Nektan Issues Trading Update
Monday February 1,2016 : NEKTAN OUTLOOK IMPACTED BY DELAY IN MAJOR CONTRACT
Current business performs strongly.
B2B mobile gaming platform and content provider Nektan issued a trading update ahead of the release of its results for the six month period ended December 31, 2015.
The company said its US joint venture Respin continued to perform strongly and now boasts 54 existing or pending contracts with tribal and commercial casino operators, up from nine in 2014, and has become the first company to be approved by Apple Inc. for mobile in-venue gaming in the US.
European operations have seen at least 32 percent compound monthly growth in overall net gaming revenue (NGR) reaching GBP827,000 in January 2016 driven by its digital / mobile partners.
The company warns that a delay in the acceleration of one large contract worth around GBP 7 million in NGR will have a significant impact on Group revenues and EBITDA.
“Strong action has been taken during January 2016 to reduce the ongoing monthly cost base by 45 percent to GBP 270,000 by April 2016, lowering the level of monthly NGR at which the Company will be EBITDA positive, the company said in a press statement.
The launch is now expected towards the end of the its current financial year.
“While we are seeing significant growth in our Net Gaming Revenues, we are disappointed with the delayed acceleration in the period of one large contract which was anticipated to be worth approximately £7 million in current year NGR,” Gary Shaw, interim Chief Executive Officer of Nektan Plc explained. “We are working hard with our partner to provide upgraded content, which will see an accelerated launch later in the second half of this financial year, and this has impacted revenues for the year as a whole.”
Jim Wilkinson, non-executive Chairman of Nektan, added: “Nektan has a very strong and strengthening strategic position in the US through our Respin JV and a fast growing European business. With a reduced cost base and the high growth rates being achieved, we believe that the Company will start fulfilling its undoubted potential.”
Zeus Capital, commenting on the update, says it now expects Nektan to report full year revenue of c.GBP 6.0 million and EBITDA loss of GBP 5.5 million, versus prior expectations of revenue of GBP 14.6 million and EBITDA of GBP 0.1 million, but maintains the company has potential and opportunity.
In related news, Nektan appointed Graham Bradshaw to the company’s senior management team as interim Finance Director (a non PLC board position). Readers will recall Gary Shaw being appointed interim chief executive and Jim Wilkinson as non executive chairman early last month (January).