VELTYCO GROUP PLC, a UK-listed company in gaming, gambling, and sports betting, recently expanded into blockchain and cryptocurrency, which boosted its stock price in December 2017. The company, however, appears to be primarily directed by German businessman Uwe Lenhoff, who remains its largest shareholder and developer, despite resigning from the board.
Offshore Business Structure and Growth Insights
VELTYCO’s main projects, initiated by Lenhoff, are located in Germany and Austria, often operated through offshore companies. In 2017, VELTYCO acquired a significant interest in Bet90, a Cologne-based sports betting firm linked to Lenhoff’s long-time associate Ingo Saager. It also took over eSports.com AG, developed by Lenhoff’s network.
In 2017, VELTYCO reported substantial growth:
- Revenue surged from €6.1 million to €16.2 million.
- Operating profit increased from €1.6 million to €7.5 million.
- Trade receivables escalated from €2.6 million to €11.8 million.
However, most receivables are due from ALTAIR ENTERTAINMENT N.V., a Curacao-licensed offshore gaming provider linked to Lenhoff. By the end of 2017, ALTAIR owed VELTYCO €10.7 million. Many websites run by ALTAIR, like KULBET, are tied to Lenhoff’s network, but some, such as Option888, have faced regulatory actions.
Related-Party Transactions and Regulatory Breaches
VELTYCO recently disclosed a loan agreement with WINSLET ENTERPRISES LTD, another Lenhoff-linked company. Due to Lenhoff’s control over both VELTYCO and Winslet at the time, this transaction breached AIM listing rules requiring disclosure of related-party transactions. Following this revelation, Lenhoff resigned from VELTYCO’s board.
Financial Concerns and Leadership Restructuring
While VELTYCO claims substantial profits, it has faced liquidity issues, exacerbated by unpaid receivables from ALTAIR and others. With a negative cash flow of €3.6 million in 2017, the company required new shares and loans to stay afloat. In March 2018, VELTYCO appointed a new CEO, Melissa Blau, in an effort to address financial concerns and recover unpaid receivables.
Shareholder Sentiment and Dividend Plans
Despite cash flow challenges, VELTYCO announced its first dividend, a move met with mixed reactions from shareholders who are skeptical about VELTYCO’s reliance on Lenhoff’s companies and offshore structures.
Under Blau’s leadership, VELTYCO aims to address its high receivables and stabilize its financial standing, but shareholder confidence remains tempered amid questions about transparency and long-term viability.