Mar 25 / 2019
Latest News / Editorial

Nektan achieves EBITDA break-even

Nektan achieves EBITDA break-even as European arm continues to grow and new business opportunities emerge globally

Nektan has announced its unaudited interim results for the six months ended 31 December 2018.

Lucy Buckley, Chief Executive Officer of Nektan, commented, “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.

sigma igaming Nektan signs Lucy Buckley as CEO
Lucy Buckley, CEO Nektan

“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.”

Financial Summary:

Unaudited six months ended 31 December 2018


Unaudited six months ended 31 December 2017



Total Adjusted EBITDA*336(916)
Operating loss from continuing operations(201)(1,919)
Loss before taxation from continuing operations(843)(2,926)
Basic & diluted loss per share (pence) continuing operations(2.7)(9.2)
Basic & diluted loss per share (pence) continued & discontinued operations(14.9)(12.6)

*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.

Post period-end:

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).



The first six months of this financial year has been a landmark period for the business. Having signed some significant partnerships during the period, we are increasingly being seen as a major mobile and online casino technology business, providing premium gaming content from some of the best game developers in the world to some of the biggest gaming brands globally. The BetVictor contract win was one such deal that demonstrates this and was only made possible due to the breadth and depth of our gaming content portfolio.

Revenue growth is increasing year-on-year, as is our profitability, and we have achieved EBITDA break-even in the period. Whilst we are still in the process of divesting a majority stake in our US subsidiary, Respin, which will help reduce the cash burden on the business, Nektan will still keep a material stake in the US as we see it as an important emerging market.

Whilst our portfolio of gaming content is large by industry standards, we continue to look for the highest quality games to enrich the product offering to our partners. In certain circumstances, we partner with game developers as this gives us higher margins on the revenue generated from those games. A highlight from this strategy was the launch of Rank Up Dragon in December 2018, which we co-developed with Rising Entertainment and since its launch has been a top performer across our B2C network.

At Nektan, we aim to adhere to the highest levels of game compliance in our regulated markets. On top of this, we are very cognisant of problem gambling and we use our technology to ensure we can limit this wherever possible. As a socially responsible operator in the online gaming industry, we adopt our own standards which extend beyond what is required by the regulator and bodies such as GamStop. We have continuous technical development cycles to create new tools and enhancements to protect all our players with particular emphasis on those who are most vulnerable.

Financial Review and KPIs

Nektan’s KPIs continue to demonstrate robust growth for the Company and most significantly we achieved EBITDA break-even in H1 FY19. With revenues continuing to rise and costs being kept under control, we continue on our path to profitability and expect European EBITDA break-even by the end of FY19 (30 June 2019).
· NGR increased 48% in the period to £13.0 million (H1 FY18: £8.8 million);

· First time depositors remained constant in the period at 75,334 (H1 FY18: 74,755); and

· Cash wagering for B2C increased 36% in the period to £346.2 million (H1 FY18: £254.5 million).

Taking the continued operations, gross profit increased from £5,728k at 65% of revenue in H1 FY18 to £8,484k at 65% of revenue for H1 FY19. Adjusted EBITDA for continued operations showed a marked improvement from a loss of £916k in H1 FY18 to a profit of £336k in H1 FY19.

Marketing, partner and affiliate costs increased from £4,503k, or 51% of revenue, to £6,065k, or 47% of revenue, demonstrating efficiencies as the business grows. Administrative costs decreased from £2,141k, being 24% of revenue, to £2,083k (16% of revenue).

The continued loss before tax for the period was £868k compared to £2,926k in the prior period. The total loss was £4,798k which includes a loss of the discontinued US business of £3,930k, this includes an impairment of £2,974k. This led to a loss per share from continuing operations of 2.7p (H1 FY18: loss per share of 9.2p).

Our technology and business model

Nektan aggregates and delivers premium casino content from the industry’s leading game providers which, using its proprietary technology, it delivers as either a fully managed white label casino solution to its B2C partners or as a content distributor to its B2B partners. Nektan’s white label solution is delivered via its Evolve platform, while the E-Lite platform distributes cutting-edge content.

Our technology is new and has been built from the ground up, making it versatile and highly agile. We can deliver live gaming environments for our partners very quickly and, depending on the requirement or jurisdiction, in multiple languages. As the proliferation of mobile device use continues, Nektan is taking a ‘mobile first’ approach, especially when it comes to partnering in Asia where mobile adoption and gaming is growing exponentially.

We provide partners with the ability to tailor their offering. Decisions can be informed by our robust business intelligence tools, which provide highly insightful management information for optimisation of bonusing and gaming, leading to exceptional user experience.


On behalf of the Board, I would like to thank the entire team at Nektan for all their hard work over the period. Without their belief in the business we would not find ourselves in this strong turnaround position. It is their dedication and professionalism that is driving the Company forward and helping to attract major partners who want to use our technology to enhance and build their gaming brands across the globe.

We also announce that the Group’s CFO, Patrick Sinclair has left the Company and we thank him for his contribution to Nektan during this significant period of growth. Whilst interim-CFO Ken Duncan assumes his responsibilities, the process of finding a replacement is underway.


During the period, Nektan announced a placing, debt conversion and partial sale of Respin, its US division. Subject to the proposed sale of the majority shareholding of Respin, the Company reaffirms that it has strong support for its placing and subscription, with demand currently at £2.2 million, higher than the minimum £1.5 million sought. The Company expects to enter into a binding contract for the US sale as soon as possible, but in any event no later than 30 April 2019. The directors remain in discussion 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.

Negotiations on the sale of the majority of our wholly owned US subsidiary, Respin LLC, are progressing and we fully expect to complete this transaction by 30 April 2019. The assets and liabilities related to this business have been presented separately in the Consolidated Statement of Financial Position and are presented as discontinued operations in the Condensed Consolidated Statement of Comprehensive Income. The comparatives in the prior year’s statement have also been restated.

Current Trading and Outlook
Following a record two quarters, B2C trading to date in Q3 FY19 is flat year-on-year and down versus Q2 FY19. This is due to a number of factors that have impacted FTDs and deposits on our white label network, including seasonality, increased UK regulation around player marketing and verifications and a delay in the granting of our Swedish operator licence. However, the Board expects trading to improve in the next quarter as we now have a record number of 152 casino brands on our network and are continuing to sign up new white label partners, as well as enhancing our player retention and loyalty tools. Our B2B division grew significantly in H1 FY19 and the pipeline is very positive, especially in high growth regions such as Asia and Africa. We also continue to seek regulation in jurisdictions that we believe will be value accretive and lead to improved trading in the next quarter.

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