TIDMTBLD
RNS Number : 7177A
tinyBuild, Inc.
27 September 2022
27 September 2022
tinyBuild, Inc
("tinyBuild" or the "Company")
2022 Half Year Results
Proposed establishment of Employee Benefit Trust
tinyBuild (AIM:TBLD), a premium video games publisher and
developer with global operations, is pleased to announce its
unaudited results for the six months ended 30 June 2022, slightly
ahead of expectations.
Financial highlights:
-- Revenue of $28.8m up 54% (H1 2021: $18.6m) reflecting a strong catalogue performance
-- Adj EBITDA ([1]) increased 25% to $9.9m (H1 2021: $7.9m)
-- Adj. Operating Profit ([2]) increased 33% to $6.8m (H1 2021: $5.1m)
-- Adj. Cash Flow from Operations(2) increased sharply to $8.8m (H1 2021: $3.8m)
-- Strong balance sheet with a net cash ([3]) position of $42.6m (Dec 2021: $48.8m)
Operational highlights:
-- Contribution from own IP increased further to 83% of Group
revenue [4] (H1 2021: 78%) due to strong organic performance (e.g.
Hello Neighbor and Totally Reliable Delivery Service) and recent
acquisitions (e.g. Deadside).
-- Strong back catalogue sales represent 99% of total gaming
revenues (H1 2021: 91%), demonstrating the Company's ability to
extend the life cyc le of games and support investments in new
titles.
-- Not For Broadcast (version 1.0), the critically acclaimed,
darkly comedic, full motion propaganda simulator, has recorded over
400,000 downloads since its launch in 2019.
-- Acquihire ([5]) of Demagic (development and porting studio)
and progress on the M&A pipeline led to two deals completed
post-period end.
Post-Period End
-- Acquihire of Konfa Games, the developer team behind Despot's
Game, for a maximum consideration of up to $5.4m over three
years.
-- Further expansion of existing back catalogue with the
acquisition of high quality titles from Bossa Studios (Surgeon
Simulator, I am fish and I am bread) for a total consideration of
$3m.
-- Released new titles including SpiderHeck (PS, Xbox, Steam),
Justice Sucks (PC and consoles) and tinykin (PC and consoles).
-- Expanded the catalogue and announced the release dates for
Despot's Game (version 1.0), The Fridge is Red (all platforms) and
Asterigos (PS, Xbox and Steam), among others.
-- Expanded the size of the revolving credit facility with Bank
of America from $25m to $35m and extended the maturity date to
three years to maintain the flexibility to fund potential M&A
in the most effective way. The facility is currently undrawn.
Employee Benefit Trust
-- The Board has approved the establishment of an Employee
Benefit Trust, known as the tinyBuild Share Incentive Trust (the
"EBT"). The EBT will be for the benefit of current and future
employees.
-- The EBT, which will act independently of the Company once
formed, is expected to conduct market purchases of the Company's
common shares of $0.001 each in order to, among other things,
satisfy potential future option exercises of vested options granted
pursuant to the Company's share incentive arrangements and to
satisfy the settlement of any other awards granted pursuant to the
Company's current and future incentive award schemes.
-- The EBT will be funded by way of a loan from the Company. The
maximum amount of the loan made available to the EBT at any time
shall be capped at $10,000,000. In effecting purchases, as a best
practice measure and by analogy with the treatment of buybacks
under the UK version of the Market Abuse Regulation (Regulation
(EU) No 596/2014), the EBT intends to comply with customary daily
price and volume parameters deemed appropriate for the level of
liquidity in the Company's shares.
Outlook
-- The first episode of Hello Neighbor animated series will
premiere alongside the release of Hello Neighbor 2 in December
2022.
-- The pipeline for coming months includes version 1.0 release
of Hello Neighbor 2, Despot's Game and Potion Craft, and new
launches such as Eville (Xbox and PC) and Asterigos (PS, Xbox and
Steam).
-- While tinyBuild monitors the impact of the cost of living
crisis and of the conflict in Ukraine, early indicators of traction
across the pipeline of over 30 titles, including Key Performance
Indicators (KPIs) for Hello Neighbor 2, are very encouraging.
-- The Board remains confident the Company is on track to
deliver results at least in line with expectations, plus accretive
acquisitions.
Alex Nichiporchik, Chief Executive Officer of tinyBuild,
commented:
"If H1 2022 was a game, we would have been playing it on the
"Very Difficult" setting. We faced unprecedented challenges,
including the war in Ukraine, having to extract staff out of
Russia, a sharp increase in the cost of living and supply chain
issues. Still, against all odds, the team pulled through and
won."
"On one side, we have taken further steps to de-risk the
business by bringing external dependencies in-house and scaling up
our publishing capacity to deliver games to more platforms. On the
other side we continued to invest in the future by re-establishing
tinyBuild's dominant presence at consumer shows, starting
development of more internal projects and delivering on our
cross-media promise. We are thrilled to announce the first e pisode
of the Hello Neighbor animated series will launch in December."
"Our goal is to expand our position as a leading global
developer and publisher, focusing on IP ownership while creating
long-term scalable franchises across multiple media formats. To
date, 2022 has seen significant progress towards that ambition, and
we look to the future with confidence."
Enquiries :
tinyBuild, Inc investorrelations@tinybuild.com
Alex Nichiporchik - Chief Executive Officer
Antonio Jose Assenza - Chief Financial Officer
Giasone (Jaz) Salati - Head of M&A and IR
Berenberg ( Sole Broker and Nominated Adviser)
Mark Whitmore, Ciaran Walsh, Milo Bonser +44 (0)20 3207 7800
SEC Newgate (Financial PR) tinybuild@secnewgate.co.uk
Robin Tozer, Bob Huxford, George Esmond +44 (0)7540 106366
About tinyBuild:
Founded in 2013, tinyBuild (AIM: TBLD) is a leading premium
AA-rated and indie video games publisher and developer. tinyBuild
strategically secures access to IP and partners with developers to
establish a stable platform on which to build multi-game and
multimedia franchises. tinyBuild has a strong portfolio of over 40
titles, and its upcoming pipeline includes over 20 new titles
currently in development.
Headquartered in Bellevue, Washington, USA, the Company has key
operations worldwide, with employees, contractors or partners in
multiple locations across five continents. tinyBuild's geographic
diversity enables it to source high-potential IP, cost-effective
development resources and a loyal customer base through innovative
grassroots marketing. tinyBuild was admitted to AIM, a market
operated by the London Stock Exchange, in March 2021.
For further information, visit: www.tinybuildinvestors.com .
OPERATIONAL REVIEW
The first half of 2022 has been dominated by the conflict in
Ukraine and by rising inflation across all geographies. In contrast
with general softness in the video games market, the Board is
pleased to confirm that catalogue titles are performing strongly,
alongside new game launches. Sales are progressing at least in line
with expectations for the financial year 2022.
tinyBuild is benefitting from platform competition and is
well-positioned to work with subscription services. The Company
continues to engage with new platforms and experiment with new
technologies. Development revenues from deals with distribution
partners were above expectations and gave the Company greater
visibility of future revenue growth, which in turn reduces the risk
attached to the development of new games.
As anticipated, the release schedule for 2022 is weighted
towards the second half of the year (e.g. Potion Craft, Hello
Neighbor 2, Asterigos, Despot's Game). Still, results for the first
half of the year were slightly above expectations thanks to a back
catalogue contribution equal to 99% of total gaming revenues,
slightly above the average of the past five years. The share of
revenues from own IP also increased to 83% in H1 2022 and the
acquisition of Bossa's titles (acquired in August 2022) adds to an
already strong portfolio.
Current portfolio and pipeline
Since the beginning of the year, tinyBuild has published four
new games (including SpiderHeck in September) and expanded games
already in the portfolio with version 1.0, downloadable content
("DLC") and new platform launches:
-- SpiderHeck (PS, Xbox, Steam) - a physics-based brawler that's
easy to pick up but difficult to master. Duel to the death or
choose to team up and hold back swarms of savage enemies.
-- Tinykin (PC and consoles) - an innovative 3D puzzle
platformer where astronaut Milo uses hundreds of tinykin and their
unique powers to go back to his home planet - and back to normal
size.
-- Cartel Tycoon (version 1.0) - a survival business simulation
inspired by the eighties narcotics trade. Expand and conquer, fight
off rival cartels and evade the authorities.
-- Not for Broadcast (version 1.0) - the critically acclaimed,
darkly comedic, full motion propaganda simulator which has recorded
over 400,000 downloads since its launch in 2019.
We have recently announced, or we are close to announcing a
release date for:
-- Hello Neighbor 2 (version 1.0) - the much-awaited sequel in
the franchise, currently available for pre-order and scheduled for
launch on 6th December, alongside two DLCs.
-- Asterigos - an action RPG set in a fantasy world inspired by
Greek and Roman mythologies, scheduled for release in October.
-- Despot's Game (version 1.0) - a rogue-like tactics
auto-battler currently available on Steam as early access,
culminating in an asynchronous multiplayer mode.
-- Eville - a multiplayer social deduction game set in a village
riddled by a series of murders scheduled for launch in October.
-- Potion Craft (version 1.0) - an alchemist simulator that
topped the Steam Global Top Sellers list as early access and
already passed 700k units sold.
Finally, we announced a number of new titles, including:
-- I am Future - a base-building game set on the ruins of a former civilization.
-- Nitro Kid - roguelike deck-builder set in the neon '80s
featuring 30+ Synthwave exclusive tracks.
-- Broken Roads - a narrative-driven RPG set in Australia with a very distinct look.
-- Farworld Pioneers - a vast colony-builder.
Investing and innovating for growth
I am pleased to announce today that we have finished writing
Season 1 of the Hello Neighbor Animated Series. The animation is
now in full progress, and we expect the first episode to premiere
alongside the release of Hello Neighbor 2 in December 2022,
maximising awareness of all the titles in the franchise.
We have kicked off development on several internal projects,
fully managed by internal studios. Our pipeline now consists of
both externally developed 2nd party IP, fully internal development,
and strategic 3rd party partnerships.
Finally, tinyBuild came back in full swing at consumer shows
sporting the brightest, most visible and fun booths at PAX West and
PAX East in the US. In keeping with tinyBuild's innovative approach
to the convention experience, we created a full-on carnival
experience enjoyed by gamers and families alike.
Acquisitions
Since the beginning of the year, we have made two acquisitions.
We acquihired Demagic, a development studio with 23 staff that has
been working with tinyBuild for over a year on various projects
including Hello Neighbor 2, unannounced titles, and more recently
Deadside.
We acquihired Konfa Games , whom tinyBuild has been working with
for over two years. Konfa Games successfully released Despot's Game
as early access (Steam only) in October 2021. Version 1.0 is
scheduled for launch soon on PlayStation 5, PlayStation 4, Xbox
Series X/S, Xbox One, Nintendo Switch, and PC via Steam and Epic
Games Store, along with the first DLC.
We acquired the top IP of Bossa Studios ([6]) (Surgeon Simulator
and I am bread/ fish) to further expand tinyBuild's portfolio in
the simulation and adventure segments.
People
As part of its effort to secure talent at a competitive cost,
the Company continued to hire staff (both employees and independent
contractors) in strategic geographies. The acquihire of Demagic
adds a team of talented developers that can support existing
studios both in terms of development and porting, and develop new
IP.
tinyBuild aims to offer employees the best working conditions in
the industry. For example, the Company has implemented clear
policies against crunching, the industry practice by which
developers overwork to meet specific targets. In June 2022,
tinyBuild also gifted one extra week of holiday to all direct
employees in a gesture of appreciation for everybody's hard
work.
As a result, tinyBuild enjoys one of the lowest levels of staff
turnover in its development studios, low single-digit, compared to
an estimated 15.5% across the industry ( Wired ).
Position and strategy
tinyBuild is well-positioned with a strong pipeline of new
titles and a proven ability to attract, screen and market
high-quality game franchises. Our low-risk M&A strategy
continues to help us increase our IP portfolio, and our multimedia
franchise model allows us to extend the life of our IP, maximising
our return on investment.
Our medium-term strategy is to expand our position as a leading
global video games developer and publisher, focussing on IP
ownership while creating long-term scalable franchises across
multiple media formats. 2022 has seen significant progress towards
that ambition, and I would like to thank all of our shareholders
for their support.
Alex Nichiporchik
Chief Executive Officer
27 September 2022
FINANCIAL REVIEW
Results for the six months ended June 2022 were slightly ahead
of expectations, and the Company closed one acquihire in the
period.
Revenue and Gross Margin
In the six months to June 2022, tinyBuild revenues were $28.8m,
or 54% increase compared to the previous year (H1 2021: $18.6m),
reflecting strong organic growth across the portfolio, a solid
performance of acquired businesses, and despite a release schedule
skewed towards the second half of the year. Gaming revenues were up
56%, including strong contribution from development services, which
now also includes Red Cerberus. Back catalogue performed strongly
in the first half, supported by Hello Neighbor titles and by
emerging franchises such as Totally Reliable Delivery Services,
Potion Craft and Deadside. Revenue from events, primarily DevGAMM,
fell to $0.15m as a result of events cancelled in Russia and
Ukraine.
Gross profit increased by 46% to $19.3m (2021 H1: $13.2m), as a
result of strong revenue growth. Gross profit margin decreased
slightly to 67% (H1 2021: 71%) due to the consolidation of lower
margin businesses (Versus Evil and Red Cerberus), only partly
offset by the positive impact of higher share of revenues deriving
from own IP titles (83% in H1 2022 vs 78% in H1 2021).
Adjusted EBITDA and Operating Profit
Adjusted EBITDA is presented net of amortisation of development
costs, net of expenses related to the conflict in Ukraine,
excluding share-based compensation expenses and exceptional costs
(e.g. IPO expenses in 2021), giving a clear, yet conservative,
picture of the business progression. Adjusted EBITDA grew 25% to
$9.9m in H1 of 2022. Margins decreased to 34% (H1 2021: 43%)
primarily due to the consolidation of structurally lower-margin
services unit Red Cerberus and third-party publisher Versus Evil,
both acquired in November 2021, plus an increase in marketing
spend. Adjusted EBITDA would increase to $10.9m (38% margin), if we
exclude the $1.0m expenses related to the conflict in Ukraine.
Operating profit for H1 2021 was $6.8m (H1 2021: $0.7m).
Excluding the $4.4m one-off IPO costs in 2021, Adjusted Operating
Profit increased 33% in 2022, reflecting an increase in
amortisation of purchased IP ($1.7m in H1 2022 vs $0.5m in H1
2021), partly offset by lower share-based compensation ($0.9m in H1
2022 vs $2.2m in H1 2021).
Finance costs and taxation
Finance costs were immaterial in H1 2022, and taxation charges
were $2.3m (H1 2021: $1.0m) reflecting the higher taxable income
and a normalisation of timing issues that benefited H1 2021.
Exceptional Costs
In H1 2021, tinyBuild incurred one-off costs ($4.4m) related to
the IPO on the London Stock Exchange's AIM market. In H1 2022, the
Company incurred $1.0m expenses relating to the conflict in
Ukraine, costs that have not been considered one-off due to the
continuation of the war.
Cash Flow
Adjusted cash flows from operating activities (excluding
exceptional costs relating to the IPO) increased 57% from $3.8m to
$8.8m in H1 2022, also due to a normalisation of timing differences
that impacted results in the first half of 2021. Software
development costs, mainly consisting of developer salaries,
advances, localisation and porting, increased from $5.6m to $14.2m,
reflecting the increase in investment for upcoming pipeline
releases.
Financial Position
The net cash position decreased from $48.8m, as of December
2021, to $42.6m as of June 2022, with the majority of the variation
driven primarily by higher organic investments. Contract
liabilities decreased from $2.6m at 31 December 2021 to nil due to
the timing of contractual payment terms and the H2 heavy release
schedule.
Events after the reporting date
In August 2022, tinyBuild announced the acquihire of Konfa, for
a maximum consideration of up to $5.4m, consisting of upfront and
deferred payments over the next three calendar years, split
approximately in 40% cash and 60% newly issued tinyBuild shares,
subject to stretched operational targets being met.
Also in August 2022, we announced the acquisition of Bossa
Studios' IP catalogue. The consideration includes an upfront
payment of $2.55m in cash and the equivalent of $0.45m in tinyBuild
shares. The franchise delivered total revenues of $6.0m in the year
ending 31 December 2021. 2021 revenues were boosted by the launch
of new titles.
Finally, tinyBuild announced today it increased the existing
credit facility with Bank of America from $25m to $35m and extended
the tenure from twelve months to three years, on similar terms. The
new credit facility has been designed to expand tinyBuild's
financial capacity in the event of larger M&A deals while
having minimal impact on P&L and cash flow if not used.
Antonio Jose Assenza
Chief Financial Officer
27 September 2022
TINYBUILD INC.
INTERIM RESULTS
FOR THE SIX MONTH PERIODED 30 JUNE 2022
TINYBUILD INC.
CONSOLIDATED CONDENSED STATEMENT OF COMPREHENSIVE INCOME /
(LOSS)
6 months 6 months Year ended
Note ended 30 ended 30 31 December
June 2022 June 2021 2021
Unaudited Unaudited Audited
--------- -------------- ---------- --------------
$'000 $'000 $'000
--------- -------------- ---------- --------------
Revenue 4 28,750 18,626 52,153
--------- -------------- ---------- --------------
Cost of sales (9,058) (5,449) (18,112)
--------- -------------- ---------- --------------
Gross profit 19,692 13,177 34,041
--------- -------------- ---------- --------------
Administrative expenses:
--------- -------------- ---------- --------------
- General administrative
expenses (12,000) (5,920) (14,469)
--------- -------------- ---------- --------------
- Share-based payment expenses (887) (2,159) (2,452)
--------- -------------- ---------- --------------
- IPO transaction costs - (4,409) (4,588)
--------- -------------- ---------- --------------
Total administrative expenses (12,887) (12,488) (21,509)
--------- -------------- ---------- --------------
Operating profit 6,805 689 12,532
--------- -------------- ---------- --------------
Finance costs (24) (9) (8)
--------- -------------- ---------- --------------
Finance income 8 4 -
--------- -------------- ---------- --------------
Profit before tax 6,789 684 12,524
--------- -------------- ---------- --------------
Income tax expense (2,306) (981) (4,281)
--------- -------------- ---------- --------------
Profit/(loss) and total comprehensive
income/(loss) for the year 4,483 (297) 8,243
--------- -------------- ---------- --------------
Attributable to:
--------- -------------- ---------- --------------
Owners of the parent company 4,457 (225) 8,268
--------- -------------- ---------- --------------
Non-controlling interests 26 (72) (25)
--------- -------------- ---------- --------------
4,483 (297) 8,243
--------- -------------- ---------- --------------
Earnings per share ($) 5 0.022 (0.001) 0.043
--------- -------------- ---------- --------------
Diluted earnings per share
($) 5 0.022 (0.001) 0.042
--------- -------------- ---------- --------------
Adjusted EBITDA 6 9,882 7,905 22,239
--------- -------------- ---------- --------------
TINYBUILD INC.
CONSOLIDATED CONDENSED STATEMENT OF FINANCIAL POSITION
30 June 31 December
2022 2021
Unaudited Audited
---- ----------------------- --------------------
ASSETS Note $'000 $'000
---- ----------------------- --------------------
Non-current assets
---- ----------------------- --------------------
Intangible assets 7 69,019 57,156
---- ----------------------- --------------------
Property, plant and equipment:
---- ----------------------- --------------------
- owned assets 524 41
---- ----------------------- --------------------
- right-of-use assets 374 528
---- ----------------------- --------------------
Trade and other receivables 266 266
---- ----------------------- --------------------
Total non-current assets 70,183 57,991
---- ----------------------- --------------------
Current assets
---- ----------------------- --------------------
Trade and other receivables 14,431 15,569
---- ----------------------- --------------------
Cash and cash equivalents 42,612 48,832
---- ----------------------- --------------------
Total current assets 57,043 64,401
---- ----------------------- --------------------
TOTAL ASSETS 127,226 122,392
---- ----------------------- --------------------
EQUITY AND LIABILITIES
Equity
---- ----------------------- --------------------
Share capital 9 204 203
---- ----------------------- --------------------
Share premium 65,143 63,546
---- ----------------------- --------------------
Warrant reserve 1,920 1,920
---- ----------------------- --------------------
Retained earnings 35,983 30,639
---- ----------------------- --------------------
Equity attributable to owners of
the parent company 103,250 96,308
---- ----------------------- --------------------
Non-controlling interest 15 137
---- ----------------------- --------------------
Total equity 103,265 96,445
---- ----------------------- --------------------
LIABILITIES
---- ----------------------- --------------------
Non-current liabilities
---- ----------------------- --------------------
Lease liabilities 201 277
---- ----------------------- --------------------
Contingent consideration 6,336 6,336
---- ----------------------- --------------------
Deferred tax liabilities 2,716 2,345
---- ----------------------- --------------------
Total non-current liabilities 9,253 8,958
---- ----------------------- --------------------
Current liabilities
---- ----------------------- --------------------
Trade and other payables 9,645 9,290
---- ----------------------- --------------------
Contingent consideration 4,793 4,793
---- ----------------------- --------------------
Contract liabilities - 2,645
---- ----------------------- --------------------
Lease liabilities 270 261
---- ----------------------- --------------------
Total current liabilities 14,708 16,989
---- ----------------------- --------------------
Total liabilities 23,961 25,947
---- ----------------------- --------------------
TOTAL EQUITY AND LIABILITIES 127,226 122,392
---- ----------------------- --------------------
TINYBUILD INC.
CONSOLIDATED CONDENSED STATEMENT OF CHANGES IN EQUITY
Note Share Share Warrant Retained Total Non-controlling Total
capital premium reserve earnings equity interest equity
attributable
to owners
of the
parent
$'000 $'000 $'000 $'000 $'000 $'000 $'000
---- ------------------- ------------------------ --------------------- -------------------- ---------------------- -------------------- ----------------------
Balance at 1
January
2021 1 18,674 - 19,919 38,594 162 38,756
---- ------------------- ------------------------ --------------------- -------------------- ---------------------- -------------------- ----------------------
Loss and total
comprehensive
expense for
the year - - - (225) (225) (72) (297)
---- ------------------- ------------------------ --------------------- -------------------- ---------------------- -------------------- ----------------------
Transactions
with
owners in
their capacity
as owners:
---- ------------------- ------------------------ --------------------- -------------------- ---------------------- -------------------- ----------------------
Share split 178 (178) - - - - -
---- ------------------- ------------------------ --------------------- -------------------- ---------------------- -------------------- ----------------------
Issue of
shares, net
of
transaction
costs 22 44,147 - - 44,169 - 44,169
---- ------------------- ------------------------ --------------------- -------------------- ---------------------- -------------------- ----------------------
Issue of
shares on
exercise of
options 1 154 - - 155 - 155
---- ------------------- ------------------------ --------------------- -------------------- ---------------------- -------------------- ----------------------
Issue of
warrants - (1,920) 1,920 - - - -
---- ------------------- ------------------------ --------------------- -------------------- ---------------------- -------------------- ----------------------
Share-based
payments - - - 2,159 2,159 - 2,159
---- ------------------- ------------------------ --------------------- -------------------- ---------------------- -------------------- ----------------------
Total
transactions
with owners 201 42,203 1,920 2,159 46,483 - 46,483
---- ------------------- ------------------------ --------------------- -------------------- ---------------------- -------------------- ----------------------
Balance at 30
June
2021 202 60,877 1,920 21,853 84,852 90 84,942
---- ------------------- ------------------------ --------------------- -------------------- ---------------------- -------------------- ----------------------
Share Share Warrant Retained Total Non-controlling Total
capital premium reserve earnings equity interest equity
attributable
to owners
of the
parent
---- ------------------- ------------------------ --------------------- -------------------- ---------------------- -------------------- ----------------------
$'000 $'000 $'000 $'000 $'000 $'000 $'000
---- ------------------- ------------------------ --------------------- -------------------- ---------------------- -------------------- ----------------------
Balance at 1
January
2022 203 63,546 1,920 30,639 96,308 137 96,445
---- ------------------- ------------------------ --------------------- -------------------- ---------------------- -------------------- ----------------------
Profit and
total
comprehensive
income for
the year - - - 4,457 4,457 26 4,483
---- ------------------- ------------------------ --------------------- -------------------- ---------------------- -------------------- ----------------------
Transactions
with
owners in
their capacity
as owners:
---- ------------------- ------------------------ --------------------- -------------------- ---------------------- -------------------- ----------------------
Issue of
shares, net
of
transaction
costs 9 1 1,569 - - 1,570 - 1,570
---- ------------------- ------------------------ --------------------- -------------------- ---------------------- -------------------- ----------------------
Issue of
shares on
exercise of
options 9 - 28 - - 28 - 28
---- ------------------- ------------------------ --------------------- -------------------- ---------------------- -------------------- ----------------------
Dividends paid 11 - - - - - (148) (148)
---- ------------------- ------------------------ --------------------- -------------------- ---------------------- -------------------- ----------------------
Share-based
payments - - - 887 887 - 887
---- ------------------- ------------------------ --------------------- -------------------- ---------------------- -------------------- ----------------------
Total
transactions
with owners 1 1,597 - 887 2,485 (148) 2,337
---- ------------------- ------------------------ --------------------- -------------------- ---------------------- -------------------- ----------------------
Balance at 30
June
2022 204 65,143 1,920 35,983 103,250 15 103,265
---- ------------------- ------------------------ --------------------- -------------------- ---------------------- -------------------- ----------------------
TINYBUILD INC.
CONSOLIDATED CONDENSED STATEMENT OF CASH FLOWS
6 months 6 months Year ended
ended 30 ended 30 31 December
June 2022 June 2021 2021
Unaudited Unaudited Audited
---- --------------- -------------- --------------
Note $'000 $'000 $'000
---- --------------- -------------- --------------
Cash flows from operating activities
---- --------------- -------------- --------------
Cash generated from operations 10 8,811 (570) 13,290
---- --------------- -------------- --------------
Net cash generated by/(used in)
operating activities 8,811 (570) 13,290
---- --------------- -------------- --------------
Cash flows from investing activities
---- --------------- -------------- --------------
Acquisition of subsidiaries, net
of cash acquired - - (11,784)
---- --------------- -------------- --------------
Software development (14,245) (5,636) (15,085)
---- --------------- -------------- --------------
Purchase of intellectual property - (2,089) (10,832)
---- --------------- -------------- --------------
Proceeds on disposal of intangible
assets - - 45
---- --------------- -------------- --------------
Purchase of property, plant and
equipment (554) - -
---- --------------- -------------- --------------
Interest received 8 4 -
---- --------------- -------------- --------------
Net cash used in investing activities (14,791) (7,721) (37,656)
---- --------------- -------------- --------------
Cash flows from financing activities
---- --------------- -------------- --------------
Repayment of borrowings - (13) (13)
---- --------------- -------------- --------------
Proceeds from issuance of ordinary
shares, net of issuance costs - 43,570 46,839
---- --------------- -------------- --------------
Proceeds on exercise of share
options - 154 155
---- --------------- -------------- --------------
Payment of principal portion of
lease liabilities (92) (91) (96)
---- --------------- -------------- --------------
Dividends paid to non-controlling
interests (148) - -
---- --------------- -------------- --------------
Net cash (used in)/generated
by financing activities (240) 43,620 46,885
---- --------------- -------------- --------------
Cash and cash equivalents
---- --------------- -------------- --------------
Net (decrease)/increase in the
year (6,220) 35,329 22,519
---- --------------- -------------- --------------
At beginning of period 48,832 26,313 26,313
---- --------------- -------------- --------------
At end of period 42,612 61,642 48,832
---- --------------- -------------- --------------
Non-cash investing activities
The Group purchased the intellectual property rights to one
development studio, for consideration which included non-cash
consideration of $1,570,000 (see note 7).
TINYBUILD INC.
NOTES TO THE UNAUDITED CONSOLIDATED INTERIM FINANCIAL
STATEMENTS
FOR THE SIX MONTH PERIODED 30 JUNE 2022
1 GENERAL INFORMATION
tinyBuild Inc. ("the Company") is a public company limited by
shares, and is registered, domiciled and incorporated in Delaware,
USA. The address of the registered office is 1100 Bellevue Way NE,
STE 8A #317, Bellevue, WA 98004, United States.
The Group ("the Group") consists of tinyBuild Inc. and all of
its subsidiaries. The Group's principal activity is that of an
indie video game publisher and developer.
The Board of Directors approved this interim financial
information on 27 September 2022.
2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
These condensed, consolidated financial statements for the
interim half-year reporting period ended 30 June 2022 have been
prepared in accordance with IAS 34 'Interim Financial Reporting'.
These interim financial statements do not constitute full financial
statements and do not include all the notes of the type normally
included in annual financial statements. Accordingly, these
financial statements are to be read in conjunction with the annual
report for the year ended 31 December 2021.
The annual financial statements of the Group are prepared in
accordance with International Financial Reporting Standards
("IFRS") as issued by the International Accounting Standards Board
("IASB"). The Annual Report and Financial Statements for 2021 have
been issued and are available on the Group's investor relations'
website:
https://www.tinybuildinvestors.com/documents-and-presentations.
The Group has applied the same accounting policies and methods
of computation in its interim consolidated
financial statements as in its 31 December 2021 annual financial
statements, except for those that relate to new standards and
interpretations effective for the first time for periods beginning
on (or after) 1 January 2022 and have been adopted in the 2022
financial statements. There are no new and amended standards and/or
interpretations that will apply for the first time in the next
annual financial statements that are expected to have a material
impact on the Group.
Tax charged within the 6 months ended 30 June 2022 has been
calculated by applying the effective rate of tax which is expected
to apply to the Group for the year ending 31 December 2022 as
required by IAS 34.
The financial statements have been prepared on the historical
cost basis except for, where disclosed in the accounting policies,
certain financial instruments that are measured at fair value. The
financial statements are prepared in US Dollars, which is the
functional currency and presentational currency of the Company and
all entities within the Group. Monetary amounts in these financial
statements are rounded to the nearest thousand US Dollars
(US$'000).
3 SEGMENTAL REPORTING
IFRS 8 'Operating Segments' requires that operating segments be
identified on the basis of internal reporting and decision-making.
The Group identifies operating segments based on internal
management reporting that is regularly reported to and reviewed by
the Chief Executive Officer, which is identified as the chief
operating decision maker. Management information is reported as one
operating segment, being revenue from self-published franchises and
other revenue streams such as royalties, licensing, development and
events.
Whilst the chief operating decision maker assessed there to be
only one segment, the Company's portfolio of games is split between
those based on IP owned by the Group and IP owned by a third party
and hence to aid the readers' understanding of our results, the
split of revenue from these two categories is shown below.
TINYBUILD INC.
NOTES TO THE UNAUDITED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
(CONTINUED)
FOR THE SIX MONTH PERIODED 30 JUNE 2022
3 SEGMENTAL REPORTING (CONTINUED)
Game and merchandise royalties 6 months 6 months Year ended
ended 30 June ended 30 June 31 December
2022 2021 2021
Unaudited Unaudited Audited
-------------- -------------- ------------
$'000 $'000 $'000
-------------- -------------- ------------
Owned IP 13,107 14,100 30,640
-------------- -------------- ------------
Third-party IP 4,359 4,050 9,231
-------------- -------------- ------------
17,466 18,150 39,871
-------------- -------------- ------------
Three customers were responsible for approximately 70% of the
Group's revenues (30 June 2021: five - 80%, 31 December 2021: three
- 67%).
The Group has six right-of-use asset located overseas with a
carrying value of $374,000 (30 June 2021: one - $39,881, 31
December 2021: five - $528,000). The Group also has tangible fixed
assets located overseas with a total carrying value of $212,000 (30
June 2021: none, 31 December 2021: none). All other non-current
assets are located in the US.
4 REVENUE 6 months 6 months Year ended
ended 30 ended 30 31 December
June 2022 June 2021 2021
Unaudited Unaudited Audited
An analysis of the Group's revenue $'000 $'000 $'000
is as follows:
Revenue analysed by class of business
Game and merchandise royalties 17,466 18,150 39,871
Development services 11,134 224 11,477
Events 150 252 805
28,750 18,626 52,153
TINYBUILD INC.
NOTES TO THE UNAUDITED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
(CONTINUED)
FOR THE SIX MONTH PERIODED 30 JUNE 2022
5 EARNINGS PER SHARE
The Group reports basic and diluted earnings per common share. Basic
earnings per share is calculated by dividing the profit attributable
to common shareholders of the Company by the weighted average number
of common shares outstanding during the period.
Diluted earnings per share is determined by adjusting the profit attributable
to common shareholders by the weighted average number of common shares
outstanding, taking into account the effects of all potential dilutive
common shares, including options.
6 months 6 months Year ended
ended 30 ended 30 June 31 December
June 2022 2021 2021
------------------ ------------------ ------------------
Unaudited Unaudited Audited
------------------ ------------------ ------------------
$'000 $'000 $'000
------------------ ------------------ ------------------
Total comprehensive income attributable
to the owners of the company 4,457 (225) 8,268
------------------ ------------------ ------------------
Weighted average number of shares 203,119,680 192,047,223 191,241,890
------------------ ------------------ ------------------
Basic earnings per share ($) 0.022 (0.001) 0.043
------------------ ------------------ ------------------
6 months 6 months Year ended
ended 30 June ended 30 June 31 December
2022 2021 2021
Unaudited Unaudited Audited
-------------- -------------- -------------
$'000 $'000 $'000
-------------- -------------- -------------
Total comprehensive income attributable
to the owners of the company 4,457 (225) 8,268
-------------- -------------- -------------
Weighted average number of shares 203,119,680 192,047,223 191,241,890
-------------- -------------- -------------
Dilutive effect of share options 2,135,640 - 2,484,523
-------------- -------------- -------------
Dilutive effect of warrants 149,130 - 149,130
-------------- -------------- -------------
Dilutive effect of restricted stock
awards 954,654 - 954,654
-------------- -------------- -------------
Weighted average number of diluted shares 206,359,104 192,047,223 194,830,197
-------------- -------------- -------------
Diluted earnings per share ($) 0.022 (0.001) 0.042
-------------- -------------- -------------
Pursuant to IAS 33 'Earnings per Share', options whose exercise
price is higher than the value of the Company's security were not
taken into account in determining the effect of dilutive
instruments. The calculation of diluted earnings per share does not
assume conversion, exercise, or other issue of potential ordinary
shares that would have an antidilutive effect on earnings per
share.
6 ADJUSTED EBITDA
The Directors of the Group have presented the performance
measure 'Adjusted EBITDA' as they monitor this performance measure
at a consolidated level and they believe this measure is relevant
to an understanding of the Group's financial performance. Adjusted
EBITDA is calculated by adjusting profit from continuing operations
to exclude the impact of taxation, net finance costs, share-based
payment expenses, depreciation, amortisation of purchased
intellectual property, acquisition costs and IPO transaction costs.
Adjusted EBITDA is not a defined performance measure in IFRS. The
Group's definition of Adjusted EBITDA may not be comparable with
similarly titled performance measures and disclosures by other
entities.
Amortisation of $3.8m (30 June 2021: $1.0m, 31 December 2021:
$3.5m) of software development costs has been included in arriving
at Adjusted EBITDA as they are a primary cost in the company's
ordinary course of business.
TINYBUILD INC.
NOTES TO THE UNAUDITED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
(CONTINUED)
FOR THE SIX MONTH PERIODED 30 JUNE 2022
6 ADJUSTED EBITDA (CONTINUED) 6 months 6 months Year ended
ended ended 31 December
30 June 30 June 2021
2022 2021
Unaudited Unaudited Audited
---------------- --------- ------------
$'000 $'000 $'000
---------------- --------- ------------
Profit/(loss) for the period 4,483 (297) 8,243
---------------- --------- ------------
Income tax expense 2,306 981 4,281
---------------- --------- ------------
Finance costs 24 9 8
---------------- --------- ------------
Finance income (8) (4) -
---------------- --------- ------------
Share-based payment expenses 887 2,159 2,452
---------------- --------- ------------
Amortisation of purchased intellectual
property, brands and customer relationships 1,754 547 1,662
---------------- --------- ------------
Depreciation of property, plant and equipment 224 101 117
---------------- --------- ------------
IPO transaction costs - 4,409 4,588
---------------- --------- ------------
Acquisition costs 212 - 888
---------------- --------- ------------
Adjusted EBITDA 9,882 7,905 22,239
---------------- --------- ------------
7 Purchased Software
INTANGIBLE Customer intellectual development
ASSETS Goodwill Brands relationships property costs Total
$'000 $'000 $'000 $'000 $'000 $'000
Cost:
As at 1 January
2021 - - - 6,170 17,127 23,297
Additions -
internally
generated - - - - 15,084 15,084
Additions -
separately
acquired - - - 10,832 - 10,832
Additions
through
business
combinations 13,202 1,815 4,261 2,356 - 21,634
Transfers - - - 1,962 (1,962) -
Disposals - - - - (90) (90)
As at 31
December 2021 13,202 1,815 4,261 21,320 30,159 70,757
Additions -
internally
generated - - - - 14,245 14,245
Additions -
separately
acquired - - - 3,195 - 3,195
As at 30 June
2022 13,202 1,815 4,261 24,515 44,404 88,197
Amortisation and
impairment:
As at 1 January
2021 - - - 1,086 7,070 8,156
Amortisation
charge for
the year - 10 51 1,601 3,500 5,162
Impairment
charge for the
year - - - - 283 283
As at 31
December 2021 - 10 51 2,687 10,853 13,601
Amortisation
charge for
the period - 61 304 1,389 3,823 5,577
As at 30 June
2022 - 71 355 4,076 14,676 19,178
Carrying amount:
As at 30 June
2022 13,202 1,744 3,906 20,439 29,728 69,019
As at 31
December 2021 13,202 1,805 4,210 18,633 19,306 57,156
TINYBUILD INC.
NOTES TO THE UNAUDITED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
(CONTINUED)
FOR THE SIX MONTH PERIODED 30 JUNE 2022
7 INTANGIBLE ASSETS (CONTINUED)
During the period, the Group purchased the intellectual property
rights to one development studio for total consideration of
$3,195,000, which included non-cash consideration for 621,006
ordinary shares totalling $1,570,000. Management concluded that
this did not meet the definition of a business combination.
Accordingly, it has been accounted for as an asset acquisition.
Amortisation of purchased intellectual property is recognised
within general administrative expense in the Statement of
Comprehensive Income. Amortisation of software development costs is
recognised within cost of sales in the Statement of Comprehensive
Income.
8 SHARE-BASED PAYMENTS
The Group operates two share-based plans, the Equity Incentive
Plan and a Stock Restriction Agreement, which are detailed as
follows:
The Stock Restriction Agreement is a plan that provides for
grants of Restricted Stock Awards (RSA) for the founders of the
company and acquired employees. The awarded shares are made in the
Company's ordinary share capital. The fair value of the RSAs is
estimated by using the Black-Scholes valuation model on the date of
grant, based on certain assumptions, and is charged on a
straight-line basis over the required service period, normally two
to three years. The fair value of the 2017 grant is $8.98 per
share, the 2019 grant is $40.21 per share and the 2021 grant is
$2.095 per share. The 2017 and 2019 RSAs vest in instalments every
three months over the service period and fully vested on IPO. The
2021 RSAs vest over 3 years in a 50:25:25 ratio. Each instalment
has been treated as a separate share option grant because each
instalment has a different vesting period. This plan is
equity-settled. A reconciliation of RSAs is as follows:
30 June 31 December
2022 2021
Opening RSA outstanding 954,654 191,220
RSA granted - 954,654
RSA vested - (191,220)
Closing RSA outstanding 954,654 954,654
Weighted average remaining contractual
life in years 2.38 2.88
The company has an Equity Incentive Plan that provides for the
issuance of non-qualified stock options to officers and other
employees that have a contracted term of 10 years and generally
vest over four years. The stock options are granted on shares
issued by the company. A reconciliation of share option movements
is shown below:
Number Weighted Number Weighted Weighted
of options average of options average average
outstanding exercise exercisable exercise remaining
price ($) price ($) contractual
life (years)
At 1 January 2022 3,767,365 0.87 1,474,928 0.54 7.68
Exercised during the
period (400,000) 0.07
Forfeited during the
period (103,164) 0.33
At 30 June 2022 3,264,201 0.99 1,254,042 0.51 7.11
TINYBUILD INC.
NOTES TO THE UNAUDITED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
(CONTINUED)
FOR THE SIX MONTH PERIODED 30 JUNE 2022
8 SHARE-BASED PAYMENTS (CONTINUED)
During the period covered by the financial statements, no
options expired. Options granted are valued using the Black-Scholes
option-pricing model. The fair value per option granted during the
period covered by the financial statements and the assumptions used
in the calculation are as follows:
Grant date
17 November 27 September 3 March 3 February
2021 2021 2021 2021
Share price at grant date $2.77 $3.38 $2.35 $1.59
Exercise price $2.77 $3.54 $2.35 $1.59
Option life 2.5 10 6.25 6.25
Expected volatility 60.00% 60.00% 60.00% 60.00%
Expected dividends 0.00% 0.00% 0.00% 0.00%
Discount rate 0.25% 0.25% 0.25% 0.25%
Weighted average fair value
per option $0.52 $1.35 $0.49 $0.66
Expected volatility is estimated based on the historic
volatility (based on the expected term) and the historical
volatility of comparable public peers over the same period.
9 SHARE CAPITAL 30 June 31 December
2022 2021
Unaudited Audited
----------- -----------
Number Number
----------- -----------
Class of share
----------- -----------
Ordinary shares of $0.001 each 203,528,087 202,507,081
----------- -----------
30 June 31 December
2022 2021
----------- -----------
Unaudited Audited
----------- -----------
$'000 $'000
----------- -----------
Class of share
----------- -----------
Ordinary shares of $0.001 each 204 203
----------- -----------
204 203
----------------------------------------- ----------- -----------
On 28 January 2022, 400,000 share options were exercised at a
weighted average exercise price of $0.07, totalling $28,000.
On 11 April 2022, 621,006 shares were issued as partial
consideration for the acquisition of intellectual property
totalling $1,571,289.
TINYBUILD INC.
NOTES TO THE UNAUDITED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
(CONTINUED)
FOR THE SIX MONTH PERIODED 30 JUNE 2022
10 CASH GENERATED FROM OPERATIONS 6 months
ended 6 months Year ended
30 June ended 31 December
2022 30 June 2021 2021
Unaudited Unaudited Audited
---------------- -------------------- ------------
$'000 $'000 $'000
---------------- -------------------- ------------
Profit/(loss) for the year 4,483 (297) 8,243
---------------- -------------------- ------------
Adjustments for:
---------------- -------------------- ------------
Share-based payments 887 2,159 2,452
---------------- -------------------- ------------
Amortisation of intangible assets 5,577 1,532 5,162
---------------- -------------------- ------------
Impairment of intangible assets - - 283
---------------- -------------------- ------------
Depreciation of tangible fixed assets 224 101 117
---------------- -------------------- ------------
Foreign exchange losses - (2) -
---------------- -------------------- ------------
Finance costs 24 9 8
---------------- -------------------- ------------
Finance income (8) (4) -
---------------- -------------------- ------------
Income tax expense 2,306 - 3,599
---------------- -------------------- ------------
Movements in working capital:
---------------- -------------------- ------------
Increase in receivables (737) (2,927) (8,160)
---------------- -------------------- ------------
(Decrease)/increase in payables (3,914) (1,141) 5,204
---------------- -------------------- ------------
Increase in deferred tax liability 371 - 682
---------------- -------------------- ------------
Income tax paid (402) - (4,300)
---------------- -------------------- ------------
Cash generated from/(used in) operations 8,811 (570) 13,290
---------------- -------------------- ------------
11 RELATED PARTY TRANSACTIONS
An analysis of key management personnel remuneration is set out
below:
Key management personnel remuneration 6 months
ended 6 months Year ended
30 June ended 31 December
2022 30 June 2021 2021
Unaudited Unaudited Audited
--------- ------------- ------------
$'000 $'000 $'000
--------- ------------- ------------
Aggregate emoluments 802 758 3,037
--------- ------------- ------------
Equity-settled share-based payments 61 2,001 2,159
--------- ------------- ------------
863 2,759 5,196
--------- ------------- ------------
Transactions with other related parties
The wife of the Company's CEO is a member and manager of DevGAMM
LLC. During the period, DevGAMM LLC paid dividends totalling
$148,000 to this related party.
There were no other related party transactions during the period
which require disclosure.
TINYBUILD INC.
NOTES TO THE UNAUDITED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
(CONTINUED)
FOR THE SIX MONTH PERIODED 30 JUNE 2022
12 SUBSEQUENT EVENTS
On 26 August 2022, the Company completed the acquisition of
Konfa Games for initial consideration of $1.4m, including amounts
previously advanced. The agreement contains performance based
earn-outs over the next three calendar years, subject to
operational targets being met.
The Company also acquired Bossa's IP Catalogue for consideration
of $3m. Henrique Olifiers, Non-executive Chairman of the Company,
is the Founder and CEO of Bossa. As a result of this relationship,
the IP Catalogue acquisition represents a related party transaction
in accordance with the AIM Rules for Companies. The Directors of
tinyBuild, excluding Henrique Olifiers, consider, having consulted
with Berenberg, tinyBuild's nominated adviser, that the terms of
the transaction are fair and reasonable in so far as shareholders
of tinyBuild are concerned.
After the year end, the company expanded the size of the
revolving credit facility with Bank of America from $25m to $35m
and extended the maturity date to three years to maintain the
flexibility to fund further potential M&A in the most effective
way. There are currently no amounts drawn on this facility.
[1] Includes amortisation of Development costs and expenses
related to the conflict in Ukraine. Excludes expenses related to
the IPO (2021) and share-based compensation expenses.
[2] Includes expenses related to the conflict in Ukraine.
Excludes expenses related to the IPO (2021).
[3] Cash and cash equivalents minus debt.
[4] Excludes Red Cerberus, a development services entity
[5] An informal term used in connection with the process of
acquiring a developer via a transfer or an engagement as
independent contractors of the employees of an external developer,
and selectively acquiring relevant target IP via an asset purchase,
rather than a corporate acquisition.
[6] Related party transaction
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END
IR ZZGZLMVLGZZZ
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September 27, 2022 02:01 ET (06:01 GMT)
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