Nektan plc (LON:NKTN), a leading international mobile gaming provider, has entered into an asset transfer and simultaneous licensing agreement with Buckingham HMB Ltd (“Buckingham”) for three of the Company’s wholly-owned gaming brands.
Buckingham will pay the Company a cash consideration of £1.75 million, with a further £200,000 expected to follow shortly, for the assets, whilst simultaneously entering in to a five-year licensing agreement with the Group for the continuing operation of the brands under Nektan’s white label Evolve platform for a monthly royalty on terms consistent with other white label agreements the Company has entered into.
The assets being transferred principally comprise the customer databases, web domains and brands relating to Chomp Casino, Spin Princess and Sapphire Rooms, which were all developed in-house. In the year ended 30 June 2016, these brands in aggregate generated Net Gaming Revenue (“NGR”) of approximately £2.0 million, and going forward the Company will continue to report the NGR relating to these brands within its NGR, consistent with other white label partners. The Company will recognise a profit on the sale in the current financial year equivalent to the consideration received.
The proceeds of the asset transfer will be used for the Group’s working capital requirements to further develop Nektan’s business in Europe and its US Joint Venture, Respin Inc.
Leigh Nissim, Chief Executive of Nektan Plc, commented: “Since formally joining the Company on 25 July, we have begun to refine our structure to bring tighter focus and to optimise our businesses in Europe and the US. As part of this process, the transfer of these brand assets coupled with the long term white label licensing agreement is a positive step forward for the business by providing additional working capital for the Group while still benefiting from a share of the ongoing revenues of the brands.”
Related party transaction
Lindsay Shaw, the wife of Gary Shaw, the Company’s Director of Strategy, holds a partnership share of 8.45% in Buckingham and is also a designated member of the partnership. As the spouse of a director of the Company she is a related party and her participation in the transaction through Buckingham constitutes a “related party transaction” under the AIM Rules.
The Directors of the Company, other than Gary Shaw, consider, having consulted with the Company’s nominated adviser, Zeus Capital, that the terms on which the related party is participating in the transaction are fair and reasonable insofar as the Company’s Shareholders are concerned.
