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tinyBuild, Inc. reported unaudited half-year results for the 6 months ended 30 June 2021, with revenue of $18.6m and Adjusted EBITDA of $7.9m, an 18% increase from H1 2020. The company's net cash increased to $61.6m, including $50m gross proceeds from its AIM listing in March 2021, which raised £36.2m. Post-period end, tinyBuild announced the acquisition of BadPixel for up to $17.1m and Animal for up to $10.2m, and secured a new $25m credit facility from Bank of America expiring September 2022.
| Date | 15 Sept 2021 |
| Time | 07:00:07 |
| Category | Results |
| ID | 7865L |
NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION, DIRECTLY OR INDIRECTLY, TO OR FOR THE ACCOUNT OR BENEFIT OF US PERSONS, AS DEFINED IN REGULATION S PROMULGATED UNDER THE US SECURITIES ACT OF 1933, AS AMENDED (THE "US SECURITIES ACT"), OR IN OR INTO THE UNITED STATES, AUSTRALIA, CANADA, JAPAN, NEW ZEALAND OR THE REPUBLIC OF SOUTH AFRICA OR ANY OTHER JURISDICTION WHERE SUCH RELEASE, PUBLICATION OR DISTRIBUTION WOULD BE UNLAWFUL.
The information contained within this announcement is deemed by the Company to constitute inside information stipulated under the Market Abuse Regulation (EU) No. 596/2014 as it forms part of UK domestic law by virtue of the European Union (Withdrawal) Act 2018. Upon the publication of this announcement via the Regulatory Information Service, this inside information is now considered to be in the public domain.
15 September 2021
tinyBuild, Inc
("tinyBuild" or the "Company")
Half year results
tinyBuild (AIM:TBLD), a leading video games publisher and developer with global operations, is pleased to announce its unaudited results for the 6 months ended 30 June 2021.
Financial highlights:
● Revenue of $18.6m (H1 2020: $18.5m), in line with expectations and reflecting a second-half weighted release schedule.
● Adj EBITDA¹ growth of 18% to $7.9m (H1 2020: $6.7m), with margins increasing to 42% (H1 2020: 36%), as contribution to revenues from own-IP increased to 78% of group revenue (67% in H1 20), supporting long-term margin expansion.
● Adj. Operating Profit² increased 94% to $5.1m (H1 2020: $2.6m), reflecting lower share-based payments
● Adj. Cash Flow from Operations² was $3.8m, lower than the previous year (H1 2020: $6.9m) due to timing differences in payments to developers and tax payments
● Net cash increased to $61.6m (Dec 2020: $26.3m), including $50m gross proceeds following the successful listing on AIM
1 Excludes expenses related to the IPO, share based compensation expenses; includes amortisation of Development costs
2 Excludes expenses related to the IPO
Operational highlights:
● Three new games published including first-party titles Cartel Tycoon (early access), Mayhem in a Single Valley and Hello Engineer (early access), growing tinyBuild's portfolio to over 40 games, in addition to platform launches (Secret Neighbor on PS4 and iOS).
● Strong back catalogue sales representing 91% of total revenues, demonstrating the Company's ability to extend games' life cycles, while adding new titles.
● Three development studio acquihires We're Five Games (Totally Reliable Delivery Service), Hungry Couch (Black Skylands) and DogHelm (Streets of Rogue).
● Successful admission to AIM, raising £36.2m ($50m) of gross proceeds, to accelerate organic growth and support our M&A strategy.
● Henrique Olifiers was appointed as Non-Executive Chairman, with Nick Van Dyk and Neil Catto appointed as Non-Executive Directors.
Post-Period End
● Acquihire of BadPixel, the studio behind successful shooter Deadside, currently in early access, for a total consideration of up to $17.1m (see separate announcement).
● Acquihire of Animal (Rawmen) announced in August 2021, for a total consideration of up to $10.2m.
● Released Black Skylands (early access), plus release dates announced for Potion Crafts (early access), Despot's Game (early access) and Happy's Humber Burger Farm.
● Secured a new credit facility of $25m (expiry September 2022) with Bank of America.
Outlook
● The pipeline for coming years now stands at 29 titles, including near launch games such as Potion Craft, Despot's Game and Happy's Humble Burger Farm.
● While tinyBuild reviews the impact of the pandemic, and the fluid macroeconomic situation, early indicators of traction across the pipeline, including 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:
"We are really excited about tinyBuild's progress this year, with major titles in our pipeline showing strong KPIs ahead of launch. This includes new titles such as Tinykin and the widely anticipated Hello Neighbor 2.
"Our successful listing on AIM earlier this year and the additional expected $25m facility announced today, provide a platform from which we can deliver our organic and M&A growth ambitions. Our back catalogue has performed strongly, and we remain focused on finding new games at different stages of development. We are evaluating a number of M&A targets to help accelerate growth.
"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, 2021 has seen significant progress towards that ambition, and we look to the future with confidence."
Enquiries:
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tinyBuild, Inc Alex Nichiporchik - Chief Executive Officer Luke Burtis - Chief Operating Officer Antonio Jose Assenza - Chief Financial Officer Giasone (Jaz) Salati - Head of M&A and IR |
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Zeus Capital (Nominated Adviser and Joint Broker) Nick Cowles, Richard Kauffer (Corporate Finance) Benjamin Robertson (Equity Capital Markets) |
+44 (0)20 3829 5000 |
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Berenberg (Joint Broker) Ben Wright, Mark Whitmore, Alix Mecklenburg-Solodkoff, Milo Bonser |
+44 (0)20 3207 7800 |
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SEC Newgate (Financial PR) Robin Tozer, Bob Huxford, Megan Kovach |
+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 Seattle, Washington, USA, the Company has key operations worldwide, with employees, contractors or partners in multiple locations across five continents. tinyBuild's geographic diversity enables it to source high-potential IP, cost-effective development resources and a loyal customer base through innovative grassroots marketing.
tinyBuild was admitted to AIM, a market operated by the London Stock Exchange, in March 2021.
For further information, visit: www.tinybuildinvestors.com.
OPERATIONAL REVIEW
2021 has seen the progressive lifting of Covid restrictions across a number of countries. In contrast with general expectations that video games sales would be negatively impacted by the lifting of restrictions, 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 2021.
tinyBuild continues to benefit from platform competition and is also well-positioned to work with subscription services. Revenues from deals with distribution partners were above management expectations and gave the Company greater visibility of future revenue growth, while helping de-risk the development process for new games.
As anticipated, the release schedule for 2021 is weighted towards the second half of the year (e.g. Potion Craft and Despot's Game). As a result, back catalogue contribution to total revenue in the first six months of the year increased to 91%. The share of revenues from own-IP also increased to 78% in H1 2021.
Current portfolio and pipeline
Since the beginning of the year, tinyBuild published four new games (including Black Skylands in July) and added new platforms for two games already in the portfolio:
● Cartel Tycoon (early access) - a survival business sim inspired by the eighties narco trade. Expand and conquer, fight off rival cartels and evade the authorities
● Mayhem in Single Valley (PC only) - a puzzle-loaded action adventure where you have to prevent the end of the world while keeping everyone from finding out it was all your fault
● Hello Engineer (early access on Stadia) - a multiplayer machinery-building construction game set in the sandbox world of a mysterious amusement park, but beware of the Neighbor
● Black Skylands (early access) - a skypunk Open World action-adventure. Build your skyship and explore the open world, fight factions of pirates and monsters, and claim territories.
● Totally Reliable Delivery Service (Steam) - a ragdoll physics simulation about terrible package delivery couriers
● Secret Neighbor (PS4, iOS and Switch) - a Multiplayer Social Suspense Game where a group of intruders try to rescue their friend from the Neighbor's creepy basement
We have recently announced, or we are close to announcing a release date for:
● Potion Craft (early access on Steam) - an alchemist simulator that was the number one trending game in the February Steam Game Festival
● Despot's Game (early access on Steam) - a rogue-like game with turbocharged battles and a top 10 trending game in the February Steam Game Festival
● Happy's Humble Burger Farm (Steam and consoles) - a first person adventure horror cooking game, a sequel to the award-winning burger simulation
● Trash Sailors (Steam and consoles) - a hand-drawn sailing simulator with co-op up to 4 players. Create the trashiest sailing team in history, fight with monsters and trash
● Undungeon - an Action/RPG game driven by intense real-time combat and an immensely rich science fiction story.
Finally, we announced three new titles:
● Tinykin - 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.
● SpiderHeck - 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.
● BookWalker - a thief with an ability to dive into books is forced to use his powers to track and steal the likes of Thor's Hammer and the Excalibur to save his brother.
tinyBuild had 23 games in the pipeline at the end of 2020. So far, in 2021, the Company has signed an additional ten new games, increasing the total number of new games under development to 29, after accounting for the four new titles already launched in 2021. Five of these new games will be developed in Eastern Europe and Russia, four in the United States and one in New Zealand.
Acquisitions
Since the beginning of the year, we have made five acquisitions. We acquihired two studios in January and February 2021: We're Five Games, the Minneapolis developer of Totally Reliable Delivery Service and the Russia based developer of Black Skylands year, Hungry Couch.
In June, we acquihired DogHelm, the studio behind Streets of Rogue, the highest-rated title in tinyBuild's portfolio according to Steam users. In August, we announced the acquihire of Animal, following a two-year partnership to develop a new game, Rawmen.
Today, we are pleased to announce the acquihire of Bad Pixel, the development studio behind the very popular open world game Deadside. Bad Pixel is based in Russia with five developers currently.
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.
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, 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, low single-digit, compared to an estimated 15.5% across the industry (Wired).
Position and strategy
tinyBuild is well-positioned with a strong pipeline of new titles and a proven ability to attract, screen and market high-quality game franchises. Our low-risk M&A strategy continues to help us increase our IP portfolio, and our multimedia franchise model allows us to extend the life of our IP, maximising our return on investment.
Our medium-term strategy is to expand our position as a leading global video games developer and publisher, focussing on IP ownership while creating long-term scalable franchises across multiple media formats. 2021 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
15 September 2021
FINANCIAL REVIEW
On 9 March 2021, tinyBuild raised $50m (£36.2m) in gross proceeds, which is being used to accelerate organic growth and support the M&A strategy. Adjusted EBITDA for the six months ended June 2021 was marginally ahead of expectations, and the Company closed three acquihires in the period.
Revenue
In the six months to June 2021, tinyBuild revenues were $18.6m, slightly ahead of the previous year (H1 2020: $18.5m), reflecting a release schedule skewed towards the second half and the success of Totally Reliable Delivery Service, which was first released on 1 April 2020. Back catalogue performed strongly in the first half, with new platform launches of Secret Neighbor driving revenues across the wider Hello Neighbor franchise. Revenue from events, primarily DevGAMM, fell slightly as a result of the global pandemic.
Adjusted EBITDA and Operating Profit
Adjusted EBITDA is presented net of amortisation of development costs, excluding share-based compensation expenses and exceptional costs (e.g. IPO), giving a clear picture of the business progression. Adjusted EBITDA grew 18% to $7.9m in H1 of 2021, with margin expanding to 42% (H1 2020: 36%) as a result of higher share of revenues from own-IP (78% in H1 2021 vs 67% in H1 2020) and back catalogue (91% in H1 2021).
Operating profit for H1 2021 was $0.7m (H1 2020: $2.6m). Excluding the $4.4m one-off IPO costs, Adjusted Operating Profit increased over 90% to $5.1m due to higher margins and lower charges relating to share-based compensation ($2.2m in H1 2021 vs $3.6m in H1 2020).
Interest income and taxation
Interest income was immaterial in H12021, and taxation charges were $1.0m, lower than $1.6m in H1 2020 due to timing differences that will reverse in the second half of the year.
Exceptional Costs Relating to the AIM Listing
In H1 2021, tinyBuild incurred one-off costs ($4.4m) related to the IPO on the London Stock Exchange's AIM market, including expenses related to audit and legal fees ($3m).
Financial Position
In H1 of 2021, the net cash position increased from $26.3m, as of December 2020, to $61.6m, with the majority of the increase being driven by the AIM float, where tinyBuild raised $50m in gross proceeds.
Cash Flow
Adjusted cash flows from operating activities decreased from $6.9m to $3.8m in H1 2021, (-$0.6m including exceptional costs relating to the IPO) mainly due to timing of payments to developers and tax, which will reverse in the second half of the year. Software development costs, mainly consisting of developer salaries, advances, localisation and porting, increased from $2.4m to $5.6m, reflecting the increase in investment for upcoming pipeline releases.
Events after the reporting date
In August 2021, tinyBuild announced the acquihire of Animal, for a total consideration up to a max of $10.2 million, split approximately 30%-70% between cash and newly issued tinyBuild shares, including upfront and deferred payments over the next three financial years.
In September 2021, we announced the acquihire of Bad Pixel, the development studio behind the very popular open-world game Deadside, for a total consideration of up to $17.1m, including upfront and deferred payments over the next three financial years. The deal will be marginally accretive in 2021, a year of investments, with greater potential for return in the following years (please see separate press release published today).
tinyBuild secured a new credit facility of $25m (expiry September 2022) on favourable terms with Bank of America. 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
15 September 2021
CONSOLIDATED CONDENSED STATEMENT OF COMPREHENSIVE INCOME
|
|
Note |
6 months ended 30 June 2021
|
6 months ended 30 June 2020
|
Year ended 31 December 2020 |
|
|
|
Unaudited |
Audited |
Audited |
|
|
|
$'000 |
$'000 |
$'000 |
|
|
|
|
|
|
|
Revenue |
4 |
18,626 |
18,510 |
37,648 |
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Cost of sales |
|
(5,449) |
(8,635) |
(15,120) |
|
|
|
|
|
|
|
Gross profit |
|
13,177 |
9,875 |
22,528 |
|
|
|
|
|
|
|
Administrative expenses: |
|
|
|
|
|
- General administrative expenses |
|
(5,920) |
(3,690) |
(8,714) |
|
- Share-based payment expenses |
|
(2,159) |
(3,561) |
(5,845) |
|
- IPO transaction costs |
5 |
(4,409) |
- |
(467) |
|
|
|
|
|
|
|
Total administrative expenses |
|
(12,488) |
(7,251) |
(15,026) |
|
|
|
|
|
|
|
Other operating income |
|
- |
- |
162 |
|
|
|
|
|
|
|
Operating profit |
|
689 |
2,624 |
7,664 |
|
|
|
|
|
|
|
Finance costs |
|
(9) |
(11) |
(21) |
|
Finance income |
|
4 |
55 |
57 |
|
|
|
|
|
|
|
Profit before tax |
|
684 |
2,668 |
7,700 |
|
|
|
|
|
|
|
Income tax expense |
|
(981) |
(1,599) |
(2,752) |
|
|
|
|
|
|
|
(Loss)/profit and total comprehensive income for the year |
|
(297) |
1,069 |
4,948 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Attributable to: |
|
|
|
|
|
Owners of the parent company |
|
(225) |
1,063 |
4,942 |
|
Non-controlling interests |
|
(72) |
6 |
6 |
|
|
|
|
|
|
|
|
|
(297) |
1,069 |
4,948 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings per share ($) |
6 |
(0.001) |
0.006 |
0.028 |
|
Diluted earnings per share ($) |
6 |
(0.001) |
0.006 |
0.027 |
|
Adjusted EBITDA |
7 |
7,905 |
6,705 |
15,275 |
CONSOLIDATED CONDENSED STATEMENT OF FINANCIAL POSITION
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30 June 2021 |
31 December 2020 |
|
|
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Unaudited |
Audited |
|
ASSETS |
Note |
$'000 |
$'000 |
|
Non-current assets |
|
|
|
|
Intangible assets |
8 |
21,933 |
15,141 |
|
Property, plant and equipment: |
|
|
|
|
- owned assets |
|
87 |
87 |
|
- right-of-use assets |
|
573 |
673 |
|
Trade and other receivables |
|
16 |
16 |
|
|
|
|
|
|
Total non-current assets |
|
22,609 |
15,917 |
|
Current assets |
|
|
|
|
Trade and other receivables |
|
7,926 |
4,999 |
|
Cash and cash equivalents |
|
61,642 |
26,313 |
|
|
|
|
|
|
Total current assets |
|
69,568 |
31,312 |
|
|
|
|
|
|
TOTAL ASSETS |
|
92,177 |
47,229 |
|
|
|
|
|
|
EQUITY AND LIABILITIES Equity |
|
|
|
|
Share capital |
10 |
202 |
1 |
|
Share premium |
|
60,877 |
18,674 |
|
Warrant reserve |
|
1,920 |
- |
|
Retained earnings |
|
21,853 |
19,919 |
|
|
|
|
|
|
Equity attributable to owners of the parent company |
|
84,852 |
38,594 |
|
Non-controlling interest |
|
90 |
162 |
|
|
|
|
|
|
Total equity |
|
84,942 |
38,756 |
|
|
|
|
|
|
LIABILITIES |
|
|
|
|
Non-current liabilities |
|
|
|
|
Trade and other payables |
|
50 |
- |
|
Lease liabilities |
|
356 |
442 |
|
Deferred tax liabilities |
|
1,663 |
1,663 |
|
|
|
|
|
|
Total non-current liabilities |
|
2,069 |
2,105 |
|
|
|
|
|
|
Current liabilities |
|
|
|
|
Borrowings |
|
- |
13 |
|
Trade and other payables |
|
3,355 |
3,496 |
|
Contract liabilities |
|
1,625 |
2,675 |
|
Lease liabilities |
|
186 |
184 |
|
|
|
|
|
|
Total current liabilities |
|
5,166 |
6,368 |
|
|
|
|
|
|
Total liabilities |
|
7,235 |
8,473 |
|
|
|
|
|
|
TOTAL EQUITY AND LIABILITIES |
|
92,177 |
47,229 |
|
|
|
|
|
CONSOLIDATED CONDENSED STATEMENT OF CHANGES IN EQUITY
|
|
Note |
Share capital |
Share premium |
Warrant reserve |
Retained earnings |
Total equity attributable to owners of the parent |
Non-controlling interest |
Total 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 period |
|
- |
- |
- |
1,063 |
1,063 |
6 |
1,069 |
|
|
|
|
|
|
|
|
|
|
|
Transactions with owners in their capacity as owners: |
|
|
|
|
|
|
|
|
|
Share-based payments |
|
- |
- |
- |
3,561 |
3,561 |
- |
3,561 |
|
|
|
|
|
|
|
|
|
|
|
Total transactions with owners |
|
- |
- |
- |
3,561 |
3,561 |
- |
3,561 |
|
|
|
|
|
|
|
|
|
|
|
Balance at 30 June 2020 |
|
1 |
18,674 |
- |
13,756 |
32,431 |
162 |
32,593 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Share capital |
Share premium |
Warrant reserve |
Retained earnings |
Total equity attributable to owners of the parent |
Non-controlling interest |
Total 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 |
10 |
178 |
(178) |
- |
- |
- |
- |
- |
|
Issue of shares, net of transaction costs |
10 |
22 |
44,147 |
- |
- |
44,169 |
- |
44,169 |
|
Issue of shares on exercise of options |
10 |
1 |
154 |
- |
- |
155 |
- |
155 |
|
Issue of warrants |
10 |
- |
(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 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CONSOLIDATED CONDENSED STATEMENT OF CASH FLOWS
|
|
|
6 months ended 30 June 2021 |
6 months ended 30 June 2020 |
Year ended 31 December 2020 |
|
|
|
Unaudited |
Audited |
Audited |
|
|
Note |
$'000 |
$'000 |
$'000 |
|
Cash flows from operating activities |
|
|
|
|
|
Cash generated from operations |
11 |
(566) |
6,883 |
16,470 |
|
|
|
|
|
|
|
Net cash generated by operating activities |
|
(566) |
6,883 |
16,470 |
|
|
|
|
|
|
|
Cash flows from investing activities |
|
|
|
|
|
Software development |
|
(5,636) |
(2,443) |
(6,549) |
|
Purchase of intellectual property |
|
(2,089) |
(180) |
(570) |
|
Purchase of property, plant and equipment |
|
- |
(5) |
(24) |
|
|
|
|
|
|
|
Net cash used in investing activities |
|
(7,725) |
(2,628) |
(7,143) |
|
|
|
|
|
|
|
Cash flows from financing activities |
|
|
|
|
|
Proceeds from borrowings |
|
- |
175 |
175 |
|
Repayment of borrowings |
|
(13) |
- |
- |
|
Proceeds from issuance of ordinary shares, net of issuance costs |
|
43,570 |
- |
- |
|
Proceeds on exercise of share options |
|
154 |
- |
- |
|
Payment of principal portion of lease liabilities |
|
(91) |
(107) |
(198) |
|
|
|
|
|
|
|
Net cash generated by/(used in) financing activities |
|
43,620 |
68 |
(23) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents |
|
|
|
|
|
Net increase in the year |
|
35,329 |
4,323 |
9,304 |
|
At beginning of period |
|
26,313 |
17,009 |
17,009 |
|
|
|
|
|
|
|
At end of period |
|
61,642 |
21,332 |
26,313 |
|
|
|
|
|
|
|
|
|
|
|
|
Non-cash investing activities
The Group purchased the intellectual property rights to four video games, for consideration which included non-cash consideration of $599,000 (see note 8).
During the period, the Group granted 1,511,448 warrants to subscribe for ordinary shares (see note 10) These warrants had a fair value at grant date of $1,919,540.
NOTES TO THE UNAUDITED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
FOR THE SIX MONTH PERIOD ENDED 30 JUNE 2021
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 127 Bellevue Way SE, Suite 200, Bellevue, WA 98004, United States. On 9 March 2021, the Company's shares were listed on the Alternative Investment Market of the London Stock Exchange ("AIM").
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 15 September 2021.
2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
These condensed, consolidated financial statements for the interim half-year reporting period ended 30 June 2021 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 2020.
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 2020 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 2020 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 2021 and will be adopted in the 2021 financial statements. There are deemed to be 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 2021 has been calculated by applying the effective rate of tax which is expected to apply to the Group for the year ending 31 December 2021 as required by IAS 34 'Interim Financial Reporting'.
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 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 is shown below.
NOTES TO THE UNAUDITED CONSOLIDATED INTERIM FINANCIAL STATEMENTS (CONTINUED)
FOR THE SIX MONTH PERIOD ENDED 30 JUNE 2021
3 SEGMENTAL REPORTING (CONTINUED)
|
Game and merchandise royalties |
6 months ended 30 June 2021 |
6 months ended 30 June 2020 |
Year ended 31 December 2020 |
|
|
Unaudited |
Audited |
Audited |
|
|
$'000 |
$'000 |
$'000 |
|
|
|
|
|
|
Owned IP |
14,100 |
12,242 |
24,683 |
|
Third-party IP |
4,050 |
4,874 |
9,239 |
|
|
|
_ |
_ |
|
|
18,150 |
17,116 |
33,922 |
|
|
|
|
|
Five customers were responsible for approximately 80% of the Group's revenues (30 June 2020: four - 73%, 31 December 2020: five - 81%).
The Group has one right-of-use asset located overseas with a carrying value of $39,881 (30 June 2020: $58,287, 31 December 2020: $49,084). All other non-current assets are located in the US.
|
4 REVENUE |
6 months ended 30 June 2021 |
6 months ended 30 June 2020 |
Year ended 31 December 2020 |
|
|
Unaudited |
Audited |
Audited |
|
An analysis of the Group's revenue is as follows: |
$'000 |
$'000 |
$'000 |
|
|
|
|
|
|
Revenue analysed by class of business |
|
|
|
|
Game and merchandise royalties |
18,150 |
17,116 |
33,922 |
|
Development services |
224 |
980 |
2,917 |
|
Events |
252 |
414 |
809 |
|
|
|
|
|
|
|
18,626 |
18,510 |
37,648 |
|
|
|
|
|
|
|
|
|
|
|
5 IPO TRANSACTION COSTS |
6 months ended 30 June 2021 |
6 months ended 30 June 2020 |
Year ended 31 December 2020 |
|
|
Unaudited |
Audited |
Audited |
|
|
$'000 |
$'000 |
$'000 |
|
|
|
|
|
|
IPO related costs |
4,409 |
- |
467 |
|
|
|
|
|
IPO transaction costs in the 6 months ended 30 June 2021 relate to significant one-off costs, which have not been deducted from equity, associated with the Group's admission onto AIM in March 2021. The costs comprise advisors' fees, stock exchange listing fees and other IPO costs. Costs totalling $8,593,000 incurred in association with the IPO which met IAS 32 definition of transaction costs (being incremental and directly related to the issuance of new equity instruments and which would have been avoided had the instruments not been issued) have been deducted from share premium.
NOTES TO THE UNAUDITED CONSOLIDATED INTERIM FINANCIAL STATEMENTS (CONTINUED)
FOR THE SIX MONTH PERIOD ENDED 30 JUNE 2021
|
6 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 2021 |
6 months ended 30 June 2020 |
Year ended 31 December 2020 |
||||
|
|
Unaudited |
Audited |
Audited |
||||
|
|
$'000 |
$'000 |
$'000 |
||||
|
Total comprehensive (loss)/income attributable to the owners of the company |
(225) |
1,063 |
4,942 |
||||
|
Weighted average number of shares |
192,047,223 |
179,602,538 |
179,602,538 |
||||
|
|
|
|
|
||||
|
Basic earnings per share ($) |
(0.001) |
0.006 |
0.028 |
||||
|
|
|
|
|
||||
|
|
6 months ended 30 June 2021 |
6 months ended 30 June 2020 |
Year ended 31 December 2020 |
|
|
Unaudited |
Audited |
Audited |
|
|
$'000 |
$'000 |
$'000 |
|
Total comprehensive income attributable to the owners of the company |
(225) |
1,063 |
4,942 |
|
Weighted average number of shares |
192,047,223 |
179,602,538 |
179,602,538 |
|
Dilutive effect of share options |
- |
2,393,223 |
2,739,413 |
|
|
|
|
|
|
Weighted average number of diluted shares |
192,047,223 |
181,995,761 |
182,341,950 |
|
|
|
|
|
|
Diluted earnings per share ($) |
(0.001) |
0.006 |
0.027 |
|
|
|
|
|
Pursuant to IAS 33, 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.
The earnings per share disclosed for the 6 months ended 30 June 2020 and year ended 31 December 2020 have been adjusted for the stock split occurring in 2021 (see note 10).
7 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 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.
NOTES TO THE UNAUDITED CONSOLIDATED INTERIM FINANCIAL STATEMENTS (CONTINUED)
FOR THE SIX MONTH PERIOD ENDED 30 JUNE 2021
|
7 ADJUSTED EBITDA (CONTINUED)
|
6 months ended 30 June 2021 |
6 months ended 30 June 2020 |
Year ended 31 December 2020 |
|
|
Unaudited |
Audited |
Audited |
|
|
$'000 |
$'000 |
$'000 |
|
|
|
|
|
|
(Loss)/profit for the period |
(297) |
1,069 |
4,948 |
|
Income tax expense |
981 |
1,599 |
2,752 |
|
Finance costs |
9 |
11 |
21 |
|
Finance income |
(4) |
(55) |
(57) |
|
Share-based payment expenses |
2,159 |
3,561 |
5,845 |
|
Amortisation of purchased intellectual property |
547 |
402 |
1,222 |
|
Depreciation of property, plant and equipment |
101 |
118 |
239 |
|
IPO transaction costs |
4,409 |
- |
467 |
|
Other operating income |
- |
- |
(162) |
|
|
|
|
|
|
Adjusted EBITDA |
7,905 |
6,705 |
15,275 |
|
|
|
|
|
|
8 INTANGIBLE ASSETS
|
Purchased intellectual property |
Software development costs |
Total |
|
|
$'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 |
- |
5,636 |
5,636 |
|
Additions - separately acquired |
2,688 |
- |
2,688 |
|
Transfers |
645 |
(645) |
- |
|
|
|
|
|
|
As at 30 June 2021 |
9,503 |
22,118 |
31,621 |
|
|
|
|
|
|
|
|
|
|
|
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 period |
547 |
985 |
1,532 |
|
|
|
|
|
|
As at 30 June 2021 |
1,633 |
8,055 |
9,688 |
|
|
|
|
|
|
|
|
|
|
|
Carrying amount: |
|
|
|
|
As at 30 June 2021 |
7,870 |
14,063 |
21,933 |
|
|
|
|
|
|
As at 31 December 2020 |
5,084 |
10,057 |
15,141 |
|
|
|
|
|
During the period, the Group purchased the intellectual property rights to four video games for total consideration of $3,333,000, including non-cash consideration of $599,000 and transfers from software development costs of $645,000. 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.
NOTES TO THE UNAUDITED CONSOLIDATED INTERIM FINANCIAL STATEMENTS (CONTINUED)
FOR THE SIX MONTH PERIOD ENDED 30 JUNE 2021
9 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. 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 and the 2019 grant is $40.21 per share. The RSAs vest in instalments every three months over the service period. Each instalment has been treated as a separate share option grant because each instalment has a different vesting period. This plan is equity-settled. The plan was fully settled upon admission to trading. A reconciliation of RSAs is as follows:
|
|
|
|
|
|
30 June 2021 |
31 December 2020 |
|
|
|
|
|
|
|
|
|
Opening RSA outstanding |
|
|
|
|
191,220 |
367,730 |
|
RSA granted |
|
|
|
|
- |
- |
|
RSA vested |
|
|
|
|
(191,220) |
(176,510) |
|
|
|
|
|
|
|
|
|
Closing RSA outstanding |
|
|
|
|
- |
191,220 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average remaining contractual life in years |
|
|
|
|
- |
1.08 |
The company has an Equity Incentive Plan that provides for the issuance of non-qualified stock options to officers and other employees that have a contracted term of 10 years and generally vest over four years. The stock options are granted on shares issued by the company. A reconciliation of share option movements is shown below:
|
|
Number of options outstanding
|
Weighted average exercise price ($) |
Number of options exercisable |
Weighted average exercise price ($) |
Weighted average remaining contractual life (years) |
|
At 31 December 2020 |
21,100 |
42.41 |
11,815 |
13.33 |
8.08 |
|
Adjust for stock split (see note 10) |
2,718,246 |
0.33 |
|
|
|
|
Granted during the period |
692,756 |
1.59 |
|
|
|
|
Exercised during the period |
(489,836) |
0.07 |
|
|
|
|
|
|
|
|
|
|
|
At 30 June 2021 |
2,942,266 |
0.58 |
1,845,436 |
0.17 |
7.99 |
|
|
|
|
|
|
|
During the period covered by the financial statements, no options expired or were forfeited. Options granted during the year were 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:
NOTES TO THE UNAUDITED CONSOLIDATED INTERIM FINANCIAL STATEMENTS (CONTINUED)
FOR THE SIX MONTH PERIOD ENDED 30 JUNE 2021
9 SHARE-BASED PAYMENTS (CONTINUED)
|
|
Grant date |
|||
|
|
3 February 2021 |
25 November 2020 |
15 October 2020 |
17 April 2020 |
|
Share price at grant date |
$1.59 |
$1.59 |
$1.06 |
$0.33 |
|
Exercise price |
$1.59 |
$1.59 |
$1.06 |
$0.33 |
|
Option life |
6.25 |
6.25 |
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 |
$0.66 |
$0.66 |
$0.44 |
$0.14 |
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. The 2020 grants have been adjusted to reflect the impact of the stock split (see note 10).
|
10 SHARE CAPITAL |
|
|
30 June 2021 |
31 December 2020 |
|
|
|
|
Unaudited |
Audited |
|
|
|
|
Number |
Number |
|
Class of share |
|
|
|
|
|
Ordinary shares of $0.001 each |
|
|
201,744,118 |
1,059,052 |
|
Series Seed preferred shares of $0.001 each |
|
|
- |
125,755 |
|
Series A preferred shares of $0.001 each |
|
|
- |
198,560 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
30 June 2021 |
31 December 2020 |
|
|
|
|
Unaudited |
Audited |
|
|
|
|
$ |
$ |
|
Class of share |
|
|
|
|
|
Ordinary shares of $0.001 each |
|
|
201,744 |
1,059 |
|
Series Seed preferred shares of $0.001 each |
|
|
- |
126 |
|
Series A preferred shares of $0.001 each |
|
|
- |
199 |
|
|
|
|
|
|
|
|
|
|
201,744 |
1,384 |
|
|
|
|
|
|
On 26 February 2021, 324,315 preferred shares were converted into 324,315 ordinary shares. The Company then completed a stock split pursuant to which 1,383,367 ordinary shares of $0.001 each were split into 179,597,639 shares of $0.001 each.
On 9 March 2021, the Company's shares were listed on the Alternative Investment Market of the London Stock Exchange ("AIM"). A total of 21,438,985 new ordinary shares were issued in the placing at the placing price of 169 pence per share. Share premium, net of transaction costs, totalling $44,147,000 has been recognised on the transaction.
During the period, 692,756 share options were issued to employees and contractors at an exercise price of $1.59 per share.
During the period, 489,836 share options were exercised at an exercise price of $0.07 per share. Share premium totalling $34,000 has been recognised on the transaction.
NOTES TO THE UNAUDITED CONSOLIDATED INTERIM FINANCIAL STATEMENTS (CONTINUED)
FOR THE SIX MONTH PERIOD ENDED 30 JUNE 2021
10 SHARE CAPITAL (CONTINUED)
During the period, 51,454 shares were issued to the Non-Executive Chairman at the placing price of 169 pence per share. Share premium totalling $120,000 has been recognised on the transaction.
During the period, 166,204 shares were issued as partial consideration for the acquisition of intellectual property (see note 8).
On 3 March 2021, the Company granted Zeus Capital 1,511,448 warrants to subscribe for ordinary shares. Each warrant confers the right, exercisable only if the share price exceeds 253 pence per share, to subscribe in cash for one ordinary share at the placing price of 169 pence per share. The warrants are only exercisable during the period from 9 September 2022 to 9 March 2031. The fair value of this warrant instrument has been calculated using a lattice model, giving a total fair value of $1,919,540. This amount has been recognised within the warrant reserve with a corresponding decrease in the share premium account.
|
11 CASH GENERATED FROM OPERATIONS |
|
6 months ended 30 June 2021 |
6 months ended 30 June 2020 |
Year ended 31 December 2020 |
|
|
|
Unaudited |
Audited |
Audited |
|
|
|
$'000 |
$'000 |
$'000 |
|
|
|
|
|
|
|
(Loss)/profit for the year |
|
(297) |
1,069 |
4,948 |
|
Adjustments for: |
|
|
|
|
|
Share-based payments |
|
2,159 |
3,561 |
5,845 |
|
Amortisation of intangible assets |
|
1,532 |
2,580 |
5,321 |
|
Depreciation of tangible fixed assets |
|
101 |
118 |
239 |
|
Foreign exchange (gains)/losses |
|
(2) |
- |
5 |
|
Finance costs |
|
9 |
11 |
21 |
|
|
|
|
|
|
|
Movements in working capital: |
|
|
|
|
|
(Increase)/decrease in receivables |
|
(2,927) |
(1,251) |
(1,299) |
|
Increase/(decrease) in payables |
|
(1,141) |
(55) |
511 |
|
Increase/(decrease) in deferred tax liability |
|
- |
850 |
879 |
|
|
|
|
|
|
|
Cash (used in)/generated from operations |
|
(566) |
6,883 |
16,470 |
|
|
|
|
|
|
12 RELATED PARTY TRANSACTIONS
An analysis of key management personnel remuneration is set out below:
|
Key management personnel remuneration |
6 months ended 30 June 2021 |
6 months ended 30 June 2020 |
Year ended 31 December 2020 |
|
|
Unaudited |
Audited |
Audited |
|
|
$'000 |
$'000 |
$'000 |
|
|
|
|
|
|
Aggregate emoluments |
758 |
410 |
1,552 |
|
Equity-settled share-based payments |
2,001 |
5,789 |
5,801 |
|
|
|
|
|
|
|
2,759 |
6,199 |
7,353 |
|
|
|
|
|
NOTES TO THE UNAUDITED CONSOLIDATED INTERIM FINANCIAL STATEMENTS (CONTINUED)
FOR THE SIX MONTH PERIOD ENDED 30 JUNE 2021
12 RELATED PARTY TRANSACTIONS (CONTINUED)
Transactions with other related parties
The wife of the Company's CEO is a member and manager of DevGAMM LLC and pursuant to an agreement tied to her continued service to DevGAMM LLC, her membership interest in the company increased from 40% to 51% during the six month period ended 30 June 2021. The results of DevGamm LLC are included in the consolidation on the basis of control.
There were no other related party transactions during the period which require disclosure.
13 SUBSEQUENT EVENTS
In August tinyBuild announced the acquihire of Animal, for a total consideration up to a max of $10.2 million, split approximately 30%-70% between cash and newly issued tinyBuild shares, including upfront and deferred payments over the next three financial years.
In September we announced the acquihire of Bad Pixel, the development studio behind the very popular open world game Deadside, for a total consideration of up to $17.1m, including upfront and deferred payments over the next three financial years.
tinyBuild secured a new credit facility of $25m (expiry September 2022) on favorable terms with Bank of America. 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.