B90 Holdings Regulatory News (B90)

16 May 2017

VELTYCO GROUP PLC

("Veltyco" or "the Group")

Final Results for the year ended 31 December 2016

Veltyco, the AIM quoted marketing company for the gaming sector, is pleased to announce its final results for the year ended 31 December 2016.

Financial highlights

· Revenue for the year increased 133% to €6,082,468 (2015: €2,609,149)

· Operating EBITDA (which excludes the listing expenses which the company incurred for the process of the reverse merger) for the year increased 200% to €2,107,975 (2015: €701,019)

· Raised €993,622 before expenses in the process of the reverse takeover

Operational highlights

· Successfully completed the reverse takeover of Sheltyco Enterprises Group Ltd and re-admission to AIM on 30 June 2016

· Executed a consolidation of ordinary shares on 30 June 2016 of 25 to 1

· Successfully added new marketing agreements to the Group's portfolio

Current trading

· Trading in the first quarter of 2017 continues to be strong

· Revenues exceeded €2.75 million for the first three months of 2017

· Acquisitions announced in April 2017 broadening Group's offering

David Mathewson, Chairman of Veltyco commented: "After a year of transition in which the Group completed its reverse takeover, strengthened the board and entered into new trading activities, Veltyco is now positioned for considerable future growth. The two acquisitions that were announced in April 2017 provide further exciting opportunities and broaden the Group's offering and revenue streams.

"The current financial year has started strongly. The Board believes that it will maintain this momentum for the remainder of the year and is confident that the Group will continue to deliver strong growth."

This announcement contains inside information for the purposes of Article 7 of Regulation (EU) 596/2014.

For further information please contact:

About Veltyco

Veltyco is a holding company primarily focused on generating marketing leads and entering into marketing contracts for the activities of various partners in the gaming industry. Veltyco focuses on complementary activities under one umbrella, leveraging its historical cash generative activities of marketing online casinos and sports betting. The introduction of Bet 90 and T4U Marketing further augments the group's plans for expansion, particularly in new territories.

Website: http://www.veltyco.com

STRATEGIC REPORT

I am pleased to present our Annual Report for the financial year ended 31 December 2016.

Financial review

2016 was a year of changes for Veltyco Group plc (the "Group", the "Company" or "Veltyco"). Veltyco successfully completed the reverse merger with Sheltyco Enterprises Group Ltd ("Sheltyco") on 30 June 2016. Sheltyco is a profitable 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 options trading. The Group focuses on all of these three complementary industries under one umbrella, leveraging its historical cash generative activities of marketing online casinos and sports betting.

As part of the completion of this reverse merger, the name of the Group was changed from Velox3 plc to Veltyco Group plc on 30 June 2016.

The total profit for the year amounted to €20,618 (2015: €503,550). The result for 2016 is highly impacted by the expenses relating to the reverse merger process and diligence process executed as well as by the accounting with respect to this merger. The operating EBITDA (which excludes the costs of the reverse merger completed in June 2016) for the year ended 31 December 2016 amounted to €2,107,975 (2015: € 701,019).

Board changes

During the year, the Company has made some changes in the Board of Directors:

On 30 June 2016 the Group completed the reverse merger process and at that time re-appointed David Mathewson as Chairman and Mark Rosman as non-executive director. Furthermore, Uwe Lenhoff (COO), Marcel Noordeloos (CFO) and Hans Dahlgren (CTO) were appointed executive directors for the Group.

Subsequent to year-end, on 16 January 2017, the Group announced that Ilan Tzorya was appointed non-executive director.

Current trading and outlook

Trading in the first quarter of 2017 has been strong. Total revenues exceeded €2.75 million for the first three months of 2017. Average monthly revenue in the first quarter was significantly ahead of average monthly revenue in the second half of 2016, which in itself was a strong trading period for the Group. The Directors see a further increase in revenues continuing after an already very strong second half of 2016. The Directors believe the Company will be able maintain momentum and that the Group is well positioned for the remainder of the year and the future.

Furthermore, the Directors believe that the two acquisitions announced on 13 April 2017 represent an exciting opportunity for Veltyco to further expand and grow its business by building on existing online brands, using its expertise in online marketing combined with award winning sportsbook technology in SBTech. The T4U Acquisition is expected to be earnings enhancing in 2017, whereas the Bet 90 Acquisition is expected to deliver a contribution in the financial year ending 31 December 2018.

Approved by the Board of Directors and signed on behalf of the board,

David Mathewson

Chairman, Veltyco Group plc

15 May 2017 

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 2016 but is derived from those accounts.

The auditors have reported on those accounts and their report was unqualified and drew attention to the disclosures concerning the realisations of receivables.

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.

Reverse asset acquisition

On 30 June 2016, Velox3 plc ("Velox3") acquired 100% of the issued capital of Sheltyco Enterprises Group Ltd ("Sheltyco") in a share for share transaction, and on the same date changed its name from Velox3 plc to Veltyco Group plc. Due to the relative size of the companies, Sheltyco's shareholders became the majority shareholders in the enlarged share capital (before a share placing and conversion of debt on the same date). In addition, the Directors and executive management became members of the enlarged Board of Directors and executive management team.

Under IFRS the acquisition constitutes a reverse asset acquisition of Velox3 by Sheltyco. It would normally be necessary for the Group's consolidated Financial Statements to follow the legal form of the business combination, with Sheltyco's results consolidated into the Group results from the date of the completion of the transaction of 30 June 2016. In this case, the consolidated financial statements have been treated as being a continuation of the Financial Statements of Sheltyco with Velox3 being treated as the acquired entity for accounting purposes.

As the consolidated group results represent a continuation of the financial statements of the legal subsidiary, the assets and liabilities of Sheltyco have been recognised and measured in the consolidated results at their pre-combination carrying amounts. The retained earnings and other equity balances recognised are the retained earnings and other equity balances of Sheltyco immediately before the business combination and the amount recognised as issued equity instruments has been determined by adding the issued equity of Sheltyco immediately before the business combination the costs of the combination, being the value of notional shares issued by Sheltyco. Adjustments have been made to the consolidated reserves to reflect the equity structure of the legal parent company, Velox3 plc (now renamed to Veltyco Group plc). As such the prior year balances are shown as restated.

The reverse asset acquisition expense represents the net liabilities of Veltyco at the acquisition date. The reverse asset acquisition reserve represents the difference in carrying value between the Additional paid in capital of Veltyco and the Share capital of Sheltyco on the acquisition date.

Reason for the reverse merger

The Company was admitted to AIM in July 2013 under the name of 24/7 Gaming Group Holdings plc as a service provider to the mobile gaming industry for smart phones and tablets. The Company developed HTML 5 based games, however, the board of directors realised during 2014 that returns from its investment in the mobile gaming sector were not satisfactory. At that juncture, the board of directors decided to explore alternative acquisition opportunities and entered in discussions to acquire an options trading business. Whilst it was considering this acquisition opportunity, the Board initiated a restructuring of the Group and, in December 2014, decided to cease operations and further funding to its gaming and publishing operations.

After careful consideration, the board of directors sought approval from shareholders to re-classify the Company as an investing company with an investing policy focused on the acquisition of direct and indirect interests in the online trading services industry. Shareholders approved this investing policy in February 2015.

In the second half of 2015, the Board was introduced to the Sheltyco acquisition opportunity. The Board believed that, considering its stage of development, historical financial performance and profitability, the presence of certain common shareholders between the two groups and the sector in which Sheltyco operates, it would constitute a good fit with Company's focus and expertise.

Sheltyco operates in growing markets and have industry experts who run the operational side of the business. By completing the merger, the Group is able benefit from the increased visibility afforded by the stock market. Being quoted on AIM is expected to enable the Enlarged Group to carry out acquisitions through equity deals, retain key employees by providing long term (equity) incentive plans and have easier access to funding, if required.

The reverse merger between Velox3 and Sheltyco was successfully completed on 30 June 2016. As of that date the Company changed its name to Veltyco Group plc.

2 Profit per share (basic and diluted)

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

On 13 April 2017 the Board announced a fundraise and two acquisitions.

The Board announced that it had raised €2.55 million (before expenses) on a private basis with a small number of investors via the issue of 5,604,551 new ordinary shares of no par value ("Ordinary Shares") (the "Subscription") to new and existing investors. The new Ordinary Shares were issued at 39 pence per new Ordinary Share, representing 8.3% of the Company's existing share capital and 7.7% of its enlarged share capital.

After the Subscription, the total number of shares in the Company in issue is 73,230,811.

The Subscription was undertaken in order to satisfy the cash consideration for two proposed acquisitions: the acquisition of 51% of the entire issued share capital of Quasar Holdings Limited for a total consideration of €2 million (the "Bet 90 Acquisition") and the acquisition of 51% of the entire issued share capital of T4U Marketing Ltd for a total consideration of €510,000 with an option to acquire the remaining 49% of the share capital (the "T4U Acquisition").

Information on the proposed acquisitions

Bet 90 Acquisition

Quasar Holdings Limited is a newly incorporated holding company, registered in Malta, that has not traded and whose only asset at completion of the Bet 90 Acquisition will be 100% of the share capital of Bet 90 Sports Limited ("Bet 90"), a company incorporated and registered in Malta. Following a pre-acquisition reorganisation, Bet 90's only material assets are the domain names www.bet90.com and www.bet90sports.com, the brand name 'Bet 90' and a Malta Class 2 Gaming Licence (MGA/CL2/989/2014) (the "MGA Licence"), which are held at nil value. It had net assets of €62,676 as at 31 December 2016, according to unaudited management accounts. Veltyco Ventures Ltd, a subsidiary of the Company, is acquiring 51% of the entire issued share capital of Quasar Holdings Limited for a total consideration of €2m in order to build a new business focused on the marketing and expansion of Bet 90's online presence in sportsbook betting, with a particular focus on the Nordic countries and South America. Bet 90's online platform is currently being updated to a new SBTech sportsbook and is scheduled to go live in June/July 2017. Bet 90 has reported no revenues in its statutory accounts for 2015 or in its management accounts for 2016.

The Bet 90 Acquisition is conditional on (i) the Malta Gaming Authority approving the continuation of the MGA Licence following the change of control of Bet 90 as a result of the Bet 90 Acquisition and Bet 90 obtaining the unconditional use of the MGA Licence; and (ii) Veltyco obtaining a Maltese legal opinion in relation to Quasar Holdings Limited and Bet 90, in each case on or before 31 May 2017.

T4U Acquisition

T4U Marketing Ltd ("T4U Marketing") is a company recently formed in Cyprus to hold the previously unincorporated business comprising the online sports-betting forum sites of the www.tippen4you.com, www.tippen4you.at and www.sportwettenforum.info domains (the "Sites"). The Sites, the oldest of which dates back to 2001, act as affiliates for major sportsbook brands, such as Bet365 and have a growing player database of about 14,000 active players. 'T4U Marketing' is a protected trademark, with a current registration expiry date of May 2024. Pursuant to the terms of the T4U Acquisition, Sheltyco Enterprises Group Ltd (a subsidiary of the Company) has the right to acquire the outstanding 49% of the entire issued share capital of T4U Marketing for €490,000 in cash or such lesser amount as is agreed in writing between the parties. According to unaudited management information, in the year ended 31 December 2016, the Sites generated revenues of approximately €320,000 and EBITDA (before any management charges) of €220,000. T4U Marketing is being acquired net of any working capital at the time of the T4U Acquisition and therefore with no material net assets.

The Board are currently awaiting the information required to assess the fair value of assets acquired and resultant goodwill for each 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 2017 accounts.

4 Annual General Meeting

A copy of the audited annual report for the year ended 31 December 2016 will be posted to shareholders shortly and is being made available from the Company's website at www.veltyco.com.