REG - Veltyco Group PLC - Interim Results
RNS Number : 0381OVeltyco Group PLC30 September 201930 September 2019
VELTYCO GROUP PLC
("Veltyco" or "the Group" or "the Company")
UNAUDITED INTERIM RESULTS FOR THE SIX MONTHS ENDED 30 JUNE 2019
Veltyco Group plc (AIM:VLTY), the online marketing and operating company for the gaming industry, announces its unaudited interim results for the six months ended 30 June 2019.
Financial overview
· Revenues for continuing businesses decreased slightly to €1.8 million (H1 2018: €2.1 million) due to some large customer wins in May and June 2019
· Net loss after tax amounted to €1.0 million (H1 2018: profit of €3.3 million)
· Completed raising of €1.355 million during the period to provide working capital
- Raised a further €300k in September 2019 pursuant to a convertible loan
Operational overview
· Paul Duffen joined the Board as Non-executive Chairman in January 2019, before being appointed Executive Chairman in March 2019
· Streamlined operational structure to match the revised business model, which is now focused on its sportsbook and casino operations through Bet90 and marketing activities for the Betsafe brand in Germany
Commenting on the results, Paul Duffen, Executive Chairman, said: "2019 has been a very challenging period for the Group, with a focus on operational restructuring following termination of non-cash generating activities in the online financial trading vertical in the second half of 2018. We have made good progress and will continue to focus on expanding the operations of Bet90 and Betsafe."
This announcement contains inside information for the purposes of Article 7 of Regulation (EU) 596/2014.
For further information please contact:
Veltyco Group Plc
+44 (0)1624 605 764
Paul Duffen, Chairman
Marcel Noordeloos, Chief Financial Officer
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
Nick Lovering / Christopher Furness
IFC Advisory (Financial PR & IR)
+44 (0)20 3934 6630
Graham Herring / Tim Metcalfe / Zach Cohen
About Veltyco
Veltyco is a group of companies focused on the operation of its own online Sportsbook and Casino product as well as marketing activities for other online gaming companies.
Website: www.veltyco.com
CHAIRMAN'S STATEMENT
I hereby present the unaudited interim results for the six months ended 30 June 2019, which consolidate the results of Veltyco Group plc ("Veltyco" or "the Company") and its subsidiaries ("the Group").
Business
As communicated in our accounts for the year ended 31 December 2018, the Group is now focused on its sportsbook and casino operations in which the Group undertakes marketing activities for the Betsafe brand in Germany and operates our own Bet90 sportsbook and casino business, in which we have a 51% interest. This follows the Company's decision to cease all of the Group's marketing activities in the online financial trading and lottery verticals towards the end of 2018, which resulted in the full impairment of the Group's outstanding receivable balance of €10.7 million in the 2018 accounts in respect of such activities.
I was appointed as Non-executive Chairman on 30 January 2019, following Gilles Ohana decision to step down from the Board. On 7 March 2019, I assumed the role of Executive Chairman.
Following these changes, the Company's Board and management team now consists of Paul Duffen (Executive Chairman), Rainer Lauffs (Executive Director and COO), Marcel Noordeloos (Executive Director and CFO) and Mark Rosman (Non-Executive Director). The composition of the Board will continue to be reviewed as the business develops.
Financial review and outlook
Revenue for the first six months of 2019 amounted to €1.8 million. Although the reported revenue for H1 2018 amounted to €8.9 million, the H1 2018 revenue for the continuing businesses amounted to €2.1 million. This was a small decrease due to a number of large winners, which did not occur in 2018, across the Group's sportsbook and casino activities, which significantly impacted the revenue and the net result for the period.
As a result of the refocusing of the Group on its sportsbook and casino operations, the Directors sought to restructure the Group's operating costs to match current operations during the first half year of 2019 and these activities are ongoing. This has included the Group now taking in-house the operations for its service centre, previously outsourced to a third party. As a result, the Group now has a fully dedicated in-house team focused on the Group's Bet90 operations and the provision of customer service and player retention activities. This affords the Group a more efficient resource to focus on growing the Bet90 activities. Despite these measures, the Group reported a loss for the first six months of 2019 of €1.0 million.
During the period the Company completed a number of fundraises to provide additional working capital, raising €555,500 (£500,000) via an issue of new ordinary shares in January 2019, a loan from certain Directors amounting to €500,000 in April 2019 and €300,000 through the issue of new ordinary shares in May 2019. Following the period end, the Company raised a further €300,000 in September 2019 through the issue of a three year unsecured convertible loan, with a 10% coupon, with an existing investor.
Whilst trading since the end of June 2019 has been in line with the Board's expectations, as set out in its 2018 Accounts, the Group continues to be reliant on being able to manage its creditors, which continue to be meaningfully in excess of the Group's current cash resources. Whilst the Group has sought to reduced its operating costs to match its current operations, including accruing Directors' salaries until further funding is secured, the Group has continued to be loss making on a monthly basis, though the Directors expect this to improve going forward. The Directors continue to manage the Group's cash resources carefully, and whilst they believe that the Group will be able to continue to manage its creditors, should trading not be in line with expectations going forward and/or the Group is not able to manage its creditors, the Group's ability to meet such liabilities may be impacted. Accordingly, the Directors continue to explore further appropriate sources of capital.
Paul J. Duffen
Executive Chairman
27 September 2019
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
Unaudited
Unaudited
Audited
Period ended
Period ended
Year ended
30 June
30 June
31 December
2019
2018
2018
Note
€
€
€
Continuing operations
Revenues
1,808,222
2,103,342
4,686,923
Cost of Sales
(982,570)
(656,921)
(1,337,518)
Gross profit
825,652
1,446,421
3,349,405
Salary expense
(576,822)
(491,197)
(1,222,887)
Marketing and selling expense
(575,073)
(1,329,744)
(2,945,609)
General administrative expense
(704,734)
(912,926)
(1,497,148)
Depreciation, amortisation and impairment expense
(48,327)
(60,414)
(128,850)
Total administrative expenses
(1,904,956)
(2,794,281)
(5,794,494)
Operating loss
(1,079,304)
(1,347,860)
(2,445,089)
Financial (expense)/income
(1,606)
25,988
38,851
(Loss) before tax
(1,080,910)
(1,321,872)
(2,406,238)
Taxation
93,735
(83,767)
(52,933)
(Loss) for the period from continuing operations
(987,175)
(1,405,639)
(2,459,171)
Discontinued operations
Profit/(loss) for the period from discontinued operations
3
-
4,659,065
(14,244,131)
Profit/(loss) for the period
(987,175)
3,253,426
(16,703,302)
Attributable to:
Equity holders of the Company
(891,292)
4,021,473
(15,177,112)
Non-controlling interests
(95,883)
(768,047)
(1,526,190)
(987,175)
3,253,426
(16,703,302)
(Loss)/earnings per share attributable to equity holders of the Company
Continuing operations
- Basic (in €)
2
(0.0113)
(0.0085)
(0.0125)
- Diluted (in €)
2
(0.0113)
(0.0085)
(0.0125)
Continuing and discontinued operations
- Basic (in €)
2
(0.0113)
0.0538
(0.2029)
- Diluted (in €)
2
(0.0113)
0.0538
(0.2029)
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
Unaudited
Unaudited
Audited
30 June
30 June
31 December
2019
2018
2018
Note
€
€
€
Non-current assets
Goodwill
1,410,931
1,743,485
1,410,931
Other intangible assets
5
1,384,217
7,785,567
1,431,925
Investments
-
25,000
-
Property, plant and equipment
619
1,800
1,238
Total non-current assets
2,795,767
9,555,852
2,844,094
Current assets
Trade and other receivables
6
921,613
12,568,743
854,215
Cash and cash equivalents
189,975
1,019,231
1,031,071
Total current assets
1,111,588
13,587,974
1,885,286
Total assets
3,907,355
23,143,826
4,729,380
Equity and liabilities
Share capital
-
-
-
Additional paid-in capital
14,644,702
13,736,202
14,344,702
Reverse asset acquisition reserve
(6,046,908)
(6,046,908)
(6,046,908)
Retained earnings
(6,110,582)
14,071,308
(5,262,376)
Equity attributable to owners of the parent
2,487,212
21,760,602
3,035,418
Non-controlling interests
(1,507,461)
(585,080)
(1,411,578)
Total shareholders' equity
979,751
21,175,522
1,623,840
Non-current liabilities
Borrowings
528,230
27,480
27,858
Total non-current liabilities
528,230
27,480
27,858
Current liabilities
Trade and other payables
2,399,374
1,940,824
3,077,682
Total current liabilities
2,399,374
1,940,824
3,077,682
Total equity and liabilities
3,907,355
23,143,826
4,729,380
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Other reserves -
Share
capital
Additional
paid in
capital
Reverse asset acquisition reserve
Retained
earnings
Total
Non-controlling
interest
Total
Equity
€
€
€
€
€
€
€
Balance as at 1 January 2018
-
13,665,233
(6,046,908)
9,948,904
17,567,229
182,967
17,750,196
Profit for the financial period
-
-
-
4,021,473
4,021,473
(768,047)
3,253,426
Share based payments
-
-
-
100,931
100,931
-
100,931
Issue of share capital
-
70,969
-
-
70,969
-
70,969
Balance as at 30 June 2018
-
13,736,202
(6,046,908)
14,071,308
21,760,602
(585,080)
21,175,522
Balance as at 1 January 2018
-
13,665,233
(6,046,908)
9,948,904
17,567,229
182,967
17,750,196
(Loss) for the financial period
-
-
(15,177,112)
(15,177,112)
(1,526,190)
(16,703,302)
Dividend paid
-
-
(210,912)
(210,912)
(68,355)
(279,267)
Share based payment
-
-
176,744
176,744
-
176,744
Shares to be issued
-
555,500
-
-
555,500
-
555,500
Issue of share capital
-
123,969
-
-
123,969
-
123,969
Balance as at 31 December 2018
-
14,344,702
(6,046,908)
(5,262,376)
3,035,418
(1,411,578)
1,623,840
(Loss) for the financial period
-
-
-
(891,292)
(891,292)
(95,883)
(987,175)
Share based payment
-
-
-
43,086
43,086
-
43,086
Issue of share capital
-
300,000
-
-
300,000
-
300,000
Balance as at 30 June 2019
-
14,644,702
(6,046,908)
(6,110,582)
2,487,212
(1,507,461)
979,751
CONSOLIDATED STATEMENT OF CASH FLOWS
Unaudited
Unaudited
Audited
30 June
30 June
31 December
2019
2018
2018
€
€
€
note
Cash flows from operating activities
Operating (loss)/profit
(1,079,304)
3,711,205
(17,297,953)
Adjustments for:
Share based payments
43,086
100,929
176,744
Depreciation
619
730
1,292
Amortisation of intangibles
47,706
199,780
403,222
Impairment of intangibles
-
-
6,482,752
Bad debt impairment
-
-
10,737,715
Cash flow from operations before working capital changes
(987,893)
4,012,644
503,772
(Increase)/decrease in trade and other receivables
(67,398)
(4,598,547)
(1,058,697)
(Decrease)/increase in trade and other payables
(585,805)
859,242
533,580
Cash flow from operations
(1,641,096)
273,339
(21,345)
Tax (paid)/received
-
(51,257)
(86,823)
Cash flow from operating activities
4
(1,641,096)
222,082
(108,168)
Cash flow from investing activities
Interest received
-
25,988
38,851
Net cash inflow/(outflow) from investing activities
-
25,988
38,851
Cash flow from financing activities
Proceeds of issue of new shares
300,000
70,969
679,469
Dividends paid
-
-
(279,273)
Loans received
500,000
-
-
Net cash inflow from financing activities
800,000
70,969
400,196
Net (decrease)/ increase in cash and cash equivalents
(841,096)
319,039
330,879
Cash and cash equivalents at start of period
1,031,071
700,192
700,192
Cash and cash equivalents at end of period
189,975
1,019,231
1,031,071
NOTES TO THE UNAUDITED INTERIM CONSOLIDATED FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED 30 JUNE 2019
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 27 September 2019. The auditor's report on the year ended 31 December 2018 financial statements was unqualified, though it made reference to a material uncertainty in relation to going concern. The year ended 31 December 2018 Annual Report and financial statements is available on the Company's website.
The preparation of unaudited 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 unaudited 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 2018.
The unaudited 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 2018. 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 2018, with the exception of the adoption of IFRS 16. The adoption of this standard has not had a material effect on the accounting policies of the Group.
The principal risks and uncertainties of the Group have not changed since the last annual financial statements for the year ended 31 December 2018, where a detailed explanation of such risks and uncertainties can be found.
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 2019
6 months ended
30 June 2018
Year ended
31 December 2018
€
€
€
Earnings
Earnings for the purpose of basic and diluted earnings per shares being net profit attributable to equity shareholders
- Continuing operations
(891,292)
(1,405,639)
(2,459,171)
- Discontinued operations
-
4,659,065
(14,244,131)
- Continuing and discontinued operations
(891,292)
3,253,426
(16,703,302)
Number of shares
Weighted average number of ordinary shares for the purposes of basic earnings per share
78,567,270
74,689,492
74,819,180
Weighted average number of dilutive share options
-
5,517,844
-
Weighted average number of ordinary shares for the purposes of diluted earnings per share
78,567,270
80,207,336
74,819,180
Earnings / (loss)per share from discontinued operations
Basic earnings / (loss per share (in € )
-
0.0623
(0.1904)
Diluted earnings / (loss per share (in € )
-
0.0581
(0.1904)
The calculation of diluted earnings per share assumes conversion of all potentially dilutive ordinary shares, all of which arise from share options and/or warrants. A calculation is performed to determine the number of share options that are potentially dilutive based on the number of shares that could have been acquired at fair value, considering the monetary value of the subscription rights attached to outstanding share options.
3. Discontinued operations
During the second half of 2018, the Group terminated its marketing agreements related to the online financial trading and the lottery verticals. The Group has not recorded any further revenues after July 2018 and used the months after the termination to restructure the operational structure. The Group now believe the online financial trading and lottery verticals to be discontinued.
The results of these discontinued activities were as follows:
6 months
ended
30 June 2019
6 months ended
30 June 2018
Year ended
31 December 2018
€
€
€
Revenue
-
6,780,282
6,947,250
Administrative expenses
-
(1,721,302)
(21,800,114)
Profit/(loss) from operations
-
5,058,980
(14,852,864)
Profit/(loss) on disposal of discontinued operations
-
-
-
Profit/(loss) before tax
-
5,058,980
(14,852,864)
Tax charge
-
(399,915)
608,733
Profit/(loss) after tax
-
4,659,065
(14,244,131)
4. Cash generated from/(used in) continuing operations
6 months
ended
30 June 2019
6 months ended
30 June 2018
Year ended
31 December 2018
€
€
€
Operating profit/(loss)
(1,079,304)
(1,347,860)
(2,445,089)
Share based payments
43,086
100,929
176,744
Depreciation and amortisation charge
48,325
60,414
128,850
(Increase)/decrease in receivables
(67,398)
(420,282)
(521,596)
Increase/(decrease) in payables
(585,805)
(581,928)
934,826
Cash generated from/(used in) continuing operations
(1,641,096)
(2,188,727)
(1,726,265)
Cash generated from/(used in) discontinued operations
-
2,462,066
1,704,920
Tax paid
-
(51,257)
(86,823)
(1,641,096)
222,082
(108,168)
5. Impairment of intangible fixed assets
During the year ended 31 December 2018, the Group recorded an impairment charge on the Intangible assets related to the online financial trading and lottery verticals, amounting to €6,482,752.
6. Trade and other receivables
During the year ended 31 December 2018, the Group recorded an impairment charge for potential recoverability problems on the receivables, amounting to €10,712,715. A provision for impairment of trade receivables is established using an expected loss model. Expected loss is calculated from a provision matrix based on the expected lifetime default rates and estimates of loss on default.
7. Significant events during the reporting period
On 30 January 2019, the Company announced that it had raised £500,000 by issuing 3,333,333 new ordinary shares to certain existing investors, at a price of £0.15 (15p) per share. Furthermore, the Company announced on the same day that Paul Duffen joined the Board as Non-Executive Chairman. Gilles Ohana, stepped down from the Board on the same day.
On 15 February 2019, the Company announced that it had granted options over, in aggregate, 2,420,000 ordinary shares to the Directors and certain employees of the Company. The new options have an exercise price of 15p (£0.15) per share and vest in accordance with the terms of Company's Long Term Incentive Plan. On the same day, a total of 600,000 options granted to Directors on 5 July 2017 were cancelled. In addition, 109,846 existing warrants that were granted by the Company on 5 October 2017, have had the terms amended, such that they will now be exercisable at a price of 15p (£0.15) per share.
On 7 March 2019, the Company announced that Paul Duffen was appointed as Executive Chairman.
On 1 April 2019, the Group announced that it had entered into separate loan agreements with three of its Directors, being Paul Duffen, Marcel Noordeloos and Mark Rosman, pursuant to which each Director provide a loan of €166,667 to the Company, totalling €500,000.
On 30 May 2019, the Company announced that it had raised €300,000 from an existing investor by issuing 4,000,000 new ordinary shares, at a price of 6.6p (£0.066).
8. Subsequent events
Fundraise
On 16 September 2019, the Company announced that it had raised €300,000 through the issue of a three year unsecured convertible loan, with a 10% coupon, to an existing investor.
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.ENDIR SELFAWFUSELU
Recent news on B90 Holdings
See all newsRCS - B90 Holdings PLC - Oddsen.nu goes global
AnnouncementREG - B90 Holdings PLC - TR-1
AnnouncementREG - B90 Holdings PLC - TR-1
AnnouncementREG - B90 Holdings PLC - Director Dealings
AnnouncementREG - B90 Holdings PLC - TR-1
Announcement