Nektan talks up 2018 progress despite mounting losses

Nektan talks up 2018 progress despite mounting losses

Thursday, January 3, 2019 Posted by News Team
Finance
Supplier posts loss after tax of £7.0m, though revenue grows to £20.1.m

London-listed white label gaming and content supplier Nektan described the financial year ended June 30, 2018 as a transformational year as a result of strong growth in revenue and customer numbers, despite increasing losses for the period.

Revenue for the year was up 51.5% at £20.1m, which was almost entirely down to its European managed services business. The division generated net gaming revenue of £19.4m, up 48.1% from the prior year, with a further 38 white label sites going live over the 12 month period. 

Nektan now operates 113 site on behalf of third-party partners. First-time depositors across all sites rose to 156,703, with amounts wagered growing 43.4% to £559.8m. 

The Evolve Lite content aggregation platform, which launched in November 2017, contributed an additional £556,000 in revenue. The solution has launched in Asia with Malta-based Tyche Digital, and after the end of the financial year was rolled out with BetVictor. 

The US-facing Respin division, meanwhile, generated £99,000 in revenue from site set-up and management fees. The division, which is to be rebranded as Rapid Games, is now majority owned by an unnamed partner, which has paid £2m for a 57.5% stake. 

Nektan’s revenue rise was accompanied by an increase in costs, with cost of sales up 57.8% to £7.5m. Marketing, partner and affiliate costs rose to £9.5m, largely as a result of the increase in white label partners over the year. 

Administrative costs were up at £5.4m, largely due to expenses incurred from the US business, as well as costs associated with establishing the Evolve Lite division. 

Adjusted EBITDA declined to £2.4m, though depreciation, amortisation and exceptional costs saw the company post an operating loss of £5.5m. Once a £230,000 tax credit was factored in, the supplier made a loss of £7.0m for the year. 

In addition to agreeing to sell the majority stake in Respin for £2.0m, Nektan has also raised £1.5m through an equity placing and subscriptions for new shares, and converted loans from directors including founder Gary Shaw into new shares. 

“I am delighted to have joined Nektan at this pivotal point in the company's evolution,” chief executive Lucy Buckley, who joined the company in December last year, said. “The global gaming market, in particular on mobile, is still growing rapidly and I believe Nektan is well positioned to increase its market share and capture new value from emerging markets.”

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