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Nektan plc

Nektan plc Strong results with revenue growth of 52%

Nektan plc (LON: NKTN), a leading international gaming solutions and services provider, announced its audited final results for the year ended 30 June 2018, and announced today that it has received in principle support to raise £3.5m in cash through the sale of 57.5% of its US subsidiary Respin for £2.0m and to raise £1.5m through an equity placing and subscriptions for new ordinary shares at a price of 15p per share.

Financial highlights

Year ended 30 June 2018

Year ended 30 June 2017

Total revenue (£000)

20,069

13,250

Adjusted EBITDA loss* (£000)

(2,355)

(3,419)

Operating loss (£000)

(5,475)

(4,624)

Loss before taxation (£000)

(7,182)

(6,219)

Basic and diluted loss per share (pence)

(16.6)

(21.8)

Financial, operational and strategic highlights

· Revenue growth of 52% to £20.1m (2017: £13.3m)

· All KPIs showed a marked improvement during the year:

o Net Gaming Revenue (NGR) up by 48% to £19.4m (2017: £13.1m)

o New First Time Depositing Players (FTDs) up by 20% to 156,703 (2017: 130,105)

o Total cash wagering up by 43% to £560m (2017: £390m)

· Adjusted EBITDA loss* reduced to £2.4m (2017: £3.4m), and an operating loss for the year of £5.5m (2017: £4.6m). These numbers include 12 months of the Group’s US division compared to 6 months in the prior year. Excluding the US, adjusted EBITDA loss* reduced to £1.4m (2017: £2.7m) which saw an operating loss of £0.5m in H2 versus £0.9m in H1

· Significant product improvements, including further multi-language and currency functionality, helping to increase the number of new casino partners and new geographies

· Major enhancements to games portfolio from some of the leading global studios taking the total number of games to over 750, helping to strengthen Nektan’s attraction to B2C and B2B partners

· In December 2017, the Company announced that it had raised £1,759,535 through a placing of 5,095,243 new ordinary shares and subscriptions for 3,283,495 new ordinary shares both at a price of 21p per share

· In July 2017, the Company secured commitments to raise £2,500,000 through an unsecured loan facility, with two of its Directors, Gary Shaw and Sandeep Reddy, of which £1,985,000 was drawn down with the balance having now expired

· The Company has entered into negotiations with HMRC in order to agree a payment schedule for £2.9m of owed UK point of consumption tax

B2C

· Launched 38 new casinos on its network taking the total at year end to 113 casinos from 55 partners

B2B

· Evolve Lite, Nektan’s B2B content aggregation platform, went live in November 2017, opening up new more profitable revenue streams

· Signed first global platform deal for Evolve Lite with Malta based gaming company, Tyche Digital Malta Limited (“Tyche”)

Post year-end highlights

· Lucy Buckley joined as Chief Executive Officer on 3 December 2018

· BetVictor went live with Nektan’s B2B global casino aggregation platform which sees BetVictor take the Evolve Lite casino platform’s content and distribute it across three of its casino brands

· On 27 December 2018, the Company announced that it had received in principle support to raise £3.5m in cash through the sale of 57.5% of its US subsidiary Respin for £2.0m and to raise £1.5m through an equity placing and subscriptions for new ordinary shares at a price of 15p per share (the “Placing Price”)

· In addition, the Company has reached agreement with holders of approximately £4.3m of the outstanding balance of the £8.1m Series A convertible loan notes and loan noteholders who own £1.2m of the outstanding convertible loan note interest to convert into new ordinary shares at the Placing Price resulting in the issue of, in aggregate, approximately 36.6m new ordinary shares

· Following the conversions, reduction of the coupon on the Series A convertible loan notes to 2.5%

· Furthermore, Gary Shaw, Executive Director of the Company, has agreed to convert £650k of his shareholder loan and the accrued interest on the full loan of £148k at the Placing Price resulting in the issue of 5,321,680 new ordinary shares

*The Group defines adjusted EBITDA as the operating result before depreciation, amortisation, income or expenditure relating to exceptional items and non-cash charges relating to share based payments and impairments. Exceptional items are considered to be one-off, non-trading items.

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Disclaimer: Statements in this article should not be considered investment advice, which is best sought directly from a qualified professional.