,783 3,057 2,486 253 20 - 12,599
Impairment 4,610 - - - - - 4,610
Disposals (1,321) - - - - - (1,321)
Translation on foreign operations (110) (12) (259) 7 (21) - (395)
At 30 June 2024 (unaudited) 58,970 26,030 12,636 1,263 800 20,879 120,578
Net Book Value
At 30 June 2024 (unaudited) 34,603 54,520 23,707 3,790 196 84,900 201,716
At 1 January 2024 (audited) 35,072 57,632 26,809 4,016 219 86,244 209,992
8. Share Capital
Unaudited Unaudited Audited
Six months ended Six months ended Year ended
30 June 2024 30 June 2023 31 December 2023
£'000 £'000 £'000
Authorised, allotted, called up and fully paid
145,803,620 (2022: 145,593,271) ordinary shares of 1p each 1,458 1,457 1,458
1,458 1,457 1,458
This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact
rns@lseg.com (mailto:rns@lseg.com)
or visit
www.rns.com (http://www.rns.com/)
.
RNS may use your IP address to confirm compliance with the terms and conditions, to analyse how you engage with the information contained in this communication, and to share such analysis on an anonymised basis with others as part of our commercial services. For further information about how RNS and the London Stock Exchange use the personal data you provide us, please see our
Privacy Policy (https://www.lseg.com/privacy-and-cookie-policy)
. END IR SFFFUMELSESURecent news on Team17
See all newsREG - Team17 Group PLC - Director/PDMR Shareholding
AnnouncementREG - Team17 Group PLC - Change of Nominated Advisor
AnnouncementREG - Team17 Group PLC - Half Year Results
AnnouncementREG - Team17 Group PLC - Director/PDMR Shareholding
AnnouncementREG - Team17 Group PLC - Holdings in Company
Announcement