Nektan plc (AIM: NKTN), the fast-growing international gaming technology and services provider, announces its unaudited interim results for the six months ended 31 December 2018.
Unaudited six months ended 31 December 2018
Unaudited six months ended 31 December 2017
Total Adjusted EBITDA*
Operating loss from continuing operations
Loss before taxation from continuing operations
Basic & diluted loss per share (pence) continuing operations
Basic & diluted loss per share (pence) continued & discontinued operations
*Adjusted EBITDA loss exclude depreciation, amortisation, income or expenditure relating to exceptional items, non-cash charges relating to share based payments and impairments.
- Revenue in the six months ended 31 December 2018 ("H1 FY19") up 48% versus the six months ended 31 December 2017 ("H1 FY18") and 17.6% versus the six months ended 30 June 2018 ("H2 FY18").
- Adjusted EBITDA of £336k (H1 FY18 (£916k) loss), driven by increased revenues and resulting business efficiencies.
- The US operations have been classified as discontinued in the period under review and prior period following the Company's announcement on 27 December 2018, advising of the proposed sale of the majority shareholding of Nektan's US subsidiary, Respin. The associated assets and liabilities of the US subsidiary have been classified as held for sale and an impairment recorded of £2.9m based on the expected sale proceeds.
- Launched new white label casino partners, notably the Shipley Brothers, taking the number of fully-managed global casino brands to a record 152 across Europe.
- Higher margin B2B division established as significant global revenue driver for the business with 10 partners live by 31 December 2018.
- The directors remain in discussions with HMRC for the £2.9m owed for UK point of consumption tax as at 31 December 2018, which will be significantly reduced by virtue of the funds received from the equity fundraising and part disposal of Respin.
- Lucy Buckley joined as Chief Executive Officer on 3 December 2018.
- Several new B2B partnerships are underway including the previously announced Addison Global's MoPlay.
- US subsidiary, Respin, soft launched its proprietary in-venue mobile gaming product with a major US tier-one casino operator and signed a new contract with one of the largest casinos in Palm Springs, California.
- The proposed sale of the majority shareholding of Nektan's US subsidiary, Respin, is progressing and the Company expects to enter into a binding contract for the sale as soon as possible, but in any event no later than 30 April 2019.
- Nektan announced on 8 February 2019 that it has received more support for the placing and subscription than previously announced on 27 December 2018, with demand at £2.2 million. However, there is a short delay in executing all transactions as they are inter-conditional.
- Trading in Nektan's B2C white label business during Q3 FY19 has, so far, been flat year-on-year and down versus Q2 FY19, due to a number of factors impacting FTDs and deposits, including seasonality, increased UK regulation around player marketing and verifications and a delay in the granting of our Swedish operator licence. The Board expects trading to improve in the next quarter (Q4 FY19).
Lucy Buckley, Chief Executive Officer of Nektan, said:
"Achieving EBITDA break-even during the period is a key milestone for Nektan and our key focus for the remainder of FY19 is on maintaining and improving profitability. EBITDA break-even was reached due to both increased revenues and operational efficiencies. Whilst we believe in our US mobile casino product, and are excited about the macro trends in the market, the proposed sale of the majority shareholding of our US subsidiary is a major contributor to our profitability plan by removing Nektan funding for the US going forward, but retaining a material stake in the emerging US market.
In Europe, Asia and Africa, our emergent B2B division is generating new high margin revenue by licensing our proprietary technology to leading operators. We are successfully attracting major casino and gaming partners as evidenced by our BetVictor launch in October 2018 and post-period end contract win with MoPlay, announced in March 2019. This growth was only achievable with the firmly established B2C and white label network which grew to a record total of 152 casino sites during the period.
All this is underpinned by our cutting-edge proprietary mobile casino technology and agility, allowing us to attract new partners, get live quicker and optimise their revenues with our advanced operational and promotional tools. Nektan is in a strong position to build on the success of the first half of FY19 and we look forward to providing further updates."