Wakefield’s Team17 facing Ukraine revenue hit

Shares of Wakefield-based Team17 Group, the developer of video games and educational entertainment apps, fell as much as 7% on Wednesday as it warned that the Russia-Ukraine war will cause it to incur a £4 million hit to revenue and £2.5 million hit to earnings in its current financial year.

The news came as Team17 reported its revenue rose 9% to £90.5 million in the year to December 31, 2021, and profit before tax increased 11% to £29.1 million.

“We are very mindful that we are entering a new period of uncertainty with local inflationary pressures and major international geo-political unrest with the highly distressing conflict in the Ukraine,” said Team17.

“The group has already seen the closure of platform sales to Russia and Belarus.

“In addition, Team17’s Games Label has two development partners based in Ukraine with titles previously expected to be released in 2022, that we continue to remain in contact with and support.

“Currently, one partner has insisted that we continue with the planned release and in that instance Team17 will commit to donate a proportion of our net profits from this title in FY22 to go to humanitarian aid alongside donations already made to the Red Cross earlier in March this year.

“Given the circumstances, it is unlikely that the other title will now be released in 2022.

“Taking into account the impact of the Russia and Belarus platform sales and the Ukraine developer title uncertainties, these are expected to impact group revenues by c.£4m in FY22.

“A part owned subsidiary of astragon, owns a small QA team based in the Ukraine where there is clearly major concern for their wellbeing.

“Currently we believe they are all safe, and we will continue to provide support wherever possible including ongoing financial support.

“In the meantime, alternative outsourced supply has been established.

“The combined impact of these global socio-economic challenges on EBIT is expected to be c.£2.5m.

“Our primary focus remains the wellbeing of the people and teams in Ukraine, and we will continue to monitor the situation and any change to the ongoing impact over the coming months.”

Team17 CEO Debbie Bestwick said: “2021 was unquestionably a key year for the group in terms of handling a second year under pandemic restrictions that has affected every one of us – be that our people, development, licensing, platform or outsourcing partners.

“I can’t thank each of them enough for their support as we build out towards our long-term strategic goals, building a group that we can all take pride in.

“We’ve invested heavily across our business in terms of people, processes and infrastructure and will continue to do so; we have a substantial, fully funded Employee Benefit Trust (EBT), set up in 2018 and we will ensure that 100% of our group employees are shareholders by April 2022, funded by the EBT as in previous years.

“We collectively have a fantastic opportunity to build a remarkable group and I’m delighted to say we have delivered another year of growth, which is testament to the contributions made by all our people across the group and the success of our growing content portfolio.

“Our group now has its most diverse range of owned IP; third-party and licensed IP targeting the broadest audiences across multiple platforms.

“We have made great strides over the last few years to build out our portfolios, laying strong foundations for future years.

“I really look forward to sharing more from Team17, astragon, StoryToys and The Label throughout 2022.

“The acquisitions have enabled us to expand not just our content portfolio but also our skillset and customer reach, taking us into new territories and markets, and enabling us to leverage the group collectively in a way we could never have imagined a few years ago.

“I look forward to updating our shareholders on our progress across 2022 and beyond.”