REG - tinyBuild, Inc. tinyBuild Inc - TBLS - Preliminary Unaudited Results to YE 31 Dec 2023
23/04/2024 07:00
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RNS Number : 5932L tinyBuild, Inc. 23 April 2024
23 April 2024
tinyBuild, Inc
("tinyBuild" or the "Company")
Preliminary Unaudited Results for the year ended 31 December 2023
tinyBuild (AIM:TBLD), a premium video games publisher and developer with
global operations, announces the Company's unaudited results for the twelve
months ended 31 December 2023.
Financial Summary (unaudited):
(12 months ended December, $'000) 2023 2022 change
Revenue 44,663 63,295 -29%
Operating profit/ (loss) (63,757) 15,923 nmf
Profit/ (loss) before tax (64,494) 15,930 nmf
Basic earnings/ (loss) per share ($ cent) (30.7) 5.7 nmf
Operating cash flow 10,879 19,268 -44%
Net cash, at 31 December 2,500 26,496 -91%
Adj. EBITDA(1) (7,113) 24,355 nmf
Adj. EBITDA margin nmf 38.5%
(1) Excludes share-based compensation expenses and exceptional items (e.g.
impairment); includes amortisation of Development costs
Financial highlights:
· Revenue declined 29% to $44.7m (2022: $63.3m), reflecting the expected drop in
large contracts (e.g. subscription programs, development partnerships and
exclusivity agreements. Notably, Versus Evil saw over 60% revenue decline in
the period as a result of game delays.
· Adj. EBITDA decreased to negative $7.1m (2022: positive $24.4m), primarily due
to lower revenues from large contracts, higher amortisation of development
costs and inflationary pressures.
· Operating loss was $63.8m (2022: $15.9m profit), as a result of $48.1m
impairment charges ($36.2m on development advances and $11.9m on intangibles
assets), a $3.5m one-off legal settlement alongside lower revenues and higher
costs. Excluding one-off charges, the operating loss is $12.2m.
· Loss before tax was $64.5m (2022: $15.9m profit) and basic EPS was -30.7c
(2022: 5.7c). Adjusted EPS, excluding one-off charges, was -5.4c (2022:
11.21c).
· Operating cash flow decreased to $10.9m (2022: $19.3m), as a result of revenue
decline and unfavourable revenue mix (higher share of third-party titles).
· The cost action plan was implemented swiftly at the end of 2023, resulting in
nearly $10m annualised savings in 2024.
· A global settlement was achieved with Stephen Escalante including a $1.5m cash
payment in December 2023, plus a $2m cash payment in February 2024.
· As expected, net cash at 31 December 2023 was $2.5m compared to $26.5m at 31
December 2022, reflecting lower revenues, higher costs and $31.9m investment
in development costs (2022: $35.8m).
Operational highlights:
· Strong back catalogue sales representing 92% of total revenue (2022: 80%),
including Hello Neighbor 2 and Potion Craft 1.0 which launched at the end of
2022.
· Contribution to revenues from own-IP titles decreased to 68% of Gaming
revenues (2022: 77%), as a result of fluctuations in the portfolio mix with
third party titles performing strongly in 2023.
· In 2023, tinyBuild released a number of new titles, including Punch Club 2, I
am Future (Early Access), Rhythm Sprouts, Farworld Pioneer and Slime 3K, plus
DLCs for Spiderheck, Graveyard Keeper, Asterigos and Not For Broadcast, and a
number of platform launches.
Employee Benefit Trust:
· Since the Company's previous update on 21 December 2023, the Employee Benefit
Trust has purchased an additional 1,015,058 ordinary shares on the market and
now holds a total of 3,916,587 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 future share awards and option
exercises of vested options granted.
Post Period End highlights:
· In January 2024, tinyBuild raised $12.3m ($11.4m net proceeds) from existing
and new shareholders in a placing, subscription and open offer.
· As at 31 March 2024, post the January fundraise, the Company had cash levels
in the high single-digit millions. This is anticipated to reduce towards the
half year as the Company invests in upcoming game releases scheduled for the
second half of this year. The announcement trailer of Kingmakers collected
tens of millions views across all social networks in the first few weeks,
making it one of the most successful announcements in the Company's history.
The Company also announced new titles Duckside and RBO.
· Among other titles already announced, Streets of Rogue 2, Level Zero, VOIN,
Ferocious, SAND and Rawmen continue to track in line with expectations.
· In February 2024, tinyBuild sold Total Reliable Delivery Service to Atari for
an undisclosed sum. There has been two studio closures post year end; Moon
Moose LLC was closed in February 2024 and Demagic LLC was closed in March
2024.
· In March 2024, Michael Schauble, Chief Commercial Officer, resigned from
tinyBuild to focus on hisfamily. Michael's role and responsibilities have been
successfully taken over by the existing business development and leadership
team.
Outlook
· The pipeline for 2024 and beyond is strong and includes a number of
larger-budget (above $1m), high-potential games alongside continuous
investment in the catalogue including updates, DLCs and platform launches.
· The implication of the conflict in Ukraine and the evolving 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 in line with expectations.
Alex Nichiporchik, Chief Executive Officer of tinyBuild, commented:
"2023 was a tough year for the whole video games industry and demonstrated
once again the importance of strong diversified back-catalogue and investing
in long-term, sustainable franchises. We see early signs of success in our
shift towards the 1,000 hour game 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 our Chairman, Henrique Olifiers, the
Board of Directors and all staff for their unwavering support and incredible
dedication navigating through these tumultuous times."
Enquiries:
tinyBuild, Inc investorrelations@tinybuild.com (mailto:investorrelations@tinybuild.com)
Alex Nichiporchik - Chief Executive Officer and co-founder
Giasone (Jaz) Salati - Chief Financial Officer
Berenberg (Nominated Adviser and Broker) +44 (0)20 3207 7800
Mark Whitmore, Ciaran Walsh, Milo Bonser
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
(http://www.tinybuildinvestors.com) .
Chairman's Statement
Restarting the game
It's an understatement to proclaim it has been a challenging financial year
for the tinyBuild. From key changes to its executive team to the closure of
studios; from delayed titles to an equity fundraise underwritten by its CEO
and founder, tinyBuild has worked with and around a great deal of issues, and
the management continues to work hard to address the challenges of a
fast-changing industry.
While it's true the industry as a whole faced headwinds in the past twelve
months, the travails of the Group should not be solely ascribed to these
variables. Our merger & acquisitions (M&A) growth strategy delivered
underwhelming results, prompting a refocus towards internal production which,
although slower, in turn allows for more control and predictability, likely
improving outcomes in the form of more games that perform in line with
forecasts.
Given our stated ambition of transitioning a significant portion of our
portfolio from premium games to games as a service, this realignment towards
production and publishing is key and features higher odds of delivering the
expected results. Greenshoots of this work can already be seen in the form of
the successful announcements of Kingmakers, Level Zero: Extraction and
DUCKSIDE, and how these titles' premises resonated with players to a higher
degree compared to the titles the group announced or launched last year.
Overall, the fundamentals of the games industry remain solid and promising,
full of opportunities, not least the opening gap in release windows that is
being created by the recent series of titles cancellations and teams' closures
industry-wide: in the next 12 to 36 months, there should be fewer competing
titles launched than otherwise across all platforms, creating more space for
our games to be seen and experienced. This puts renewed demand over the
tinyBuild teams, in particular its executive group, to go back to the basics
that formed its earlier success stories: its ability to produce and find
high-quality IP rather than offloading this mandate to companies brought into
tinyBuild through M&A.
The executive team's conviction in its ability to deliver against the stated
objectives is exemplified by the CEO's actions when reinvesting into the
business at a critical juncture. This belief is shared throughout the Group,
and bolstered by the recent titles announcements' reception, pointing towards
the potential of our upcoming games and their alignment with the group's long
term strategy.
What remains now is to execute on the new strategy, and live up to the
expectation of these games both on production and publishing fronts -
something tinyBuild has the capability to deliver over the coming years.
Henrique Olifiers
Non-Executive Chairman
Chief Executive's Review
2023 has been the reset year of the games industry, which is bleeding into
2024. We've seen development budgets in AAA skyrocket, which led to, despite
record-setting sales, also record-setting layoffs, and a complete reshuffle of
allocation of capital. Many studios have realized the hardships of building
efficient teams remotely. Most studios are readjusting to listening to gamers
first and foremost, and using real data to make decisions. All while megahits
such as Palworld and Helldivers 2 are reaffirming our strategy of investing
into deeply replayable, emergent gameplay products.
In 2023 we have refocused on products that connect with audiences, using hard
data to back it up, evidenced by early 2024 traction and announcements. We are
also leaner and more efficient, with a lower and more flexible cost base.
We're all gamers at tinyBuild. It's all about the games. My full attention has
been on our games product since post the fundraise at the start of the year.
Tectonic shifts in the industry
Over the course of 2023 funding for video games dried up completely. All of
the sudden, capital was not cheap anymore, if it was accessible at all. At the
same time, the wave of labour cost inflation caused by the invasion of Ukraine
aggravated pressure on development budgets, which were already particularly
high, so funding even the most promising game became incredibly hard in the
context of the funding environment before 2023.
As the development of a game was becoming more difficult to finance, a huge
number of games developed in previous years were being released, without
sufficient market demand to support all of them. A good and fun game that
would have performed really well only a few years back may just drown in the
sea of new launches and even struggle to cover its costs.
For a game to get noticed now, you need to have a brand new idea, cool-looking
graphics, top-notch technology, constant two-way communication with your
audience and impeccable marketing strategy. The relationship between developer
and publisher is even more important and is the only way to achieve a
successful launch.
Adapting our strategy
Over the past few years, we have continued to adapt our strategy to the
changing environment, shifting gradually to the 1,000-hour game. When players
are so completely fascinated by the experience that nothing else matters. They
spend over a year playing it, for several hours every day. Every single day.
We all have these memories from our youth. Mortal Kombat, Tekken, GTA SAMP
(which morphed into GTA Online), Counter-Strike, Team Fortress 2, World of
Warcraft, amongst the many examples.
The easiest way to create a game like these is to get thousands of developers
churning out enormous amounts of content in a mega franchise. It's absolutely
fine to do so. If I think of it though, the amount of money poured into some
of my favourite games is really scary. So we took a different tack, we look
for emergent gameplay based on the interaction systems instead of content.
Games where the players may decide their own definition of win. Games like
Minecraft or DayZ, H1Z1, Rust, ARK, The Culling even. If you grew up playing
Minecraft, your game experience is not about a game saying you did great. It's
about knowing you did great. It's about the emotional satisfaction of your own
set goal and achieving that goal.
Let's first talk about multiplayer since this is the obvious focus for us.
Secret Neighbor, SpeedRunners, Pandemic Express, Deadside, the upcoming SAND,
Rawmen, Kingmakers, Level Zero - all of these are multiplayer games. Here's
what we learned from these games and playing other titles:
● You release a game that blows up.
● Tens of thousands of users play the game.
● Two weeks later the buzz starts to drop off.
● Development teams need to rapidly scale up and produce more content
so that veteran players come back.
We were stuck in exactly this grind loop with Secret Neighbor, working
overtime to get content updates out the door. Even then, new players can't
really appreciate the later-stage level content as they're still enjoying the
vanilla game. Instead now we focus on adding more systems to the game so that
all players can experience from the outset and interact with each other on an
equal level. Social interaction in multiplayer games is another gameplay
mechanic which is not fully understood and should be used in single player
experiences. The addition of crafting, looting, farming and similar mechanics
also allows users to create their own progression and their own personal space
in the game.
So here we have a formula to create worlds where players can spend 1,000
hours, without committing a AAA budget.
KINGMAKERS - the potential to be the next big thing?
Kingmakers is a shooter/real time strategy hybrid where you fight off
thousands of enemies in a medieval battle - using modern weapons. The game is
developed by the extremely talented team behind Road Redemption, and the tech
behind it has been in the works for over four years.
The announcement of this title is a testament to our approach to production
and marketing of new IP. The announcement trailer received tens of millions of
views across social media, propelling the game to top 50 wishlisted on Steam
within weeks. We are working hard to meet player expectations when the game
launches.
Level Zero: Extraction - re-announcement
If something isn't working, you need to adapt and overcome. Level Zero was
announced two years ago as an asymmetric multiplayer title, and while it got
initial traction, we were concerned about the longevity of the concept. A year
ago we came together with the design team and looked at the market landscape,
agreeing we had an opportunity to pivot into an exciting direction. Typically
re-announcing a game gets little to no traction.
Our production and marketing teams came up with a brilliant plan. Let's
re-announce the game in its new form - as an Extraction-style horror title -
focusing on the unique aspects of several human teams fighting each other, and
an overarching threat, a team of monsters that hunts everyone. We did an
amazing trailer, and actually gave the game to targeted influencers to play
it. The shortest way to describe it is "Alien Isolation meets Escape from
Tarkov", and it hit the target audience exactly how we forecasted. A new,
fresh take with live gameplay sessions recorded for influencers. This
rejuvenated interest in the title, and set us up for a public playtest with
close to 100,000 players opting in.
We have proven that we don't need a AAA budget to reach large audiences. We
have plenty of exciting projects in the pipeline for 2024 and beyond. This
pipeline combined with the recent fundraise, leaves tinyBuild well positioned.
I am as confident in the opportunity ahead and we all remain 100% committed to
ensuring we capitalise on it.
2024 and beyond is the time to shine.
Alex Nichiporchik
CEO and Founder
Chief Financial Officer's Review
2023 was a testing year. Testing for our staff and testing for the whole
Company. Game delays at Versus Evil and inflationary cost pressures added to a
sharp decline in revenues from large deals into the end of the year. We
regrouped once more and together we made some difficult decisions. We took
action on costs to re-align expected revenues with planned growth investments
and we raised net proceeds of over $11m in new capital, welcoming Atari as a
new core investor in tinyBuild.
The full impact of the internal reorganisation will become visible only in
2024 which started with cautious investments in high-potential games that have
already received validation from their respective audiences.
Revenue
Revenue generated from games sold to consumers were resilient at $34.2m (-1%
y-o-y), but the sharp drop in revenues from large contract (e.g. subscription
programs, development partnerships and exclusivity agreements) caused Company
revenues to decline by 29% (2022: +21%) from $63.3m to $44.7m. Events revenues
increased over 100% in 2023 with launches in new locations across Western and
Central Europe.
Revenue generated from own-IP (1st and 2nd party games) declined to 65% of
gaming revenues (2022: 77%), as a result of changes in portfolio mix. Revenues
from back-catalogue increased to 92% of total (2022: 80%), with successful new
releases including I am Future (Early Access) and Punch Club 2. The top 5
games generated 46.8% of total revenues (2022: 44.8%), and the top 10 games
65.4% (2022: 66.3%), demonstrating broad diversification across audiences,
genres and technologies.
Operating Profit and Adjusted EBITDA
Operating loss was $63.7m (2022: $15.9m operating profit), impacted by the
$18.6m decline in revenues, the $36.2m impairment of software development
costs and $11.9m impairment of other intangible assets. Exceptional charges
for 2023 relate to a $3.5m legal settlement. Included within the operating
loss is a further $0.6m of charges in relation to the conflict in Ukraine,
where the situation remains uncertain and management cannot exclude further
charges in the future.
Adjusted EBITDA is presented net of amortisation of development costs,
excluding share-based compensation expenses, amortisation of purchased IP and
other intangible assets and one-off costs. Adj. EBITDA loss was $7.1m (2022:
$24.4m profit), largely driven by the decline in revenues, aggravated by
inflationary pressure on costs resulting from the geopolitical and
macroeconomic situation. The full impact of cost action carried out before the
end of 2023 will be visible in 2024.
Interest income and taxation
Interest income was $0.4m (2022: $0.1m) and tax provision $1.4m (2022: $0.5m).
Financial Position
In 2023, the net cash position decreased to $2.5m from $26.5m, as investments
in new games including a number of larger-budget titles more than offset cash
generated by the operations. In December tinyBuild also paid the $1.5m as part
of the legal settlement, with a further $2m paid in February 2024. Capitalised
software development costs decreased from $35.8m to $31.9m in 2023 as a result
of more selective investments in the upcoming pipeline releases. As at 31
March 2024, post the January fundraise, the Company had cash levels in the
high single-digit millions. This is anticipated to reduce towards the half
year as the Company invests in upcoming game releases scheduled for the second
half of this year.
Goodwill decreased from $3.7m to zero, following the impairment of Versus Evil
and Red Cerberus. IP decreased to $16.1m (2022: $23.1m) and Software
Development to $34.0m (2022: $49.0m) as the impairment carried out in 2023
more than offset additions.
Cash Flow
Cash flows from operating activities decreased from $19.3m to $10.9m primarily
due to lower revenues and game delays at Versus Evil, more than offsetting the
decrease in investments. Timing issues (e.g. December sales) also impacted net
working capital. It is important to note that timing issues can fluctuate year
over year and variability here is to be expected especially during the Holiday
season and partners' payment terms.
Employee incentive plan and EBT update
Since the Company's previous update on 21 December 2023, the Employee Benefit
Trust has purchased an additional 1,015,058 ordinary shares on the market and
now holds a total of 3,916,587 ordinary shares. The EBT was setup 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.
As previously announced, the Remuneration Committee of tinyBuild intends to
utilise share awards to incentivise and retain key employees and executive
directors. The share awards not only encourage share ownership and stakeholder
alignment in the business but also serves to preserve cash resources that
would otherwise be used by the Company to satisfy bonus awards. A further
announcement will be made in due course in connection with these awards, which
includes a multiyear vesting share award to Giasone Salati, CFO of the
Company. Where possible, the Company has the option to issue shares from the
employee benefit trust to satisfy such awards.
Acquisitions and disposals
In December 2023 tinyBuild sold Not Games studio, while retaining Not For
Broadcast, a critically acclaimed full motion propaganda simulator. tinyBuild
had acquired the studio in March 2023, ahead of the game's launch on consoles.
Giasone (Jaz) Salati
Chief Financial Officer
TINYBUILD INC.
CONSOLIDATED UNAUDITED INCOME STATEMENT
FOR THE YEAR ENDED 31 DECEMBER 2023
2023 2022
Unaudited
Note $'000 $'000
Revenue 4 44,663 63,295
Cost of sales (30,980) (20,592)
Impairment of software development costs (36,206) (95)
Gross (loss)/profit (22,523) 42,608
General administrative expenses (26,090) (23,328)
Impairment of intangible assets (11,849) (11,075)
Share-based payment expenses (414) (1,726)
Non-recurring costs (3,500) (1,678)
Other income 619 11,122
Operating (loss)/profit (63,757) 15,923
Finance costs (128) (73)
Finance income 391 80
(Loss)/profit before tax (63,494) 15,930
Income tax 649 (4,417)
(Loss)/profit for the year (62,845) 11,513
(Loss)/profit for the year is attributable to:
Owners of the parent company (62,537) 11,545
Non-controlling interests (308) (32)
(62,845) 11,513
Basic earnings per share ($) 5 (0.307) 0.057
Diluted earnings per share ($) 5 (0.307) 0.056
Adjusted EBITDA* 6 (7,113) 24,355
*Adjusted EBITDA is a non-IFRS measure and is defined as earnings after
capitalised software development costs, but before interest, tax,
depreciation, amortisation, share-based payments expenses, impairment and
other significant one-off other income or expense items.
TINYBUILD INC.
CONSOLIDATED UNAUDITED STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 31 DECEMBER 2023
2023 2022
Unaudited
$'000 $'000
(Loss)/profit for the year (62,845) 11,513
Other comprehensive income net of taxation
Exchange differences on translation of foreign operations - may be
reclassified to profit and loss
(24) 7
Total comprehensive income for the year (62,869) 11,520
Total comprehensive income for the year is attributable to:
Owners of the parent company (62,561) 11,552
TINYBUILD INC.
CONSOLIDATED UNAUDITED STATEMENT OF FINANCIAL POSITION
AS AT 31 DECEMBER 2023
2023 2022
ASSETS Unaudited
$'000 $'000
Non-current assets
Goodwill - 3,746
Other intangible assets 51,512 76,638
Property, plant and equipment:
- owned assets 661 794
- right-of-use assets 374 342
Deferred tax assets - -
Other receivables 385 406
Total non-current assets 52,932 81,926
Current assets
Trade and other receivables 13,666 25,382
Cash and cash equivalents 2,500 26,496
Total current assets 16,166 51,878
TOTAL ASSETS 69,098 133,804
EQUITY AND LIABILITIES
Equity
Share capital 204 204
Share premium 65,593 65,593
Own shares (1,031) -
Warrant reserve 1,920 1,920
Translation reserve (17) 7
Retained earnings (18,213) 43,910
Equity attributable to owners of the parent company 48,456 111,634
Non-controlling interest (351) (43)
Total equity 48,105 111,591
LIABILITIES
Non-current liabilities
Lease liabilities 146 97
Deferred tax liabilities 388 1,800
Total non-current liabilities 534 1,897
Current liabilities
Trade and other payables 20,227 20,046
Lease liabilities 232 270
Total current liabilities 20,459 20,316
Total liabilities 20,993 22,213
TOTAL EQUITY AND LIABILITIES 69,098 133,804
TINYBUILD INC.
CONSOLIDATED UNAUDITED STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 DECEMBER 2023
Share Share premium Own shares Warrant reserve Translation reserve Retained Total equity attributable to owners of the parent company Non-controlling interest Total equity
capital
earnings
$'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000
Balance at 204 65,593 - 1,920 7 43,910 111,634 (43) 111,591
1 January 2023
Loss for the year - - - - - (62,537) (62,537) (308) (62,845)
Other comprehensive income:
Foreign exchange differences on the translation of foreign operations - - - - (24) - (24) - (24)
Total comprehensive income for the year - - - - (24) (62,537) (62,561) (308) (62,869)
Transactions with owners in their capacity as owners:
Share-based payment charge - - - - 414 414 - 414
Own shares acquired - - (1,031) - - - (1,031) - (1,031)
Total transactions with owners - - (1,031) - - 414 (617) - (617)
Balance at 31 December 2023 204 65,593 (1,031) 1,920 (17) (18,213) 48,456 (351) 48,105
TINYBUILD INC.
CONSOLIDATED UNAUDITED STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 DECEMBER 2023
Share capital Share premium Warrant reserve Translation reserve Retained Total equity attributable to owners of the parent company Non-controlling interest Total equity
earnings
$'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 CASH FLOWS
FOR THE YEAR ENDED 31 DECEMBER 2023
2023 2022
Unaudited
$'000 $'000
Cash flows from operating activities
Cash generated from operations 10,617 19,188
Net interest received 262 80
Net cash generated by operating activities 10,879 19,268
Cash flows from investing activities
Acquisition of subsidiaries, net of cash acquired (1,234) -
Software development costs (31,899) (35,789)
Purchase of intellectual property - (4,150)
Purchase of property, plant and equipment (180) (1,180)
Net cash used in investing activities (33,313) (41,119)
Cash flows from financing activities
Acquisition of own shares (1,031) -
Proceeds from exercise of share options - 28
Payment of principal portion of lease liabilities (531) (365)
Dividends paid to non-controlling interests - (148)
Net cash used in financing activities (1,562) (485)
Cash and cash equivalents
Net decrease in the year (23,996) (22,336)
At 1 January 26,496 48,832
At 31 December 2,500 26,496
TINYBUILD INC.
NOTES TO THE CONSOLIDATED UNAUDITED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
1 GENERAL INFORMATION
tinyBuild Inc. ("the Company") is a public company limited by shares, and is registered, domiciled and incorporated in Delaware, USA. tinyBuild has been listed on the London Stock Exchange (AIM:TBLD) since March 2021. The address of the registered office is 1239 120(th) Ave NE, Suite A, Bellevue, WA 98005, United States of America.
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 2023 are unaudited. The financial information set out in this announcement does not constitute the Group's financial statements for the year ended 31 December 2023.
This financial information should be read in conjunction with the financial statements of the Group for the year ended 31 December 2022 (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 46 to 53 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 31 December 2023 Year ended
31 December 2022
$'000 $'000
Owned IP 23,765 26,915
Third-party IP 12,816 13,105
36,581 40,020
Three customers were responsible for approximately 60% of the Group's revenues (2022: three - 67%).
The Group has nine (2022: seven) right-of-use assets located overseas with a carrying value of $374,000 (2022: $342,000). The Group also has tangible assets located overseas with a carrying value of $540,757 (2022: $623,000). All other non-current assets are located in the US.
4 REVENUE
Year Ended Year ended
31 December 2023 31 December 2022
Unaudited
An analysis of the Group's revenue is as follows: $'000 $'000
Revenue analysed by class of business
Game and merchandise royalties 36,581 40,020
Development services 6,919 22,744
Events 1,163 531
44,663 63,295
Revenue analysed by timing of revenue
Transferred at a point in time 37,744 40,551
Transferred over time 6,919 22,744
44,663 63,295
For royalties receivable, the Group recognises royalty income in the period in which it is earned.
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 2023 31 December 2022
Unaudited
$'000 $'000
(Loss)/profit attributable to the owners of the company (62,537) 11,545
Weighted average number of shares 203,877,356 203,421,359
Basic earnings per share ($) (0.307) 0.057
(Loss)/profit attributable to the owners of the company (62,537) 11,545
Weighted average number of shares 203,877,356 203,421,359
Dilutive effect of share options - 1,481,621
Dilutive effect of warrants - -
Dilutive effect of restricted stock awards - 954,654
Weighted average number of diluted shares 203,877,356 205,857,634
Diluted earnings per share ($) (0.307) 0.056
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, acquisitions costs, and other significant non-recurring expenses. 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 2023 31 December 2022
Unaudited
$'000 $'000
(Loss)/profit for the year (62,845) 11,513
Income tax (649) 4,417
Finance costs 128 73
Finance income (391) (80)
Share-based payment expenses 414 1,726
Amortisation of purchased intellectual property, brands and customer relationships (note 7) 4,482
3,999
Depreciation of property, plant and equipment 785 747
Impairment of intangible assets (note 7) 48,055 11,075
Legal settlement 3,500 -
Ukraine-related costs - 1,678
Acquisition costs 27 329
Other income (619) (11,122)
Adjusted EBITDA (7,113) 24,355
7 INTANGIBLE ASSETS
Purchased Intellectual Property Software Development Costs
Customer Relationships $'000 $'000
Goodwill Brands $'000 Total
$'000
$'000
$'000
Cost:
As at 1 January 2022 13,202 1,815 4,261 21,320 30,160 70,758
Additions - internally generated - - - - 35,788 35,788
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
Additions - internally generated - - - - 31,899 31,899
Additions - separately acquired 2,418 - - - - 2,418
Disposals (2,418) - - - (413) (2,831)
As at 31 December 2023 13,202 1,815 4,261 29,966 97,183 146,427
Amortisation and impairment:
As at 1 January 2022 - 10 51 2,687 10,853 13,601
Amortisation charge for the year - 121 609 3,269 5,787 9,786
Impairment charge 9,456 675 - 944 95 11,170
As at 31 December 2022 9,456 806 660 6,900 16,735 34,557
Amortisation charge for the year - 73 353 4,056 10,652 15,134
Impairment charge for the year 6,164 - 2,773 2,912 36,206 48,055
Eliminated on disposal (2,418) - - - (413) (2,831)
As at 31 December 2023 13,202 879 3,786 13,868 63,180 94,915
Carrying amount:
As at 31 December 2023 - 936 475 16,098 34,003 51,512
As at 31 December 2022 3,746 1,009 3,601 23,066 48,962 80,384
8 RELATED PARTY TRANSACTIONS
An analysis of key management personnel remuneration is included in the
Remuneration Committee Report on an individual basis, and is summarised below:
Key management personnel remuneration Year ended Year ended
31 December 2023 Unaudited 31 December 2022
$'000 $'000
Aggregate emoluments 2,511 2,217
Equity-settled share-based payments 46 88
2,557 2,305
Transactions with other related parties
The wife of the Company's CEO is the founder and CEO of DevGAMM LLC. During
the period, DevGAMM LLC paid dividends totalling $nil (2022: $148,000) to this
related party, in lieu of salary which included compensation for the previous
two years.
During 2022, the Company also acquired Bossa's IP Catalogue for consideration
of $3 million. 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.
On 4 December 2023, tinyBuild agreed to a binding summary of terms relating to
a global settlement agreement to be entered into with Steve Escalante, Lance
James and Stall Proof, LLC relating to a claim which had been made against
tinyBuild following its acquisition of Versus Evil LLC ("Versus Evil") and Red
Cerberus LLC ("Red Cerberus") in November 2021. tinyBuild has agreed to pay to
the Claimants $3.5 million in cash (in addition to legal costs). The first
payment was paid within 2023 of $1.5 million. The second payment of $2 million
was paid subsequent to year end on 9 February 2024. The $2 million balance is
accrued for as at 31 December 2023.
There were no other related party transactions during the period which require
disclosure.
9 ULTIMATE CONTROLLING PARTY
The Company's ultimate controlling party is Alex Nichiporchik who owned 37.8%
of outstanding shares on a fully diluted basis as of 31 December 2023.
Subsequent to the year end, the Alex's ownership interest increased to 57.9%
(see note 10).
10 POST REPORTING DATE EVENTS
In January 2024, a fundraise was approved in a special meeting on 26 January
2024. As part of this fundraise, 193,341,081 Ordinary shares of $0.001 each
were issued at 5 pence per share raising gross proceeds of approximately $12.3
million in aggregate. Net proceeds are approximately $11.4 million.
As a result of the fundraise, Alex Nichiporchik's ownership increased to 57.9%
of outstanding shares on a fully diluted basis. This has no impact on the
ultimate controlling party as Alex remains the ultimate controlling party.
In February 2024, tinyBuild sold Total Reliable Delivery Service to Atari for
an undisclosed sum. There has been two studio closures post year end; Moon
Moose LLC was closed in February 2024 and Demagic LLC was closed in March
2024.
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