TEAM17 GROUP PLC — Interim / Quarterly Report 2020

Sep 10, 2020

National Storage Mechanism | Additional information

RNS Number : 5421Y

Team17 Group PLC

10 September 2020

10 September 2020

Team17 Group plc

("Team17", the "Group" or the "Company")

Half year results

Record H1 performance aligned with a solid portfolio of new releases across H2

Team17, a global games label, creative partner and developer of independent ("indie") premium video games, is pleased to announce its unaudited interim results for the six months ended 30 June 2020 ("H1 2020").

Financial highlights:

·    Record H1 revenues grew 28% to £38.8m (H1 2019: £30.4m)

·    Gross profit up 21% to £18.3m (H1 2019: £15.1m)

·    Gross profit margin of 47.3% (H1 2019: 49.8%)

·    Record H1 profit before tax up 28% to £13.3m (H1 2019: £10.4m)

·    Adjusted EBITDA* up 24% to £14.9m (H1 2019: £12.0m)

·    Earnings per share ("EPS") grew 25% to 8.5 pence (H1 2019: 6.8 pence)

·    Adjusted EPS ** up 22% to 8.9 pence (H1 2019: 7.3 pence)

·    Operating cash conversion of 114% (H1 2019: 109%) ***

·    Net cash and cash equivalents of £50.4m (H1 2019: £35.8m)

Operational highlights:

·    Strong performance across the portfolio, particularly from multiplayer, co-op and online games during the peak of the COVID-19 ("Covid") outbreak

·    Three new releases and further portfolio downloadable content ("DLC") launched in H1:

·     Moving Out launched in April across PS4, Xbox One, Switch and PC

·     Golf With Your Friends (Console) launched in May across PS4, Xbox One and Switch

·     Main Assembly released in June on Steam Early Access

·     DLC released for Hell Let Loose, Overcooked! and The Escapists franchises alongside several other titles

·   Current portfolio now includes over 345 digital revenue lines in very diverse genres across multiple   platforms

·    Solid portfolio of new releases scheduled across H2:

·    Announced first game with Tencent Games' NeXT Studios for release in the Autumn

·    Announced Worms Rumble partnership with PlayStation 5 & 4, and also launching on PC (Q4 release)

·    Announced Overcooked! All You Can Eat coming to next generation consoles in Q4

·    10 additional new games signed for release in future years

·   Continued investment in development talent, alongside ongoing recruitment of new commercial and operational team members as we grow:

·     Yippee Entertainment Limited ("Yippee") acquired in January 2020, fully integrated and working 100% on Team17 games

·     Recruitment plans continued with a 14% increase in headcount in the first six months to 228 (H1 2019: 164)

·    Mark Crawford confirmed as the permanent CFO, joining the board in April 2020

Outlook:

·     Games sector resilience through the Covid pandemic also reflected in Team17 performance

·    Clear benefit to H1 results from these extraordinary "one-off" circumstances and as a result the Board now expects revenue and adjusted EBITDA to be ahead of market expectations for the year ended 31 December 2020

·    H2 results will undoubtedly continue to be influenced by "normalisation" of the global economic environment and consumer behaviours

·    Solid portfolio of new titles including key franchise releases scheduled in H2

Debbie Bestwick MBE, Chief Executive Officer of Team17, commented:

"2020 was always going to be a memorable year for myself and many at Team17. This year we celebrate our 30th anniversary and also the 25th anniversary for our beloved Worms franchise. I'm delighted to share yet another record start to our fiscal year from the Group in the first half of 2020.

Our broad genre and platform agnostic portfolio shows the importance of inclusivity and variety in gaming. Be it at home with your family or online with our growing community across the globe, from single player or local co-op to massive online games, we truly have an exceptional portfolio that encourages more gamers than ever before to step into the worlds we create and enjoy our characters.

We live the world of video games, it's part of everything we do here at Team17 be it creating our worlds, introducing new characters or bringing communities together. None of this would be possible without our talented and growing team. I would like to say a special thank you to our Teamsters and label partners for their continued resilience, ingenuity and brilliance as we grow together to deliver our personal and corporate ambitions."

*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 payments and any exceptional items. Exceptional items are those items believed to be exceptional in nature by virtue of their size and or incidence.

** Adjusted EPS is defined as profit after tax adjusted to add back any exceptional items divided by the Weighted Average Number of Shares. Exceptional items are those items believed to be exceptional in nature by virtue of their size and or incidence. Exceptional items are detailed in note 4.

*** Operating cash conversion is defined as cash generated from operating activities as per the statement of cash flows, divided by EBITDA including the add back of amortisation of development costs (not normally included in EBITDA) 

Enquiries:

Team17 Group plc Debbie Bestwick MBE, Chief Executive Officer Mark Crawford, Chief Financial Officer	via Vigo Communications
GCA Altium (Nominated Adviser) Adrian Reed / Paul Lines	+44 (0)845 505 4343
Berenberg (Broker) Chris Bowman / Toby Flaux / Marie Moy/ Alix Mecklenburg-Solodkoff	+44 (0)20 3207 7800
Vigo Communications (Financial Public Relations) Jeremy Garcia / Charlie Neish team17@vigocomms.com	+44 (0)20 7390 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 ("GWYF"), 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.

OPERATIONAL REVIEW

Introduction

We have experienced strong sales traction across our portfolio, particularly from our more socially orientated, multiplayer, co-op and online games. This increase in demand has meant improved revenues in the period from our key franchises Worms, Overcooked! and The Escapists, as well as individual titles such as Golf With Your Friends and Hell Let Loose. Three second quarter releases, made up of two new titles and the launch of an existing title on new platforms, also contributed to our record sales in the period.

In H1 2020, given the second half weighting of anticipated new title releases, 86% of revenues came from our back catalogue (H1 2019: 74%), with the remainder coming from the previously mentioned new releases. Our growing portfolio of 345 digital revenue lines continues to demonstrate the value of our low risk, genre and platform agnostic, portfolio-based business model.

As a result, we have delivered another record first half performance with revenues up 28% to £38.8m (H1 2019: £30.4m) and gross profit up 21% to £18.3m (H1 2019: £15.1m). Due to the strong sales performance in H1, we now expect our 2020 revenue profile to be more evenly balanced across the year, with positive impact of new title releases in the second half of the year offsetting any reduction in Covid related uplift seen in H1 as the global economic environment and consumer behaviours normalise.

Adjusted EBITDA grew 24% to £14.9m (H1 2019: £12.0m) and despite the expected impact of increased headcount costs, the Covid related reduction of other overheads meant that the adjusted EBITDA margin was held at a higher level than we estimated at 38.4% (H1 2019: 39.5%).

The effective tax rate was in line with expectations at 17.4% (2019 H1: 15.3%). Tax payments in 2020 have significantly increased to £4.2m (H1 2019: £0.6m), principally due to the timing of payments under the HMRC corporation tax payment scheme.

Our ongoing commitment to growth remains unchanged and is based around our established strategic pillars:

·    Continuing to develop new games and additional content to support lifecycle sales;

·    Leveraging technology and innovation, including next generation consoles;

·    Capitalising on the Group's own IP and growing label portfolio;

·    Evaluating selective M&A opportunities; and

·    Continuing to support our people and harnessing their skills

As referenced above, we continue to evaluate a large number of opportunities and potential partnerships through our selective M&A strategy and the label's greenlight process. More games have been signed in H1 than any half year period and we now have more games in later stage discussion than at any other time in our history. This includes first-time partners in Mexico and Russia, which is a testament to our award-winning label's growing global reputation for delivering exceptional results for our partners, regardless of location.

We are extremely proud of how our teams seamlessly switched to remote working, as various lockdowns were imposed globally. Their performance throughout the pandemic has been terrific, and we will not be seeking a full return to office-based working in the short term.

During the first six months of the year, our focus on talent acquisition continued as we successfully recruited new members to our teams in all three locations, with headcount increasing 14% from 200 at the year end 2019 to 228 at the end of June 2020. We will continue to actively recruit in the second half of the year to deliver on our growth plans and seek to expand our second UK development studio, in order to meet the future demand created by our games label's significant pipeline of titles.

H1 2020 releases

We launched three new releases in the first half of the year, alongside additional post-launch content across multiple platforms:

·    Moving Out - full PC & console launch in April 2020

·    Golf With Your Friends (console) - launched on PS4, Xbox One and Switch in May 2020

·    Main Assembly - launched into Early Access on Steam in June 2020

In April, we launched Moving Out on PC and current-generation consoles, a fun, diverse and accessible party game developed by a distributed development team in Australia, which was critically well-received. In May, we launched Golf With Your Friends on console, building on its success in Steam Early Access. Finally, in June, our creative sandbox title, Main Assembly was launched on Early Access, to a positive reception and a 9/10 rating on Steam. 

As part of our ongoing focus on life cycle management, we also developed and launched new DLC to extend  sales lifecycle and player engagement across a number of games, including Genesis Alpha One, Automachef and two updates each for Overcooked! 2 and The Escapists 2.

Post period-end a free update to Overcooked! 2 with additional DLC was launched across multiple platforms and also Blasphemous: Stir of Dawn DLC was released in August.

During the first half of the year, we released six content updates for our authentic, WW2 first person shooter, Hell Let Loose, while the title remained in Early Access, delivering on our roadmap promises to our customers, ahead of the game's full launch in 2021. We have since delivered a seventh, substantial update in July 2020, seeing the game reach the top of the global top sellers rankings on Steam. 

H2 2020 releases

In July we launched Neon Abyss, our second title from China with Veewoo Games following the success of My Time at Portia and the niche genre Ageless, a puzzle platformer from Malaysian developer One More Dream Studios. Building on our label's growing reputation in Asia, we also recently announced a publishing agreement with Tencent Games' NExT Studios for its roguelike adventure, Crown Trick, which launches on PC and Switch later this year.  

Throughout the rest of FY2020, we plan to launch the following new title releases:

·    Hammerting - the dwarf mining simulator (Sweden)

·    Crown Trick - a role-playing game with turn-based combat (China)

·    Going Under - a satirical dungeon crawler (North America)

·    The Survivalists - island survival in The Escapists universe (own-IP, UK)

·    Overcooked! All You Can Eat - created within our studio for Next-Gen Consoles (UK)

·    Worms Rumble - a fresh, exciting real-time take on Worms (own-IP, UK)

Within our roster of launches in H2, two notable titles launching in Q4 are Team17's own IP - The Survivalists, launching on 5 platforms including Apple Arcade alongside the new instalment in our over 75 million unit selling Worms franchise, Worms Rumble, through which we are excited to be working with PlayStation to bring Worms to a new generation, 25 years after the franchise's first release.

Next Generation Consoles

Both Sony and Microsoft's next generation consoles, PlayStation 5 and Xbox Series X/S respectively, are set to launch in late 2020, with improved architecture, processing and graphics capabilities. While we will continue to launch our titles on PlayStation 4 and Xbox One, we look forward to launching specific new games on both new platforms. Most notably in the near-term, we will be launching Worms Rumble on PlayStation 5 and Overcooked! All You Can Eat. Our focus remains on developing and publishing premium indie games and we look forward to the new technology capabilities that both consoles will bring to the market.

Outlook

Team17 continues to make significant strategic and operational progress as we grow. We have just completed our 2nd year as a listed PLC and feel we have come a long way in a very short time.

Our core focus will always be on the safety and wellbeing of our people which we have maintained throughout the challenges of the first half of the year whilst ensuring business continuity. We have strong relationships with our global partners and together have successfully executed on a busy period of games development and launches during the period.

The games sector has proved to be resilient at a time when many sectors have struggled as a result of the global lockdowns caused by the Covid pandemic. H1 results clearly benefitted from these extraordinary "one-off" circumstances and as a result the Board now expects revenue and adjusted EBITDA to be ahead of market expectations for the year ended 31 December 2020, however H2 results will undoubtedly continue to be influenced by the "normalisation" of the global economic environment and consumer behaviours.

As we look ahead, we are very proud of the way we continue to diversify across genres and challenge ourselves with new technology that we believe will be important in the coming years. We want to work with the most creative developers around the globe and we are delighted at our progress and success thus far. Whether it is with 100 player games such as Hell Let Loose or cross platform play with key franchises launching in H2 with Worms Rumble and Overcooked! All You Can Eat, we challenge ourselves constantly to deliver technology and genre diversification that we believe will benefit the long term growth of the business.

We are positive given the strength of our brand portfolio, our ongoing development partnerships, planned title launches and pipeline of future titles that we will continue to meet our growth objectives.

We believe there are more opportunities than ever before for controllers of IP such as content creators and publishers, and we maintain very strong relationships with all our partners across platform, distribution and our label. We are confident that our ever-growing portfolio, places us in a strong position to benefit from our relationships and these opportunities.

Debbie Bestwick MBE

Chief Executive Officer

10 September 2020          

Condensed Consolidated Statement of Comprehensive Income

		Unaudited Six months ended 30 June 2020	Unaudited Six months ended 30 June 2019	Audited Year ended 31 December 2019
	Note	£'000	£'000	£'000
Revenue	3	38,777	30,396	61,794
Cost of sales		(20,445)	(15,263)	(32,257)
Gross profit		18,332	15,133	29,537
Gross profit %		47.3%	49.8%	47.8%
Administrative expenses		(5,057)	(4,859)	(10,581)
Operating profit		13,275	10,274	18,956
Finance income		81	86	232
Finance cost		(22)	(4)	(18)
Profit before tax		13,334	10,356	19,170
Taxation		(2,317)	(1,580)	(2,551)
Profit and total comprehensive income attributable to shareholders		11,017	8,776	16,619
Basic and diluted earnings/(loss) per share	5	8.5 Pence	6.8 Pence	12.9 Pence

All results relate to continuing activities.

Condensed Consolidated Statement of Financial Position

		Unaudited 30 June 2020	Unaudited 30 June 2019	Audited 31 December 2019
	Note	£'000	£'000	£'000
ASSETS
Non-current assets
Goodwill	6	22,380	21,083	21,083
Brands	6	15,147	16,930	16,039
Development costs	6	5,894	2,366	2,803
Property, plant and equipment		1,457	512	1,478
Right of use assets		1,446	81	1,513
Deferred tax		361	172	248
		46,685	41,144	43,164
Current assets
Trade and other receivables		12,111	8,480	11,487
Tax receivables		378	-	-
Cash and cash equivalents		50,375	35,785	41,853
		62,864	44,265	53,340
Total assets		109,549	85,409	96,504
EQUITY AND LIABILITIES
Equity
Share capital		1,315	1,313	1,313
Share premium		44,084	44,084	44,084
Merger reserve		(153,822)	(153,822)	(153,822)
Other reserves		159,296	158,864	158,864
Retained earnings		41,130	21,620	29,710
Total equity		92,003	72,059	80,149
Non-current liabilities
Lease liabilities		1,393	-	1,464
Provisions		41	205	26
Deferred tax liabilities		3,181	2,962	3,007
Total non-current liabilities		4,615	3,167	4,497
Current liabilities
Trade and other payables		12,789	7,607	10,198
Lease liabilities		142	102	122
Current tax liabilities		-	2,474	1,538
Total current liabilities		12,931	10,183	11,858
Total liabilities		17,546	13,350	16,355
Total equity and liabilities		109,549	85,409	96,504

Condensed Consolidated Statement of Changes in Equity

		Share capital	Share premium	Merger reserve	Other reserves	Retained earnings	Total
Six months to 30 June 2019	Note	£'000	£'000	£'000	£'000	£'000	£'000
Balance at 1 January 2019 (audited)		1,313	44,084	(153,822)	158,864	12,170	62,609
Share based compensation		-	-	-	-	674	674
Total transactions with owners recognised directly within equity		-	-	-	-	674	674
Profit and total comprehensive expense for the period		-	-	-	-	8,776	8,776
Balance at 30 June 2019 (unaudited)		1,313	44,084	(153,822)	158,864	21,620	72,059
Six months to 31 December 2019
Balance at 1 July 2019 (unaudited)		1,313	44,084	(153,822)	158,864	21,620	72,059
Share based compensation		-	-	-	-	247	247
Total transactions with owners recognised directly within equity		-	-	-	-	247	247
Profit and total comprehensive income for the year		-	-	-	-	7,843	7,843
Balance at 31 December 2019 (audited)		1,313	44,084	(153,822)	158,864	29,710	80,149

Six months to 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	7	2	-	-	432	-	434
Total transactions with owners recognised directly within equity		2	-	-	432	403	837
Profit and total comprehensive income 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

Condensed Consolidated Statement of Cash Flows

		Unaudited Six months ended 30 June 2020	Unaudited Six months ended 30 June 2019	Audited Year ended 31 December 2019
	Note	£'000	£'000	£'000
Operating activities
Profit before tax		13,334	10,356	19,170
Adjustments for:
Depreciation of property, plant and equipment		203	184	355
Depreciation of right-of-use assets		67	11	57
Amortisation of intangible fixed assets	6	1,636	2,686	4,888
Loss on disposal of fixed assets		-	-	29
Share-based compensation		403	674	921
Finance income		(81)	(86)	(232)
Financial expenses		22	4	18
Increase in trade and other receivables		(588)	(384)	(3,351)
Increase in trade and other payables		2,340	816	3,321
Increase in provisions		15	65	(113)
Cash generated from operating activities		17,351	14,326	25,063
Tax paid		(4,164)	(600)	(2,494)
Net cash inflow from operating activities		13,187	13,726	22,569
Cash flow from investing activities
Acquisition of subsidiaries (net of cash acquired)	7	(664)	-	-
Purchase of property, plant and equipment		(174)	(75)	(1,265)
Sale of property, plant and equipment		-	20	43
Capitalisation of development costs	6	(3,835)	(1,467)	(3,215)
Interest received		81	86	232
Net cash outflow from investing activities		(4,592)	(1,436)	(4,205)
Cash flow from financing activities
Interest paid		(22)	(4)	(17)
Receipt of lease incentive		-	-	48
Repayment of lease liabilities		(51)	(13)	(54)
Net cash outflow from financing activities		(73)	(17)	(23)
Net increase in cash and cash equivalents		8,522	12,273	18,341
Cash and cash equivalents at beginning of period		41,853	23,512	23,512
Cash and cash equivalents at end of period		50,375	35,785	41,853

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

This interim report has been prepared in accordance with the AIM rules and IAS 34 "Interim Financial Reporting" as adopted by the European Union. The condensed consolidated financial statements for the 6 months ended 30 June 2020 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 includes the financial results of the group prepared in accordance with International Financial Reporting Standards (IFRSs) as adopted by the European Union. The report of the auditors for the prior year financial statements for the year ended 31 December 2019 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 interim condensed consolidated financial information is not audited and does not constitute statutory financial statements as defined in Section 434 of the Companies Act 2006. These condensed interim financial statements were approved for issue on 10 September 2020.

Going concern

Management has produced forecasts that have also been sensitised to reflect plausible downside scenarios as a result of the Covid

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 2020 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 31 to 37 of the prior year financial statements. There has been no change to any accounting policy from the date of the prior year financial statements.

3. Segmental information

The Chief Operating Decision Maker considers this business as a single operating segment, however this information is voluntarily disclosed.

Revenue by Third Party/Own IP:

	Unaudited Six months ended 30 June 2020	Unaudited Six months ended 30 June 2019	Audited Year ended 31 December 2019
	£'000	£'000	£'000
Own IP	5,431	5,037	10,312
Third Party IP	33,346	25,359	51,482
	38,777	30,396	61,794

4. Adjusted EBITDA calculation

		Unaudited Six months ended 30 June 2020 £'000	Unaudited Six months ended 30 June 2019 £'000	Audited Year ended 31 December 2019 £'000
Profit attributable to shareholders		11,017	8,776	16,619
Share based compensation		459	674	921
Adjusted earnings		11,476	9,450	17,540
Taxation		2,317	1,580	2,551
Finance income		(81)	(86)	(232)
Finance cost		22	4	18
Amortisation of brands intangible asset		892	892	1,783
Depreciation		270	195	412
Adjusted EBITDA		14,896	12,035	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 the number of shares upon which share options have been granted and the performance criteria has been met.

At 30 June 2020 70,796 (30 June 2019: Nil, 31 December 2019: 70,796) share options had met the required performance criteria.

		Unaudited Six months ended 30 June 2020	Unaudited Six months ended 30 June 2019	Audited Year ended 31 December 2019
Profit attributable to shareholders £'000		11,017	8,776	16,619
Weighted average number of shares		129,365,060	129,246,382	129,246,382
Weighted average diluted number of shares		129,431,328	129,303,701	129,253,947
Basic earnings per share (pence)		8.5	6.8	12.9
Diluted earnings per share (pence)		8.5	6.8	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 adjusted weighted average diluted

number of shares includes share options where performance criteria has been met as described above.

		Unaudited Six months ended 30 June 2020	Unaudited Six months ended 30 June 2019	Audited Year ended 31 December 2019
Adjusted earnings £'000		11,476	9,450	17,540
Weighted average number of shares		129,365,060	129,246,382	129,246,382
Weighted average diluted number of shares		129,431,328	129,303,701	129,253,947
Adjusted basic earnings per share (pence)		8.9	7.3	13.6
Adjusted diluted earnings per share (pence)		8.9	7.3	13.6

6. Intangibles

	Development costs	Brands	Goodwill	Total
	£'000	£'000	£'000	£'000
Cost
At 1 January 2019 (audited)	10,615	21,983	21,083	53,681
Additions	1,467	-	-	1,467
At 30 June 2019 (unaudited)	12,082	21,983	21,083	55,148
Additions	1,748	-	-	1,748
At 31 December 2019 (audited)	13,830	21,983	21,083	56,896
Additions	3,835	-	1,297	5,132
At 30 June 2020 (unaudited)	17,665	21,983	22,380	62,028
Amortisation
At 1 January 2019 (audited)	7,922	4,161	-	12,083
Charge for the period	1,794	892	-	2,686
At 30 June 2019 (unaudited)	9,716	5,053	-	14,769
Charge for the period	1,311	891	-	2,202
At 31 December 2019 (audited)	11,027	5,944	-	16,971
Charge for the period	744	892	-	1,636
At 30 June 2020 (unaudited)	11,771	6,836	-	18,607

Net carrying amount
At 30 June 2020 (unaudited)	5,894	15,147	22,380	43,421
At 31 December 2019 (audited)	2,803	16,039	21,083	39,925
At 30 June 2019 (unaudited)	2,366	16,930	21,083	40,379
At 1 January 2019 (audited)	2,693	17,822	21,083	41,598

Goodwill

The Group tests for impairment every six months, or more frequently if there are indicators that goodwill might be impaired. Goodwill additions in the period occurred on the acquisition of Yippee Entertainment Limited (note 7).

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 £1,364,000. 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:

		£'000
Purchase consideration
Cash consideration		780
Deferred consideration		150
Shares issued in Team17 Group Plc		434
Total purchase consideration		1,364

The assets and liabilities recognised as a result of the acquisition are as follows:

		£'000
Cash and cash equivalents		116
Property, plant and equipment		8
Receivables		58
Payables		(115)
Net identifiable assets acquired		67
Add: Goodwill		1,297
		1,364

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. See note 6 above for the changes in goodwill as a result of the acquisition.

Acquisition related costs of £108,000 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 they are wholly immaterial to the six months ended 30 June 2020 results.

Deferred consideration

The deferred consideration arrangement requires the Group to pay the former owners of Yippee Entertainment Limited up to a maximum of £150,000 by 31 December 2020. There is no minimum amount payable. No discount rate has been used to calculate the present value as the payment is expected to be in less than one year from the date of acquisition.

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 is £28,973 and the full amount is deemed to be collectible.

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 or visit 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.

END

IR SSSFAUESSEEU