RightBridge Ventures Group AB interim Q2 2023 report

STRONG REVENUE and GROSS MARGIN GROWTH DURING THE FIRST 6 MONTHS OF THE YEAR

EBITDA IMPACTED BY EXTRAORDINARY EXTERNAL EXPENSES as well as TRICKED ApS

Profit and loss, in summary, group	Apr-Jun Jan-June Jan-Dec
SEK thousands	2023	2022	2023	2022		2022
Revenue	1.621	1.916	4.151	2.564		8.445
EBITDA	-3.328	-2.569	-8.795	-3.751		-23.598
Adjusted EBITDA	-2.899	-2.569	-5.421	-3.751		-12.219
Depreciation, amortization and impairment losses	-781	-226	-1.822	-292		-54.208
Earnings Before Interest and Taxes (EBIT)	-4.108	-2.804	-10.618	-4.057		-77.828
Profit/loss for the period	-1.398	9.673	-8.391	8.027		-67.680
EPS	-0,009	1,16	-0,05	0,96		-1,58

 

6 MONTHS JAN-JUNE 2023

REVENUES. The Group’s net sales have amounted to 4 151 KSEK (2 564 KSEK), an increase of 62% over the equivalent period of last year.

 

EBITDA. The Group’s EBITDA for 6 months to June amounted to –8 795 KSEK (-3 751 KSEK).

Adjusted EBITDA excluding one-off items amounted to – 5 421 KSEK (-3 751 KSEK).

 

EARNINGS. The Group’s net results for the first six months of 2023 have been -8 391 KSEK (8 027KSEK). Earnings per share* amounted to SEK -0.05 (0.96).

 

SECOND QUARTER 2023

REVENUES. The Group’s net sales have amounted to 1 621 KSEK (1 916 KSEK), a decrease of 15% over the equivalent quarter of last year.

 

EBITDA. The Group’s EBITDA for the quarter amounted to – 3 328 KSEK (- 2 569 KSEK).

Adjusted EBITDA excluding one-off items amounted to – 2 899 KSEK (-2 569 KSEK)

 

EARNINGS. The Group’s net results for the second quarter 2023 have been -1 398 KSEK (9 673 KSEK). Earnings per share* amounted to SEK -0.009 (1.16).

 

The equity/assets ratio** as of 30 June 2023 was 84% (94% )

 

*Earnings per share: earnings are divided by the average number of shares for the period. The total number of shares in the company as of 30 June 2023 amounts to 162 116 244. The average number of shares for the second quarter 2023 was 161 446 178. The average number of shares for 2022

was 42 936 539.

 

**Equity ratio: adjusted equity (equity and untaxed reserves less deferred tax) as a percentage of the balance sheet total.

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Significant events during the period

• -       Danish authorities accept the foreclosure petition of Tricked apS and a liquidator was appointed
• -       First deliverables of D11 Hub have been accepted by the client and the co – financeer of the hub, Kingdom of Bahrain' Labour Fund (Tamkeen)
• KnotOk is rebranded to Gaming Guardians, launching its e- commerce platform and unveiling the upcoming integration of an AI community and anti – toxicity management tools

Significant events after the period

• -       The Board of the Company dedcided to inititate arbitration proceedings due to broken lock-up agreement.
• -       Team Singularity Academy team wins EU ProLeague Division 2, and qualifies among top100 in Europe (rank #77
• Gothenburg municipality selects Lilmix to represent the city's esport culture and community at the annual Gothenburg Culture Festival ("Göteborgs Kulturkalas") anniversary year.

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ABOUT RIGHTBRIDGE VENTURES GROUP AB

 RightBridge Ventures Group AB (“RightBridge Ventures Group” or the “Company”) is a Sweden based listed corporation with a portfolio of esports and gaming companies that entertain, distribute digital media, gaming and esports content and enable brands and corporations to access the esports and gaming consumer community.

The industry has ratified the Company’s initial investment thesis “esport and gaming is not just playing games”. Organisations that manage esports teams are increasingly developing media and entertainment companies or agencies. While ‘original’ business areas remain in the foreground of the activities, the revenue contribution of such areas is declining compared to ‘expanding’ business areas. In particular, content creation and influencer marketing play an important role. They enable esports teams to bridge the gap between video gaming, esports and streaming and authentically activate their players – and thus their most important assets – independent from the competitions, providing the opportunity to deepen the connection to their fan bases, in line with RightBridge developed synergies among the Company's portfolio firms.

Knacks Sp. Z.o.o. Is a marketing, talent and a full-service esports agency based in Poland. It offers marketing and talent management services to players, teams and brands in the esports industry. The agency's services include influencer marketing, social media management, content creation and event management. Knacks Esports Marketing and Talent Agency also provides consulting services to companies looking to enter the esports industry. RightBridge Ventures Group ownership: 59.18%

1337 eSports AB is an esport and gaming specialised corporate advisory firm founded by Rightbridge Ventures. The company provides solid business solutions and expertise for esports and gaming companies seeking to improve their existing operations, or/and seeking to monetise the social digital environment of esports, gaming and the Metaverse. RightBridge Ventures Group ownership: 100%

Esports Pte Ltd. (“ESPL” - Esports Players League) is an operator of a global esports and media network. The company's network specialises in creating a platform for gamers, game developers, game and other digital media and content publishers to compete in online and on-ground tournaments, as well as market and distribute their content. ESPL is the pioneer in User Generated Tournament - ESPL Arena. RightBridge Ventures Group ownership: 21.77% 

Gaming Guardians is the first corporate digital responsibility initiative that provides support to corporations and consumers to handle toxicity in the digital realm of the Metaverse. RightBridge Ventures Group ownership: 100%

1 Direct ownership: 4,73%; Through 100% owned holding company iCandy Digital Pte. Ltd. 17.04%

Lilmix Esports AB is a professional esports organisation based in Sweden. It was founded in 2019 and currently fields teams in Counter-Strike: Global Offensive (“CS:GO”). Lilmix's CS:GO team has been particularly successful, with multiple top-three finishes in regional tournaments and online leagues. In addition to its competitive teams, Lilmix also has a content creation team that produces videos and streams on platforms like Twitch and YouTube. RightBridge Ventures Group ownership: 22%

Team Singularity is an international esport organisation that fields teams of Rocket League, CS:GO and Apex Legends. The organisation has achieved notable success in the esports industry, particularly in Apex Legends. Team Singularity also has a content creation team and is involved in esports talent development. RightBridge Ventures Group ownership: 89.99%

eSports Pulze AB (“ePulze”) is a top online platform for casual and professional esports players alike. This Swedish- based platform offers daily tournaments leagues and ladders in popular esports titles such as Dota 2, League of Legends and CS:GO. With its user-friendly interface, players can easily find and join competitions at all skill levels, track their progress and connect with other players and teams. ePulze also hosts live events and tournaments worldwide, making it a must-visit platform for esports enthusiasts who are looking for an exciting and competitive gaming experience. RightBridge Ventures Group ownership: 7.25%

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CEO Letter

Dear shareholders,

 

In our pursuit of navigating the rapidly evolving landscape of this industry, I am pleased to announce that our strategic decisions are yielding positive outcomes, even as we and others confront challenges impacting the sector:

 

• •     The perception that esports and gaming promote antisocial behavior and are solely reserved for children and youth continues to persist.
• •       Rising interest rates, inflation, and an ongoing crisis regarding the cost of living have created a complex economic climate.

■     In the current economic environment, securing orretaining sponsorship agreements has become particularly challenging due to the limited marketing budgets affected by macroeconomic developments.

 

These challenges also present business opportunities to harness the explosive growth of the industry in growth regions such as MENA. The increasing number of esports and gaming content viewers and consumers globally is exemplified by our portfolio company Epulze, which broadcasted nearly 500 hours during Q1 2023, amassing 14.6 million views and 1.9 million unique viewers.

In light of these challenges and opportunities, the Company has collaborated with its portfolio companies to address and capture them. Aligned with our commitment to staying at the forefront of market trends and customer demands, the Company has undertaken a strategic shift in our portfolio companies' product offerings. We are supporting our portfolio companies in allocating resources to emerging value-added services and technologies to remain competitive. Gaming Guardians stands as a clear testament to this endeavor.

This work has already yielded promising results in this new direction, and we are confident it will be a significant driver of future growth.

Our recent accomplishments over the past period showcase our ability to overcome these hurdles:

Diversified Revenue Mix through Value-Added Services (VAS). We have proactively diversified our portfolio companies' revenue mix by adding on value-added services (VAS). This transition from traditional sponsorship has enabled a broader range of services, including media services, education, event management, content creation, and media concept development. This expanded business portfolio has reduced our vulnerability to economic fluctuations and shifting market conditions. These services now constitute approximately 70 % of the Company's consolidated revenues, propelling entities like esports organisation Lillmix to profitability.

62% revenue growth and enhanced operational efficiency: The Company's efforts have resulted in increased revenue growth during the first half of 2023 (approximately 4.2 MSEK) compared to the same period in 2022 (approximately 2.6 MSEK). Our adaptability to changing market conditions and focus on VAS, coupled with our inaugural delivery to D11 Hub, have contributed to this positive trajectory. Furthermore, we have maintained our emphasis on operational efficiency, leading to an improved gross margin compared to the previous half-year period. 

Furthermore, despite a dramatic decline of company valuations across all industries, the audited impairments of the Company assets remain stable with only a 10% decline in the value of total assets.

Progress in Delivering to Bahrain Digital Gaming Hub – D11 Hub: Substantial strides have been made regarding our ongoing delivery to D11 Hub. Anticipated to launch in the third quarter of 2023, D11 Hub will provide a platform for regional engagement within the esports and gaming sphere in the MENA region.

Our  delivery  at  this  stage encompasses a comprehensive planning of a social media and influencer marketing strategy, content planning, educational materials, events, and tournaments. The mounting interest surrounding D11 Hub underscores our path towards              fostering              meaningful community engagement.

Community focus through Education and Gaming Guardians: Our commitment to instigating positive change in society has evolved through collaborations between Lilmix and several educational institutions, as well as the launch of the "Gaming Guardians" community platform. This platform endeavors to combat toxicity within the esports and gaming community and serves as an embodiment of our dedication to fostering a positive gaming culture while incorporating emergent AI technologies. Through our collaborative initiatives, we strive to make a meaningful impact on the esports and gaming realm.

Financial Results and the Impact of cost of listing and external administrative extraordinary expenses:  I  also  wish  to  highlight that the Company's results during this period have been significantly affected (nearly 55% of the group's consolidated expenses) by external costs associated with the Company's listing through a reverse acquisition transaction with Agilit, as well as portfolio company consolidation. This process has entailed temporary expenses for legal and administrative purposes, as well as the professional services requisite for executing a successful transaction. However, I underscore that measures have already been undertaken to curtail these costs (c. 2.5MSEK during Q2 and c. 5.9 MSEK for the first 6 months), and most of them are of extraordinary nature driven by listing, administration of securities and Tricked foreclosure.

These endeavours exemplify the commitment of our dedicated team, in conjunction with our  invaluable  collaborative  partners and shareholders, who together have paved the way for our future development. With one eye on challenges and another on opportunities, we persist in working resolutely to shape a successful future for the Company.

Our  interim  report  reflects  these early successes, indicative of a more diversified presence in the esports and gaming domain. Our focus on media, content, and technology, alongside our portfolio of esports organizations              as              engaged              and compelling messengers, demonstrates the progress we've made.

These steps reflect our devoted personnel, steadfast shareholders, and esteemed collaborative partners who stand by us on this journey

Warm regards,

Carlos Barrios

CEO, RightBridge Ventures Group AB

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FINANCIAL RESULTS

CONSOLIDATED RESULTS

The group’s revenue for the second quarter amounted to 1 621 KSEK (1 916 KSEK). Most of the revenue drop in the period can be attributable to prize money and other tournament revenue. In contrast, contract- based revenue has increased in the period vs the same period in 2022 by 9%. Q2 2023 includes the first billings for our contracts won in the Middle East.

Year-to-date to June 30th, revenue has increased by 62% compared to the equivalent period of last year, driven by the increase in marketing and media services offset by a drop in low-margin prize money of 469K SEK over the same period

 

External expenses (55%) and staff costs (45%) during Q2 2023 amounted to 4 537 KSEK (3 470 KSEK), the increase is mostly due to the full impact in the quarter of the expenses of acquired companies during last year in addition to higher audit, legal, pension and IT costs.

EBITDA for the second quarter amounted to -3 328 KSEK (-2 569 KSEK) and the adjusted EBITDA amounted to -2 899 KSEK (-2 569 KSEK). Year-to-date to June 30th EBITDA has amounted to –8 795K SEK (-3 751K SEK), with Tricked contributing to negative 2 633K SEK EBITDA for the first 2 months of the year.

Net result for Q2 2023 amounted to -1 398KSEK (9 673 KSEK) with items below the EBITDA line related to losses in associated companies as well as goodwill amortization and depreciation, offset by the positive effect of the accounting disposal of Tricked's balance sheet for 5 840 KSEK.

 

Net result for Year-to-date June 2023 amounted to -8 391 KSEK (8 027 KSEK).

PARENT COMPANY RESULTS

The Parent Company’s revenue for the second quarter amounted to 0 KSEK (0 KSEK). EBITDA for the quarter amounted to -902 KSEK (-804 KSEK) Net result for the period amounted to -928 KSEK (- 3 438 KSEK)

The Parent Company’s revenue for the first 6 months of 2023 amounted to 0 KSEK (0 KSEK). EBITDA for the same period amounted to –1 442 KSEK (-2 490 KSEK) Net result for the 6 month period ending 30 June 2023 amounted to –3 804KSEK (- 5 124 KSEK)

LIQUIDITY AND CASH FLOW PARENT COMPANY

Second quarter 2023

Cash Flow from operating activities amounted to - 929 KSEK (-804 KSEK). Cash flow from investing activities amounted to -1 106 KSEK (-300 KSEK) which is related to shareholder loans to subsidiaries. Cash Flow from financing activities amounted to 0 KSEK (0 KSEK).

Net cash flow for the period amounted to -2 728 KSEK (-1 870 KSEK). Cash and cash equivalents at the end of the period amounted to 1 546 KSEK (3 403 KSEK).

6 months to 30 June 2023

Cash Flow from operating activities amounted to –1 594 KSEK (- 2 490 KSEK). Cash flow from investing activities amounted to -4 906 KSEK (-600 KSEK) which is related to shareholder loans to subsidiaries. Cash Flow from financing activities amounted to 5 932 KSEK (5 696 KSEK). The parent company raised in the period 2 000 KSEK in equity and 3 932 KSEK in loans.

 

Net cash flow for the period amounted to -454 KSEK (2 051 KSEK). Cash and cash equivalents at the end of the period amounted to 1 546 KSEK (3 403 KSEK).

LIQUIDITY AND CASH FLOW CONSOLIDATED

Second quarter 2023

Cash Flow from operating activities amounted to – 2 916 KSEK(-1 958 KSEK). Cash Flow from investing activities amounted to -4 KSEK (-1 661 KSEK). Cash Flow from financing activities amounted to -75 KSEK(10 141 KSEK).

Net cash flow for the period amounted to – 2 995 KSEK (6 523 KSEK). Cash and cash equivalents at the end of the period amounted to 2 249 KSEK (7 681 KSEK).

The Company plans to continue enhancing its liquidity position for existing operations and additional acquisitions through a combination of subsequent rights issues, operational changes to improve the profitability of its subsidiaries and the use of additional efficient credit facilities where possible.

In order to improve liquidity in the group, and as communicated in March 2023, the company issued a maximum of 27,940,028 warrants of series TO1. Each warrant of series TO1 entitles the holder to subscribe for one new share in the Company against cash payment corresponding to SEK 0.50.

The subscription period for the subscription of shares with the support of warrants of series TO1 will be from, and including, November 1, 2023 to, and including, November 15, 2023.

Upon full exercise of the warrants of series TO1, the Company may receive up to approximately SEK 13.97 million before issuing costs.

Year to date 2023

Cash Flow from operating activities amounted to – 7 454 KSEK(-2 680 KSEK). Cash Flow from investing activities amounted to -4 KSEK (-2 511 KSEK). Cash Flow from financing activities amounted to 6 628 KSEK KSEK (11 141 KSEK).

Net cash flow for the period amounted to – 829 KSEK ( 5 950 KSEK). Cash and cash equivalents at the end of the period amounted to 2 249 KSEK (7 681 KSEK).

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CONSOLIDATION

In accordance with 7 kap §23 ÅRL the acquiring company of RightBridge Ventures Group AB is RightBridge Ventures AB because the owners of RightBridge Ventures AB gained control over RightBridge Ventures Group AB. This means that the controlling parent company is RightBridge Ventures AB even though the legal parent company is Rightbridge Ventures Group AB.

In the financial statements of RightBridge Ventures Group AB, the parent company will therefore be RightBridge Ventures AB and RightBridge Ventures Group AB will be seen as a subsidiary and included in the financial statements as per the date of the transaction.

THE SHARE

RightBridge Ventures Group AB (Publ) has been listed since 28th February 2022 on Nasdaq Stockholm First North Growth.

 The number of shares in Rightbridge Ventures Group AB as of 30th of June 2023 was 162 116 244.

Ticker First North – RIGHTB ISIN code SE0019070749

ACCOUNTING PRINCIPLES

 This report is prepared in accordance with the Annual Accounts Act and BFNAR 2012:1(K3). The company is applying the same accounting principles and calculation methods which were applied to the 2022 Annual Report.

 

Auditors

Moore Allegretto

 

Certified Adviser

Amudova AB Postadress: c/o Nybrogatan Business Center Box 5855, 102 40 Stockholm [email protected]

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RISKS and CORPORATE RESPONSIBILITY DISCLOSURE

In this section, the risk factors and significant circumstances considered essential to the Company's operations and future development are described. The risks described below are not ranked in any specific order, and the risk factors listed below are limited to those specific to the Company and its portfolio companies and do not claim to be exhaustive. The following risks may have a substantial adverse effect on the Company's operations, financial position, and results. They could also impact the performance of the Company's shares, potentially leading to investors losing all or part of their invested capital. Additional risks currently unknown to the Company could also have a similar negative effect.

 Currency Risks. The company's reporting currency is SEK, and the company invests in growth companies in various jurisdictions, which means that both existing and future portfolio company shares may be denominated in currencies other than SEK. As such, there are currency risks in the form of translation exposure. This currency risk primarily relates to the translation of foreign portfolio companies' income statements and balance sheets and arises when translating the portfolio companies' equity and results into the company's reporting currency. Therefore, the value of the company's portfolio is exposed to exchange rate differences, which could result in a negative impact on the company's operations, financial position, and results.

Liquidity Risk.Liquidity risk is the risk that the company cannot fund its commitments and meet short-term payment obligations as a result. This could occur in one or more of the company's portfolio companies. If the company or its portfolio companies fail to meet short-term payment obligations, it could result in a negative impact on the company's operations, financial position, and results.

Credit Risk. Credit risk (counterparty risk) is the risk that the company's counterparts cannot fulfill their obligations to the company. This entails specific credit risk, which could have a negative impact on the company's operations, financial position, and results.

Risks Related to the Company's Acquisitions and Investments. The company's business model involves acquiring and building companies from scratch or investing in existing growth companies, often as active minority shareholders within the segments of esports/gaming, e-commerce, and fintech. Growth through acquisitions demands the development of systems, infrastructure, and organization, and there is a risk that the Company may not effectively manage this growth. Investments always entail risks and uncertainties, particularly investments in companies in early stages, which are often the profile of the company's acquisition candidates. The company's financial position depends on how the companies in which the Company has invested or will invest develop in the future. There is also a risk that expected synergies resulting from the acquisition strategy are not realized to the desired extent, or that the legal, financial, or commercial due diligence of target companies is insufficient. There is also a risk that the target company withholds essential information, leading to the company's acquisition ambitions not achieving the expected effects. If this risk materializes, it could have a significant negative impact on the company's operations, growth, and long-term profitability.

Risks Related to Dependence on Key Personnel. The company has a limited organization and is highly dependent on key personnel and qualified staff. The company's success and future growth depend on the knowledge, experience, and creativity of a few individuals. The company has four individuals considered key personnel. These individuals work in management, finance, and investments. The company may fail to retain these key personnel and to recruit new qualified staff to the extent and on the terms needed, which could have a negative impact on the company's operations, financial position, and results.

Risks Related to Economic Development. External factors such as supply and demand, as well as economic cycles, can impact revenues, costs, and stock valuations. A general economic downturn and changes in user purchasing power can negatively affect the demand for products and services offered by the company's portfolio companies. Therefore, there is a risk that the company's future revenues and stock valuations may be affected by these factors, which are beyond the company's control, potentially leading to a negative impact on the company's operations, financial position, and results.

Political Risks. Several of the company's portfolio companies are led and operate in Southeast Asia, primarily in Singapore and Kuala Lumpur. Risks can arise from changes in legislation, taxation, duties and fees, exchange rates, and other conditions applicable to companies operating in international markets. Regulatory decisions can also impact the company's operations. The company will also be influenced by factors associated with the political and economic climate in the countries where they conduct their operations, which could have a negative impact on the company's operations, financial position, and results.

Disputes. There is a risk that the company may become involved in arbitration proceedings and/or legal processes. These types of legal processes can be time- consuming and costly, and there is a risk that they may not be resolved advantageously for the company. There is also a risk that the company, in the event of losing legal processes, may be required to compensate the counterparty for legal costs, which could have a negative impact on the company's operations, financial position, and results.

Tax Risk. The company's operations are conducted in accordance with the company's interpretation of tax laws. There is a risk that the company's interpretation of applicable laws, regulations, or relevant authorities' interpretation of these or administrative practices may be incorrect, which could have a negative impact on the company's operations, financial position, and results.

Sustainability Disclosures. The company's view on corporate responsibility and sustainability is to conduct its operations in a way that generates positive outcomes for all stakeholders and maximizes economic, social, and environmental value simultaneously. By doing so, Company Investment Group accepts the responsibility that follows from this, which goes beyond both strict legal obligations and economic outcomes. Transparency, the desire for fair business, and positive connections to society form the basis for daily activities and corporate responsibility practices.

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DECLARATION BY THE BOARD OF DIRECTORS

The Board of Directors and the CEO of Rightbridge Ventures Group AB (publ) hereby certify that this interim report provides a true and fair overview of the operations, financial position and performance of the Group and Parent company.

 

Stockholm, 31 August 2023

This interim report has not been reviewed by the Company’s auditor.

 

 

 

Magnus Leppäniemi Stefan Lindeberg Kenneth Arnström

 

 

 

Johan Rooth Carlos Barrios

Chairman of the board CEO

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FINANCIAL CALENDAR

30.11.2023 Q3 July - September 2023

28.02.2024 Q4 October – December 2023

31.05.2024 Q1 January – Mars 2024

30.08.2024 Q2 January – June 2024

 

For more information, please contact:

 

Carlos Barrios, CEO

Telephone: +46 70 511 25 79

Email: [email protected]

 

Johan Rooth, Chairman of the Board

Telephone: +46 70 536 77 33

Email: [email protected]

 Address:

Rightbridge Ventures Group AB (Publ)

Norrlandsgatan 24

111 43 Stockholm

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 DISCLOSURE

This information is information that RightBridge Ventures Group AB (publ) is obliged to make public according to the EU's market abuse regulation (MAR). The information was provided, through the above contact person, for publication on 31.08.2023.

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