TIDMTM17
RNS Number : 3334S
Team17 Group PLC
16 March 2021
This announcement contains inside information for the purposes
of Article 7 of Regulation (EU) No 596/2014. Upon the publication
of this announcement, this information is now considered to be in
the public domain.
16 March 2021
Team17 Group plc
("Team17", the "Group" or the "Company")
Unaudited Final Results for the year ended 31 December 2020
Record year underpinned by Team17's strong Games portfolio
Team17 , a global games entertainment label, creative partner
and developer of independent ("indie") premium video games, is
pleased to announce its full year preliminary results for the year
ended 31 December 2020.
2020 Headlines:
-- More titles released than any previous year helping to deliver revenue growth of 34%
-- Record GBP26.2m profit before tax - up 36% year on year
-- Continued improvement in shareholder value with basic EPS growth of 32%
Financial highlights:
12 Months ended
31 December 31 December Growth
2020 2019
Revenue GBP83.0m GBP61.8m 34%
Gross Profit GBP39.1m GBP29.5m 33%
Gross Profit Margin 47% 48%
Profit Before Tax GBP26.2m GBP19.2m 36%
Adjusted EBITDA(1) GBP30.1m GBP22.1m 36%
Operating Cash Conversion(2) 109% 103%
Cash and cash equivalents GBP61.5m GBP41.9m 47%
Basic Earnings per Share
("EPS") 17.0 pence 12.9 pence 32%
Diluted EPS 16.8 pence 12.9 pence 30%
Basic Adjusted EPS ("AEPS")(3) 18.2 pence 13.6 pence 34%
Diluted AEPS(3) 18.1 pence 13.6 pence 33%
Operational and strategic highlights:
-- Strengthening portfolio with 12 titles launched in the year
providing new revenue lines which included a record 10 new games
released, supported by an increasing depth of back catalogue
titles:
o Approaching 400 digital revenue lines delivered across the
whole portfolio
o 2 titles launched on next-generation consoles, Worms Rumble
and Overcooked! All You Can Eat
o Cross-play tech integration in Next Generation titles (forms
the wrapper for releases in future years for online games using the
Unreal and Unity engines)
-- Solid underlying Back Catalogue performance making up 78% of revenues.
-- First party IP reached 21% of revenues, supported by 2 first party titles launched in Q4.
-- Seamless transition to remote working in early March 2020
ahead of the Covid-19 ("Covid") outbreak with the safety of our
Teamsters paramount.
-- Continued investment in senior management and core infrastructure:
o CFO appointed and key hires made in Development Studio, HR and
IT
o Martin Hellawell appointed Senior Independent Non-Executive
Director (with immediate effect)
o Finance system upgrade initiated
-- With the acquisition and integration of Yippee Entertainment
Limited ("Yippee") establishing a second UK development studio
based in Media City, Manchester, the team has now doubled in
size.
-- Overall headcount growth of 25% to 250 Teamsters at year end (2019: 200)
-- In January 2021, completed the acquisition of all rights and
assets for Golf With Your Friends, an
existing third party title to become a fully owned IP for a total consideration of GBP12m.
Outlook:
-- Team17 has a solid and diverse pipeline of launches for 2021
and beyond and is well positioned to continue to deliver on our
growth plans
-- The year has started well and the expansion of both major new
consoles and distribution platforms underpins management's optimism
about the future of gaming given its unique mixture of technology
and entertainment
-- The board continues to be mindful of any potential headwinds
associated with a prolonged pandemic, including uncertain
macro-economic and consumer environments alongside manufacturing
and supply chain challenges
-- However, the Company remains confident that its ever-growing
and diverse portfolio and high-quality development and commercial
teams will continue to underpin performance
-- Team17 continues to review a healthy pipeline of potential
M&A opportunities that could bring long term value to the
Group
Debbie Bestwick MBE, Chief Executive Officer of Team17,
commented:
"I am delighted that our Teamsters and the wider Team17 family
have pulled together, in what has been a challenging 12 months for
many. It is because of their hard work and creativity, alongside
that of our brilliant label partners, that we can report yet
another record year of profitability.
Team17 has been able to offer gamers a means of escapism and a
way to interact with their friends and family more than ever
before, even when they were unable to meet face to face. The
ability to enjoy interactive entertainment between multiple
households is something that is almost unique to gaming and we are
pleased that our inclusive and family-oriented games have proven so
popular.
2020 was a significant year for the gaming industry as a whole,
as we saw the launch of both Sony and Microsoft's next-gen
consoles. It is fantastic to see our titles being launched on both
these platforms and that another generation of gamers will get to
explore Team17's gaming universes. Incredibly, our Worms franchise
is now twenty-five years old and in December we launched the
franchise's newest title, Worms Rumble , on PlayStation 5. While we
have all been delighted to see how well the game has taken to this
new platform, I know many gamers, myself included, will fondly
remember Worms' first iteration, developed for the Commodore Amiga
and released in 1995.
2021 will be a very exciting and busy year for Team17, with more
games signed to our label than any time in our history and new IP
launches to look forward to including Rogue Heroes, King of Seas,
Narita Boy, Epic Chef, Super Magbot, Greak: Memories of Azur, Honey
I Joined a Cult and Hokko Life with three new games still to be
announced. Alongside these, Hell Let Loose is due to exit Early
Access and launch on PlayStation 5 and Xbox X/S, Overcooked! All
You Can Eat will launch on Nintendo Switch, PlayStation 4, Xbox One
& PC and Worms Rumble will launch on Xbox X/S, Xbox One and
Nintendo Switch. I look forward to updating our shareholders on our
progress as the year goes on."
Footnotes:
(1) 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) and share based payment
costs.
(2) Operating cash conversion is defined as cash generated from
operating activities as per the statement of cash flows, divided by
EBITDA.
(3) Adjusted earnings per share 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).
Enquiries:
Team17 Group plc via Vigo Communications
Debbie Bestwick MBE, Chief Executive Officer
Mark Crawford, Chief Financial Officer
GCA Altium (Nominated Adviser) +44 (0)161 250
Adrian Reed / Paul Lines 3577
Berenberg (Broker)
Chris Bowman / Toby Flaux / Marie Moy / +44 (0)20 3207
Alix Mecklenburg-Solodkoff 7800
Vigo Communications (Financial Public
Relations)
Jeremy Garcia / Charlie Neish +44 (0)20 7390
team17@vigocomms.com 0238
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, console, 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 and in bringing them to market across multiple
platforms for fixed percentage royalties ("third party IP").
Since foundation in 1990, the Company has launched over 100
games, including the iconic Worms, Overcooked! and 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.
Visit www.team17.com for more info.
Chair and Chief Executive's Review
Introduction
We are delighted to report a sixth consecutive record
performance year. Supported by our Teamsters and Games Label
partners, we delivered one of our most ambitious rosters of game
launches, built upon our internal tech wrappers for 1(st) and 3(rd)
party online Games to include Cross-Play (for Unity and Unreal
engine games), alongside further enhancements to our back catalogue
portfolio contributing to another excellent year.
Pleasingly, we launched 2 existing titles on new platforms and
released a record 10 new game titles in 2020 which included 7 new
game releases and 3 new games set in existing gaming universes. We
continued to build on our existing franchises with additional 34
downloadable content packs ("DLC") delivered across 15 titles,
further enhancing their lifecycles and encouraging continued player
interaction.
Across the year, 78% of the Company's revenues came from our
strong and diverse back catalogue portfolio, partly as a result of
Covid related lockdowns which provided an opportunity for gamers
globally to explore our diverse mix of content. This contributed to
a significantly better than expected performance in FY2020 with new
releases in total for the year accounting for 22% of sales. Our
portfolio model came into its own in 2020 and underpins our low
risk business model that we believe in so strongly.
2020 Launches
As referenced above, we continued to strengthen our IP portfolio
with record title releases during the year working alongside
development teams globally:
-- Moving Out - physics-based moving simulator (SMG Studio, Australia & DevM Games, Sweden)
-- Golf with Your Friends (console*) - multiplayer mini golf
game (Blacklight Interactive, Australia)
-- Main Assembly - robot building sandbox game (Bad Yolk, Sweden)
-- Crown Trick - role-playing game with turn-based combat (NeXT Studios, China)
-- Going Under - satirical dungeon crawler (Aggro Crab, USA)
-- Ageless - time altering puzzle platformer (One More Dream Studios, Malaysia)
-- Neon Abyss - dungeon-based action-platformer (Veewoo Games, China)
-- Hammerting - dwarf mining simulator (Warpzone Studios, Sweden)
-- The Survivalists - island survival in The Escapists universe (own-IP, UK)
-- Overcooked! All You Can Eat - boosted Overcooked bundle for next-gen (Ghost Town Games, UK)
-- Worms Rumble - real-time, cross-platform Worms title (own-IP, UK)
-- Monster Sanctuary (console*) - monster collecting and
turn-based combat (Moi Rai Games, Germany)
* existing games launched on to new platforms
As a result of both the strength of our portfolio model and the
successful launch of new titles in 2020, we are delighted to report
revenues of GBP83.0m up 34% (2019: GBP61.8m), an increase of 36% in
gross profit to GBP39.1m (2019: GBP29.5m), profit before tax up 36%
to GBP26.2m (2019: GBP19.2m) and a 33% increase in adjusted EBITDA
to GBP30.1m (2019: GBP22.1m), all of which are records for the
business. We continue to be highly cash generative, ending the year
with cash and cash equivalents of GBP61.5m (2019: GBP41.9m).
The Company's portfolio continues to grow and now comprises
nearly 400 digital revenue lines ("DRL"), compared to just over 300
DRL this time last year. The expansion of our DRL across our genre
and platform agnostic portfolio continues to underpin the Company's
growth and mitigates the risks associated with over-dependence on
any one title or specific distribution platform.
The Company's core business model has remained focused, robust
and is central to our ongoing success. Therefore, we will continue
to focus on our key priorities:
-- Growing our strong portfolio of titles, including additional paid and free DLC;
-- Harnessing new technology and platforms;
-- Capitalising on the strength of the Games Label model and our
unique Greenlight process that identifies and contracts new IP;
-- Evaluating selective M&A opportunities; and
-- Continuing to invest in our people and infrastructure, while
identifying new creative and commercial talent
Covid
Over the course of the pandemic and continuing into 2021, the
safety and wellbeing of our Teamsters and Label Partners has
remained our number one priority. Due to the seamless transition to
remote working, the business suffered minimal interruption during
the early stages of the pandemic. Having proven their ability to
work effectively from home, we will continue to bring our people
back to the office only when we feel safe and comfortable to do so.
We also expect to see a permanent shift in working and business
travel practices across our industry and will listen closely to
feedback from our teams and partners, as we develop increasingly
flexible working practices across the business.
2021 Pipeline
Continuing on from 2020, with one of our most ambitious
pipelines delivered not just in the number of game launches and
updates but technically as a remote work force, our fiscal 2021
pipeline is no less ambitious. We have a solid and diverse pipeline
of new IP to look forward to including: Rogue Heroes, King of Seas,
Narita Boy, Epic Chef, Super Magbot, Greak: Memories of Azur, Honey
I Joined a Cult and Hokko Life with three new games yet to be
announced. In addition to new IP, there is a special mention for
some of our existing portfolio titles such as Hell Let Loose which
will arrive on Next Generation Consoles this year alongside Worms
Rumble and Overcooked! All You Can Eat which will launch on
additional existing platforms with full cross play.
Rogue Heroes was launched in February 2021 and, together with
the new titles already announced, we look forward to updating our
shareholders on further titles to be released in 2021.
Industry recognition
The quality of Team17's business, management and games has
continued to be recognised within the video game industry
throughout 2020 with many awards and nominations but call out
to:
-- Team17 named Indie Publisher of the Year at MCV Develop Awards
-- Blasphemous won Game of the Year, Best Art, Best Game Design,
Best PC Game, and Best Console Game at Gamelab
-- Moving Out awarded Game of the Year Award at Australian Game Developer Awards
-- Team17 named Publishing Star at Develop:Star Awards
-- Team17 and Worms inducted into Golden Joysticks Hall of Fame
-- Greak: Memories of Azur won the Award for the Best Upcoming
Game for PC/Consoles as well as Best Graphic Art at VJMX Awards
-- Debbie Bestwick named Entrepreneur of the Year at the 2020 AIM Awards
Market overview
In 2020, the video games market saw an unprecedented period of
growth, accelerated by the significant increase in demand for at
home entertainment during the Covid pandemic.
As a result of this positive tailwind, the overall market grew
(4) 19.6% 2020 vs 2019 to $174.9 billion whilst previous estimates
were for 8.2% growth to $164.6 billion. The market is now predicted
to reach $217.9 billion by 2023 growing at 7.6% CAGR, a slightly
lower rate than prior year predictions reflecting uncertainty
within the global marketplace. Over the same period, the mobile
gaming sector is expected to grow at 9.8% CAGR, whilst console and
PC sectors are predicted to grow at 7.4% and 2.4% respectively.
With the launch of next-generation consoles in November 2020, we
entered a new era of gaming with both consoles boasting significant
improvements to architecture, processing, and graphics
capabilities. Our platform agnostic approach means that although we
will continue to release games across all platforms, including
PlayStation 5 and Xbox Series X|S, the Company's performance
remains untethered to a single console.
( (4) market data sourced from NewZoo Global Games Market Data
January 2021)
Outlook
Team17 has a solid pipeline of launches for 2021 and beyond
coupled with a strengthening Greenlight process continually adding
further IP and strengthening our offering to 3(rd) party partners
with our unique development tools and resources. The Company is
therefore well positioned to continue to deliver on our growth
plans.
The expansion of both major consoles and distribution platforms
underpins management's optimism about the future of gaming given
its unique mixture of technology and entertainment.
Whilst gaming has proven to be extremely resilient, the board
continues to be mindful of any potential headwinds associated with
a prolonged pandemic, including uncertain macro-economic and
consumer environments alongside manufacturing and supply chain
challenges facing next generation and existing hardware. We expect
these to be in part ongoing and key considerations in 2021.
We would like to take this opportunity to thank our Teamsters
for their tenacity and faultless commitment in what has been a
challenging year for all of us. It is through their endurance and
ingenuity that Team17 has been able to thrive in an unprecedented
trading environment.
With a solid pipeline of launches for 2021 and beyond, Team17 is
well positioned to continue to deliver underlying growth and
support the long-term prospects aligned with our ambitious
strategic plans. The acquisition in early January of IP rights and
assets for Golf With Your Friends is a clear indication of our
strategic intent and desire to grow our IP base, expanding our
portfolio and franchise footprint.
The Group continues to focus on retaining cash generated from
operations to further invest in the business and its growth plans
and the Directors do not propose a dividend at this time.
We are confident that our ever-growing portfolio and high
quality development and commercial resources place Team17 in a
strong position and will continue to underpin the Group's future
performance.
Debbie Bestwick MBE Chris Bell
Chief Executive Officer Non-Executive Chair
15 March 2021
Chief Financial Officer's Review
Performance overview
2020 was undoubtedly an exceptional year with the Covid pandemic
impacting individuals and businesses across the globe. Overall we
reported record revenues with higher than expected back catalogue
sales alongside the launch of 12 titles with 2 existing titles
released on new platforms and a record 10 new titles launched
during the year (2019: 7) resulting in new releases representing
22% of revenues in the period (2019: 29%). Overall, the Group's
revenues grew 34% to another record level of GBP83.0m (2019:
GBP61.8m) for the year to 31 December 2020.
Gross profit grew by 33% to GBP39.1m (2019: GBP29.5m) and gross
margin percentage was 47% (2019: 48%). Movement in gross margins
reflect a combination of the sales mix, the age profile of the
titles within our portfolio and the ongoing support provided to
titles post launch. It should be noted that this combination of
sales mix between back catalogue and new releases together with
associated amortisation charges is subject to the scale and timing
of new game releases and will vary from year to year.
With a growing pipeline of titles in production combined with
more internal IP, development costs capitalised in the period have
increased by 134% to GBP7.5m (2019: GBP3.2m). Capitalised costs
will vary from year to year as they reflect the combination of the
increased number of titles in development, timing and number of
planned launches, the mix of own IP launched in the year and also
the technical tools we build within our talented development teams
including multiplayer online games and cross platform technology.
Costs incurred to support an increasing number of live games or
deliver new content as DLC (either paid for or free updates) are
fully expensed in the period.
Amortisation charges have risen primarily due to the increase in
number of titles launched in the period. Team17's amortisation
policy means that the majority of the capitalised development costs
for a title are written off in the 12 months after the title is
launched. Charges will vary year to year in accordance with the
timing and quantity of titles launched alongside the level of
development costs capitalised.
In December 2020, we launched Worms Rumble on PC, PlayStation 4
and the next generation PlayStation 5 console and as part of this
launch, revenue was secured under a license agreement with
PlayStation which was recognised in the period under IFRS 15. As a
result of the licence deal combined with the launch on the next
generation console, first year revenues are expected to be more
heavily weighted towards the launch date and we have therefore
updated our amortisation policy to better reflect this with a
higher amortisation charge for this title being recognised in
December 2020. The total amortisation charges for this title over
the first year after launch will remain in line with the existing
policy.
Administration costs grew by 23% to GBP13.0m (2019: GBP10.6m)
with the key driver of the increase being the growth in headcount.
We were pleased to be able to continue to recruit throughout the
year despite the pandemic related restrictions and as a result
total headcount grew by 25% to 250 (2019: 200). The increase in
headcount includes the team that joined as a result of the
acquisition of Yippee in January 2020, enabling the expansion our
development capability with a second studio based in Media City,
Manchester with access to a new and broad talent pool. Average
headcount increased by 34% to 233 during the period (2019: 173)
reflecting the fact that prior year headcount increase was
predominantly second half loaded.
In line with the increased number of game launches in the
period, there were increased marketing costs, however other
commercial costs associated with global gaming events were reduced
as a direct result of Covid restrictions. In addition, there were
relatively small overhead costs associated with the Manchester
studio in its first year within Team17.
The resulting operating profit for the period was GBP26.2m which
showed a 38% growth compared to the previous year (2019:
GBP19.0m).
The business continues to remain debt free (with the exception
of the lease liabilities included under IFRS 16); with global
interest rates remaining extremely low, bank interest generated net
finance income of GBP0.1m (2019: GBP0.2m). The resulting profit
before tax grew 36% to GBP26.2m (2019: GBP19.2m)
Adjusted EBITDA was GBP30.1m which grew 36% year on year (2019:
GBP22.1m) and the Adjusted EBITDA margin as expressed as a
percentage remained at 36% (2019: 36%) continuing to support the
underlying profitability of the portfolio business model whilst
making important investment in the team and infrastructure to
support the future growth aspirations for the business. Adjusted
EBITDA includes the add back for share based payments charges
including employers national insurance contributions of GBP1.7m
(2019: GBP0.9m) associated with share awards used to reward and
incentivise Team17 employees.
The effective tax rate after Video Games Tax Relief (VGTR) and
adjustments made to prior years is 16% (2019: 13%).
Statement of Financial Position
Team17 remains highly cash generative with an operating cash
conversion of 109% (2019: 103%). Cash generated from operations
increased to GBP35.4m (2019: 25.1m) which resulted in the continued
growth in net cash and cash equivalents to GBP61.5m (2019:
GBP41.9m) at 31 December 2020, an increase of GBP19.6m (2019:
GBP18.3m). The Board expects the Group to remain highly cash
generative in 2021. Cash and cash equivalents includes GBP3.2m
(2019: GBP3.2m) held in the Employee Benefit Trust (EBT) which is
used to support employee share awards and incentivise Team17
employees.
Intangible assets are reviewed for indicators of impairment
every six months. As at 31 December 2020 the net book value was
GBP22.4m (2019: GBP21.1m) for goodwill reflecting the addition to
goodwill associated with the Yippee acquisition, GBP14.3m (2019:
GBP16.0m) for brands and also includes GBP6.3m (2019: GBP2.8m) of
capitalised development costs relating to unreleased titles and
titles that have been launched within the previous two years.
Trade and other receivables has increased by GBP4.9m to GBP16.4m
(2019: GBP11.5m). This increase is predominantly driven by trading
uplift. Timing on tax recoveries has led to a tax receivable of
GBP0.7m (2019: GBPNil). Trade and other payables equally increased
in line with trading to GBP17.2m (2019: GBP11.7m), most notably
impacted by royalty accruals and licence income timing on trading
towards the end of the financial period.
Share Issues
During the year Team17 announced separate share issues, firstly
in January 2020 for 114,000 new ordinary shares issued as part of
the consideration for the acquisition of Yippee and then in July,
further to the exercise of options as part of the Team17 Group plc
Long Term Incentive Plan, 70,946 ordinary shares were issued and
allotted. The Group's issued share capital now comprises
131,473,222 ordinary shares of GBP0.01 each.
The Group continues to manage a Deferred Bonus Share Plan for
its senior management as well as an All Employee Share Incentive
Plan ("SIP"). Team17 runs an employee SIP with matching shares and
this continues to be well supported with 44% of all employees as
shareholders making monthly contributions. These are both funded
from the Employee Benefit Trust ("EBT") and therefore will not
result in the issue of shares to satisfy the options.
Events After the Reporting Date
On 21 January, Team17 announced the acquisition of all rights
and assets for Golf With Your Friends, an existing third party
title to become a fully owned IP for a total consideration of
GBP12m which will be satisfied totally in cash with an initial
payment of GBP9m and a further GBP3m paid within 12 months.
Mark Crawford
Chief Financial Officer
15 March 2021
Unaudited Consolidated Statement of Comprehensive Income
Unaudited Audited
Year ended Year ended
31 December 31 December
2020 2019
Note GBP'000 GBP'000
Revenue 3 82,969 61,794
Cost of sales (43,823) (32,257)
================================ ===== ============= =============
Gross profit 39,146 29,537
Administrative expenses (12,979) (10,581)
Operating profit 26,167 18,956
Finance income 112 232
Finance cost (43) (18)
================================ ===== ============= =============
Profit before tax 26,236 19,170
Taxation (4,292) (2,551)
================================ ===== ============= =============
Profit and total comprehensive
income attributable
to shareholders 21,944 16,619
================================ ===== ============= =============
Basic earnings per share 5 17.0 Pence 12.9 Pence
Diluted earnings per 5 16.8 Pence 12.9 Pence
share
Basic adjusted earnings 5 18.2 Pence 13.6 Pence
per share
Diluted adjusted earnings 5 18.1 Pence 13.6 Pence
per share
================================ ===== ============= =============
Unaudited Consolidated Statement of Financial Position
Unaudited Audited
31 December 31 December
2020 2019
Note GBP'000 GBP'000
================================ ======= ============= =============
ASSETS
Non-current assets
Intangible fixed assets 6 42,921 39,925
Property, plant and equipment 1,353 1,478
Right-of-use asset 1,378 1,513
Deferred tax - 248
================================ ======= ============= =============
45,652 43,164
================================ ======= ============= =============
Current assets
Trade and other receivables 16,430 11,487
Tax receivables 670 -
Cash and cash equivalents 61,470 41,853
================================ ======= ============= =============
78,570 53,340
================================ ======= ============= =============
Total assets 124,222 96,504
================================ ======= ============= =============
EQUITY AND LIABILITIES
Non-current liabilities
Lease liabilities 1,320 1,464
Provisions 76 26
Deferred tax liabilities 2,126 3,007
================================ ======= ============= =============
Total non-current liabilities 3,522 4,497
================================ ======= ============= =============
Current liabilities
Trade and other payables 17,206 11,736
Lease liabilities 145 122
Total current liabilities 17,351 11,858
================================ ======= ============= =============
Total liabilities 20,873 16,355
================================ ======= ============= =============
Equity
Share capital 1,315 1,313
Share premium 44,084 44,084
Merger reserve (153,822) (153,822)
Other reserve 159,296 158,864
Retained earnings 52,476 29,710
================================ ======= ============= =============
Total equity 103,349 80,149
================================ ======= ============= =============
Total equity and liabilities 124,222 96,504
================================ ======= ============= =============
Unaudited Consolidated Statement of Changes in Equity
Share Share Merger Other Retained
capital premium reserve reserves earnings Total
Year to 31 December
2019 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Balance at
1 January 2019 1,313 44,084 (153,822) 158,864 12,170 62,609
Share based compensation - - - - 921 921
Total transactions
with owners - - - - 921 921
========================== ========= ========= ========== ========== ========== ========
Profit and total
comprehensive
income for the
year - - - - 16,619 16,619
========================== ========= ========= ========== ========== ========== ========
Balance at
31 December 2019
(audited) 1,313 44,084 (153,822) 158,864 29,710 80,149
========================== ========= ========= ========== ========== ========== ========
Year to 31 December 2020
========================================= ========= ========== ========== ========== ========
Balance at
1 January 2020 1,313 44,084 (153,822) 158,864 29,710 80,149
Share based compensation - - - - 822 822
Issue of shares
on exercise of
options 1 - - - - 1
Issue of shares
on acquisition
of subsidiary 7 1 - - 432 - 433
========================== ========= ========= ========== ========== ========== ========
Total transactions
with owners 2 - - 432 822 1,256
========================== ========= ========= ========== ========== ========== ========
Profit and total
comprehensive
income for the
year - - - - 21,944 21,944
========================== ========= ========= ========== ========== ========== ========
Balance at
31 December 2020
(unaudited) 1,315 44,084 (153,822) 159,296 52,476 103,349
========================== ========= ========= ========== ========== ========== ========
Unaudited Consolidated Statement of Cash Flows
Unaudited Audited
Year ended Year ended
31 December 31 December
2020 2019
Note GBP'000 GBP'000
===================================== ===== ============= =============
Operating activities
Profit before tax 26,236 19,170
Adjustments for:
Depreciation of property, plant
and equipment 404 355
Depreciation of right-of-use
assets 135 57
Amortisation of intangible
fixed assets 6 5,812 4,888
Share-based compensation 822 921
Finance income (112) (232)
Finance cost 43 18
Loss on disposal 24 29
Increase in trade and other
receivables (4,908) (3,351)
Increase in trade and other
payables 6,908 3,321
Increase/(Decrease) in provisions 50 (113)
Cash generated from operating
activities 35,414 25,063
Tax paid (7,125) (2,494)
===================================== ===== ============= =============
Net cash inflow from operating
activities 28,289 22,569
===================================== ===== ============= =============
Cash flow from investing activities
Acquisition of subsidiary (net
of cash received) 7 (813) -
Purchase of property, plant
and equipment (338) (1,265)
Sale of property, plant and
equipment 43 43
Capitalised development costs 6 (7,512) (3,215)
Interest received 112 232
===================================== ===== ============= =============
Net cash from investing activities (8,508) (4,205)
===================================== ===== ============= =============
Cash flow from financing activities
Interest paid (43) (17)
Receipt of lease incentive - 48
Repayment of lease liabilities (121) (54)
Net cash from financing activities (164) (23)
===================================== ===== ============= =============
Net increase in cash and cash
equivalents 19,617 18,341
Cash and cash equivalents at
beginning of period 41,853 23,512
===================================== ===== ============= =============
Cash and cash equivalents at
end of period 61,470 41,853
===================================== ===== ============= =============
Notes to the Unaudited Consolidated 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
The preliminary results for the year ended 31 December 2020 are
unaudited. The financial information set out in this announcement
does not constitute the Group's financial statements for the year
ended 31 December 2020 as defined by Section 434 of the Companies
Act. This financial information has been prepared in accordance
with international accounting standards in conformity with the
requirements of the Companies Act 2006. It has been prepared on the
historical cost basis, except for those items which are measured at
fair value.
This financial information should be read in conjunction with
the financial statements of Team17 Group plc for the year ended 31
December 2019 (the "Prior year financial statements"), which are
available from the Registrar of Companies. The auditors,
PricewaterhouseCoopers LLP, reported on those accounts and their
report was unqualified, did not contain an emphasis of matter
paragraph and did not contain any statement under Section 498 (2)
or (3) of the Companies Act 2006.
The Group's financial statements for the year ended 31 December
2020 will be finalised on the basis of the financial information
presented by the Directors' in these preliminary results and will
be delivered to the Registrar of Companies following the Annual
General Meeting of Team17 Group plc.
Accounting policies
The Group's principal accounting policies used in preparing this
information are as stated on pages 31 to 37 of the prior year
financial statements. There has been no significant change to any
accounting policy from the date of the prior year financial
statements.
3. Segmental information
Whilst the chief operating decision maker considers there to be
only one segment, the Company's portfolio of games is split between
those based on IP owned by the Group and IP owned by a third party
and hence to aid the readers understanding of our results, the
split of revenue from these two categories are shown below:
Revenue by first party/third party IP:
Unaudited Audited
Year ended Year ended
31 December 31 December
2020 2019
GBP'000 GBP'000
================ ============= =============
First party IP 17,310 10,312
Third party IP 65,659 51,482
============= =============
82,969 61,794
============= =============
4. Adjusted EBITDA
Unaudited Audited
Year ended Year ended
31 December 31 December
2020 2019
Profit attributable to shareholders 21,944 16,619
Share based compensation 1,662 921
Adjusted profit after tax 23,606 17,540
============= =============
Taxation 4,292 2,551
Finance income (112) (232)
Finance cost 43 18
Amortisation of brands 1,784 1,783
Depreciation 535 412
============= =============
Adjusted EBITDA 30,148 22,072
============= =============
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.
Unaudited Audited
Year ended Year ended
31 December 31 December
2020 2019
============================================ ============ ============
Profit attributable to shareholders GBP'000 21,944 16,619
Weighted average number of shares 129,398,375 129,246,382
Weighted average diluted number of shares 130,607,624 129,253,947
============ ============
Basic earnings per share (pence) 17.0 12.9
Diluted earnings per share (pence) 16.8 12.9
============ ============
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 4. The weighted average diluted number of
shares includes share options considered to be dilutive under the
treasury stock method as described above.
Unaudited Audited
Year ended Year ended
31 December 31 December
2020 2019
============================================ ============ ============
Adjusted profit after tax GBP'000 23,606 17,540
Weighted average number of shares 129,398,375 129,246,382
Weighted average diluted number of shares 130,607,624 129,253,947
============ ============
Basic adjusted earnings per share (pence) 18.2 13.6
Diluted adjusted earnings per share (pence) 18.1 13.6
============ ============
6. Intangibles
Development
costs Brands Goodwill Total
GBP'000 GBP'000 GBP'000 GBP'000
Cost
At 1 January 2019 10,615 21,983 21,083 53,681
Additions 3,215 - - 3,215
======== ========= =========== ========
At 31 December 2019 13,830 21,983 21,083 56,896
Additions 7,512 - - 7,512
Amounts arising on acquisitions - - 1,296 1,296
At 31 December 2020 21,342 21,983 22,379 65,704
======== ========= =========== ========
Accumulated amortisation
At 1 January 2019 7,922 4,161 - 12,083
Charge for the year 3,105 1,783 - 4,888
======== ========= =========== ========
At 31 December 2019 11,027 5,944 - 16,971
Charge for the year 4,028 1,784 - 5,812
At 31 December 2020 15,055 7,728 - 22,783
======== ========= =========== ========
Net carrying amount
At 31 December 2020 6,287 14,255 22,379 42,921
======== ========= =========== ========
At 31 December 2019 2,803 16,039 21,083 39,925
======== ========= =========== ========
Goodwill
The Group tests for impairment every six months, or more
frequently if there are indicators that goodwill might be
impaired.
The recoverable amount of the cash generating unit ("CGU") at 31
December 2020 is determined from the fair value less costs of
disposal of the underlying business units. The key assumption in
calculating the fair value was the expected future cashflows at 31
December 2020. No impairment is considered necessary at 31 December
2020.
7. Acquisition of subsidiary
On 1 January 2020 Team17 Group plc acquired 100% of the issued
shares in Yippee Entertainment Limited, for total consideration of
GBP1,363,000. The acquisition is expected to increase the studio
capacity by adding a talented and versatile team which will
continue to be run by Mike Delves, an industry veteran with over 30
years' experience. Details of the purchase consideration, the net
assets acquired and goodwill are as follows:
GBP'000
Purchase consideration
Cash consideration 780
Deferred consideration 150
========
Total cash consideration 930
Shares issued in Team17 Group
plc 433
========
Total purchase consideration 1,363
The assets and liabilities recognised as a result of the
acquisition are as follows:
GBP'000
Cash and cash equivalents 116
Property, plant and equipment 8
Receivables 58
Payables (115)
========
Net identifiable assets acquired 67
Add: Goodwill 1,296
========
1,363
The goodwill is attributable to Yippee Entertainment Limited's
talented multi-award winning video game development team. It has
been allocated to the sole segment of the business which is the
production and publishing of video games. None of the goodwill is
expected to be deductible for tax purposes.
Acquisition related costs of GBP108,000 are included in
administrative expenses in the Statement of Comprehensive Income
for the year ended 31 December 2019.
Financial performance of Yippee Entertainment Limited has not
been disclosed as it was wholly immaterial to the year ended 31
December 2020 results.
Deferred consideration
The deferred consideration arrangement required the Group to pay
the former owners of Yippee Entertainment Limited up to a maximum
of GBP150,000 by 31 December 2020 with no minimum. The full amount
of GBP150,000 was paid in December 2020.
Shares issued in Team17 Group plc
The shares were issued as part of the consideration for the
acquisition of Yippee and therefore merger relief has been applied
to the premium on the issue.
Trade and other receivables
The fair value of trade and other receivables at acquisition was
GBP58,000 and the full amount was deemed to be collectible.
8 . Post balance sheet events
On 4 January 2021 Team 17 Digital Limited acquired the Golf With
Your Friends IP from Entertainment Holdings Pty Ltd a company
incorporated in Australia for GBP12,000,000. This consideration is
made up of an initial cash payment of GBP9,000,000 and deferred
cash consideration of GBP3,000,000 due within 12 months of the
acquisition date.
The acquisition underlines part of the Company's strategy to
make value enhancing acquisitions that will support the growth
ambitions alongside organic growth and the Board expects this to be
an ongoing part of the growth strategy.
At the time when these financial statements are authorized for
issue, the Group had not yet completed the accounting for the
acquisition and hence the fair values of assets acquired have not
been disclosed.
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END
FR EAFDSFLNFEAA
(END) Dow Jones Newswires
March 16, 2021 03:06 ET (07:06 GMT)
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