Rainbow Rare Earths Phalaborwa project shaping up to be one of the lowest cost producers globally. Watch the video here.
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Is this the overhang then? Burtis owns ~14m shares...
"After taking paternity leave in 2022, Luke Burtis, Chief Operating Officer (COO) and Board Member, has decided to resign from his board position and management role with immediate effect to spend more time with his family. Luke has been a valuable member of tinyBuild, and his contributions to strategy and operations in the early years have been invaluable. The Board of tinyBuild would like to express its gratitude to Luke for his contributions during his tenure and wishes him all the best in his future endeavours."
Seems likely although a member on here was in contact with TBLD recently (via email) and was told that none of the directors were selling. Either TBLD were unaware of this at the time or they were telling porkies.
Results today read well. This share is at bargain basement levels so I’m not surprised to see the shares are up heavily today
Slight bounce since the open on low volume, I'm remaining wary as there are so many moving parts here & the CEO wants to bat it off as 'markets', where did Amati & Franklin buy their shares from? Why haven't TR1's been released for them? What does Burtis propose to do with his 14m shareholding?
I'd also have thought that the employee benefits trust buying 419k shares was material information that should be RNS'd at the time of purchase?
As for the results, capitalised development spend is off the charts at $35m vs just $15m prior year & cumulative carried software development intangibles sit at $49m vs their amortisation policy of depreciating over 36 months... that means a potential average of ~$16.5m per annum will be depreciated over the next 3 years (vs just $9.2m over the last 2 years combined)... that is a huge headwind to gross margins.
The CEO did not address any of the concerns raised on here and corporate governance questions need to be answered over the next two days.
Agreed @ ShearClass. The Capex you mention has to be taken into context with the speed in which TBLD are buying in and developing IP. One could argue the TBLD are trying to grow a little too quickly. I think a period of consolidation is needed especially as the macro backdrop looks very uncertain in the near future.
Despite this, which ever way yo dice it, from where I'm sitting at £100m market cap the shares are very attractively priced.
The results on the face of it are good given the overall environment stated. My only observation that back catalogue sales represented almost all of total gaming revenues, seems very high and so it will be imperative that successful new titles emerge.
Reading through some of the usual waffle one gets from these reports, I can't see that any of my queries have been addressedd. If I'm asking them, I'm damn sure many others are too.
On 7th February the SP had drifted down to a lowly £0.75p. This morning, even after an 8% rise following the results, I could still buy at £0.515p.....some 31% lower than about six weeks ago. Whoever sold on 7th February has left everyone else a big hill to climb. I will be 'unhappy' if it turns out to be the COO as was.
The fact that one of the founders, Burtis, has decided to leave is disappointing.....only two years after the IPO. There doesn't seem to be any announcement that he was a seller, but no doubt we will eventually find out. And they don't intend to carry on his postion of COO, preferring automony within seperate teams. Just my opinion but, in my eyes, that carries risks too with no overall COO monitoring the teams.
Quote from the CEO today : ''It's easy to go insane when looking at your share price live on screen. I see many people obsessing over it. Our shares have been volatile and it means that the share price can move up or down by 5% or even 10% in a day, but that volatility doesn't alter the fundamental value of the business''. Yes Mr Nichiporchik, quite so, but that doesn't explain the 20% drop in SP on 8th February. Without RNS's, everything becomes even more nebulous.
Good summary Simon. It's quite a coincidence that the COO & 7% shareholder is leaving with 'immediate effect' and just a few weeks earlier a huge number of shares were dumped by a mystery seller. Some were bought by Amati & Franklin Templeton, but the rest remain MIA & there is clearly still an overhang in play.
Has Mr Burtis sold his holding and not told anyone? This absolutely needs to be clarified on tomorrow's call IMO.
TM17 Founder & biggest shareholder Debbie Bestwick stepping down as CEO, Yet this stock sits on a PE of 15!!! More than double TBLD's. TBLD should, if matching TM17'S PE, be 100p per share. The current share valuation is unwarranted.
Well, it all remains a mystery. I've watched a recording of the presentation by the CEO, the CFO and a couple of other guys. All very informal. Most of the hour was taken up by a repetition of comments re the accounts and the games.
Shareholdings came up in a couple of questions at the end. About recent significantly large single trades detrimentally affecting the shares, the guy there said it was the seller (not the company) who is obliged to instigate an RNS if the percentages in ownership changes to, as he put it...''3, 4, or 5%''. Whilst the company were not obliged to check anything they had nevertheless made checks and there had been no significant change in ownership re any of the senior management or major institutions shareholdings, and the details on their website were up to date.
The last question asked whether the CEO was tempted to, or wanted to buy more shares in the company given its low price and great prospects. The CEO said he would love to buy more shares at this price but due to technicalities it would instigate a 'takeover event'..... On that basis he said he couldn't do it. I think he also said he thought the price had been subdued due to not many employees being able to buy the shares as most were outside the UK. They were looking at ways of making it easier for employees to have share ownership.
Unfortunately I am none the wiser after watching this. Only my opinion, and I may be totally wrong, but I got the distinct feeling that this is still a bit of a one man band operation. I was left underwhelmed.
A potential new investor watching that would leave the money in their pocket. They seemed more concerned about getting to the Bafta Games Awards later on. Alex seems to hire people who tell him what he wants to hear. They did not put up any explanation for the share trades of Feb 8/9, when a third of the company shares were traded. I expect more of the same.
I found the presentation very revealing in terms of why the share price sits where it does & why cash burn has been so high. In short, I don't think the CFO has anywhere near the required experience to be heading up a listed company. IMO some of his answers to questions were very poor, particularly the one about dividend payments to non controlling interests, which seemed very awkward & bordering on making it up.
Looking at LinkedIn, he joined TBLD as a finance manager in Dec 2018 & was then promoted to Director of Finance & HR before assuming the CFO title just before listing. Prior to TBLD he worked at a construction company & an administrators, he only graduated in 2013 & doesn't appear to have a finance or accounting degree...
I'd guess that the CEO doesn't think finance / accounting is important & would rather have someone that does as he says rather than a CFO who actively controls the financial performance of the business & says no to him. Pretty crazy for a company valued at £100m today & a huge contrast to the CFO's who head up FDEV, TM17 & DEVO.
Bottom line is I very much doubt he has any input into the acquisition decisions & as such the cash burn is being driven by the CEO's ego. A dangerous situation for a PLC & I suspect this ship is heading for the rocks. Won't post here any further but will watch from afar, good luck to all those who continue to hold...
Such interesting discussion re cash burn- how does one develop a game without spending money? I don't see how you can't capitalise it either given its nature. You'll have no idea if its been "burnt" until you wind forward 2 years to see if its generated any return. You'll see the exact same treatment at TM17 for example
Interestingly the current cash level exceed the proceeds raised at IPO so cashflow has actually been generated and not burnt since listing (even including this investment phase in the latest financial year)
Strikes me this is now a "show me" story over the next few years. I'm interested to see the size of insider purchases, particularly those of the CEO which he said would be forthcoming in the presentation.
FYI Re the Feb 9th trades, pull up the history and you'll see that some duplicates have been deleted and you're left with (presumably) equal and opposite pairs, which look like roll-overs
I'd have to agree that the CFO does not instil confidence
In their first interims post IPO they had $61.6m, so they've used around $36m in cash since.
And also not true re. TM17, in their full year results released earlier this week they made £49m operating FCF and spent £26m on capitalised software development. TBLD made $19m in operating FCF and spent $36m on capitalised software development. Quite a difference.
That might be fine in isolation, however couple it with aggressive spending on acquisitions + the strategic expansion into TV production and it looks a bit out of control.
Oh and those trades were 100% not rollovers, rollovers have no impact on the price whereas shares fell 30% in early Feb...
I don't think amounts spent on acquisitions and deferred consideration can be labelled as cash burn. I do have to wonder though as you say re the acceleration in spending.
I make no reference to the quantum of capitalised development costs merely that it's the same treatment for another indie games developer (TM17) and you literally have no idea if its money well spent until a few years down the line.
The issue I have with the trades is that they're about 30% of the mkt cap? Other than the CEO no entity has anywhere near that % - when you remove the trades that have been deleted you still have 2/3 of that volume remaining so around 20%- do we think its premier and Martin currie that have sold down then which ties in with the TBLD website? I can't see those shares in public hands being so concentrated
I should add I don't hold (as someone is still v keen to sell) but it looks interesting
As I think ShearClass mentioned before, Premier Funds sold their holding of the company (8,607,717 shares) sometime between July '22 and 8/3/23. I'd hazard a guess that the sale was on 7th February but cannot be sure.
During the same period, Franklin increased their holding by 2,580,930 and Amati increased their holding by 2,028,000 leaving, in theory, an overhang of about 4 million shares. Even if this occurred on 7th February, it doesn't seem to tally with the volumes on that day.
My afterthought about the CEO's comment about being eager to buy more shares in his company is why, when he already holds 37% ? It doesn't really make sense unless he wants to take it back under his control in which case there would be some unhappy institutions and shareholders. If he hasn't done so already, I'm sure Luke Burtis would want to reduce his holding now he's standing back. On that basis alone I can see this sp continuing to drift downwards. I have a relatively small amount invested but have been stung before with this type of operation. Someone please remind me not to invest in IPO's again on the basis that most private investers get shafted in favour of the institutions who bought in at a fraction of the price.
Investors Chronicle are still seeing this as a 'buy' .....but then again they have been supportive all along together with Questor who tipped them at £2.50 !!! The present price is tempting to average down, but given my reservations, I will 'hold' on the hope some cash rich American games business comes in to acquire it.
this has been a fairly fascinating share to watch...i've never spent so long deliberating over something in the market. in many ways...there are a lot of pluses here. if alex executes long term from here...the opportunity is huge. no doubt at these levels it could be a 10 bagger over the medium term...and generally having a high conviction founder leading the business is a good thing.
however...there are a lot of moving parts here...something this forum has done an excellent job of debating about. certainly helped me with my decision making here. potential pitfalls:
1. the business is now generating a lot of revenue from past titles. that is fine but not going to be the key determinant to success here. tinybuild need some home runs with own IP developed games that can be built into franchises. that's what would make this a bagger and actually mean the cash spent has been a good strategy. they might be able to succeed...but HN 2 has clearly not been a huge success - most evident as Alex never stopped talking about it and I got distinct impression in results/presentation that he was trying to not focus on it.
2. gaming is really consumer taste sensitive...a few wrong moves or bad titles and suddenly everyone just leaves you. very little actual consumer loyalty and its a hard business to analyse in that regard for PI's. This and the above point make me most nervous. dodgy shareholder dealings and more cash being spent on investment I can live with...but if the games aren't hitting consumers in the right way, this share will be down the toilet.
3. as well pointed out today on the forum...cfo is clearly out of his depth (which may be how alex wants it)...thats a real problem when you have a very capital intensive business which has ramped up investment, both in headcount and game development AND acquisitions. wouldn't take much for things to really get out of control.
4. shareholder disclosure has been really poor and the COO leaving abruptly seems honestly a bit suspicious. may be nothing at all...but if he's left and sold shares at these gutter prices, it does really worry me. stock is now crazily valued vs. the other gaming companies, and is at lower multiples vs. devolver etc...and at very hefty discounts vs. T17. any insider selling at these levels or under even a quid just makes me really question whats going on internally.
for all of those reasons i'm going to hold off until more clarity on how there games are being received. but one im going to be watching daily and best of luck to those who are invested.
According to Morningstar, as of 31.03.23, Franklin and Amati have reduced to under 3%. No mention of the Netease 6.3% stake.
Charlie156.....interesting figures on Morningstar. Some look accurate and others are inexplicable, such as Premier, who they imply still retain 8,607, 717 shares (4.22%) as at 31/3/23 , whereas on Tinybuild's website they are no longer mentioned as of 8/3/23.
I'm comparing ownership details on three different websites. Some make sense but others don't. I mean. where is Franklin Templeton on the Morning Star figures......they apparently own over 11million (5.7%) and not mentioned, and, as you say, Netease with nearly 13million (6.3%). Weird.
It is irritating that shareholders are unable to easily find a true and accurate list of main owners of these shares.
Just to add to info re holdings, FT website can sometimes provide a more granular look at movements (with some dates)- link below- top holders and movers section under institutional shareholders
https://markets.ft.com/data/equities/tearsheet/profile?s=TBLD:LSE
And just to echo the thoughts below, I've found this forum (both +ve and -ve) very useful
well....now we are moving into the 30s anytime now...
good report released by zeus on researchtree few days ago...looks at UK and EU gaming sector...the conclusion of which looking at all the numbers is that TB is way way way way undervalued vs. literally every other name. However...are we missing something more serious? I just don't know...but at these multiples of value its starting to get to stage where it is worth just taking the risk from valuation standpoint...
The market appears to have taken the change in amortisation policy very negatively. That isn't surprising given that it's effectively kicked the problem down the road & meant that EBITDA & bottom line profit will be significantly impacted for the next few years.
As to the valuation, whether it's cheap or not all depends on whether they can continue to grow the top line, if revenue growth were to stall + amortisation costs increase by ~$10m per annum + they continue to invest cash in new games, depleting the cash balance, then the current £85m won't look cheap. If it was to get to sub £50m then I'd agree it's probably worth a punt, but only with the disclaimer of needing to see the half year financials before buying!
as usual shearclass...your comments always very useful. and you are spot on...this is a revenue growth play and any faultering on that front with failure to release new games which build decent franchises...you have a failed growth story because even 'average' top line growth will not offset all the other headwinds.
this is why its hard to invest...very hard to forecast the top line prospects because very difficult to gauge the success of new games etc.
Definitely something not. Tipped in the Times today and so that may see short term bounce
Cheers ggrantsu, yes really difficult to invest - particularly when such a huge overhang is still evident and there is no clue as to what is causing it... Safe to say that the puff piece in the Sunday Times doesn't mention any of the risks, yet claims it's 'in the bargain bin', horrible journalism but amazingly still generates substantial volume.
I note that Devolver Digital 'kitchen sinked' their results this morning, looking beyond the headline figures it looks better value than TBLD (with the obvious exception that they are primarily a 3rd party published), and much lower risk given the huge cash on balance sheet + lack of cash burn. Normalised EBITDA was $23.2m with operating cashflow of $30m, they spent $32m on capitalised software development and around $2.5m on share buybacks so total cash outflow was $4m. They ended 2022 with $79.5m cash and their market cap this morning is £128m... so their current EV is £64m.
TBLD EV using 31/12 cash on balance sheet = £70m / £15.5m operating cashflow = 4.5x
DEVO EV using 31/12 cash on balance sheet = £64m / £24.2m operating cashflow = 2.6x
Not holding either company but interesting to watch where both of them goes over the near term...
https://www.reuters.com/markets/deals/angry-birds-maker-rovio-confirms-talks-with-sega-over-tender-offer-2023-04-15/
Rovio (Angry Birds) potential t/o by Sega