Nektan plc (LON:NKTN), a leading international mobile gaming provider, today provides a pre-close update on trading for the year ended 30 June 2016.
The Directors expect that growth in revenue for the second half of the year to be positive with an expected total NGR of £4,243k (H1: £1,629k), an increase of 160% over the first half of the year. Player numbers are similarly up, with total cash bets increased by 129% to £104.1m in H2 (H1: £45.4m) and the number of first time depositors increasing by 77% to 30,997 in H2 (H1: 17,512), reflecting the continued progress of the business.
During the year, Nektan launched 29 new partners in to its network and achieved a number of important milestones that position the business favourably for continued growth:
· Migration of all players and partners to its new and upgraded Evolve 2 platform, the proprietary back office platform owned and operated by Nektan.
· Addition of 110 new games from leading providers such as IGT, NetEnt, SciGames and others.
· New payment methods available to players including BOKU
· Launch of Nektan Marketing Services for the provision of digital gaming player acquisition and marketing services for Nektan partners.
· Extension of the customer journey and associated payments to enable multi-currency processing and the facilitation of International gaming transactions.
The migration of customer partners to the new Evolve 2 platform during the last quarter caused some slowdown in growth due to anticipated downtime and testing of the new platform which is now fully operational and functioning as expected.
As previously announced in the Interim Results for the six months ended 31 December 2015, the Directors implemented a wholescale review of all costs and have reduced fixed costs to a monthly run rate of approximately £340,000 from £490,000.
Overall, revenues for the full year are expected to be at or around market expectations with LBITDA expected to be marginally below.
As previously announced on 14 June 2016, Respin LLC (“Respin”), the Group’s US joint venture, continued to build on strong momentum in the period with regulatory approval from a designated independent test lab for release of its “Rapid Games” product, a Class II Mobile in venue gaming solution.
Leigh Nissim, the incoming CEO of Nektan PLC, is due to start on Monday 25th July.
Working Capital
The Group’s business model continues to see it receive net gaming revenues in cash on a monthly basis, which will grow in line with its business activities. The Group has significant cash outflows around quarterly payments of gaming revenue taxes and convertible loan note interest. The marginally lower level of EBITDA has reduced the Company’s cash levels and therefore Directors are continuing to assess the Group’s financing options.
These options include seeking new investors, debt finance or other financial support from key stakeholders for the Group; seeking a strategic partner; or seeking to realise value from its trading assets.
The directors of Respin, the Group’s US joint venture, are also in active discussions with selected parties about the funding of that business. This may or may not lead to cash being made available to Nektan.
These options are being explored in detail and, whilst the Directors believe that, if required, the Group would be reasonably likely to secure additional funding from one of these options, any such funding or realisation of value in those circumstances could be on unfavourable and onerous terms.
Jim Wilkinson, Chairman of Nektan PLC, said: “The progress in the business this year is encouraging. Our focus on building the foundations for continued growth has been positive, with the Evolve 2 platform now established internationally and our business operations maturing as we expand. We plan to develop the business further across both Europe and the US as both mobile casino markets expand.”
