Last checked at 27 Sep 2016 07:00
27 September 2016
VELTYCO GROUP PLC
("Veltyco" or "the Group" or "the Company")
UNAUDITED INTERIM RESULTS FOR THE SIX MONTHS ENDED 30 JUNE 2016
Veltyco, the AIM quoted company focused on generating marketing leads and entering into marketing contracts for the activities of its partners in sports betting, casinos, lottery and binary options announces its unaudited interim results for the six months ended 30 June 2016.
Financial Highlights
· Revenues increased by 78% to €2,102,558 (1H 2015: €1,179,379)
· EBITDA for the first six months increased 127% to €744,129 (1H 2015: €326,609)
· Operating profit of increased 134% to €471,361 (1H 2015: €201,304)
· Raised €707,950 before expenses in the process of the reverse takeover
Operations Highlights
· Successfully completed the reverse takeover of Sheltyco Enterprises Group Ltd
· Successfully completed re-admission to AIM on 30 June 2016
· Uwe Lenhoff, Hans Dahlgren and Marcel Noordeloos joined the Board of Directors on re-admission
· Restructuring of the Group has been completed
· Executed a consolidation of ordinary shares of 25 to 1
Commenting on the results, David Mathewson, Chairman, said:
"It has been an exciting period for the Group and we are very happy to release these interim statements, the first after successfully completing the reverse acquisition of Sheltyco Enterprises Group Ltd ("Sheltyco"). Following the acquisition, the Company changed its name from Velox3 plc to Veltyco Group plc and welcomed the new Directors to the Board.
Trading in the third quarter of 2016 has started well showing increased traffic in the lottery and binary options businesses. The casino and sportsbook traffic remains on target, showing a small increase from prior year activities.
The Directors continue to actively review potential acquisition opportunities which fit into the Company's profile."
For further information please contact:
Veltyco Group plc | +44 (0)16 2460 5764 |
David Mathewson, Chairman | |
Marcel Noordeloos, CFO | |
Stockdale Securities ltd | |
Antonio Bossi David Coaten | +44 (0)20 7601 6100 |
IFC Advisory (Financial PR) | + 44 (0)203 053 8671 |
Graham Herring | |
Heather Armstrong | |
Miles Nolan |
This announcement contains inside information for the purposes of the Market Abuse Regulations.
CHAIRMAN'S STATEMENT
I am pleased to present the unaudited interim results for the six months ended 30 June 2016, which consolidates the results of Veltyco Group plc ("Veltyco").
Reverse Takeover and re-admission to AIM
Veltyco was re-admitted to AIM after the successful reverse take-over of Sheltyco Enterprises Group Ltd ("Sheltyco"), a company active in generating marketing leads for sports book, casino, lottery and binary options partners. The reverse takeover and re-admission to AIM was completed on 30 June 2016. The Company trades under the ticker VLTY.
Business review
Financial review
During the first six months of 2016 the Group focused on the two new marketing lines in lottery and binary options, while maintaining its strong presence in sports book and casino. As part of the reverse takeover and re-admission, the Group was able to raise sufficient funds to fully finance the reverse takeover process and restructure the financial position of the Group. The gross receipts raised in the process amounted to €707,950, of which €410,606 was subscribed on readmission. A further €978,595 of loans and fees were converted to equity. Subsequent to the period end, as part of the admission, the Company raised a further €285,672 as announced on 2 September 2016.
The Group made a loss for the period of €1,123,289 (2015: Profit of €217,279) primarily as a result of the reverse asset acquisition expense of €1,555,898 (2015: nil).
Revenues for the first six months of 2016 amounted to €2,102,558 and EBITDA (excluding reverse asset acquisition expense) of €744,129, both showing a significant increase compared to the same period last year. The Group has benefitted from the start of the marketing efforts of binary options as well as the marketing in the lottery industry, with LottoPalace. These operations were added to the Groups' focus in the first quarter of 2016 and we have seen significant growth in both areas.
Outlook
During the first six months of 2016 the Group began its marketing and promotion activities on the binary options and lottery platforms, for which the results are in line with the Directors' expectations.
On 22 September 2016, the Company announced that it has entered into a new marketing agreement with ZoomtraderGlobal, which the Directors believe should bring additional traffic and players, resulting in improving results.
David MathewsonExecutive Chairman26 September 2016
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
| |||||||
Unaudited | Unaudited | Audited | |||||
period ended | period ended | Year ended | |||||
30 June | 30 June | 31 December | |||||
2016 | 2015 | 2015 | |||||
€ | € | € | |||||
CONTINUING OPERATIONS | |||||||
Revenues | 2,102,558 | 1,179,379 | 2,609,149 | ||||
Salary expense | (278,888) | (226,100) | (448,000) | ||||
Marketing and selling expense | (798,484) | (437,095) | (897,536) | ||||
General administrative expense | (281,057) | (189,575) | (562,594) | ||||
Depreciation & amortisation | (272,768) | (125,305) | (209,616) | ||||
Total administrative expenses | (1,631,197) | (978,075) | (2,117,746) | ||||
Operating profit | 471,361 | 201,304 | 491,403 | ||||
Reverse asset acquisition expense | (1,555,898) | - | - | ||||
Finance cost | (80,825) | (13,440) | (22,978) | ||||
Financial income | 42,073 | 29,415 | 62,750 | ||||
(Loss)/profit before tax | (1,123,289) | 217,279 | 531,175 | ||||
Taxation | - | - | (27,625) | ||||
(Loss)/profit for the financial period | (1,123,289) | 217,279 | 503,550 | ||||
Earnings per share | |||||||
Basic | (0.0257) | 0.0050 | 0.0115 | ||||
Diluted | (0.0257) | 0.0050 | 0.0115 | ||||
CONSOLIDATED BALANCE SHEETS | |||||
Unaudited | Unaudited | Audited | |||
30 June | 30 June | 31 December | |||
2016 | 2015 | 2015 | |||
€ | € | € | |||
Non-current assets | |||||
Property, plant and equipment | 4,971 | - | - | ||
Intangible assets | 23,235 | 1,623,678 | 25,556 | ||
Other receivables | 930,207 | 102,757 | 900,464 | ||
Total non-current assets | 958,413 | 1,726,435 | 926,020 | ||
Current assets | |||||
Cash and cash equivalents | 498,763 | 141,807 | 41,788 | ||
Trade and other receivables | 2,556,422 | 2,512,446 | 2,125,625 | ||
Total current assets | 3,055,185 | 2,654,253 | 2,167,413 | ||
Total assets | 4,013,598 | 4,380,688 | 3,093,433 | ||
Equity and liabilities | |||||
Share Capital | - | - | - | ||
Additional paid-in capital | 7,527,090 | 6,046,980 | 6,046,980 | ||
Reverse asset acquisition reserve | (6,046,908) | (6,046,908) | (6,046,908) | ||
Retained earnings | 1,201,823 | 2,242,392 | 2,304,891 | ||
Total shareholders' equity | 2,682,005 | 2,242,464 | 2,304,963 | ||
Current Liabilities | |||||
Trade and other payables | 1,183,798 | 433,539 | 655,321 | ||
Borrowings | 147,795 | 1,704,685 | 133,149 | ||
Total current liabilities | 1,331,593 | 2,138,224 | 788,470 | ||
Total equity and liabilities | 4,013,598 | 4,380,688 | 3,093,433 | ||
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY | ||||||||||
Additional | ||||||||||
Share | paid in | Reverse asset | Retained | |||||||
capital | capital | acquisition reserve | earnings | Total | ||||||
€ | € | € | € | € | ||||||
Balance as at 1 January 2015 | - | 6,046,980 | (6,046,908) | 2,025,113 | 2,025,185 | |||||
Profit for the financial period | - | - | - | 217,279 | 217,279 | |||||
Transactions with owners: | ||||||||||
Issue of share capital | - | - | - | - | - | |||||
Balance as at 30 June 2015 | - | 6,046,980 | (6,046,908) | 2,242,392 | 2,242,464 | |||||
Balance as at 1 January 2015 | - | 6,046,980 | (6,046,908) | 2,025,113 | 2,025,185 | |||||
Profit for the financial period | - | - | - | 503,550 | 503,550 | |||||
Transactions with owners: | ||||||||||
Contributions by and distributions to owners from business combinations | - | - | - | 6,190 | 6,190 | |||||
Other contributions by and distributions to owners | - | - | - | (229,962) | (229,962) | |||||
Balance as at 1 January 2016 | - | 6,046,980 | (6,046,908) | 2,304,891 | 2,304,963 | |||||
Loss for the financial period | - | - | - | (1,123,288) | (1,123,288) | |||||
Transactions with owners: | ||||||||||
Share based payments | - | 90,909 | - | 20,220 | 111,129 | |||||
Issue of share capital | - | 1,389,201 | - | - | 1,389,201 | |||||
Balance as at 30 June 2016 | - | 7,527,090 | (6,046,908) | 1,201,823 | 2,682,005 | |||||
CONSOLIDATED CASH FLOWS | |||||
Unaudited | Unaudited | Audited | |||
30 June | 30 June | 31 December | |||
2016 | 2015 | 2015 | |||
€ | € | € | |||
Cash flows from operating activities | |||||
Operating profit | 471,361 | 201,304 | 491,403 | ||
Adjustments for: | |||||
Unrealised exchange loss | - | (11,292) | (20,408) | ||
Share based payments | 30,303 | - | - | ||
Amortisation of customer list | 2,321 | 125,305 | 209,616 | ||
Impairment charge - intangible assets | 270,447 | - | 33,808 | ||
Cash flow from operations before working capital changes | 774,432 | 315,317 | 714,419 | ||
(Increase) in trade and other receivables | (378,481) | (231,707) | (366,753) | ||
(Decrease) / Increase in trade and other payables | (58,223) | 71,250 | (55,951) | ||
Cash flow from operations | 337,728 | 154,860 | 291,715 | ||
Tax paid | - | (35,174) | (41,431) | ||
Cash flow from operating activities | 337,728 | 119,686 | 250,284 | ||
Cash flow from investing activities | |||||
Payments for acquisitions of intangible assets | (275,447) | - | 16,384 | ||
Receipts on disposal of intangible assets | 5,000 | - | - | ||
Acquisition of subsidiaries, net of cash acquired | - | - | (200) | ||
Disposal of subsidiaries, net cash outflow on disposal | - | - | (1,611) | ||
Loans granted | (29,743) | (436,130) | (780,945) | ||
Loans repayments received | - | 5,100 | 104,071 | ||
Interest received | 42,073 | 8,859 | 7 | ||
Cash acquired on reverse asset acquisition | 2,112 | - | - | ||
Net cash outflow from investing activities | (256,005) | (422,171) | (662,294) | ||
Cash flow from financing activities | |||||
Proceeds of issue of new shares | 410,606 | - | - | ||
Repayment of borrowings | (35,354) | (33,369) | - | ||
Proceeds from borrowings | - | 49,510 | 25,000 | ||
Interest paid | - | (1,642) | (995) | ||
Net cash inflow from financing activities | 375,252 | 14,499 | 24,005 | ||
Net increase/(decrease) in cash and cash equivalents | 456,975 | (287,986) | (388,005) | ||
Cash and cash equivalents at start of period | 41,788 | 429,793 | 429,793 | ||
Cash and cash equivalents at end of period | 498,763 | 141,807 | 41,788 |
NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTSFOR THE SIX MONTHS ENDED 30 JUNE 2015
1 Basis of preparation
The interim consolidated financial statements incorporate the results of Veltyco Group plc (the "Company") and entities controlled by the Company (its subsidiaries) (collectively the "Group").
The interim consolidated financial statements are unaudited, do not constitute statutory accounts and were approved by the Board of directors on 26 September 2016.
The preparation of interim consolidated financial statements requires management to make judgements, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets and liabilities, income and expense. Actual results may differ from these estimates.
In preparing the interim consolidated financial statements, the significant judgements made by management in applying the Group's accounting policies and the key sources of estimation uncertainty were the same as those that applied to the consolidated financial statements as at and for the year ended 31 December 2015.
The interim financial information in this report has been prepared using accounting policies consistent with IFRS as adopted by the European Union. IFRS is subject to amendment and interpretation by the International Accounting Standards Board (IASB) and the IFRS Interpretations Committee and there is an ongoing process of review and endorsement by the European Commission. These policies are consistent with those to be adopted in the Group's consolidated financial statements for the year ended 31 December 2016. The accounting policies applied by the Group in this interim report are the same as those applied by the Group in the consolidated financial statements for the year ended 31 December 2015 except in relation to the reverse asset acquisition described below.
The principal risks and uncertainties of the Group have not changed since the last annual financial statements and the Admission Document published on 9 June 2016, where a detailed explanation of such risks and uncertainties can be found.
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.
As Velox3 was an AIM quoted investing company with no assets, 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).
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.
2 Earnings per share
The calculation of earnings per share is based on the following earnings and number of shares.
6 months ended 30 June 2016 | 6 months ended30 June 2015 | Year ended31 December 2015 | ||
€ | € | € | ||
| (1,123,289) | 217,279 | 503,550 | |
Number of shares | ||||
Weighted number of ordinary shares for the purposes of basic earnings per share | 43,753,775 | 43,753,775 | 43,753,775 | |
Basic loss per share (in € ) | (0.0257) | 0.0050 | 0.0115 | |
Diluted loss per share (in € ) | (0.0257) | 0.0050 | 0.0115 | |
Basic loss per share has been calculated by dividing the net results attributable to ordinary shareholders by the weighted average number of shares in issue during the period adjusted for the exchange ratio in the reverse asset acquisition.
3 Significant events during the reporting period
On 30 June 2016 the shares of the Company were consolidated in a 25 to 1 ratio. As part of the reverse takeover, the Company issued 43,753,775 shares to the shareholders of Sheltyco.
On 30 June 2016, Mr Uwe Lenhoff, Mr Hans Dahlgren and Mr Marcel Noordeloos joined the Board of Directors of the enlarged Group. Mr. David Mathewson (Chair) and Mr Mark Rosman were existing Directors of Velox3.
On 30 June 2016 the Directors issued Share Options under the Long term incentive Share Option Scheme as follows:
Director | Number of options granted | Exercise period | Exercise price |
David Mathewson | 400,000 | 5 years | 25p |
Marcel Noordeloos | 750,000 | 5 years | 25p |
Hans Dahlgren | 750,000 | 5 years | 25p |
Mark Rosman | 400,000 | 5 years | 25p |
As the grant date was 30 June 2016 no expenses have been recognised relating to these options. In total 4,150,000 share options have been granted to Directors and others, all at an exercise price of 25p. The options have a 5 year term and will vest 25% per year, starting 1 year after the grant.
4 Subsequent events
On 2 September 2016, the Company announced that the Second Subscription as disclosed in the Admission Document was completed and involves an amount of €285,672 for which the company has issued 878,991 new Ordinary Shares. Furthermore 175,798 Warrants have been granted as part of this second subscription.
On 22 September 2016, the Company announced that it had entered into a marketing and revenue sharing agreement (the "Marketing Agreement") in respect of the domain ZoomtraderGlobal (www.zoomtraderglobal.com) ("ZoomtraderGlobal") with Novox Capital Limited ("Novox"). Novox is a Cyprus Securities and Exchange Commission (CySEC) investment firm and the owner and operator of the domain.
The Marketing Agreement grants Options888 exclusive marketing rights and a participation in revenue generated by all new customers to ZoomtraderGlobal.
In addition, Novox has assigned to Veltyco the benefit of an option agreement with Elsona Assets Limited ("Elsona") to acquire ZoomtraderGlobal. It is not the current intention of Veltyco to exercise the option.
As consideration for the Option Assignment and procuring entry into the Marketing Agreement, the Company has allotted and issued to DTIG Holding Limited ("DTIG"), a subsidiary of Elsona, and applied for the admission to trading on AIM of, 10,688,000 new ordinary shares ("New Shares") in the Company. Trading of the New Shares is expected to commence on or around 27 September 2016 ("Admission"). Following Admission, the Company's issued share capital will consist of 67,626,260 ordinary shares ("Ordinary Shares"), with no Ordinary Shares held in treasury. Therefore, shareholders may use the above figure of 67,626,260 Ordinary Shares as the denominator for the calculations by which they will determine if they are required to notify their interest, or a change to their interest, in Veltyco under the FCA's Disclosure and Transparency Rules. Furthermore, a return on the revenue generated under the Marketing Agreement of up to €50,000 per month will be payable to Elsona for an initial lead-in period of 12 months or until the aggregate sum of returns paid equals €600,000.
A copy the Company's unaudited interim results for the six months to 30 June 2016 are available on the Company's website at www.veltyco.com.