REG - tinyBuild, Inc. - Results for the year ended 31 December 2021
29/03/2022 07:00
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RNS Number : 3620G tinyBuild, Inc. 29 March 2022
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29 March 2022
tinyBuild, Inc
("tinyBuild" or the "Company")
Preliminary Unaudited Results for the year ended 31 December 2021
tinyBuild, a premium video games publisher and developer with global
operations, is pleased to announce its full year results for the 12 months
ended 31 December 2021, slightly ahead of expectations.
Financial Summary (unaudited):
(12 months ended December, $'000) 2020
Revenue 37,648 52,153 39%
Operating profit 7,664 12,532 64%
Profit before tax 7,700 12,524 63%
Basic earnings per share ($ cent) 2.8 4.4 57%
Operating cash flow 16,470 13,290 -19%
Net cash, at 30 December 26,313 48,832 86%
Adj. EBITDA(1) 15,275 22,239 45%
Adj. EBITDA margin 40.6% 42.6%
(1 )Excludes share-based compensation expenses, and exceptional items (e.g.
IPO cost) includes amortisation of Development costs
Financial highlights:
● Strong revenue growth of 39% to $52.2m (2020: $37.7m), slightly
ahead of expectations, reflecting a strong performance in the last part of the
year from new titles including Potion Craft and back catalogue sales.
● Record Adj. EBITDA of $22.2m (2020: $15.3m) up 45% y-o-y growth,
slightly ahead of expectations. Margin increased to 42.5% (2020: 40.6%)
primarily due to the ongoing shift towards own-IP versus third party IP.
● Operating profit increased by 64% to $12.5m (2020: $7.7m), as a
result of lower share-based payment expenses. Profit before tax and basic EPS
also grew by a similar amount to $12.5m and 4.3c, respectively.
● Operating cash flow was $13.3m, below the previous year record of
$16.5m, as a result of $5.5m IPO costs .
● Net cash as of 31 December 2021 was $48.8m compared to $26.3m as
at 31 December 2020), after accounting for gross proceeds of £36.2m ($50m)
from the IPO, acquisitions, and a significant increase in development costs.
Operational highlights:
● Portfolio increased to over 70 titles (30 at the time of the IPO),
thanks to addition of Versus Evil publishing label and nine new titles
launched by tinyBuild during FY 2021.
● Contribution to revenues from first-/second-party games increased
to 81% of Group revenues (2020: 70%), supporting long-term margin expansion.
● Robust back catalogue sales represented 83% of total revenue
(2020: 75%), demonstrating the Company's ability to extend the life cycle of
games, while adding new titles.
● Five acquihires of games studios completed (We're Five, Hungry
Couch, Doghelm, Animal and Bad Pixel) for a total upfront consideration of
$12.7m (cash and shares).
● Major acquisition of Versus Evil, a US-based publisher focused on
RPG and strategy games, and of Red Cerberus, a QA and testing services
provider based in Sao Paolo, Brazil. The upfront consideration was $12.5m,
with a maximum consideration of up to $31.3m.
Post Period End highlights:
● tinyBuild has been working hard to support staff (employees and
independent contractors) and their families in areas affected by the war in
Ukraine. At the time of print, all employees and independent contractors have
moved out of the riskiest areas and plans are in place to welcome anybody
fleeing the conflict in our studios across Europe. We continue to monitor the
situation carefully and have further contingency plans in place.
● Versus Evil signed four new titles, all own-IP, since the
acquisition closed in November 2021. Red Cerberus is looking to expand its
capacity to fulfil a growing pipeline of potential new contracts.
● Deadside development team grew to ten people and accelerated its
growth plans. The latest update 0.2.7 (re-spawn beacons) was released from
Kyiv on 4th March. A combination of more content and renewed marketing efforts
means Deadside has been the best-selling game in the tinyBuild portfolio for
the past few weeks.
● Potion Craft (early access released in September 2021), continued
to perform strongly after topping the Steam Global Sales charts at launch and
it has now crossed 600,000 downloads.
● Not for Broadcast released its last episode and moved to version
1.0 in January 2022, recording over 300,000 downloads since its launch in
2019.
Outlook
● The pipeline for 2022 and beyond is strong and includes the closed
Beta pre-orders (7 April 2022) for Hello Neighbor 2, that has seen a constant
increase in the number of followers for over a year now.
● The implication of the conflict in Ukraine and the fluid
macroeconomic situation impose caution and vigilance in the medium and long
term. In particular, 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 has been an incredible ride, from the IPO to our largest deal ever
with Versus Evil and Red Cerberus opening up new avenues of growth. Our back
catalogue has performed strongly, and we have an even more diverse revenue mix
in terms of titles, genres, geography and audience. Our strategy to accumulate
owned-IP has resulted in a strong financial performance and has translated
into an improved profitability.
"A growing pipeline of high-quality titles set for release in the next two
years, the majority of which are first and second-party, means we can build
more multi-game franchises and emulate the success of Hello Neighbor. It is
great to see an enlarged fanbase engaging with Hello Neighbor 2, and we look
forward with confidence to the closed Beta pre-orders. With books, graphic
novels, and early work for a potential animated TV series, Hello Neighbor
provides a template of how we might for many of our future games.
Our goal is to expand our position as a leading global developer and
publisher, focusing on IP ownership while creating long-term scalable
franchises that will survive for generations regardless of the media. 2021 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 and co-founder
Luke Burtis - Chief Operating Officer and co-founder
Antonio Jose Assenza - Chief Financial Officer
Giasone (Jaz) Salati - Head of M&A and IR
Berenberg (Nominated Adviser and Sole Broker) +44 (0)20 3207 7800
Ben Wright, 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 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
(http://www.tinybuildinvestors.com) .
Chairman's Statement
Level One complete, here comes the Boss
As tinyBuild (AIM:TBLD) enters its second year as a publicly traded company,
I'm honoured to update shareholders on the success of our strategy, games and
teams during a period marked by very difficult events.
Looking back to tinyBuild's listing in March 2021, the macro question lurking
on the horizon was how much of the pandemic's tailwinds we would shed in the
course of the year, given the significant bump the games industry sales
experienced during the lockdowns prior. Despite the logical rationale that
such exceptional growth couldn't prove permanent, it was a longstanding belief
held by game developers and publishers alike that, once a gamer, always a
gamer - thus privately most of us expected to retain the attention of these
newfound audiences.
The games industry, much like every other sector, has had to contend with many
recent setbacks, particularly the global chip shortage. This affected the
manufacturing of consoles, mobiles and PC gaming GPUs, limiting the games
industry's full potential. Despite this challenge, last year saw 1.4% sales
growth for the whole industry and 5.3% growth in the number of players,
corroborating our expectations: not only did we retain the lockdown audience
we gained, we expanded our reach through the excellence of our content.
At tinyBuild, we executed our M&A strategy aimed at expanding our
capabilities in IP generation, games development and publishing, while
continuing to invest organically to launch more games on more platforms. The
industry's growth corroborated our approach of boldly investing in our future.
In November, the acquisition of Versus Evil (USA) and Red Cerberus (Brazil)
bolstered our publishing capabilities in RPG and Strategy genres. The
acquisitions also added Quality Assurance functions to the Group, and improved
our in-house porting facilities. This has helped make our titles as widely
available as possible from day one.
With Bad Pixel and Animal studios joining the group, we continued our venture
into GaaS (Games as a Service). GaaS offers higher long tail revenue and
longer life cycles for games thanks to titles that are played over and over as
a hobby, translating into greatly improved ROI.
And with DogHelm we bring into the Group a critically acclaimed IP - Streets
of Rogue - and a development partner whose historic relationship with
tinyBuild made the acquisition an obvious move. Added to the studios acquired
pre-IPO (We're Five Games and Hungry Couch), tinyBuild can execute on its
strategy for the foreseeable future. Now we aim to improve our internal
management processes to ensure the seamless integration of the new studios,
team members and operational units. We are aware that scaling up creative and
technical teams is a big undertaking in its own right.
Furthermore, new monetisation models are being considered to adapt in light of
increasing inflation and its effect on our players around the world. We
continue to pursue opportunities for IP expansion in order to maximise our
engagement with our growing audiences.
2022 is going to be yet another exciting year for our teams. The mindset of
thriving in change is a defining aspect of tinyBuild's culture, a key element
that should prove particularly useful in the short to medium term global
entertainment landscape.
Finally, the appalling situation in Ukraine which directly impacts many
colleagues. Management's unique understanding of the region means contingency
plans had already been prepared and could be executed promptly to relocate
teams to safer locations, from both Ukraine and Russia. Critically, this
ensured the safety of our staff, and to their great credit, projects remained
on track.
In our second public annual report, we're proud to once again announce record
revenue and EBITDA, and a performance that exceeded the market's expectations.
This is testimony to the Executive team's strategic and delivery capabilities.
These results will add to our standing in the games industry and puts us in a
stronger position to deliver the Group's plans for FY 2022, and helps with
M&A.
Above everything, our focus remains on people, as demonstrated by one of the
lowest staff turnover in the industry. We recognise that an appropriate
share-based awards plan is important to retain key employees and to align
staff incentives with shareholders value creation for the long term. For that
reason, during FY22 we intend to implement a formal share-based incentive plan
and look forward to providing more details soon.
We hope the following pages provide valuable insight into our strategy and
validation of our strategy, building confidence in our ability to deliver an
exciting future for tinyBuild, its games, players and investors alike.
Henrique Olifiers
Non-Executive Chairman
CHIEF EXECUTIVE'S REVIEW
Over the last 15 years, I am proud to say we've built tinyBuild into a
tremendous global entertainment company - against all the odds. Personally, my
career started off during a global recession, few industry contacts, and with
a passport that didn't allow me any freedom of travel (Sadly, it still does
not, hence why I can't make it to the UK to present these results in person).
tinyBuild has gone through the 2014 Orange Revolution in Kyiv, the 2020-2021
global pandemic, and now as I'm writing this we're in the process of
extracting people to safety from the biggest war Europe has seen since my
grandfather was given a rifle at the age of 17. For me, the last few months
has put everything into context. What is really worth fighting for? Whom do
you want to surround yourself with? The experience of the last few months -
from starting a war room meeting to plan out logistics and routes in different
scenarios of a Russian invasion, to hitting the button to actually start
moving people.
The only constant here is people. People you want to work with, people you
trust - not just with work, but literally with your own life. This is what we
built. We built a company where colleagues trust each other with their own
lives.
The situation in Ukraine
The team behind Hologryph - who joined us as a first party studio in 2020 -
created a shelter location within Lviv in Western Ukraine, renting apartments,
setting up work spaces, helping everyone who was fleeing from the war zone,
until nobody was left behind. From there people who can - with their elderly
parents, kids, dogs, cats - would get support in crossing the border with
Poland, and then head out into either our Netherlands or Latvia studios. In
both locations I've welcomed everyone to my own home, setting up living spaces
and getting people everything they'd need while our HR team searches for more
permanent housing.
We are also supporting Russian colleagues who are no longer comfortable
staying in Russia. The issue is they, much like me, don't have freedom of
travel. They can't even go to the European Union. Nor can they get a visa in
today's situation. So we've implemented a complex extraction operation - as
flights were getting cancelled in real time - to get people out of Russia. The
first stage of this operation is complete, and we are setting up a new
tinyBuild location in the Balkans. We're getting an office and helping all
team members relocate. This will be a mid-term temporary location (unless
everyone loves it there and decides to stay!) for all departments who weren't
able to get into the EU. We will be figuring out visas from that location and
we are planning a third studio in Western Europe to help more people relocate.
Looking back at 2021
Current events in Ukraine puts last year into perspective. As a business, we
achieved record growth, through M&A and organically. We listed on the
London Stock Exchange, preparing our business for exponential growth. We have
proven success is not about the amount of games you launch but how you treat
them once they are launched.
For example, today our top selling game on PC is Deadside, by our studio, Bad
Pixel, which we acquihired in September 2021. Since then, Deadside has seen a
dramatic rise in concurrent users, sales, and downloadable content (DLC)
attachment rates. All of this was delivered through a series of well timed,
well designed updates to the game. We're approached Deadside as a
game-as-a-service product, an approach we have used on other titles. All of
our titles in Early Access on PC (Deadside, Potion Craft, Despot's Game) are
seeing meaningful engagements with every single update, and have player
communities excited for when those titles get to version 1.0 and launch on
more platforms.
Our original franchise, Hello Neighbor, continues to grow and expand into new
channels. We have a team of world-class writers working on the Hello Neighbor
Animated Series and the new video game, Hello Neighbor 2. Our goal is to
elevate the franchise with both interactive and linear products that fans
would love, so that both complement each other with the aim to create a pop
culture phenomenon. We're pushing boundaries on the animation front - because
we don't have the restrictions typically imposed by a mainstream TV network.
The series will be dark, funny, thought provoking, and touches the very core
of human relationships. How far would you go to save your loved ones? That's
the theme of Hello Neighbor, explored deeper in Hello Neighbor 2 and in the
upcoming Animated Series.
Finally in 2021, we increased our publishing capability, as well as our game
development expertise. As of today, we have two publishing labels (tinyBuild,
Versus Evil), plus Bad Pixel will keep its own operations and self-publish
Deadside, since 'games as a service' doesn't fit well into a traditional
publishing pipeline. We anticipate that more of our studios will become their
own publishing labels as they gradually build up internal publishing capacity
tailored to their genre, platform, or specific community.
Growth Strategy
tinyBuild has a dual approach to generating long-term shareholder value
through organic growth and M&A. On the one hand, the Company develops
franchises that will potentially live for generations, independent of the
medium. On the other hand, tinyBuild continues to diversify its portfolio, its
geographic presence, its revenue sources and its business model to reduce
dependencies on any single factor and increase visibility on future revenue.
Organic growth
tinyBuild focuses on three main avenues to drive organic growth. First, the
Company leverages existing partnerships and in-house developers to:
● Increase the quality and diversity of its pipeline, by signing new
titles with particular focus on genre-defining ideas (e.g. Tinykin)
● Invest in and support acquired studios to fully realize the
potential of the wider portfolio (e.g. Deadside).
● Empower acquired publishing labels to consolidate their reach in new
genres (e.g. Versus Evil in RPG and strategy)
● Create new IP by enabling creative teams to realize their full
potential by exploring new directions (e.g. Potion Craft)
● Capitalize on the symbiotic relationship with influencers while
expanding our presence on new social media channels, to retain tinyBuild's
strategic marketing advantage.
Second, tinyBuild follows a multi-game and Game as a Service franchise model
expansion to:
● Use the success of the Hello Neighbor IP as a blueprint for
expanding a game into a multi-title franchise (e.g. Streets of Rogue 2 and
Totally Reliable Adventure Park)
● Extend IP lifespan by regularly adding new content to existing
titles (e.g. Graveyard Keeper's DLCs)
● Port successful titles onto different platforms using mobile
primarily as a marketing tool (e.g. Secret Neighbor on iOS)
● Add cross-play options to further extend the audience for the most
established franchises (e.g. Hello Neighbor 2)
Lastly, tinyBuild works specifically on its own-IP portfolio to:
● Pursue multimedia opportunities such as books and graphic novels,
providing off-screen extension (e.g. Hello Neighbor)
● Produce TV series of successful titles while retaining ownership of
it's IP opening the door to potentially larger revenue streams
● Use merchandise as marketing and customer engagement tools which can
also generate, albeit modest, revenues.
M&A strategy
The Group's M&A strategy is evolving, reflecting tinyBuild's growing
success and ambitions. Since 2013, tinyBuild has completed seven acquihires
including DogHelm, Animal and Bad Pixel in the second half of 2021. As a
result of these transactions, tinyBuild expanded its own-IP portfolio to
include Streets of Rogue (June 2021), Rawmen (August 2021) and Deadside
(September 2021).
In the acquihire model, the consideration typically consists of cash and
tinyBuild shares to help align the goals of tinyBuild with those of the key
developers. While the acquihire model will remain an important part of the
inorganic growth strategy, tinyBuild will utilise other models too, as it
looks to increase its access to in-house development talent, games services,
publishing labels and diversify its business model. The growing in-house
capability in terms of development talent, games services, and publishing
gives the Group greater visibility on the whole process and protects the
business against potential delays caused by lack of access to third-party
resources.
More opportunities for acquihires and larger-scale acquisitions may arise in
the future, to further scale and diversify the business.
Outlook
Our pipeline is growing strongly, year after year. However, for us quality
comes above quantity. We take a portfolio approach about how many games we
will launch in a given year and focus on the lifetime of each title. When
titles like Streets of Rogue (launched into 1.0 in 2017, developed by Doghelm,
a 1st party studio) break the top10 portfolio daily revenue, you know it's a
great title with phenomenal potential for the upcoming sequel. We're not in
the launch-and-forget business, we're in the plant a seed and see-it-grow
business.
Perspective is everything. With all the challenges we're facing, work doesn't
actually stop. Everyone at tinyBuild loves video games. There are many more
jobs out there with better hours, more security, and less stress. We're here
because we love what we do. And we're being bonded by a - albeit absolutely
terrible - unique experience that we believe will enable us to grow into the
strongest, most resilient entertainment company in the world.
The implication of the conflict in Ukraine and the fluid macroeconomic
situation impose caution and vigilance. Our priority remains staff's safety
and well-being. Once again, despite the odds, we look forward with
determination and we are confident that we will deliver results at least in
line with expectations, plus accretive acquisitions.
Alex Nichiprochik
CEO and Founder
Chief Financial Officer's Review
2021 saw another strong financial performance for tinyBuild, ahead of
ambitious targets set by management, both in terms of back catalogue and in
terms of new games. Nine new titles were released, all of them being own-IP
from tinyBuild, and the company closed the year with over thirty games in
pipeline. In addition to game releases and new games in the pipeline, the
tinyBuild's family grew with seven acquisitions, including the complimentary
publisher Versus Evil.
Revenue
tinyBuild saw total revenues increase 39% (2020: 35%) from $37.6m to $52.2m.
tinyBuild's revenue is generated mainly from game's sales on various
platforms, a variety of platform deals (e.g. subscription programs,
development partnerships and exclusivity agreements). The addition of Red
Cerberus starting from November 2021 also adds fast-growing service revenues
from QA and testing. Last but not least, events include primarily revenues
from DevGAMM, our Eastern Europe game developers conference, which was held
both, in person and online in 2021.
Revenue generated from own-IP (1st and 2nd party games) increased to 81% of
gaming revenues (2020: 70%). Our strategy is to continue to expand own-IP
portfolio, which will also support underlying adj. EBITDA margin expansion in
the long term.
Adjusted EBITDA and Operating Profit
Adjusted EBITDA is presented net of amortisation of development costs, and
excluding share-based compensation expenses, giving a clear picture of the
business progression. It increased from $15.3m to $22.2m in 2021, a growth of
45%, largely driven by strong 2021 revenue and relative stability with
tinyBuild's operating expenses. The increase in margins to 42.5% in FY 2021
(2020: 40.6%) is consistent with a higher share of revenues from own-IP titles
and the inherently higher profitability attached to back catalogue sales that
increased to 83% of group sales in 2021 (2020: 75%).
Operating profit increased to $12.6m (2020: $7.6m) mostly as a result of lower
charges relating to share-based compensation which were unusually high in 2020
due to accelerated vesting of options held by management in 2020.
Interest income and taxation
Interest income was $0m (2020: $0.1m) and taxation $4.3m (2020: $2.8m).
Financial Position
In 2021, the net cash position increased from $26.3m to $48.8m, mainly driven
by a successful IPO on the AIM in the LSE, while the company accelerated
investments in new titles and focused on acquisitions. Capitalized software
development costs, mainly consisting of porting, localization and developer
salaries, increased from $10.0m to $15.4m reflecting the increase in spend for
upcoming pipeline releases. Goodwill of $13.2m appears for the first time, due
to strategic acquisition of Versus Evil and Red Cerberus in November of 2021.
IP has increased from $5.1m in 2020 to $18.6m in 2021 because of identifiable
assets from the aforementioned acquisition. tinyBuild currently still holds
the 25 million USD credit line with Bank of America.
Cash Flow
Cash flows from operating activities decreased from $16.4m to $13.3m as
tinyBuild receivables and prepaids increased ($6.1m). Accrued expenses and
other current liabilities saw an increase in 2021 of $1.9m. It's important to
note that said timing issues can fluctuate year over year and variability here
is to be expected especially during the Holiday season and partners' payment
terms. Cash generated from operations include an add back of $2.5m for share
based payments in the current year (2020: $5.8m)
Acquihires and Acquisitions
In 2021 tinyBuild made seven acquisitions for a total upfront payment of
$25.5m (cash and shares). In February of 2021, tinyBuild acquired We're Five
(TRDS) and Hungry Couch (Black Skylands). In June of 2021, tinyBuild elevated
Streets of Rogue from 3(rd) party to 1(st) party via acquisition of DogHelm.
In August 2021, tinyBuild acquired the studio Animal (Rawmen). In September of
2021 tinyBuild acquired Bad Pixel (Deadside). Finally, in November of 2021,
tinyBuild completed its acquisition of Versus Evil, a US based publisher and
Red Cerberus gaming services provider.
Events after the reporting date
In early 2022, in response to the sudden invasion of Ukraine, tinyBuild
enacted contingency plans to move staff and their families out of risky areas
in East Ukraine and Kyiv. In addition, tinyBuild has also helped staff
relocating away from sanctioned nations providing logistic and financial
support. tinyBuild's people resilience and cohesiveness has been nothing short
of incredible and allowed the Company to secure production lines for upcoming
titles with minimal disruption.
TINYBUILD INC.
CONSOLIDATED UNAUDITED STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 31 DECEMBER 2021
Unaudited 2021 2020
Note $'000 $'000
Revenue 3 52,153 37,648
Cost of sales (18,112) (15,120)
Gross profit 34,041 22,528
Administrative expenses:
- General administrative expenses (14,469) (8,714)
- Share-based payment expenses (2,452) (5,845)
- IPO related costs (4,588) (467)
Total administrative expenses (21,509) (15,026)
Other operating income - 162
Operating profit 12,532 7,664
Finance costs (8) (21)
Finance income - 57
Profit before tax 12,524 7,700
Income tax expense (4,288) (2,752)
Profit and total comprehensive income
for the year 8,236 4,948
Attributable to:
Owners of the parent company 8,261 4,942
Non-controlling interests (25) 6
8,236 4,948
Basic earnings per share ($)* 4 0.043 0.028
Diluted earnings per share ($)* 4 0.042 0.027
Adjusted EBITDA** 5 22,239 15,275
*Basic earnings per share and diluted earnings per share for the comparative
period have been adjusted to reflect the stock split that occurred during
2021.
**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 (e.g. IPO and acquisition costs).
TINYBUILD INC.
CONSOLIDATED UNAUDITED STATEMENT OF FINANCIAL POSITION
AS AT 31 DECEMBER
2021
Unaudited 2021 2020
ASSETS Note $'000 $'000
Non-current assets
Intangible assets 6 57,156 15,141
Property, plant and equipment:
- owned assets 41 87
- right-of-use assets 528 673
Trade and other receivables 266 16
Total non-current assets 57,991 15,917
Current assets
Trade and other receivables 13,528 4,999
Cash and cash equivalents 48,832 26,313
Total current assets 62,360 31,312
TOTAL ASSETS 120,351 47,229
EQUITY AND LIABILITIES
Equity
Share capital 203 1
Share premium 63,546 18,674
Warrant reserve 1,920 -
Retained earnings 30,632 19,919
Equity attributable to owners of the parent company 96,301 38,594
Non-controlling interest 137 162
Total equity 96,438 38,756
LIABILITIES
Non-current liabilities
Lease liabilities 277 442
Contingent consideration 6,336 -
Deferred tax liabilities 4,339 1,663
Total non-current liabilities 10,952 2,105
Current liabilities
Borrowings - 13
Trade and other payables 5,262 3,496
Contingent consideration 4,793 -
Contract liabilities 2,645 2,675
Lease liabilities 261 184
Total current liabilities 12,961 6,368
Total liabilities 23,913 8,473
TOTAL EQUITY AND LIABILITIES 120,351 47,229
TINYBUILD INC.
CONSOLIDATED UNAUDITED STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 DECEMBER 2021
Note Share capital Share premium Warrant reserve Retained Total equity attributable to owners of the parent company Non-controlling interest Total
earnings equity
$'000 $'000 $'000 $'000 $'000 $'000 $'000
Balance at 1 January 2020 1 18,674 - 9,132 27,807 156 27,963
Profit and total comprehensive income for the year - - - 4,942 4,942 6 4,948
Transactions with owners in their capacity as owners:
Share-based payments - - - 5,845 5,845 - 5,845
Total transactions with owners - - - 5,845 5,845 - 5,845
Balance at 31 December 2020 1 18,674 - 19,919 38,594 162 38,756
Profit and total comprehensive income for the year - - - 8,261 8,261 (25) 8,236
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
Unaudited Balance at 31 December 2021 203 63,546 1,920 30,632 96,301 137 96,438
TINYBUILD INC.
CONSOLIDATED UNAUDITED STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 31 DECEMBER 2021
Unaudited 2021 2020
Note $'000 $'000
Cash flows from operating activities
Cash generated from operations 13,290 16,470
Net cash generated by operating activities 13,290 16,470
Cash flows from investing activities
Purchase of subsidiaries, net of cash acquired (11,784) -
Software development (15,085) (6,549)
Purchase of intellectual property (10,832) (570)
Proceeds on disposal of intangible assets 45 -
Purchase of property, plant and equipment - (24)
Net cash used in investing activities (37,656) (7,143)
Cash flows from financing activities
Proceeds from borrowings - 175
Repayment of borrowings (13) -
Proceeds from issuance of shares, net of transaction costs 46,839 -
Proceeds from exercise of share options 155 -
Payment of principal portion of lease liabilities (96) (198)
Net cash generated by/(used in) financing activities 46,885 (23)
Cash and cash equivalents
Net increase in the year 22,519 9,304
At 1 January 26,313 17,009
At 31 December 48,832 26,313
TINYBUILD INC.
NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
1 GENERAL INFORMATION
TinyBuild Inc. ("the Company") is a private company limited by shares, and is
registered, domiciled and incorporated in Delaware, USA. On 9 March 2021 the
Company became a public company. 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 2021 are unaudited. The
financial information set out in this announcement does not constitute the
Group's financial statements for the year ended 31 December 2021.
This financial information should be read in conjunction with the financial
statements of the Group for the year ended 31 December 2020 (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 43 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 other than the policies described below.
Business combinations
The acquisition method of accounting is used to account for business
combinations regardless of whether equity instruments or other assets are
acquired.
The consideration transferred is the sum of the acquisition-date fair values
of the assets transferred, equity instruments issued or liabilities incurred
by the acquirer to former owners of the acquiree and the amount of any
non-controlling interest in the acquiree. For each business combination, the
non-controlling interest in the acquiree is measured at either fair value or
at the proportionate share of the acquiree's identifiable net assets. All
acquisition costs are expensed as incurred to profit or loss.
On the acquisition of a business, the consolidated entity assesses the
financial assets acquired and liabilities assumed for appropriate
classification and designation in accordance with the contractual terms,
economic conditions, the consolidated entity's operating or accounting
policies and other pertinent conditions in existence at the acquisition-date.
Contingent consideration to be transferred by the acquirer is recognised at
the acquisition-date fair value. Subsequent changes in the fair value of the
contingent consideration classified as an asset or liability is recognised in
profit or loss. Contingent consideration classified as equity is not
remeasured and its subsequent settlement is accounted for within equity.
The difference between the acquisition-date fair value of assets acquired,
liabilities assumed and any non-controlling interest in the acquiree and the
fair value of the consideration transferred and the fair value of any
pre-existing investment in the acquiree is recognised as goodwill.
Business combinations are initially accounted for on a provisional basis. The
acquirer retrospectively adjusts the provisional amounts recognised and also
recognises additional assets or liabilities during the measurement period,
based on new information obtained about the facts and circumstances that
existed at the acquisition-date. The measurement period ends on either the
earlier of (i) 12 months from the date of the acquisition or (ii) when the
acquirer receives all the information possible to determine fair value.
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 Unaudited Year ended 31 December 2021 Year
ended 31 December 2020
$'000 $'000
Owned IP 30,640 24,683
Third-party IP 9,231 9,239
_
39,871 33,922
Three customers were responsible for approximately 67% of the Group's revenues
(2020: four - 80%).
The Group has six right-of-use asset located overseas with a carrying value of
$528,000 (2020: $49,084). All other non-current assets are located in the US.
4 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.
Unaudited Year ended Year ended
31 December 2021 31 December 2020*
$'000 $'000
Total comprehensive income attributable to the owners of the company
8,261 4,942
Weighted average number of shares 191,241,890 179,602,538
Basic earnings per share ($) 0.043 0.028
Total comprehensive income attributable to the owners of the company 8,261 4,942
Weighted average number of shares 191,241,890 179,602,538
Dilutive effect of share options 4,933,940 2,739,413
Weighted average number of diluted shares 196,175,829 182,341,951
Diluted earnings per share ($) 0.042 0.027
*Basic earnings per share and diluted earnings per share for the comparative
period have been adjusted to reflect the stock split that occurred during
2021.
5 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.
Unaudited Year ended Year ended
31 December 2021 31 December 2020
$'000 $'000
Profit for the year 8,236 4,948
Income tax expense 4,288 2,752
Finance costs 8 21
Finance income - (57)
Share-based payment expenses 2,452 5,845
Amortisation of purchased intellectual property, brands and customer 1,662 1,222
relationships
Depreciation of property, plant and equipment 117 239
IPO related costs 4,588 467
Acquisition costs 888 -
Other operating income - (162)
Adjusted EBITDA 22,239 15,275
6 INTANGIBLE ASSETS Purchased intellectual property Software development costs
Goodwill Brands Customer relationships Total
$'000 $'000 $'000 $'000 $'000 $'000
Cost:
As at 1 January 2020 - - - 5,600 10,578 16,178
Additions - internally generated - - - - 6,549 6,549
Additions - separately acquired - - - 570 - 570
As at 31 December 2020 - - - 6,170 17,127 23,297
Additions - internally generated - - - - 15,084 15,084
Additions - separately acquired - - - 10,832 - 10,832
Additions through business combinations (note 7) 13,202 1,815 4,261 2,356 - 21,634
Transfers - - - 1,962 (1,962) -
Disposals - - - - (90) (90)
Unaudited As at 31 December 2021 13,202 1,815 4,261 21,320 30,159 70,757
Amortisation and impairment:
As at 1 January 2020 - - - 267 2,568 2,835
Amortisation charge for the year - - - 819 4,502 5,321
As at 31 December 2020 - - - 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
Unaudited As at 31 December 2021 - 10 51 2,687 10,853 13,601
Carrying amount:
Unaudited As at 31 December 2021 13,202 1,805 4,210 18,633 19,306 57,156
As at 31 December 2020 - - - 5,084 10,057 15,141
7 BUSINESS COMBINATIONS
On 24 November 2021, the Group acquired 100% of the issued share capital of
Versus Evil LLC, a Delaware limited liability company, together with its two
wholly owned subsidiaries, Red Cerberus LLC and Steven Joseph Escalante -
Serviços de Tecnologia de Informação, Eireli LLC.
The goodwill of $13,202,000 represents our bolstered publishing capabilities
in RPG and Strategy genres. The acquisitions also added Quality Assurance
functions and improved our in-house porting facilities that have helped our
plan to make our titles as widely available as possible from day one.
Consideration for the acquisition comprised $13,062,000 cash. Contingent
consideration of $11,123,000 has been recognised in respect of a variable
number of equity instruments which will be issued in the event of the acquired
company meeting certain EBITDA targets in the future. The potential outcome of
the undiscounted contingent consideration ranges between $Nil and $18,750,000.
Acquisition related costs totalling $887,502 have been recognised in profit or
loss within general administrative expenses.
7 BUSINESS COMBINATIONS (CONTINUED)
The fair values of the identifiable assets acquired, and liabilities assumed
at the date of acquisition were:
Book value Fair value adjustments Total
$'000 $'000 Unaudited $'000
Intangible assets - 8,432 8,432
Property, plant and equipment 2 - 2
Trade and other receivables 1,912 - 1,912
Cash 1,278 - 1,278
Trade and other payables (635) - (635)
Total 2,557 8,432 10,989
Goodwill 13,202
24,191
Consideration:
Cash 13,062
Fair value of contingent consideration - equity 11,129
Total consideration 24,191
8 POST REPORTING DATE EVENTS
In early 2022, in response to the sudden invasion of Ukraine, tinyBuild
enacted contingency plans to move staff and their families out of risky areas
in East Ukraine and Kyiv. In addition, tinyBuild has also helped staff
relocating away from sanctioned nations providing logistic and financial
support . tinyBuild's people resilience and cohesiveness has been nothing
short of incredible and allowed the Company to secure production lines for
upcoming titles with minimal disruption.
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