Everplay Group (LSE:EVPL) — Full Year Results

0:01 Good afternoon, ladies and gentlemen, and welcome to the Team seventeen Group PLC investor presentation. Throughout this recorded presentation, investors will be in listen only mode. Questions are encouraged. They can be submitted at any time via the q and a tab that's just situated on the right hand corner of your screen. Please just simply type in your questions and press send. The company may not be in a position to answer every question it receives during the meeting itself. However, the company will review all submitted today and publish responses, where it's appropriate to do so and these will be available via your investor meet company dashboard. Before we begin, I would like to submit the following poll. And if you could give that your kind attention, I'm sure the company would be most grateful. And I'd now like to hand you over to CEO, Debbie Bestwick. Good afternoon. Good afternoon. Thank you for joining us, everybody, and joining Mark and I. Today, we will be presenting the year end results, followed by a q and a, where we will also talk about the decision that I've made this week. We've turned off the camera so that we can make the

1:02 slides larger for you. But what we will do is pull the cameras back up when we jump into the Q and A. And so I'll start today with the operational highlights. Next slide, please. Operational highlights. We collectively are very pleased with FY 'twenty two overall group performance. In any given year, there are always opportunities and challenges we face and not always ones related to the business. The last few years has certainly provided many for all of us across our sector with COVID, the terrible situation in Ukraine and the macroeconomics pressure many are facing around the globe. All have some form of impact, be it on our people, partners or consumer base. We are delighted our business has continued to show strong resilience and remain very focused on our collective goals, and that is a testament to the people within our group, our development and business partners and lastly, gaming being a key form of entertainment for many.

2:00 We are pleased to share today as an enlarged group, we have delivered significant revenue growth, up 52% year on year and adjusted EBITDA growth up 36% on the previous year. However, Mark will cover the financials later in the presentation. As we mentioned at H1, all acquisitions are embedded within the group, and we are delighted with how all have settled in and collectively are working together. STORE TOYS is coming up to two years since acquired in July 2021, ASTRGON, fourteen months, The Label, fourteen months and Hell Let Loose, as we all know, has been working with Team17 for many years. We are specifically proud of the performance of all M and A carried out over the 2021 and 2022 period and the high quality of leadership that has joined us.

2:51 FY 2022 saw 12 new releases and six on additional platforms across the group. As you know, we were more second half weighted than in previous years. And it's worth noting, seven of the 12 new releases were released in the last quarter of the year, along with four on other platforms. Titles to call out specifically from Team seventeen's games label are Marauders, which was their biggest game on launch on PC to date. Dymecia, which performed very well and similar Ship of Falls in the second half. From ASTRON, key mentions, Construction Simulator and Police and Patrol Officers, which launched on console and was very successful. Group owned IP has grown significantly due to the acquisitions.

3:41 In fact, four out of the top five selling titles in the group are now own IP compared to two in FY 'twenty one. That gives that takes us up to 41% of all revenues are now own IP, almost double FY 'twenty one. Our people. Headcount grew with 53 people added in January from the acquisition, plus then grew in each division over the year, adding a further 74 new team members. Attrition is now down from the peaks of FY 2021 and remains lower than the market average. Engagement survey, Pulse results are shared in September, all showed improvements in Team seventeen's games label.

4:27 But to recap, overall engagement, 84. Over 90% would recommend Team seventeen as a place to work. 94% say it's safe and supportive place to work. They are currently running their next annual survey as we speak, and we will update later in the year. StoryToys also ran their first engagement survey. 82% engagement and 94% proud to be part of StoryToys. Astragon will run their first one this year, and we will share later in the year with you all. We'd always like a 100% engagement. Certainly, not everybody wants to click on a survey, but we we are trying our hardest to get that higher as well. Portfolio. The group now has its most diverse portfolio of owned third party and licensed IP to date, targeting the broadest audiences across multiple platforms with a clear deliverable road map ahead.

5:26 FY 'twenty two saw a solid performance of back catalog across the group, which now represents threefour of the total group revenues, delivering just under £100,000,000 in FY 'twenty two. With Team seventeen's games label now looking after

5:42 over 700 digital revenue lines and seeing double digit growth in FY 'twenty two in their back catalogue, Story toys model is very different. And as seen in FY 2022, no new apps were launched, but equally saw strong double digit year on year growth. This is a testament to our life cycle management and focus on maximizing revenue across the life of a game or an app. Now let me hand over to Mark for some of the financial highlights. Next slide, please. Thanks, Debbie. As Debbie mentioned at the start of her piece on the highlights, the enlarged group has delivered significant revenue growth in 2022 over 50%. Of the revenues, 137,000,000 revenues, 44.2 came from the acquired businesses.

6:31 But but then on a like for like comparison, which is includes all of digital and the second half of story toys, we showed a growth of 3%. And I think that's against the backdrop of a of a 4% decline in games market total as, outlined by Newzoo in their latest update. So this is a pleasing result for us, overall and, you know, especially when you consider we had a very, heavily weighted second half, with lots of launches, you know, made up more than 60% of the total year's revenue. Although that is now becoming a regular pattern and it's it's becoming quite a norm in terms of the the shape of the business in half year, second year. So half year and second year splits. In terms of by division, the breakdown, we're very pleased with all divisions that outperformed that that challenging marketplace.

7:18 The games label provided and does still provide the majority of of revenues with Ashagon now making up a quarter of the group. And Story two is just a little under 10%, but growing, and we'll talk about that a bit later. A particularly impressive performance came from Ashagon, most notably with, Construction SIM, latest version launching in September, but also Police Sim launching out of early access, in mid November, which definitely helped them push their performances well ahead of our our expectations. As mentioned just shortly ago, Story Toys continues to be a growing part of our group, and as Debbie mentioned, built with no new releases, but building on their existing apps. And that demonstrates the value of their life cycle of longer term future growth, and what you'll hear a bit more about that in the later slides.

8:06 Just as a note on team seventeen games labels, team seventeen USA business was the label. We acquired that in January. They released their first title. It's called Farmside, which is a mobile game to Apple at the end of q four. Now that's about milestone delivery and and we recognized all the revenue for that as we finished all of our performance obligations in q four even though it was actually held by Apple Arcade and launched on Apple Arcade in February this year. In terms of own IP, Debbie mentioned a great performance. So it's up to 41% of revenues, which almost doubled last year. It's really pleasing for us to see Ashtagon's performance growing their own IP titles compared to their prior year acquisition levels. And and and really, they benefited, as I mentioned, from the the good success for construction sim and also police sim. But but also, there are other two apps that own sorry, own IP titles, firefighting sim and bus sim.

9:06 And just as a point here, we we classify StoryToys as third party, you know, even though it's under license and they do all the development, it's probably somewhere in the middle, but but it's it's part of that third party business section. So next slide, please.

9:23 So keen to go a little bit more detail on on the breakdown of new releases and back catalog. There's a bit more coming, you know, within each individual division, but so I'll try and steer all of Debbie's thunder. But but overall, we're pleased with new releases. As Debbie mentioned, 18 in total, but 39,000,000 of the revenues came from new releases, almost double last year's value, which leasing completely new games that we bring to market as well as existing games that we then launch out and release onto wider platforms, so taking them onto console or mobile as example. So those 18 titles are made up of 12 new games, 11 of which came from the label games label, which includes some great titles that you you'll have no seen, like Marauders and Thymesia, but also alongside Construction Sim from Ashtragon.

10:11 It's worth noting that those new releases for the group were on sale for just over two hundred weeks. So it's effectively a quarter of their maximum possible if they'd launch at the beginning of the year, and that compares to almost half the amount of time the new releases were on sale in the prior year. So, again, reiterate,

10:28 it's not about being a hit driven business. We build those new releases into into the business, and then they become the back catalog in future years to support ongoing growth. Story toys performance was, as we said, all about their existing apps within their back catalog, so it's all back catalog growth. As mentioned, it's got a longer life cycle and a growth profile post launch. It's particularly pleasing to see them growing, as Debbie said, but against the decline in the market, of a mobile sector of 6%. And they also improved their position in the top 10 entertainment providers. And in terms of strength of the back catalog, it's now grown over 40% to just under a 100,000,000, and it and it did clearly benefited from the acquisition of acquired EVERPLAY GROUP PLC titles in ASTRY GONE as well as STORY TOYS previously.

11:17 And equally important though is the continued growth of the team seventeen's core back catalog, which grew a double digit level. So particularly pleasing, I think, when you consider, you know, they maintain that growth into the second half alongside a very heavily weighted new release program. I put the the bottom chart in on this slide as to try and demonstrate a bit more about how we consistently build our portfolio out over time. It's done since the IPO, and it's cumulative, so it's additioning it's just the addition year on year to get to the endpoint. But I think the it it makes the point for me that it would not depend on any one particular element, but but, really, it's a combination of the development pipeline and bringing out new release launches. And then it's the next chunk, which is all about expert street smart life cycle management, growing the back catalog through additions of continued paid for and free DLC alongside sort of smart promotional calendar and positioning on on sale profile systems across Steam and on consoles.

12:20 And then you can see at the top more recently adding in those acquired games and apps to broaden both the genre of games, but also the platforms that we sell across and also the age range that that back catalog appeals to. So that's cumulative. I think it does demonstrate that we build that back catalog over time and that it's not dependent on the solo type or hit driven model, and we effectively are able to monetize over a longer period of time. And and if you think for us looking at the digital core business, that back catalog, if I went back pre COVID times because we obviously saw some some real everybody saw some benefits in the twenty twenty year with COVID. But the growth in the back catalog since 2019 is something like 70% to where it is today, so demonstrates it's outperformed the market in that sense.

13:06 And I think what we're now seeing is all of the CEOs of of each of the three business divisions are sharing those life cycle management skills across each business, and that's further helping to boost sort of that internal knowledge base and grow future value. So I'm gonna hand back now to Debbie to go over the the three divisions in a little bit more detail, recapping some of these highlights, but also looking at the outlook. So if you can go on to the next slide, please. Thank you, Mark. Team seventeen's games label, a solid performance for team seventeen. Hell Let Loose has continued to perform well in FY twenty two following the acquisition to make it an own IP title and was the joint top selling title in the group's back catalog. Two owned IPs are in the top five titles by revenue in f y twenty two, Golf With Your Friends alongside Hell Let Loose.

13:58 Back catalog, which we talk about extensively, was supported by over 30 DLC updates. If you don't understand DLC, let me just explain. This is downloadable content where we provide sometimes free, sometimes paid, but a lot of the back catalog support is usually free content on the games label, and this is to increase, engagement levels. And those 30 releases, were released across 15 different titles, and this helps support the continued double digit year on year growth for the games label. Despite new releases having less time on sale compared with the previous year, as Mark mentioned, we saw very positive signs over the final quarter, specifically the controls over the discount levels in peak platform sales to protect future years' revenue earnings.

14:49 Moving on to the outlook. Just a few points here for you. Michael Patterson has now been the CEO, running the day to day operations for eighteen months and has added to his senior team to support future growth with many experienced individuals that collectively have over a hundred and fifty years in games and have worked on some of the biggest IPs and for many of the top gaming platforms and publishers, including Sega, PlayStation, Xbox, Hasbro, Nintendo, Square Enix, Capcom, and more. Studio networks under Roger Carpenter, who has over twenty five years in games and joined last year from Microsoft, where he oversaw the development of Minecraft. The studio networks are better aligned to move at speed to better support own IP, back catalog, and third party development requirements, specifically the outsourcing division, which has grown quite significantly over the last three years.

15:45 You should expect a similar number of new releases from Team seventeen's games label as last year. It's a strong pipeline, but we expect lots of great games to launch in the game sector this year. So whilst confident in our quality, we will, as always, remain sensible regarding managing expectations. Key titles to mention, sequels to the highly rated Blasphemous and Movin' Out, of which you all know much about from previous years. Both games sold in excess of 1,000,000 units as new original IP. New IP of no Dredge launches today, 5PM for those who are interested. Those of you who follow Team seventeen's games label closely, no doubt are seeing the review scores landing some of the highest Team seventeen's games label as received on launch day for a product.

16:35 Equally, look out for Tropang two, a very clever first person shooter set in the future. And Gord, a single player strategy adventure game built by a new team who previously contributed to The Witcher created by CD Projekt RED and This War of Mine created by eleven Bit Studios. Alongside other announced titles, we still have a few unannounced and look forward to sharing at the right time. Team seventeen USA Farmside was a game we spoke about a year ago but couldn't name due to the platform confidentiality. The game is off to a good start. First few days metrics were better than any previous game launched by them historically, at Team seventeen US. Their second title is due to launch in FY 2023.

17:21 And again, we can't share the name due to confidentiality, and they are also well underway on other Team seventeen IP for future years. Back catalog as ever as every year, we'll see a significant amount of support in free and paid DLC across the portfolio. Own IP specifically, Hell Let Loose and Golf With Your Friends, will have numerous paid and free updates throughout '23. We look forward to sharing more throughout the year. Next slide, please. AstraGon. A very busy and strong year from AstraGon. Construction SIM was the number one best revenue earner across the group in new IP launch last year. Also to help you, it also had nine times higher day one concurrent users count on PC than the previous version launch.

18:12 As per Team seventeen's games label, they also controlled discounting levels in peak platform sales and is a good example of shared knowledge being used within the group. Alongside Construction SIM were releases on each of the other three own IP titles onto wider platforms with a notable performance from PoliceSIM, which launched in mid November on console and came out of early access. Bus Simulator launched on mobile and Switch in October, and Fiosim launched on console in mid December. Own IP accounts for 73% of ASTRON's FY 2022 revenue, up from just under 50% in the previous year. And two of our ASTRON's titles are now in the group's top five selling titles, four very solid franchises now part of our group portfolio due to the acquisition.

19:06 Regarding the outlook, strong executive leadership in Julia and Tim. They've been joint CEOs since 2017. And between the two, over forty years experience in their niche area. More continued investment will continue in PEOPLE as it is a small team to help them scale the third party side that we announced last year and also more investment into new owned IP. Three of the four main owned IPs will also see numerous paid free content updates between quarter two and quarter four. Select season passes will also be introduced for some titles for the first time. We're not naming those titles at this stage because they're not public. Existing IP will be launched onto more platforms this year.

19:54 The third party label signed their first game last year in Railroads Online. Expect more in this year. ASTRON are incredibly creative regarding new IP in their space. FIRE and PLC launched in 2020 and 2021. Expect more exciting new original IP in 2024 and 2025. Next slide, please. StoryToys. A robust performance in FY 2022 despite no new apps launched. Back catalog benefited from a growing number of high quality app updates. This totaled 200 in the year compared with circa a 120 the year before. This really demonstrates the life cycle of their apps. As an example, Lego Duplo Marvel app, which was launched in December 21, saw higher revenue in December 22. They have a very different life cycle to traditional video games.

20:51 Significant growth regarding active subscribers, now over 300,000. And again, as an example, LEGO DUPLEMARVEL generated more subscribers in '21, sorry, in December 22 over December 21. Overall, delivering strong double digit growth, which is a great performance given the 6% decline in the mobile market. More so, as Mark mentioned, gaining market share in the kids space. Extended a number of existing partner relationships with Lego, Disney, and Marvel. Investment in people saw the team grow almost double to support future growth, but also expand the Story Toys internal leadership team for scale. On the outlook side, executive team is led by Emmett, CEO and Prieser, CCO, collectively have close to forty years combined knowledge in their specialist area.

21:47 Investment in people will continue to support the growing portfolio of released and upcoming releases. New games announced for FY '23 so far. Lego, Duplo, Disney, Mickey and Friends to celebrate Disney's one hundredth anniversary is already on preorder. Marvel HQ has been announced. Marvel HQ is an edutainment hub designed for kids aged four to seven, containing fun and age appropriate activities, videos, books, comets, interactive characters, and more from across the Marvel universe. New partners announced this week, Mattel, multiple apps. We can't share what they are at the moment because they're not announced yet, but trust me, they're good global brands.

22:33 And Sesame Workshop, I don't think it takes a genius to work out what we're working on there. The titles are in development. StoryToys remains focused upon nurturing its strategic brand relationships to continue to build out its portfolio of apps and deliver the highest quality possible for its youngest audiences going forward. I'll now move over to Mark for the next slide. Thank you.

22:59 Thanks, Debbie. So I'm just going take you through some of the P and L and balance sheet highlights for the year. So gross profit linked linked to the growth in NIP. This increased slightly to 51% with year on year growth of 53%, obviously, benefiting from some of the acquisitions as well. But we we get slightly lower royalties income from lower third party sales, also some higher amortization charges across the wider group, which does bring down some of the additional benefit from that growth in our IP. This is also alongside the mix of gross margins. So to give you some idea across the divisions, Ashtrigon does have still 27% of its revenues through physical physical distribution products. So that is a lower margin element to it. And therefore, overall, their gross margins are slightly lower than the games label and story toys are about the same level.

23:52 But overall, even despite that mix, we're we're maintaining very strong gross margins. In addition, we continue to deliver, as Debbie's talked about, some considerable free DLC, which is fully expensed through the through the cost of sales line impacting gross margin as well as ongoing support to live games now such as Hold Let Loose. So those are all way through the the cost of sales impacting gross margin. In terms of our admin expenses, we feel it's in in term in terms of giving a true picture of the operating cost of the groups, we exclude the the acquisition related fees and charges and amortization of acquired intangibles. That's all just under 15,000,000, three times what it was last year, but that's linked to all of that increased m and a activity. The increase in FY '22 then taking that out includes just under 7,000,000 costs associated with the new businesses.

24:44 So Ashtacorn and the label and and half one of Story Toys flowing through, noting that we brought in 53 team members and all of their associated overheads into the group at the beginning of the year on the label and and the Astragon. As a result, though, the underlying admin costs were up just a little over 4,000,000 on the year as shown in the slide. And these are mostly people driven because it's a as as

25:09 a business, we're very peep we're people first and and people cross survey element of our overhead base. And and that came from predominantly the salary benchmarking cost of living increases last year, and we made that clear in the March update, but also the overall addition of 74 new team members across the group throughout the year. Equally, we we are back into live events, gaming events post pandemic, not all of them, but quite a lot. And that's with with some type of marketing, drove up some of the spend in that area. And then just a sheer fact of our scale,

25:46 you know, we've got increased costs and inflation on some of those professional legal costs. But overall, you know, despite those those increases in costs, we delivered an impressive 36% growth in in adjusted EBITDA, adding 13,000,000 onto last year's earnings result at this level, taking us to 49,000,000. And as outlined, taking out those admin costs is still a very strong performance. It is and and actually leaves us in in a really great place remaining highly profitable and growing and delivers us, I think, a sort of best in class EBITDA margin. On to the next slide, please. So just thinking about the balance sheet, adding in those acquired businesses, following that sort of careful due diligence process, has meant that we continue to support our our very strong cash performance with a cash conversion of 108%, slightly up on last year.

26:41 Very strong cash conversion, close to 50,000,000 in net cash from operations.

26:47 Overall, the cash position dropped slightly, but that's a reflection of using our cash reserves for the first two acquisitions in January of the label and held that loose. But then following the equity fund raise, the the funds to support the Ashagon acquisition and other consideration payments made in in 2022 meant we had a net outflow of 25,000,000, which still delivered us the position of just just 50,800,000 in in cash at the end of the year. On adjusted EPS measure, we've delivered a very consistent 25% growth in in EPS, adjusted EPS over the last three years, delivering us to just under 28p, which is a 26 percent increase year on year. The the EPS, the basic measure does does include all of the acquisition costs and the dilution, and it has gone back slightly. But those also include 9,000,000 of one off acquisition acquisition related costs, some of which linked to the overperformance of Ashtrigon in terms of higher earn outs and management incentive payments, will, you know, reduce quite significantly next year and then disappear the year after.

27:53 So what you know, was there some acquisition costs flowing through this year in that measure, we expect this won't be the same, let's say, going forward, and we'll see improvement in EPS in future years.

28:05 In terms of other balance sheet highlights, clearly, with the enlarged group, we've invested more in development costs that have been capitalized, and that's increased significantly. So partly that's due to a larger development pipeline in title numbers within the games label. And and some of those spends on titles are are larger now. So you you've heard about Gord as a new title coming next year. And and that's seen within the games label, the amount of development cost capitalized doubled since last year. But the the the total also, the 26,000,000 also includes, you know, Ashtragon, which has larger development budgets, some three to four times higher than the historic games label averages. And because they have a a longer life life of development for Ashtrigon, and they're just they're developing complex, you know, working simulation titles. So that's a bigger spend on their budgets.

29:00 It's important to note these costs are not all capitalized for launches in the next year. They they're also delivering future titles as well, so they're spread over a longer period of time. Linked with the acquisitions, obviously, we've seen some increase in other interest in intangible assets. So, you know, added brand values mostly through Hell Let Loose, but also some of some Ashtagon has put down to brand values, and they're over a longer life cycle because their evergreen nature is seeing these brands, and they're adding equally, then

29:31 we've added 22,000,000 of acquired back catalog games through story toys as well on apps as well as the games for Ashtagon. And then finally, the balance, you know, in goodwill, which gets reviewed each year. Trade receivables have increased with the group scale, but but also Ashagon do have some slightly longer payment terms, but they're all with major blue chip partners and, you know, 90% of those are cleared by the time we by this point already, so no concerns on that level. And then liabilities are significantly impacted this year in 2022 by contingent consideration linked to the earn outs. So 18,000,000 of those which appear in trade payables are due linked to earn outs realized for Ashtagon and for Hell Let Loose and the label in '22, and those are being paid in '23.

30:20 And then a a following 9,000,000, which should be due for for for this year into 24 subjects then meeting all the performance criteria, and those you'll see in in other liabilities.

30:31 But a key message for me is that we've done some, I think, some really good m and a. It's added to our position. We had a very strong cash conversion and cash position in terms of cash generation, and we've maintained a very clean balance sheet. And that's now the same position moving forward is is, you know, a solid part of the business for us, and and we're really proud of keeping maintaining that balance. So I'm gonna hand back over to Debbie, I think, to, summarize.

31:00 Thank you, Mark. Across the divisions, slides, I've shared quite a bit on Outlook. So I just want to recap how this all comes together regarding group Outlook focus to help At PEOPLE, highly experienced teams led by very knowledgeable and exceptional CEOs delivering across all three divisions, continued investment in PEOPLE.

31:22 IP portfolio, owned, third party, and licensed, a very exciting lineup of FY 'twenty three releases and more in future years alongside a very valuable and growing back catalog, reaching a wider audience of players with our biggest and most diverse portfolio of content to date. Group structure, leveraging our combined experience and knowledge across the group to benefit all divisions. Example, back catalog, that all important life cycle management we've talked about for the last five years, very evident across all areas now within the group. Portfolio growth, again, highly visible across all areas with AstraGhan expanding not only just into new IP, but third party publishing in their niche. And story toys, new partners, and more new apps and hubs. There's still

32:12 lots more to come, but it's a good start. M and A, we continue to review many opportunities, and we'll remain highly selective and apply our rigorous DD process. Our areas of focus haven't changed. IP ownership, additional resources where needed in development support functions where we see a need alongside our use of outsourced capability.

32:36 Consistent delivery. We take huge pride in our track record of delivering organic and acquisition growth. This is always a key focus. The resilience and strength of our group portfolio model is testament to the business we are today as a group. I'd like to thank you all for that before handing back to Mark, who will run the Q and A. Thank you all. Debbie, Mark, that's great. And if I may just jump back in there. Thank you very much indeed for your presentation this afternoon. If I may, I will just bring back up your cameras there as well. Ladies and gentlemen, please do continue to submit your questions just by using the Q and A tab that's situated on the top right hand corner of your screen. But just while the team take a few moments to review those questions that were submitted already, I would like to remind you that a recording of this presentation along with a copy of the slides and the published q and a can be accessed via your investor dashboard.

33:29 Debbie, Mark, we did receive a number of pre submitted questions ahead of today's event. And as you can see there in the q and a tab, we've also received a number of questions throughout your presentation this afternoon as well. So firstly, thank you to all of those on the call for taking the time to submit their questions. And, Mark, perhaps if I may hand back to you to chair the q and a session, and then I'll pick up from you at the end. Thank you. Thanks, Jake. Debbie, I guess the inevitable first question is to you. What's your reasons for the the the announcement in terms of your intentions to step down as CEO, but continue to work with team seventeen? And then was there any is it personal, or are there any other internal pressures or external pressures for you to do that? Okay. Look. This is totally a personal decision. I think everybody would like me to stay longer.

34:18 And I keep saying unless somebody can freeze my children's ages, it's becoming difficult. You know, my daughter, 26, gets married this year. I don't know where that time has gone. And my son starts GCSEs, and I've got a few years before he goes away to university. It's totally a personal decision. I want to go traveling with my children when that time comes because at some point, they don't think I'm cool to hang around with, to be totally honest. And, you know, this is not a job where you can take a few years sabbatical. And, you know, I wouldn't be able to make this decision if it wasn't for my complete and utter confidence in the leadership team that we've been bringing through and building upon over the last few years, but also the process that we have in place for succession planning, working with our very experienced board as well.

35:11 I'm confident that we will find the right candidate. We have I don't want to talk too much about the candidate side, but we have strong internal, and we have strong external candidates. And we will be resolving this throughout this year. But to help you, I'm here. I only know how to do things one way, which is 100% all the time. That will continue throughout this year until the successor is in place. I'll be doing, a very healthy handover process to help that person and then gracefully slide in onto the board as a nerd. And my reason for doing that, our board right now, if you look at the board, there's very little gaming experience on that. I will bring a lot of gaming experience. You know? I could only tell my team about this on Monday night because of the governance roles, and there were a few chuckles and smiles about me actually being on the board, because they can certainly expect more challenging questions from me when I do join that side as well.

36:09 But I'll be there to provide as much knowledge or as little knowledge as they need, but I'm very confident that we have an incredibly experienced group of people right across our business. Thanks, Debbie. One for me, really, just can can you explain why we reverse our amortization required intangible assets when you calculate adjusted numbers? We do that because, you know, alongside the the the one off fees and adjustment costs, we we don't believe that they add to the understanding of trading, the operating costs of the business. So they're still there. They're still part of the unadjusted statutory measure, but we don't believe that from an adjusted point of view, they they give us the the correct view to look at in terms of trading. And a follow-up question to that would be the the treatment of the amortization of capitalized on the cost that is included in the adjusted numbers. Does that adequately reflect the cost of maintaining intangible assets?

37:05 The reason for leaving that in is because if we didn't put that in, we we don't think there's a fair match of taking all the revenues and profits from titles that have been released in that year and subsequent years and not having any of the costs of developing those in the p and l. So we we believe that's a more accurate way of of presenting the numbers. So we do that for that reason. Debbie, there's two that are kind of linked, which I'll give to you. It's around strategy and and future. And then first part is really, will the strategy I'm focusing on in indie games change as the company grows? And then a tag onto that, if if it's possible to answer with a a bit of a crystal ball is where do you see the company in five years' time? So they're kind of linked.

37:51 Okay. To answer the first part regarding Indy, we're talking about team seventeen's games label specifically here, not the wider group. That strategy absolutely will not change. It's part of the DNA of everything that I believe in, but more importantly, what Michael and the team are building in there. So we will always be a part of that space. We're firm believers in the creativity and the innovation that comes from that area. Regarding the company over the next five years, I'd say, at the last five years. If you want a crystal ball, you know, we can't promise that. I think the bigger question actually is where the industry will be in five years' time. A lot of what we do at Team seventeen and across the group here, is very much focused on content.

38:38 It's about building that portfolio. You know, we we have a very diverse portfolio, many different genres, but equally different age groups as well. You know, when we talk about story toys, this is preschool children that come in from around 1.5 years old. You know, you look at Astra Gon, it's quite a mix in Astra Gon's area. But you've got young children from about six plus, who are playing simulate some of those simulations who aspire to be a firefighter when they grow up, aspire to be a police person when they grow up. But equally, you've got the hardcore hobbyists that are very focused on, you know, things like bus simulator and construction simulator, their hobbyist areas.

39:23 But also they crossover quite strongly into the mainstream a little bit. And they age all the way up to 70 years old there. And team seventeen, as you know, quite well. We have our family games, you know, all those games from worms to Overcooked, Golf with Your Friends, etcetera. We have new the new brand new original indie games that we launch every year. We have the more mature age games such as Blasphemous, Hell Let Loose, Marauders. You know? And so I would look at it in terms of our strategy is all about building content portfolio, for the widest audience as possible. And I hope that helps you in terms of where we think. Because I think that's gonna be a very key part over the next five years in terms of how broad wise and strong is your portfolio.

40:15 Thanks, Debbie. One, I'll answer, which is after a hectic period of acquisitions, looking back, would you have done anything differently? Has anyone exceeded your expectations? And look. I think I could talk for Debbie and I. We're we're a small team at the group level, and, you know, we never planned them all to to happen at the same time. And if we could have had a way of spreading them out, we would have done. But but would we have changed anything about the deals we did? No. I think we we've done some incredible deals and not just because of the value that the the financial value that they've added, but as Debbie's pointed to in her slides and just now, it's about building we we've we've created a really strong leadership team with some, you know, experts real experts in their field at CEO level and below that within their teams that are really adding, you know, tremendously to the knowledge within our group. And they're sharing best practice and skills and experience across the group. So that's between Michael and team seventeen digital and games table. It's with Emmett and Parisa in story toys and also Tim and Julia in Germany. They're all really excellent and and experts in their fields, and and they're a pleasure to work with. You know, I think we've pointed to, you know, that they've all done very well into it's a horrible phrase, isn't it? But they've all done exceptionally well post acquisition.

41:34 Yeah. I think we pointed the fact that Ashtagon really had a a tremendous year last year in terms of their financial results and and exceeded the expectations financially. I think StoryToys are now doing things that you'll start to see the benefit for in the next couple of years in terms of the license agreements that they've signed that we talked about in the r and s and earlier in terms of Mattel and Sesame Street. So that's great as well. And then the label was always a growth business for the future, and there's a question about that, which we'll come back to in a second. Deb Debbie. In fact, why don't we do that? So, Debbie, what are your plans for growth in The US? And then you can perhaps carry on with with the label piece and where that fits. Okay. It's hard to know specifically what that relates to, you know, what is growth within The US.

42:21 I mean, a large amount of our revenue is from The US, you know, when you break down our business, you know, by area. If you're looking at investment into acquiring more US based businesses, you know, I think this ties into the part that Mark spoke about previously. I think I you know, we firmly believe it's very easy for anybody to do m and a. To do great m and a is incredibly difficult. And, you know, we're very strategic in how we look at what we want part of a group and how we work that. And if it so happens that they're in America, they will be in America. We do there is nothing that changes our perception of one country over another country. It comes down to great business, to be honest.

43:10 Great. Thanks, Debbie. There's one that's kind of tagged a bit to the m and a part, which I'll just touch on now. So we're planning to slow down the acquisition pace this year given the sizable recent acquisitions, chance to integrate them fully in the group. And the answer to that is, you know, we did take a a short break at the begin you know, post those acquisitions. But, actually, I think you've heard us talk about it was a very light touch integration. We acquired businesses with extremely experienced management teams and leadership team that have been running their businesses for many years. And so, you know, actually, the integration has been all about people and then, you know, bedding them down and giving them the support and the the the the sort of encouragement and and inspiration to go and be great at what they do. So, you know, the m and a side on on behind that, we continue to see opportunities.

43:59 None of them have been of the sort of scale that we would want to, you know, get involved within the last year. We'll continue to look at m and a going forward as and when it comes up with the right opportunity. Debbie, one pass for you about is retaining talented individuals, and employees and team members a struggle. I think our attrition levels are pretty good. But I think, you know, I look and go, our EBT scheme, you know, I think 99.999% of our employees are all shareholders. That's very important. You know, many of you will remember when we did our IPO, I gave a big chunk of my shares, to form that EBT scheme. And and that is there to help retain people as much as it is hiring people and rewarding longevity.

44:52 I think, you know, when I look across the business, there's so many of our people that have been with us a significantly long time. But equally, I think you also have to remember we have a high portion of young people entering the games industry, that join our business. So I think as long as we are doing everything that we can, and we personally try to do everything that we can, the engagement surveys show great results that we're seeing. But I would say to you, it's a 20 it is one of those things where the day that we say that we've done enough on anything relating to our people is the day that we fail. We must continue always keep focused on that area. Thanks, Debbie. And the final quest oh, there's there's a couple coming through. So, I'll do the first one. So we we talked about continuing to invest in the team to support StoryToy's growth ambition. So how much investment and where will it be spent? So not gonna go into details of value investment, but, you know, the investment in StoryToy's, as you heard, will be all around supporting the the ability to develop those additional licenses that that we've talked about in terms of Mattel and Sesame Street. So that will go into developing future IP in terms of the apps and then ongoing app updates throughout the year. So it it just to reassure you, it's it is their level of investment is not the same as a as a Ashtagon level, and it's and it's not the same as the the average that would go into a third party or own IP title within the games label.

46:24 They have some incredible engines that they've created for their existing apps that they can utilize across new apps in in certain places, but they're very efficient in what they do. So it it it's nothing to be, you know, concerned about that it's gonna seriously impact in terms of cash and stuff, but it's it's investing in their infrastructure around development to be able to support the long term future value through their apps. And then, Debbie, then how do you incentivize key personnel in your acquisitions? And I'll I'll come to the second part rather than because it's I can read it, Mark. Don't worry. No. Thank you. William, thank you for the question. How do you incentivize key personnel in acquisitions? It's a big part of our due diligence, to be totally honest. What we what we come across, when when we acquired Astragon as a good example, the management team didn't actually have any equity in the business, you know, despite they've been running the business since 2017.

47:21 We worked incredibly hard, to build a management incentive plan for that team over a three year period. We can't share the details of that, but it's very important. But, also, we do a huge amount of work in that DD process regarding cultural fit on the people side as well. And we look for very entrepreneurial thing. What I can say to you about Tim and Julia, they're incredibly entrepreneurial you know, in the same way that Emmett and Paris are. You know? And it's about making sure that we do have incentives in place. We've got good earnout management incentive plans in place. But equally, it's not always money that is a driver for some of these people. It's actually building their ambitions, and we're helping them build what they'd love to build as part of our group.

48:10 Okay. So I think that draws to an end the questions, and I'd just like to thank everybody that's taking the time to dial in and join Debbie and I today. And as I think Jake said, and he'll wrap up probably after me that this will get published anywhere on the website at some point in the future. But thank you everybody for joining us today to share our results with you. Mark, that's great. And Debbie as well, thank you very much indeed for updating investors this afternoon. And absolutely, the recording will be available on the Investor Meet company platform in about an hour's time. So could I please ask investors not to close this session as you'll now be automatically redirected for the opportunity to provide your feedback in order that the management team can better understand your views and expectations? This will only take a few moments to complete, but I'm sure will be greatly valued by the company. On behalf of the management team of Team seventeen Group PLC, we would like to thank you for attending today's presentation.

49:03 That now concludes today's session. So good afternoon to you all.