TIDMVLTY
RNS Number : 5717Q
Veltyco Group PLC
07 June 2018
7 June 2018
VELTYCO GROUP PLC
("Veltyco" or "the Group")
Final Results for the year ended 31 December 2017
Veltyco, the AIM quoted marketing company for the gaming sector,
is pleased to announce its final results for the year ended 31
December 2017.
Financial highlights
-- Revenue for the year increased 165% to EUR16.2 million (2016: EUR6.1 million)
-- Operating EBITDA for the year increased 260% to EUR8.1 million (2016: EUR2.2 million)(1)
-- Raised EUR2.55 million before expenses during the period to
fund the acquisitions of T4U Marketing Ltd ("T4U") and Bet90 in
April 2017
-- Proposing to pay a maiden dividend for the year ended 31
December 2017 amounting to 0.25p per share
Operational highlights
-- Completed the acquisitions of 51% interests in each of T4U
and Quasar Holdings Ltd (running the Bet90 operations)
-- Launched Bet90 in July 2017 and achieved significant growth
in revenues; the Board expects Bet90 to be a key driver of further
growth in 2018
-- Achieved growth in all three major verticals the Group operates in
Post year end
-- Acquired a 51% interest in Varkasso Limited, a software
platform providing crypto wallet solutions based on blockchain
technology
-- Completed acquisition of a database of active users in the
online financial trading sector, ahead of the Group's intended
launch of a regulated brand later in 2018
-- Extended existing partnership with eSports.com
Current trading
-- Momentum from 2017 has continued into 2018, with revenues of
approximately EUR4.8 million in the first quarter of 2018 - growth
of 60% year on year
-- As at 28 May 2018, the Company had cash of EUR1.6 million
compared to EUR0.7 million as at 31 December 2017
Gilles Ohana, Chairman, commented: "We are delighted with the
progress achieved at Veltyco throughout 2017, which has delivered a
very strong trading performance and enabled us to propose a maiden
dividend.
We have enjoyed a positive start to 2018 with revenues in the
first quarter showing significant growth when compared to the
corresponding period in 2017. Looking ahead, we see continued
growth in 2018, both from our marketing activities, including the
potential to expand our current sportsbook marketing activities
into new territories, and our own brands, in particular Bet90,
which is expected to be a key driver of this growth."
This announcement contains inside information for the purposes
of Article 7 of Regulation (EU) 596/2014.
____________
(1) Operating EBITDA excludes the listing expenses which the
Company incurred in respect of the reverse merger completed during
2016 and share based payment expense.
For further information please contact:
Veltyco Group Plc +44 (0)1624 605 764
Gilles Ohana, Chairman
Melissa Blau, CEO
Marcel Noordeloos, CFO
Strand Hanson Limited (Nominated Adviser) +44 (0)20 7409 3494
James Harris / Richard Tulloch / James Dance
Whitman Howard Ltd (Broker) +44 (0)20 7659 1234
Francis North / Nick Lovering
IFC Advisory (Financial PR & IR) +44 (0)20 3934 6630
Graham Herring / Miles Nolan / Zach Cohen
About Veltyco
Veltyco is a group of companies focused on generating marketing
leads and entering into marketing contracts for the activities of
various partners in the gaming industry as well as operating its
own brands. Veltyco focuses on complementary activities under one
umbrella, leveraging its historical cash generative activities of
marketing online casinos and sports betting.
Website: www.veltyco.com
STRATEGIC REPORT
I am pleased to present our Annual Report for the financial year
ended 31 December 2017.
Financial and operational highlights
Revenues: +165% to EUR16.2 million (EUR6.1 million)
Operating EBITDA: +260% to EUR8.1 million (EUR2.2 million)
Operating profit: +361% to EUR7.5 million (EUR1.6 million)
Maiden dividend proposed: 0.25p per share (2016: nil)
Operational review
The Board is delighted with the operational progress achieved
during 2017 and the significant uplift in its operating results.
The growth in 2017 has been delivered from both our core marketing
and promotion activities for third parties but also from our own
gaming brands.
During 2017, Veltyco Group plc (the "Group", the "Company" or
"Veltyco") achieved significant growth in both revenues and
profitability, through the Company's continued focus on the
marketing and promotion for its partners in sports betting,
casinos, poker games, lottery and online financial trading.
Revenues increased 165% to EUR16.2 million (2016: EUR6.1 million),
driven by the significant increase in the Group's commissions from
its marketing activities, together with a full year's contribution
from marketing activities for Zoomtraderglobal. In addition, the
Company's own brands had a positive impact on revenues, in
particular Bet90, the Company's own sportsbook which commenced
operations in July 2017.
The majority of our revenue continues to be derived from online
marketing activities but we are also seeking to increase the level
of operational control we have by owning our own brands. Given the
Company's expertise in marketing, the Board believes that the
continued expansion of its own brand activities, following the
acquisitions of 51% interests in each of Bet90 and T4U during 2017,
and the recently announced intention to launch a new regulated
brand active in the online trading sector later in 2018, will be a
key driver for the Company's future growth.
As previously announced, the Company is in discussions regarding
the potential acquisition of Ruleo Alpenland GmbH, a company that
operates the BTTY branded sportsbook in Germany and Austria.
Following completion of due diligence and recent developments
regarding the German license program that could impact on BTTY
going forward, the Board is currently considering its options
regarding the acquisition and will update the market shortly.
Subsequent to the year end, the sportsbook operator, for whom
the Group undertakes marketing activities, informed the Company
that it would not be automatically extending its existing marketing
agreement and that it would therefore end at the end of April 2018.
The Company is pleased to confirm that following discussions
between the parties, the Group and the sportsbook operator have
agreed, subject to documentation, to further extend the existing
agreement as well as to potentially expand the marketing
relationship to include additional territories. In light of this
and the upcoming FIFA World Cup in Russia starting in mid-June
2018, the Group continues to provide marketing activities to the
sportsbook operator. The Directors believe that the proposed
continuation of the existing marketing agreement and potential
expansion into new territories, demonstrates the reach of the
Group's marketing activities.
Another exciting venture which Veltyco has entered is that of
eSports.com - the eSports market (multiplayer and team video game
competitions) is a rapidly expanding market and is attracting
increasing interest from many large companies and media brands. To
leverage our client base and address this market we recently
acquired a minority stake in Germany based www.esports.com, which
is an online portal for the eSports industry providing news, scores
and statistics. This is an exciting opportunity for Veltyco to
ultimately provide betting odds on games, through Bet90, as the
eSports market develops.
Innovative techniques are at the heart of the Company's
operations and was the basis for the acquisition of a 51% interest
in Varkasso in January 2018, a Company which has the exclusive
rights to the use 8crypt, a crypto e-wallet service provider based
on blockchain technology. The Board believes that the strategic
investment will, in the future, allow Veltyco to provide a solution
that enables customers to connect their own individual crypto
wallets to traditional currencies as well as crypto currencies.
Financial review
2017 was a year of significant growth for Veltyco. After the
successful completion of the reverse merger in June 2016, Veltyco
has expanded and diversified its operations, both through the
addition of marketing partners and acquisitions, in particular
Bet90.
Revenues increased significantly to EUR16.2 million (2016:
EUR6.1 million), driven by the strong performance across our core
marketing and promotion activities for third parties together with
a growing contribution from our own gaming brands as detailed
above. The total profit for the year amounted to EUR6.8 million
(2016: EUR20.6 thousand). The results for 2016 were significantly
impacted by the expenses relating to the reverse merger and
associated due diligence processes of in aggregate EUR1.5 million.
The operating EBITDA for the year ended 31 December 2017 was EUR8.1
million (2016: EUR2.2 million pre any costs associated with the
reverse merger).
Details of the operating EBITDA are as follows:
2017 2016
EUR EUR
Operating profit 7,482,129 1,621,946
Depreciation and amortisation expense 380,173 87,169
Impairment charge - 275,011
Reverse merger listing expense - 123,850
Share based payment (included in
salary expense) 239,084 140,940
---------- ----------
Operating EBITDA 8,103,386 2,248,916
---------- ----------
Further to the acquisition of 51% of the Bet90 operations via
Quasar Holdings Ltd (for a total cash consideration of EUR2.0
million), the Company also acquired 51% of T4U Marketing Ltd (for a
total cash consideration of EUR0.5 million), a company that
operates the online sports-betting forum sites of the
www.tippen4you.com, www.tippen4you.at and www.sportwettenforum.info
domains. To fund these two acquisitions, the Company raised EUR2.55
million (before expenses) via a subscription with new and existing
shareholders.
Both acquisitions are performing in line with Company's
expectations and the Board believes that Bet90 will be a
predominant driver of the Company's growth in revenues and
profitability going forward.
Cash Flow
The Group operates in three major verticals (sports book and
casinos, online lotteries and online financial trading) and has
revenues and cost centres in numerous locations around the world.
Significant growth was achieved across all verticals during 2017
and in particular, in respect of commissions due from the Group's
marketing activities in online financial trading.
The Group has experienced some operational difficulties in
receiving agreed marketing commissions within the online financial
trading vertical due to internal processes applied by the Group's
banks, however, the Directors have received written confirmation
from the operators that the commissions are due and payable to the
Group. The Directors started the process of restructuring the
Group's banking relationships during 2017, in order to collect the
receivables from all trading operators in different locations,
without any restriction and the benefits are already being seen and
are expected to increase in the coming months.
As a result of the above, the Group had a negative cash flow
from operations of EUR1.1 million for the year ended 31 December
2017. Following completion of the restructuring of the Group's
banking relationships, the Group does not expect to experience
ongoing issues regarding the receipt of commissions due to it
pursuant to its marketing agreements.
Board changes
During and post the year end, the Company made a number of
changes to its Board and senior management to reflect the Company's
evolution and growth.
In January 2017, the Group announced the appointment of Ilan
Tzorya as Non-executive Director to support the Group's option
marketing activities.
On 20 November 2017, the Group announced the appointment of
Gilles Ohana as Non-executive Director and that David Mathewson
would be stepping down as the Company's Non-Executive Chairman on
31 January 2018. Gilles Ohana was subsequently appointed as
Non-Executive Chairman on 26 March 2018.
After the year end, in March 2018 the Company announced a number
of further changes to its Board and senior management, as the
Company sought to enhance the composition of its management team to
allow it to capitalise on the significant opportunities that it
believes are available to it. As part of the changes, Melissa Blau
was appointed as Chief Executive Officer and Rainer Lauffs was
appointed as Chief Operating Officer, while Uwe Lenhoff and Hans
Dahlgren both stepped down from the Board, though they both remain
fully committed to the Company as part of the Company's Senior
Management team. Uwe Lenhoff is now the Company's Head of Business
Development, allowing him to focus on his strength as an
entrepreneur and new business generator whilst handing over the day
to day operations of the business to Rainer Lauffs. Hans Dahlgren
will continue as the Company's Chief Technical Officer. In
addition, the Company announced the resignation of Ilan Tzorya as a
Non-executive Director, to make way for the aforementioned changes
to be implemented.
The Company is seeking a further independent Non-executive
Director in line with the continuing growth of the Company and a
further announcement will be made as appropriate.
Current trading and outlook
Following a very strong end to 2017, the momentum has continued
into the first quarter of 2018 with revenues of approximately
EUR4.8 million (Q1 2017: approximately EUR3 million), an increase
of approximately 60% compared to the same period in 2017. The Board
continues to believe that the Company is well positioned to achieve
growth in 2018, with Bet90 being the main driver as it continues to
grow and expand into new markets.
Dividend
The Directors are proposing to pay a maiden dividend for the
year ended 31 December 2017, amounting to 0.25p per share and will
include the final proposal in the notice of the Annual General
Meeting. The Directors intend to establish a progressive dividend
policy going forward, taking into account the growth strategy of
the Group, both organically as well as its development and growth
through acquisitions.
Approved by the Board of Directors and signed on behalf of the
Board,
Gilles Ohana
Non-executive Chairman, Veltyco Group plc
6 June 2018
Directors' Report
The Directors present their report and consolidated financial
statements for the year ended 31 December 2017.
Principal activities and review of the business
Veltyco is a company primarily focused on generating marketing
leads and entering into marketing contracts for the activities of
its partners in sports betting, casinos, poker games, lottery and
online financial trading. Veltyco focuses on all of these three
complementary industries under one umbrella, leveraging its
historical cash generative activities of marketing online casinos
and sports betting. Following the acquisitions of a 51% interest in
Bet90 in April 2017 and the launch of its operations at the end of
July 2017, the Group now has its own sportsbook, which is expected
to be a significant contributor to the Group's growth in 2018.
Results and dividends
The Group's profit for the year, after taxation, amounted to
EUR6.8 million (2016: profit of EUR20.6 thousand). The Group's 2016
profit was highly impacted by the reverse merger accounting and
re-listing process. The operating EBITDA for the full year 2017
amounts to EUR8.1 million (2016: EUR2.2 million).
The Directors are proposing to pay a dividend for the year ended
31 December 2017, amounting to 0.25p per share and will include the
final proposal in the notice of the Annual General Meeting.
Future developments
Future developments are discussed in the Strategic Report.
Financial Risk Management
The Board of Directors is responsible for setting the objectives
and underlying principles of financial risk management for the
Group. The Board of Directors establishes the detailed policies
such as authority levels, oversight responsibilities, risk
identification and measurement and exposure limits.
Capital risk management
The Company's objectives when managing capital are to safeguard
the Group's ability to continue as a going concern in order to
provide returns for shareholders.
Liquidity risk
Liquidity risk is the risk that arises when the maturity of
assets and liabilities does not match. An unmatched position
potentially enhances profitability, but can also increase the risk
of losses. The Group has procedures with the object of minimising
such losses such as maintaining sufficient cash and other highly
liquid current assets and by having available an adequate amount of
committed credit facilities.
Currency risk
The Group is exposed to translation and transaction foreign
exchange risk. As the majority of the Group's transactions are
denominated in Euro, the Directors deem the Group's exposure to
exchange rate fluctuations to be minimal.
Interest rate risk
The Group's exposure to upside interest rate risk is limited.
The loans on the balance sheet have a fixed interest rate. The
Directors do not consider the impact of possible interest rate
changes based on current market conditions to be material to the
net result for the year or the equity position at the year-end for
either the year ended 31 December 2017 or 31 December 2016.
Credit risk
The Group's credit risk is primarily attributable to trade
receivables, most of which are due from the Group's partners in the
online financial trading vertical. The risk is that one of these
partners would fail to discharge its obligation with regard to the
balance owed to the Group. In addition, the Group has experienced
some operational difficulties in receiving agreed marketing
commissions from operators within the online financial trading
sector due to internal processes applied by the Group's banks and
the Group is in the process of restructuring its banking
arrangements.
The Group seeks to reduce this credit risk by:
-- monitoring balances with these partners on a regular basis.
-- the current restructuring of its banking relationships in
order to enable the Group to receive funds in different locations
on a timely basis, which has not always been possible to date;
and
-- entering into agreements to receive funds directly from the partners payment processors.
The Group considers that based on the factors above, on past
experience and on current trading, the receivables are of good
credit quality and there is a low level of potential bad debt as at
year-end. In addition, the Directors believe that the systems being
put in place will enable monies due to the Group to be received on
a timely basis.
An additional credit risk the Group faces relates to customers
in its own operations (such as Bet90) disputing charges made to
their credit cards ("chargebacks") or any other funding method they
have used in respect of the services provided by the Group.
Customers may fail to fulfil their obligation to pay, which will
result in funds not being collected. These chargebacks and
uncollected deposits, when occurring, will be deducted at source by
the payment service providers from any amount due to the Group.
When needed, the Group provides for these eventualities by way of
an impairment provision based on analysis of past transactions. For
the year-ended 31 December 2017, the Group has not made any
provision for this.
Market risk
Market risk is the risk that changes in market prices, such as
foreign exchange rates, interest rates and equity prices will
affect the Company's income or the value of its holdings of
financial instruments. The objective of market risk management is
to manage and control market risk exposures within acceptable
parameters, while optimising the return.
Going concern
After careful review of the Group's forecast for 2018, its
medium-term plans, liquid resources and all relevant matters, the
Directors are confident that the Group has adequate financial
resources to continue in operational existence for the foreseeable
future and for a period of at least 12 months from the date of this
Annual Report. The Directors have therefore continued to adopt the
going concern basis in preparing the Group's financial
statements.
The Group operates in three major verticals (sports book and
casinos, online lotteries and online financial trading) and has
revenues and cost centres in numerous locations around the world.
Significant growth was achieved across all verticals during 2017
and in particular in respect of commissions due from the Group's
marketing activities in online financial trading.
The Group has experienced some operational difficulties in
receiving agreed marketing commissions from operators within the
online financial trading sector due to internal processes applied
by the Group's banks, however, the Directors have received written
confirmation from the operators that the commissions are due and
payable to the Group. The Directors started the process of
restructuring the Group's banking relationships during 2017, in
order to collect the receivables from all trading operators in
different locations, without any restriction.
As a result of the above, the receipt of agreed commissions due
to the Group in respect of the online financial trading vertical
has been slower than anticipated and together with the significant
growth in commissions from its marketing activities, the Group's
trade receivable balance as at 31 December 2017 was approximately
EUR8.8 million, the majority of which related to the Group's online
financial trading activities. Together with a non-current and
current loan receivable balance totalling EUR2.6 million and
accrued income (being revenue that has been generated but not yet
invoiced) of EUR2.7 million, the Group's total receivables balance
as at 31 December 2017 was, in aggregate, EUR14.1 million across
all of its operations. Of the total receivables balance,
approximately EUR10.7 million related to marketing activities for
Altair Entertainment N.V. ("Altair") in the online financial
trading vertical.
The restructuring process of the Group's banking operations has
made good progress and the benefits are already being seen and are
expected to increase in the coming months. Since the year end, the
receivables position of the Group as at 31 December 2017 has
decreased and the Directors believe that the operators will fully
settle the outstanding balances during the coming months.
Since the year end, the Group's total receivable balance of
EUR14.1 million as at 31 December 2017 has been reduced to EUR4.9
million, all of which relates to the online financial trading
vertical (of which EUR3.4 million is due from Altair), as
follows:
-- pursuant to the acquisition of Marsovia Holdings Ltd
("Marsovia") (regarding the database of users within online
financial trading) from Altair, the EUR4.0 million consideration
was offset against the full amount of the current loan receivable
balance of EUR2.6 million and EUR1.4 million of trade receivables
due from Altair, as announced on 25 May 2018 and disclosed in Note
15 of the accounts;
-- EUR2.5 million has been settled against a loan provided to
the Group by Winslet Enterprises Ltd ("Winslet"), a related party
(ultimately controlled by Uwe Lenhoff, a previous director of the
Company who is also the Company's main shareholder) for a
corresponding amount. The balance of the loan as at 31 December
2017 was EUR1.0 million (see Note 22);
-- EUR0.35 million has been offset against amounts due to a
subsidiary of Altair, Payific Ltd; and
-- EUR2.3 million has been received in cash by the Group from trading operators.
The above settlements are against the oldest receivables and as
a result of trading since the year end and the ongoing
restructuring of the Group's banking relationships, the Group's
trade receivable balance as at 28 May 2018 was approximately EUR8.4
million (of which EUR3.4 million is due from Altair and EUR2.7
million is due from Celestial Trading Ltd ("Celestial")). In
addition to the current trade receivable balance, the Group also
has accrued income in respect of April and May 2018. Since the
beginning of 2018, Celestial Trading Ltd has been operating all of
the online financial trading brands for which the Group undertakes
marketing activities and as a result, the commission due from such
activities in 2018 is now payable by Celestial.
The Group had a negative cash flow from operations of EUR1.1
million for the year ended 31 December 2017. As a result of the
above, the Group's current cash position has improved since the
year end to EUR1.6 million as at 28 May 2018 (31 December 2017:
EUR0.7 million) and at the same date, its borrowings have decreased
from EUR1.4 million at the year end to just EUR27 thousand.
The Directors believe they have taken sufficient measures and
made appropriate arrangements with its trading providers to obtain
additional comfort on the collectability of these receivables, and
therefore believe this balance will be recovered in full.
Furthermore, the Directors continue to work on diversifying the
Group's banking relationships in order to continue to receive
commission payments in a normal way within the online financial
trading vertical.
The ability of the Group to settle its liabilities as they fall
due is dependent on the ability of the customers to settle the
trade receivable balances and the Group's ability to finalise the
restructuring of its banking relationships during the course of
2018, or to obtain loans from third parties to fund the working
capital requirements of the business in the ordinary course. The
Directors believe that with the agreements and measures in place,
the outstanding amounts will be fully recovered during the
remainder of the year.
Post balance sheet events
On 11 January 2018, the Group announced that MWB Fairtrade
Wertpapierhandelsbank AG, a German securities broker, had
successfully applied for a secondary listing of Veltyco's ordinary
shares of no par value ("Ordinary Shares") to start trading on the
Quotation Board Segment of the Open Market of the Frankfurt Stock
Exchange ("FSE"), also known as the Regulated Unofficial Market of
the FSE, or Freiverkehr. Accordingly, the Ordinary Shares of
Veltyco are now tradable on the FSE under the symbol 24GN. The
entire issued ordinary share capital of the Company continues to
trade on the AIM market of the London Stock Exchange under the
symbol VLTY.
On 17 January 2018, the Board announced that it had entered into
an agreement to acquire a 51% interest in Varkasso Limited
("Varkasso"), a company that has the exclusive rights to use
8Crypt, a software platform providing crypto wallet solutions based
on blockchain technology. The Board believes that this acquisition
is an important step towards optimising players experience across
its partners' platforms, allowing customers to access each platform
from one wallet that also has the ability to accept crypto
currencies through the use of blockchain technology.
On 16 February 2018, David Mathewson, former Chairman of the
Company, exercised his 250,000 options at an exercise price of
GBP0.25 per share.
Furthermore, on 15 March 2018, the Company announced that it had
entered into a further partnership with eSports.com, focusing on
the roll out of a new eSports business: in essence, the Group has
extended its partnership with eSports.com and has entered into a
joint venture with eSports.com to join forces in a blockchain
project.
On 25 May 2018, the Company announced it that it had entered
into an agreement with Altair to acquire the entire issued share
capital of Marsovia. This acquisition being the first step in the
Group seeking to launch a new regulated brand, active in the online
trading sector. Marsovia holds a database of approximately 43,500
customers, of which approximately 26,000 are considered to be
active, in the online trading sector.
The total consideration for this transaction amounted to EUR4.0
million and was offset against the existing indebtedness of, in
aggregate, approximately EUR2.6 million pursuant to certain loans
provided by the Group to Altair and certain trade receivables of
approximately EUR1.4 million relating to the existing marketing
agreements with Altair, resulting in this acquisition being cash
neutral for Veltyco.
At the same time, the Directors confirmed that the existing
marketing agreements for various brands in the online trading
sector would continue for at least a further three years.
On 3 May 2018, the Company entered into a set-off agreement with
Winslet, a company controlled by Uwe Lenhoff, pursuant to which the
balance of a loan amounting to EUR2.5 million was settled in full
against a corresponding amount of trade receivables from operators
for whom Veltyco undertakes marketing activities in the online
financial trading vertical. As a result, the trade receivables
reduced by an equivalent amount, resulting in the set-off agreement
being cash neutral to the Group.
Directors and their interest
The following Directors held share options as at 31 December
2017:
Number of options Exercise Date of grant Vesting
Price (GBP) period
------------------ ------------- -------------- ----------
David Mathewson 250,000* 0.25 30 June 2016 1-2 years
Marcel Noordeloos 750,000 0.25 30 June 2016 1-4 years
Marcel Noordeloos 300,000 0.65 5 July 2017 1-4 years
Hans Dahlgren 562,500 0.25 30 June 2016 1-4 years
Hans Dahlgren 300,000 0.65 5 July 2017 1-4 years
Mark Rosman 400,000 0.25 30 June 2016 1-4 years
Mark Rosman 300,000 0.65 5 July 2017 1-4 years
Gilles Ohana 800,000 0.25 22 May 2017 1-4 years
* As David Mathewson left the Company on 31 January 2018, a
total of 690,000 options were cancelled which are not included in
this figure.
Directors who served during the year
Appointed Resigned
-------------- ----------------
David Mathewson 24 April 2013 31 January 2018
Mark Rosman 19 March 2014 -
Uwe Lenhoff 30 June 2016 26 March 2018
Marcel Noordeloos 30 June 2016 -
Hans Dahlgren 30 June 2016 26 March 2018
Ilan Tzorya 16 January 26 March 2018
2017
Gilles Ohana 20 November -
2017
On 26 March 2018, Melissa Blau was appointed as director and
Chief Executive Officer and on the same date Rainer Lauffs was
appointed director and Chief Operating Officer.
Directors' responsibilities
The Directors are responsible for preparing the annual report
and the financial statements in accordance with applicable law and
regulations. Company law requires the Directors to keep reliable
accounting records which allow financial statements to be prepared.
In addition, the Directors have elected to prepare group financial
statements in accordance with International Financial Reporting
Standards as adopted by the European Union and applicable law. The
financial statements are required to give a true and fair view of
the state of affairs of the Group and of the profit or loss of the
Group for that year. In preparing these financial statements, the
Directors are required to:
-- select suitable accounting policies and then apply them consistently;
-- make judgments and accounting estimates that are reasonable and prudent;
-- state whether applicable IFRSs have been followed, subject to
any material departures disclosed and explained in the financial
statements; and
-- prepare the financial statements on the going concern basis
unless it is inappropriate to presume that the Group will continue
in business.
The Directors are responsible for keeping adequate accounting
records that are sufficient to show and explain the Company's
transactions and disclose with reasonable accuracy at any time the
financial position of the Company and prepare financial statements.
They are also responsible for safeguarding the assets of the
Company and hence for taking reasonable steps for the prevention
and detection of fraud and other irregularities.
The Directors are also responsible for ensuring that they meet
their responsibilities under the AIM Rules.
The Directors are responsible for the maintenance and integrity
of the corporate and financial information included on the
company's website. Legislation in the Isle of Man governing the
preparation and dissemination of financial statements may differ
from legislation in other jurisdictions.
In so far as each of the Directors is aware:
-- there is no relevant audit information of which the Company's auditors are unaware; and
-- the Directors have taken all steps that they ought to have
taken to make themselves aware of any relevant audit information
and to establish that the auditor is aware of that information.
Auditors
The auditors of the Group are Nexia Smith & Williamson,
Chartered Accountants.
This report was authorised for issue by the Board on 6 June
2018.
Gilles Ohana
Non-executive Chairman
6 June 2018
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
Year ended Year ended
31 December 31 December
Notes 2017 2016
EUR EUR
Revenues 16,194,791 6,082,468
Cost of Sales (976,763) -
------------- -------------
Gross Margin 15,218,028 6,082,468
Salary expense (1,087,235) (608,825)
Marketing and selling expense (4,550,529) (2,682,422)
General administrative expense (1,717,962) (683,246)
Listing expenses - (123,850)
Depreciation, amortisation and
impairment expense (380,173) (362,179)
------------- -------------
Total administrative expenses (7,735,899) (4,460,522)
------------- -------------
Operating profit 7,482,129 1,621,946
Reverse asset acquisition expense - (1,555,898)
Financial income/(expense) 98,779 (9,286)
Profit before tax 7,580,908 56,762
Taxation (801,116) (36,144)
Total comprehensive income 6,779,792 20,618
------------- -------------
Attributable to:
Equity holders of the Company 7,333,280 20,618
Non-controlling interests (553,488) -
6,779,792 20,618
------------- -------------
Earnings per share attributable to equity holders of the Company
- Basic (in EUR) 2 0.1017 0.0004
- Diluted (in EUR) 2 0.0944 0.0004
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
31 December 31 December
2017 2016
EUR EUR
Non-current assets
Goodwill 1,743,485 -
Other intangible assets 3,985,347 2,740,792
Investments 25,000 -
Property, plant and equipment 2,530 4,158
Loans receivable 997,476 916,197
Total non-current assets 6,753,838 3,661,147
------------- -------------
Current assets
Loans receivable 1,558,057 1,590,883
Trade and other receivables 11,881,469 2,602,338
Cash and cash equivalents 700,192 144,125
Total current assets 14,139,718 4,337,346
------------- -------------
Total assets 20,893,556 7,998,493
------------- -------------
Equity and liabilities
Share capital - -
Additional paid-in capital 13,665,233 10,614,354
Reverse asset acquisition reserve (6,046,908) (6,046,908)
Retained earnings 9,948,904 2,376,540
Equity attributable to owners
of the parent 17,567,229 6,943,986
------------- -------------
Non-controlling interests 182,967 -
Total shareholders' equity 17,750,196 6,943,986
------------- -------------
Non-current liabilities
Borrowings 1,355,223 26,358
Total non-current liabilities 1,355,223 26,358
------------- -------------
Current Liabilities
Trade and other payables 1,788,137 1,028,149
Total current liabilities 1,788,137 1,028,149
------------- -------------
Total equity and liabilities 20,893,556 7,998,493
------------- -------------
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Other
reserves
-
Additional Reverse
Share paid in asset Retained Non-controlling Total
acquisition
capital capital reserve earnings Total interest Equity
EUR EUR EUR EUR EUR EUR EUR
Balance as at 1
January
2016 (restated) - 6,046,980 (6,046,908) 2,304,891 2,304,963 - 2,304,963
---------- ------------ ------------- ----------- ------------ ---------------- ------------
Profit for the
financial
period - - - 20,618 20,618 - 20,618
Share based
acquisition - 2,801,592 - - 2,801,592 - 2,801,592
Share based
payments - 90,909 - 51,031 141,940 - 141,940
Issue of share
capital - 1,674,873 - - 1,674,873 - 1,674,873
Balance as at 31
December
2016 - 10,614,354 (6,046,908) 2,376,540 6,943,986 - 6,943,986
---------- ------------ ------------- ----------- ------------ ---------------- ------------
Profit for the
financial
period - - - 7,333,280 7,333,280 (553,488) 6,779,792
Share based
payments - 161,000 - 239,084 400,084 - 400,084
Exercise of stock
options
and warrants - 333,416 - - 333,416 - 333,416
Non-controlling
interests
on acquisitions - - - - - 736,455 736,455
Issue of share
capital - 2,556,463 - - 2,556,463 - 2,556,463
Balance as at 31
December
2017 - 13,665,233 (6,046,908) 9,948,904 17,567,229 182,967 17,750,196
---------- ------------ ------------- ----------- ------------ ---------------- ------------
CONSOLIDATED STATEMENT OF CASH FLOWS
31 December 31 December
2017 2016
EUR EUR
Cash flows from operating activities
Operating profit 7,482,129 1,621,946
Adjustments for:
Share based payments 239,084 53,016
Depreciation 1,628 813
Amortisation of intangibles 378,545 86,356
Impairment - 275,011
------------- -------------
Cash flow from operations before
working capital changes 8,101,386 2,037,142
(Increase) in trade and other receivables (9,279,131) (1,761,112)
Increase/(decrease) in trade and
other payables 146,894 (307,415)
------------- -------------
Cash outflow from operations (1,030,851) (31,385)
Tax paid (72,152) (50,144)
Cash outflow from operating activities (1,103,003) (81,529)
------------- -------------
Cash flow from investing activities
Acquisition of subsidiaries (2,510,000) -
Acquisitions of intangible assets (75,000) (275,011)
Acquisition of investments (25,000) -
Loans granted (189,681) (767,701)
Loans repayments received 225,000 497,800
Interest received 15,007 80,388
Cash acquired on reverse asset acquisition - 2,112
Net cash outflow from investing activities (2,559,674) (462,412)
------------- -------------
Cash flow from financing activities
Proceeds of issue of new shares 2,889,879 646,278
Loans received 1,328,865 -
Net cash inflow from financing activities 4,218,744 646,278
------------- -------------
Net increase in cash and cash equivalents 556,067 102,337
Cash and cash equivalents at start
of period 144,125 41,788
------------- -------------
Cash and cash equivalents at end
of period 700,192 144,125
------------- -------------
Notes
1. General Information
The financial information set out in this announcement does not
comprise the Group's statutory accounts for the year ended 31
December 2017 but is derived from those accounts.
The auditors have reported on those accounts and their report
was unqualified and drew attention to a material uncertainty in
relation to going concern with respect to recoverability of trade
receivables.
The principal accounting policies as adopted by the Group in the
preparation of its consolidated financial statements for the year
ended 31 December 2017 are set out below. The accounting policies
have been consistently applied, unless otherwise stated.
Basis of preparation
The Consolidated Financial Statements have been prepared in
accordance with International Financial Reporting Standards
("IFRS") as adopted by the European Union and issued by the
International Accounting Standards Board ("IASB"). These accounting
policies comply with each IFRS that is mandatory for accounting
periods ending on or after 31 December 2017. The Consolidated
Financial Statements have been prepared under the historical cost
convention and on a going concern basis.
The Directors have reviewed the accounting policies used by the
Group and consider them to be appropriate. The accounting policies
are consistent with the prior years.
Basis of consolidation
The Consolidated Financial Statements incorporate the results of
Veltyco Group plc (the "Company") and entities controlled by the
Company (its subsidiaries) (collectively the "Group"). Control is
achieved where the Company has the power to govern the financial
and operating policies of an entity.
The results of subsidiaries disposed of are included in the
consolidated statement of comprehensive income to the effective
date of loss of control and those acquired from the date on which
control is transferred to the Group.
Going concern
After careful review of the Group's forecast for 2018, its
medium-term plans, liquid resources and all relevant matters, the
Directors are confident that the Group has adequate financial
resources to continue in operational existence for the foreseeable
future and for a period of at least 12 months from the date of this
Annual Report. The Directors have therefore continued to adopt the
going concern basis in preparing the Group's financial
statements.
The Group operates in three major verticals (sports book and
casinos, online lotteries and online financial trading) and has
revenues and cost centres in numerous locations around the world.
Significant growth was achieved across all verticals during 2017
and in particular in respect of commissions due from the Group's
marketing activities in online financial trading.
The Group has experienced some operational difficulties in
receiving agreed marketing commissions from operators within the
online financial trading sector due to internal processes applied
by the Group's banks, however, the Directors have received written
confirmation from the operators that the commissions are due and
payable to the Group. The Directors started the process of
restructuring the Group's banking relationships during 2017, in
order to collect the receivables from all trading operators in
different locations, without any restriction.
As a result of the above, the receipt of agreed commissions due
to the Group in respect of the online financial trading vertical
has been slower than anticipated and together with the significant
growth in commissions from its marketing activities, the Group's
trade receivable balance as at 31 December 2017 was approximately
EUR8.8 million, the majority of which related to the Group's online
financial trading activities. Together with a non-current and
current loan receivable balance totalling EUR2.6 million and
accrued income (being revenue that has been generated but not yet
invoiced) of EUR2.7 million, the Group's total receivables balance
as at 31 December 2017 was, in aggregate, EUR14.1 million across
all of its operations. Of the total receivables balance,
approximately EUR10.7 million related to marketing activities for
Altair Entertainment N.V. ("Altair") in the online financial
trading vertical.
The restructuring process of the Group's banking operations has
made good progress and the benefits are already being seen and are
expected to increase in the coming months. Since the year end, the
receivables position of the Group as at 31 December 2017 has
decreased and the Directors believe that the operators will fully
settle the outstanding balances during the coming months.
Since the year end, the Group's total receivable balance of
EUR14.1 million as at 31 December 2017 has been reduced to EUR4.9
million, all of which relates to the online financial trading
vertical (of which EUR3.4 million is due from Altair), as
follows:
-- pursuant to the acquisition of Marsovia Holdings Ltd
("Marsovia") (regarding the database of users within online
financial trading) from Altair, the EUR4.0 million consideration
was offset against the full amount of the current loan receivable
balance of EUR2.6 million and EUR1.4 million of trade receivables
due from Altair, as announced on 25 May 2018 and disclosed in Note
15 of the accounts;
-- EUR2.5 million has been settled against a loan provided to
the Group by Winslet Enterprises Ltd ("Winslet"), a related party
(ultimately controlled by Uwe Lenhoff, a previous director of the
Company who is also the Company's main shareholder) for a
corresponding amount. The balance of the loan as at 31 December
2017 was EUR1.0 million (see Note 22);
-- EUR0.35 million has been offset against amounts due to a
subsidiary of Altair, Payific Ltd; and
-- EUR2.3 million has been received in cash by the Group from trading operators.
The above settlements are against the oldest receivables and as
a result of trading since the year end and the ongoing
restructuring of the Group's banking relationships, the Group's
trade receivable balance as at 28 May 2018 was approximately EUR8.4
million (of which EUR3.4 million is due from Altair and EUR2.7
million is due from Celestial Trading Ltd ("Celestial")). In
addition to the current trade receivable balance, the Group also
has accrued income in respect of April and May 2018. Since the
beginning of 2018, Celestial Trading Ltd has been operating all of
the online financial trading brands for which the Group undertakes
marketing activities and as a result, the commission due from such
activities in 2018 is now payable by Celestial.
The Group had a negative cash flow from operations of EUR1.1
million for the year ended 31 December 2017. As a result of the
above, the Group's current cash position has improved since the
year end to EUR1.6 million as at 28 May 2018 (31 December 2017:
EUR0.7 million) and at the same date, its borrowings have decreased
from EUR1.4 million at the year end to just EUR27 thousand.
The Directors believe they have taken sufficient measures and
made appropriate arrangements with its trading providers to obtain
additional comfort on the collectability of these receivables, and
therefore believe this balance will be recovered in full.
Furthermore, the Directors continue to work on diversifying the
Group's banking relationships in order to continue to receive
commission payments in a normal way within the online financial
trading vertical.
The ability of the Group to settle its liabilities as they fall
due is dependent on the ability of the customers to settle the
trade receivable balances and the Group's ability to finalise the
restructuring of its banking relationships during the course of
2018, or to obtain loans from third parties to fund the working
capital requirements of the business in the ordinary course. The
Directors believe that with the agreements and measures in place,
the outstanding amounts will be fully recovered during the
remainder of the year.
2. Earnings per share (basic and diluted)
Year ended Year ended
31 December 31 December
2017 2016
EUR EUR
Earnings
Earnings for the purposes of basic
and diluted earnings per share, being
net profit after tax attributable to
equity shareholders 7,333,280 20,618
------------- -------------
Number of shares
Weighted average number of ordinary
shares for the purposes of:
Basic earnings per share 72,128,655 53,116,500
Diluted earnings per share 77,648,727 55,788,510
------------- -------------
Basic earnings per share (in EUR) 0.1017 0.0004
Diluted earnings per share (in EUR) 0.0944 0.0004
------------- -------------
The share options are not sufficiently dilutive to create a
difference between basic and diluted earnings per share reported
above.
3. Post balance sheet events
Sportsbook partnership
Subsequent to the year end, the sportsbook operator, for whom
the Group undertakes marketing activities, informed the Company
that it would not be automatically extending its existing marketing
agreement and that it would therefore end at the end of April 2018.
The Company is pleased to confirm that following discussions
between the parties, the Group and the sportsbook operator have
agreed, subject to documentation, to further extend the existing
agreement as well as to potentially expand the marketing
relationship to include additional territories. In light of this
and the upcoming FIFA World Cup in Russia starting in mid-June
2018, the Group continues to provide marketing activities to the
sportsbook operator.
Varkasso Limited
On 17 January 2018 the Company announced that it had entered
into an agreement to acquire 51% of the issued capital in Varkasso
Limited ("Varkasso"), a company that has the exclusive rights to
use 8Crypt, a software platform providing crypto wallet solutions
based on blockchain technology.
8Crypt has been developed by the founder and shareholder of
Varkasso, with the aim of providing end-users with a broad range of
services in relation to their crypto assets from one location, from
which they are able to manage, trade (buy, sell, exchange) and
accept both traditional and crypto currencies. 8Crypt enables users
to connect their crypto wallet directly to both traditional and
crypto currencies, seamlessly providing and accepting payments from
debit and credit cards and bank transfers for traditional
currencies and well-known blockchain platforms such as Bitcoin,
Ethereum and LiteCoin for crypto currencies.
Veltyco plans to incorporate 8Crypt's crypto wallet across each
of the platforms of Veltyco's various partners, including Veltyco's
own site Bet90.com, thereby allowing customers access to each
platform from one wallet without having to make separate deposits
on each of the individual platforms. Furthermore, once incorporated
into its partners' platforms, the Board believes that is will
enhance the Company's ability to cross-sell the different platforms
to its customer base.
Veltyco agreed to acquire a 51% interest in Varkasso for a total
consideration of EUR300,000 satisfied through the issue of 100,000
new Ordinary Shares and a cash consideration of EUR200,000.
The Board are currently awaiting the information required to
assess the fair value of assets acquired and resultant goodwill for
this acquisition. As such, disclosures required under IFRS 3 in
respect of these items cannot be given at this stage and will be
reported in the year ending 31 December 2018 accounts.
Exercise of stock options
On 16 February 2018, a total of 325,000 options were exercised.
These options had an exercise price of GBP0.25 per share. After
this exercise, a total of 74,768,659 Ordinary Shares are in
issue.
eSports.com
On 15 March 2018, the Company announced that it had extended its
partnership with eSports.com and entered into and a joint venture
with eSports.com to join forces in a blockchain project.
The purpose of the project is to create an infrastructure to
bring members and/or customers of communities (sports, gaming,
playing) to a fully transparent technological platform. The
platform will seek to transfer data such as know your client
regulated information, but also historical data, in a decentralised
manner and could, in the future, be combined with automated
payments.
It is proposed that eSports.com AG, the parent company of
eSports.com, and Veltyco will each have a 50% interest in the joint
venture and will provide equal funding to the project.
Frankfurt secondary listing
On 11 January 2018, the Group announced that MWB Fairtrade
Wertpapierhandelsbank AG, a German securities broker, had
successfully applied for a secondary listing of Veltyco's Ordinary
Shares to start trading on the Quotation Board Segment of the Open
Market of the Frankfurt Stock Exchange ("FSE"), also known as the
Regulated Unofficial Market of the FSE, or Freiverkehr.
Accordingly, the Ordinary Shares of Veltyco are now also tradable
on the FSE under the symbol 24GN. The entire issued ordinary share
capital of the Company continues to trade on the AIM market of the
London Stock Exchange under the symbol VLTY.
Acquisition of Marsovia Holdings Ltd (database)
On 25 May 2018, the Company announced it that it has entered
into an agreement with Altair to acquire the entire issued share
capital of Marsovia. This acquisition is the first step in the
Group seeking to launch a new regulated brand, active in the online
financial trading sector. Marsovia holds a database of
approximately 43,500 customers, of which approximately 26,000 are
considered to be active, in the online financial trading
sector.
The total consideration for this transaction amounted to EUR4.0
million and was offset against the existing indebtedness of, in
aggregate, approximately EUR2.6 million pursuant to certain loans
provided by the Group to Altair and certain trade receivables of
approximately EUR1.4 million resulting from the existing marketing
agreements with Altair, resulting in this acquisition being cash
neutral for Veltyco.
At the same time, the Directors confirmed that the existing
marketing agreements for various brands in the online financial
trading sector will continue for at least a further three
years.
The Board are currently awaiting the information required to
assess the fair value of assets acquired and resultant goodwill for
this acquisition. As such, disclosures required under IFRS 3 in
respect of these items cannot be given at this stage and will be
reported in the year ending 31 December 2018 accounts.
Offset agreement
On 3 May 2018, the Group entered into the set-off agreement with
Winslet, a company controlled by Uwe Lenhoff, pursuant to which the
balance of the Winslet Loan, amounting to EUR2.5 million, was
settled in full against a corresponding amount of trade receivables
from operators for whom Veltyco undertakes marketing activities in
the online financial trading sector. As a result, the trade
receivables reduced by an equivalent amount, resulting in the
set-off agreement being cash neutral to the Group.
4. Availability of Accounts and Annual General Meeting
A copy of the audited annual report will shortly be available on
the Company's website at www.veltyco.com.
A copy of the audited annual report and the notice for the
Annual General Meeting for the year ended 31 December 2017 will be
posted to shareholders in due course.
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
FR FFMPTMBBMBPP
(END) Dow Jones Newswires
June 07, 2018 02:00 ET (06:00 GMT)
B90 (LSE:B90)
Historical Stock Chart
From Apr 2024 to May 2024
B90 (LSE:B90)
Historical Stock Chart
From May 2023 to May 2024