Team17 Regulatory News (TM17)

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.

19 March 2019

Team17 Group plc

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

Unaudited Final Results for the year ended 31 December 2018

Strong revenue growth and cash generation complements a solid pipeline for 2019

Team17, a global games label, creative partner and developer of independent ("indie"), premium video games, is pleased to announce its maiden full year preliminary results for the year ended 31 December 2018 with record Group profits and Adjusted Earnings per share ahead of expectations.

Financial highlights:

● Revenue increased 46% to £43.2m (2017: £29.6m)

● Gross profit up 18% to £19.8m (2017: £16.9m)

● Gross profit margin of 46% (2017: 57%) due to increasing contribution from third-party sales in the period

● Adjusted EBITDA* up 18% to £15.3m (2017: £12.9m)

● Basic and diluted Earnings per share ("EPS")** of 6.1 pence (2017: 4.3 pence)

● Adjusted EPS*** of 8.1 pence (2017: 4.9 pence)

● Operating cash conversion**** of 107% (2017: 107%)

● Net cash and cash equivalents at year end of £23.5m (2017: £8.4m)

Operational highlights:

● Successfully completed IPO on AIM in May 2018

● Portfolio grew strongly in 2018 with 12 new game launches (2017: 10 new game launches)

o Launched seven new title IPs during the period

o Four additional platform releases for existing IPs in 2018

o Launched one new sequel from an existing franchise IP, Overcooked 2

● Solid pipeline of game launches planned for 2019

● Headcount increased 30% to 167 at the end of the year (2017: 128) reflecting further investment across all areas of the business, especially in our quality assurance, commercial and development capabilities

● Significant industry recognition, with Team17 and its staff nominated for over 140 awards across multiple disciplines in 2018

● Appointment of Jo Jones as Chief Financial Officer in October 2018

● Post year end, the Group announced the appointment of Jennifer Lawrence as Non-executive Director

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

"I'm delighted to report on an excellent year for Team17, delivering record revenues and operating profits in the period as well as successfully completing our listing on the Alternative Investment Market. This result was successfully driven by delivery of our ever-growing portfolio during 2018. We have continued to build upon the enviable track record of revenue and profit growth shown over previous years coupled with our ability to effectively manage the lifecycle of our games.

"Our people remain our point of differentiation - their passion, talent, ambition and teamwork collectively made the difference in 2018, and as such, it was most rewarding to see industry recognition across our label with over 140 nominations and awards for our games and people.

"Our incredibly exciting industry continues to grow at a rapid pace. We believe there are more opportunities than ever before for content creators and publishers with the rapid uptake and more openness of digital distribution platforms alongside new emerging distribution methods. We have a solid pipeline of game launches in 2019 and look forward to updating our shareholders on our continued progress in due course."

Footnotes:

* 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), exceptional items, share based payment costs and one-off amortisation accounting estimation change relating to prior periods. 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 and adjusted EBITDA in note 5.

** The calculation of the basic earnings per share is based on the profits attributable to the shareholders of Team 17 Group plc divided by the weighted average number of shares in issue (Note 6). The weighted average number of shares takes into account treasury shares held by the Team 17 Employee Benefit Trust.

*** Adjusted earnings per share is calculated by dividing the adjusted profit after tax by the weighted average number of ordinary shares in issue since listing on AIM adjusted for the dilutive effect of share options (Note 6)

****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:

About Team17

Founded in 1990, Team17 is a leading international video games label and creative partner for independent developers. The portfolio comprises over 100 games, including The Escapists franchise, My Time at Portia, Genesis Alpha One, Overcooked franchise, Yoku's Island Express, Yooka-Laylee, the Worms franchise and many more from developers around the world. Visit www.team17.com for more info.

CHAIRMAN AND CHIEF EXECUTIVE'S REVIEW

OPERATIONAL REVIEW

Introduction

We are delighted to report our maiden full year results for the year ended 31 December 2018 following our admission to AIM in May 2018. Throughout the period we have continued to build on our strong track record, delivering record revenues of £43.2m up 46% (2017: £29.6m) and record gross profit up 18% to £19.8m (2017: £16.9m).

Team17 is a leading video games label and creative partner for independent ("indie") developers, focused on the premium, rather than free to play market, and creating games for the PC home computer market, the video games console market and the mobile and tablet gaming markets. Alongside developing the Company's own games in house ("first-party IP"), Team17 also partners with independent developers across the globe to add value to their games in all areas of development and production alongside bringing them to market across multiple platforms for a fixed percentage share of revenues ("third-party IP"). Since foundation in 1990, we have launched over 100 games, including the iconic Worms franchise, the Overcooked franchise, The Escapists franchise, Yooka-Laylee and Yoku's Island Express, making Team17 one of the most prolific developers and partners of games for the indie market.

We have delivered a solid performance in 2018 through a combination of strong sales from both first-party and third-party IP (Note 3). Our internal studio were also the creators of Overcooked 2, which was released in 2018, and saw our resources fully utilised by a third-party label partner to create a full sequel of a franchise for the first time. Importantly, our significant back catalogue1 portfolio continues to underpin growth, with £22.3m of revenues derived from this channel in 2018 (2017: £15.7m) with the remainder comprising of newly launched games.

Our stock market listing last year was a key milestone for the Company, and we were delighted with the level of support seen from investors throughout our successful IPO on AIM in May 2018. The oversubscribed placing raised £107.5m, of which £45.1m was used to repay debt and the remainder distributed to existing shareholders leaving Team17 in a strong cash position. Our entry onto AIM has allowed the Company to retain our independence and enhance our profile whilst also providing the ability to incentivise both current and future employees.

On behalf of everyone at Team17 we'd like to thank all of our label partners and shareholders for their support and contribution to our journey thus far.

Business Model

Founded in 1990, we announced our Games Label in 2013 with the first game launched in 2014. Our Games Label focuses on premium, high-quality games, continually striving for innovation in gameplay and created by talented partners from around the globe. Through working with Team17, our partners have access to our award-winning development and commercial resources, helping them to compete at a much higher level than they would otherwise be able to do alone with limited budgets and resource. 

We focus on the global independent gaming market. The games market continues to experience strong growth due to the adoption of digital distribution and reduced barriers to entry driven by middleware gaming engines creating more accessible development tools for smaller development teams. Additionally, there is increased accessibility for customers through digital distribution platforms such as Steam, the Epic Games store, PlayStation, Xbox, Nintendo, Google and Apple stores.

We have adopted a comprehensive process for identifying creative ideas and talent via our 'greenlight process'. Games, sourced across a number of channels (including desk research, existing relationships, direct submission and crowdfunding), are comprehensively evaluated for commercial and product quality viability. Upon signing a title, we provide funding and value-added resources to our partners, with any payments contingent on achieving mutually agreed milestones to deliver the highest quality games possible within budget.

The strength and depth of our skill set enables us to support our partners through all stages of game creation and franchise building. We have long established credentials in successfully building franchises and bringing high quality games to market. We have cultivated experienced teams across all areas of the business and refined the best approach across all disciplines required to deliver quality games. As such, our expertise is broad and includes:

● Market leading code, art, audio and design capabilities - to ensure the game is developed to the highest possible quality for the broadest audience within budget

● Marketing, PR and community services - leveraging our experience and network to grow audiences and maximise visibility across key influencers in target markets

● Sales and life cycle management - tactically implementing promotions and events to maximize sales revenues alongside retaining value over the life cycle of the game

● Release management - we have one of the highest multi-platform pass rates in the industry

● Cross platform development - maximizing revenues through coordinated development and release of games across multiple platforms to garner platform support and increase return on investment

● QA, usability and localization - our internal resource provides access to a robust quality assurance team and usability suite whose key focus is to broaden the audience for our games as well as test to ensure we minimize the chances of errors or glitches being uncovered post-launch

Managing the life cycle of games ensures they continue to contribute revenues to the business as part of our back catalogue. The back catalogue, which comprises of titles released in previous financial years, is continually supplemented by new game releases. Successful games such as Worms, The Escapists and Overcooked have continued to contribute significant revenues to the business long after their initial release and have spawned successful sequels.

As the games industry has evolved with the digital era, the lifecycle has also extended significantly, with a game's success no longer pegged to boxed retail sales in the first week of launch. Franchises can be built and grown over a number of years in the digital world, and we are proud of our success in creating a number of leading franchises, and our ability to maintain strong pricing of our games in industry wide traditional discount sales windows.

The access we and our partners have to these core resources enables us to continue to deliver high quality games. This is independently recognised around the world with over 140 nominations and awards across our label in 2018. We are able to deliver an end-to-end solution to our label partners and support them all the way from concept to launch, and post-launch through lifecycle management and franchise building.

Games development and launches

We continued to see strong momentum of games launched across 2018. In September 2018, we announced the launch of PLANET ALPHA, the 100th game we have launched since founded in 1990.

Our portfolio grew strongly in 2018 with 12 new launches comprising seven new IP games alongside four additional platform games to existing franchises and one sequel game. Additionally, we continued to release new paid and free downloadable content ("PDLC", "FDLC") at optimum points during the lifecycle to further enhance the value and extend the life cycle of games that form part of the back catalogue.

We have a solid pipeline of games scheduled for release in 2019 and have already launched three games in January: Genesis Alpha One, launched on PlayStation 4, Xbox One and on PC exclusively via the Epic Games store; My Time at Portia, released on PC via Steam and the Epic Games store; and The Escapists 2 Pocket breakout for mobile.

Across our internal studio and label partners we are working on a number of additional releases to be announced later in 2019. We only announce games at the optimal time in order to maximize awareness and commercial success for the Group and the game, with detail on some game launches planned for 2019 already in the public domain:

● My Time at Portia launched out of early access in January 2019 on Epic's Game store and Valve's Steam store, achieving number one globally on Steam. The console versions will launch in April 2019

● Hell Let Loose, the 100-person WW2 simulation shooter, will launch later in 2019

● Golf with your Friends franchise ("GWYF"), joined the label in February 2019. Our team and creative developers will be working to grow this franchise further in 2019

Market dynamics

The video games market continues to see significant growth and opportunities, with a recent report from gaming analytics firm, Newzoo, estimating the market will be valued in excess of $180bn by 20212. Advances in technology - both for games developers and players alike - have contributed to this overall growth, along with the ability for indie developers to realise ideas and launch games.

In late 2018, Epic announced the launch of the Epic Games store, a new digital distribution platform selling to PC gamers. The Epic Games store offers significant opportunities for developers with the platform offering 88% of revenues derived from games sales.

The trend of gamers accessing games via digital distribution platforms continues to gain momentum. New games launched on the leading PC digital distribution platform, Steam, numbered 7,918 in 2018, versus 560 in 2013.

Due to greater access to development tools, we continue to see a large number of games submitted by developers for assessment as part of our greenlight process, but as ever our focus is on quality over quantity.

Outlook

We are delighted with the progress the Group has made in 2018, delivering record revenue growth and completing a very successful IPO. As stated at the time of listing, we have invested in both commercial and creative talent within the business as we seek to capitalize on the strong demand for our label resources. 

We have made an encouraging start to 2019 and remain well placed for future growth, both through new proprietary games launches, as well as in supporting independent developers through our games label. We remain focused on leveraging our back catalogue and our life cycle management initiatives.

Therefore, the Group looks forward to another successful year and is confident it can continue to deliver shareholders value in 2019 and well beyond.

1 - Back catalogue is defined as revenues from titles released in previous financial years

2 - Newzoo - https://newzoo.com/solutions/standard/market-forecasts/global-games-market-report/

CHIEF FINANCIAL OFFICER'S REVIEW

Introduction

The financial results for 2018 reflect a year of continued financial progress and an exciting period of operational change for the Company. We delivered our successful AIM IPO of the business in addition to launching an array of new titles during the year.

The below table highlights the strong financial performance of the Group:

* 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), exceptional items, share based payment costs and one-off amortisation accounting estimation change relating to prior periods. 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 and adjusted EBITDA in note 5.

** The calculation of the basic earnings per share is based on the profits attributable to the shareholders of Team 17 Group plc divided by the weighted average number of shares in issue (Note 6). The weighted average number of shares takes into account treasury shares held by the Team 17 Employee Benefit Trust.

*** Adjusted earnings per share is calculated by dividing the adjusted profit after tax by the weighted average number of ordinary shares in issue since listing on AIM adjusted for the dilutive effect of share options (Note 6).

****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).

On 23 May 2018, Team17 successfully completed its IPO on AIM, raising £107.5m. As part of this transaction the Lloyds Development Capital ("LDC") private equity and Directors loans were repaid in full leaving the Group debt free. A new ultimate holding company, Team17 Group Plc was incorporated during the period and all activity within Team17 Holdings Limited transferred to this new company. 

Results

Revenue growth in the year to 31 December 2018 was strong, increasing 46% to £43.2m (2017: £29.6m) and building on the trend seen in previous years. The mix of releases in 2018 was heavily weighted towards third-party IP, driven by the particularly strong performance from Overcooked 2, resulting in third-party sales representing 74% of total revenues, a greater proportion than ever before (2017: 50% of total revenue).

Gross profit also grew strongly in the period, up 18% to £19.8m (2017: £16.9m). Gross margins were 46%, 11pts lower than 2017 when we saw launches of The Escapists 2 and a number of other first-party IP titles, which carry a higher margin for Team17. 

Reported operating profit grew by 11% to £9.9m (2017: £8.9m) despite being impacted by one-off costs relating to the IPO. Excluding these one-off costs, operating expenses for the year were £7.3m (2017: £5.9m) with the increase in costs primarily due to the normalisation of directors remuneration which was previously heavily dividend based.

Adjusted EBITDA grew by 18% to £15.3m (2017: £12.9m) illustrating the strong underlying profit growth of the business during the year. The adjusted EBITDA figure includes add backs for exceptional costs of £2.6m related to the IPO, £0.4m of share based payment charges and a £0.3m catch-up charge resulting from a revision in the basis of calculating depreciation on capitalised development costs (see below). 

Net Finance costs were £1.3m in the period (2017: £3.6m) and relate to interest on the loan notes previously held by the Directors of the Company and LDC. These were repaid in full at the IPO and hence will not be a cost to the Company going forwards.

Treatment of IPO and acquisition costs

£3.3m of costs were borne in relation to the IPO and raising of new finance. The accounting of these costs is governed by IFRS 3 and accordingly £0.7m was charged to equity and £2.6m through the income statement.

Corporation Tax

The effective tax rate for the company was 17% (2017: 18%). This has been impacted by the non-deductible costs borne in relation to the IPO and loan note interest offset by a catch up in VGTR (Video Games Tax Relief) accounting reflecting the fact the Group is making use of the tax credits available to it.

Amortisation of capitalised development costs

During the year the group has revised its approach to the recognition of recoupable costs within its Intellectual Property and its amortisation of development costs - adopting an 85% reducing balance approach in the case of the latter (previously straight line) and retaining the former within capitalised development costs (previously derecognised when 'recovered' from the third party) and amortising in line with all other development costs. This ensures the costs continue to be written off over a two-year period but more accurately reflects the sales curve of the game. This revision in accounting estimate is accounted for as at 31 December 2018 and then prospectively. The net impact of this adjustment was £0.3m. EBITDA does not include an add back for amortisation of games ordinarily as this is booked as a cost of sale item within the accounts, however, due to their prior year and catch up nature these costs have been reflected in the presentation of adjusted EBITDA.

Balance Sheet and Cash

The balance sheet is dominated by the intangible assets arising from the earlier LDC transaction in 2016. These comprise net book values of £21.1m and £17.8m for goodwill and brands respectively which are subject to regular review. The remaining £2.7m net book value of intangible assets relates to capitalised development costs on titles launched within the last two years. As mentioned above, these have been subject to a revision in accounting estimation in this financial year resulting in a £0.3m movement to the carrying value at 31 December 2018.

Trade and other receivables were £8.1m (2017: £6.8m) with the increase reflecting the higher December 2018 revenue figures. 

Current liabilities are £8.0m (2017: £7.4m), the growth in accruals and deferred income within this category is a function of revenue growth and represents higher royalty payments due to our third-party development partners at the end of the year.

Non-current liabilities are £3.3m (2017: £45.2m) and predominantly relate to deferred tax; the loan notes and interest thereon held at 31 December 2017 (£38.0m and £3.5m respectively) were repaid in full at the time of the IPO.

Cash and cash equivalents closed at £23.5m (2017: £8.4m). Operating cash conversion was once again strong at 107% (2017: 107%) for the year reflecting the ongoing cash generative nature of the business model.

Share Issues

At the time of Team17's IPO, Debbie Bestwick was granted options over 972,272 shares and141,892 options were granted to Jo Jones on 18 December 2018. These options are exercisable on 23 May 2021 and 30 October 2021 respectively. The Group is in the process of implementing a Deferred Bonus Share Plan for its senior management team and an All Employee Share Incentive Plan. Both will be funded via the Employee Benefit Trust and will not represent a dilution of shares.

Dividend

As laid out in the Company's strategy at the time of the IPO, it is the Group's intention to utilise the cash it generates to further invest in the business and its future growth. As such, Directors do not propose a dividend at this time.

Jo Jones

Chief Financial Officer

18 March 2019

Unaudited Condensed Consolidated Statement of Comprehensive Income

Unaudited Condensed Consolidated Statement of Financial Position

Unaudited Condensed Consolidated Statement of Changes in Equity

Unaudited Condensed Consolidated Statement of Cash Flows

Notes to the Unaudited 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.

The Group successfully floated on the UK AIM stock market on 23 May 2018.

2. Basis of preparation

The preliminary results for the year ended 31 December 2018 are unaudited. The financial information set out in this announcement does not constitute the Group's financial statements for the year ended 31 December 2018 as defined by Section 434 of the Companies Act. This financial information has been prepared in accordance with International Financial Reporting Standards ("IFRS") adopted by the EU, IFRIC interpretations and the Companies Act 2006 applicable to companies reporting under IFRS and therefore complies with Article 4 of the EU IAS regulations. 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 Team 17 Holdings Limited for the year ended 31 December 2017 (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 2018 will be finalised on the basis of the financial information presented by the Director's in these preliminary results and will be delivered to the Registrar of Companies following the Annual General Meeting of Team17 Group plc.

The same accounting policies and methods of computation are followed in this financial information as in the prior year financial statements, except for as described below.

Accounting policies

The Group's principal accounting policies used in preparing this information are as stated on pages 18 to 24 of the prior year financial statements with the exception of the Group reorganisation as described below. There has been no significant change to any accounting policy from the date of the prior year financial statements. In connection with the admission, the Group undertook a reorganisation of its corporate structure which resulted in the Company becoming the ultimate holding company of the Group. Prior to the reorganisation the ultimate holding company was Team 17 Holdings Limited.

The transaction was accounted for as a capital reorganisation rather than a reverse acquisition since it did not meet the definition of a business combination under IFRS 3. In a capital reorganisation, the consolidated financial statements of the Group reflect the predecessor carrying amounts of Team 17 Holdings Limited with comparative information of Team 17 Holdings Limited presented for all periods since no substantive economic changes have occurred.

The requirements of IFRS 9 - Financial Instruments and IFRS 15 - Revenue from contracts with customers have been adopted in this financial information. Both standards were adopted by Team 17 Holdings Limited in the financial statements for the year ended 31 December 2017. There was no impact of the adoption of these standards to any balances previously reported.

IFRS 16 was issued in January 2016. It will result in all leases being recognised on the balance sheet by lessees, as the distinction between operating and finance leases is removed. Under the new standard, an asset (the right to use the leased item) and a financial liability to pay rentals are recognised. The only exceptions are short-term and low-value leases.

The Group's activities as a lessee are not material and hence the group does not expect any significant impact on the financial statements.

3. Segmental information

Revenue by Third Party/Own IP:

4. Exceptional items

Exceptional items in the year ending 31 December 2018 relate to significant one-off costs, which have not been deducted from equity, associated with the Group's admission onto AIM in May 2018. The costs comprise advisors fees (£1,323,000), the write off of unamortised loan note fees (£258,000), stock exchange listing fees (£43,000), other IPO costs (£56,000) and bonuses payable to Directors which were contingent on admission to AIM (£917,000). Costs totalling £730,000 incurred in association with the IPO which met IAS 32 definition of transaction costs (being incremental and directly related to the issuance of new equity instruments and which would have been avoided had the instruments not been issued) have been deducted from share premium.

Exceptional items in 2017 relate to the estimated fair value of shares issued by the company during 2018 to the former chairman in respect of the settlement of a claim that arose in 2017. The charge of £1,988,000 included £224,000 of associated employment taxes.

5. Adjusted EBITDA Calculation

6. EPS

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 Team 17 Employee Benefit Trust.

The calculation of the diluted 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 as adjusted for any dilutive effect of share options. At 31 December 2018 the performance criteria for issuing the share options had not been met and therefore there is no dilutive effect.

The calculation of adjusted earnings per share is based on the profit attributable to shareholders as shown above plus additional costs added back during the year (Note 5). The weighted average number of shares uses the number of shares in issue post listing on AIM on 23 May. This has been applied retrospectively to the number of shares in issue at 31 December 2017 and the metric has been restated to ensure that the adjusted earnings per share figures are comparable over the two periods.

7. Intangibles

Goodwill

The Group tests annually for impairment, or more frequently if there are indicators that goodwill might be impaired. Goodwill was tested for impairment at 31 December 2018.

*Revision of accounting estimate

During the year the group has revised its approach to the recognition of recoupable costs within its Intellectual Property and its amortisation of development costs - adopting an 85% reducing balance approach over 2 years in the case of the latter (previously straight line over 2 years) and retaining the former within capitalised development costs (previously derecognised when recovered from the third party) and amortising over the useful economic life of the game in line with all other costs. The impact of this revision of accounting estimate is an increase to capitalised costs of £1,720,000 and a corresponding increase in amortisation of £1,983,000 giving an overall reduction in net book value of £263,000. This revision in accounting estimate is accounted for as at 31st December 2018 and then prospectively. 

8. Admission to AIM

This note should be read in conjunction with the consolidated statement of changes in equity and the consolidated statement of cash flows. The Group's admission onto AIM involved a number of transactions which are explained below:

i) Capital re-organisation

Prior to Admission the Company acquired the entire share capital of Team 17 Holdings Limited (comprising £0.01 nominal ordinary shares) in exchange for issuing the same number of its own ordinary shares (of £1 nominal ordinary shares) to the existing shareholders of Team 17 Holdings Limited. This transaction was under common control and treated as a capital restructuring and not a business combination. The Company recorded the investment at fair value and applied group reconstruction relief, leading to the creation of the merger reserve of £153,822,000. The impact of this transaction on the consolidated financial statements is disclosed as a 'Capital reorganisation' in the statement of changes in equity.

Subsequently (but prior to admission), the Company sub-divided its £1 ordinary shares into £0.01 nominal shares. The impact of this share split has been taken into account in the calculation of basic earnings per share in accordance with IAS 33. The sub-division of shares has been retrospectively applied from the first day of the comparative financial period, leading to an increase in the weighted average number of shares in issue across all periods. Basic EPS for the year ending 31 December 2017 has been restated as a result.

ii) New share issue

Prior to the listing the Company had in issue 103,962,794 £0.01 ordinary shares. As part of the IPO the Company issued a further 27,325,482 £0.01 ordinary shares, at £1.65 per share. This raised a total of £45,087,045. A further 37,849,200 existing shares were placed on sale, at £1.65, by the existing shareholders. Following admission, the Company had in issue 131,288,276 ordinary £0.01 shares of which 65,174,682 were placed on AIM and 2,041,900 were held within the Group as treasury shares within the Employee Benefit Trust.

The £45,087,045 proceeds of the share issue were utilised by the Company to: repay shareholder loan notes (£38,226,000); repay director loans (£1,345,000); repay accrued interest on shareholder loan notes (£4,630,000); repay accrued interest on directors loans (£198,000); and settle transaction costs associated with the listing (note 4).

iii) Employee Benefit Trust

In November 2017, an Employee Benefit Trust (the "Trust") was set up. As part of the IPO transaction, the Trust was gifted shares creating a £3.6m capital contribution reserve (included in other reserves). Subsequently the EBT sold half of its shareholding (in line with all other shareholders). At 31 December 2018, and included in these consolidated financial statements, the Trust holds 2,014,900 shares in Team17 Group plc.