TIDMTBLD
RNS Number : 5403U
tinyBuild, Inc.
29 March 2023
29 March 2023
tinyBuild, Inc
("tinyBuild" or the "Company")
Preliminary Unaudited Results for the year ended 31 December
2022
Directorate change
tinyBuild (AIM:TBLD), a premium video games publisher and
developer with global operations, is pleased to announce its
unaudited results for the twelve months ended 31 December 2022.
Financial Summary (unaudited):
(12 months ended December,
$'000) 2021 2022 change
--------------------------- ------ -------------------- ------
Revenue 52,153 63,295 21%
------ -------------------- ------
Operating profit 12,532 15,923 27%
------ -------------------- ------
Profit before tax 12,524 15,930 27%
------ -------------------- ------
Basic earnings per share
($ cent) 4.3 5.7 32%
------ -------------------- ------
Operating cash flow 13,290 19,259 45%
------ -------------------- ------
Net cash, at 31 December 48,832 26,496 -46%
------ -------------------- ------
Adj. EBITDA(1) 22,239 24,355 10%
------ -------------------- ------
Adj. EBITDA margin 42.6% 38.5%
------ -------------------- ------
(1) Excludes share-based compensation expenses, and exceptional
items (e.g. IPO cost, Ukraine/ Russia relocation) includes
amortisation of Development costs
Financial highlights:
-- Revenue grew 21% to $63.3m (2021: $52.2m), reflecting a solid
performance in the last part of the year from new titles including
Hello Neighbor 2, Tinykin, Asterigos, Spiderheck and back catalogue
sales.
-- Adj. EBITDA increased to $24.4m (2021: $22.2m) up 10% y-o-y,
while margin decreased to 38.5% (2021: 42.6%) primarily due to the
consolidation of Versus Evil and Red Cerberus acquired in November
2021.
-- Operating profit increased by 27% to $15.9m (2021: $12.5m),
thanks to lower share-based payment expenses and exceptional costs.
It includes a $11.1m write-off of the intangibles from the Versus
Evil/ Red Cerberus acquisition broadly offset by a reduction in
deferred earn out payment.
-- Profit before tax grew by 27% to $15.9m and basic EPS grew by
32% to 5.7c, reflecting a lower tax charge.
-- Operating cash flow increased 45% to $19.3m (2021: $13.3m),
as a result of revenue growth and lower exceptional charges.
Excluding $2m one-off items in 2022 (2021: $5.5m), operating cash
flow increased by 13% to $21.3m (2021: $18.8m).
-- Net cash as of 31 December 2022 was $26.5m compared to $48.8m
as at 31 December 2021, reflecting increased investments on
development costs ($35.8m in 2022, vs $15.1m in 2021) and $4.2m
cash payment for M&A in the year.
Operational highlights:
-- In 2022, tinyBuild released a number of new titles, including
Tinykin, SpiderHeck, Asterigos and Hello Neighbor 2, plus version
1.0 of Cartel Tycoon, Despot's Game and Potion Craft, and a number
of platform launches which generated growth across the entire
portfolio of over 80 titles.
-- Notably, in 2022 the Company launched three new games with a
development budget of over $1m that achieved an average return of
1.9x before the end of the year demonstrating the Company's ability
to successfully bring larger-budget games to market across multiple
platforms and providing a solid base for future releases.
-- Contribution to revenues from first/second-party games
decreased marginally to 77% of Gaming revenues (2021: 81%),
primarily due to the consolidation of Versus Evil's 3rd party
portfolio.
-- Robust back catalogue sales represented 80% of total revenue
(2021: 83%), demonstrating the Company's ability to extend the life
cycle of games, while adding new titles.
-- Three acquihires completed (Demagic, Scythe and Konfa Games)
plus the acquisition of Bossa's IP (Surgeon Simulation franchise, I
am Bread, I am Fish) for a total upfront cash consideration of
$4.2m.
-- Successfully relocated over a hundred people following the
invasion of Ukraine, and set up a new studio in Belgrade,
Serbia.
-- 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.
Directorate change:
-- After taking paternity leave in 2022, Luke Burtis, Chief
Operating Officer (COO) and Board Member, has decided to resign
from his board position and management role with immediate effect
to spend more time with his family. Luke has been a valuable member
of tinyBuild, and his contributions to strategy and operations in
the early years have been invaluable. The Board of tinyBuild would
like to express its gratitude to Luke for his contributions during
his tenure and wishes him all the best in his future
endeavours.
-- As the Company continues to move towards the more
decentralised structure set out at the Capital Markets Day in June
2022, the responsibilities of the COO role have been distributed
among a wider group of decision-makers, giving individuals and
teams more autonomy and accountability for their areas of
responsibility. Therefore, the Company does not currently intend to
appoint a replacement.
Employee Benefit Trust:
-- Since the Company's pre-close trading update released on 23
January 2023, the Employee Benefit Trust has purchased an
additional 419,200 ordinary shares on the market and now holds a
total of 573,500 ordinary shares. The EBT was set up in 2022 for
the benefit of current and future employees and will continue to
act independently of the Company to satisfy potential future option
exercises of vested options granted. The maximum amount of the loan
made available to the EBT at any time shall be capped at $10m.
Post Period End highlights:
-- Acquisition of NotGames, a UK-based studio, for an upfront
cash consideration of $1.5m plus max deferred consideration of
$4.2m, subject to stretched financial targets. NotGames is the
developer studio of Not For Broadcast, a critically acclaimed full
motion propaganda simulator. Not for Broadcast has a 94% positive
review score on Steam and it has been nominated for the Game
Developer Conference awards and BAFTA Game awards.
-- Recent announcements include the release date for I am
Future, a brand new VR title in the Hello Neighbor franchise (Hello
Neighbor: Search and Rescue), the VR version and the first DLC for
Not For Broadcast, and the first announcement for Punch Club 2:
Fast Forward, among others.
-- Hello Neighbor 2 users' review score continues to improve on
Steam ("very positive" in the past 30 days). The roadmap for 2023
will focus on improving gameplay features: better AI, expansion of
the Neighborhood with new unique characters, more complex
investigations and more lore exploration.
-- The first two episodes of Hello Neighbor animated series have
already collected over 1m viewers each. Season 1 will consist of 18
episodes, each 10-14 minutes long, all released during 2023.
tinyBuild teamed up with Man of Action, the creators of Ben 10, to
develop a new world that is at the same time coherent with and
wider than the narrative already developed in the games, books and
graphic novels.
Outlook
-- The pipeline for 2023 and beyond is strong and includes a
number of larger budget games alongside continuous investment in
the catalogue including updates, DLCs and console launches.
-- The timing of these investments and of new releases means
that the net cash position is expected to dip lower in the first
half of 2023 and to improve in the second half of 2023 to rise
above $26.5m by the end of December 2023, excluding potential
unannounced M&A.
-- The implication of the conflict in Ukraine and the evolving
macroeconomic situation impose caution and vigilance and tinyBuild
continues to carefully assess the position of its staff, its
exposure in terms of revenues and any other factor that may have an
impact on the business.
-- All considered, 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:
"Last year was possibly the hardest test of our strategy and it
validated the importance of investing in long-term, sustainable
franchises and the people behind them. We faced unprecedented
challenges, all while integrating acquisitions in different
geographies and moving to a decentralised approach to keep the
company agile at a larger scale."
"Our highly diversified portfolio of games continues to perform
well as we push deeper into a wider variety of platforms and
technologies. Our strong back catalogue performance supports an
acceleration in organic investments while M&A multiples adapt
to the changed environment. Finally, we see early signs of success
of our cross-media product and we will continue to experiment with
the aim to add additional revenue streams to our core
business."
"On a personal note, I want to thank Luke for his enormous
contribution to the Company and for his precious advice on so many
occasions. As a team, we support Luke's decision to focus on his
family and wish him all the best in the future."
Enquiries :
tinyBuild, Inc investorrelations@tinybuild.com
Alex Nichiporchik - Chief Executive Officer
and co-founder
Antonio Jose Assenza - Chief Financial
Officer
Giasone (Jaz) Salati - Head of M&A and
IR
Berenberg (Nominated Adviser and Joint
Broker)
Ben Wright, Mark Whitmore, Ciaran Walsh,
Milo Bonser +44 (0)20 3207 7800
Numis (Joint Broker)
Hugo Rubinstein, Tejas Padalkar +44 (0)20 7260 1000
SEC Newgate (Financial PR) tinybuild@secnewgate.co.uk
Robin Tozer, Harry Handyside, Molly Gretton +44 (0)7540 106366
About tinyBuild:
Founded in 2013, tinyBuild (AIM: TBLD) is a global video games
publisher and developer, with a catalogue of more than 70 premium
titles across different genres. tinyBuild's strategy is to focus on
its own intellectual property (IP) to build multi-game and
multimedia franchises, in partnership with developers.
tinyBuild is headquartered in the USA with operations stretching
across the Americas and Europe. The Group's broad geographical
footprint enables the Company to source high-potential IP, access
cost-effective development resources, and build a loyal customer
base through its innovative grassroots marketing.
tinyBuild was admitted to AIM, a market by the London Stock
Exchange, in March 2021.
For further information, visit: www.tinybuildinvestors.com .
Chairman's Statement
Building our portfolio, one IP at a time
The video games industry, much like its film industry cousin, is
a hit-driven business. Once in a blue moon, a single title can
boost a company or group's revenue overnight by adding a few
surprising zeroes to its bottom line, and the pursuit of such an IP
is the goal of most teams within game studios. Relying on a single
hit, though, is not sound strategy: as a creative product, there is
no blueprint for engineering a runaway success. If such a thing
were possible, we would have companies consistently churning out
billion-dollar franchises; the reality is that these come along
quite rarely even for the most sophisticated and experienced
creators. Counting on a single hit to materialise in order to meet
expectations is not a sustainable strategy.
For tinyBuild's strategy, the hit-driven characteristic of our
industry translates to operating with a portfolio approach. The
larger our portfolio grows, the more resilience and predictability
is built into our forecasts and operations. Overperforming titles
make up for those falling short of the estimations, and on
aggregate we are able to predict quite accurately our yearly
revenues while still leaving the door open to the eventual runaway
hit, the ultimate aim of every game project in production at the
Group's studios.
The alternative of hyping and overreliance on a particular
title, especially prior to its litmus test at launch, introduces
volatility that, in our view, is incompatible with market
expectations and our ambitions for growing the tinyBuild group at a
sustainable and consistent rate. Instead, we choose to invest our
energy in our teams by continually improving their skills,
capabilities and confidence, therefore increasing the chances of
their creative output beating their own ambitions and, eventually,
resulting in an unexpected hit that could translate in a
significant upside.
In the following pages you will see this very dynamic at play
with the fourth quarter 2022 delivering our most successful quarter
ever, against a disruptive background that saw teams and products
relocating from countries at war in the middle of their live
projects.
The investments made in the teams, a direct result of our
people-first approach, lays down the tracks for our new GaaS (Game
as a Service) launches in the years ahead. This represents a marked
change of pace towards the future that sees the tinyBuild studios
gradually leveraging its industry-leading community expertise to
the benefit of organically growing nascent live service games. By
expanding the portfolio with these new service titles, whose nature
is such that their launch is just the start of their growth curve,
we further our goal of increasing predictable and resilient
revenues.
We closed FY'22 with record revenue and EBITDA, keenly focused
on continuing the growth trajectory in the years ahead with a
rapidly expanding portfolio of games, one successful IP at a time.
The mindset of limiting downside with a broad base of titles, while
creating the conditions for the upside provided by a hit, is the
shared approach of the entire tinyBuild team. Our mission is clear,
and its execution is ever improving: make more, better games our
players fall in love with.
Henrique Olifiers
Non-Executive Chairman
CHIEF EXECUTIVE'S REVIEW
We recently crossed the two year mark since tinyBuild went
public. On March 9, 2021 we listed on the London Stock Exchange. It
is time to reflect on why we listed, and how it's going so far.
tinyBuild's mission is to build long-lasting, sustainable
franchises across multiple media formats. We know video games. It's
a great business. Our ultimate goal is to create franchises within
video games, and take them to other media - beyond interactive
entertainment, so that they outlive us as a generation.
WHY WE WENT PUBLIC
We considered listing in the US. Other exchanges looked even
more interesting in 2020. Specifically, the London Stock Exchange
already had a very well educated investor group and listed peers
with comparable business models, if different strategies. In the
US, you inevitably get compared to the big AAA companies and mobile
juggernauts which have very different prospects to ours.
I also wanted to make sure we have a mechanism to align
incentives in the Company. Having actual "shares" that are tradable
achieves this. IPO it was.
I started my career playing video games professionally, and
ended up in game production. No formal education. Founded tinyBuild
while living in the Netherlands before we became a US company. Then
I moved to the US. We have people scattered all over the world, and
we all have a passion for playing and making video games.
DEALING WITH THE UPS AND DOWNS
It's easy to go insane when looking at your share price live on
screen. I see many people obsessing over it. Our shares have been
volatile and it means that the share price can move up or down by
5% or even 10% in a day, but that volatility doesn't alter the
fundamental value of the business.
With that in mind, the market has definitely gone down over the
past half year, but it doesn't impact our operations or long term
vision. We dealt with relocating over 100 people in a time of war,
so we can manage a turbulent share price. The key is to not make
short term decisions that may impact your long term growth
potential. Every decision we make needs to get us incrementally
closer to the long term goal.
From a personal perspective, running a public company is an
amazing experience, one which I wouldn't necessarily recommend to
everybody. People who know me may note this peculiar character
trait of being able to focus on a specific issue at the time. It's
important to know what you can impact, and spend your energy on
that. Obsessing over situations you can't change is the biggest
waste of time (the only finite resource we have) for any management
team.
DECENTRALISED STRUCTURE
As of right now we operate a dozen internal studios working on
our own franchises. The first catalyst was the acquisition of the
development team of Hello Neighbor, and from there we started
learning and building how to operate studios. We learned the hard
way that it's better to decentralise as much as possible. You can't
just go from being a publisher to suddenly running studios. It's a
gradual process where you build up muscle, experience and
discipline.
At one point just as we went public, it became clear that growth
brings bottlenecks. Especially when it comes through rapid hiring.
I've seen this happen in companies experiencing rapid headcount
growth and didn't want to end up in the same trap. So, we started
decentralising.
It's a painful process where instead of having departments and
department leads (directors/heads/ managers), you build
multi-disciplinary teams that focus on the product itself. Instead
of having 50 people spread across 5 different disciplines (i.e.
marketing, production, community management, etc) we have groups of
3-7 people working on specific products - and only those products.
Instead of having product-centric decisions go through a director
(bottleneck), they are decided within the product group itself.
It's definitely a journey to get to such a structure, as you need
to be extremely confident in your people. Most experienced
professionals will have grown up in a traditional department
structure, and the natural career growth is to become a manager -
we have the opposite, everyone is hands on, including myself, and
able to assist team mates. This is how tinyBuild was when we were 5
people, and that magic scaled to where we are now.
A simplified way to look at our structure is this: we have a
supporting team at the top to keep the rain out, and supporting
team below to make sure the company has a solid foundation with
product groups working directly on products from both internal and
external studios. The goal is to give as much ownership as possible
to people actually working on products.
What happens when you have the right people is that everyone
feels involved. Everyone has direct ownership. It's an empowering
feeling. Alongside these product groups you build supporting
layers. HR, development services (localisation/ QA), finance,
contracts management -- those exist as supporting layers for the
product groups.
This structure allowed us to start delivering games everywhere
all at once. To both consoles/ PC, and mobile. If you want to
create a franchise, it needs to be present on as many relevant
platforms as possible. Any developer that's launched games to
multiple platforms understand the major challenges involved.
STEPPING UP INVESTMENTS
Investing in long-term, sustainable franchises and the people
behind them was validated as crucial during the unprecedented
challenges we faced last year. In 2022, we accomplished a
remarkable feat by shipping three titles in a row with a budget of
$1 million or more and by the end of 2022, we had already achieved
an average return of 1.9x.
We proved our publishing team is capable of handling larger
projects, delivering them across platforms, on time, quality and
budget. A great achievement in normal times, an outstanding
achievement during the year we relocated over 100 people in a time
of war.
We are now ready to step up investments and take advantage of
opportunities created by an uncertain macroeconomic environment. We
did not plan for the cost of living crisis or geopolitical
instability, it is more like being prepared and ready for the
unknown. One example is when we set up the $35m revolving credit
facility with Bank of America, shortly after the IPO. Now we have
an extra level of safety and more flexibility if required.
Counting on a publishing team that can deliver big games across
various platforms such as PC, console, mobile, and VR, means that
we can now confidently invest in games with a budget $1-5m and 2-5
year development cycle when peers are forced to retrench and the
most interesting opportunities become more affordable.
In 2022 we found that M&A multiples were often anchored to
unrealistic expectations, while we were having much more productive
discussion with development studios working on new high-potential
games. That's why we stepped away from some potential acquisitions
and preferred to invest more directly.
Every week the executive team sits down and reviews all options.
Every week we approach capital allocation decisions as if it was
the first time, with no sacred cows and the determination to
uncover new opportunities that have the right ingredients, both in
terms of financial upside and strategic fit. This is not a linear
process and sometimes we go for months without finding anything
exciting, sometimes we can make decisions on many projects at
once.
In 2023 we will continue to invest for the long term with the
same down-to-earth approach, expecting a minimum 2x return on our
investments and looking at the whole spectrum of options ahead of
us. As the founder and tinyBuild shareholder, I can't see a better
way to create value long term.
CROSS MEDIA
Another part of our strategy since before the IPO days, is our
focus on cross media. I believe we are working on a truly
groundbreaking TV Series for Hello Neighbor. With the writers
behind Ben 10, Sonic, and Big Hero Six - we have an all-stars team
and a division dedicated to bringing games to linear media, and to
merchandise. We've proven we can produce books with over 4 million
novels sold, now it's time to prove we can produce TV content of
the highest quality.
We could go the easy way about it and ask one of the big
platforms to fund the project, leaving us a thin profit margin and
possibly having a say in how we have to go about it. Instead we
preferred to make the investment to deliver what we see as a very
innovative product, that has value both as a standalone TV series
and as a multiplier of our video game franchises.
We are excited about the developments of what we call a "canon
commercial". It's a canonically relevant piece of audiovisual
content such as cartoons that has the potential to drive the best
marketing possible. Just as cartoons were used to sell toys in the
90s, we can now use them to sell games.
In 2022 we launched the first two episodes of Hello Neighbor
animated series inside the games, an absolute first in terms of
marketing innovation - creating an immensely positive community
response, and fueling the continued hype for the Hello Neighbor
franchise. We have the whole first season being completed in 2023,
unveiling secrets that Hello Neighbor players have been waiting for
a long time for. And more to go after that with a low-risk,
EBITDA-neutral approach that allows us to experiment without
betting the house on anything specific.
THERE ARE NO SHORTCUTS
I've been working full-time since I was 14 years old, and I am
turning 35 this summer. Playing games professionally, writing about
the industry, marketing and producing games. What you learn is that
the world is unfair, and you should focus on what you can impact
and work on your skills. What you shouldn't do is take shortcuts.
Every couple of years there's a new shiny thing that you don't
fully understand why it's useful, and people are trying to sell you
on it. Don't let the hype influence your decision making.
There are no shortcuts in life or business. Anything you do
requires hard work, dedication, and love for what you do. Going
public was a way to allow us to continue growing, innovating, and
following our course and it's only the beginning of the journey. I
feel lucky for being able to experience this in an accelerated way.
Usually it takes companies years to go public, and to experience
huge swings in the price. We listed in under a year, and within the
past 2 years have seen insane highs and lows. It's humbling. It's
an experience, it's levelling up. And I'm happy we said no to most
"hyped" opportunities, such as going into social games a decade
ago, all the crypto-esque scams, selling JPGs, and always stayed
course.
OPTIMISTIC OUTLOOK
The market has been challenging. Still, I'm optimistic about the
industry in general. In 2023 we will be seeing plenty of
groundbreaking AAA titles, alongside standout AA/indie games that
really set new trends. Our goal is to make sure we deliver high
quality games on as many platforms as possible, and pave the way
for them to become franchises. I can't wait until we start
revealing our upcoming products in 2023 and beyond.
Alex Nichiprochik
CEO and Founder
Chief Financial Officer's Review
2022 saw a resilient financial performance for tinyBuild, both
in terms of back catalogue and in terms of new games, in a
challenging geopolitical and macroeconomic environment. Nine new
titles were released, and the company closed the year with a
portfolio of over 80 games. In addition, tinyBuild grew with four
acquisitions, including Bossa Studio's IP.
Revenue
tinyBuild saw total revenues increase 21% (2021: 39%) from
$52.2m to $63.3m, including the consolidation of Versus Evil and
Red Cerberus, acquired in November 2021. tinyBuild's revenue is
generated mainly from game sales on various platforms and a variety
of platform deals (e.g. subscription programs, development
partnerships and exclusivity agreements). Events include primarily
revenues from DevGAMM, our game developers conference operator,
which demonstrated incredible resilience in the face of the
invasion of Ukraine.
Revenue generated from own-IP (1st and 2nd party games)
decreased slightly to 77% of gaming revenues (2021: 81%), as a
result of the consolidation of primarily third-party publisher
Versus Evil. Our strategy is to continue to expand our own-IP
portfolio, which will support underlying adjusted EBITDA margin
growth in the long term.
Adjusted EBITDA and Operating Profit
Adjusted EBITDA increased from $22.2m to $24.4m in 2022, a
growth of 10%, largely driven by solid organic performance and the
consolidation of inherently lower margin Versus Evil and Red
Cerberus. The ongoing decentralisation process and the continuous
shift toward own-IP support further margin increase in the medium
terms, though the progression will depend on the revenue mix.
Adjusted EBITDA is presented net of amortisation of development
costs, excluding share-based compensation expenses, amortisation of
purchased IP and other intangible assets and exceptional costs,
giving a clear picture of the underlying business progression.
Development costs for own IP are now amortised over a 36 month
period, in line with industry standards, to reflect the extended
life-cycle of the games.
Operating profit increased 27% to $15.9m (2021: $12.5m) mostly
as a result of lower exceptional charges (e.g. relocation costs
relating to the war in Ukraine) and lower share-based compensation
costs that dropped for the second year in a row.
Exceptional charges for 2022 include $1.7m for staff relocation
following the invasion of Ukraine, where the situation remains
uncertain and management cannot exclude further charges in the
future. The $11.1m writedown relating to Versus Evil and Red
Cerberus is offset by the decrease in contingent consideration
($11.1m other operating profit), resulting in no material impact on
operating profit.
Interest income and taxation
Interest income was $0.1m (2021: $0.0m) and taxation increased
to $4.4m (2021: $4.3m), mainly due to changes in deferred tax due
to new US tax legislation coming into effect.
Financial Position
In 2022, the net cash position decreased to $26.5m from $48.8m,
mainly driven by larger investments in new games including a small
number of larger budget titles. Capitalised software development
costs, increased from $15.1m to $35.8m in 2022 reflecting a larger
number of organic opportunities and investments in the upcoming
pipeline releases.
Following the customary annual test, goodwill has been reduced
from $13.2m to $3.7m, reflecting a downward revision for the
carrying value for Versus Evil and Red Cerberus, a decrease which
is offset by an equal decline in contingent consideration. IP has
increased from $18.6m in 2021 to $23.1m in 2022 primarily due to
identifiable assets from the acquisition of Demagic, Bossa IP and
Konfa Games.
tinyBuild currently still holds a $35m revolving credit line
with Bank of America, which remains undrawn.
Cash Flow
Cash flows from operating activities increased from $13.3m to
$19.3m thanks to lower exceptional and tax charges more than
offsetting increased marketing costs and the adverse impact of
timing differences. Cash generated from operations include an add
back of $1.7m for share based payments in the current year (2021:
$2.5m)
Acquihires and Acquisitions
In 2022 tinyBuild acquihired three studios and Bossa's IP for a
total upfront cash payment of $4.2m. In April 2022, tinyBuild
acquihired DeMagic, a porting studio based in Serbia. In August
2022, tinyBuild acquihired Konga Games (Despot's Game) and Bossa IP
(Surgeon Simulator franchise, I am Bread and I am Fish), a related
party transaction. In December 2022, tinyBuild acquihired the
studio Scythe (Happy's Humble Burger Farm).
Events after the reporting date
In March 2023, after taking paternity leave in 2022, Luke
Burtis, Chief Operating Officer (COO) and Board Member, announced
his resignation with immediate effect to spend more time with his
family. As the Company continues to move towards the more
decentralised structure set out at the Capital Markets Day in June
2022, the responsibilities of the COO role have been distributed
among a wider group of decision-makers, giving individuals and
teams more autonomy and accountability for their areas of
responsibility. Therefore, the Company does not currently intend to
appoint a replacement.
In March 2023 tinyBuild acquired NotGames (Not for Broadcast),
for an upfront cash consideration of $1.5m plus max deferred
consideration of $4.2m, subject to stretched financial targets.
NotGames is the developer studio of Not For Broadcast, a critically
acclaimed full motion propaganda simulator.
TINYBUILD INC.
CONSOLIDATED UNAUDITED STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEARED 31 DECEMBER 2022
2022 2021
Unaudited
Note $'000 $'000
Revenue 63,295 52,153
Cost of sales (20,687) (18,112)
Gross profit 42,608 34,041
Administrative expenses:
- General administrative expenses (34,403) (14,469)
- Share-based payment expenses (1,726) (2,452)
- Exceptional costs (inc. IPO
and Ukraine invasion) (1,678) (4,588)
Total administrative expenses (37,807) (21,509)
Other operating income 11,122 -
Operating profit 15,923 12,532
Finance costs (73) (8)
Finance income 80 -
Profit before tax 15,930 12,524
Income tax expense (4,417) (4,281)
Profit for the year 11,513 8,243
Other comprehensive income net
of taxation
Exchange differences on translation 7 -
of foreign operations - may be
reclassified to profit and loss
Total comprehensive income for
the year 11,520 8,243
Attributable to:
Owners of the parent company 11,545 8,268
Non-controlling interests (32) (25)
11,513 8,243
Basic earnings per share ($) 5 0.057 0.043
Diluted earnings per share ($) 5 0.056 0.042
Adjusted EBITDA* 6 24,355 22,239
*Adjusted EBITDA is a non-GAAP measure and is defined as
earnings before interest, tax, depreciation, amortisation
(excluding amortisation of capitalised software development costs),
share-based payments expenses and other significant one-off
expenses.
TINYBUILD INC.
CONSOLIDATED UNAUDITED STATEMENT OF FINANCIAL POSITION
AS AT 31 DECEMBER 2022
2022 2021
Unaudited
ASSETS Note $'000 $'000
Non-current assets
Intangible assets 7 80,384 57,156
Property, plant and equipment:
- owned assets 795 41
- right-of-use assets 341 528
Trade and other receivables 406 266
Total non-current assets 81,926 57,991
Current assets
Trade and other receivables 25,382 15,569
Cash and cash equivalents 26,496 48,832
Total current assets 51,878 64,401
TOTAL ASSETS 133,804 122,392
EQUITY AND LIABILITIES
Equity
Share capital 204 203
Share premium 65,593 63,546
Warrant reserve 1,920 1,920
Translation reserve 7 -
Retained earnings 43,910 30,639
Equity attributable to owners of
the parent company 111,634 96,308
Non-controlling interest (43) 137
Total equity 111,591 96,445
LIABILITIES
Non-current liabilities
Lease liabilities 97 277
Contingent consideration - 6,336
Deferred tax liabilities 1,800 2,345
Total non-current liabilities 1,897 8,958
Current liabilities
Trade and other payables 20,046 9,290
Contingent consideration - 4,793
Contract liabilities - 2,645
Lease liabilities 270 261
Total current liabilities 20,316 16,989
Total liabilities 22,213 25,947
TOTAL EQUITY AND LIABILITIES 133,804 122,392
TINYBUILD INC.
CONSOLIDATED UNAUDITED STATEMENT OF CHANGES IN EQUITY
FOR THE YEARED 31 DECEMBER 2022
Share Share Warrant Translation Retained Total Non-controlling Total
capital premium reserve reserve earnings equity interest equity
attributable
to owners
of the
parent
company
$'000 $'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/(loss) for
the year - - - - 11,545 11,545 (32) 11,513
Other
comprehensive
income:
Foreign exchange
differences
on the
translation of
foreign
operations - - - 7 - 7 - 7
Total
comprehensive
income
for the year - - - 7 11,545 11,552 (32) 11,520
Transactions
with owners in
their capacity
as owners:
Dividends paid to
non-controlling
interests - - - - - - (148) (148)
Issue of shares
on exercise
of options - 28 - - - 28 - 28
Issue of shares,
net of
transaction
costs 1 2,019 - - - 2,020 - 2,020
Share-based
payment charge - - - - 1,726 1,726 - 1,726
Total
transactions
with owners 1 2,047 - - 1,726 3,774 (148) 3,626
Balance at 31
December 2022 204 65,593 1,920 7 43,910 111,634 (43) 111,591
TINYBUILD INC.
CONSOLIDATED UNAUDITED STATEMENT OF CHANGES IN EQUITY
FOR THE YEARED 31 DECEMBER 2021
Share Share Warrant Translation Retained Total Non-controlling Total
capital premium reserve reserve earnings equity interest equity
attributable
to owners
of the
parent
company
$'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000
Balance at 1
January 2021 1 18,674 - - 19,919 38,594 162 38,756
Profit/(loss)
and total
comprehensive
income for
the year - - - - 8,268 8,268 (25) 8,243
Transactions
with owners in
their capacity
as owners:
Share split 178 (178) - - - - - -
Issue of
shares, net
of
transaction
costs 23 46,816 - - - 46,839 - 46,839
Issue of
shares on
exercise
of options 1 154 - - - 155 - 155
Issue of
warrants - (1,920) 1,920 - - - - -
Share-based
payments - - - - 2,452 2,452 - 2,452
Total
transactions
with owners 202 44,872 1,920 - 2,452 49,446 - 49,446
Balance at 31
December 2021 203 63,546 1,920 - 30,639 96,308 137 96,445
TINYBUILD INC.
CONSOLIDATED UNAUDITED STATEMENT OF CASH FLOWS
FOR THE YEARED 31 DECEMBER 2022
2022 2021
Unaudited
$'000 $'000
Cash flows from operating activities
Cash generated from operations 19,259 13,290
Net cash generated by operating activities 19,259 13,290
Cash flows from investing activities
Acquisition of subsidiaries, net of
cash acquired - (11,784)
Software development (35,780) (15,085)
Purchase of intellectual property (4,150) (10,832)
Proceeds on disposal of intangible
assets - 45
Purchase of property, plant and equipment (1,235) -
Net cash used in investing activities (41,165) (37,656)
Cash flows from financing activities
Repayment of borrowings - (13)
Proceeds from issuance of shares,
net of transaction costs - 46,839
Proceeds from exercise of share options 28 155
Payment of principal portion of lease
liabilities (310) (96)
Dividends paid to non-controlling (148) -
interests
Net cash generated by/(used in) financing
activities (430) 46,885
Cash and cash equivalents
Net (decrease)/increase in the year (22,336) 22,519
At 1 January 48,832 26,313
At 31 December 26,496 48,832
TINYBUILD INC.
NOTES TO THE CONSOLIDATED UNAUDITED FINANCIAL STATEMENTS
FOR THE YEARED 31 DECEMBER 2022
1 GENERAL INFORMATION
TinyBuild Inc. ("the Company") is a private 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.
2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of preparation
The preliminary results for the year ended 31 December 2022 are
unaudited. The financial information set out in this announcement
does not constitute the Group's financial statements for the year
ended 31 December 2022.
This financial information should be read in conjunction with
the financial statements of the Group for the year ended 31
December 2021 (the "prior year financial statements"), which are
available from the Registrar of Companies.
Accounting policies
The Group's principal accounting policies used in preparing this
information are as stated on pages 42 to 49 of the prior year
financial statements. There has been no significant change to any
accounting policy from the date of the prior year financial
statements.
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 Board of directors, 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 considers 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 are shown below.
Game and merchandise royalties Year ended Year ended
31 December 31 December
2022 2021
Unaudited Audited
$'000 $'000
Owned IP 26,915 30,640
Third-party IP 13,105 9,231
40,020 39,871
Three customers were responsible for approximately 67% of the
Group's revenues (2021: three - 67%).
The Group has seven (2021: six) right-of-use assets located
overseas with a carrying value of $342,000 (2021: $528,000) and
tangible assets located overseas with a carrying value of $623,000
(2021: $nil). All other non-current assets are located in the
US.
4 REVENUE
An analysis of the Group's revenue Year ended Year ended
is as follows: 31 December 31 December
2022 2021
Unaudited Audited
$'000 $'000
Game and merchandise royalties 40,020 39,871
Development services 22,744 11,477
Events 531 805
63,295 52,153
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 and warrants to the extent that they
are deemed to be issued for no consideration in accordance with IAS
33.
Year ended Year ended
31 December 31 December 2021
2022
Unaudited Audited
$'000 $'000
Total comprehensive income attributable
to the owners of the company 11,545 8,268
Weighted average number of shares 203,421,359 191,241,890
Basic earnings per share ($) 0.057 0.043
Total comprehensive income attributable
to the owners of the company 11,545 8,268
Weighted average number of shares 203,421,359 191,241,890
Dilutive effect of share options 1,948,232 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 206,473,374 194,830,197
Diluted earnings per share ($) 0.056 0.042
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, brands and customer relationships,
acquisitions costs, exceptional costs relating to the conflict in Ukraine
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.
Year ended Year ended
31 December 31 December
2022 2021
Unaudited Audited
$'000 $'000
Profit for the year 11,513 8,243
Income tax expense 4,417 4,281
Finance costs 73 8
Finance income (80) -
Share-based payment expenses 1,726 2,452
Amortisation of purchased intellectual
property, brands and customer relationships 3,999 1,662
Depreciation of property, plant and equipment 747 117
Impairment of intangible assets 11,075
IPO related costs - 4,588
Ukraine related costs 1,678
Acquisition costs 329 888
Other operating income (11,122) -
Adjusted EBITDA 24,355 22,239
7 INTANGIBLE ASSETS
Purchased Software
Customer intellectual development
Goodwill Brands relationships property costs Total
$'000 $'000 $'000 $'000 $'000 $'000
Cost:
As at 1 January 2021 - - - 6,170 17,126 23,296
Additions - internally
generated - - - - 15,085 15,085
Additions - separately
acquired - - - 10,832 - 10,832
Additions - 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 - - - - 35,789 35,789
Additions - separately
acquired - - - 8,395 - 8,395
Transfers - - - 251 (251) -
As at 31 December 2022 13,202 1,815 4,261 29,966 65,697 114,941
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 - - - - 283 283
As at 31 December 2021 - 10 51 2,687 10,853 13,601
Amortisation charge for
the year - 121 609 3,269 5,787 9,786
Impairment charge for the
year 9,456 675 - 944 95 11,170
As at 31 December 2022 9,456 806 660 6,900 16,735 34,557
Carrying amount:
As at 31 December 2022 3,746 1,009 3,601 23,066 48,962 80,384
As at 31 December 2021 13,202 1,805 4,210 18,633 19,306 57,156
8 RELATED PARTY TRANSACTIONS
An analysis of key management personnel remuneration is set out
below:
Key management personnel remuneration Year ended Year ended
31 December 31 December
2022 2021
Unaudited Audited
$'000 $'000
Aggregate emoluments 2,217 3,037
Equity-settled share-based payments 88 2,159
2,305 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.
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.
There were no other related party transactions during the period
which require disclosure.
9 POST REPORTING DATE EVENTS
In March 2023, after taking paternity leave in 2022, Luke
Burtis, Chief Operating Officer (COO) and Board Member, announced
his resignation with immediate effect to spend more time with his
family. As the Company continues to move towards the more
decentralised structure set out at the Capital Markets Day in June
2022, the responsibilities of the COO role have been distributed
among a wider group of decision-makers, giving individuals and
teams more autonomy and accountability for their areas of
responsibility. Therefore, the Company does not currently intend to
appoint a replacement.
In March 2023, tinyBuild acquired NotGames (Not for Broadcast)
for initial consideration of $1.5m. The agreement contains
performance based earn-outs over the next three calendar years,
subject to operational targets being met. NotGames is the developer
studio of Not For Broadcast, a critically acclaimed full motion
propaganda simulator.
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END
FR ZZGZFLRRGFZM
(END) Dow Jones Newswires
March 29, 2023 02:00 ET (06:00 GMT)
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