REG - tinyBuild, Inc. - 2022 Half Year Results
27/09/2022 07:00
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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 Operations² 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 cycle
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 episode 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 (mailto: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) +44 (0)20 3207 7800
Mark Whitmore, Ciaran Walsh, Milo Bonser
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
(http://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
(https://www.wired.com/story/big-union-make-videogame-workers-lives-sane/) ).
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 PERIOD ENDED 30 JUNE 2022
TINYBUILD INC.
CONSOLIDATED CONDENSED STATEMENT OF COMPREHENSIVE INCOME / (LOSS)
6 months ended 30 June 2022 6 months ended 30 June 2021 Year ended 31 December 2021
Note
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 2021
2022
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 capital Share premium Warrant reserve Retained Total equity attributable to owners of the parent Non-controlling interest Total
earnings equity
$'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 capital Share premium Warrant reserve Retained Total equity attributable to owners of the parent Non-controlling interest Total
earnings equity
$'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 1 1,569 - - 1,570 - 1,570
9
Issue of shares on exercise of options - 28 - - 28 - 28
9
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 ended 30 June 2022 6 months ended 30 June 2021 Year ended 31 December 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 PERIOD ENDED 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 PERIOD ENDED 30 JUNE 2022
3 SEGMENTAL REPORTING (CONTINUED)
Game and merchandise royalties 6 months ended 30 June 2022 6 months ended 30 June 2021 Year ended 31 December 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 ended 30 June 2022 6 months ended 30 June 2021 Year ended 31 December 2021
Unaudited Unaudited Audited
An analysis of the Group's revenue is as follows: $'000 $'000 $'000
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 PERIOD ENDED 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 ended 30 June 2022 6 months ended 30 June 2021 Year ended
31 December 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 ended 30 June 2022 6 months ended 30 June 2021 Year ended
31 December 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 PERIOD ENDED 30 JUNE 2022
6 ADJUSTED EBITDA (CONTINUED) 6 months ended 6 months ended Year ended
30 June 2022 30 June 2021 31 December 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 1,754
relationships
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 INTANGIBLE ASSETS Purchased intellectual property Software development costs
Customer relationships
Goodwill Brands 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 PERIOD ENDED 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 $2.095 per share. The
2017 and 2019 RSAs vest in instalments every three months over the service
period and fully vested on IPO. The 2021 RSAs vest over 3 years in a 50:25:25
ratio. Each instalment has been treated as a separate share option grant
because each instalment has a different vesting period. This plan is
equity-settled. A reconciliation of RSAs is as follows:
30 June 2022 31 December
2021
Opening RSA outstanding 954,654 191,220
RSA granted - 954,654
RSA vested - (191,220)
Closing RSA outstanding 954,654 954,654
Weighted average remaining contractual life in years 2.38 2.88
The company has an Equity Incentive Plan that provides for the issuance of
non-qualified stock options to officers and other employees that have a
contracted term of 10 years and generally vest over four years. The stock
options are granted on shares issued by the company. A reconciliation of share
option movements is shown below:
Number of options outstanding Weighted average exercise price ($) Number of options exercisable Weighted average exercise price ($) Weighted average remaining 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 PERIOD ENDED 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 2021 27 September 2021 3 March 2021 3 February
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 2021
2022
Unaudited Audited
Number Number
Class of share
Ordinary shares of $0.001 each 203,528,087 202,507,081
30 June 31 December 2021
2022
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 PERIOD ENDED 30 JUNE 2022
10 CASH GENERATED FROM OPERATIONS 6 months ended 6 months ended Year ended
30 June 2022 30 June 2021 31 December 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 ended Year ended
30 June 2022 30 June 2021 31 December 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 PERIOD ENDED 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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