Nektan raises cash but says it will need more

Nektan raises cash but says it will need more

Tuesday, January 3, 2017 Posted by Andy McCarron
Losses widen even as revenue increases

UK AIM-listed mobile gaming specialist Nektan successfully raised £2.3m from existing shareholders between Christmas and New Year but its annual report released at the same time admitted the company will be seeking further financing in 2017.

The placing of new shares came with the company’s annual results statement that showed operating losses widening to £8.3m in the year to June 2016 from £7.2m in 2015. Cash resources had dwindled to £0.1m before the new cash raise despite a total of £6.4m worth of new shares being issued in the year to June.

The company warns in the notes to its accounts that even after the new cash raise and a contemporaneous deferral of interest on a collateralised loan being arranged the company will require further funding in the year ahead. The amount is unspecified though the notes add that further asset sales remain a possibility.

The need for a further cash raise as well as issues around a put option held by Nektan’s partners Betfred for the half share in a marketing services joint venture (which could cost Nektan up to £4m if it were exercised) which caused auditors at BDO to issue a “significant doubt” warning with regard to the company’s ability to continue as a going concern.

The cash crisis came even after the company reported net gamin g revenue rise to £5.8m in the year to June. In the first quarter 2017 NGR rose to £2.1m from £0.5m in the same period last year. First-time depositors in the three months rose to over 14,000 from 6,500.

Nektan is now wholly involved in providing B2B gaming solutions for mobile gaming having offloaded its proprietary consumer-facing brands in August for £1.95m to a company called Buckingham which is partly owned by Lindsey Shaw, wife of Nektan founder Gary Shaw. The deal included a five-year licensing arrangement.

Among Nektan’s largest customers is Sun Bets. The annual report doesn’t specify Sun Bets’ share of Nektan’s revenues but it does say its largest customer is worth 25% of total revenues.

The company said that in the year to June it had added 29 new customers to its platform and had added over 110 games from suppliers such as IGT, SciGames and Net Ent.

The company said in its results statement that its realignment was continuing. This includes the formal increase in its share of the loss-making ReSpin joint venture in the US which provides mobile gaming solutions to tribal gaming interests. Nektan now owns 85 percent of the business after converting additional funding into equity.

Totally Gaming says: It seems clear that Nektan’s shareholders are a forgiving bunch. The company was formed in July 2013 and is yet to make a profit and as the annual report makes clear, this latest fund raise will not be the company’s last. At least revenues are heading in the right direction, though clearly a lot more will be needed for the company to reach profitability.


Compliance focus slows LeoVegas growth in third quarter


High 5 and GVC target European growth with expanded partnership


LeoVegas reshuffles marketing and communications leadership

No alternative text provided

PokerStars previews virtual reality poker experience

Gaming Products & Services Directory

The essential directory for the gaming industry